TaxTMI 
TaxTMI 
TaxTMI 
2013 (5) TMI 832
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....s and objectives of assessee trust are educational and charitable to promote the education in all its branches and to serve the society particularly the poor people as well. A search and seizure operation was carried out at the premises of the assessee trust on 17.09.2010 and during the course of search, certain documents were found and seized which inter alia indicated the following : (i). Seizure / detection of unaccounted cash (ii). Unexplained cash deposit in bank account. (iii). Total capitation fees received accommodation entries. (iv). Receipt of on money from students towards admission. The AO gave his report to the ld. CIT, explaining therein that from the residence of Shri Y.K. Gupta, one of the trustees and key person of the group at 10, Jawahar Nagar, Khandari, Agra during the search and seizure operation on 17.09.2010, some computerized papers were recovered. This is a list (Annexure-1) containing the details of students, names, father's name, admission number, received amount (a), Due amount (A), received amount (B), Due amount (B), balance and authorized person. The list pertains to Hindustan College of Science and Technology, HIDs and HIT, running under the Sha....
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....om the truth. Neither any student has given any amount over and above the amount of fees nor has the college charged any such amount. According to the report of Dr. Jagdish HG, the complaint was totally fabricated. Even then, in order to take pre-caution for future, Mr. Ashok Darayani was shifted from admission cell. The assessee submitted that college has never received any amount of donation towards admission. It was further submitted that colleges are running in highly competitive environment offering the similar courses. The assessee has to incur expenditure on advertisements in order to secure presence and place of Institution in educational scenario. Therefore, it is not possible to receive any donation or capitation fees. The AO did not accept the reply of assessee genuine and rejected the same. The report of the AO was forwarded by JCIT Central Range, Kanpur, who has also made similar observations of receipt of on money/capitation fees from the students. It was stated that it is in violation of grant of registration u/s. 12A of the IT Act. The ld. CIT, therefore, issued show cause to the assessee dated 18.03.2013 requiring him to explain the receipt of on money/donations....
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...., actual is 51% at Sl. No. 33, it is written, AIEEE, Fake percentage is to entered, at Sl. No. 55, it is written AIEEE, Entered fake 60%age in 12th Origin and again of these students, the amount of case are also mentioned. These amounts also have not been found credited in the books of account. 8. From the above, it is very clearly seen that there are clear cut evidence of receipt of "on money" from the students for grant him admission from Managing Quota. Not only that the Investigation Wing has also found out certain students have given admission as evidence from Annexure despite the fact that their percentage is not up to the mark and / incorrect percentages were entered. 9. At this point, it is clear that the assessee trust which has been established for imparting education and has been recognized of the University by State Government and approved by UGC and maintain high standard of integrity and financial discipline with regard to the function of the trust and income generated from the property held under the trust. The trust property which utilized for the purpose of education. This consists of the entire infrastructure and the property rights in the form of various appr....
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....explain if when and where the amount (B) mentioned in the name of various students so systematically has been credited in the books of account of the trust. That these amounts relate as consideration for grant of admission is also evident from the computer printout which cannot be ignored for the above reasons. The evident found during the course of search very clearly indicate that the trust is not being run in accordance to the object and it is evident that the income from the property held under the trust has been systematically applied for the benefit of the trustees which was never the object of the trust. It is, thus, very clear that the activities of the trust are not being carried out in accordance with the objects of the trust. At this point, it can be seen that the facts of this case are different from the case of Agra Development Authorities decided by the Hon'ble Jurisdictional ITAT Bench. In that case the Hon'ble ITAT has held that CIT has not been able to make out a case that the trust is not being run in accordance with the objects of the trust. It is a clear cut case where, the evidence very clearly indicates that the income from the property held under the trust is....
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....od of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA : Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied: Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form30 and manner to the Commission....
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....egistration under clause (b) of subsection (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of sub-section (1) of section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 40[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. 6.2 Section 2(15) of the IT Act provides as under : 2(15) "charitable purpose" includes relief of the poor, education, medical relief, [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects o....
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....ion from AIEEE (All India Engineering Entrance Examination), Central Counseling Board. On the top of the list, AIEEE is also mentioned. As regards the list of students getting admission through AIEEE, the ld. counsel for the assessee demonstrated before us that the ld. CIT has wrongly mentioned in the order that the amount mentioned in the list in front of names of students, have not been found credited in the books of account of the assessee. The ld. counsel for the assessee submitted that AIEEE list of students are the students who got admission branch-wise from Central Counseling Board. The students bring branch-wise allotment letters from AIEEE. Therefore, the assessee trust was bound to give admission to those students in their respective branches which they got allotted from AIEEE. In the said list in some cases, in front of names of students, fake percentage is mentioned for the reason that the student getting admission from AIEEE and has lesser percentage than what is fixed in the system of assessee trust for that particular branch, then to get the student enrolled in that branch percentage is noted and is accordingly mentioned in the list. The ld. counsel for the assesse....
