2005 (10) TMI 66 - HC - Income Tax

Charitable Institution registration u/s 12AA - whether the petitioner is right in contending that the second respondent-Commissioner of Income-tax had no power and jurisdiction to withdraw the registration granted under section 12AA order impugned in this petition is an order passed by the second respondent without power and jurisdiction and therefore, the petitioner was entitled to approach this court under article 226 of the Constitution of India for quashing the said order without exhausting any alternate remedy of filing appeal. Hence, we reject the contention of learned counsel for the respondents that the writ petition is not maintainable for the reason that the petitioner has not exhausted the alternate remedy of filing appeal before the Tribunal against the impugned order - held that passed by the second respondent withdrawing/rescinding the order granting registration to the petitioner society u/s 12AA, is quashed. Consequently, the registration granted to the petitioner society u/s 12AA, stands restored

Issues Involved:
1. Power and jurisdiction of the Commissioner of Income-tax to withdraw registration under section 12AA of the Income-tax Act.
2. Validity of the reasons for withdrawal of registration.
3. Maintainability of the writ petition without exhausting alternate remedies.

Detailed Analysis:

1. Power and Jurisdiction of the Commissioner of Income-tax to Withdraw Registration under Section 12AA:

The primary issue is whether the Commissioner of Income-tax had the authority to withdraw the registration granted under section 12AA of the Income-tax Act. The court noted that the Commissioner, in the impugned order, admitted there was no provision in the Act conferring such power or jurisdiction. The Commissioner argued that the review of activities was necessary to prevent misuse of benevolent legislation, but the court rejected this, stating that the Commissioner must function strictly within the statutory provisions. The court emphasized that any lacuna in the statute could only be remedied by the Legislature, not by the Commissioner assuming non-existent powers.

The court also addressed the argument that the authority had inherent power to revoke registration, rejecting it by pointing out that the insertion of sub-section (3) in section 12AA with effect from October 1, 2004, was to confer a new power, not to clarify an existing one. The court held that prior to this amendment, the Commissioner had no power to revoke registration.

The court further rejected the application of section 21 of the General Clauses Act, 1897, which allows the power to rescind orders, stating that it applies to notifications, orders, rules, or bye-laws of general application, not to quasi-judicial orders like the one in question. The court cited several judicial precedents to support this view.

2. Validity of the Reasons for Withdrawal of Registration:

The Commissioner's reasons for withdrawing the registration included the assertion that the society was profit-driven and not engaged in charitable activities. The petitioner countered that surplus funds were used solely for educational purposes, maintaining their charitable status. The court found that even if the society was not conducting charitable activities, the Commissioner could only deny benefits under sections 11 and 12 at the time of assessment, not revoke the registration.

3. Maintainability of the Writ Petition without Exhausting Alternate Remedies:

The respondents argued that the writ petition was not maintainable as the petitioner had not exhausted the alternate remedy of filing an appeal under section 253(1)(c) of the Act. The court held that the availability of an alternate remedy does not bar the exercise of jurisdiction under article 226 of the Constitution of India, especially when the impugned order is passed without power and jurisdiction. Thus, the petitioner was entitled to approach the High Court directly.

Conclusion:

The court concluded that the order dated May 8, 2002, withdrawing the registration under section 12AA, was passed without power and jurisdiction, and thus quashed it. The registration granted to the petitioner society was restored. The court did not find it necessary to address other contentions raised by the petitioner due to the lack of jurisdiction being a decisive factor.

The writ petition was allowed, and there was no order as to costs.

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