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2018 (2) TMI 756 - HC - Income TaxPower of CIT to cancel registration u/s 12A - registration order cancelled with retrospective effect - scope of amendment to section 12A - Commissioner concluded that the activity conducted by the assessee was clearly in the nature of trade and business - according to the Tribunal, the Commissioner could not have cancelled such registration w.e.f. A.Y. 2009-10 as that would refer to a date prior to the date when the power to cancel the registration (granted under Section 12-A(1) of the Act) was first conferred on the Commissioner. Held that:- In the instant case, undisputedly the registration had been granted much prior to the introduction of the first proviso to Section 2(15) of the Act. Therefore, on the date of grant of registration to the assessee, it was fully eligible for the registration. The registration thus granted did not suffer from any inherent or fundamental defect. Then, the assessee continued to avail the benefit of the registration for all the assessment years subsequent to the grant of its registration. Such a registration order cannot be allowed to be cancelled with retrospective effect so as to affect past transactions that too in absence of any express legislative intent and without any adverse inference being first drawn against the assessee, in terms of Section 13(8) of the Act, during the relevant assessment year. In absence of any legislative intent expressed to suggest that the legislature had empowered the Commissioner to cancel the assessee's registration under Section 12-A of the Act with retrospective effect, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. Cancellation of the assessee's registration under Section 12-A of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the Commissioner in this case. Thus, question no. 1 is answered in the negative that is in favour of the assessee and against the revenue. Validity of notice issued - jurisdictional error - Held that:- The cancellation of registration would not be automatic or natural or the only consequence of the receipts (arising from an activity specified in the first proviso to Section 2(15) of the Act), exceeding ₹ 10,00,000/- in any previous year. In case of the assessee before us to whom registration under Section 12A of the Act had been granted before incorporation of the provisos to Section 2(15) of the Act, in the event of its receipts from activities specified in the first proviso to Section 2(15) of the Act exceeding ₹ 10,00,000/- in a subsequent year, cancellation of the registration under Section 12-A of the Act would not be the natural or the only consequence of such an event, if established. We answer the question no.2 in favour of the revenue and against the assessee. According to us the cancellation notice having been issued on 06.03.2012, it did not suffer from any jurisdictional error. On that date the Commissioner had vested (in him) the power to cancel a registration granted to the assessee under Section 12A of the Act (on 24.09.2003). Therefore, merely because the Commissioner had wrongly given effect to such cancellation w.e.f. A.Y. 2009-10, it did not vitiate the entire order. Since the Tribunal has not recorded any finding either on the merits of the contention raised by the assessee, that it was pursuing a charitable purpose and as to the date from which the registration could have been cancelled in pursuance of the notice dated 06.03.2012, we consider it necessary to remit the matter to the Tribunal to decide this issue afresh in accordance with law.
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