2024 (9) TMI 1308 - AT - Income Tax

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

M/s Shaheed Nand Kumar Patel Versus Commissioner of Income Tax (E), Bhopal

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 ... Rejection of application for grant of registration u/s 10(23C)(vi) on unaudited accounts - As argued as per the applicable statutes, the audited clause applied on the assessee university only after three years of existence - HELD THAT:- As in the present case as the assessee was unable to furnish necessary information or explanation before the CIT(E). The order of rejection passed by CIT(E), wherein elaborate discussion was made regarding the failure of the assessee in submitting the information and supporting documents towards the response of various queries. Before us also AR has submitted that the accounts of the assessee university are not required to be audited as per applicable statute, the audit clause applied only after 3 years of existence, however, such contention have not been established with any supporting evidence. Even the audit clause no. 48(1) of the relevant statute does not state that the audit should be done after 3 years of the existence. It is also the contention of the AR that audit for FY 2020-21 was not carried out for the reason that the assessee institution was notified under the audit list on 13.12.2022 by whereas on perusal of records, it is revealed that the books of the assessee for completed FY 2021-22 were got audited on 30.09.2022 i.e., before the date of aforesaid notification dated 13.12.2022, however, the audit of FY 2020-21 was not carried out, therefore, such contention that the audit was not conducted on account of assessee’s non-inclusion in the audit list is found to be untenable and incomprehensible. Regarding vehicle expenses also no plausible explanation or supporting evidence could be furnished before us, rather the vouchers shown to us which were debited under the said head are found to be irrelevant for which Ld. AR had tried to explain that there was a mistake in booking the said expenses under proper head of account and genuineness of such expenses should not be doubted. For examination expenses AR contention that these are confidential expenses and relevant information was shown to the ITO-Exemption, Bilaspur at the time of physical verification was found to be bereft of any supporting evidence, thus, the observations of CIT(E), that the assessee failed to provide relevant detailed and explanations on the above-mentioned points could not be reasonably refuted. Further, no corroborative evidence such as any letter / request showing purpose from the donee qua the donation offered by various teachers and professors for the purpose of honouring gold medallist students could be furnished before the Ld. CIT(E) and so before us. Respectfully following the principle of law laid down in the case of New Noble Education Society [2022 (10) TMI 855 - SUPREME COURT] we do not find any infirmity in the order of Ld. CIT(E), so as to interfere with the same - Decided against assessee. 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.