9911796707
TMI Blog2005 (11) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was unnecessary or otherwise, as stated in the aforesaid note, it appears that a specific provision in the Income-tax Act has become necessary to overcome such litigation. The amendment brought about by insertion of sub-section (3) to section 12AA has contemplated a statutory procedure to be followed and a quasi-judicial proceeding to be conducted for cancelling the registration once granted. Such procedure even if followed, and the quasi judicial proceeding even if conducted, as in the instant case, by the statutory authority constituted under the Income-tax Act, there can be no legal sanctity for the order that ensues such proceeding, in the absence of a statutory power under that Act to do what is contemplated under that order. What is sought to be exercised by the impugned order is a substantive power to cancel the registration granted earlier, and it was sought to be exercised by a quasi-judicial authority. In the absence of specific provision in the statute under which that quasi-judicial authority is constituted, i.e. the Income- tax Act, such a substantive power cannot be exercised. The principles of natural justice followed and the nature of proceedings conducted can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's search proceedings on the assessee. Thus, our hands are tied up by the legal hurdle for attempting to rescue the Department which we express with restraint. In the result, the appeal of the assessee is allowed hereby. - HON'BLE N.D. RAGHAVAN, VICE PRESIDENT AND J. SUDHAKAR REDDY, ACCOUNTANT MEMBER For the Appellant : T. Rajendra Prasad For the Respondent : S. R. Ashok, Y. R. Rao ORDER N.D. Raghavan, Vice President. 1. This is an appeal of the assessee challenging as erroneous the order dated 26-7-2004, of the Commissioner of Income-tax (Central), Hyderabad, cancelling the registration granted to the assessee under section 12AA of the Income-tax Act, 1961. 2.1 Facts of the case, as gathered from the record, are briefly THESE: 2.2 The appellant-assessee, Sri Chaitanya Educational Committee (SCEC), is a Society registered (No. 26/87) with the Registrar of Societies, Machilipatnam, Krishna District, Andhra Pradesh, under the Societies Registration Act, 1860. It is engaged in academic field. It was formed with Shri Boppana Satyanarayana Rao as the President and his wife Smt. Boppana Jhansi Lakshmi Bai, as the Secretary. Other members of the Society consist of their close re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Anand Mission Trust v. Asstt. CIT [2004] 88 ITD 125, it was further contended before the Commissioner that the power to cancel the registration was conferred on the Commissioner by the insertion of section 12AA of the Act, only with effect from 1-10-2004. 2.5 On careful consideration of the matter, the Commissioner for the reasons detailed at great length in his order impugned before this Tribunal, did not accept the explanations offered or objections raised by the assessee, and consequently cancelled the registration granted under section 12A of the Act. Hence, the instant appeal by the assessee before us. 3.1 The learned counsel for the assessee submitted in brief THAT : 3.2 The learned Commissioner of Income-tax (Central) erred in cancelling the registration granted to the assessee-Society under section 12A of the Income- tax Act. He has assumed power which is not vested in him by the Income-tax Act in cancelling the registration granted under section 12A of the Act. He has erred in concluding that the assessee is not pursuing the objects for which it was established, as in fact the assessee-society has established colleges and has been imparting Intermediate education to stud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are procedural in nature and the applicability of those provisions do not extend to judicial or quasi-judicial orders, as the one impugned in the instant case. Cancellation of registration granted under section 12A of the Act by the impugned order amounts to review of the earlier order, which is not permissible in law. 3.4 In support of the above contentions reliance is placed on a number of decisions, and a paper-book containing copies of copious decisions together with index-cum-digest of the propositions laid down therein, running into 204 pages has been filed by the assessee before us. Some of the decisions relied on by the learned counsel for the assessee are the following- (1) Kailashanand Mission Trust's case (2) Namra Mahila Avam Bal Kalyan Samiti v. CIT [2005] 1 SOT 224 (Jab.) (3) M.P. Madhyam v. Joint CIT [2004] 89 TTJ (Ind.) 770 (4) Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR 310 (SC) (5) Victoria Technical Institute v. Addl. CIT [1991] 188 ITR 57 (SC) (6) Bachchu Lal v. State AIR 1951 All. 836 (7) Bulion Agricultural Produce Exchange (P.) Ltd. v. Forward Markets Commission AIR 1979 All. 332 (8) Jagdish Prasad Pradhan v. District Board AIR 1966 All. