TaxTMI 
TaxTMI 
2005 (11) TMI 208
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....ife Smt. Boppana Jhansi Lakshmi Bai, as the Secretary. Other members of the Society consist of their close relatives like daughters Ms. Sushmasree and Ms. Seema and brother Shri B. Rajendra Prasad. It was formed with various objects, more specifically set out in the trust deed dated 26-1-1987, and noted in para 1.2 of the impugned order dated 26-7-2004 of the Commissioner. The assessee Society had applied for registration under section 12A of the Income-tax Act, 1961 on 9-1-1992 and it was granted Registration by letter H. qrs. No. III/69/91-92 dated 14-8-1992 by the Commissioner of Income-tax, Visakhapatnam. The assessee-Society has been filing returns of incomes showing details of fees and collections and expenditure of all the colleges run by it. The assessee has claimed exemption under section 10(22) of the Act till the assessment years 1998-99, and from 1999-2000 onwards it has been claiming the benefit of exemption under sections 11 and 12 of the Act. Assessments were completed under section 143(3) of the Act for the assessment years 1993-94 to 1996-97. The Department seems to have accepted the claim of the assessee that its income is exempt under section 10(22) of the Act. ....
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....established, as in fact the assessee-society has established colleges and has been imparting Intermediate education to students, and the colleges run by the assessee are recognised by the Government of Andhra Pradesh. The findings of the Commissioner that the assessee is not pursuing the objects for which it was established, and that it is running only coaching centres for courses like EAMCET, IIT-JEE entrance, etc., are incorrect. The provisions of General Clauses Act are applicable only to the orders issued in terms of delegated/subordinate legislation and not to judicial or quasi-judicial orders, and as such those provisions have no application to an order in the nature of quasi-judicial ones, passed under the Income-tax Act. Under the provisions of section 12AA of the Income- tax Act, as amended by the Finance (No.2) Act, 2004, the Commissioner has power to cancel the registration granted under section 12A of the Act, with effect from only 1-10-2004. The Commissioner has not referred to the full text or the notes on clauses forming part of the Finance Bill (No.2), 2004, but has referred to only a selective portion thereof in a pick and choose manner. A perusal of the totality t....
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..... State AIR 1951 All. 836 (7) Bulion & Agricultural Produce Exchange (P.) Ltd. v. Forward Markets Commission AIR 1979 All. 332 (8) Jagdish Prasad Pradhan v. District Board AIR 1966 All. 26 (9) Institution of Civil Engineers v. IRC 1931 All ER 454 (10) IRC v. Yorkshire Agricultural Society 1927 All ER 536 (11) Patel Narshi Thakershi v. Pradumansinghji Arjunsinghji AIR 1970 SC 1273 (12) State of Madhya Pradesh (Now Maharashtra v. Haji Hasan Dada AIR 1966 SC 905 (13) S.J.S. Fernandes v. V. Ranganayakulu Chetty AIR 1953 Mad. 236 (14) Mahalaxmi Motors Ltd. v. Dy. CIT 2004 (2) ALD (NOC) 115 (15) CIT v. Hyderabad Race Club Charitable Trust 2003 (6) ALD (NOC) 177 (16) CIT v. Bhawani Prasad Girdhari Lal & Co. [1991] 187 ITR 257 (All.) (17) Kanmarlapudi Lakshimanarayana Chetty v. First Addl. ITO AIR 1957 AP 159 (18) CIT v. Jagabandhu Roul [1984] 145 ITR 153 (Ori.) (19) East India Hotels Ltd v. C.R. Shekhar Reddy, Dy. CIT [1998] 230 ITR 622 (Kar.) (20) Uppala Peda Venkataramanaiah v. First Addl. ITO, Visakhapatnam [1964] LII (Short Notes of Current Cases) 2 (2....
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....objects, the assessee was merely content with running certain colleges and hostels on commercial lines. The only activity of the assessee was to train/coach students to appear for competitive entrance examinations such as IIT-JEE, as also entrance examination for medical and engineering courses in the State of Andhra Pradesh. Except running certain coaching centres and hostels for the intermediate colleges, the assessee as noted by the Commissioner, did not devote its attention for fulfilment of any other stated objects and it did never open or run orphanages, care homes, balwadis and night schools for adult education to remove illiteracy, as per the objects specified in the trust deed. Running of a private coaching institute for the purpose of training the students to appear at some specified examinations upon taking specified sum from the trainees, would not enable the assessee to claim its activities to be of charitable nature. The availability of the exemption should be evaluated each year to find out whether the institutions existed during the relevant year solely for the educational purposes and not for purposes of profit, and the decisive or acid test is as to whether the ob....
