CIT-II, CHANDIGARH vs. M/S PUNJAB CRICKET ASSOCIATION

Facts

The Income Tax Department (appellant/revenue) challenged an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B', dated 27.08.2009. The ITAT had held that the income tax authority lacked the jurisdiction to cancel the registration granted to M/s Punjab Cricket Association, Mohali (respondent/assessee) under Section 12A of the Income Tax Act, 1961, by invoking powers under Section 12AA(3) of the Act. The revenue argued that the ITAT erred in its decision. The High Court examined the applicability of its prior judgments in similar matters, specifically concerning the retrospective cancellation of registration.

Held

The High Court, after considering the submissions and examining the applicability of its prior judgments, found that the issue raised by the revenue stood finally adjudicated. The Court referred to its decisions in Commissioner of Income-Tax vs. Young Scholars Educational Society (supra) and Pinegrove International Charitable Trust vs. Union of India (supra), which held that the power to cancel registration under Section 12AA(3) of the Income Tax Act, 1961, was prospective and could not be applied retrospectively. The Court noted that the ITAT had held the order of cancellation passed by the Commissioner on 02.03.2010 to be without jurisdiction and without authority in law, as the amendment empowering the Commissioner to cancel registration was made in Section 12AA(3) by the Finance Act of 2010, and the power was not available on the date of cancellation. The facts of the present case were found to be similar to Industrial Infrastructure Development Corporation (Gwalior) Limited’s case (supra). Therefore, the High Court concluded that the registration of the respondent could not have been cancelled retrospectively. Questions of law nos. 1, 3, and 4 were answered in favour of the assessee.

Key Issues

1. Whether the Income Tax Appellate Tribunal erred in holding that the income tax authority has no jurisdiction to cancel the registration granted under Section 12A of the Income Tax Act, 1961, by invoking powers under Section 12AA(3) of the Act? (Question of law) Assessee's Contentions: The assessee relied on judgments from the High Court in cases such as Commissioner of Income-Tax vs. Young Scholars Educational Society (supra) and Pinegrove International Charitable Trust vs. Union of India (supra). These judgments held that the power to cancel registration under Section 12AA(3) of the Act was prospective and could not be applied retrospectively. The assessee argued that the ITAT's decision was correct based on these precedents. Revenue's Contentions: The revenue argued that the ITAT's order was erroneous. They contended that the ITAT had incorrectly held that the cancellation of registration was without jurisdiction and without authority in law. The revenue's arguments were implicitly countered by the High Court's reliance on its own previous decisions.