2002 (9) TMI 264 - AT - Income Tax

Tribunal reinstates 12A registration, citing promissory estoppel, lack of justification. Assessments to be reconsidered.

The Tribunal allowed the appeals, reversing the orders of the CIT(A) and CIT. The assessee's registration under section 12A was reinstated, and ... - Issues Involved:1. Legality and jurisdiction of the CIT's order withdrawing registration u/s 12A.2. Applicability of s. 12A and s. 12AA for cancellation of registration granted earlier.3. Violation of natural justice and lack of material consideration in the CIT's order.4. Effective date of cancellation or withdrawal of registration.Summary of Judgment:Issue 1: Legality and Jurisdiction of the CIT's OrderThe assessee challenged the CIT's order withdrawing registration u/s 12A on grounds that it was illegal, without jurisdiction, perverse, and prejudicial. The Tribunal found that the CIT's reasons for cancellation were insufficient and did not establish that the assessee's activities were predominantly commercial rather than charitable. The Tribunal emphasized that the principle of promissory estoppel applied, as the assessee had been enjoying registration for many years under the same facts and circumstances.Issue 2: Applicability of s. 12A and s. 12AA for Cancellation of RegistrationThe assessee argued that s. 12AA, effective from 1st April 1997, was procedural and did not apply retrospectively to cancel or withdraw registration granted in 1986. The Tribunal agreed, stating that these sections were meant for conditions and procedures for registration, not for cancellation of already granted registration. The Tribunal noted that no application for registration was pending before the CIT, and the CIT's act of cancellation was not justified.Issue 3: Violation of Natural Justice and Lack of Material ConsiderationThe assessee contended that the CIT's order was silent on the material considered and violated the rule of natural justice. The Tribunal found that the CIT failed to specify how the profit-making activities of the assessee were predominant over its charitable purposes. The Tribunal highlighted that the CIT's order lacked specific reasons and did not demonstrate a change in the assessee's approach from charitable to commercial.Issue 4: Effective Date of Cancellation or Withdrawal of RegistrationThe assessee argued that the CIT's order was silent on the effective date of cancellation or withdrawal, rendering it legally invalid. The Tribunal did not specifically address this point but implicitly supported the assessee's position by allowing the appeal and reversing the CIT's order.Additional Points:- The Tribunal referenced the principle of promissory estoppel and cited relevant case law, including CIT vs. Indore Table Tennis Trust and Thiagarajar Charities vs. Addl. CIT, to support its decision.- The Tribunal noted that the CIT's order was influenced by official bias, as the CIT had previously rejected the assessee's claim for exemption in another capacity.- The Tribunal concluded that the cancellation of registration was not justified and allowed the appeal, directing the AO to frame the assessment afresh in light of its observations.Outcome:The appeals were allowed, and the orders of the CIT(A) and CIT were reversed. The assessee's registration u/s 12A was reinstated, and the assessments for the relevant years were to be reconsidered.