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....t, the company SClL was set up and run on a day-to-day basis with the money of SCEC. The diversion of the funds was without adequate security of compensation. (iv) The income and funds of SCEC were diverted for acquisition of assets like land etc. in the names of Dr. B.S. Rao, Dr. Jhansi Lakshmi Bai, their two davghters and also in benami names. (v) A Mercedes Benz car was purchased with the funds of SCEC and, made available for personal use of Shri Ch. Srinivas, husband of Smt. Seema and son-in-law of Dr. B.S. Rao and Dr. Jhansi Lakshmi Bai. (vi) Mr. B. Rajendra Prasad, brother of Dr. B.S. Rao, is proprietor of Classic Financial Services. Funds of SCRC were diverted to the aforesaid concem. Dr. B. Rajendra Prasad is a trustee in SCEC." 4.4 The Commissioner by way of illustration, noted at length certain instances of violations of the above nature financial year-wise, in para-8 of the impugned order at pages 5 to 9. In para-9 of the impugned order, at pages 9 to 15 thereof, he extracted relevant portions of the statements of Smt. B. Jhansi Laxmi Bai, one of the Directors of the Committee, recorded on 1-11-2002 and 2-11-2002, at the time of search and o....
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....Ker.) (c) Action for Welfare & Awakening in Rural Environment (AWARE) v. Dy. CIT [2003] 263 ITR 13 (AP) (d) NTR Estate v. CIT [1986] 157 ITR 285 (AP) (e) S. Gopal Reddy v. CIT [1990] 181 ITR 378 (AP) (f) Fifth Generation Education Society v. CIT [1990] 185 ITR 634 (All.) (g) Radeshyam Khare v. State of Madhya Pradesh AIR 1959 SC 107 (h) Aligarh Muslim University v. Mansoor Ali Khan [2000] 7 SCC 529 (i) Madhya Pradesh Madhyam v. CIT [2002] 256 ITR 277 (MP) (j) Motichand Jain v. M. Jaikumar [2004] 1 ALD 250 (FB)(AP) (k) Rajendra Kumar v. Kalyan [2000] 8 SCC 99. 5. The learned counsel for the assessee, in his rejoinder, distinguished the case-laws relied upon by the Revenue and submitted that the impugned order of the CIT is illegal and invalid as well as liable to be cancelled, without even going into the merits of the matter, besides also distinguishing that the ratio laid down by the Hon'ble A.P. High Court in the case of Motichand Jain rendered by Full Bench of three Judges, relied upon by the Revenue, has been overruled by a Larger Bench of five Judges in the case of Vallabhaneni Lakshmana Swa....
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.... 30-3-2005 in the said W.P. No. 6753 of 2005, has directed as follows- "The only grievance made in this Writ Petition is that the petitioner filed an appeal before the Income-tax Appellate Tribunal against the order passed by the 1 st respondent-Commissioner of Income-tax, Hyderabad, dated 26-7-2004, and the same is pending. In the meanwhile, he is resorted to coercive steps, and therefore, he seeks appropriate direction. 2. After hearing the learned counsel for the petitioner and the learned standing counsel, we find it appropriate to direct the Income-tax Appellate Tribunal to dispose of the appeal filed by the petitioner within three weeks from the date of receipt of a copy of this order. Till such time, the respondents shall not resort to any coercive steps. 3. With the direction indicated above, the Writ Petition is disposed of. No costs." 7.1.B The above order of the Hon'ble A.P. High Court giving directions to this Tribunal, which is not a party to the Writ proceedings, was received by the Registry of this Tribunal on 8-4-2005 along with the letter of the assessee dated 6-4-2005. Thereupon, in compliance with the order of the Hon'ble Hig....
