2004 (2) TMI 300 - AT - Income Tax

Tribunal Overrules CIT's Withdrawal of Registration, Citing Lack of Jurisdiction and Breach of Natural Justice Principles.

The Tribunal quashed the CIT's order withdrawing the registration under s. 12A, determining that the CIT lacked jurisdiction to revoke the registration. ... Challenged the validity of order passed by the learned CIT withdrawing registration u/s 12A - No jurisdiction to pass such order u/s 12A - Charitable or religious trust - No opportunity of hearing - HELD THAT:- The Tribunal has held in the case of Kailashchand Mission Trust [2003 (10) TMI 273 - ITAT DELHI-C] that the learned CIT having no powers, either incidental or specifically provided in the statute, to review his own order nor being empowered to rescind/withdraw the registration already granted u/s 12A as per the provisions of s. 21 of the General Clauses Act; his order withdrawing the registration already granted u/s 12A was without jurisdiction. To the similar effect is the decision of Indore Bench of Tribunal in the case of M.P. Madhyam vs. CIT [2002 (9) TMI 264 - ITAT INDORE] cited by the learned counsel for the assessee, wherein it has been held that provisions of s. 12A are meant for conditions and procedure for registration and not for withdrawal or cancellation of registration already granted on earlier occasion. Since the ratio of the aforesaid decisions of Delhi Bench and Indore Bench of Tribunal is directly applicable in the present case, we hold, respectfully following the same, that the learned CIT was not empowered to pass the impugned order withdrawing registration already granted to the assessee-trust u/s 12A and such order being invalid having passed without jurisdiction, is liable to be quashed. We order accordingly. Keeping in view our decision rendered hereinabove on ground Nos. 1 and 2 quashing the impugned order passed by the learned CIT, we do not deem it necessary to consider and decide the other grounds raised by the assessee in the present appeal which have been rendered merely of academic nature. In the result, the appeal of the assessee is allowed. Issues Involved:1. Legality and jurisdiction of withdrawing registration u/s 12A.2. Applicability of s. 12A for cancelling or withdrawing registration.3. Violation of natural justice principles.4. Confrontation of documents and fairness.5. Opportunity of being heard before rejecting application u/s 12A.6. Supply of copies of statements and inspection of documents.Summary of Judgment:Issue 1: Legality and Jurisdiction of Withdrawing Registration u/s 12AThe Tribunal examined whether the CIT had the jurisdiction to withdraw the registration granted u/s 12A. It was observed that the CIT could not exercise the power of review as neither the Act provided such power nor did the CIT have inherent powers of review. The Tribunal cited the case of Kailashchand Mission Trust vs. Asstt. CIT, where it was held that the CIT could not review its earlier order passed u/s 12A.Issue 2: Applicability of s. 12A for Cancelling or Withdrawing RegistrationThe Tribunal considered whether the CIT could rescind/withdraw the registration granted earlier u/s 12A based on s. 21 of the General Clauses Act. It was held that the word 'orders' in s. 21 refers to subordinate legislation and not to judicial or quasi-judicial orders. Therefore, the CIT's order u/s 12A could not be rescinded/withdrawn by virtue of s. 21 of the General Clauses Act. The Tribunal concluded that the CIT's order withdrawing the registration was without jurisdiction.Issue 3: Violation of Natural Justice PrinciplesThe assessee contended that the order impugned was silent on the material considered by the CIT, amounting to a violation of natural justice. The Tribunal noted that the CIT had not provided adequate confrontation of documents collected behind the back of the appellant, which was against fairness and principles of natural justice.Issue 4: Confrontation of Documents and FairnessThe assessee argued that the CIT cancelled the registration without confronting the documents to the appellant. The Tribunal observed that the CIT had not followed the established law by not confronting the enquiries made by the Department, rendering the cancellation of registration illegal.Issue 5: Opportunity of Being Heard Before Rejecting Application u/s 12AThe assessee claimed that no opportunity of being heard was allowed before rejecting the application u/s 12A as required u/s 12AA(1)(b)(ii) of the IT Act, 1961. The Tribunal found that the CIT did not act judiciously in not acceding to the assessee's request to supply the copies of statements recorded and to allow inspection.Issue 6: Supply of Copies of Statements and Inspection of DocumentsThe Tribunal noted that the CIT had twisted the facts in a capricious manner in his order by not supplying the copies of statements recorded and not allowing inspection, which was against the principles of natural justice.Conclusion:The Tribunal quashed the CIT's order withdrawing the registration u/s 12A, holding that the CIT was not empowered to pass such an order. Consequently, the other grounds raised by the assessee were rendered academic and were not considered. The appeal of the assessee was allowed.