TMI Blog2010 (12) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The admitted factual position is that the impugned order was passed on 16th Nov., 2009, when no such specific jurisdiction was granted to DIT(E), and the powers of cancellation of registration had come into effect from 1st June, 2010 only. Benefit of this ambiguity or because of an abnormal situation, the advantage should go in favour of the taxpayer. Review of order - It is a well settled law that the power to review is not an inherent power of judicial or quasi-judicial officer, unless specifically conferred on him by the 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 date of insertion of the said clause can be said to be beyond jurisdiction. - ITA NO. 3339/AHD/2009 - - - Dated:- 10-12-2010 - SHRI G.D. AGARWAL, VICE-PRESIDENT (AZ) J, AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER J, Revenue by :Shri H.P. Meena, SR-DR Assessee by:Shri S.N.Divetdia, AR ORDER 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 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 under section 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 cancellation of registration of such Trust. He stated the facts of the present case that the DIT(Exem.) Ahmedabad had cancelled registration with effect from 30-3-2004 by order under section 12AA(3) of the Act on 14-3-2005 and the registration granted to the assessee-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 operations 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 14-3-2005 and the matter was set aside to DIT(Exem.) with directions to inquire into the activities for financial year 2003-04 and DIT(Exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rthquake donations on technical grounds which has been deleted by Tribunal vide its order dated 30-7-2010 in ITA No. 449/Ahd./2008 and it is now settled law that the powers of cancellation under section 12AA(3) confines to enquiring 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 utilization which is beyond the scope of his powers and assessee submits that the activities carried out during the financial year 2002-03 has been considered by Assessing Officer in accordance with the objects of the trust as it would be evident from the assessment order passed under section 143(3) dated 24-3-2006 will not be appreciated that the impugned order has been passed at a later date by DIT (Exem.) and the summery of position of assessment and appeals are as under:- A.Y Asst. order by AO ITAT order 2001-02 143(3) r.w.s. 254 dt.29-3-2004 ITA NO. 1860/A/09 dt.4-9-2009 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt and diversion of fund for sister concerns for a sum of Rs. 15 lakh have 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 withdrawn and the DIT(Exem.) withdrew the registration w.e.f 31-3-2004 as per legal position obtained on that date. By virtue of section 12AA(3) of the Act an order passed on or after 1-10-2004 can have effect of withdrawing of registration from the year in which the activities of the trust enjoying the registration granted earlier were 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 concerns to camouflage 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 under section 12AA of the Act w.e.f. 1-4-2000, the financial year in which such illegalities were committed. Accordingly, the meaning of section 12AA(3) of the Act the trust is not entitled to enjoy the benefit of registration under section 12AA of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12A before its amendment. This amendment will take effect from 1st June, 2010. The relevant amendment is further explained by Memorandum 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 registration of a trust or in institution engaged in charitable activities. Section 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 for which such trust or institution was established, the registration granted under section 12AA can be cancelled by the Commissioner after providing the trust or institution an opportunity of being heard. The power of cancellation of registration is inherent and flows from the authority of granting registration. However, judicial 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 institution under provisions of section 12A as it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers to issue orders including the power to rescind such orders and the Commissioner would not have power to rescind 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 practising fraud or forgery, there was nothing in the show-cause notice or in the impugned orderMarch 9, 2004, alleging that the petitioner had obtained the registration by practising fraud or forgery. In the light of the above-discussion and by considering the totality of the facts and circumstances of the case, we hold that the order dated March 9, 2004, passed by the Commissioner of Income-tax (annexure No. 15 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 datedMarch 9, 2004, passed by opposite party No. 2 withdrawing/rescinding the order granting registration onApril 1, 1999, to the petitioner s society under section 12A of the Act, is quashed. Consequently, the registration granted to the petitioner s society onApril 1, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d factual position is that the impugned order was passed on 16th Nov., 2009, when no such specific jurisdiction was granted to DIT(E), and the powers of cancellation of registration had come into effect from 1st June, 2010 only. Benefit of this ambiguity 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 under section 12A can be cancelled by invoking section 12AA(3). The law is also clear that a registration granted under section 12AA(1)( b ) can also be revoked by invoking this very section i.e., section 12AA(3)of the Act. Accordingly, as per our interpretation the original section 12A had neither provided a specific clause prescribing refusal or registration. Now by prescribing both in section 12AA, it has the substantive effect over the rights of a taxpayer. Such an introduction cannot be termed merely a procedural introduction in the statute 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 amendment then also a procedural amendment cannot be held as retrospective i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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