Does violation of provisions of section 11(5) and 13, be a basis for cancellation of registration u/s 12A of the IT Act?

THE INCOME TAX APPELLATE TRIBUNAL
DELHI “A” BENCH: NEW DELHI
(THROUGH VIDEO CONFERENCING)

BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND
SHRI KUL BHARAT, JUDICIAL MEMBER

ITA No.4147/Del/2011
Assessment Year : NIL

M/s. Bhai Hospital Trust,
54, Janpath,
Connaught Place,
New Delhi-110001.
PAN-AAATB0492M
APPELLANT 

Vs

DIT(Exemption),
Plot No.15, 3rd Floor,
Aayakar Bhawan, Laxmi
Nagar, District Centre,
New Delhi-110092.
RESPONDENT

Appellant by Sh. Tarandeep Singh, Adv. &
Sh. Pulkit Verma, Adv.
Respondent by Sh. Satpal Gulati, CIT DR

Date of Hearing 05.05.2021
Date of Pronouncement 18.06.2021

ORDER

PER KUL BHARAT, JM :

 This appeal filed by the assessee for the assessment year NIL is directed against the order of learned DIT(Exemptions), Delhi dated 19.07.2011. The assessee has raised following grounds of appeal:-

1. “That on facts and in law, the Order dated 19th July, 2011 passed by the Director of Income Tax (Exemptions), New Delhi (Ld.DIT) cancelling the registration u/s 12A of the Act of the appellant trust, since inception, is bad and without properly considering and appreciating the facts and legal position and is also contrary to the position consistently accepted by the department over a long period of more than 25 years.

2. That on facts and in law, the Ld.DIT passed the impugned order by making wrong and legally incorrect observations and by wrongly holding  that the appellant trust had violated the provisions of section 2(15),10(23C)(iiiae), 11(5), 13(1)(c) & 13(1 )(d) r.w.s. 13(3) of the Income Tax Act, 1961. He also failed to appreciate that the appellant had not violated any of the provisions and full explanations / submissions in this regard had been made in response to his show cause notice dated 28th March, 2011.

3. That on facts and in law, the Ld.DIT erred in not appreciating that the case of appellant was covered u/s 10(23C)(iiiae) of the Act and the Registration u/s 12A could not mean that compulsorily, the provisions of section 11,12 & 13 particularly provisions of section 11(5) are applicable and more so when the department in the past, had always accepted that the case of the appellant was covered u/s 10(22A) upto Assessment Year 1998-99 and u/s 10(23C)(iiiae) from Assessment Year 1999-2000 to 2006-07.

4. That on facts and in law, the Ld.DIT erred in taking a view that the appellant trust had not been carrying on charitable activities wherein it was duly accepted position in the past that charitable activities in the form of running an OPD facility for poor and needy persons was being continuously run since the year 1982.

5. Without prejudice to the grounds hereinabove and without accepting any violation of law, even if there was any violation of provisions of section 11 (5) and 13 of the Act, it would only result in taxability of income of the appellant and cannot be a basis for cancellation of registration u/s 12A of the Act and accordingly the whole basis of the Ld.DIT to cancel the registration, is illegal, unjustified and also against the provisions of law.

6. Without prejudice to the grounds hereinabove, the Ld.DIT also erred in cancelling the registration u/s 12A since inception, whereas the powers to cancel the registration were provided in provisions of section 12AA(3) of the Act w.e.f. 1st June, 2010 and the registration could be cancelled prospectively and not since inception i.e. 30th March, 1980.

To know more in details find the attachment file