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (44) State of Andhra Pradesh v. S.M.K. Parasurama Gurukul AIR 1973 SC 2237 (45) CIT v. U.P. Forest Corpn. AIR 1998 SC 1125 (46) Shyam Sunder v. Ram Kumar [2001] 8 SCC 24 (47) Province of Bombay v. Kusal Das S. Advani AIR 1950 SC 222 (48) Board of Revenue v. Sardarni Vidyawati AIR 1962 SC 1217 (49) State of Bihar v. D.N. Ganguly AIR 1958 SC 1018 (50) Gharurul Hasan v. State of Rajasthan AIR 1967 SC 107 4.1 On the other hand, the learned Standing Counsel of the Revenue, for and on behalf of the DR-CIT, to say in brief, by defending the order impugned, countered THAT: 4.2 In spite of several specified objects, the assessee was merely content with running certain colleges and hostels on commercial lines. The only activity of the assessee was to train/coach students to appear for competitive entrance examinations such as IIT-JEE, as also entrance examination for medical and engineering courses in the State of Andhra Pradesh. Except running certain coaching centres and hostels for the intermediate colleges, the assessee as noted by the Commissioner, did not devote its attention for fulfilment of any other stated objects and it did never open or run orphanages, care homes, balwadis and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal use of Dr. B.S. Rao/Dr. Jhansi Lakshmi Bai and their family members. (iii) Dr. B.S. Rao and Dr. Jhansi Lakshmi Bai floated a company Sri Chaitanya Infosystem Co. Ltd. (SCIL) for doing business in software and call centre. They have got substantial interest in the company within the meaning of Explanation 3 to section 13 inasmuch as they hold almost 100 per cent equity shares in the company. Huge amount of funds of SCEC were diverted to the aforesaid company for meeting various day-to-day and other expenses of SCIL. In fact, the company SClL was set up and run on a day-to-day basis with the money of SCEC. The diversion of the funds was without adequate security of compensation. (iv) The income and funds of SCEC were diverted for acquisition of assets like land etc. in the names of Dr. B.S. Rao, Dr. Jhansi Lakshmi Bai, their two davghters and also in benami names. (v) A Mercedes Benz car was purchased with the funds of SCEC and, made available for personal use of Shri Ch. Srinivas, husband of Smt. Seema and son-in-law of Dr. B.S. Rao and Dr. Jhansi Lakshmi Bai. (vi) Mr. B. Rajendra Prasad, brother of Dr. B.S. Rao, is proprietor of Classic Financial Services. Funds of SCRC were di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner was justified in passing the impugned order to cancel the registration in exercise of the powers that were always available with him. 4.6 Besides distinguishing the case-laws relied upon by the assessee, the learned Standing Counsel for the Revenue. In support of the above contentions, placed reliance on the decisions following- (a) Bihar Institute of Mining Mining Surveying v. CIT [1994] 208 ITR 608 (Pat.) (b) Agappa Child Centre v. CIT [1997] 226 ITR 211 (Ker.) (c) Action for Welfare Awakening in Rural Environment (AWARE) v. Dy. CIT [2003] 263 ITR 13 (AP) (d) NTR Estate v. CIT [1986] 157 ITR 285 (AP) (e) S. Gopal Reddy v. CIT [1990] 181 ITR 378 (AP) (f) Fifth Generation Education Society v. CIT [1990] 185 ITR 634 (All.) (g) Radeshyam Khare v. State of Madhya Pradesh AIR 1959 SC 107 (h) Aligarh Muslim University v. Mansoor Ali Khan [2000] 7 SCC 529 (i) Madhya Pradesh Madhyam v. CIT [2002] 256 ITR 277 (MP) (j) Motichand Jain v. M. Jaikumar [2004] 1 ALD 250 (FB)(AP) (k) Rajendra Kumar v. Kalyan [2000] 8 SCC 99. 5. The learned counsel for the assessee, in his rejoinder, distinguished the case-laws relied upon by the Revenue and submitted that the impugned order of the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the assessee unnecessarily burdening the Constitutional Authority of Hon'ble High Court of Andhra Pradesh, against the CIT (Central) and the ACIT (Circle-V) both respondents at Hyderabad, though the Tribunal has not rejected the early hearing prayed for. The Hon'ble High Court by its Oral Order dated 30-3-2005 in the said W.P. No. 6753 of 2005, has directed as follows- The only grievance made in this Writ Petition is that the petitioner filed an appeal before the Income-tax Appellate Tribunal against the order passed by the 1 st respondent-Commissioner of Income-tax, Hyderabad, dated 26-7-2004, and the same is pending. In the meanwhile, he is resorted to coercive steps, and therefore, he seeks appropriate direction. 