Court Quashes Tax Order, Allows Fresh Steps under Amended Law

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 the impugned order was without jurisdiction and illegal, as the Commissioner lacked the power to cancel registration under Section 12-A at that time. Despite an alternative remedy through appeal, the court decided against relegate the petitioner due to jurisdictional issues with the impugned order.

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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 ActRs.
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 orderRs.

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.

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