2020 (4) TMI 861 - HC - Income Tax

Exemption u/s 11 - CIT jurisdiction to cancel the registration certification granted in favour of a trust in exercise of power u/s 12-A - HELD THAT - Such power could be exercised by the CIT only on and after 1.10.2004 as the amendment in question was not retrospective but is prospective in nature. Similar is the position in the present case also. On 15.10.2001, the assessee was granted registration by the CIT u/s 12A and the exemption under Section 80G on 18.3.2002. The order withdrawing the said registration with retrospective effect was passed by the CIT on 12.8.2003 i.e. much prior to coming into force of the aforesaid amendment enacting sub-section (3) in Section 12AA of the Act conferring the powers on the CIT to withdraw/cancel/recall the registration granted by him to any firm/trust/society. Indeed, the functions exercisable by the CIT u/s 12A are neither legislative nor executive but as mentioned above they are essentially quasi judicial in nature. It is for all these reasons the CIT had no jurisdiction to cancel the registration certificate once granted by him u/s 12A of the Act till the power was expressly conferred on the CIT by Section 12AA (3) of the Act w.e.f. 1.10.2004. Since the Supreme Court in Industrial Infrastructure Development Corporation 2018 (2) TMI 1220 - SUPREME COURT had already held that the amendment in question was not retrospective but was prospective in nature, it would be deemed that in the present case also the CIT at the time of passing the aforesaid orders had no express power to recall/withdraw registration certificate granted to the assessee trust. The substantial question of law framed is thus, answered accordingly. - Decided against the revenue.

Summary

Issues:
Jurisdiction of Commissioner of Income Tax to cancel registration certification granted to a trust under Section 12-A of the Income Tax Act.

Analysis:
1. The appeal was filed by the Revenue challenging the order passed by the Income Tax Appellate Tribunal quashing the order of the Commissioner of Income Tax withdrawing the registration certificate granted to the trust under Section 12A of the Act.
2. The substantial question of law for determination was whether the Tribunal was justified in holding that the Commissioner of Income Tax lacked jurisdiction to cancel the registration certification.
3. The trust was granted registration under Section 12A of the Act and exemption under Section 80G. Subsequently, the registration and exemption were withdrawn by the Commissioner on the grounds that the trust was not charitable as per the Act.
4. The appellant argued that the Tribunal erred in entertaining the objection regarding the Commissioner's power to cancel the registration, and that adequate hearing was provided before the cancellation.
5. The senior counsel for the assessee contended that the documents supporting the cancellation were not shared with the assessee, and the Commissioner had no express power to cancel the registration once granted.
6. The High Court dismissed the appeal, citing a Supreme Court decision that until October 1, 2004, the Commissioner had no express power to cancel the registration granted under Section 12A.
7. The Court held that the amendment conferring such power was prospective and not retrospective, thus the Commissioner lacked jurisdiction to cancel the registration granted to the trust.
8. As no illegality or perversity was found in the Tribunal's findings, the substantial question of law was answered against the Revenue, and the appeals were dismissed.