2. After hearing the learned counsel for the petitioner and the learned standing counsel, we find it appropriate to direct the Income-tax Appellate Tribunal to dispose of the appeal filed by the petitioner within three weeks from the date of receipt of a copy of this order. Till such time, the respondents shall not resort to any coercive steps. 3. With the direction indicated above, the Writ Petition is disposed of. No costs. 7.1.B The above order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (CIT) again requested in writing for adjournment (!) on the ground that the Standing Counsel could not come and would be ready only on 25-4-2005. The DR (CIT)'s letter in that respect is extracted below- Office of the Departmental Representative (CIT) Income-tax Appellate Tribunal, Hyderabad. ITA No. 887/H/04/DR ITAT/03-04 Dated: 21-4-2005 To The Assistant Registrar, Income-tax Appellate Tribunal, Hyderabad. Sir, Sub:- Appeals before ITAT B-Bench, Hyderabad ITA No. 887/H/04 in the case of Sri Chaitanya Educational Committee, Poranki, Voijayawada Regarding. The appeal in the above case is posted for hearing before the Hon'ble B-Bench ITAT, Hyderabad on 20-4-2005. 2. The Sr. Standing Counsel Sri S.R. ASHOK who is to argue the case on behalf of the department was prepared to argue the case on *25-4-2005. However, the counsel for the assessee preferred the case to be heard on **26th April. Therefore it is requested that the case may be posted for hearing either on 25th or 26th April, 2005. 3. This letter of request may kindly put up before Hon'ble Members for their kind consideration. Yours faithfully, Sd/ (Y.R. RAO) Departmental Representative (CIT) Income-tax Appellate T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal, the assessee could not on account of summer vacation file an application before the Hon'ble High Court seeking enlargement of time prescribed by it having got already expired at the request of adjournments by both parties simultaneously and also alternatively, the above sequence of events in the matter of hearing before the Tribunal has been summarized by the learned counsel in his petition dated 4-5-2005, in the following words- It is submitted that the Hon'ble High Court in W.P. No. 6753/05 vide orders dated 4-4-2005 directed to dispose off the appeal within three weeks and the said order was submitted to this Hon'ble Tribunal on 8-4-2005 and this Hon'ble Tribunal posted the matter to 13-4-2005 for hearing. On that day the arguments were not completed and due to the preoccupation and pressure of the work, the appellant's counsel requested this Hon'ble Tribunal for adjournment and this Hon'ble Tribunal adjourned the matter to 20-4-2005. On 20-4-2005 the appellant's counsel again sought adjourned either to 25-4-2005 or in the 1st week of May 2005 due to the pressure of work on the last working days before summer vacation, but this Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Tribunal, Shapoorwadi, Adarshnagar, HYDERABAD Sir, Sub:- Request to release the order in the case of Sri Chaitanya Educational Committee (ITA No. 887/H/2004)-Reg. As directed by the Hon'ble High Court of Andhra Pradesh, the case was heard on 20-4-2005; 26-4-2005; 3-5-2005 5-5-2005 by the Hon'ble ITAT 'B' Bench, Hyderabad in the above mentioned case. Till now the orders are not received by this office. As heavy demand of Rs. 54.46 crores is locked up and the Department is not able to pursue collection because of the Hon'ble Court's order, it is requested that the Hon'ble Tribunal may release the orders in the above case at the earliest. Yours faithfully, Sd/- (K.HARIPRASADA RAO) Addl. Commissioner of Income-tax, Central Range-2, Hyderabad. Copy submitted to Director General of Income-tax (Inv.), Hyderabad for kind information. Copy submitted to the Commissioner of Income-tax (Central), Hyderabad, for kind information. Copy to the Departmental Representative, ITAT, Hyderabad, for information. We deprecate the abovesaid letter, for its tone and tenor by observing that Shri K. Hariprasada Rao has no locus standi to intervene, as he is neither a party to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for early hearing. The Department also points out the very same high stakes involved and 'heavy demand of Rs. 54.46 crores' locked up as the reason for the urgency of the disposal of the appeal. 