Advantage India Vs PCIT (ITAT Delhi)
NGO as Liaison Conduit – Tribunal Sustains PCIT(C)’s Cancellation of Charitable Registration
Assessee, a society registered u/s 12AA since 1999 & under FCRA, faced cancellation of its registration by PCIT (Central)-2, Delhi through an order dated 21.12.2018. The cancellation followed a search on the Deepak Talwar Group & a survey on Assessee on 22.06.2016, which unearthed material suggesting that Assessee was used as a conduit for routing liaison income in the guise of charitable donations. The order cancelled registration retrospectively from inception (1999).
Assessee challenged the action primarily on jurisdictional grounds, arguing that only CIT(Exemption) could cancel registration u/s 12AA. It relied on CBDT notifications of 2014 & ITAT precedents. It was also contended that violations of Sec. 13 conditions, even if present, do not automatically establish non-genuineness of activities. Further, it claimed the show-cause notice was defective & that retrospective cancellation was not permissible without express statutory sanction.
Revenue argued that once the case was centralized & PAN transferred u/s 127, PCIT(Central) had full jurisdiction, supported by CBDT Notification 70/2014 & a 2024 CBDT directive. On merits, Revenue detailed how donations from Airbus SAS & Isolux Corsan were routed as consideration for liaisoning services, & how funds were diverted for personal & business use of Deepak Talwar & his entities. Evidence included bogus purchases via shell concerns (Accordis Healthcare), salaries of employees working for Talwar’s group but shown as society staff, travel expenses of Talwar debited as NGO expenditure, & fixed deposits pledged for overdrafts of Talwar’s companies.
