Court rules cancellation of registration under Income Tax Act cannot be retrospective, limits reopening assessments to fraud cases.

The court held that the Commissioner lacked the power to cancel the registration before the amendment to Section 12AA(3) of the Income Tax Act. The amendment was deemed prospective, not retrospective, with the cancellation taking effect from the date of the order. Reopening completed assessments based solely on the cancellation was found impermissible unless fraud or concealment was involved. Consequently, the court quashed the reopening orders for the specified assessment years and closed the connected miscellaneous petitions, granting no costs.

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Issues Involved:
1. Power of the Commissioner to cancel the certificate of registration before the amendment to Section 12AA(3).
2. Prospective or retrospective effect of the amendment to Section 12AA(3).
3. Effective date of the cancellation of registration.
4. Reopening of completed assessments based on the cancellation of the certificate of registration.

Issue-wise Detailed Analysis:

1. Power of the Commissioner to Cancel the Certificate of Registration Before the Amendment to Section 12AA(3):
The petitioner was granted registration under Section 12A of the Income Tax Act in 1992 for charitable activities, specifically 'medical relief'. The Department assessed the income periodically until the amendment to Section 12AA, which empowered the Commissioner to cancel such registrations. The Commissioner cancelled the registration on 30.12.2010, which was upheld by the Tribunal. The petitioner argued that the Commissioner lacked the power to cancel the registration before the amendment. The court observed that without express statutory powers, cancellation was not permissible, and the order by the Commissioner under Section 12AA is quasi-judicial, not subject to Section 21 of the General Clauses Act.

2. Prospective or Retrospective Effect of the Amendment to Section 12AA(3):
The petitioner contended that the amendment to Section 12AA(3) effective from 01.06.2010 is prospective and does not apply to earlier assessments. The court held that the amendment does not explicitly state it has retrospective effect. Therefore, the cancellation cannot operate from a past date, and the amendment is prospective in nature.

3. Effective Date of the Cancellation of Registration:
The court held that the cancellation of registration would take effect only from the date of the order, i.e., 30.12.2010. Since the act of cancellation has serious civil consequences and the amendment is prospective, the exemption cannot be denied for assessment years up to 2010-11 based solely on the cancellation order.

4. Reopening of Completed Assessments Based on the Cancellation of the Certificate of Registration:
The petitioner argued that reopening completed assessments based on the cancellation order dated 30.12.2010 is not permissible. The court agreed, stating that reopening can only occur if there was fraud, collusion, or concealment of material facts, which was not alleged in this case. The assessments were reopened merely due to the cancellation, which the court found impermissible. Consequently, the orders reopening assessments for 2004-2005 to 2007-2008 and the assessment order for 2010-11 were quashed.

Conclusion:
The court allowed all the writ petitions, quashing the reopening orders for the assessment years 2004-2005 to 2007-2008 and the assessment order for 2010-11. No costs were awarded, and connected miscellaneous petitions were closed.

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