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....ect is extracted below- Office of the Departmental Representative (CIT) Income-tax Appellate Tribunal, Hyderabad. ITA No. 887/H/04/DR ITAT/03-04 Dated: 21-4-2005 To The Assistant Registrar, Income-tax Appellate Tribunal, Hyderabad. Sir, Sub:- Appeals before ITAT B-Bench, Hyderabad ITA No. 887/H/04 in the case of Sri Chaitanya Educational Committee, Poranki, Voijayawada - Regarding. The appeal in the above case is posted for hearing before the Hon'ble B-Bench ITAT, Hyderabad on 20-4-2005. 2. The Sr. Standing Counsel Sri S.R. ASHOK who is to argue the case on behalf of the department was prepared to argue the case on *25-4-2005. However, the counsel for the assessee preferred the case to be heard on **26th April. Therefore it is requested that the case may be posted for hearing either on 25th or 26th April, 2005. 3. This letter of request may kindly put up before Hon'ble Members for their kind consideration. Yours faithfully, Sd/ (Y.R. RAO) Departmental Representative (CIT) Income-tax Appellate Tribunal ....
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....s. 7.1.C To inform that, as advised by the Tribunal, the assessee could not on account of summer vacation file an application before the Hon'ble High Court seeking enlargement of time prescribed by it having got already expired at the request of adjournments by both parties simultaneously and also alternatively, the above sequence of events in the matter of hearing before the Tribunal has been summarized by the learned counsel in his petition dated 4-5-2005, in the following words- "It is submitted that the Hon'ble High Court in W.P. No. 6753/05 vide orders dated 4-4-2005 directed to dispose off the appeal within three weeks and the said order was submitted to this Hon'ble Tribunal on 8-4-2005 and this Hon'ble Tribunal posted the matter to 13-4-2005 for hearing. On that day the arguments were not completed and due to the preoccupation and pressure of the work, the appellant's counsel requested this Hon'ble Tribunal for adjournment and this Hon'ble Tribunal adjourned the matter to 20-4-2005. On 20-4-2005 the appellant's counsel again sought adjourned either to 25-4-2005 or in the 1st week of May 2005 due to the pressure of work on the last....
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.... Central Range-2, Hyderabad. Dated 19-10-2005 To The Assistant Registrar, Income-tax Appellate Tribunal, Shapoorwadi, Adarshnagar, HYDERABAD Sir, Sub:- Request to release the order in the case of Sri Chaitanya Educational Committee (ITA No. 887/H/2004)-Reg. As directed by the Hon'ble High Court of Andhra Pradesh, the case was heard on 20-4-2005; 26-4-2005; 3-5-2005 & 5-5-2005 by the Hon'ble ITAT 'B' Bench, Hyderabad in the above mentioned case. Till now the orders are not received by this office. As heavy demand of Rs. 54.46 crores is locked up and the Department is not able to pursue collection because of the Hon'ble Court's order, it is requested that the Hon'ble Tribunal may release the orders in the above case at the earliest. Yours faithfully, Sd/- (K.HARIPRASADA RAO) Addl. Commissioner of Income-tax, Central Range-2, Hyderabad. Copy submitted to Director General of Income-tax (Inv.), Hyderabad for kind information. Copy submitted to the Commissioner of Income-tax (Central), Hyderabad, for kind information. Copy to the....
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....for the urgency of the disposal of this appeal which appears to have prompted it to approach the Hon'ble High Court within months of institution of the appeal without even awaiting the response of the Tribunal to the request of the assessee for early hearing. The Department also points out the very same high stakes involved and 'heavy demand of Rs. 54.46 crores' locked up as the reason for the urgency of the disposal of the appeal. 7.l.G We are constrained to observe at this juncture that though high stakes involved is queerly the reason for the early disposal of this appeal as emphasised by the parties, actually no demand arises out of the CIT's order dated 26-7-2004 impugned in the instant case, which is merely an order cancelling the registration of the assessee, and the alleged orders involving stakes as high as 'heavy demand of Rs. 54.46 crores' as put by the Revenue, are not impugned in this appeal. This is also self-evident from the very fact that this appeal stated to be involving heavy stakes has been instituted on payment of appeal fee of Rs. 500 only, which is the barest minimum against the maximum of Rs. 10,000 payable on assessed income of Rs....
