K.Verma Charitable Trust,, Ahmedabad v. The DIT(E), Ahmedabad

ITA 3339/AHD/2009 | misc
Pronouncement Date: 10-12-2010 | Result: Allowed

Appeal Details

RSA Number 333920514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 3339/AHD/2009
Duration Of Justice 11 month(s) 23 day(s)
Appellant K.Verma Charitable Trust,, Ahmedabad
Respondent The DIT(E), Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 10-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 10-12-2010
Date Of Final Hearing 24-11-2010
Next Hearing Date 24-11-2010
Assessment Year misc
Appeal Filed On 18-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH BEFORE SHRI G.D. AGARWAL VICE-PRESIDENT (AZ) AND SHRI MAHAVIR SINGH JUDICIAL MEMBER ITA NO.3339/AHD/2009 [ASSTT.YEAR] K.VERMA CHARITABLE TRUST -VS- DIT(E) AHMEDABAD 31-B GOVERNMENT SERVANT COLONY 2 ND FLOOR NATURE VIEW NAVRANGPURA AHMEDABAD BUILDING ASHRAM RD. PAN NO.AAATK8143L AHMEDABAD (APPELLANT) (RESPONDENT) REVENUE BY :SHRI H.P. MEENA SR-DR ASSESSEE BY:SHRI S.N.DIVET DIA AR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY ASSESSEE-TRUST IS AGAINST THE ORDER OF DIRECTOR OF INCOME-TAX (EXEMPTION) AHMEDABAD VIDE NO.DIT(E)/K.VERMA/12AA/ 2009-10 DATED 16-11- 2009. WHEREBY REGISTRATION GRANTED U/S.12A INCOME- TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 31-01-1981 HAS BEEN CA NCELLED WITH EFFECT FROM 01-04- 2000. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF DIT(EXEMPT) AHMEDABAD CANCELING THE REGISTRATION GRANTED U/S.12 A OF THE ACT . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND :- ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 2 INVALID & BAD ORDER (1) A) DIRECTOR OF INCOME TAX (EXEMPTION) AHMEDABAD ERRED IN PASSING ORDER U/S.12AA DTD 16.11.2009 REFUSING REGISTRATION W.E. F. 01.04.2000. B) THE ORDER PASSED WITHOUT CONSIDERING DIRECTION O F HON.ITAT AMOUNTS NOT ONLY TO CONTEMPT OF COURT BUT ALSO VIO LATING PRINCIPLE OF NATURAL JUSTICE AS CONTENTION PUT BY LETTER DTD 20. 07.2009 ARE NOT CONSIDERED. C) THE ORDER PASSED BY DIT(E) AHD I) WHEN DEPARTMENT HAS FILED APPEAL AGAINST THE OR IGINAL ORDER OF HON. ITAT DTD 18-08-2006 WITH GUJARAT HIGH COURT. II) IN 2 ND ROUND OF APPEAL FILED BY DEPARTMENT AGAINST CIT(A) S ORDER U/S.143(3) IT IS DISMISSED BY THE TRIBUNAL IS UNJ USTIFIED & BAD IN LAW. WITHOUT PREJUDICE ON MERITS (2) THE ORDER PASSED BY DIT(E) AHMEDABAD IS WITHOUT JURISDICTION AS ONLY COMMISSIONER OF INCOME TAX COULD HAVE PASSED ORDER CANCELING REGISTRATION U/S. 12AA. THE DIT(E) HAS NO AUTHORITY TO PASS IMPUGNED ORDER. (3) THE DIT(E) ERRED IN CANCELING REGISTRATION WITH EFFECT FROM 1.04.2000 (I.E AY 2000-01) WHILE IN ORIGINAL ORDER U/S 12AA. DTD 1 4.03.2005 REGISTRATION IS CANCELLED W.E.F. 30.03.2004. SEC. 12AA(3) WHICH ENABLES HIM TO CANCEL REGISTRATION HAS COME INTO THE STATUTE BOOK FROM 01 .10.2006. THE IMPUGNED ORDER IS ILLEGAL AND WITHOUT JURISDICTION. (4) THE DIT(E) AHMEDABAD ERRED IN PASSING ORDER ON THE SAME LINE OF ORIGINAL ORDER WITHOUT CONSIDERING FACTS AND EXPLAN ATIONS SUBMISSIONS AND EVIDENCES PLACED ON RECORD BEFORE DDIT(E) AHD CIT( A) AND ITAT IN APPEAL U/S.143(3) & 12AA. (5) THE APPELLANT CRAVES LEAVE TO ADD AMEND ALTER EDIT DELETE MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 3. