Appellant : Commissioner Of Income Tax, Jabalpur v. Respondent : Namra Mahila Avam Bal Kalyan Samiti, Rewa (Mp

THE HIGH COURT OF MADHYA PRADESH: JABALPUR (Division Bench) MAIT No.71/2004 APPELLANT : Commissioner of Income Tax, Jabalpur Versus RESPONDENT : Namra Mahila Avam Bal Kalyan Samiti, Rewa (MP) -------------------------------------------------------------------------------------------- Coram: Hon’ble Shri Justice Ajay Kumar Mittal, Chief JusticeHon’ble Shri Justice Vijay Kumar Shukla, Judge -------------------------------------------------------------------------------------------- Appearance: Shri Sanjay Lal, Advocate for the appellant. Shri Sumit Nema, Senior Advocate with Shri Mukesh Agrawal,Advocate for the respondent/assessee. -------------------------------------------------------------------------------------------- O R D E R (Oral)[11.2.2020] Per: Ajay Kumar Mittal, CJ In the present appeal preferred by the Revenue under Section 260-A ofthe Income Tax Act, 1961 (for short “the Act”), challenge is to an orderdated 27.2.2004 (Annexure B) passed by the Income Tax Appellate Tribunal,(for short “the Tribunal”), Jabalpur Bench, Jabalpur in ITA No.198/Jab/2003in respect of the Assessment Year 2002-03, whereby the appeal filed by therespondent – Samiti (for short “the assessee”) was allowed and the orderpassed by the Commissioner of Income Tax-II, Jabalpur [for short “theCIT”] was quashed. 2.This appeal was admitted on 2.2.2006 for determination of thefollowing substantial question of law by this Court :- “Whether the Income Tax Appellate Tribunal isjustified in coming to hold that the Commissioner ofIncome Tax has no jurisdiction to cancel theregistration certification granted in favour of a trust inexercise of power under Section 12-A of the Act ?” 3.A few facts relevant for the decision of the controversy involved asnarrated in the present appeal may be noticed. The assessee is a trust situatedat Rewa in the State of Madhya Pradesh. The assessee was grantedregistration under Section 12A of the Act on 15.10.2001 by the CIT and videorder dated 18.3.2002 also granted exemption under Section 80G of the Act.On 3.9.2002, a survey was conducted in the premises of the assessee. Afterfurther investigation, the CIT issued a show cause notice to the assesseestating therein as to why the registration certificate granted to the assesseeunder section 12A of the Act as well as the exemption under Section 80G ofthe Act be not cancelled/withdrawn. The show cause notice also set out thefactual grounds for the withdrawal of the registration certificate. Theassessee was asked to reply to the show cause notice. The assessee,accordingly, filed its reply and opposed the grounds on which thewithdrawal/cancellation of the certificate was proposed. Thereafter, theregistration as well as the exemption granted to the assessee werecancelled/withdrawn by the CIT vide order dated 12.8.2003, on the groundthat the assessee Trust was not charitable in nature within the meaning ofproviso to Section 2(15) of the Act. Aggrieved by the order of CIT, theassessee filed an appeal before the Tribunal impugning the withdrawal ofregistration under Section 12A of the Act. Vide order dated 27.2.2004, theTribunal allowed the appeal filed by the assessee and the order passed by the CIT withdrawing registration already granted to the assessee Trust underSection 12A of the Act was held to be invalid and without jurisdiction.Hence, the instant appeal by the appellant – Revenue. CIT withdrawing registration already granted to the assessee Trust underSection 12A of the Act was held to be invalid and without jurisdiction.Hence, the instant appeal by the appellant – Revenue. 4.Learned counsel for the appellant-Revenue submitted that the Tribunalhad not properly appreciated the relevant material available on record. It wasargued that the objection raised by the assessee, regarding power of CIT tocancel/withdraw the order by which the registration was granted, shouldhave been raised immediately after receiving the show cause notice and,therefore, the Tribunal has committed an error in entertaining such objectiontaken for the first time before it. Further, it was contended that sufficientopportunity of hearing was afforded to the assessee by the CIT beforepassing the order of cancellation/withdrawal of registration under the Act.Learned counsel also submitted that in view of the amendment in Section12AA of the Act, the CIT had powers to cancel/withdraw the registrationgranted by it to any firm/trust/society. Accordingly, it was prayed that thisappeal be allowed by setting aside the order impugned in this appeal. 