Arya Smaj Model Town Vs PCIT (ITAT Delhi)
The assessee, an educational society registered under the Societies Registration Act and holding registration under Section 12A, appealed against the order of the Principal Commissioner of Income Tax (Central)-3 cancelling its registration under Sections 12A, 12AA and 12AB on the basis of search-related material alleging non-genuine activities and diversion of funds in violation of Section 13(1)(c). The assessee contended that the PCIT (Central) lacked jurisdiction to cancel the registration, that the transfer of the case under Section 127 was only for coordinated assessment and not for cancellation of registration, that the registration had been renewed after the search, that cancellation could not operate retrospectively, and that the Assessing Officer’s reference was contrary to law. The Revenue defended the cancellation, relying on search findings, alleged diversion of funds, bogus expenditure, unsecured loans, and the powers of the PCIT under Sections 12AA and 12AB. The Tribunal observed that the issues were identical to those decided by the coordinate bench in Lakhmi Chand Charitable Society v. PCIT, Central-3, where it had been held that the reference made by the Assessing Officer lacked statutory basis, the power to cancel registration did not vest with the PCIT (Central) merely because of transfer under Section 127, and the proceedings were without jurisdiction. Following the coordinate bench decision, the Tribunal held that the impugned order cancelling the registration was without jurisdiction and unsustainable. The appeal of the assessee was accordingly allowed.
