Heart Foundation of India v. CIT

Case snapshot

Sections / provisions: 12AB

Questions before the Court / Tribunal

• Section 12AB registration: whether charitable registration can be cancelled retrospectively and whether the cancelling authority had jurisdiction.
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

Heart Foundation of India vs Commissioner of Income Tax- 5th Floor, Hemdil, Linking Road Central, Pune Santacruz (West), Mumbai Bodhi Tower, Aaykar Sadan, 6th AAAAH0500R Floor 548/2b, Gultekadi, Salisbury Park, Pune 411 037 APPELLANT RESPONDENT

Assessee represented by Dr. K Shivram A/w Mr. Sashi Bekal Department represented by Smt.Madhumalti Ghosh, CIT DR

certificate dated July 21, 1889. The assessee has been carrying on its activities in accordance with the trust deed since its inception. There was a search carried out on one M/s.Emcure Pharmaceuticals Ltd and its group companies on 16/12/2020. Simultaneously, a survey action was carried out on the assessee. A statement from Dr. Lekha A Pathak, trustee was also recorded. The case of the assessee was centralized in Pune vide order dated March 07, 2022. The assessee had been filing the return of income in the status of charitable trust upto the A.Y. 2020-21. The assessee for the assessment year 2021-22 filed a return of income on October 11,2022 in the status of Association of Persons (AOP) declaring a total income of Rs.3,75,070/-. The return was filed in the status of AOP for the reason that the assessee had not applied for the registration of the trust under the new provision i.e. section 12AB of the Act due to Covid lockdown and its impact on the medical industry. The case of the assessee was selected for scrutiny and the Assessing Officer made a reference under the Second Proviso to section 143(3) of the Act to PCIT (Central) Pune alleging that the assessee has made specific…

assessee also raised an additional ground contending the jurisdiction of PCIT to cancel the registration. The relevant additional ground reads as under:- ―1. On facts and circumstances of the case and in law, the Ld. Principal Commissioner of Income-tax (PCIT) - Central Circle, Pune has erred in passing an order under section 12AB(4) of the Income-tax Act, 1961 (Act) cancelling the registration of the assessee-trust without jurisdiction. Hence the cancellation is bad in law.‖

5. The Ld.AR presented without prejudice arguments to submit that the cancellation of the registration of the trust cannot be done retrospectively. The Ld.AR in this regard relied on the decision of Rajasthan High Court in the case of Indian Medical Trust vs PCIT (2019) 414 ITR 296 (Raj) and the judgement of the Hon‘ble Madras High Court in the case of Auro Lab vs ITO (2019) 411 ITR 308 (Mad). The Ld.DR submitted that in above two decisions, it has been held that the Commissioner is not authorized under section 12AA(3) to cancel the registration of the trust retrospectively. The Ld.AR further submitted in assessee's case the registration is cancelled under the new section 12AB(4) and clause (ii) of the said section specifically provides that the cancellation of registration cannot be retrospective. The relevant extract of the section reads as follows:-

Appellant / assessee submissions

In support of the admission of the additional ground, the ld A.R. submitted that it involved only adjudication of pure legal issue and no fresh facts were required to be examined. The learned DR opposed the admission of additional ground. Taking into consideration the entire conspectus of the facts and circumstances of the case and the additional ground raised before us we are convinced that its adjudication does not require any fresh investigation of facts and involves pure legal issue. Respectfully following the judgement of the Hon‘ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT [(1998) 229 ITR 383 (SC)] we admit this additional ground for adjudication. Accordingly we will first proceed to adjudicate the legal objection raised through additional ground.

4. The Ld.AR in this regard submitted that the PCIT, Central Circle is not the prescribed authority and is not the authority for granting registration or cancellation of the registration. It is submitted that the jurisdiction lies with the CIT(Exemption) who is the prescribed authority in this connection. The Ld.AR drew our attention to the CBDT Notification No.52 & 53 of 2014 dated 22/10/2014 notifying the prescribed authorities for various territorial areas (page 135 of paper book). The ld AR submitted that for the territorial area of Greater Mumbai and Navi Mumbai (serial No.12), the Commissioner of Income-tax

5. The Ld.AR presented without prejudice arguments to submit that the cancellation of the registration of the trust cannot be done retrospectively. The Ld.AR in this regard relied on the decision of Rajasthan High Court in the case of Indian Medical Trust vs PCIT (2019) 414 ITR 296 (Raj) and the judgement of the Hon‘ble Madras High Court in the case of Auro Lab vs ITO (2019) 411 ITR 308 (Mad). The Ld.DR submitted that in above two decisions, it has been held that the Commissioner is not authorized under section 12AA(3) to cancel the registration of the trust retrospectively. The Ld.AR further submitted in assessee's case the registration is cancelled under the new section 12AB(4) and clause (ii) of the said section specifically provides that the cancellation of registration cannot be retrospective. The relevant extract of the section reads as follows:-

6. The Ld.DR, on the other hand, submitted that the PCIT is an authority above the CIT and, therefore, has jurisdiction over the CIT(Exemption). Accordingly, the Ld.DR submitted that the jurisdiction of the PCIT cannot be questioned. Further, the Ld.AR submitted that section 12AB(4) provides that a reference can be made to the PCIT or the CIT and that when the language of the section gives jurisdiction to the PCIT, the notification cannot override the powers of the PCIT. Accordingly, the Ld.DR submitted that the PCIT has correctly exercised his jurisdiction in passing the order cancelling the registration of the assessee trust.

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

The reasoning is integrated into the packaged record. Read it with the facts, statutory text and operative directions; this editorial article does not invent missing reasons.

Operative decision and relief

Transfer of jurisdiction—Power of competent officers—Centralization of case-Dissenting note—Assessee was issued notice enshrining proposal for transfer of his case from Kolhapur to Mumbai, so as to centralise cases relating to D. Y. Patil Group—Assessee objected that such notice did not referred to any agreement being reached by officers of equal rank at Mumbai and Ko/hapur— These objections were however overruled and assessee's case was transferred—High Court quashed purported transfer u/s 127— Held, "Centralisation Committee" which took decision for transfer of jurisdiction, is not authority envisaged u/s 127(2)—Counter-affidavit filed on behalf of Revenue does not disclose that there was any agreement between authorities of equal rank, as a pre-condition for invoking powers u/s 127— "Absence of dissenting note" from officer of equal rank who has to agree to proposed transfer would not constitute agreement, envisaged u/s 123(2)(a)— -Assessee's petition allowed.

12. In result the appeal of the assessee is allowed. Order pronounced in the open court on 27/07/2023.

Ratio and legal principle

• The packaged judgment addresses Section 12AB registration: whether charitable registration can be cancelled retrospectively and whether the cancelling authority had jurisdiction. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with section 12ab registration: whether charitable registration can be cancelled retrospectively and whether the cancelling authority had jurisdiction. Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• 12AB - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Ramesh Kumar Patodia Vs Citibank N.A. - Court / Tribunal to be verified
• ACIT vs. ARMEE INFOTECH - Court / Tribunal to be verified
• Commissioner of Central Excise and Service Tax , Kanpur Vs AR Polymers Pvt ltd - Court / Tribunal to be verified

Different outcome / possible distinction

• Ambaradi Seva Sahkari Mandali Ltd. & Others - Allowed
• RADHEYSHYAM MANDIR TRUST Vs. COMMISSIONER OF INCOME TAX (EXEMPTION) - Remanded / restored

Full judgment and source control

Read / download packaged judgment record

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