9911796707
TMI Blog2005 (11) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ecretary. 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. 2.3 Income-tax authorities seem to have carri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished 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 thereof clearly indicates that prior to the above amendm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission 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 (21) Harlal v. Lala Prasad AIR 1931 Nagpur 138 (22) R. Kapilanath v. Krishna AIR 2003 SC 565 (23) Munnalal Lachhiram v. Manakchand AIR 1950 Madhya Bharat 119 (24) Madhya Pradesh State Road Transport Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 object of the society is not to make profit. In the instant case, as noted at length by the Commissioner in the impugned order, several instances have come to light in the course of search indicating the following- (a) There was diversion of the committee's funds for noncharitable objects; (b) The trustees have used the trust funds for the personal benefits of the trustees; (c) Several payments were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Shri B.S. Rao, President of the appellant-society recorded on 19-11-2002. Those statements of Smt. B. Jhansi Laxmi Bai and Shri B.S. Rao amply testified the wilful, continuous and conspicuous gross violation of the provisions of section 13 of the Income-tax Act, by blatantly misusing the fund of the trust for personal benefits of the trustees and their near and dear. While even a single instance of misutilization of the trust fund would be sufficient to deny the benefit provided under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004] 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 Swamy v. Valluru Basavaiah 2004 (5) ALD 807 (LB) AP, copy of which is also filed before us. 6. Further, both the parties before us, to strengthen their stand respectively for and against, have also referred to the following provisions of law, including under different enactments, which are detailed below- Provision of law Marginal Note Section 2(7A) of the Income-tax Act Definitions - 'Assessing Officer' Section 12AA of the Income-tax Act Procedure for registration Section 12AA(3) w.e.f. 1-10-2004 Inserted by Finance (No.2) Act, 2004 for cancelling registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 High Court, the case was posted for hearing immediately on 13-4-2005, in spite of finalization of cause list and framing of constitution of that week already. On that date, peculiarly at the request of the assessee's counsel, filing his vakalat on that date, the case was adjourned to 20-4-2005, which was not objected to by the Revenue, to be heard as the first case of that date, as announced in the open court itself, which has been duly noted by the learned counsel for the assessee and for the Revenue as well. On 20-42005 the Department strangely requested this time for adjournment on the ground that the Senior Standing Counsel would app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hyderabad. 1. Copy to the assessee. *Wrongly mentioned in the letter as 21-4-2005 **Wrongly mentioned in the letter as 25th April Thus, the learned counsel for the assessee submitted that his case before the Hon'ble High Court posted for that day would come up on 25-4-2005. Ultimately, both the parties agreed to argue the matter on 26-4-2005, to which date the case finally got adjourned, the Tribunal making it again clear that no more adjournment would be granted in the matter in view of the Hon'ble High Court's directions. On 26-4-2005, the matter was heard up to some length and was adjourned to 3-5-2005, under the circumstances following- "For continuance of this case, AR prayed not to have this week and desired to have in next week. Standing Counsel expressed his busyness in the HC on the eve of summer vacation and in spite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant'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 working days before summer vacation, but this Hon'ble Tribunal posted the matter to 21-4-2005 and later to 26-4-2005. On 26-4-2005, the matter was heard in part and the Hon'ble Tribunal adjourned the matter to 3-5-2005 on the request made by the respondent's counsel. On 3-5-2005, the respondent filed a memo seeking adjournment to 4-5-2005 and this Hon'ble Tribunal after hearing the arguments of the appellant's counsel, adjourned the matter to 4-5-2005, for which the appellant counsel represented that he has no objection to adjourn the matter 4-5-2005. The delay is due to the requests made by the counsels of the parties and not this Hon'ble Tribunal. The Hon'ble Tribunal advised the counsel of the appellant to file an application before the Hon'ble High Court for enhancement of the time fixed by the Hon'ble High Court but the appellant could not file the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral of Income-tax (Inv.), Hyderabad for kind information. Copy submitted to the Commissioner of Income-tax (Central), Hyderabad, for kind information. Copy to the Departmental