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SHRI S.N.DEVETIA STATED THAT THE DIT (EXEM) AHMEDABAD HAS NO POWER TO CANCEL TH E REGISTRATION GRANTED U/S.12A OF THE ACT AS THE AMENDMENT IN SUB-SECTION-3 OF SEC TION 12AA HAS BEEN MADE BY THE FINANCE ACT 2010 W.E.F. 1-6-2010 THAT WHERE A TRUST HAS OBTAINED A REGISTRATION AT ANY TIME U/S.12A OF THE ACT AND THE COMMISSIONER IS SATISFIED THAT THE ACTIVITY OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST HE SHALL PASS AN ORDER IN WRITING CAN CELLATION OF REGISTRATION OF SUCH TRUST. HE STATED THE FACTS OF THE PRESENT CASE THAT THE DIT(EXEM.) AHMEDABAD HAD CANCELLED REGISTRATION WITH EFFECT FROM 30-03-2004 BY ORDER U/S.12AA(3) OF THE ACT ON ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 3 14-03-2005 AND THE REGISTRATION GRANTED TO THE ASSE SSEE-TRUST AND MAIN GROUND FOR CANCELLATION OF REGISTRATION OF THE ASSESSEE-TRUST IS THAT IT HAD MISUSED ITS STATUS AS CHARITABLE TRUST FOR DERIVING UNDUE BENEFITS TO THE SISTER CONCERN AND FOR CLAIMING WRONG DEDUCTIONS ON BOGUS EARTHQUAKE RELIEF OPERATI ONS AND ADVANCES OF MONEY TO NON-CHARITABLE ORGANIZATIONS. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE US AGAINST APPEAL NO.1121/AHD/2005 WHICH WAS DISPOSED OF VIDE ORDER DATED 14-03- 2005 AND THE MATTER WAS SET ASIDE TO DIT(EXEM.) WIT H DIRECTIONS TO INQUIRE INTO THE ACTIVITIES FOR FINANCIAL YEAR 2003-04 AND DIT(EXEM. ) PASSED ORDER WITHDRAWING EXEMPTION WITH EFFECT FROM 01-04-2000 BY RELYING UP ON THE SAME REASONS AS HIS EARLIER ORDER. THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT THE IMPUGNED ORDER IS VOID AB INITO AND BEYOND THE POWERS/JURISDICTION OF DIT(EXEM.) THAT THE POWERS TO CANCEL THE REGISTRATION GRANTED TO THE TRUST U/.S 1 2A ARE CONFERRED UPON DIT(EXEM.) W.E.F. 1-6-2010 BY AMENDMENT BROUGHT ABOUT IN FINAN CE ACT (NO-2) 2010. THE EXPRESSION OR HAS OBTAINED REGISTRATION AT ANY TIME U/S.12A WERE INSERTED BY SAID FINANCE ACT W.E.F. 1-6-2010. NOW THE ORIGINAL ORDER CANCELING THE REGISTRATION GRANTED U/S.12A TO THE ASSESSEE-TRUST WAS PASSED ON 14-03-2005 AND THE CONSEQUENTIAL ORDER IS PASSED ON 16-11-2009. THUS BOTH THE ORDERS HAVE BEEN PASSED BEFORE POWERS WERE CONFERRED UPON THE DIT(EX EM.) AND HENCE THE SAME SHOULD BE QUASHED AS ILLEGAL AND THESE POWERS ARE H ELD TO PROSPECTIVE AND NOT RETROSPECTIVE AS HELD IN CASE OF AJIT EDUCATION TRUST V. CIT (2010) 46 DTR 482 (AHD) OF THIS TRIBUNAL AND BY HONBLE ALLAHABAD HIGH COUR T IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELOPMENT V. CHIEF CIT AND OTHERS (2009) 315 ITR 382 (ALL). 