Chandigarh Educational Trust, Mohali v. Pr.CIT-Central,Gurgaon, At Chandigarh

ITA 96/CHANDI/2021 | misc
Pronouncement Date: 31-08-2021 | Result: Allowed

Appeal Details

RSA Number 9621514 RSA 2021
Assessee PAN AAAAC8124A
Bench Chandigarh
Appeal Number ITA 96/CHANDI/2021
Duration Of Justice 3 month(s) 13 day(s)
Appellant Chandigarh Educational Trust, Mohali
Respondent Pr.CIT-Central,Gurgaon, At Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 31-08-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 31-08-2021
Assessment Year misc
Appeal Filed On 18-05-2021
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BE NCH A CHANDIGARH (VIRTUAL COURT) .. !' .. # $% BEFORE: SHRI. N.K.SAINI VP & SHRI R.L. NEGI JM ITA NO. 96/CHD/2021 ASSESSMENT YEAR : CHANDIGARH EDUCATIONAL TRUST 2368 PHASE-10 MOHALI PUNJAB-160060 THE PCIT(CENTRAL) - GURGAON AT CHANDIGARH C.R. BUILDING HIMALAYA MARG SECTOR-17-E CHANDIGARH- 160017 PAN NO: PTLM12857F APPELLANT RESPONDENT ITA NO. 97/CHD/2021 ASSESSMENT YEAR : CHANDIGARH EDUCATIONAL SOCIETY CHANDIGARH GROUP OF COLLEGES VPO JHANJERI STATE HIGHWAY-12A SIRHIND ROAD SAS NAGAR MOHLAI PUNJAB-140307 THE PCIT(CENTRA) - GURGAON AT CHANDIGARH C R BUILDING HIMALAYA MARG SECTOR-17E CHANDIGARH-160017 PAN NO: AAAAC8124A APPELLANT RESPONDENT ITA NO. 98/CHD/2021 ASSESSMENT YEAR : SHRI GURU RAM DASS EDUCATIONAL SOCIETY CHANDIGARH ENGINEERING COLLEGE VPO LANDRAN TEHSIL AND DISTRICT: MOHALI PUNJAB-140307 THE PCIT (CENTRAL) - GURGAON AT CHANDIGARH C.R. BUILDING HIMALAYA MARG SECTOR-17E CHANDIGARH-160017 PAN NO: AACTS6157Q APPELLANT RESPONDENT !' ASSESSEE BY : SHRI M.S. SYALI SR. ADVOCATE SHRI SUDHIR SEHGAL ADVOCATE SHRI TARANDEEP SINGH ADVOCATE #!' REVENUE BY : SMT. CHANDRAKANTA CIT $ %! & DATE OF HEARING : 19/07/2021 '()*! & DATE OF PRONOUNCEMENT : 31/08/2021 2 $&/ ORDER PER N.K. SAINI VICE PRESIDENT THESE APPEALS BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DT. 22/03/2021 OF THE PR. CIT(C)-GURGAON. 2. SINCE THE ISSUES INVOLVED ARE COMMON IN ALL THES E APPEALS WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. AT THE FIRST INSTANCE WE WILL DEAL WITH THE APPE AL IN ITA NO. 96/CHD/2021 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS: 1. THAT ON FACTS AND IN LAW THE ORDER PASSED BY PRI NCIPAL COMMISSIONER OF INCOME TAX (CENTRAL)-GURGAON {'PCIT-GURGAON'}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{AS PER S ECTION 153B(1)(A) R.W 3 RD PROVISO TO SECTION 153B AND NOTIFICATION NO. S.O. 9 66(E) DATED 27-02-2021 23 7.2 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON THE ASSESSEE ON 03/10/ 2019. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE RECEIVED A SHOW CAUSE N OTICE DATED 24/11/2020 FROM THE OFFICE OF PR. CIT(C) GURGAON RUNNING INTO 59 PAGES. THE ALLEGATIONS AGAINST THE ASSESSEE IN THE SHOW CAUSE NOTICE WAS A BOUT THE DIVERSION OF FUNDS OF TRUST TO TRUSTEES ON THAT GROUND IT HAD BEEN SU GGESTED THAT THE ACTIVITY OF THE ASSESSEE WERE NOT GENUINE OR WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE ASSESSEE SOCIETY AND IT HAD BEEN PROPOSED THAT THE REGISTRATION OF THE ASSESSEE TRUST BE CANCELLED BY INVOKING THE PROVISIONS OF SECTION 12AA(3) AND 12AA(4) OF THE ACT. IT WAS STAT ED THAT THE SO CALLED ALLEGATIONS MENTIONED IN THE SHOW CAUSE NOTICE WERE ONLY THE PRIMA FACIE INFERENCE AS DRAWN BY THE DEPARTMENT DURING THE POS T SEARCH EXPARTE INVESTIGATION