Time Out??

[Mlancaster]

Here's one, particularly for you younger officials...
In a varsity game I observed last night, A crew of 2 {still in the dark ages at some schools}...After a made basket, A1 passes the ball inbounds to A2.
A2 catches the ball and dribbles a couple of times. Before you know it, the coach of B calls vehemently for a time out. The trail immediately blows his whistle, and grants the time out. The time keeper immediately notifies this official that team B did not have the ball...The official rescinds the time out BEFORE it is reported, and gives the ball to A for a throw in.
Was this correct?????