2012 (3) TMI 662 - AT - Income Tax

Appeal allowed against withdrawal of registration under Income Tax Act

The appeal was filed against the withdrawal of registration under section 12AA of the Income Tax Act. The Income Tax Appellate Tribunal (ITAT) allowed the ... Cancellation of registration under section 12AA(3) - Distinction between approval and registration - Power to withdraw approvals under section 293C - Temporal effect of legislative amendment affecting jurisdiction - Preliminary objection to jurisdictionCancellation of registration under section 12AA(3) - Power to withdraw approvals under section 293C - Distinction between approval and registration - Temporal effect of legislative amendment affecting jurisdiction - Preliminary objection to jurisdiction - Whether the order of the Commissioner cancelling the assessee's registration under section 12AA, issued after a show-cause notice framed under section 293C, was without jurisdiction and liable to be annulled. - HELD THAT: - The Tribunal found the facts identical to a prior decision of the Bench and upheld the assessee's preliminary objection that the show-cause notice and the order of cancellation were without jurisdiction. The reasoning adopted identifies a statutory distinction between 'approval' and 'registration': section 293C confers power to withdraw 'approvals' and does not apply to registration under section 12A/12AA. Further, section 12AA(3) in its original form applied to registrations granted under clause (b) of sub-section (1) and did not empower cancellation of registrations granted earlier under section 12A; an amendment expanding that power became effective only from 01.06.2010. The impugned order was passed prior to the effective date of the broader amendment and was therefore unsustainable. The Tribunal followed earlier decisions holding that a show-cause and cancellation under section 293C cannot validate an order cancelling registration, and accordingly annulled the cancellation without expressing any opinion on the merits of the charitable status; the Commissioner remains free to act in accordance with law.Impugned order cancelling registration quashed; appeal allowed.Final Conclusion: The Tribunal allowed the appeal on the ground that the cancellation was without jurisdiction because the notice and power relied upon (section 293C) relate to approvals not registrations and the wider power to cancel earlier registrations became effective only from 01.06.2010; the Commissioner may, if permissible, take action in accordance with law. Issues involved: Appeal against withdrawal of registration u/s 12AA of the Income Tax Act, 1961.Summary:The appellant filed an appeal against the withdrawal of registration u/s 12AA by the Ld. CIT-II, Agra. The registration was initially granted w.e.f. 01.04.2003, but a notice for withdrawal was issued w.e.f. Assessment Year 2009-10 under section 12AA(3) read with section 293C of the Act. The withdrawal was based on the grounds that the activities of the assessee were not deemed charitable under the proviso to section 2(15) inserted by Finance Act, 2008.The appellant contended that the issue was similar to a previous case of Agra Development Authority, ITA No.447/Agr/2011. The ITAT found the facts to be identical to the Agra Development Authority case and referred to the objection raised by the Ld. Authorised Representative regarding the jurisdiction of the CIT to cancel registration earlier granted under section 12A of the Act. The ITAT upheld the objection, citing that the CIT's order was without jurisdiction as there was no provision in section 12AA for such cancellation.The ITAT also highlighted the distinction between 'approval' and 'registration' under the Act, noting that section 293C, which deals with withdrawal of approval, cannot apply to a case of registration. Therefore, the impugned order was annulled due to lack of jurisdiction. The appeal of the assessee was allowed with no order as to costs.Given the identical facts, the ITAT followed the decision in the Agra Development Authority case and allowed the appeal filed by the assessee. The issue was decided in favor of the assessee based on the preliminary objection raised regarding jurisdiction, without expressing any opinion on the merit and other aspects of the matter. The CIT was granted liberty to take action in accordance with the law if suggested.In conclusion, the appeal filed by the assessee was allowed, maintaining consistency with the previous order of the ITAT in the Agra Development Authority case.(Order pronounced in the open Court on 30.03.2012)