BY THE DIRECTOR OF INVESTIGATION PAN CHKULA AND THE MATTER HAS STILL NOT ATTAINED FINALITY THEREFORE THE CANCELLATION OF REGISTRATION VALIDLY GRANTED TO THE ASSESSEE BY THE DEPARTMENT WOULD FURTHER JEOPAR DIZE THE CONDUCT OF EDUCATIONAL ACTIVITIES AS CARRIED OUT BY THE ASSESS EE. 7.3 IT WAS FURTHER STATED THAT IT WAS NOT IN DOUBT THAT THE ASSESSEE TRUST IS ENGAGED IN IMPARTING EDUCATION TO STUDENTS AND THE GROUPS GHARUAN CAMPUS WAS GRANTED A UNIVERSITY STATUS AS CHANDIGARH UNI VERSITY IN 2012 AND THAT THE GROUP OF COLLEGES HAS A COMBINED STRENGTH OF 45 000 STUDENTS. THE PRIMARY OBJECT OF THE ASSESSEE SOCIETY IS TO IMPART EDUCATI ON WHICH IS BEING DISCHARGED VERY EFFECTIVELY AND THE SAME FINDS ITS SUPPORT FRO M THE FACT THAT THE NUMBER OF STUDENTS AS WELL AS NUMBER OF COURSES ARE INCREASIN G IN EACH UPCOMING YEAR SINCE THE INCEPTION OF THE TRUST. 7.4 LD. COUNSEL FOR THE ASSESSEE ON THE BASIS OF TH E CHART OF SEQUENCE OF EVENTS INCORPORATED IN THE FORMER PART OF THIS ORDE R SUBMITTED THAT SEARCH ACTION UNDER SECTION 132 OF THE ACT HAD TAKEN PLACE IN THE ASSESSEES CASE ON 03/10/2019 AND THE CASE WAS CENTRALIZED UNDER SECTI ON 127 OF THE ACT VIDE 24 ORDER DT. 14/05/2020 PASSED BY THE LD. CIT(E) CHAN DIGARH. THEREAFTER NOTICE UNDER SECTION 153A OF THE ACT WAS ISSUED BY THE LD. ACIT CC-2 CHANDIGARH ON 07/09/2020 IN RESPONSE TO THEREOF THE ASSESSEE FIL ED THE RETURN OF INCOME ON 19/10/2020 THE A.O. ISSUED NOTICE UNDER SECTION 14 3(2) OF THE ACT FOR SELECTING THE RETURN OF INCOME FILED UNDER SECTION 153A OF TH E ACT FOR SCRUTINY ON 05/11/2020 AND AGAIN ISSUED DETAILED QUESTIONNAIRE UNDER SECTION 142(1) OF THE ACT ON 21/11/2020. THEREAFTER THE LD. PR. CIT ISSU ED THE NOTICE FOR CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA OF THE ACT O N 24/11/2020 IN RESPONSE THERETO THE ASSESSEE FILED PARTIAL REPLY DT. 04/1/ 2021 AND 01/02/2021RAISING THE OBJECTIONS THAT THE JURISDICTIONAL A.O. WAS PARALLE L CONDUCTING THE INVESTIGATION IN THE MATTER AND HE WOULD YET TO FORM AN OPINION A FTER TAKING INTO CONSIDERATION THE FINDINGS OF THE INVESTIGATION WIN G AND THE REPLIES OF THE ASSESSE WHO SOUGHT ADDITIONAL TIME FOR SUBMITTING THE DETAI LED REPLY ON MERIT OF THE ALLEGATIONS LEVIED IN SHOW CAUSE NOTICE. HOWEVER TH E LD. PR. CIT HAD NOT DISPOSED OFF THE OBJECTIONS RAISED BY THE ASSESSEE THEREFORE A WRIT PETITION WAS FILED BEFORE THE HON'BLE P&H HIGH COURT AGAINST THE SHOW CAUSE NOTICE SO ISSUED FOR CANCELLATION OF THE REGISTRATION UNDER SECTION 12AA OF THE ACT WHICH WAS DISPOSED OFF ON 17/03/2021 BY OBSERVING AS UNDER: LIMITED GRIEVANCE OF THE PETITIONER IS THAT SHOW CAUSE NOTICE ANNEXURE P-4 HAS BEEN ISSUED TO IT BY THE AUTHORITY HAVING NO JURISD ICTION IN THE MATTER. BESIDES THE NOTICE IS PREMATURE AS ASSESSMENT PROCEEDINGS ARE Y ET TO BE COMPLETED IN THE FIRST INSTANCE. HE SUBMITS THAT HE HAD ALREADY SUBM ITTED A REPLY TO THE SHOW CAUSE NOTICE BUT NO RESPONSE HAS BEEN RECEIVED. NOTICE OF MOTION. AT THIS STAGE MR. TAJENDER JOSHI ADVOCATE ACCEPTS NOTICE ON BEHALF OF THE RESPONDENT. HE SUBMITS IN CASE REPLY TO THE SHOW CA USE NOTICE HAS BEEN RECEIVED SAME SHALL BE DECIDED BY THE CONCERNED AU THORITY AT THE EARLIEST IN ANY CASE NOT LATER THAN ONE MONTH. 