Representative, ITAT, Hyderabad, for information. We deprecate the abovesaid letter, for its tone and tenor by observing that Shri K. Hariprasada Rao has no locus standi to intervene, as he is neither a party to this proceedings nor a Departmental Representative who appeared, assisted or/and presented this case before this Tribunal. Neither could the said Addl. CIT or any body interfere as this, when the case is subjudice, nor is the Tribunal subordinate to him or the Department which is only a litigant as one of the parties before this Tribunal. Such letter and endorsement of its copies to various authorities high sounding to him mentioned above therein, gives impression to us that an attempt is made either to threaten this Tribunal treating it like an assessee before the Department, or be little the image of the Tribunal in the minds of those authorities. That apart, neither any stay has been granted by this Tribunal, much less any Stay Petition has been filed before this Tribunal, nor any stay could a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes 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. 10,00,000 and above. From the pleadings of the parties from the stage of institution of this appeal to its conclusion in different stages not only before the Tribunal but also even before the Hon'ble High Court, it is clear that the parties have been in the guise of such so-called high stakes and coercive steps, indulging in acts of misleading not only each other by alleged coercive steps of the Department and consequent directions against the Department (appearing to have been) erroneously obtained by the assessee from the Hon'ble High Court, but also the Hon'ble High Court and this Tribunal, pressing for urgent disposal of appeal, against the order of the CIT that has not given rise to any demand of even a single paise (!), filed barely an year back, while many appeals filed years back are awaiting their turn even to be posted for hearing. 7.1.H Weare prompted to dwell at this length and make the above observations in this order on a 'no issue' on account of pressure sought to be brought upon us, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the first issue, with regard to the legality and validity of the order dated 26-7-2004, the contentions of the Revenue with reference to the legal objections of the assessee on the competence of the Commissioner to cancel the registration by the impugned order, are two pronged i.e. (a) The provisions of sub-section (3) of section 12AA inserted by the Finance Act, 2004 with effect from 1-10-2004 are merely procedural and come to the rescue of the Department in validating the impugned order dated 26-7-2004 by retrospective operation of the amendment; and (b) Secondly, even prior to insertion of sub-section (3) of section 12AA, whether the power to cancel the registration always existed, though it was specifically so provided by amendment with effect from 1-10-2004 only. 7.3.A Interpretation of statutes postulates the search for the true meaning of words used in the statute. If the language in the statute is plain, obvious meaning is to be applied. Rules of interpretation are applied only to resolve ambiguities. When two interpretations are possible, the interpretation which favours the aggrieved should be preferred. The approach and purpose of interpretation is to ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emper and time. When the language employed by the enactment is clear, there is no question of interpreting the provisions in any manner, except by giving them their plain and obvious meaning. Nebulous concept of the legislative intent cannot be used to curtail the explicit provisions in a statute. When the meaning of the word is plain, it is not the duty of the Court to busy itself with supposed intention. There is no scope for importing into the statute the words which are not there. Casus Omissus cannot be supplied by the court except in the case of absolute necessity and when reason for it, is found in the four corners of the statute itself, since the function of the court is only to expound and not to expand i.e. legislate. On the other hand, it is the duty of the court to construe a provision of law in such a way as to carry out and effectuate to the fullest extent, the intention of law (sentetia Legis) legislated by Parliament or Legislature irrespective of consequences. The language of a statute must be understood in the sense it was understood when it was enacted, and that is what we are following and doing in the instant case in the succeeding paragraphs, so as to maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court held, as per relevant portion of the head note as under- "Normally, a change in the law of procedure operates retrospectively. In the case of Chapter XIV-B, there was no change of procedure, but a special procedure was provided. Section 158BA would not apply in a case where a search was initiated under section 132 before 30-6-1995. In that view, it cannot be said that Chapter XIV -B has retrospective operation." 