Lucknow/New Delhi, Jun 25 (PTI) The Income Tax Department has revoked the tax exemption benefit accorded two decades ago to the Uttar Pradesh-based Maulana Mohammad Ali Jauhar Trust of jailed Samajwadi Party leader Azam Khan, alleging its activities were "non-genuine" and not in accordance with the declared aims and objectives of a charitable institution.

The Lucknow-headquartered Trust has Khan, a former cabinet minister of UP, as its main trustee along with some family members and associates.

It was first given the status of a charitable institution for tax purposes in September 2005 for its stated primary objective of promoting education, particularly for the underprivileged and marginalized sections of society.

It runs the Muhammad Ali Jauhar University and a public school in UP's Rampur district.

The I-T Department in Lucknow issued a more than 140-page order on June 23 cancelling the Trust's registration.

This was preceded by a show cause notice issued to the Trust on June 17 following which the office of the Principal Commissioner of Income Tax (Central) passed a final order.

Trouble began for the Trust in September 2023 when the Lucknow investigation wing of the tax department raided it along with Khan and others and found alleged discrepancies in its operations.

PTI has accessed the order, which stated that "it was clear that the various non-genuine activities being undertaken by the Trust are against the Trust's core objects...this undermines the integrity of the Trust and its tax-exempt status".

This included charges that the Trust's premises were used for political activities (of the Samajwadi Party), that certain Jauhar University buildings were constructed using government funds, the presence of dummy trustees in the body and that a mosque was constructed using the Trust's funds.

The order said that "the registration granted to M/s Maulana Mohammad Ali Jauhar Trust under sections 12A, 12AA or 12AB of the Act, was cancelled for the previous years relevant to Assessment Years 2020-21, 2021-22, 2022-23, and AY 2023-24 and for all subsequent previous years as laid down in section 12AB (4) of the Income Tax Act".

It is clear, the order added, that the activities of the assessee (Maulana Mohammad Ali Jauhar Trust) were found to be "non-genuine" and were not being carried out in accordance with the declared aims and objects and conditions subject to which registration was granted to it under sections 12A read with sections 12AA, and section 12AB of the Income Tax Act, 1961.

These sections (12A, 12AA and 12AB) regulate income tax exemptions given to charitable trusts, NGOs, and religious and educational institutions.

As a result of this cancellation, the order said the Trust will now be treated as an Association of Persons with all consequences under the Act to follow.

Officials explained that the Trust's income will now be liable for taxation at normal rates.

The tax department can now raise substantial demand, interest and penalty depending on final assessments, the officials said.

The order alleged that the premises of Trust "were used for political activities and that the Trust property was used by political party without paying any rent and such rental income on property held under the Trust was forgone..." It added that "no convincing argument" could be filed by the assessee on this issue.

It added that there was "no dispute" that the construction of certain buildings by government agencies /provision of funds was undertaken (in the Jauhar University campus) when the "main person of the Trust" Azam Khan was a "very powerful" minister. PTI NES KVK KVK

Charitable trust registration cancelled after alleged non-genuine activities and misuse of trust property for political purposes. The Income Tax Department cancelled the tax-exempt registration of Maulana Mohammad Ali Jauhar Trust after concluding that its activities were non-genuine and not in accordance with its declared charitable objects. The department treated the trust as an Association of Persons, making its income liable to tax at normal rates and exposing it to further tax consequences under the Act.