AI Drafter 
TaxTMI 
TaxTMI 
2020 (9) TMI 196
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....eciate that since inception appellant is carrying on the activity of providing education through the medical college run by the appellant which is a charitable activity as per the provisions of section 2(15 ) of the Act, and there is no change in the aforesaid activity and hence withdrawal of registration u/s 12AA(3) of the Act on the ground that the activities of the trust are not in accordance with the objects of the trust are wholly erroneous and unsustainable in law. 3. That the Pr. CIT erred on facts and in law in alleging that appellant trust was engaged in the nefarious activities for inducting of fresh batch of students for academic session without requisite infrastructure which is in violation of clause (ii) para 4 of the trust deed, simultaneously the same was in violation of section 2(15 ) of the Act which is factually incorrect and hence misconceived. 4. That various adverse findings recorded in the impugned order are factually incorrect, legally misconceived and untenable. 5. Without prejudice to the aforesaid grounds, that the Pr. CIT erred on facts and in law in withdrawing registration under section 12 AA(3) of the Act since incep....
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....aid inspection report, the permission for approval for 4th year MBBS Course was declined. 9. 27.02.2010: The Gian Sagar Medical College and Hospital submitted a compliance report by stating that all the deficiencies as pointed in the inspection have been removed. Further with regard to the deficiency of non availability of the auditorium, it was submitted that the auditorium is under construction and will be made available by the institution as per the phase wise requirement at the time of inspection of 4th renewal. Along with the compliance report, the evidences with regard to the construction of the auditorium was also submitted. 10. 22.03.2010: In view of the compliance report submitted by the assessee trust, a further inspection was carried out, and it was reported that all the deficiencies as pointed out at the time of first inspection have been removed. 11. The executive committee of the MCI on 05.04.2010 recommended for granting permission to the Gian Sagar Medical College and Hospital for admission in 4th year MBBS Course in the said medical college. 12. 22.04.2010: An FIR was lodged against Dr. Ketan Desai, President of MCI, Sh. J.P. Singh and Dr. Sukhwinder Si....
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....report have been rectified. Further the existing facilities and faculty at Gian Sagar Medical College & Hospital appear more than adequate to conduct undergraduate medical teaching. However, there is scope for improvement of clinical and laboratory services within the existing infrastructure." 18. 16/17.06.2010: On 15.05.2010, the MCI was superseded by issuing an amendment in the MCI act and replaced by Boards of Governors of 7 persons. As per this amendment the Board of Governor was to carry out the function as council. The Board of Governors had also conducted the inspection by team of 3 inspectors of the Gian Sagar Medical College & Hospital on 16/17.06.2010. In this report, it is stated that the auditorium is not available and is required at the time of admission of 5th batch. 19. 12.07.2010: The Board of Governors had after considering the said report decided to grant the permission to admit the 4thbatch of 100 MBBS students in said college for the academic year 2010-11 and accordingly the permission letter was issued on 12.07.2010. 20. 2014: An assessment under section 143(3) of the Act was framed for the AY 2011-12, wherein on the aforesaid allegation of alleged pay....
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....onted to the assessee. Infact, whole allegation of the CBI, and revenue proceeded on an assumption that for getting the permission for admission of students in fourth year, since the assessee was not having requisite infrastructure, as such, Dr. Ketan Desai entered into criminal conspiracy with Sh. J.P. Singh, the New Delhi and consequently, Shri Ketan Desai was discharged by the Hon'ble Court. 25. It was argued that at time of first inspection on 11/12.01.2010, 14 deficiencies including the non availability of auditorium was pointed out, however, on 27.02.2010 when the Gian Sagar Medical College and Hospital submitted compliance report, all the deficiencies as pointed out earlier were removed, and in respect of the auditorium it was submitted that same is under construction and relevant documentary evidences with regard to the same was also furnished alongwith the compliance report. It was submitted that on the basis of the aforesaid compliance report, a further inspection was carried out on 22.03.2010 and accordingly on 05.04.2010, permission was granted to the Gian Sagar Medical College and Hospital for admission in 4th year MBBS Course in the said medical college. It was arg....