7.3.D Similarly, in the case of Jayalakshmi Leasing Co. In re [1997] 228 ITR 1 (AT) the Special Bench of the IT Settlement Commission, examining the jurisdiction to admit and deal with applications in respect of cases of block periods arising under Chapter XIV-B of the Income-tax Act, on the interpretation of statutory provisions observed, vide relevant portion of the head note on pages 2 and 3, as follows- "... The failure to specifically bar the application of Chapter XIX-A to proceedings under Chapter XIV-B could be taken to indicate a legislative intent not to exclude the provisions of Chapter XIX-A to block assessment proceedings. Section 158BH would also support this view. The conclusion that a later enactment repeals an earlier enactment is to be resort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of clear contrary intendment expressed therein be given greater retrospectivity than is expressly mentioned so as to enable the authorities to affect finality of tax assessments or to reopen liabilities which have become barred by lapse of time." In the light of the observations of the Apex Court italicized above, the law that applies to the impugned proceedings taken up by the Commissioner for withdrawing the registration benefit to the assessee, is the one in force at the relevant point of time, i.e. from the period immediately prior to initiation of those proceedings to the date of passing of the impugned order, i.e. 26-7 -2004, and not the amended provisions of section 12AA which came into effect only from 1-10-2004 in the absence of any express or implied indication in the amended provisions imputing retrospective operation to the same. 7.3.F We may also refer to the decision of Apex Court in CIT v. Dhadi Sahu [1993] 199 ITR 610, wherein considering the effect of amendment to the provisions of section 274(2) by the Taxation Laws (Amendment) Act, 1970 with effect from 1-4-1971, the Apex Court vide relevant portion of the head-note on pages 611-612 of the Report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the "produce belonging to" a member-society. Immediately thereafter, in 1999 the provisions of section 80P(2)(a)(iii) were amended by the Income-tax (Second Amendment) Act, 1998 (No. 11 of 1999) with retrospective effect from 1-4-1968, by substituting sub-clause (iii) to read "the marketing of agricultural produce grown by its members". When the validity of the retrospective amendment to section 80P(2)(a)(iii) is challenged, the Apex Court affirming the view taken by the High Court upholding the validity, held, vide relevant portion of head-note on page 550 of the Reports (260 ITR), as follows- "The legislative power either to introduce enactments having retrospective effect for the first time or to amend an enacted law with retrospective effect is not only subject to the question of competence but is also subject to several judicially recognized limitations. The first is the requirement that the words used must expressly provide for or clearly imply retrospective operation. The second is that the retrospectivity must be reasonable and not excessive or harsh, otherwise it runs the risk of being struck down as unconstitutional. The third is where the legislation is introduced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retrospective, it should be specifically so provided. In order to hold the provision to be having retrospective operation, it would have to be shown that it is of a procedural nature." On the procedural or substantive nature of the provision under consideration in that case, the High Court held as per relevant portion of head note as follows- "Held: (ii) That it was clear from the language of section 40A(3) that the language did not in any manner suggest retrospectivity. Considering the tense used in the section, the amendment was prospective. The amendment limiting the discretion of the assessing authorities and creating a right on the assessee to plead for the remaining eighty per cent, expenditure as allowable expenditure could not be viewed as a mere procedural provision. It would have to be held as a provision dealing with substantive right of the assessee. Thus, the amended provision was not of retrospective nature. The Tribunal was right in holding that the amended provision was only prospective." In the instant case, the provisions of section 12AA conferring the Commissioner with the power to withdraw the registration granted earlier, and laying down a specific proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that: "The proviso inserted by the Finance (No.2) Act, 1991 with effect from 1-10-1991, to section 272A(2) of the Income-tax Act, 1961, has not been given retrospective effect. In the absence of any retrospective effect to such provisions, this proviso cannot have any impact with regard to any default relating to the assessment year 1989-90 requiring the assessee to file the return on or before 30-4-1989, for the period ending on 31-3-1989. No law can have retrospective effect unless it is so provided specifically by the law itself." (Emphasis supplied) 7.3.M In CWT v. B.R. Theatres & Industrial Concerns (P.) Ltd. [2005] 272 ITR 177 Mad. examining the retrospective