7.5 LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. PR. CIT WITHOUT GIVING ANY OPPORTUNITY OF BEING HEARD AFTER THE DIRECTION OF HON'BLE P&H HIGH COURT PASSED THE ORDER ON 22/03/2021 AND CANCELLED THE RE GISTRATION OF THE ASSESSEE SOCIETY GRANTED UNDER SECTION 12AA OF THE ACT EVEN WHEN HE HIMSELF ADMITTED 25 IN PARA 3 OF HIS ORDER THAT THE ASSESSEE ASKED MORE TIME FOR FURNISHING THE REPLY ON MERIT. IT WAS STATED THAT THE LD. PR. CIT PASSED THE IMPUGNED ORDER IN HASTE AFTER THE DIRECTION GIVEN BY THE HON'BLE JURISDICTI ONAL HIGH COURT WITHOUT GIVING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT WAS SUBMITTED THAT THE PROVISIONS CONTAINED IN SUB SECTION 3 OF SECTION 12 AA OF THE ACT CLEARLY PROVIDES THAT THE REASONABLE OPPORTUNITY OF BEING HEARD TO B E GIVEN TO THE ASSESSEE. IT WAS CONTENDED THAT THE LD. PR. CIT NEITHER GAVE PRO PER OPPORTUNITY OF BEING HEARD NOR CONSIDERED THE APPRAISAL DONE BY THE CONC ERNED A.O BEFORE CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT. THEREFORE THE IMPUGNED ORDER PASSED BY THE LD . PR. CIT MAY BE SET ASIDE. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: FEDCO(P) LTD. AND ORS VS. S.N. BILGRAMI AND ORS REP ORTED IN AIR 1960 SC 415 (SC) ITO VS. ASHOKE GLASS WORKS REPORTED IN 125 ITR 491 ( CALCUTTA) DCIT VS. SAHARA INDIA FINANCIAL CORPORATION LTD. RE PORTED IN 183 ITD 266 (DELHI-TRIB) CIT VS. PARKE DAVIS (INDIA) LTD. REPORTED IN 239 IT R 820 (AP) CIT FARIDABAD VS. MOTOROLA INDIA LIMITED REPORTED IN 326 ITR 156 (P&H) RAMSHILA ENTERPRISES (P.) LTD. VS. CIT REPORTED IN 383 ITR 546 (CALCUTTA) PCIT PUNE VS. SUNGARD SOLUTIONS (I)(P.) LTD. REPOR TED IN 415 ITR 294 (BOMBAY) STATE BANK OF INDIA VS. CHANDRA GOVINDJI(KM.) REPOR TED IN (2000) 8 SCC 532 (SC) GKN DRIVESHAFT (INDIA) LTD. VS. ITO & ORS. REPORTED IN (2003) 1 SCC 72 (SC) P.N. ESWARA IYER AND ORS. VS. REGISTRAR SUPREME CO URT OF INDIA REPORTED IN (1980) 4 SCC 680 (SC) KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT REPORTED IN 113 TTJ 906 (CUTTACK) KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT REPORTED IN 336 ITR 389 (ORISSA) MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATION RESE ARCH VS. CIT REPORTED IN 133 TTJ 706 (PUNE) HIND CHARITABLE TRUST VS. PCIT IN MISC. BENCH NO. 7 201 OF 2018 ORDER DATED 11.04.2018 OF HON'BLE ALLAHABAD HIGH COURT. ORIENT (GOA) LTD. VS. DCIT REPORTED IN 66 ITD 479 ( PUNE) 7.6 IT WAS CONTENDED THAT THE MATERIAL WHICH WAS RE QUIRED WAS FURNISHED BEFORE THE A.O HOWEVER THE LD. PR. CIT DID NOT WA IT FOR THE ORDER PASSED BY THE A.O. ON MERIT AND DID NOT GIVE ANY OPPORTUNITY OF B EING HEARD AFTER THE 26 DIRECTION WAS GIVEN BY THE HON'BLE JURISDICTIONAL H IGH COURT TO DISPOSE OFF THE OBJECTION AND TO CONSIDER THE EARLIER WRITTEN SUBMI SSIONS FURNISHED IN PART BY THE ASSESSEE WITHIN ONE MONTH. HOWEVER THE LD. PR. CI T PASSED THE IMPUGNED ORDER IN HASTE WITHOUT GIVING AN OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE WITHIN 5 DAYS OF THE DIRECTION GIVEN BY THE HON'BLE JURISDIC TIONAL HIGH COURT ALTHOUGH THE TIME AVAILABLE WAS ONE MONTH. 7.7 THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTEN TION TOWARDS PAGE NO. 45 OF THE ASSESSEES PAPER BOOK WHICH IS THE COPY OF T HE REPLY DT. 04/01/2021 GIVEN TO THE LD. PR. CIT CENTRAL BY THE ASSESSE WHEREIN IT HAS BEEN MENTIONED IN PARA 3 THAT THE POINT TO POINT REPLY ON THE ALLEGATIONS AS MADE IN THE SHOW CAUSE NOTICE WILL REQUIRE EXTENSIVE WORKING AND SOME MORE TIME WAS REQUIRED. 