TaxTMI 
TaxTMI 
2016 (4) TMI 1119
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....t. (ii) The Ld. CIT (Exemptions) has erred in challenging the genuineness of the activities of the trust by stating that the said activities are not being carried out in accordance of the object of the trust. 3. (i) The Ld. Commissioner of Income-tax (Exemptions) has erred in cancelling the registration of the applicant on the ground that applicant has received voluntary donation in exchange of cash and was not justified in stating without any basis that the applicant is making clear profits and that too charging huge capitation fee from students or their parents. (ii) The Ld. CIT (Exemptions) has erred in cancelling the registration of the trust on the ground of unverifiable donation of Rs. 1 crore without confronting the assessee with the evidence he purportedly had and hence ignoring the principles of natural justice. (iii) That the Ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without providing the opportunity of cross examination to the appellant. 4. The Ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without giving any meaningful opportunity to the appellant to show cause. 2....
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....n this issue, the same may be given to the assessee so that specific reply on the same could be submitted on it. Being not convinced with the explanations of the assessee, the ld. Commissioner of Income Tax (Exemptions) has cancelled the registration under section 12A of the Act having observed that the assessee is running a Medical College with 150 seats for MBBS being filled up every year and apparently, the assessee is generating huge amount of cash by charging the capitation fees from the parents of the students and this cash has been used to obtain or manage the donation from M/s Herbicure Health Care Bio Herbal Research Foundation by way of cheque after paying commission to M/s Herbicure Health Care Bio Herbal Research Foundation. 4. Aggrieved, the assessee has preferred an appeal before the Tribunal with the submission that as per audited accounts and computation of income for financial year 2010-11, the assessee-trust incurred expenditure to the tune of Rs. 32,18,98,751/- (including capital expenditure as against income amounting to Rs. 30,26,58,393/-, resulting into excess of expenditure over income and thereby carry forward of losses). The assessment for assessment year ....
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.... crore was paid by the assessee in cash to the donor in exchange of donation received by cheque. Further, the assessee has stated that in case there is any authentic material is available with him, which could throw some light on this issue, the same may be given to the assessee so that specific reply on the same could be submitted on it. Despite this specific affirmation, the ld. Commissioner of Income Tax has passed an order on the very same day i.e. 27.11.2015 and cancelled the registration earlier granted under section 12AA of the Act. 6. The ld. counsel for the assessee has further contended that the assessee has placed the objects of the society before the ld. Commissioner of Income Tax (Exemptions) and no defect has been pointed out by him therein. It was further urged that even if this amount is treated to be unexplained receipts in the hands of the assessee, addition under section 68 of the Act is not called for, as it was applied for charitable purposes to achieve the objects of the assessee. In support of these contentions, the ld. counsel for the assessee has placed reliance upon the judgment of the Hon'ble Allahabad High Court in the case of CIT vs. Chhadami Lal Jain ....
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....237 has held that if there is no evidence to show that capitation fee alleged to have been collected was applied either for or any interested person, registration under section 12A of the Act cannot be denied. 10. Besides, reliance was also placed upon the following judgment:- 1) Scientific Educational Advancement Society vs. Union of India and Another (P&H), CWP No.2052 of 2009. 11. Reliance was also placed upon the order of the Tribunal in the case of Income Tax Officer vs. M/s Saraswati Educational Charitable Trust in I.T.A. No. 776/LKW/2014, in which it was held that once the donations received was taken as income of the assessee which was applied for charitable purposes, the provisions of section 68 of the Act cannot be invoked. 12. The ld. D.R., on the other hand, has placed reliance upon the order of the ld. Commissioner of Income Tax (Exemptions). 13. Having carefully examined the order of the ld. Commissioner of Income Tax (Exemptions) in the light of the rival submissions, we find that on receipt of certain information from the ld. Commissioner of Income Tax (Exemptions), Kolkata; ld. Commissioner of Income Tax (Exemptions) has issued notice under section 12AA(3) of....
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.... witness or to make any further comments in this regard and the ld. Commissioner of Income Tax (Exemptions) has passed an order on the very same day cancelling the registration earlier granted to the assessee. No doubt, the ld. Commissioner of Income Tax (Exemptions) is empowered to cancel the registration as per provisions of section 12AA(3), where the Principle CIT 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. But in the instant case ld. Commissioner of Income Tax (Exemptions) has simply received information from the ld. Commissioner of Income Tax (Exemptions), Kolkata that M/s Herbicure Health Care Bio Herbal Research Foundation was engaged in giving donations on receipt of cash through brokers, but nowhere it has been stated that M/s Herbicure Health Care Bio Herbal Research Foundation has paid donation to the assessee on receipt of cash of the equal amount through brokers. Similar statement of Shri. Swapan Ranjan Das Gupta was also made, but in that statement also there was no reference of the assessee. The ld. Commissioner of Income Tax ....
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....the case of CIT vs. Uttaranchal Welfare Society, 42 taxmann.com 361, in which their Lordships have held that section 68 of the Act has no application where assessee had disclosed donations as its income. While relying on this proposition of law, their Lordships have followed the view taken by Hon'ble Delhi High Court in the case of DIT (Exemptions) vs. Keshav Social & Charitable Foundation, 278 ITR 152 and the judgment of the Hon'ble Apex court in the case of S.RM.M.CT.M. Tiruppani Trust vs. CIT, 230 ITR 636, in which it was held that section 68 of the Act has no application in such cases where the assessee has disclosed donations as its income. 18. Similarly in the case of Director of Income Tax vs. Hans Raj Samarak Society, 35 taxmann.com 642, their Lordships of the Hon'ble Delhi High Court has held that provisions of section 68 of the Act could not be applied as donation had already been shown by the assessee as income. 19. Similar views were also expressed by the Chennai Bench of the Tribunal in the case of Padanilam Welfare Trust vs. DCIT (supra) in which it was held that merely because capitation fee was collected by the assessee-trust from students, the same would not cons....