or otherwise nature of amendment of section 40 of Finance Act, 1983 by Finance Act, 1988, for purposes of Wealth-tax Act, the Hon'ble Madras High Court held- "The test to be applied for deciding as to whether a later amendment should be given retrospective effect, despite a legislative declaration specifying a prospective date as the date from which the amendment is to come into force, is as to whether without the aid of the subsequent amendment, the unamended provision is capable of being so construe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, in the case of Uppala Peda Venkataramanaiah relied upon by the assessee, examining the retrospective or otherwise nature of the provisions of section 155 of the Income-tax Act, 1961, Hon'ble Andhra Pradesh High Court held as follows- "(ii) that in the absence of express words or necessary implication to the contrary a statute which was not purely procedural had only prospective and not retrospective operation; section 155 of the Income-tax Act, 1961 had on ly prospective operation. (iii) that as the appellate orders were passed before the coming into force of the Income-tax Act, 1961, the statutory provisions which were in force at the time when the appellate orders were passed governed those rectification proceedings and the Act of 1961 did not in any manner destroy the rights and privileges acquired under these statutory provisions or the liabilities incurred thereunder." 7.3.Q Similarly, in the case of Harlal relied upon by the assessee, the then Hon'ble Nagpur High Court examining the retrospective or otherwise nature of the amendment made to the Transfer of Property Act, observed as under- "Unless an intention to the contrary is clear, an Act is to be const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts and obligations of parties should be decided only according to the law, which existed when the action was begun, unless a clear contrary intention is evident in the Amending Act. There could not be imputation of retrospective operation to an Amending Act and that could be done only by the Amending Act either expressly or by necessary implication. In the instant case the Amending Act has indicated that the amendments introduced shall have only prospective operation and pending proceedings should continue as if the Amending Act had not been passed" 7.3.U Similarly in the case of Maharaja Chintamani Saran Nath Sahdeo, relied upon by the assessee, considering retrospective or otherwise nature of amendment made to Bihar Land Reforms Act, Hon'ble Apex Court held that the amending provision restricting compensation to three times of net income has no retrospective application, as amendment affects substantive right. It was also held that substituted legislation cannot be said to have retrospective operation as Golden Rule of construction applies even to a substituted legislation and a substituted legislation cannot be held to be retrospective in the absence of any thing in the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was claimed only for the period 1965 to 1976. The said order could not be given retrospective effect." 7.3.Y This Hyderabad Bench of the Tribunal in the case of A.P. State Civil Supplies Corpn. Ltd. had occasion to consider the applicability of the amended provisions of section 254(2A) inserted by the Finance Act, 2001 with effect from 1-6-2001, to the matters where stay had already been granted prior to that date. After discussing at length the case-law on the point in the light of K.J. Aiyer's Judicial Dictionary; commentaries by Sampath Iyengar on Law of Income-tax, Eighth Edition (revised by Hon'ble Supreme Court Justice Mr. S. Ranganathan) Vol. 1 at page 57 under Sl.38 with the head note 'Retroactive Legislation' and Chaturvedi & Pithisaria's 'Incometax Law Fourth Edition, 1990 Vol. 1 at page 239, the Tribunal concluded that no retrospectivity could be read into those amended provisions. Relevant portion of the head-note of the said decision reads as under- "Sub-sections (2A) and (2B) have been inserted by the Finance Act, 1999 with effect from 1-6-1999 and the provisos to the aforesaid section were inserted by the Finance Act, 2001 with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.Z In view of the foregoing discussion and considering the ratio decidendi laid down in the case-laws not only cited before us, but also others being fortifying our view taken in the light of the judicial precedents cited before us, the first contention of the Revenue based on the retrospective nature of the amendment to the provisions of section 12AA, though came into statute book with effect from 1-10-2004, is liable to be rejected. 7.4.A As for the existence of power in the Commissioner to cancel the registration once granted, even prior to amendment of the provisions of section 12AA with effect from 1-10-2004, the contentions in brief are that the grant of registration is subject to fulfilment of specific conditions year after year, whenever there is breach in the fulfilment of those conditions, the registration so granted can always be withdrawn/cancelled; the power to grant conferred by the statute also includes the power to withdraw and even the provisions of General qauses Act come to the rescue of the department in that behalf. We do not find merit even in these contentions, the Revenue for the reasons discussed hereunder. 