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....ven after the lodging of the FIR, inspection of the assessee premises was carried out twice, and on each occasion, it was found that assessee had requisite infrastructure for the approval and recommendations made by the Executive Committee of the MCI at its meeting on 05.04.2010 to grant permission for admission of 100 students in the year 2010-11 for the fourth batch of MBBS Students at the Gian Sagar Medical College & Hospital, Patiala was justified on the basis of the report of the Council of Inspectors. In such circumstances, cancellation of the registration of the assessee trust by the Pr. CIT is wholly unsustainable in law. It was submitted that u/s 12AA(3) of the Act, registration can be cancelled only when the Principal Commissioner is satisfied that 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. In this case, the ld. AR argued that it would be seen that the learned Pr. CIT without any tangible material and purely on the basis of the allegation has held that assessee trust was involved in the nefarious activities which allegation is factually incorrect and without any material.....
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....srepresentation. 52. Therefore, we are of the view that the cancellation of the assessee's registration under Section 12-A of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the Commissioner in this case. Thus, question no. 1 is answered in the negative that is in favour of the assessee and against the revenue." 30. In view of the aforesaid facts and circumstances of the case, it was argued that order of the ld. Pr. CIT cancelling the registration be held unsustainable in law. 31. The ld. DR relied on the orders of the ld. PCIT. The order of the ld. PCIT is as under: " The assessee trust, M/s Gian Sagar Education & Charitable Trust (Regd.) is running a medical college & hospital under the name of M/ s Gian Sagar Medical College & Hospital at Banur, Punjab and Mohali. The assessee trust was registered u/s 12A of the Income Tax Act, 1961 vide CIT- XI, Chandigarh-II, Chandigarh letter F. No. CIT/ CHD- II/Tech/3612 dated 02.04 .2005 and registered at S.No. 89. It is also eligible for tax relief u/ s 80G of the I.T. Act, 1961 vide F.No. CIT- II/CHD/809/Tech 187/471 dated 07.05.2007 . 2. During the cour....
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....lated date, Sh. Rohit Jain and Ms. Deepashree Rao, AR of the assessee trust appeared before the undersigned on 21.09.2017 and discussion was held on the submissions filed by the assessee on 23.02.2017. 7. After considering the submission of AR, material available on record, it is noticed that CBI team had arrested Sh. Kamaljit Singh, CEO of M/s Gian Sagar Medical College & Hospital while on his official duty on 22.04.2010 on the allegations that he has delivered an amount of Rs. 2 crore to Sh. Ketan Desai, President of Executive Committee of MCI through a middleman Mr. J.P. Singh. And also on the same date, Dr. Sukhwinder Singh, Vice Chairmna of M/s Gian Sagar Medical College & Hospital was chargesheeted and arrested by CBI team. The assessee trust was engaged in the nefarious activities for inducting of fresh batch of students for academic session without the requisite infrastructure. It is clearly violation of (ii) of para 4 of trust deed, simultaneously, violating the provision of Section 2(15 ) of the I.T. Act while carring out of its activity. The society was established with the sole intention of helping charitable and philanthropic venture of running of med....
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....t the Gian Sagar Medical College & Hospital, Patiala was justified on the basis of the report of the Council Inspectors and the compliance report of the Principal. The observations made in the first report have been rectified. Further, the existing facilities and facility at Gain Sagar Medical College and Hospital appear more than adequate to conduct undergraduate medical teaching. However, there is scope for improvement of clinical and laboratory services within the existing infrastructure." 34. Further, we also observe that the Board of Directors, MCI vide their letter No. MCI-NO-35(41 )/2010 -MED/682 has renewed permission for admission of fourth batch of 100 MBBS students for the academic year 2010-2011 . The letter of granting approval is as under: ROARD OF GOVERNOKS IN SJUPER - SESSION OF MEDICAL COUNCIL OF INDIA MCI-NO.35(41 )/2010-MED./682 THE DEAN/PRINCIPAL Gian Sagar Medical College & Hospital, Ram Nagar, Banur, Distt. Patiala Punjab-140601 Ph.01762-520006, 507741 Fax: 01762 -520007 Email: principaloffice@ giansagar. com Sub: Gian Sagar Medical College Patiala- Renewal of permission for admission o....