7.8 IT WAS FURTHER SUBMITTED THAT THE RELIANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF THE ITAT CUTTACK BENCH IN THE CASE OF KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT IN APPEAL NO. 86 (CUT TACK) OF 2007 ORDER DATED 05/10/2007 WHEREIN THE FACTS WERE SIMILAR TO THE AS SESSEES CASE I.E; THE LD. CIT(ADMIN) HAS PROPOSED THE CANCELLATION OF REGISTR ATION UNDER SECTION 12AA OF THE ACT AND PROCEEDED ON THE BASIS OF THE FINDINGS OF THE SEARCH AND SEIZURE OPERATION AND THAT THE SEARCH AND SEIZURE OPERATION WAS THE BASIS FOR CONCLUSION OF THE FINAL ASSESSMENT PROCEEDINGS THE ACTION OF THE LD. CIT WAS HELD AS PREMATURE (COPY OF THE SAID ORDER WAS ALSO FURNISHED WHICH IS PLACED ON THE RECORD). IT WAS STATED THAT THE AFORESAID DECIS ION OF THE ITAT CUTTACK BENCH WAS NOT OVERRULED. IT WAS ACCORDINGLY SUBMITTED THA T THE LD. PR. CIT WAS NOT JUSTIFIED IN CANCELLING THE REGISTRATION ALREADY GR ANTED TO THE ASSESSEE UNDER SECTION 12AA OF THE ACT WITHOUT GIVING DUE AND REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WITHOUT CONSIDERING OUTCO ME OF THE ASSESSMENT TO BE FRAMED BY THE A.O. ON MERIT. 8. IN HER RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT. IT WAS FURTHER SUB MITTED THAT THE LD. PR. CIT HAS 27 JUST ACTED UPON THE DIRECTION GIVEN BY THE HON'BLE JURISDICTIONAL HIGH COURT AND DECIDED THE CASE OF THE ASSESSEE WITHIN ONE MONTH W HICH WAS THE LIMIT GIVEN BY THE HON'BLE HIGH COURT. IT WAS FURTHER SUBMITTED TH AT THE LD. PR. CIT ISSUED THE NOTICE DT. 24/11/2020 AND THE ASSESSEE FURNISHED TH E REPLY DT. 04/01/2021 AND THEREAFTER ON 01/02/2021 SO IT CANNOT BE SAID THAT SUFFICIENT TIME WAS NOT GIVEN TO THE ASSESSEE FOR GIVING THE REPLY. IT WAS FURTHE R SUBMITTED THAT THE HON'BLE HIGH COURT DIRECTED THE LD. PR. CIT TO DISPOSE OFF THE O BJECTION FURNISHED BY THE ASSESSEE WHICH HAD BEEN DISPOSED OFF THEREFORE TH E DIRECTIONS GIVEN BY THE HON'BLE HIGH COURT WERE COMPLIED BY THE LD. PR. CIT . IT WAS ALSO STATED THAT REASONABLE OPPORTUNITY OF BEING HEARD WAS PROVIDED TO THE ASSESSEE ON 05/01/2021 19/01/2021 AND 01/02/2021. THEREFORE IT CANNOT BE SAID THAT A DUE AND REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT G IVEN TO THE ASSESSEE. THE LD. CIT DR FURNISHED THE COPY OF THE ORDER SHEET WH ICH IS PLACED AT PAGE NO. 1 & 2 OF THE PAPER BOOK FURNISHED BY THE DEPARTMENT. IT WAS STATED THAT A SHOW CAUSE NOTICE UNDER SECTION 12AA(3) / 12AA(4) OF THE ACT FOR CANCELLATION OF REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT ON 25/02/2014 IN CASE OF THE ASSESSEE WAS ISSUED ON 23/11/2020 IN RESPONSE TO W HICH THE ASSESSEE FURNISHED EMAIL DT. 05/12/2020 AND REQUESTED FOR ADJOURNMENT ON THE REQUEST OF THE ASSESSEE THE CASE WAS FIXED FOR HEARING ON 05/01/2 021 ON THE SAID DATE THE COUNSEL FOR THE ASSESSEE APPEARED AND FURNISHED THE SUBMISSION. AGAIN THE MATTER WAS ADJOURNED TO 19/01/2021 ON THE SAID DAT ED THE COUNSEL FOR THE ASSESSEE ATTENDED AND REQUESTED THE ADJOURNMENT FOR 01/02/2021 WHICH WAS GRANTED ON THE SAID DATE THE LD. COUNSEL FOR THE A SSESSEE APPEARED AND ON HIS REQUEST THE MATTER WAS ADJOURNED FOR 10/02/2021. HO WEVER THE ASSESSEE APPROACHED TO HONBLE JURISDICTIONAL HIGH COURT IN WRIT WHEREIN THE DIRECTION VIDE ORDER DT. 17/03/2021 WAS GIVEN TO DISPOSE OFF THE OBJECTIONS OF THE ASSESSEE FURNISHED IN RESPONSE TO THE SHOW CAUSE N OTICE AND THE SAME WAS TO BE DECIDED BY THE CONCERNED AUTHORITY AT THE EARLIE ST IN ANY CASE NOT LATER 28 THAN ONE MONTH. THEREFORE THE LD. PR. CIT DISPOSED OFF THE OBJECTIONS OF THE ASSESSEE AT THE EARLIEST ON 22/03/2021. 