TaxTMI 
TaxTMI 
2019 (7) TMI 315
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp; 3. The appeals of the assessee had been originally heard on 04.04.2018 and an order had been passed on 19.06.2018 dismissing the appeals of the assessee. Miscellaneous Petition came to be filed against to the said order and the Tribunal in its orders in MP Nos.186188/Chny/2018 dated 13.03.2019 had recalled the orders of the Tribunal for the purpose of adjudicating the following grounds specifically as the same had not been adjudicated when deciding the original appeals: ITA No.370/Chny/2017: 1. The order of the Principal Commissioner of Income Tax, Central 2, Chennai, cancelling the registration of the appellant under section 12AA of the Act, is against the facts and circumstances of the case, against the law and the principle of equity and natural justice. 2. The entire proceeding for cancellation of registration under section 12AA is invalid. The PCIT erred in issuing the show cause notice on the very issue which had attained finality based on the reply given by the appellant. The SCN issued in the impugned proceedings is mere reproduction of the earlier SCN. 3. The PCIT erred in proceeding with the cancellation of registration after nearly 3 y....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee trust and to cover up the lack of jurisdiction the Assessing Officer in denying the benefit u/s.10(23C)(vi). 14. The. CIT(A) ought to have appreciated that the disallowance u/s.40(a)(ia) prior period expense, deposit refund, salary paid to Managing Trustee were made contrary to the facts of the case and against the principles of law." 4. Consequent to the Miscellaneous Petition order, the appeals came to be heard on 15th May, 2019. For the purpose of filing detailed submission and to specifically point out the issues need to be adjudicated, the appeals were posted for hearing to 16.05.2019. After due exchange of notes between the Ld.AR and the Ld.DR, the Ld.AR filed the following note before the Tribunal, wherein, six specific issues have been raised for adjudication. The note is as follows: Before the Income Tax Appellate Tribunal, Chennai 'C' Bench, ITA Nos.637, 638 and 370/17 Assessment Years 2010-11 and 2011-12 M/s.Prathyusha Educational Trust Points not considered in the original order by ITAT - in ITA INos.370, 637 & 638/Chny/2017 Sec 12AA cancellation order, Asst years 2010-11 and 2011-12: 1. The assessee is a Public Chari....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ide its order. 6. Immediately, the successor officer to the original Assessing officer who passed the original asst. order, on a suo-moto basis, without affording any opportunity to the assessee, issued a corrigendum dated 22nd January 2015 stating that while passing the assessment order for assessment year 2010-11 and 2011-12, in the preface in column no.10, 'the section and sub-section under which the assessment is made' it was erroneously mentioned as ['143(3) r.w.s.153A for Asst. year 2010-11] and ['143(3) for Asst. year 2011-12], instead of 'section 144 of the Income Tax Act, 1961' as the assessment was actually made u/s.144 of the Act, as brought out in para 4 of the assessment order." 7. The assessee filed a Writ petition during February, 2015 against the said corrigendum and the same was disposed vide order dt. 05.07.2016 directing "to challenge the correctness of the impugned corrigendums by raising additional grounds before the Commissioner of Income Tax (Appeals) in the appeal petitions which were filed on 22.04.2013, against the assessment orders dated 28.03.2013, for the years 2010-11 and 2011-12 and the Commissioner of I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....13. It is further submitted that this objection was raised by the appellant in the Writ Petitions filed by them challenging the notices under Section 226(3) of the Act, after which the first respondent/Assessing Officer has issued the impugned corrigendum, which is erroneous. It is submitted that the provisions of Section 144 of the Act, are applicable only if the appellant fails to comply with the conditions mentioned in clauses (a) (b) & (c) of sub-section (1) of Section 144 and only then, the Assessing Officer shall make the assessment of the total income or loss to the best of his judgment based on the materials covered and determine the sum payable by the assessee on the basis of such assessment. In other words section 144 is complete in itself thus without following any of the procedures laid down under section 144 casually treating the assessment originally made under section 143(3) as an assessment under section 144 is rather unfortunate approach the Dept. has chosen to somehow to bring the additions in the assessment order to tax. * It is submitted that the original orders do not indicate that the assessment was made under Section 144 of the Act. * ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. years starting from 2006-07. 