4. SECONDLY THE LD. COUNSEL FOR ASSESSEE STATED TH AT HONBLE TRIBUNAL HAD IN THE EARLIER ORDER HAD VIDE PARA 31-32 SPECIFICALLY DIRE CTED DIT(E) TO ENQUIRE INTO THE ACTIVITIES CARRIED OUT DURING THE FINANCIAL YEAR 20 03-04 BUT IT IS NOTICED FROM THE IMPUGNED ORDER THAT ONLY THE ACTIVITIES RELATING TO FINANCIAL YEAR 2000-01 HAVE BEEN RELIED UPON AND NO ADVERSE FINDING IS GIVEN FOR FIN ANCIAL YEAR 2003-04. LD. COUNSEL FOR ASSESSEE STATED THAT ASSESSEE-TRUST SUBMITS THA T DIT(EXEM.) HAS CANCELLED REGISTRATION IN THE IMPUGNED ORDER BY RELYING UPON THE ACTIVITIES OF FINANCIAL YEAR 2001-02 WAS CARRIED IN APPEAL TO TRIBUNAL AND VIDE ORDER DATED 04-09-2009 IN ITA NO.1860/AHD/2009 THE ORDER PASSED BY CIT(A) HAS BEEN CONFIRMED AND IT WAS HELD THAT DONATIONS WERE RECEIVED FROM THREE PARTIES AND WERE APPLIED FOR EARTHQUAKE RELIEF ACTIVITY. EVEN THE MISCELLANEOUS APPLICATION NO.414/AHD/2009 DATED 232-04- ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 4 2010 FILED BY REVENUE HAS BEEN REJECTED. LD. COUNSE L FOR ASSESSEE STATED THAT EVEN WHILE COMPLETING THE ASSESSMENT FOR ASSESSMENT YEAR 2004-05 DIT(EXEM.) HAS NOT FOUND ANY ACTIVITIES AS NON-GENUINE OR AGAINST THE OBJECTS OF THE TRUST. SINCE THERE IS NO ADVERSE FINDING GIVEN IN THIS ORDER BY HIM EXCEP T FOR ADDITION IN RESPECT OF EARTHQUAKE DONATIONS ON TECHNICAL GROUNDS WHICH HAS BEEN DELETED BY TRIBUNAL VIDE ITS ORDER DATED 30-07-2010 IN ITA NO.449/AHD/2008 AND IT IS NOW SETTLED LAW THAT THE POWERS OF CANCELLATION U/S.12AA(3) CONFINES TO ENQU IRING ABOUT THE ACTIVITIES OF THE TRUST AND ITS GENUINENESS BUT IT DOES NOT EMPOWER HIM TO LOOK INTO THE PROCEDURE OF EXAMINING THE INCOME AND SOURCE FROM WHERE RECEIPTS ARE DERIVED. LD. COUNSEL STATED THAT IN THE PRESENT CASE DIT(EXEM) HAS GONE INTO THE PROCEDURE OF SCRUTINY RELATING TO DONATIONS FROM THREE PARTIES AND ITS UT ILIZATION WHICH IS BEYOND THE SCOPE OF HIS POWERS AND ASSESSEE SUBMITS THAT THE ACTIVIT IES CARRIED OUT DURING THE FINANCIAL YEAR 2002-03 HAS BEEN CONSIDERED BY AO IN ACCORDANC E WITH THE OBJECTS OF THE TRUST AS IT WOULD BE EVIDENT FROM THE ASSESSMENT ORDER PA SSED U/S.143(3) DATED 24-03- 2006 WILL NOT BE APPRECIATED THAT THE IMPUGNED ORDE R HAS BEEN PASSED AT A LATER DATE BY DIT (EXEM) AND THE SUMMERY OF POSITION OF A SSESSMENT AND APPEALS ARE AS UNDER:- A.Y ASST. ORDER BY AO ITAT ORDER 2001-02 143(3) R.W.S. 254 DT.29.3.04 ITA NO.1860/A/09 DT.4-9- 09 2003-04 143(3) DT. 24.3.06 NIL 2004-05 143(3) DT.26-12-2006 ITA NO.449/A/08 DT.30.7.10 2005-06 NO ORDER U/S.143(3) NIL 5. ON THE OTHER HAND LD. SR-DR SHRI H.P.MEENA REL IED ON THE ORDER OF DIT (EXEM) AND STATED THAT THE DIT(EXEM) ON MERITS DECI DED THIS ISSUE THAT THE ASSESSEE-TRUST HAVING MISUSED ITS STATUS AS CHARITA BLE TRUST FOR DERIVING UNDUE BENEFIT TO ITS SISTER CONCERN AND FOR CLAIMING WRON G DEDUCTIONS ON BOGUS EARTHQUAKE RELIEF DONATIONS ADVANCES OF MONEY TO NON-CHARITAB LE ORGANIZATIONS AND IT IS ALSO ADMITTED BY ASSESSEE-TRUST THAT DURING APPELLATE PR OCEEDING BEFORE TRIBUNAL. HE STATED THAT THERE IS VIOLATION OF PROVISIONS OF SEC TION 11 OF THE ACT AND AT ANY STRETCH OF IMAGINATION THE TRUST ENJOYING REGISTRATION U/S .S12AA OF THE ACT CANNOT MISUSE ITS ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 