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....ct, 2004, with effect from 1-10-2004 only, even prior to such insertion the power to withdraw or cancel the registration was always enjoyed by the Revenue authorities, or at least by retrospective operation of the same amendment and in terms of section 21 of the General Clauses Act, 1897, the power to issue order for registration under section 12AA of the Income-tax Act, includes the power to rescind the order. For this purpose, reliance was also placed on a portion of the "notes on clauses" forming part of Finance (No.2) Bill, 2004, which we have already mentioned hereinabove and extracted in para 7.3.B herein. 7.2.B In this appeal, therefore, two issues arise for consideration before us. They are- (a) Whether the CIT as on 26-7-2004 has the power to cancel the registration? (b) If so, whether the violations of the provisions of section 10(22) and section 13 stated to have come to light as a result of search operations conducted under section 132 of the Act, warrant cancellation of registration of the assessee? 7.2.C As for the first issue, with regard to the legality and validity of the order dated 26-7-2004, the contentions of the Revenue with reference t....
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....communicated through words. When language is misunderstood even in ordinary conversation, the person who has spoken the words can only and shall alone be approached for clarification. Legislature cannot be approached because it becomes functus officio after the enactment of an Act. It is, therefore, left to the judiciary to make proper interpretation of the language used in the statute. The famous Jurist Rt. Hon'ble Lord Denning, Master of the Rolls, said, "we do not sit here to pull the language of the Parliament to pieces and make non-sense of it. That is an easy thing to do. We sit here to find out the intention of Parliament and carry it out. We do better by filling in the gaps and making sense of the enactment than by opening to destructive analysis." Viscount Simonds called it "a naked usurpation of the legislative function under the thin guise of interpretation". We wish therefore to follow the aforesaid principles in their true sense, letter and spirit. When the language in a statute is transparent and plain, it is wrong to give it colour according to the temper and time. When the language employed by the enactment is clear, there is no question of interpreting the prov....
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....n order in writing cancelling the registration granted under the said section. The proposed amendment will take effect from 1st October, 2004." (Emphasis supplied) The amendment in question has vested in the Commissioner a new judicial/quasi-judicial power of cancelling the registration. So, what is aimed at by the amendment is not a change in procedure envisaged in section 12AA dealing with the grant of registration but conferment of an additional power under that section for cancellation of registration granted earlier duly following the provisions set out in the amendment itself. Such an amendment cannot be termed as a mere procedural one, so as to be retrospective and applicable to all pending matters, but has to be deemed to be a substantive one effective only from the date specified in the Act itself. 7.3.C In this context, we may refer to the decision of Hon'ble Kerala High Court in the case of N.T. John v. CIT [1997] 228 ITR 314 wherein considering the question whether section 158BA contained in Chapter XIV-B is retrospective or prospective in operation, Hon'ble Kerala High Court held, as per relevant portion of the head note as under- ....
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....ts which had become final due to the bar of limitation prior to 1-4-1989, and this position was equally applicable to limitation proposed on the basis of order passed under the Income-tax Act or under any other law. The provision of a fiscal statute, more particularly one regulating the period of limitation, must receive a strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation of litigants for an indefinite period on future unforeseen events. Proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective' operation so as to allow upsetting of proceedings which had already concluded and attained finality. A taxing provision imposing liability is governed by the normal presumption that it is not retrospective and the settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot, in the absence of clear contrary ....
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....SC), wherein the court was concerned with the nature of amendment made to the provisions of section 80P(2)(a)(iii). Facts before the Apex Court in that case are that section 80P(2)(c)(iii) of the Income- tax Act, 1961 as originally inserted provided that in the case of a Co-operative Society engaged in "(iii) the marketing of the agricultural produce of its members" the whole of the amount of profits and gains of business attributable to such activity would be deducted from the gross total income. The Supreme Court in Assam Co-operative Apex Marketing Society Ltd. v. Addl. CIT [1993] 201 ITR 338 rendered under the corresponding earlier proviso, section 81, held that the phrase "produce of its members" must refer to agricultural produce actually "produced by its members." In a later decision, Kerala State Co-operative Marketing Federation Ltd. v. CIT [1998] 231 ITR 814, a larger Bench of the Supreme Court overruled the decision in the case of Assam Co-operative Apex Marketing Society Ltd. and held that the exemption under section 80P(2)(a)(iii) was not restricted only to primary societies and that "produce of its members" in that provision had to be construed as including the "produ....