8 2011-12 Notice u/s.143(2) dt.12.02.2013 To attend for personal hearing; no other details asked for in the notice Authorized Representative and Trust official appeared in person 9 2010-11 Notice dt.22.03.2013 Notice stated that the details asked for vide Notice u/s.142(1) dt.12.02.2012 AR and official from Trust appeared in response to earlier notices and further no details were asked for by the AO vide notice dt.12.02.2013, therefore, statement mentioned by AO that the details were asked for is incorrect 10 2011-12 Notice dt.22.03.2013 -do- -do- Therefore, it is submitted that the corrigendum issued post various legal actions taken by the appellant is only an afterthought, contrary to the facts, and liable to be deleted. 2. Further on the alleged violation of Sec 13 by referring to the mobilisation advance paid of Rs. 6 crs. in connection with the construction of buildings in the college premises, the following grounds were raised before CIT(A). The AO has, in the asst order, without any detailed discussion/factual demonstration that the appellant has violated provisions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before the Hon'ble ITAT Chennai against the order of CIT(A) and one of the grounds of appeal is the validity of the corrigendum and the treatment of the originally passed U/s.143(3) as sec 144, which is as under: Ground No.7 - "The learned CIT(A) ought to have appreciated that the corrigendum is only an afterthought issued after the judicial proceedings taken up by the assessee trust and to cover up the lack of jurisdiction the AO in denying the benefit U/s.10(23C}(vi). Whereas, in the original order passed by the ITAT on 19.06.2018, the raised issue was not discussed. 12. Therefore along with other issues which were not discussed in the above referred ITAT order, the assessee raised the ground of corrigendum and sec.144 in the Miscellaneous petition (page no.2 of MP) filed in MP Nos.186 to 188/2018. The ITAT while disposing the Misc Petition vide its order dt.13.03.2019, has directed to consider the issue of validity of corrigendum (Page No. 3 of the MP order). 13. Therefore, it is kindly requested to.... i) As the High Court has directed to consider correctness of the impugned corrigendums as a part of the appeal,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or such services but held it to be violating sec 13(l)(c). On the above basis, as it is not disputed that Assessee is solely engaged in running an educational institution and the entire receipt was utilized in running the educational Institution, violation if any of any provision, can be considered at the time of assessment and approval u/s.12AA need not be withdrawn Sd/- COUNSEL FOR APPELLANT 5. It was submitted by the Ld.AR that the assessee is a Charitable Trust, which is running an Educational Institution. It was a submission that the assessee's trust had registration u/s.12AA from 22.10.2002 and the assessee had also been granted approval u/s.10(23C)(vi) from 30.04.2008. It was a submission that there was a search on the premises of the assessee trust on 02.07.2010. It was a submission that consequent to the search, assessments came to be completed. It was a submission that in the course of the search certain documents were found which were in respect of the advance fee collected from students. It was a submission that the said advances were adjusted against the regular fee as and when the students were admitted to the course.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AY 2010-11 & 2011-1 2 8 26.04.2013 Stay Application filed before Assessing Officer. 9 07.05.2013 Order passed by ACIT rejecting the petition for Stay of collection of tax. 10 15.05.2013 Stay Application filed before Joint Commissioner of Income-tax Central- Range II. 11 18.11.2014 Order passed by DGIT (lnv) u/s.10(23C)(vi) withdrawing the approval from assessment Year 2010-11 onwards. 12 01.12.2014 Rectification Petition filed u/s. 154 of the Act before DCIT (lnv) pointing out the lack of reasonableness of opportunity to the Petitioner and non-appreciation of certain vital facts. 11.12.2014 13 19.12.2014 Order passed by the Hon'ble High Court in W.P. No. 33376 and 33377 of 2014 directing the JCIT, Central Range II, to pass a speaking order on the stay application dt 13.05.2014 after affording an opportunity of Personal hearing. 