5 STATUS FOR BENEFITS TO PERSONS CONNECTED WITH THE M ANAGING TRUSTEE AND SUCH VIOLATIONS HAVE TAKEN PLACE DURING THE YEAR END 31 ST MARCH 2001. HE FURTHER STATED THAT THIS IS ALSO CORROBORATED BY THE CROSS-EXAMINA TION OF THE TRUSTEE OF MDNT IN WHICH SHRI MAHESHS VERMA WAS ALSO THE TRUSTEE. AS R EGARDS THE DIRECTIONS OF THIS TRIBUNAL TO CONSIDER THE ACTIVITIES DURING THE YEAR ENDED 31 ST MAR.04 HE STATED THAT THE PROVISIONS OF SECTION 12(3) OF THE ACT HAVE BEE N INVOKED AND THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2004-05 ARE IN APPE AL BEFORE TRIBUNAL. IN ANY CASE THE ACTIVITIES DURING THE YEAR ENDED 31 ST MAR04 CANNOT ABSOLVE THE VIOLATIONS COMMITTED DURING THE YEAR ENDED 31STD MAR01 AND AS SESSEE COMMITTING MISMANAGEMENT MISAPPROPRIATION OF FUNDS AND ILLEGA LITY OF TRANSACTIONS CANNOT BE AT A PREMIUM TO ESCAPE WITHOUT ANY APPEAL AS OTHERWISE IT WOULD SEND A WRONG MESSAGE THAT THE TRUST REGISTERED FOR CARRYING OUT A CHARITABLE ACTIVITIES CAN DO ACTIVITIES/TRANSACTIONS WHICH ARE NOT SANCTIONED BY LAW. ACCORDINGLY HE STATED THAT IT IS FOR THE CONTROL OF ILLEGAL MISMANAGEMENT OF THE TRUST FUND AND ITS ACTIVITIES THAT SECTION 12AA(3) OF THE ACT HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT 2004 W.E.F 01-10-2004 AND THIS PROVISIONS CAN BE INVOKED WHEN THE AUTHORITY GRANTING REGISTRATION IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTIONS ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST OR INSTITUTIONS. HE STATED THAT IN THE PRESENT CASE MANIPULATION OF BANK ACCOUNT AND DIVERSION OF FUND FOR SISTER CONCERNS FOR A SUM OF RS.15 LAKH HA VE BEEN CLEARLY ESTABLISHED AND TAKEN NOTE OF EVEN BY THE TRIBUNAL AS EXTRACTED IN THEIR ORDER. HE ARGUED THAT THE REGISTRATION ONCE GRANTED RUNS PERPETUALLY UNLESS W ITHDRAWN AND THE DIT(EXEM) WITHDREW THE REGISTRATION W.E.F 31-3-2004 AS PER LE GAL POSITION OBTAINED ON THAT DATE. BY VIRTUE OF SECTION 12AA(3) OF THE ACT AN ORDER PA SSED ON OR AFTER 01-10-2004 CAN HAVE EFFECT OF WITHDRAWING OF REGISTRATION FROM THE YEAR IN WHICH THE ACTIVITIES OF THE TRUST ENJOYING THE REGISTRATION GRANTED EARLIER WER E FOUND TO BE NOT GENUINE OR NOT IN ACCORDANCE WITH THE OBJECT OF THE TRUST. HE STATED THAT THE ASSESSEE-TRUST MANIPULATED ITS BOOKS AND THAT OF THE SISTER CONCER NS TO CAMOU9FLAGE TRANSACTIONS TO THE TUNE OF RS.15 LAKH OBTAINED ILLEGALLY BENEFITS QUITE UNBECOMING OF A CHARITABLE ORGANIZATION. ACCORDINGLY HE STATED THAT THE TRUST SHALL LOSE THE BENEFIT OF REGISTRATION U/S.12AA OF THE ACT W.E.F. 01-04-2000 THE FINANCIAL YEAR IN WHICH SUCH ILLEGALITIES WERE COMMITTED. ACCORDINGLY THE MEANI NG OF SECTION 12AA(3) OF THE ACT THE TRUST IS NOT ENTITLED TO ENJOY THE BENEFIT OF R EGISTRATION U/S.12AA OF THE ACT W.E.F. 01-04-2000 AND HENCE THE REGISTRATION GRANTED TO TH E TRUST U/S.12AA OF THE ACT ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 6 EARLIER WAS RIGHTLY WITHDRAWN W.E.F. 01-04-2000 I.E . ASSESSMENT YEAR 2001-02. HE STATED THAT THE REGISTRATION U/S.12AA IS NOT GRANTE D YEAR-WISE AND HENCE ONCE WITHDRAWN W.E.F. 01-04-200 THE ACTIVITIES DURING T HE YEAR ENDED 31-03-2004 CANNOT ALTER THE STATUS OF THE TRUST. ACCORDINGLY THE SR. DR SUPPORTED THE ORDER OF DIT(E) CANCELING REGISTRATION. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO EMULATED TH E LEGAL POSITION. NOW THE QUESTION ARISES WHETHER THE PROVISION OF U/S.12AA O F THE ACT AS AMENDED BY FINANCE ACT 2010 W.E.F. 01-06-2010 IS PROSPECTIVE OR RETRO SPECTIVE. FOR THIS WE HAVE NOW TO GO THROUGH THE RELEVANT PROVISION AS INTRODUCED BY THE FINANCE ACT 2010. IT IS SEEN THAT BY AMENDMENT OF SECTION 12AA OF THE ACT IN SUB-SECTION (3) AFTER THE WORD BRACKETS AND FIGURE SUB-SECTION (1) THE WORDS F IGURES LETTER AND BRACKETS OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2)ACT 1996 (33 OF 199 6)] SHALL BE INSERTED WITH EFFECT FROM THE 1 ST DAY OF JUNE 2010. THE NOTE ON CLAUSES OF FINANCE BILL 2010 HAS CLARIFIED THAT CLAUSE (7) OF THE BILL AMENDED SECTI ON 12AA OF THE ACT W.E.F. 01-06- 2010 AND RELEVANT NOTE ON CLAUSES AS REPORTED IN (2 010) 321 ITR 83 (ST.) WHICH READS AS UNDER:- THIS AMENDMENT WILL TAKE EFFECT RETROSPECTIVELY FR OM 1 ST APRIL 2010. CLAUSE 7 OF THE BILL SEEKS TO AMEND SECTION 12AA OF THE INCOME-TAX ACT RELATING TO PROCEDURE FOR REGISTRATION OF A TRUSTS OR INSTITUTION. UNDER THE EXISTING PROVISION CONTAINED IN SUB-SECTION (3) OF THE AFORESAID SECTION IF THE ACTIVITIES OF THE TRUST OR INSTITUTION REFERRED TO IN SUB-SECTION (1) WHICH HAS BEEN GRANTED REGISTRATION UNDER SUB-SECTION (1) ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION THE COMMISSIONER SHALL AFTER GIVING A REASONABLE OPPOR TUNITY OF BEING HEARD TO THE SAID TRUST OR INSTITUTION PASS AN ORDER IN WRI TING CANCELING THE REGISTRATION GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1). IT IS PROPOSED TO AMEND THE SAID SUB-SECTION (3) SO AS TO ALSO PROVIDE FOR CANCELLAT ION OF REGISTRATION WHERE ANY TRUST OR INSTITUTION HAS OBTAINED REGISTRATION AT A NY TIME UNDER SECTION 12A BEFORE ITS AMENDMENT. THIS AMENDMENT WILL TAKE EFFECT FROM 1 ST JUNE 2010 ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 7 THE RELEVANT AMENDMENT IS FURTHER EXPLAINED BY MEMO RANDUM EXPLANATION THE PROVISION IN FINANCE BILL 2010 AND CLAUSE (7) HAS BEEN EXPLAINED AND AS REPORTED IN (2010) 321 ITR 116 (ST.) WHICH READS AS UNDER:- CANCELLATION OF REGISTRATION OBTAINED UNDER SECTION 12A SECTION 12AA PROVIDES THE PROCEDURE RELATING TO REG ISTRATION OF A TRUST OR IN INSTITUTION ENGAGED IN CHARITABLE ACTIVITIES. SECTI ON 12AA(3) CURRENTLY PROVIDES THAT IF THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE FOUND TO BE NON-GENUINE OR ITS ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS F OR WHICH SUCH TRUST OR INSTITUTION WAS ESTABLISHED THE REGISTRATION GRANT ED UNDER SECTION 12AA CAN BE CANCELLED BY THE COMMISSIONER AFTER PROVIDING TH E TRUST OR INSTITUTION AN OPPORTUNITY OF BEING HEARD. THE POWER OF CANCELLATION OF REGISTRATION IS INHERE NT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWEVER JUDICI AL RULINGS IN SOME CASES HAVE HELD THAT THE COMMISSIONER DOES NOT HAVE THE POWER TO CANCEL THE REGISTRATION WHICH WAS OBTAINED EARLIER BY ANY TRUST OR INSTITUT ION UNDER PROVISIONS OF SECTION 12A AS IT IS NOT SPECIFICALLY MENTIONED IN SECTION 2AA. IT IS THEREFORE PROPOSED TO AMEND SECTION 12AA SO AS TO PROVIDE THAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAI NED UNDER SECTION 12A AS IT STOOD BEFORE AMENDMENT BY THE FINANCE (NO.2) ACT 1996. THIS AMENDMENT IS PROPOSED TO TAKE EFFECT FROM 1 ST JUNE 2010. 7. WE FIND THAT HONBLE ALLAHABAD HIGH COURT HAS IN TERPRETED THE SECTION 12AA(3) OF THE ACT IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELOPMENT (SUPRA) AS AMENDED BY FINANCE (NO.2) ACT 2004 W.E.F 01-04- 2004 AS PROSPECTIVE AND NOT RETROSPECTIVE OR CLARIFICATORY. THE HONBLE ALLAHAB AD HIGH COURT HELD AS UNDER:- REGARDING CANCELLATION OF REGISTRATION WHICH WAS G RANTED ON APRIL 1 1999 UNDER SECTION 12A OF THE ACT IT IS TRUE THAT THERE WAS NO EXPRESS PROVISION IN SECTION 1`2A OF THE ACT FOR CANCELLATION OF THE REG ISTRATION. THE APPLICABILITY OF SECTION 21 OF THE GENERAL CLAUSES ACT 1897 WAS DI SCUSSED BY THE UTTARANCHNL HIGH COURT IN THE CASE OF WELHAM BOYS SCHOOL SOCIETY [2006] 285 ITR 74 (UTTARCHAL) WHERE IT WAS OBSERVED THAT ANY ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 12A IS A Q UASI-JUDICIAL ORDER WHICH DOES NOT FALL IN THE CATEGORY OF ORDERS MENTIONED IN SECTION 21 OF THE GENERAL CLAUSES ACT 1897 BY RELYING THE RATIO LAI D DOWN IN THE CASE OF GHAURUL HASAN V. STATE OF RAJASTHAN 107. THE HIGH COURT OBSERVED THAT BY VIRTUE OF SECTION 21 OF THE GENERAL CLAUSES ACT TH E COMMISSIONER OF INCOME- TAX HAD NO POWER TO RESCIND THE ORDER PASSED EARLIE R BY THE COMMISSIONER GRANTING REGISTRATION TO THE PETITIONERS SOCIETY. IT MAY BE MENTIONED THAT SECTION 12AA(3) WAS INCORPORATED WITH EFFECT FROM O CTOBER 1 2004 TO EMPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION GRANTED TO A TRUST OR ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 8 INSTITUTION. THE SAME IS NOT APPLICABLE RETROSPECTI VELY AND IN THE ASSESSEES CASE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. THE OBJECT OF THIS PROVISION IS NOT CLARIFICATORY OR EXPLANATORY SO P RIOR TO THAT DATE THE AUTHORITIES GRANTING REGISTRATION HAD NO INHERENT P OWER TO WITHDRAW OR REVOKE THE REGISTRATION ALREADY GRANTED. THE ORDER CANCELI NG THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION UNDER SECTION 12AA OF THE ACT BEING A QUASI-JUDICIAL ORDER DOES NOT FALL WITHIN THE CATEGORY OF ORDERS M ENTIONED UNDER SECTION 21 OF THE GENERAL CLAUSES ACT 1897 WHICH PROVIDES THAT THE POWER CONFERRED ON A AUTHORITY EMPOWERS TO ISSUE ORDERS INCLUDING THE PO WER TO RESCIND SUCH ORDERS AND THE COMMISSIONER WOULD NOT HAVE POWER TO RESCIN D THE ORDER PASSED BY THE COMMISSIONER EARLIER GRANTING THE REGISTRATION TO A TRUST OR INSTITUTION. EVEN ASSUMING THE COMMISSIONER HAS POWER TO RESCIND THE ORDER OF REGISTRATION ON THE GROUND THAT THE REGISTRATION HAD