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....r payment of any on money/donation/capitation fees to the trust at the time of admission of student in different branches. In the absence of any examination of any student or their parent by the officers of the Revenue Department, there appears no justification to take any adverse view against the assessee. The assessee has filed copies of undertaking given by the students at the time of taking of admission in different courses that no capitation money have been paid. Same is also signed by their respective parents. Copies of some of the undertakings are filed in the paper book page 41 to 62. No corroborative evidences have been found during the course of search to prove receipt of any on money/donation/capitation fees from the students in any form. No evidence of any cash or property accumulated by the assessee trust was found on receipt of any on money. Even one of the properties was referred to the DVO for estimating the cost of construction and the DVO has given report dated 08.03.2013, stating that the assessee has declared total cost of construction at Rs. 2.12 crores and the DVO has estimated the cost of construction at Rs. 2.24 crores. There is no much difference in the cos....
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....he absence of any proper investigation into the matter, we are of the view that the provisions of section 292C could not have been applied against the assessee. In the absence of any recovery of incriminating material against the assessee and any corroborative evidences during the course of search, we are of the view that the various papers/list annexed with the impugned order is not admissible in evidence against the assessee trust. Therefore, the sole basis of the ld. CIT to cancel the registration on the basis of recovery of various papers is wholly unjustified and the impugned order, therefore, cannot be sustained in law. 7. Considering the provisions of section 12AA(3) of the IT Act, it is clear that sub-section (3) of section 12AA was inserted in the Act w.e.f. 01.10.2004. Prior to that, there was no provision for cancellation of registration once granted till the enactment of sub-section (3) w.e.f. 01.10.2004. Therefore, the provision for cancellation of registration has been introduced in the Act w.e.f. 01.10.2004 u/s. 12AA(3) of the IT Act. This sub-section provides that when a trust or an institution has been granted registration under sub-clause (b) of sub-sec. (1) and ....
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....petitioner-institute on August 9, 2005. Without waiting for the conclusion of the assessment proceeding based on documents seized and information recovered in the course of such search and seizure an order dated December 15, 2006 was passed by the Commissioner under section 12AA(3) of the Act directing cancellation of the registration of the petitioner-institution. This order was quashed by the Tribunal. Notice was again issued for cancellation of registration. On a writ petition contending that while there had been search and seizure operation carried out against the petitioner-institute on August 9, 2005, assessment proceedings followed and were completed but no adverse finding had been recorded against the petitionerinstitution to form any fresh ground for issue of notice." 7.2 ITAT Ahmedabad Bench in the case of Ajit Education Trust vs. CIT, 134 TTJ (Ahd) 483 held as under : "Amendment of sub-s. 12AA w.e.f. 1st June, 2010 should not be applicable retrospectively and its operation has to be effective from the date it was introduced and onwards and therefore CIT was not justified in cancelling the registration granted to the assessee under s. 12A, by invoking provisions of s.....
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....ied. Therefore, there was no reason to interfere with the order of the Tribunal." 7.5 ITAT, Agra Bench in the case of Agra Development Authority vs. CIT, 141 ITD 336 in paras 19 to 22 held as under : "19. The heading of section 12A 'Conditions for applicability of sections 11 and 12' was substituted with effect from 01.06-2007 in place of previous title 'Conditions as to registration of the Trusts etc. It means that prior to 01.06.2007, this section itself provided conditions regarding registration of trust etc. It is noted here because with the substitution of the present title, this section no longer provides for registration of trust etc. A special provision has been enacted in section 12AA providing for procedure for registration of trust etc., with effect from 01.04.1997. It is also noted that section 12A was inserted in the statute book by the Finance Act, 1972 with effect from 01.04.1973. It was omitted and was again restored with effect from 01.04.1989. Section 12A, as it stood at the time when it provided for registration of trust, nowhere provided for cancellation of the registration once granted. It is also pertinent to note that the words 'such trust or institution i....
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....(3) of the Act by the CIT only on the following conditions:- i) That the trust or society has already been granted registration under section 12AA(1)(b) of the Act. Or ii) W .e .f. 01.06.2010 - registration has been granted at any time under section 12A as stood before its amendment by the (Finance No.2) Act 1996 iii) The CIT subsequently found and satisfied that :- a) activities of such trust or institution are not genuine, or b) are not being carried out in accordance with the objects of the trust or institution. 20. In the light of above discussion, if we consider the facts of the case under consideration as discussed above, we find that the CIT is not correct in cancelling the registration under section 12AA(3) of the Act which has been granted under section 12A of the Act on the following grounds and reasons :- i) Section 12AA(3) of the Act empowers the CIT to cancel such registration if he satisfy that activities of the trust or institutions are not genuine or are not being carried out in accordance with objects of the trust or institution as the case may be. The combined reading of both the sections makes it clear that before 01.06.2010 registration can be cancelled ....