9. IN HIS REJOINDER THE LD. COUNSEL FOR THE ASSESSE E SUBMITTED THAT FIRST NOTICE WAS SERVED UPON THE ASSESSEE ON 03/01/2021 FOR HEAR ING ON 05/01/2021 I.E; AFTER THE GAP OF ONE DAY HOWEVER THE ASSESSEE COULD NOT CONTACT THE COUNSEL SINCE THE TIME WAS VERY SHORT AND THEREFORE THE ADJOURNME NT WAS SOUGHT AND THE CASE WAS ADJOURNED TO 19/01/2021 ON THE SAID DATED THE ASSESSEE SOUGHT TIME TO FILE THE COPY OF THE CASE LAWS ON THE ISSUE AS T O WHETHER THE DIRECTOR (EXEMPTION) HAD A JURISDICTION OR THE LD. PR. CIT W AS HAVING THE JURISDICTION THEREFORE THE CASE WAS ADJOURNED TO 01/02/2021 ON THE SAID DATE THE ASSESSEE FURNISHED THE REPLY AND SUBMITTED THAT THE ISSUE OF JURISDICTION GOES TO THE ROOT OF THE MATTER IT WAS ALSO SUBMITTED THAT THE EXEMPTIO N CLAIMED BY THE ASSESSEE CAN ONLY BE WITHDRAWN BY THE LD. CIT(E) AND NOT BY THE LD. PR. CIT THEREFORE THE CASE WAS ADJOURNED FOR 10/02/2021. HOWEVER THERE W AS NO DISCUSSION ON THE SAID DATE AND THE IMPUGNED ORDER HAS BEEN PASSED EX PARTE ON 22/03/2021 AND THE REGISTRATION ALREADY GRANTED TO THE ASSESSEE UN DER SECTION 12AA OF THE ACT WAS CANCELLED. IT WAS POINTED OUT THAT EVEN WHEN TH E CASE WAS ADJOURNED FOR 10/02/2021 AT 11.00 A.M NO ENTRY IN THE ORDER SHEET HAS BEEN MADE FOR THE SAID DATE THE REFERENCE WAS MADE TO PAGE NO. 2 OF THE D EPARTMENTAL PAPER BOOK WHICH IS THE COPY OF THE ORDER SHEET. ACCORDINGLY I T WAS SUBMITTED THAT THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT WITHOUT PR OVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND WITH OUT CONSIDERING THE ORDER PASSED BY THE A.O. ON MERIT MAY BE SET ASIDE. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOT IN DISPUTE THAT THE LD. PR. CIT PASSED THE IMPUGNED ORDER EXPARTE ON 22/03/2021 AND CANCELLED THE REGISTRATION ALREADY GRANTED TO T HE ASSESSEE UNDER SECTION 29 12AA OF THE ACT BY INVOKING THE PROVISIONS OF SECTI ON 12AA(3)/12AA(4) OF THE ACT. THE SAID PROVISIONS READ AS UNDER: 12AA. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION(1) OR HAS OBTAINED REGISTRATION AT A NY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) A CT 1996 (33 OF 1996) AND SUBSEQUENTLY THE PRINCIPAL COMMISSIONER OR COMMISSI ONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION AS THE CASE MAY BE HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGIS TRATION OF SUCH TRUST OR INSTITUTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLA USE (B) OF SUB-SECTION(1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT 1996 (33 OF 1 996) AND SUBSEQUENTLY IT IS NOTICED THAT (A) THE ACTIVITIES OF THE TRUST OR THE INSTITUTION ARE BEING CARRIED OUT IN A MANNER THAT THE PROVISIONS OF SECTIONS 11 AND 12 DO NOT AP PLY TO EXCLUDE EITHER WHOLE OR ANY PART OF THE INCOME OF SUCH TRUST OR INSTITUTION DUE TO OPERATION OF SUB-SECTION (1) OF SECTION 13 OR (B) THE TRUST OR INSTITUTION HAS NOT COMPLIED WITH THE REQUIREMENT OF ANY OTHER LAW AS REFERRED TO IN SUB-CLAUSE(II) OF CLAUSE(A) OF SU B-SECTION (1) AND THE ORDER DIRECTION OR DECREE BY WHATEVER NAME CALLED HOLDI NG THAT SUCH NON- COMPLIANCE HAS OCCURRED HAS EITHER NOT BEEN DISPUT ED OR HAS ATTAINED FINALITY THEN THE PRINCIPAL COMMISSIONER OR THE COMMISSIONE R MAY BY AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTIO N: PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELL ED UNDER THIS SUB-SECTION IF THE TRUST OR INSTITUTION PROVES THAT THERE WAS A REASON ABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED OUT IN THE SAID MANNER. FROM THE PROVISIONS CONTAINED IN PROVISO TO SUB SEC TION 3 OF SECTION 12AA OF THE ACT IT IS CRYSTAL CLEAR THAT NO ORDER UNDER THIS S UB SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. 