7.l.G We are constrained to observe at this juncture that though high stakes involved is queerly the reason for the early disposal of this appeal as emphasised by the parties, actually no demand arises out of the CIT's order dated 26-7-2004 impugned in the instant case, which is merely an order cancelling the registration of the assessee, and the alleged orders involving stakes as high as 'heavy demand of Rs. 54.46 crores' as put by the Revenue, are not impugned in this appeal. This is also self-evident from the very fact that this appeal stated to be involving heavy stakes has been instituted on payment of appeal fee of Rs. 500 only, which is the barest minimum against the maximum of Rs. 10,000 payable on assessed income of Rs. 10,00,000 and above. From the pleadings of the parties from the stage of institution of this appeal to its conclusion in different stages not only before the Tribunal but also even before the Hon'ble High Court, it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 21 of the General Clauses Act, 1897, the power to issue order for registration under section 12AA of the Income-tax Act, includes the power to rescind the order. For this purpose, reliance was also placed on a portion of the notes on clauses forming part of Finance (No.2) Bill, 2004, which we have already mentioned hereinabove and extracted in para 7.3.B herein. 7.2.B In this appeal, therefore, two issues arise for consideration before us. They are- (a) Whether the CIT as on 26-7-2004 has the power to cancel the registration? (b) If so, whether the violations of the provisions of section 10(22) and section 13 stated to have come to light as a result of search operations conducted under section 132 of the Act, warrant cancellation of registration of the assessee? 7.2.C As for the first issue, with regard to the legality and validity of the order dated 26-7-2004, the contentions of the Revenue with reference to the legal objections of the assessee on the competence of the Commissioner to cancel the registration by the impugned order, are two pronged i.e. (a) The provisions of sub-section (3) of section 12AA inserted by the Finance Act, 2004 with effect from 1-10-2004 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, left to the judiciary to make proper interpretation of the language used in the statute. The famous Jurist Rt. Hon'ble Lord Denning, Master of the Rolls, said, we do not sit here to pull the language of the Parliament to pieces and make non-sense of it. That is an easy thing to do. We sit here to find out the intention of Parliament and carry it out. We do better by filling in the gaps and making sense of the enactment than by opening to destructive analysis. Viscount Simonds called it a naked usurpation of the legislative function under the thin guise of interpretation . We wish therefore to follow the aforesaid principles in their true sense, letter and spirit. When the language in a statute is transparent and plain, it is wrong to give it colour according to the temper and time. When the language employed by the enactment is clear, there is no question of interpreting the provisions in any manner, except by giving them their plain and obvious meaning. Nebulous concept of the legislative intent cannot be used to curtail the explicit provisions in a statute. When the meaning of the word is plain, it is not the duty of the Court to busy itself with supposed intention. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a change in procedure envisaged in section 12AA dealing with the grant of registration but conferment of an additional power under that section for cancellation of registration granted earlier duly following the provisions set out in the amendment itself. Such an amendment cannot be termed as a mere procedural one, so as to be retrospective and applicable to all pending matters, but has to be deemed to be a substantive one effective only from the date specified in the Act itself. 7.3.C In this context, we may refer to the decision of Hon'ble Kerala High Court in the case of N.T. John v. CIT [1997] 228 ITR 314 wherein considering the question whether section 158BA contained in Chapter XIV-B is retrospective or prospective in operation, Hon'ble Kerala High Court held, as per relevant portion of the head note as under- Normally, a change in the law of procedure operates retrospectively. In the case of Chapter XIV-B, there was no change of procedure, but a special procedure was provided. Section 158BA would not apply in a case where a search was initiated under section 132 before 30-6-1995. In that view, it cannot be said that Chapter XIV -B has retrospective operation. 