BEEN OBTAINED BY PRACTICING FRAUD OR FORGERY THERE WAS NOTHING IN THE SHOW-CAUSE NOTICE OR IN THE IMPUGNED ORDER MARCH 9 2004 ALLEGING THAT THE PETITIONER HAD OBT AINED THE REGISTRATION BY PRACTICING FRAUD OR FORGERY. IN THE LIGHT OF THE ABOVE-DISCUSSION AND BY CONSIDE RING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE WE HOLD THAT THE ORD ER DATED MARCH 9 2004 PASSED BY THE COMMISSIONER OF INCOME-TAX (ANNEXURE NO.1`5 TO THE WRIT PETITION) AS PER THE THEN LAW IS WITHOUT POWER AND JURISDICTION AND THEREFORE IT IS LIABLE TO BE SET QUASHED. ACCORDINGLY THE IMPUGNED ORDER DATED MARCH 9 2004 PASSED BY OPPOSITE PARTY NO.2 WITHDRAWING/RESCINDING THE ORDER GRANTIN G REGISTRATION ON APRIL 1 1999 TO THE PETITIONERS SOCIETY UNDER SECTION 1 2A OF THE ACT IS QUASHED. CONSEQUENTLY THE REGISTRATION GRANTED TO THE PETIT IONERS SOCIETY ON APRIL 1 1999 STANDS RESTORED FOR THE ASSESSMENT YEARS UNDE R CONSIDERATION. 8. WE ACCORDINGLY FIND THAT VIDE SECTION 12AA(1)(B )(II) THE DIT(E) CAN REFUSE THE REGISTRATION APPLICATION UNDER S. 12A; BUT VIDE S. 12AA(3) HE IS GIVEN POWERS TO DEAL WITH A REGISTRATION GRANTED WITHIN THIS VERY S ECTION 12(1)(B)(I). SO THE SAID POWER OF REFUSAL OF REGISTRATION UNDER S. 12AA(1)(B)(II) IS RESTRICTED TO THE APPLICATION MOVED UNDER S/.12A SEEKING THE GRANT OF REGISTRATION. THE NECESSITY OF THE SAID INTRODUCTION WAS THAT AS PER THE ALREADY EXISTED S. 12A THERE WA S NO SPECIFIC PROVISION FOR THE REFUSAL OF A REGISTRATION. ON ACCOUNT OF THIS REASO N THERE WAS A DOUBT IN THE PAST AND LITIGATION HAD ALSO CROPPED UP THAT IN THE ABSENCE OF ANY SPECIFIC POWER NOT BEING PROVIDED IN THE SAID S. 12A WHETHER A REGISTRATION ONCE GRANTED COULD EVER BE REVOKED BY DIT(E) OR NOT. IT IS NOW STREAM-LINED TH AT AN APPLICATION FOR SEEKING REGISTRATION IS TO BE MOVED AS PRESCRIBED IN S. 12A AND THEREAFTER THE PROCEDURE OF REGISTRATION IS TO BE FOLLOWED AS RECOMMENDED IN S. 12AA.DUIE TO THIS ENACTMENT AT PRESENT NO AMBIGUITY EXISTS THAT IF A REGISTRATION GRANTED THE SAME CAN BE CANCELLED ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 9 AS WELL IF NECESSITATED. THUS THE SCOPE OF BOTH THE S12AA(1) AND 12AA(3) ARE WIDE ENOUGH TO COVER ALL THOSE REGISTRATION SO FAR BEEN GRANTED EITHER UNDER S. 12A OR UNDER S. 12AA(1)(B) BY THIS VERY SECTION. WE FURTHE R NOTED THAT THE PROVISION FOR REFUSAL OF REGISTRATION OF APPLICATION UNDER S. 12A WAS ALREADY INEXISTENCE VIDE S 12AA(1)(B)(II) THEN STILL THERE WAS LAWFUL REQUIREM ENT TO AGAIN MENTION THE SAME IN THE SAME STATUTE BY INTRODUCING THE AFORE-QUOTED O R HAS OBTAINED REGISTRATION AT ANY TIME UNDER S. 