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....on 12AA (3) is not satisfied, the CIT cannot cancel or withdraw registration granted under section 12A of the Act. In the case under consideration, the condition stipulated in section 12AA(3), that activities of the assessee, Agra Development Authority are non-genuine or not being carried out in accordance with the object of the assessee, Agra Development Author is not satisfied. The CIT by his own motion added one more condition in section 12AA (3) that the object of the assessee, Agra Development Authority is not charitable as per amended provisions of section 2(15) of the Act for which the CIT is not empowered to add such own condition in the statute. Similar view has been taken by the I.T.A.T., Ahmedabad in the case of Ahmadabad Urban Development Authority vs. DIT, ITA No.754/Ahd/ 2010, order dated 21.5.2010. 21. Now we come to the judgments relied upon by the Revenue. The CIT & ld. Departmental Representative relied upon a judgment of Hon'ble Bombay High Court in the case of Sinhagad Technical Education Society vs. CIT - Writ Petition No.2545 of 2011 judgment dated 01.02.2012. The CIT was of the view that as per the said judgment, the CIT can cancel registration under section....
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....ve discussions that the CIT cancelled registration under section 12A w.e.f. 2009-10 which is the period prior to 01.06.2010. The C.B.D.T. has also clarified that the amendment in section 12AA(3) is applicable from A.Y. 2011-12. 22. In the light of above discussion, the order of CIT is not in accordance with law. We, therefore, set aside the order of CIT and restore the registration under section 12A of the Act which has been cancelled w.e.f. 2009-10. Since the issue raised in grounds number 1, 2 & 4 have been decided in favour of the assessee on the basis and reasons discussed above, so under the facts and circumstances, the grounds on merit raised in grounds number 3, 5, 6, 7 & 8 wherein the CIT held that the activities of the assessee, Agra Development Authority, is not charitable, we are not expressing any opinion on these grounds of appeal. Grounds number 9 & 10 are general in nature, require no independent finding." 7.6 Hon'ble Allahabad High Court in the case of CIT vs. Manav Vikas Avam Sewa Sansthan, 336 ITR 250 held as under : "A judicial/quasi-judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under whi....
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..... In the present case, the ld. CIT in para 13 of the impugned order has cancelled the registration without giving the date from which date the cancellation of registration would be effective. Therefore, in the absence of any date from when the registration would be cancelled, the order of the ld. CIT cannot be sustained in law. We have already held above that the seized computerized papers are not admissible in evidence against the assessee for the reasons mentioned above. Even for the sake of arguments, we may assume that the AO made addition of Rs. 65,20,000/- against the assessee of unaccounted donations in assessment year 2009-10, the registration u/s. 12A cannot be cancelled, as the provisions contained in section 12AA(3) are prospectively applicable w.e.f. 01.06.2010, i.e., from assessment year 2011-12. This view is further fortified by our order in the case of Agra Development Authority (supra) as well as the judgment of Hon'ble Delhi High Court in the case of DIT(E) vs. Mool Chand Khairati Ram Trust, 199 Taxman 1 and the order of ITAT Ahmedabad Bench in the case of DIT (E) vs. N.H. Kapadia Education Trust, 136 ITD 111. We may also note here that the ld. CIT issued the show ....
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....it was found to be dumb document and not admissible in evidence. Therefore, such is not an adverse circumstance against the assessee for cancellation of registration. 8. The ld. counsel for the assessee further submitted that when only addition is made in the assessment year 2009-10 of unaccounted donations for which no registration could be cancelled prior to 01.06.2010 and no other material was found against the assessee in other assessment years, therefore, we are of the view that the ld. CIT has taken a very harsh view of cancellation of registration against the assessee. At the most, matter could have been investigated only in the assessment year 2009-10 with regard to whether the assessee would be entitled for benefit of section 11 or the assessee has violated the provisions of section 13 of the IT Act in such circumstances. Therefore, cancellation of registration would not be justified in the matter. The ld. counsel for the assessee also submitted that in the similar circumstances, the ld. CIT, Central Kanpur issued show cause notice of cancellation of registration u/s. 12A in the case of Rajeev Memorial Academy Welfare Society (PB-155), but the ld. CIT did not cancel the r....
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....g adverse view of personal enrichment by trustee against the assessee trust. There is no basis, whatsoever, to make allegation against the assessee for cancellation of registration. 10. Considering the above discussion, the order of the ld. CIT in canceling the registration is not in accordance with law. We, therefore, set aside the order of the ld. CIT and restore the registration u/s. 12A of the IT Act since inception. In the result, the appeal of the assessee in ITA No. 128/Agra/2013 is accordingly allowed. ITA No. 127/Agra/2013 (Babu Mohan Lal Arya Smarak Educational Trust): 11. The ld. representatives of both the parties submitted that the issue is same as have been considered in the case of Sharda Educational Trust (supra) and submitted that the findings in that case may be followed in the case of this assessee as well. However, for the sake of brevity, we briefly note that this assessee was granted registration u/s. 12A by the ld. CIT-I, Agra vide order dated 31.01.2006 w.e.f. 28.08.1998. The objects of the assessee trust are also educational and admittedly, carried out the educational activities. During the course of search, Annexure A-32 and A-33 were recovered from the....