The Central Board of Direct Taxes (CBDT) has asked three senior officers of the Income-Tax Department to explain the delay in taking action with regard to the cancellation of Tata Trusts’ registration.
Sources close to the development said the CBDT has issued notices to three senior officers — Sanjeev Dutt, Rajeev Nabar and S Jindal — asking why no action was taken against the Trusts when the Comptroller and Auditor General of India (CGI) had flagged violations way back in 2013.
The three officers held commissioner-level posts in Mumbai, and were responsible for granting exemptions during the period when Tata Trusts had offered to surrender the exemptions it had received under the Income-Tax Act.
Cancellation of registration
On October 31 last year, the I-T Department had cancelled the registration of six Tata Trusts — Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust — for violation of norms for charitable trusts.
Tata Trusts had said it had surrendered the registration voluntarily, and that the move should take effect from 2015, when it initiated the process of surrendering the registration. The I-T Department order said the cancellation would be effective from October 2019. Tata Trusts has now moved the Income-Tax Appellate Tribunal challenging the order.
The date of the cancellation of registration is the key issue in the case, as it will form the basis of the tax outgo. Section 115TD was inserted with effect from June 1, 2016, and provides for the levy of additional income-tax in case of withdrawal of registration. Therefore, if the cancellation date is taken as 2019, Tata Trusts would have a much higher tax outgo.