11. AS REGARDS TO THE ISSUE RELATING TO THE REASONA BLE OPPORTUNITY OF BEING HEARD THE HON'BLE APEX COURT IN THE CASE OF SBI VS . CHANDRA GOVINDJI (SUPRA) HELD AS UNDER: 30 IN ASCERTAINING WHETHER A PARTY HAD REASONABLE OPPO RTUNITY TO PUT FORWARD HIS CASE OR NOT ONE SHOULD NOT ORDINARILY GO BEYON D THE DATE ON WHICH ADJOURNMENT IS SOUGHT FOR. THE EARLIER ADJOURNMENT IF ANY GRANTED WOULD CERTAINLY BE FOR REASONABLE GROUNDS AND THAT ASPECT NEED NOT BE ONCE AGAIN EXAMINED IF ON THE DATE ON WHICH ADJOURNMENT IS SO UGHT FOR THE PARTY CONCERNED HAS A REASONABLE GROUND. THE MERE FACT TH AT IN THE PAST ADJOURNMENTS HAD BEEN SOUGHT FOR WOULD NOT BE OF AN Y MATERIALITY. IF THE ADJOURNMENT HAD BEEN SOUGHT FOR ON FLIMSY GROUNDS T HE SAME WOULD HAVE BEEN REJECTED 11.1 SIMILARLY IN THE CASE OF P.N. ESWARA IYER AND ORS. VS. REGISTRAR (SUPRA) IT HAS BEEN HELD AS UNDER: THE RIGHT TO BE HEARD IS OF THE ESSENCE BUT HEARING DOES NOT MEAN MORE THAN FAIR OPPORTUNITY TO PRESENT ONE'S POINT ON A D ISPUTE FOLLOWED BY A FAIR CONSIDERATION THEREOF BY FAIR MINDED JUDGES. PRESEN TATION CAN BE WRITTEN OR ORAL DEPENDING ON THE JUSTICE OF THE SITUATION. WHERE ORAL PERSUASIVENESS IS NECESSARY IT IS UNFAIR TO EXCLUDE IT AND THEREFO RE ARBITRARY TOO. BUT WHERE ORAL PRESENTATION IS NOT THAT ESSENTIAL ITS EXCLUS ION IS NOT OBNOXIOUS. WHAT IS CRUCIAL IS THE GUARANTEE OF THE APPLICATION OF AN I NSTRUCTED INTELLIGENT IMPARTIAL AND OPEN MIND TO THE POINTS PRESENTED. FROM THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO CASES IT WOULD BE CLEAR THAT THE REASONABLE OPPORTUNITY OF BEING HEARD IS TO BE GIVEN AND THE FACT THAT IN THE PAST ADJOURNMENTS HAD BEEN SOUGHT FOR WOULD NO T BE OF ANY MATERIALITY. IN THE PRESENT CASE THE HON'BLE JURISDICTIONAL HIGH C OURT DIRECTED THE LD. PR. CIT VIDE ORDER DT. 17/03/2021 TO DISPOSE OFF THE OBJEC TIONS RAISED BY THE ASSESSEE AND THE LETTERS FURNISHED IN THE RESPONSE TO THE SH OW CAUSE NOTICE. HOWEVER THE LD. PR. CIT WITHOUT PROVIDING ANY OPPORTUNITY OF B EING HEARD TO THE ASSESSEE PASSED THE IMPUGNED ORDER ON 22/03/2021 EXPARTE WHI CH IS AGAINST THE PROVISIONS CONTAINED IN PROVISO TO SUB SECTION 3 OF SECTION 12AA OF THE ACT. 11.2 IN THE PRESENT CASE THE LD. PR. CIT HIMSELF AD MITTED AT PAGE NO. 8 OF THE IMPUGNED ORDER THAT THE SHOW CAUSE NOTICE HAS BEEN ISSUED TO THE ASSESSEE WHICH WAS BASED ON THE STATEMENT DOCUMENTS AND EV IDENCES ETC COLLECTED DURING THE SEARCH AND POST SEARCH PROCEEDINGS AND A LSO ON PERUSAL OF RETURN OF INCOME AND DETAILS EXAMINED BY THE A.O. DURING THE ASSESSMENT PROCEEDINGS. HOWEVER IN THE PRESENT CASE NO ASSESSMENT WAS FRAME D BY THE A.O. THEREFORE IT IS NOT CLEAR THAT HOW AND IN WHAT MANNER THE LD. PR . CIT CONSIDERED THE DETAILS 31 EXAMINED BY THE A.O. WHEN THE ASSESSMENT HAD NOT BE EN COMPLETED BY THE A.O. IN THE INSTANT CASE THE LD. PR. CIT WHILE CANC ELLING THE REGISTRATION OF THE ASSESSEE TRUST CONSIDERED THE PROVISIONS CONTAINED IN SECTION 11 12 AND 13 OF THE ACT AND