14 22.01.2015 Nearly after 2 years Corrigendum issued to assessment order passed u/s/s 143(3) r.w.s 153A of the Act for the Assessment Years 2010-11 and section 143(3) for the assessment year 201112 stating that assessment was actually made u/s.144 of the Act it was erroneously mentioned as '143 r.w.s. 153A ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Act as also the benefit of Sec.12AA of the Act. It was also a submission that the assessee's registration u/s.12AA may be restored in its entirety right from the AY 2010-11. In respect of the specific query from the Bench, whether the assessee has filed any appeal against the order passed by the DGIT (Investigation) dated 18.11.2014 withdrawing the approval u/s.10(23C)(vi) from the AY 2010-11 onwards, it was fairly agreed by the Ld.AR that no appeal has been filed till date against the said order. 7. In reply, the Ld.DR submitted that the issue had already been decided by the Tribunal vide its order dated 19.06.2018, wherein, in Para No.7.2, the Tribunal has held as follows: 7.2 From the above, it is clear that on a search and seizure action, it was found that huge amount of Rs. 1,57,42,700/- was collected from students, in cash, without issuing any receipts and without entering them in the regular books of accounts maintained by the trust. Subsequently, the assessee was required to prove its exemption claim. After considering the assessee's submissions etc, the above facts were confirmed with a finding that the impugned sum was lying with t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the regular books of accounts maintained by the trust. When the assessee, a public charitable trust, has not kept clear and accurate accounts of the trust-property and failed to furnish with full and accurate information as to the impugned amount and state of the trust property, a finding was arrived that the impugned sum was lying with the Managing Trustee and others during the said period, which have not been used for the objects of the assessee trust. These facts have not been disproved. All these activities violate the provisions of the Indian Trusts Act, the Income Tax Act etc and hence the assessee's case clearly falls within the mischief of all the above clauses of Section 4 of the Indian Trust Act, supra. An assessee which claims to be a Trust existing for Public Charitable Purposes but does not carry its activities in accordance with its objects could certainly fall within the prohibitions of clauses of 54 of The Indian Trusts Act 1882, as extracted above. Further, al....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order dated 07.12.2016 cancelling the registration u/s.12AA shown amounts having been collected from various students towards various branches of engineering. A perusal of the dates shows that the same has been collected between November, 2009 and June, 2010, substantial portions having been collected between April, 2010 and June, 2010. Admissions taken place during June-July. The assessee has claimed these advances received, as and when the admission is processed, the same have been recorded into the regular books. If the admission is not taken, the amount is returned. It is for the assessee to tally the accounts. There are 214 entries in the said diary. It is not an impossible task to identify the student with the admission and to identify to whom the money has been returned if the admission has not been taken. The Revenue would not be able to identify from the seized diary who is the student and who is not the student because the admission details are also not available in the said diary nor their addresses. Further, only if the assessee is able to identify and specify the students, they can be questioned for proving the amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as been passed by the PCIT on 07.12.2016 cancelling the registration u/s.12AA with retrospective effect from the AY 2010-11 onwards. Admittedly, this registration has been cancelled on account of the fact that the search on the assessee on 02.07.2010 brought out the evidences in the form of the incriminating documents which showed that the assessee Trust was being run for the purpose of profit and not solely for educational purpose as also on account of the fact that the cash which had been collected in the form of capitation fee had been misappropriated by the Trustees for purposes other than the objects of the Trust and the trustees are unable to show how the funds were used only for attaining the objects of the Trust. In these circumstances, the order passed by the PCIT, Central-2, Chennai, cancelling the registration u/s.12AA of the Act vide its order dated 07.12.2016 stands upheld. 12. In the result, the appeal filed by the assessee in ITA No.370/Chny/2017 stands dismissed. For ITA Nos.637 & 638/Chny/2017 for the AYs 2010-11 & 2011-12: 13. In respect of the appeals in ITA Nos.637 & 638/Chny/2017, the main crux of the arguments of the Ld.AR a....