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.... is to be given retrospective effect even without a declaration to that effect from the Legislature. Where the intention of the Legislature is clearly conveyed and wherever the language is clear the intention of the Legislature is to be gathered from the language used. A construction which requires for its support, addition or substitution of words or which results in rejection of words has to be avoided. The court is to pronounce the judgment and not to make law." In the instant case there is a pronouncement by the Legislature itself that the amendment is effective from 1-10-2004. Therefore, in view of the ratio of the Madras High Court noted above, there cannot be retrospectivity against the intention of the Legislature. 7.3.I Similarly, in the case of M.G. Pictures (Madras) Ltd. v. Asstt. CIT [2003] 263 ITR 832 (Mad.) examining the issue with regard to retrospective or otherwise nature of the amendment to section 40A(3) restricting disallowance with effect from 1-4-1996, Hon'ble Madras High Court held, as per relevant portion of the head-note on p. 83, as follows- "An amendment must have in its language something pointing towards its retrospectivity. In order ....
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....pointed out in the parent Act. It was also observed that the retrospective amendment takes away the right given to the petitioner and that cannot be done in the guise of curing a nonexisting lacuna by the respondents. 7.3.K Similarly, in the case of Gem Granites v. CIT [2004] 271 ITR 322 (SC) the Apex Court, examining the retrospective or otherwise nature of the amendment to the provisions of section 80HHC by the Finance Act, 1991, whereby the benefit of section 80HHC has been extended to a specific kind of mineral, Apex Court held that every statute is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. It was also held therein that subsequent legislation may be looked into to fix the proper interpretation to be put on the statutory provision as it stood earlier. In this case, the Hon'ble Apex Court has also approved the view taken by the Hon'ble Madras High Court in CIT v. Pooshya Exports (P.) Ltd.'s case. 7.3.L Further in the case of CIT v. New Rajasthan Trading Co. [2004] 271 ITR 511 (Raj.) on the retrospectivity of proviso inserted in section 272A(2) by Finance (No.2) Act, 1991 with effect from 1-10....
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.... 1994, on the other. There was no question of Parliament overruling the decision of the Supreme Court by passing Finance Act, 2000, and the Finance Act, 2003, to amend the provisions retrospectively. It was held in that context that a Legislature is competent to remove infirmities retrospectively and make any imposition of tax declared invalid, valid. 7.3.O In the case of Kanmarlapudi Lakshminarayana Chetty's case relied upon by the assessee before us, Hon'ble A.P. High Court examining the retrospective or otherwise nature of the amendment to the Income-tax Act, by way of insertion of subsection (5) to section 35 by the Income-tax (Amendment) Act, 1953, observed that the said sub-section (5) is not declaratory of a pre-existing law but it clearly affects vested rights which have accrued to the assessee, and as such the well-settled rule of construction precludes the Court from construing the section as retrospective. It was held in that case that a statute affecting vested rights is prima facie prospective unless the statute expressly or by necessary implication indicates to the contrary. Even where it is retrospective in operation, the Courts should confine its operatio....
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....ctment is expressed in language which is fairly capable of either interpretation it ought to be construed as prospective only." 7.3.S Further, in the case of J.P. Jani relied upon by the assessee Hon'ble Supreme Court, examining the scope of section 297(2)(d)(ii) of the new Act, i.e. Income-tax Act, 1961, held as follows- "On a proper construction of section 297(2)(d)(ii) of the New Act, the Income-tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force. The principle is based on the well-known rule of interpretation that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operations should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time." 7.3.T Further, in the case of Y. Arul Nadar, relied upon by the assessee, considering retrospective or otherwise nature of an amendment made to the statute, Hon'ble Madras High Court held as foll....
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.... its face, clearly indicates retrospective effect where intended, there can be no justification to read retrospectivity into the amendment made by clause (a) of section 6 of the Amending Act which does not contain any word to that effect. 7.3.W Further, in the case of Govind Das, relied upon by the assessee, the Hon'ble Summit Court examining retrospective or otherwise nature of the provisions of section 171(6), held that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or imply an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. 7.3.X In the case of Agastyar Trust, relied upon by the assessee, Hon'ble Supreme Court, considering the assessee's claim for exemption under T.N. Urban Land Tax Act, 1966 on the basis of recognition by a subsequent order of the ITAT of the assessee as a public Charitable Trust under section 12A(a) of the Income-tax Act, 1961, it was held as follows- "Since the order recognizing the appellant Trust as a charitable trust under section 12A(a) of the Income-tax Ac....