7.3.D S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and finality to legal proceedings and to avoid exposure to risk of litigation of litigants for an indefinite period on future unforeseen events. Proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective' operation so as to allow upsetting of proceedings which had already concluded and attained finality. A taxing provision imposing liability is governed by the normal presumption that it is not retrospective and the settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot, in the absence of clear contrary intendment expressed therein be given greater retrospectivity than is expressly mentioned so as to enable the authorities to affect finality of tax assessments or to reopen liabilities which have become barred by lapse of time. In the light of the observations of the Apex Court italicized above, the law that applies to the impugned proceedings taken up by the Commissioner for withdrawing the registration benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity would be deducted from the gross total income. The Supreme Court in Assam Co-operative Apex Marketing Society Ltd. v. Addl. CIT [1993] 201 ITR 338 rendered under the corresponding earlier proviso, section 81, held that the phrase produce of its members must refer to agricultural produce actually produced by its members. In a later decision, Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814, a larger Bench of the Supreme Court overruled the decision in the case of Assam Co-operative Apex Marketing Society Ltd. and held that the exemption under section 80P(2)(a)(iii) was not restricted only to primary societies and that produce of its members in that provision had to be construed as including the produce belonging to a member-society. Immediately thereafter, in 1999 the provisions of section 80P(2)(a)(iii) were amended by the Income-tax (Second Amendment) Act, 1998 (No. 11 of 1999) with retrospective effect from 1-4-1968, by substituting sub-clause (iii) to read the marketing of agricultural produce grown by its members . When the validity of the retrospective amendment to section 80P(2)(a)(iii) is challenged, the Apex Court affirming the view tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case there is a pronouncement by the Legislature itself that the amendment is effective from 1-10-2004. Therefore, in view of the ratio of the Madras High Court noted above, there cannot be retrospectivity against the intention of the Legislature. 7.3.I Similarly, in the case of M.G. Pictures (Madras) Ltd. v. Asstt. CIT [2003] 263 ITR 832 (Mad.) examining the issue with regard to retrospective or otherwise nature of the amendment to section 40A(3) restricting disallowance with effect from 1-4-1996, Hon'ble Madras High Court held, as per relevant portion of the head-note on p. 83, as follows- An amendment must have in its language something pointing towards its retrospectivity. In order to hold a statute retrospective, it should be specifically so provided. In order to hold the provision to be having retrospective operation, it would have to be shown that it is of a procedural nature. On the procedural or substantive nature of the provision under consideration in that case, the High Court held as per relevant portion of head note as follows- Held : (ii) That it was clear from the language of section 40A(3) that the language did not in any manner suggest retrospectivity. Conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. It was also held therein that subsequent legislation may be looked into to fix the proper interpretation to be put on the statutory provision as it stood earlier. In this case, the Hon'ble Apex Court has also approved the view taken by the Hon'ble Madras High Court in CIT v. Pooshya Exports (P.) Ltd.'s case. 7.3.L Further in the case of CIT v. New Rajasthan Trading Co. [2004] 271 ITR 511 (Raj.) on the retrospectivity of proviso inserted in section 272A(2) by Finance (No.2) Act, 1991 with effect from 1-10-1991, the Hon'ble Rajasthan High Court held that: The proviso inserted by the Finance (No.2) Act, 1991 with effect from 1-10-1991, to section 272A(2) of the Income-tax Act, 1961, has not been given retrospective effect. In the absence of any retrospective effect to such provisions, this proviso cannot have any impact with regard to any default relating to the assessment year 1989-90 requiring the assessee to file the return on or before 30-4-1989, for the period ending on 31-3-1989. No law can have retrospective effect unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of insertion of subsection (5) to section 35 by the Income-tax (Amendment) Act, 1953, observed that the said sub-section (5) is not declaratory of a pre-existing law but it clearly affects vested rights which have accrued to the assessee, and as such the well-settled rule of construction precludes the Court from construing the section as retrospective. It was held in that case that a statute affecting vested rights is prima facie prospective unless the statute expressly or by necessary implication indicates to the contrary. Even where it is retrospective in operation, the Courts should confine its operation only to the extent the language renders it necessary. 