ALSO MENTIONED THAT TO DECIDE THE ELIGIBILI TY OF SECTION 12AA OF THE ACT SUBSEQUENTLY AFTER HAVING BEEN GRANTED EARLIER THE TESTS TO BE APPLIED ARE AS TO WHETHER THE ACTIVITY OF THE TRUST ARE BEING CARRIED OUT AS PER THE STATED OBJECT AND INCOME WAS DERIVED ONLY FROM THE PROPERTY HELD UNDER THE TRUST (SOURCE TRUST)AND AS TO WHETHER THE TRUST WAS APPLYING ENTI RE RECEIPT / INCOME SOLELY FOR THE CHARITABLE PURPOSE OF THE TRUST AS REQUIRED UND ER SECTION 11 12 AND 13 (APPLICATION TEST). HOWEVER THE APPLICATION TEST U NDER SECTION 11 12 AND 13 OF THE ACT COULD HAVE BEEN APPLIED ONLY AFTER THE OUT COME OF THE EXAMINATION BY THE A.O. FROM THE RECORD. IN OUR OPINION THE A. O ONLY AFTER PROPER EXAMINATION OF THE ASSESSEES RECORD MAY BE IN A PO SITION TO COME TO THE CONCLUSION AS TO WHETHER THE BENEFIT DIRECTLY OR IN DIRECTLY FROM THE PROPERTY OR THE INCOME HAS BEEN DERIVED BY THE PERSON MENTIONED UNDER SECTION 13(3) OF THE ACT OR AS TO WHETHER THE ASSESSEE TRUST RECORD ENTIRE RECEIPT OR EXPENSES IN THE BOOKS OF ACCOUNTS. IN THE PRESENT CASE NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE A.O. HAD UNDERTAKEN AFORESAID EXERCISE AS REGARDS TO THE PROVISIONS CONTAINED IN SECTION 11 12 AND 13 OF TH E ACT. 11.3 ON A SIMILAR ISSUE THE COORDINATE BENCH OF THE ITAT AT CUTTACK IN THE CASE OF KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. C IT(SUPRA) HELD AS UNDER: REGISTRATION OF A TRUST AND CANCELLATION OF THE SAM E ARE ADMINISTRATIVE FUNCTIONS WHEREAS ASSESSMENT OF THE TRUST IS A QUASI-JUDICIAL FUNCTION. AN ADMINISTRATIVE FUNCTION AND QUASI-JUDICIAL FUNCTION CANNOT BE MIXE D UP TOGETHER. HOWEVER THE POWER ENTRUSTED WITH THE COMMISSIONER FOR CANCELLAT ION OF REGISTRATION SHOULD BE IN CONSONANCE WITH THE PROVISIONS. IN THE INSTANT CASE THE COMMISSIONER HAD PROPOSED THE CANCELLATION PROCEEDING ON THE BASIS O F THE FINDING OF THE SEARCH AND SEIZURE OPERATION. THEREFORE THE QUESTION FAR CONSIDERATION AROSE AS TO WHETHER THE COMMISSIONER SHOULD HAVE WAITED TILL TH E FINAL ASSESSMENT WAS COMPLETED OR NOT. THE APPREHENSION OF THE REVENUE REGARDING CONTINUAN CE OF REGISTRATION TO BE AGAINST THE INTEREST OF THE CORRECT ON ONE HAND; ON THE OTHER HAND THE CANCELLATION OF REGISTRATION MEANT A GREAT BLOCK FO R THE ASSESSEE-SOCIETY/TRUST TO 32 CONTINUE ITS ACTIVITIES. THEREFORE DESPITE THE FAC T THAT THE 'HAD DISCLOSED A SIZEABLE AMOUNT FOR REASONS BEST KNOWN TO IT SIMPL Y SHOULD NOT BE A BASIS FOR IMMEDIATE CANCELLATION OF REGISTRATION WITHOUT FINA L DETERMINATION/ASSESSMENT IN THE SEARCH AND SEIZURE PROCEEDINGS. IT WAS PREMATUR E AND IN CLEAR CUT JUDICIAL TERMS IT WAS LIKE HANGING A PERSON BEFORE PRONOUNCE MENT OF A JUDGMENT. EVEN OTHERWISE GOING THROUGH THE CANCELLATION ORDER OF THE COMMISSIONER THAT THE BASIS OF CANCELLATION WAS THE SEARCH AND SEIZURE PR OCEEDING ALONE. NO OTHER FINDING DEPICTED IN THE ORDER. THE COMMISSIONER'S A PPREHENSION AND ARGUMENT THAT CONTINUANCE OF REGISTRATION WOULD HAVE A BEARI NG ON THE SEARCH AND SEIZURE ASSESSMENT PROCEEDINGS WAS EQUALLY VITAL AS THE OTH ER HAND CANCELLATION OF REGISTRATION WOULD ALSO HAVE A BEARING ON THE ASSES SMENT PROCEEDINGS. NO DOUBT BOTH THE CANCELLATION AS WELL AS CONTINUA NCE OF REGISTRATION WOULD HAVE AN EFFECT AND A BEARING ON THE ASSESSMENT PROC EEDING. IT DOES NOT MEAN THAT THE ASSESSMENT PROCEEDING BEING A QUASI-JUDICI AL PROCEEDING SHOULD BE