7.4.B As on the date when the impugned order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lauses Act shows that the word 'orders' is coupled with other words "notifications, rules and bye laws". The word 'order' is of widest amplitude and would include all kinds of orders including administrative order, judicial orders and legislative orders. It is not clear whether the word 'order' was used by the Legislature in widest sense or in restricted sense. Therefore, to resolve such issue, the Courts/Tribunals have resorted to the rules of interpretation. In such cases, rule of noscitur a sociius is applied. If the aforesaid principle is applied to the provision of section 21 of GCA, the word 'orders' would not include judicial or quasi-judicial orders. This word is associated with the words 'notification, rules and bye-laws'. So the word 'order' should be construed in the context in which the associated words are used. Associated words are in the nature of subordinate legislation. Therefore, the word 'order' contemplated in this section would be restricted to such orders which are issued by way of delegated/subordinate legislation. In view of the above discussion, it is held that section 21 of G.C. Act would include only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being interpreted as including judicial or quasi-judicial orders since the word is associated with notifications, rules and bye-laws .... (Para- 13)" 7.4.G In the case of Kailashanand Mission Trust, the Delhi Bench of the Tribunal concluded that the Commissioner had no power to rescind/withdraw the registration granted in the absence of specific power conferred in that behalf, with the following observations- "... Hence, the impugned order was without jurisdiction, if the Legislature had intended so, it could have easily conferred powers of cancellation to the CIT under section 12A. In the absence of such enactment, by implication, the CIT has no power to cancel registration granted earlier. The reason is obvious as the Legislature has specifically granted power to deny exemption under section 11 on year to year basis if there is any contravention of the provision of section 11 or 13. If under given facts of the case, the funds of the trust are being misused, the Assessing Officer is fully equipped with the power to deny exemption to such trust. But registration, once granted cannot be cancelled by the CIT in the absence of any specific power." (Emphasis supplied) The above d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be denied to the assessee who had been enjoying the registration for the last so many years under the same facts and circumstances unless there is a breach of condition laid down for granting registration in specific term." 7.4.J Similarly, examining the scope of the powers of the Commissioner, while granting registration, to verify as to whether assesseetrust or institution is carrying on such activities, which may prima facie indicate that he is entitled to get benefit under section 11/13, the Lucknow Bench of the Tribunal in the case of St. Don Bosco Educational Society held as follows- "... Here the scope of the powers of the CIT is confined to examine the genuineness of the activities of the trust or institution and to examine the object of the trust or institution. Once the CIT has not doubted the genuineness of the activities of the assessee-society nor doubted the object, his powers end and he cannot be allowed to travel beyond it and to enter into the scope to find out as to whether assessee is a charitable institution or not or whether assessee is carrying on any activity which is covered under the definition of section 2(15). It is Assessing Officer who will be havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uasi judicial proceeding even if conducted, as in the instant case, by the statutory authority constituted under the Income-tax Act, there can be no legal sanctity for the order that ensues such proceeding, in the absence of a statutory power under that Act to do what is contemplated under that order. What is sought to be exercised by the impugned order is a substantive power to cancel the registration granted earlier, and it was sought to be exercised by a quasi-judicial authority. In the absence of specific provision in the statute under which that quasi-judicial authority is constituted, i.e. the Income- tax Act, such a substantive power cannot be exercised. The principles of natural justice followed and the nature of proceedings conducted cannot lend legal sanctity to the action of the authority exercising such power, in the absence of specific provision in the statute conferring such power in that authority. 