7.3.P Further, in the case of Uppala Peda Venkataramanaiah relied upon by the assessee, examining the retrospective or otherwise nature of the provisions of section 155 of the Income-tax Act, 1961, Hon'ble Andhra Pradesh High Court held as follows- (ii) that in the absence of express words or necessary implication to the contrary a statute which was not purely procedural had only prospective and not retrospective operation; section 155 of the Income-tax Act, 1961 had on ly prospective operation. (iii) that as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The principle is based on the well-known rule of interpretation that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operations should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time. 7.3.T Further, in the case of Y. Arul Nadar, relied upon by the assessee, considering retrospective or otherwise nature of an amendment made to the statute, Hon'ble Madras High Court held as follows- The general rule is, when an amendment is introduced in the statute governing the case already pending, the rights and obligations of parties should be decided only according to the law, which existed when the action was begun, unless a clear contrary intention is evident in the Amending Act. There could not be imputation of retrospective operation to an Amending Act and that could be done only by the Amending Act either expressly or by necessary implication. In the instant case the Amending Act has indicated that the amendments introduced shall have only prospective operation and pending proceedings should continue as if the Amending Act had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds matters of procedure. 7.3.X In the case of Agastyar Trust, relied upon by the assessee, Hon'ble Supreme Court, considering the assessee's claim for exemption under T.N. Urban Land Tax Act, 1966 on the basis of recognition by a subsequent order of the ITAT of the assessee as a public Charitable Trust under section 12A(a) of the Income-tax Act, 1961, it was held as follows- Since the order recognizing the appellant Trust as a charitable trust under section 12A(a) of the Income-tax Act was passed on 29-4-1977 by ITAT, the appellant could not claim the benefit of that order as the exemption of the land from payment of urban land tax was claimed only for the period 1965 to 1976. The said order could not be given retrospective effect. 7.3.Y This Hyderabad Bench of the Tribunal in the case of A.P. State Civil Supplies Corpn. Ltd. had occasion to consider the applicability of the amended provisions of section 254(2A) inserted by the Finance Act, 2001 with effect from 1-6-2001, to the matters where stay had already been granted prior to that date. After discussing at length the case-law on the point in the light of K.J. Aiyer's Judicial Dictionary; commentaries by Sampath Iye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spective butonly prospective with effect from 1-6-2001 as spelt out by the Amendment Act itself, the stay already granted by the Tribunal on various dates prior to 1-6-2001 would hold good and continue to be in force pending disposal of the relevant appeals out of which the stay petitions had arisen.... The ratio decidendi of the above decision squarely applies to the facts of the present case wherein the Revenue seeks to press into service the provisions of sub-section (3) of section 12AA brought on to the statute book with effect from 1-10-2004, to give life to the order of the CIT dated 26-7-2004 impugned in this appeal. 7.3.Z In view of the foregoing discussion and considering the ratio decidendi laid down in the case-laws not only cited before us, but also others being fortifying our view taken in the light of the judicial precedents cited before us, the first contention of the Revenue based on the retrospective nature of the amendment to the provisions of section 12AA, though came into statute book with effect from 1-10-2004, is liable to be rejected. 7.4.A As for the existence of power in the Commissioner to cancel the registration once granted, even prior to amendment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich can be equated with notifications, rules or bye-laws, which are procedural in nature, and not to orders which are passed in quasi-judicial or judicial proceedings. 