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....demand in dispute. Such a right accrued to the assessee by virtue of the Tribunals order coming into effect, could get impaired if the proviso to section 254(2A) is read as retrospective when it has been actually not effectuated so but only with effect from 1-6-2001 by the Finance Act, 2001. If at all, the said insertion of the proviso might be applicable only to stay petition which had been filed prior to the said date of 1-6-2001 but which has not come up for hearing until the said date of 1-6-2001, but in the instant stay petitions except for the assessment year 1997-98, orders had been passed by the Tribunal very much prior to the date of 1-6-2001. As the concerned proviso inserted by the Amendment Act was not retrospective butonly prospective with effect from 1-6-2001 as spelt out by the Amendment Act itself, the stay already granted by the Tribunal on various dates prior to 1-6-2001 would hold good and continue to be in force pending disposal of the relevant appeals out of which the stay petitions had arisen...." The ratio decidendi of the above decision squarely applies to the facts of the present case wherein the Revenue seeks to press into service the provisions of sub-....
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....and subject to the like sanctions and conditions (if any) to add to, amend, vary or rescind any notifications, orders, rules or byelaws so issued." Just as a man is known by the company he keeps, so is a word known in the company of its words. In other words, a word is expected to be interpreted with reference to its accompanying words. This is the principle enshrined in the doctrine of ejusdem generis, the broader version of which is noscitur a sociius, i.e. The meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it. Applying the said principle, as pointed out by the learned counsel for the assessee, therefore, we have to hold that the said provision of General Clauses Act apply to such orders which can be equated with notifications, rules or bye-laws, which are procedural in nature, and not to orders which are passed in quasi-judicial or judicial proceedings. 7.4.C It is worthwhile to refier to the decision of the Tribunal in the case of Kailas hanand Mission Trust, relied upon by the assessee, wherein the Delhi Bench had occasion to examine the power of CIT to review or rescind/withdraw the registration granted under section 1....
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.... applicability of provisions of section 21 of the General Clauses Act to Forward Contract (Regulation) Act, 1952, the Hon'ble Allahabad High Court in the case of Bullion & Agricultural Produce Exchange (P.) Ltd held as follows- "... In our opinion, section 21 of the General Clauses Act may not apply inasmuch as that section does not obviously confer a power of review on an authority exercising judicial or quasijudicial power. Judicial or quasi-judicial authorities can review their order only if such power is specifically provided for." 7.4.F Similarly, interpreting the provisions of section 21 of the U.P. General Clauses Act in the context of an order passed under U.P. District Boards Act, the Hon'ble Allahabad High Court in the case of Jagdish Prasad Pradhan as per the relevant portion of the head note, held as follows- "The State Government acts as a Tribunal with quasi-judicial powers and it will have no power to rescind, modify or review its decision once taken, unless it is provided by the statute. A power of review is not inherent in a Court or Tribunal but has to be conferred by statute, AIR 1964 AIL 148 (151) Ref. (Para-12) .......
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.... being so, the amendment to the provisions of section 12AA by insertion of sub-section (3) has brought a change in the mechanism to check misuse of funds or contraventions to the provisions of section 11 or 13, with effect from 1-10-2004. 7.4.H Reiterating the ratio laid down in the above decision, it was also held by the Jabalpur Bench of the Tribunal in Namra Mahila Avam Bal Kalyan Samiti's case, relied upon by the assessee that CIT is not empowered to withdraw registration already granted under section 12A. 7.4.I Similarly, in the case of M.P. Madhyam, Indore Bench of the Tribunal made a comparison between the provisions of sections 12A and 12AA and concluded that those provisions are not meant for withdrawal or cancellation of registration already granted. The observations of the Tribunal as per relevant portion of the head-note are as follows- "A careful perusal of the provisions of sections 12A and 12AA shows that these provisions are meant for conditions and procedure for registration and not for withdrawal or cancellation of registration already granted on earlier occasion. Admittedly, no application for registration was pending before the CIT to allow or....
