The Kerala High Court has held that the income tax principal commissioner can cancel registration under Section 12A of the Income Tax without waiting for assessing the authority’s decision.
The bench of Dr. Justice A.K.Jayasankaran Nambiar and Justice Easwaran S. has observed that the provisions of Section 12AA independently empower the Principal Commissioner to consider whether or not the circumstances mentioned in Section 12AA(3) and 12AA(4) of the Income Tax Act exist as a pre-condition for directing a cancellation of the registration that was granted to the Trust under Section 12A of the Income Tax Act.
Pursuant to a survey conducted in relation to the activities of the respondent-assessee on 26.02.2020 and a search conducted in the premises of the assessee on 05.11.2020, show-cause notices were issued under Section 12AA(3) /(4) of the Income Tax Act to the assessee proposing to cancel the registration granted to them under Section 12A of the Income Tax Act.
Although the assessee preferred a detailed reply to the show-cause notices on 15.12.2020, by an order dated 31.12.2020, the Principal Commissioner of Income Tax rejected the contention raised by the assessee and confirmed the proposal for cancellation of the registration.
The order of the Principal Commissioner contained detailed reasons as to why, in the opinion of the Principal Commissioner, the registration granted to the assessee under Section 12A of the Income Tax Act had to be cancelled.
At any rate, aggrieved by the order of the Principal Commissioner, the respondent-assessee preferred appeals before the Appellate Tribunal. The Appellate Tribunal, on a consideration of the appeals, passed the order impugned before us by the revenue in these appeals, finding that the order cancelling the registration granted to the assessee was passed prematurely by the Principal Commissioner of Income Tax.
The court held that the statutory provisions do not require the Principal Commissioner to await a decision of the Assessing Authority concerned before passing an order cancelling the registration granted to an assessee under Section 12A of the Income Tax Act.
The court held that the assumption by the Appellate Tribunal that the determination of relevant facts by an Assessing Officer was a pre-condition to the Principal Commissioner exercising his powers under Section 12AA, or that the exercise of power by the Principal Commissioner under Section 12AA would preclude an independent assessment by the Assessing Officer, as he would be bound by the determination by the Principal Commissioner under Section 12AA, is flawed since the statutory provisions do not admit of any interpretation.
Case Details
Case Title: PCIT Versus Last Hour Ministry
Case No.: ITA NO. 20 OF 2023
Date: 03/03/2025
Counsel For Petitioner: Jose Joseph
Counsel For Respondent: Sivaraman
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