7.4.M As it may be noted here, even this power of cancellation, was only with regard to registration granted under clause (b) of sub-section (1) of section 12AA. In the instant case, it is an undisputed fact, the registration to the assessee was granted under section 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot hold good in the context of the facts and circumstances of the instant case, where the registration has in fact and indeed been cancelled by the Commissioner by the impugned order. It was also observed therein that the right to conduct the proceedings of cancellation in accordance with law cannot be denied to the respondent/Department. What is important in these observations of the High Court is 'the right to conduct the proceedings of cancellation in accordance with law'. When the statute has not conferred on the Commissioner prior to 1-10-2004 the power to cancel, the same cannot be exercised in accordance with law even as per the said decision held by the Hon'ble Madhya Pradesh High Court. Even in this case of M.P. Madhyam, it appears, when the registration was ultimately cancelled by the Commissioner, the assessee carried the matter before the Tribunal. By its decision, extracted in para-7.41, hereinabove, the Tribunal quashed such order of cancellation passed by the Commissioner. 7.5.C Similarly, the Full Bench decision of the Hon'ble Andhra Pradesh High Court relied upon by the Revenue in the case of Motichand Jain holding that the amendment raising the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already expressed our view based on several case-laws that insertion of sub-section (3) of section 12AA does not have retrospective operation, and if we look at the position existing prior to the amendment made, especially when the substantive right of the party would be affected, and more so when it is not merely a matter of procedure as submitted by the Revenue, besides the fact that granting of exemption is done by the Assessing Officer on year to year basis being himself also fully equipped to reject such claim for exemption if the circumstances of any case so warrants, the theory of useless formality, propounded by the Hon'ble Supreme Court in the aforesaid case, has no field to play in the instant case. It may be that, even if we cancel the order impugned herein, the CIT might again be invoking the amended provisions of section 12AA to cancel the registration of the assessee even for earlier periods. But, that cannot deter us from correctly judging the legality and validity of the order impugned herein. It is more so, because every time the CIT invokes a provision to exercise a power conferred on him under the statute, he is instituting a new quasi-judicial proceeding, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of benefit of registration to the assessee insofar as concurrent or other proceedings that may be taken up for determining tax or penalty. (c) In view of the above, though the impugned order of the CIT dated 26-7-2004 has been passed under section 12AA after following due procedure and complying with the principles of natural justice to be observed in all quasijudicial/judicial proceedings, the same has been passed to exercise a power that has not been conferred by section 12AA viz. at the relevant point of time, i.e. to cancel the registration granted earlier, because such power was conferred under section 12AA only by insertion of sub-section (3) thereunder with effect from 1-10-2004, and prior to that date orders under section 12AA could be either granting or refusing to grant registration, and it is only against the latter type of orders passed under section 12AA, a first appeal before the Tribunal was provided by the statute by the Finance Act, 1999 with effect from 1-6-1999. That being so, questions do arise to contemplate even as to the maintainability of this appeal itself firstly because of appealability of the order cancelling registration and secondly because of mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order with undue sense of urgency, which we have critically noted at length in the foregoing paras, for early hearing and speedy disposal of this appeal filed barely an year back, while several other much older matters are awaiting their turn in the record rooms of this Tribunal and High Court, we feel that it is the fittest case where costs should be awarded on either or both the parties, for their own individual contributions to the delay in the disposal of this appeal. However, taking a lenient view of the matter and considering the fact that latches prevailed on both the parties as revealed supra, and the Hon'ble High Court of Andhra Pradesh seems to be seized of connected matters, we would like to leave the question of awarding cost untouched as such. 8.2 At the same time, in this case, where the Department appears to have a stronger case on merits as made out at elaborate length by the CIT in the order impugned, while on the preliminary point of the presence or absence of a statutory power in the Commissioner to cancel the registration granted the assessee appears to have a stronger case, resulting in both sides strenuously arguing at length in their respective f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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