Atwal was invited by Canadian high commissioner Nadir Patel for a dinner which he was hosting for the visiting Canadian prime minister and his delegation on Thursday.
Jaspal Atwal told Canada's Postmedia network that he did not plan to attend Thursday's dinner, which was being hosted by Canada's high commissioner, as he is in Mumbai on business.
He said the MP from his party "took full responsibility" for the dinner invitation.
According to reports, Mr Atwal was convicted in Canada for shooting at the then Punjab Minister Malkiat Singh in 1986 when the minister was on a private visit to Vancouver.
Union food processing minister Harsimrat Kaur Badal today urged Canadian Prime Minister Justin Trudeau to facilitate start of Toronto - Amritsar Air Canada flights besides suggesting that the Canadian government jointly celebrate the 550 Parkash Purab of Guru Nanak Dev ji in league with the SGPC. "And we are very clear about that", she said. "Here is a picture from my 2015 Canada visit, when I'd met PM Trudeau and Ella-Grace", PM Modi said in another tweet.
But photographs of Atwal flanked by Canadian officials at the Mumbai event attended by Trudeau have thrust the controversy back into the headlines.
Atwal was an agent with the International Sikh Youth Federation, a recognized terrorist organization in both Canada and India.
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Meanwhile, a senior Indian Ministry of Home Affairs (MHA) official, while speaking to PTI, claimed Atwal's name is no longer in the MHA blacklist which resulted in the issuance of visa to him. PM Trudeau, his wife Sophie Gregoire Trudeau, and children Ella (9), Hadrien (3), and Xavier (10) have taken social media by storm with their adorable public appearances in all-Indian costumes and their visits to some of the most iconic destinations in the country including the Taj Mahal, Sabarmati Ashram, and the Golden Temple.
"Canadian side has already clarified that the invitation has been withdrawn".
Sidhu was driving on a rural road in the small community of Gold River, British Columbia, when his vehicle was ambushed by Sikh extremists. A judge called it an act of terrorism and sentenced Atwal and three others to 20 years in prison. Sidhu survived the attack but, five years later, was killed in Punjab's Moga.
Atwal's name no longer figures in the current blacklist, he added.
"His words are a big relief to all of us here in India and we look forward to his government's support in tackling fringe separatist elements", Singh said.
Ties between New Delhi and Ottawa have been frosty in recent times as Canada is being seen as offering a platform to separatists demanding an independent Khalistan.
The two leaders are scheduled to hold a bilateral summit here on Friday.