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. The Tribunal held that the CIT's actions violated principles of natural justice, including failure to provide confrontation of documents and an opportunity to be heard. The assessee's appeal was allowed.

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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 12A
The 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 Registration
The 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 Therefore, the CIT's order u/s 12A could not be rescinded/withdrawn by virtue of s. 21 of the General Clauses Act.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 Principles
The 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 Fairness
The 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 12A
The 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 Documents
The 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.

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