2013 (6) TMI 94 - HC - Income Tax

Cancellation of certificate granted u/s 12-A - the objects of the petitioner s society is not charitable as opined by AO - Whether the writ petition maintanable against the availability of alternative remedy by way of appeal as provided for under Section 253(1)(c) - Held that - The impugned order dated 17th March, 2009 cancelling the registration of the petitioner is totally without jurisdiction and illegal in view of the law as it then stood as it has been held that regarding cancellation of registration which was granted on April 1, 1999, u/s 12A it is true that there was no express provision in section 12A for cancellation of the registration. The Court took note of the applicability of Section 21 of the General Clauses Act, 1897 and held that the registration cannot be cancelled in exercising of power under Section 12-A. See CIT Versus Manav Vikas Avam Sewa Sansthan 2010 (2) TMI 882 - Allahabad High Court . Finding substance in the argument of petitioner that the impugned order is liable to be quashed as it is totally without jurisdiction as the proceedings giving rise to the present writ petition was initiated on facts noticed by the Assessing Authority during assessment proceedings in AY 2005-06 as carried in appeal successfully by the assessee. The department carried the matter in further appeal before the ITAT who on 13th May, 2011 has restored the matter back to the C.I.T. (A) with directions on some other issue, not in issue here. The scope of inquiry by the C.I.T.(A) has been restricted to some calculation part. Thus this fact as it transpired during the course of argument for the purpose of record only. The impugned order is appealable under Section 253(1)(c) - However, it is not fit to relegate the petitioner to avail alternative remedy by way of appeal as no useful purpose is going to be served. The order is without jurisdiction. In view of the decision Whirlpool Corporation vs. Registrar of Trademarks Mumbai & others 1998 (10) TMI 510 - SUPREME COURT the objection raised by the respondent is overruled.In favour of assessee.

Summary

Issues:
1. Whether the writ petition is liable to be dismissed on the ground of availability of alternative remedy by way of appeal under Section 253(1)(c) of the Act?
2. Whether the Commissioner of Income Tax had the power to cancel the registration granted under Section 12-A of the Act on the day of passing the impugned order?

Issue 1:
The first issue revolves around whether the writ petition should be dismissed due to the availability of an alternative remedy through appeal under Section 253(1)(c) of the Act. The respondent argued that the petitioner has an alternative remedy through appeal and supported the impugned order on merits. However, the court, considering the arguments and previous discussions, found that the impugned order was without jurisdiction. Citing the decision in Whirlpool Corporation vs. Registrar of Trademarks Mumbai & others, the court overruled the objection raised by the respondent's counsel, stating that no useful purpose would be served by relegate the petitioner to avail the alternative remedy by way of appeal. The court allowed the writ petition, quashing the impugned order dated 17th March 2009 but clarified that the Commissioner of Income Tax could take fresh appropriate steps as permissible under the amended Section 12AA(3) of the Act.

Issue 2:
The second issue concerns whether the Commissioner of Income Tax had the power to cancel the registration granted under Section 12-A of the Act on the day of passing the impugned order. The court addressed this issue first and referred to previous case law to analyze the legality of the Commissioner's power to cancel registration under Section 12-A. The court cited the Division Bench decision in Oxford Academy for Career Development vs. Chief Commissioner of Income-Tax, which held that further probing into the object of registration is impermissible after registration. The court followed this decision and others, concluding that the impugned order cancelling the registration of the petitioner was without jurisdiction and illegal as the Commissioner did not have the power to cancel the registration under Section 12-A at the time of passing the order. The court noted that subsequent amendments had provided for the power to cancel registration under Section 12-A to the Commissioner of Income Tax, effective from 1st June 2010.

In summary, the court allowed the writ petition, quashed the impugned order, and clarified that the Commissioner of Income Tax could take fresh steps under the amended provision. The court found that the impugned order was without jurisdiction and illegal, based on the lack of power of the Commissioner to cancel registration under Section 12-A at the time of issuance. The court also addressed the availability of an alternative remedy through appeal but decided against relegate the petitioner to that remedy due to the jurisdictional issues with the impugned order.