7.4.C It is worthwhile to refier to the decision of the Tribunal in the case of Kailas hanand Mission Trust, relied upon by the assessee, wherein the Delhi Bench had occasion to examine the power of CIT to review or rescind/withdraw the registration granted under section 12A. Examining similar arguments advanced on the basis of the provisions of General Clauses Act, the Tribunal, observed, as per head-note below- The perusal of section 21 of General Clauses Act shows that the word 'orders' is coupled with other words notifications, rules and bye laws . The word 'order' is of widest amplitude and would include all kinds of orders including administrative order, judicial orders and legislative orders. It is not clear whether the word 'order' was used by the Legislature in widest sense or in restricted sense. Therefore, to resolve such issue, the Courts/Tribunals have resorted to the rules of interpretation. In such cases, rule of noscitur a sociius is applied. If the aforesaid principle is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the head note, held as follows- The State Government acts as a Tribunal with quasi-judicial powers and it will have no power to rescind, modify or review its decision once taken, unless it is provided by the statute. A power of review is not inherent in a Court or Tribunal but has to be conferred by statute, AIR 1964 AIL 148 (151) Ref. (Para-12) ... The word 'order in section 21 of the V.P. General Clauses Act, refers to executive orders or subordinate judicial orders, the passing and cancellation whereof is subject to and regulated by procedural laws. The word is not capable of being interpreted as including judicial or quasi-judicial orders since the word is associated with notifications, rules and bye-laws .... (Para- 13) 7.4.G In the case of Kailashanand Mission Trust, the Delhi Bench of the Tribunal concluded that the Commissioner had no power to rescind/withdraw the registration granted in the absence of specific power conferred in that behalf, with the following observations- ... Hence, the impugned order was without jurisdiction, if the Legislature had intended so, it could have easily conferred powers of cancellation to the CIT under section 12A. In the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful perusal of the provisions of sections 12A and 12AA shows that these provisions are meant for conditions and procedure for registration and not for withdrawal or cancellation of registration already granted on earlier occasion. Admittedly, no application for registration was pending before the CIT to allow or deny the same as per initial requirement of the provisions laid down in these two sections. At the same time, granting of registration was earlier a prima facie act of the authority under section 12A. The benefit of the principle of promissory estoppel, however, cannot be denied to the assessee who had been enjoying the registration for the last so many years under the same facts and circumstances unless there is a breach of condition laid down for granting registration in specific term. 7.4.J Similarly, examining the scope of the powers of the Commissioner, while granting registration, to verify as to whether assesseetrust or institution is carrying on such activities, which may prima facie indicate that he is entitled to get benefit under section 11/13, the Lucknow Bench of the Tribunal in the case of St. Don Bosco Educational Society held as follows- ... Here the scope o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of power of cancellation of registration flowing from the power to register has led to litigation. Whether the litigation was unnecessary or otherwise, as stated in the aforesaid note, it appears that a specific provision in the Income-tax Act has become necessary to overcome such litigation. The amendment brought about by insertion of sub-section (3) to section 12AA has contemplated a statutory procedure to be followed and a quasi-judicial proceeding to be conducted for cancelling the registration once granted. Such procedure even if followed, and the quasi judicial proceeding even if conducted, as in the instant case, by the statutory authority constituted under the Income-tax Act, there can be no legal sanctity for the order that ensues such proceeding, in the absence of a statutory power under that Act to do what is contemplated under that order. What is sought to be exercised by the impugned order is a substantive power to cancel the registration granted earlier, and it was sought to be exercised by a quasi-judicial authority. In the absence of specific provision in the statute under which that quasi-judicial authority is constituted, i.e. the Income- tax Act, such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stinguishable from the facts of the case on hand and accordingly cannot come to its aid. 7.5.B For instance, in the case of Madhya Pradesh Madhyam, relied upon by the Revenue, the Hon'ble Madhya Pradesh