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....asise that it should be read in totality, such total reading evidences that the amendment in question was effective only from 1-10-2004. The relevant portion of the explanatory note relied upon by the Revenue, though already extracted above, may be noted once again hereunder, as it is pressed into service to give life to the impugned order of the CIT- "Although, the power of cancellation of registration flows from the power to register, the same has not been specifically provided in the Income-tax Act thereby leading to unnecessary litigation." 7.4.L In the above extract, we do not find any support to the contentions of the Revenue with regard to the power of the CIT to cancel the registration existing even prior to amendment to the provisions of section 12AA with effect from 1-10-2004. The above explanatory note specifically notes that there was no specific provision in the Income-tax Act, and exercise of power of cancellation of registration flowing from the power to register has led to litigation. Whether the litigation was unnecessary or otherwise, as stated in the aforesaid note, it appears that a specific provision in the Income-tax Act has become necessary to ove....
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....The case-laws relied upon by the learned Standing Counsel for the Revenue are clearly distinguishable for the simple reason that the issue before us is confined to the question as to whether the CIT as on the date of the impugned order, i.e. 26-7-2004, was having power to cancel the registration granted to the assessee. For the detailed discussion made hereinabove, in the absence of specific power conferred under the provisions of section 12AA as it stood on the relevant date, we have to hold that the Commissioner does not have such a power to cancel the registration under section 12AA of the Income-tax Act or by virtue of the General Clauses Act, and the subsequent amendment made to the provisions of section 12AA by insertion of sub-section (3) thereunder specifically with effect from 1-10-2004 equally cannot come to the rescue of the Revenue. That being so, the caselaws relied upon by the Revenue are clearly distinguishable from the facts of the case on hand and accordingly cannot come to its aid. 7.5.B For instance, in the case of Madhya Pradesh Madhyam, relied upon by the Revenue, the Hon'ble Madhya Pradesh High Court noted that it was simply a case of issuance of showca....
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....nue placed reliance on the decision of the Hon'ble Supreme Court in the case of Aligarh Muslim University to bring in the theory of useless/idle formalities, and contended that even if the Department's stand is not accepted and the order impugned herein dated 26-7-2004 is quashed on the ground that as on that date the CIT does not have power under section 12AA to cancel the registration once granted, considering the specific power conferred on the Commissioner by the amendment to that section with effect from 1-10-2004, registration of the assessee could be cancelled now again with retrospective effect invoking the amended provisions. As such, quashing of the order impugned, by the Tribunal in these proceedings, would give way to mere academic exercise by the Tribunal and also useless/idle formalities of initiation of fresh proceedings to cancel the same again which, in the light of the ratio decidendi of the Hon'ble Supreme Court in the case of Aligarh Muslim University, should be avoided, the Department highlighted. In our considered view, even such contentions of the Revenue do not hold water. As propounded by the Hon'ble Supreme Court in that case itself, the ap....
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....deficiencies in this case- (a) The impugned order of the CIT dated 26-7-2004 bears the title 'Order of cancellation of Registration granted under section 12AA of the Income-tax Act, 1961'. Neither the registration in this case was granted earlier under section 12AA as it was granted under section 12A, nor is there any power conferred on the CIT by the statute under section 12A to cancel the registration granted earlier, prior to 1-10-2004. (b) The impugned proceedings have been initiated by the CIT (Central) and have been concluded by that very authority. The same does not arise out of any other proceedings, viz. assessment or otherwise. Thus, the moot order, that has given rise to a cause of action for the assessee, is the impugned order of the CIT dated 26-7-2004. As such, in the impugned order, strangely, there is no endorsement of copies of such order to anyone else than the assessee, though normally orders of the CIT or CIT(A) are marked to various authorities including the Assessing Officer. In the absence of these details in the endorsement, the Assessing Officer is not identifiable, resulting strangely in the CIT(Central), Hyderabad, himself being ....
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....er the pre-amended provisions of law there is no power vested in the CIT to review or rescind the registration once granted, as a result of which the CIT does not or cannot have any power to cancel the registration granted by him as well as that section 21 of the General Clauses Act is not applicable to the instant proceedings under section 12AA being judicial/quasi-judicial in nature. In that view of the matter, on this legal ground itself, the order of the CIT impugned herein is liable to be cancelled. We therefore, quash it accordingly. 7.8 In view of our finding on the legality and validity of the impugned order of the CIT on the first issue going in favour of the assessee, it has become redundant for us to go into the merits of the second issue relating to the justification for passing the impugned order in the light of the violations of the provisions of section 10(22) and section 13 stated to havebeen committed and come to light on account of the Department's search proceedings on the assessee. Thus, our hands are tied up by the legal hurdle for attempting to rescue the Department which we express with restraint. 8.1 Before parting with this case, wherein the asses....