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....r the petitioners contends that charge was framed against the petitioners on 04. 06 . 2012 for having allegedly committed the offence under Section 120-B IPC read with Section 7, 8, 12 & 13 (2 ) read with Section 13 ( 1) (d) of Prevention of Corruption Act. 3. Learned senior counsel for the petitioners submits that sanction was not granted to the prosecution to prosecute the sole public servant who was also charge sheeted on the same date. Learned senior counsel further submits that since the sole public servant, who was arrayed as an accused, is not being prosecuted, the charge as was framed, cannot stand. 4. Learned senior counsel, under instructions, seeks leave to withdraw the petition with l iberty to approach the trial court for inter alia modification of the charge on the ground that the sole public servant is not being prosecuted as the sanction has not been granted for his prosecution. 5. In view of the above, the petition is dismissed as withdrawn with l iberty to the petitioners, as prayed for. It is clarified that this court has neither considered nor expressed any opinion on the merits of the contentions of either of the parties. 6. ....
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....uption by way of bribe and criminal misconduct by the assessee trust, registration of the trust was cancelled since inception u/ s 12AA(3 ) of the Income Tax Act, 1961. A Charitable trust conduct must be at par with its provision of trust deed and as, per existing law. Its misconduct and desire to defy rules and norms have been exposed by virtue of the bribe activities. Such incidents cannot be classified as charitable by any reckoning. Such organizations which do not carry any charitable activity, cannot be granted registration. In these facts & circumstances, I am satisfied that the activities of the trust axe not genuine and not being carried out in accordance with the objects of the trust. Accordingly, after affording reasonable opportunity to the trust, registration granted u/ s 12 A vide order dated 02 .04.2005 to the assessee trust is cancelled since inception." 38. In the background of all these developments, the case of the assessee is being examined. 39. The aims & objects of the trust are as under: " i) To, establish, maintain, run, develop, improve, extend, undertake, promote, assist in all kind of research & development work to promote; assist o....
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.... up and running of Adult education centres and coaching centers for moral upliftment, educational skills towards self reliance. xiv) To grant stipend, scholarships or any other assistance or otherwise to deserving students or scholars in the field of education with special emphasis on the following specialties Medicine, Pharmacy, Computer Science, Engineering, Agriculture Environmental sciences and banking. The trustees reserve the right to grant stipends or scholarships in any field of Education that they deem fit in any part of India. xv) To lift the poor from the curses of poverty, hunger, illiteracy and diseases by starting and carrying out concentrated and intensive programmes. 4. i) To borrow, raise loans from any person, bank or financial institution in such a manner as the Trustees shall think proper or convenient for the furtherance of objects of the Trust and for this purpose the Trustees may secure repayment of these loans. To reach this objective Trustees will always try to have a balanced budget, so that revenues and expenses balance and not produce losses. The objective of the operations of the Trust is not to create a losing operations, but....
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....hat day.] (2) Every order granting or refusing registration under clause ( b) of sub-section (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 12 A.] [(3 ) Where a trust or an institution has been granted registration under clause (b) of sub- section (1 ) [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 [Principal Commissioner or] 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.] [(4 ) Without prejudice to the provisions of sub- section (3 ), where a trust or an institution has been granted registration under clause ....
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....or places or objects of artistic or historic interest,] and the advancement of any other 69object of general public utility: [Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]]" 44. The ld. PCIT, did not have record of activities which are not in accordance with the objects of the trust. The entire order of the ld. PCIT is based on the appraisal report of DDIT( Inv.) only. We do not find mention of ....