5.On the contrary, learned senior counsel for the assessee supported thefindings recorded by the Tribunal and submitted that the documents on thebasis of which the CIT proceeded to cancel the registration were neverconfronted to the assessee, therefore, the Tribunal has rightly quashed theorder passed by the CIT. It was stated that adequate opportunity of hearingwas not provided to the assessee by the CIT before passing the order ofcancellation of the said registration under Section 12A of the Act by it.Learned senior counsel argued that once the CIT had granted the registrationcertificate under the Act, at the relevant time, he had no express power to cancel/recall/withdraw the said order granted in favour of the assessee.According to learned counsel, the amendment conferring powers to the CITto withdraw such registration came into force w.e.f. 1.10.2004 and it couldnot be given retrospective effect. In support of his contentions, reliance wasplaced on the decision of the Supreme Court in the case of IndustrialInfrastructure Development Corporation (Gwalior) M.P. Ltd. Vs.Commissioner of Income Tax, Gwalior – (2018) 4 SCC 494. 6.We have heard learned counsel for the parties and find that the presentappeal deserves to be dismissed. 7.The Apex Court in Industrial Infrastructure DevelopmentCorporation (supra) has held that the CIT had no express power to cancelthe registration once granted by him to the assessee under Section 12A of theAct till 1.10.2004. The order passed under Section 12A of the Act by the CITis a quasi judicial order and it could be withdrawn when there was expresspower vested in him under the Act to do so. The relevant extract of the saiddecision reads as under:- “17. In our considered opinion, the CIT had no express power ofcancellation of the registration certificate once granted by him tothe assessee under Section 12A till 01.10.2004. It is for the reasonsthat, first, there was no express provision in the Act vesting theCIT with the power to cancel the registration certificate grantedunder Section 12A of the Act. Second, the order passed underSection 12A by the CIT is a quasi judicial order and being quasijudicial in nature, it could be withdrawn/recalled by the CIT onlywhen there was express power vested in him under the Act to doso. In this case there was no such express power.” cancellation of the registration certificate once granted by him tothe assessee under Section 12A till 01.10.2004. It is for the reasonsthat, first, there was no express provision in the Act vesting theCIT with the power to cancel the registration certificate grantedunder Section 12A of the Act. Second, the order passed underSection 12A by the CIT is a quasi judicial order and being quasijudicial in nature, it could be withdrawn/recalled by the CIT onlywhen there was express power vested in him under the Act to doso. In this case there was no such express power.” 8.It is not in dispute that the express power was conferred on the CIT tocancel the registration for the first time by enacting sub-section(3) in Section12AA of the Act effective from 1.10.2004 by the Finance (No.2) Act 2004cancel the registration for the first time by enacting sub-section(3) in Section12AA of the Act effective from 1.10.2004 by the Finance (No.2) Act 2004 (23 of 2004). Thus, such power could be exercised by the CIT only on andafter 1.10.2004 as the amendment in question was not retrospective but isprospective in nature. Similar is the position in the present case also. On15.10.2001, the assessee was granted registration by the CIT under Section12A of the Act and the exemption under Section 80G of the Act on18.3.2002. The order withdrawing the said registration with retrospectiveeffect was passed by the CIT on 12.8.2003 i.e. much prior to coming intoforce of the aforesaid amendment enacting sub-section (3) in Section 12AAof the Act conferring the powers on the CIT to withdraw/cancel/recall theregistration granted by him to any firm/trust/society. Indeed, the functionsexercisable by the CIT under Section 12A of the Act are neither legislativenor executive but as mentioned above they are essentially quasi judicial innature. Therefore, it is for all these reasons the CIT had no jurisdiction tocancel the registration certificate once granted by him under Section 12A ofthe Act till the power was expressly conferred on the CIT by Section 12AA(3) of the Act w.e.f. 1.10.2004. 9.Since the Supreme Court in Industrial Infrastructure Development Corporation (supra) had already held that the amendment in question wasnot retrospective but was prospective in nature, it would be deemed that inthe present case also the CIT at the time of passing the aforesaid orders hadno express power to recall/withdraw registration certificate granted to theassessee trust. The substantial question of law framed is thus, answeredaccordingly. 10.No illegality or perversity could be pointed out by the learned counselfor the revenue in the findings recorded by the Tribunal in the appeal whichmay warrant interference by this Court. 11.Accordingly, the substantial question of law is answered against therevenue and in favour of the assessee. The appeals stand dismissed. (Ajay Kumar Mittal) (Vijay Kumar Shukla)Chief Justice Judge AnchalDigitally signed by ANCHAL KHARE Date: 2020.03.13 17:25:46 +05'30'