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT 1996 (33 OF 1996). NOW THE ANOMALY IS THAT WHETHER FOR THE PURPOSE OF REFUSAL OF A REGISTRATION GRANTED BY S. 12A IS IT TO BE DEALT WI TH IN TWO SUB-SECTIONS I.E. S.12AA(1)(B)(II) AND 12AA(3) OF THE ACT OR NOT? BEC AUSE OF THIS VARIANCE THE ASSESSEE HAS CHALLENGED THE REFUSAL OF A REGISTRATI ON GRANTED UNDER S. 12A CAN NOW BE CANCELLED ONLY BY THE LATEST AMENDMENT IN S.12AA (3) THAT TOO W.E.F. 1 ST JUNE 2010. SINCE THE DIT(E) HAS PASSED THE ORDER PRIOR T O THE AMENDMENT THE SAME IS VOID AB INITIO CLAIMED BY ASSESSEE. THE ADMITTED FA CTUAL POSITION IS THAT THE IMPUGNED ORDER WAS PASSED ON 16 TH NOV. 2009 WHEN NO SUCH SPECIFIC JURISDICTION WAS GRANTED TO DIT(E) AND THE POWERS OF CANCELLATI ON OF REGISTRATION HAD COME INTO EFFECT FROM 1ST JUNE 2010 ONLY. BENEFIT OF THIS AM BIGUITY OR BECAUSE OF AN ABNORMAL SITUATION THE ADVANTAGE SHOULD GO IN FAVOUR OF THE TAXPAYER. THE LAW IS NOW CLEAR FROM 1ST JUNE 2010 THAT A REGISTRATION GRANTED UN DER S. 12A CAN BE CANCELLED BY INVOKING. 12AA(3). THE LAW IS ALSO CLEAR THAT A REG ISTRATION GRANTED UNDER S. 12AA(1)(B) CAN ALSO BE REVOKED BY INVOKING THIS VER Y SECTION I.E. S 12AA(3)OF THE ACT. ACCORDINGLY AS PER OUR INTERPRETATION THE ORI GINAL S. 12A HAD NEITHER PROVIDED A SPECIFIC CLAUSE PRESCRIBING REFUSAL OR REGISTRATION . NOW BY PRESCRIBING BOTH IN 12AA IT HAS THE SUBSTANTIVE EFFECT OVER THE RIGHTS OF A TAX PAYER. SUCH AN INTRODUCTION CANNOT BE TERMED MERELY A PROCEDURAL INTRODUCTION IN THE S TATUTE BUT THIS INTRODUCTION HAS SUBSTANTIALLY MADE AN IMPACT ON THE SIZEABLE RIGHTS OF A TRUST OR INSTITUTION. EVEN OTHERWISE IF IT IS TO BE TERMED AS PROCEDURAL AMEN DMENT THEN ALSO A PROCEDURAL AMENDMENT CANNOT BE HELD AS RETROSPECTIVE IN NATURE SO AS TO BE EFFECTIVE FROM AN EARLIER DATE. THE INSERTION OF THE NEW CLAUSE W.E.F . 21ST JUNE 2010 SHOULD NOT BE APPLICABLE RETROSPECTIVELY AND ITS OPERATION HAS TO BE EFFECTIVE FROM THE DATE IT WAS INTRODUCED AND ONWARDS. IT IS AN UNDISPUTED FACT TH AT AN ORDER UNDER S. 12A WAS PASSED BY A CIT AND THAT ORDER WAS UNDER CONSIDERAT ION BEFORE THE DIT(E). NOW THE QUESTION IS THAT WHETHER AN OFFICER HAS POWER TO RE VIEW HIS ORDER UNLESS AND UNTIL IT IS SPECIFICALLY PROVIDED IN THE STATUTE ON ACCOUNT OF PARTICULAR DATE. IT IS A WELL SETTLED ITA NO.3339/AHD/2009 K.VERMA CHARITABLE TRUST V. DIT(E) ABD PAGE 10 LAW THAT THE POWER TO REVIEW IS NOT AN INHERENT POW ER OF JUDICIAL OR QUASI JUDICIAL OFFICER UNLESS SPECIFICALLY CONFERRED ON H IM BY T HE STATUTE IF MUST BE DELEGATED BY LAW EITHER SPECIFICALLY OR BY NECESSARY IMPLICATION . IN THE ABSENCE OF SUCH AN AUTHORITY THE ACTION OF THE DIT(E) PRIOR TO THE DAT E OF INSERTION OF THE SAID CLAUSE CAN BE SAID TO BE BEYOND JURISDICTION. HENCE WE QUASH THE ORDER OF DIT(E) DATED 16-11- 2009 CANCELING REGISTRATION GRANTED U/S 12A OF THE ACT . 9. AS WE HAVE HELD THAT THE DIT(E) HAS NO POWER UND ER THE STATUTE TO CANCEL REGISTRATION GRANTED U/S.12A OF THE ACT AS ON THAT DATE WE NEED NOT GO INTO THE MERITS OF THE CASE AND THE ISSUE RAISED ON MERITS H AS BECOME INFRUCTUOUS. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D/ ORDER PRONOUNCED ON THIS DAY OF 10 TH DEC 2010 SD/- SD/- ( G.D.AGARWAL ) ( MAHAVIR SINGH ) (VICE PRESIDENT) (JUDICIAL MEMBER) AHMEDABAD DATED : 10/12/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE DIT(EXEMPTION) AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD