2003 (10) TMI 273 - AT - Income Tax

Registration u/s 12A - Charitable Or Religious Trust - Whether CIT can rescind/withdraw the registration granted earlier u/s 12A in 1974 - HELD THAT - We are of the view that the word 'orders' would not include judicial or quasi-judicial orders. This word is associated with the words 'notification, rules and bye laws'. So the word 'order' should be construed in the context in which the associated words used. Associated words are in the nature of subordinate legislation. Therefore, the word 'order' contemplated in this section would be restricted to such orders which are issued by way of delegated/subordinate legislation. For example, orders issued by the Central Board of Direct Taxes u/s 119 of the Act would fall within the scope of section 21 of GCA as such orders would be in the nature of subordinate legislation. This view is also fortified by the Supreme Court judgment in the case of Ghaurul Hasan v. State of Rajasthan 1961 (4) TMI 99 - SUPREME COURT . Thus, it is held that section 21 of GCA would include only those orders which are in the nature of subordinate legislation and would not include other orders particularly judicial or quasijudicial orders. Consequently, the order of CIT passed u/s 12A in 1974 could not be rescinded/withdrawn by the impugned order by virtue of section 21 of GCA. Hence, the impugned order was without jurisdiction. In the course of hearing, a query was raised from the Bench as to whether the impugned order was retrospective or with prospective effect. The learned DR was unable to comment. Therefore, in the interest of justice, it would be appropriate to say few words on this aspect. In our opinion, it is only the Legislature which has power to legislate retrospectively. No other authority has such powers and, therefore, any order cannot be given effect to retrospectively. The Hon'ble Supreme Court in the case of Kazi Lhendup Dorji v. CBI 1994 (3) TMI 381 - SUPREME COURT has held that power u/s 21 of GCA cannot be exercised retrospectively. Hence, in any circumstances, the order of CIT u/s 12A cannot be given effect to retrospectively even assuming for the sake of argument that such section was applicable. Thus, we are unable to uphold the impugned order of CIT u/s 12A. Consequently, the impugned order is quashed. In the result, appeal of the assessee is allowed.

Summary

Issues Involved:
1. Whether the CIT can rescind/withdraw the registration granted earlier u/s 12A.
2. Whether the CIT has the power of review under the Income-tax Act.
3. Applicability of section 21 of the General Clauses Act (GCA) to the CIT's order.

Summary:

1. Whether the CIT can rescind/withdraw the registration granted earlier u/s 12A:
The primary issue was whether the CIT could rescind/withdraw the registration granted to the trust u/s 12A in 1974. The CIT issued a notice to the trust on 4-12-2002, citing various grounds such as the trust being run as a private trust, misuse of corpus funds, non-disclosure of business receipts, and limiting activities to a particular religious community. The CIT, invoking section 21 of the General Clauses Act (GCA), rescinded the registration on 27-2-2003, citing financial discrepancies and misappropriation of trust funds.

2. Whether the CIT has the power of review under the Income-tax Act:
The assessee contended that the CIT had no power of review under the Income-tax Act, as the Act is an independent code and does not confer such powers. The Tribunal agreed, stating that the power to review is not inherent and must be conferred by statute. The Tribunal cited several judgments, including Patel Narshi Thakershi v. Pradyumansinghji Arjunsinghji, to support the view that no authority has inherent power to review its own order unless specifically provided by law.

3. Applicability of section 21 of the General Clauses Act (GCA) to the CIT's order:
The Tribunal examined whether section 21 of the GCA, which allows the rescinding of orders, could be applied to the CIT's order. It concluded that the word "orders" in section 21 of the GCA refers to subordinate legislation and not to judicial or quasi-judicial orders. The Tribunal applied the rule of Noscitur a sociis, interpreting "orders" in the context of associated words like "notifications, rules, and bye-laws," which are in the nature of subordinate legislation. Consequently, the Tribunal held that section 21 of the GCA could not be invoked to rescind the registration granted u/s 12A.

Conclusion:
The Tribunal quashed the CIT's order, holding that the CIT had no jurisdiction to rescind/withdraw the registration granted u/s 12A. The Tribunal emphasized that the power to cancel registration must be explicitly conferred by the statute, and in the absence of such power, the CIT's action was without jurisdiction. The appeal of the assessee was allowed.