INTERFERED WITH LIKE THE INSTANT CASE. RATHER IN AL L FAIRNESS THE COMMISSIONER SHOULD HAVE TAKEN PRECAUTION TO COMPLETE THE ASSESSMENT EX PEDITIOUSLY AND THEN SHOULD HAVE ARRIVED AT THE CONCLUSION OF PROPOSED C ANCELLATION OF REGISTRATION. THE PRESENT ACT OF THE COMMISSIONER AMOUNTED TO INT ERRUPTION IN THE ASSESSMENT PROCEEDING. THE POWER UNDER SECTION 12AA(3) ENUNCIA TED UNDER THE ACT IS AN UNBRIDLED POWER IN THE HANDS OF THE COMMISSIONER TO SAFEGUARD THE INTEREST OF THE REVENUE AS AND WHEN HE IS SATISFIED TO DO SO. I T DOES NOT MEAN THAT THIS UNBRIDLED POWER GIVEN BY THE ACT AFTER MUCH DELIBER ATIONS IN THE PARLIAMENT SHOULD BE UTILIZED WITHOUT CLEAR CUT SATISFACTION. AS PER STRICT JUDICIAL DISCIPLINE THE POWER OF PUNISHMENT IS AN UNBRIDLED POWER LIKE THE PRESENT POWER OF CANCELLATION ENVISAGED UNDER SECTION 12AA(3). BUT S UCH UNBRIDLED POWER SHOULD BE UTILIZED QUITE CAUTIOUSLY AND CONSCIOUSLY. THERE FORE THE ORDER OF THE COMMISSIONER WAS A PREMATURE ONE WHICH HAD BEEN UTI LIZED AT A PREMATURE STAGE IN HASTE. THEREFORE SAID ORDER WAS TO BE SET ASIDE AND THE REGISTRATION OF THE ASSESSEE-TRUST WAS TO BE CONTINUED. 11.4 IN THE PRESENT CASE ALSO THE LD. PR. CIT WITHO UT WAITING THE OUTCOME OF THE ASSESSMENT FRAMED BY THE A.O. CANCELLED THE REGISTR ATION ALREADY GRANTED UNDER SECTION 12AA OF THE ACT VIDE ORDER DT. 22/02/ 2011 THE SAID ACTION OF THE PR. CIT IN THE PRESENT CASE WAS A PREMATURE ONE PAR TICULARLY WHEN NO SUBMISSIONS WERE MADE DT. 04/01/2021 & 01/02/2021 B Y THE ASSESSEE ON MERITS OF THE CASE AND THIS FACT HAS BEEN POINTED OUT BY THE LD. PR. CIT IN PARA 6 AT PAGE 5 OF THE IMPUGNED ORDER WHEREIN IT HAS BEEN MENTION ED THAT THE SUBMISSIONS CONTAINED MOSTLY THE LEGAL ISSUES. 11.5 WE THEREFORE CONSIDERING THE TOTALITY OF THE F ACTS AS DISCUSSED HEREINABOVE ARE OF THE CONSIDERED VIEW THAT THE DUE AND REASONABLE OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED BY THE LD. PR. CIT TO THE ASSESSEE 33 AFTER THE DIRECTION GIVEN BY THE HON'BLE JURISDICTI ONAL HIGH COURT ON 17/03/2021 AND THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT ON 22/03/2021 EXPARTE AGAINST THE PROVISIONS AS CONTAINED IN THE PROVISO OF SUB SECTION 3 OF SECTION 12AA OF THE ACT WHICH PROVIDES THAT THE REASONABLE OPPORTUNITY OF BEING HEARD IS TO BE PROVIDED BEFORE CANCELLATION THE REGISTRAT ION. IN THAT VIEW OF THE MATTER THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT (CENTR AL) IS SET ASIDE AND THE ISSUE IS REMANDED BACK TO HIS FILE TO BE ADJUDICATED AFRE SH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF B EING HEARD TO THE ASSESSEE AND ALSO BY KEEPING IN VIEW THE FINDINGS GIVEN BY T HE A.O. AS REGARDS TO THE VIOLATION OF THE PROVISIONS CONTAINED IN SECTION 13 (1)(C) OF THE ACT IF ANY. 12. SINCE THE ISSUE INVOLVED IN OTHER APPEALS OF TH E ASSESSEES I.E; ITA NO. 97/CHD/2021 AND ITA NO. 98/CHD/2021 ARE SIMILAR AND THE FACTS ARE IDENTICAL THEREFORE OUR FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER IN RESPECT OF ITA NO. 96/CHD/2021 SHALL APPLY MUTATIS MUTANDIS TO THOSE A PPEALS ALSO. 13. IN THE RESULT APPEALS OF THE ASSESSEES ARE ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2021) SD/- SD/- .. .. (R.L. NEGI ) ( N.K. SAI NI) # $%/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 31/08/2021 (+! -.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR ITAT CHANDIGARH 6. 8:% GUARD FILE