High Court noted that it was simply a case of issuance of showcause notice, against which it was open to the petitioner to file reply to the show cause against the proposed action before the Commissioner of Income-tax, Bhopal. As such, the High Court observed that it was not inclined to interfere at that stage of the proceedings. The ratio of that decision cannot hold good in the context of the facts and circumstances of the instant case, where the registration has in fact and indeed been cancelled by the Commissioner by the impugned order. It was also observed therein that the right to conduct the proceedings of cancellation in accordance with law cannot be denied to the respondent/Department. What is important in these observations of the High Court is 'the right to conduct the proceedings of cancellation in accordance with law'. When the statute has not conferred on the Commissioner prior to 1-10-2004 the power to cancel, the same cannot be exercised in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court in the case of Aligarh Muslim University, should be avoided, the Department highlighted. In our considered view, even such contentions of the Revenue do not hold water. As propounded by the Hon'ble Supreme Court in that case itself, the applicability of the aforesaid theory of useless formality may depend upon the facts of any particular case. That being so, that theory cannot have universal application, since it depends on facts and circumstances of each and every case. As for the facts and circumstances of the instant case, we have already expressed our view based on several case-laws that insertion of sub-section (3) of section 12AA does not have retrospective operation, and if we look at the position existing prior to the amendment made, especially when the substantive right of the party would be affected, and more so when it is not merely a matter of procedure as submitted by the Revenue, besides the fact that granting of exemption is done by the Assessing Officer on year to year basis being himself also fully equipped to reject such claim for exemption if the circumstances of any case so warrants, the theory of useless formality, propounded by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT or CIT(A) are marked to various authorities including the Assessing Officer. In the absence of these details in the endorsement, the Assessing Officer is not identifiable, resulting strangely in the CIT(Central), Hyderabad, himself being made respondent in this appeal and the concerned Assessing Officer is not even impleaded as a party to this appeal even by the Revenue. Similarly, strange is the fact that there is no assessment year involved in these proceedings initiated by the CIT(Central), Hyderabad, as the matter apparently relates to cancellation of benefit of registration to the assessee insofar as concurrent or other proceedings that may be taken up for determining tax or penalty. (c) In view of the above, though the impugned order of the CIT dated 26-7-2004 has been passed under section 12AA after following due procedure and complying with the principles of natural justice to be observed in all quasijudicial/judicial proceedings, the same has been passed to exercise a power that has not been conferred by section 12AA viz. at the relevant point of time, i.e. to cancel the registration granted earlier, because such power was conferred under section 12AA only by inserti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department's search proceedings on the assessee. Thus, our hands are tied up by the legal hurdle for attempting to rescue the Department which we express with restraint. 8.1 Before parting with this case, wherein the assessee, in the guise of coercive steps by the Department, and the Department in the guise of high stakes involved, have pressed into service various measures some of which amount to not only misleading each other but also the Hon'ble High Court and this Tribunal, and exerting undue pressure on this Tribunal for securing release of the order with undue sense of urgency, which we have critically noted at length in the foregoing paras, for early hearing and speedy disposal of this appeal filed barely an year back, while several other much older matters are awaiting their turn in the record rooms of this Tribunal and High Court, we feel that it is the fittest case where costs should be awarded on either or both the parties, for their own individual contributions to the delay in the disposal of this appeal. However, taking a lenient view of the matter and considering the fact that latches prevailed on both the parties as revealed supra, and the Hon'ble High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
