University registration rejected under section 10(23C)(vi) for failing to provide required documents and audit information

The ITAT Raipur upheld the CIT(E)'s rejection of the university's application for registration under section 10(23C)(vi). The assessee failed to provide necessary information and supporting documents despite queries from CIT(E). The university's contention that audit was not required for three years after existence was unsupported by evidence, and audit clause 48(1) contained no such provision. The assessee's explanations regarding vehicle expenses, examination expenses, and donations lacked supporting documentation. Following New Noble Education Society precedent, the tribunal found no infirmity in CIT(E)'s order and decided against the assessee.

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Issues Involved:
1. Non-audited accounts for FY 2020-21.
2. Non-furnishing of details for Vehicle and other Expenses.
3. Non-furnishing of details for Examination Expenses.
4. Non-furnishing of details for Specific Donations.
5. Application of Supreme Court decision in New Noble Educational Society v. CCIT.

Issue-wise Detailed Analysis:

1. Non-audited Accounts for FY 2020-21:
The assessee argued that the accounts for FY 2020-21 were not required to be audited as it was the first complete year of the university, and all funds were received through the State Government for salary and infrastructure development. The CIT(E) rejected this argument, noting that Rule 2C(2)(g) requires the submission of annual accounts for the last three years. The CIT(E) emphasized that the Chhattisgarh Vishwavidyalaya Adhiniyam 1973 mandates annual audits, which the assessee failed to comply with, violating the second proviso clause (ii)(a)(B) to section 10(23C) of the Act.

2. Non-furnishing of Details for Vehicle and Other Expenses:
The assessee claimed that vehicle expenses were mostly small payments not liable for TDS. However, the CIT(E) found that payments to individuals like Sailandra Dubey (Rs. 2,31,831) and Prakash Kumar Tripathi (Rs. 3,31,499) were not explained or supported by documents. The CIT(E) concluded that these amounts were not genuinely vehicle expenses, thus rejecting the application on these grounds.

3. Non-furnishing of Details for Examination Expenses:
The assessee stated that Rs. 25,00,000 out of the total examination expenses was for printed papers, but no supporting documents were provided. Additionally, Rs. 12,70,592 was claimed as exam expenses without relevant details. The CIT(E) found the explanations unsatisfactory and noted the lack of supporting evidence, thus considering the accounts not genuine and correct.

4. Non-furnishing of Details for Specific Donations:
The assessee received Rs. 25,00,000 for gold medals from various teachers and professors but did not offer this amount as income, showing it directly in the balance sheet. The CIT(E) noted that no supporting documents from the donors were provided to ascertain the purpose of the donation. The lack of explanation and documentation led to the rejection of the application.

5. Application of Supreme Court Decision in New Noble Educational Society v. CCIT:
The CIT(E) referred to the Supreme Court's decision, stating that the Commissioner is free to call for audited accounts to ascertain the genuineness of the institution. The assessee argued that the focus should be on the objects and activities, not the proportion of income. However, the CIT(E) found that the assessee failed to provide necessary information and supporting documents, thus justifying the rejection of the application based on the Supreme Court's guidance.

Conclusion:
The appeal was dismissed as the assessee failed to provide satisfactory explanations and supporting documents for the issues raised by the CIT(E). The CIT(E)'s decision to reject the application for registration under section 10(23C)(vi) was upheld, following the principles laid down by the Supreme Court in the New Noble Educational Society case. The various grounds of appeal raised by the assessee were rejected, and the order pronounced in the open court on 31/05/2024 confirmed the dismissal of the appeal.

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