2020 (4) TMI 861 - HC - Income Tax

High Court dismisses Revenue's appeal challenging ITAT order; Commissioner lacked jurisdiction to cancel trust registration under Income Tax Act

The High Court dismissed the appeal filed by the Revenue challenging the order of the Income Tax Appellate Tribunal. The Court held that the Commissioner ... Power of the Commissioner of Income Tax to cancel registration granted under Section 12A - quasi-judicial nature of an order granting registration under Section 12A - prospective effect of statutory amendment conferring cancellation powerPower of the Commissioner of Income Tax to cancel registration granted under Section 12A - quasi-judicial nature of an order granting registration under Section 12A - prospective effect of statutory amendment conferring cancellation power - Whether the Commissioner of Income Tax had jurisdiction to cancel the registration granted to the assessee under Section 12A prior to the amendment effective 1.10.2004. - HELD THAT: - The Court held that the order granting registration under Section 12A is quasi judicial in character and, prior to the insertion of sub section (3) in Section 12AA by the Finance (No.2) Act, 2004 w.e.f. 1.10.2004, there was no express statutory power vested in the Commissioner of Income Tax to cancel a registration once granted. The amendment conferring explicit cancellation power took effect on 1.10.2004 and is prospective; it could not be applied to validate a cancellation made earlier. In view of the Supreme Court's earlier decision in Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. Vs. Commissioner of Income Tax, Gwalior , which held that the CIT had no such express power till 01.10.2004, the cancellation order dated 12.8.2003 was without jurisdiction. The Tribunal's conclusion quashing the CIT's cancellation of the registration was thus affirmed on that legal basis. [Paras 6, 8, 9, 11]The cancellation of the registration certificate effected by the Commissioner on 12.8.2003 was invalid for want of express statutory power and the Tribunal's order allowing the assessee's appeal is upheld.Final Conclusion: The substantial question of law is answered against the Revenue: the CIT had no jurisdiction to cancel the registration granted under Section 12A before the statutory power was expressly conferred w.e.f. 1.10.2004; the appeals are dismissed. 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.