TaxTMI 
TaxTMI 
2021 (10) TMI 1012
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.... before the Tribunal was 23/05/2019. It was submitted that on some professional advice, the assessee, instead of filing appeal before the Tribunal, filed a Writ Petition in the Lucknow Bench of Hon'ble Allahabad High Court on 24/04/2019 wherein the order passed by Pr. CIT (Central) was challenged and a petition for interim relief in the form of stay and operation of the said order, was filed. Learned counsel for the assessee submitted that various dates were fixed by Hon'ble High Court but no decision was taken and the matter is still pending therein and in the meantime the assessee was advised to file appeal before the Tribunal and therefore, the appeal was filed before the Tribunal and in the process the appeal became time barred by 216 days. It was submitted that since the delay had occurred due to legal process adopted by the assessee on the advice of a professional and therefore, there is no fault on the part of the assessee and it was prayed that the delay in filing the appeal may be condoned and the appeal be heard on merits. 3. Learned CIT, D.R., did not have any objection to the condonation application filed by the assessee and finding the explanation by the ass....
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....celled the registration granted to the assessee vide his order dated 20/03/2019 and against the cancellation of registration, the assessee filed a Writ Petition before Lucknow Bench of Hon'ble Allahabad High Court for interim stay and operation of the said order and which is still pending before Hon'ble Court despite having listed for hearing on a numbers of occasions. Learned counsel for the assessee further submitted that side by side the assessee also challenged the issuance of notice u/s 153A through a writ before Hon'ble Allahabad High Court on the ground that the assessee should have been asked to file their returns u/s 153C of the Act instead of section 153A as the cases of the assessee were reopened in view of incriminating material found at the premises of another person which Hon'ble High Court dismissed by holding that since assessee was before Settlement Commission therefore, it should get its issues resolved from there only. The assessee filed appeal before Hon'ble Supreme Court against the findings of Hon'ble High Court and Hon'ble Supreme Court, vide order dated 03/04/2017, remitted back the issue to Hon'ble High Court with a direction....
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.... Hon'ble High Court in the case of Tahiliani Design Pvt. Ltd. (supra) and therefore, it was prayed that the order passed by learned CIT (Exemptions) be set aside as illegal being void ab initio. 5. Learned CIT, D.R., on the other hand, heavily placed reliance on the order of learned CIT (Exemptions) and also filed written submissions which, for the completeness, are reproduced below: "In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to Section 12AA of I.T.Act: 1. Dawn Educational Charitable Trust Vs CIT [2016] 73 taxmann.com 61 (SC)/r20161 242 Taxman 1 (SO Where Hon'ble Supreme Court dismissed SLP against High Court's ruling that where assessee-trust was running posh school for children of non-resident Indians on commercial lines under guise of charitable purpose, application made for registration under section 12A was to be rejected. 2. Navodava Education Trust Vs Union of India 2018-TIOL- 261-HC-KAR-IT where Hon'ble Karnataka High Court held an institution having the cloak of "educational trust", whose trustees appear to be the members of same family and who thoroughly abused ....
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....and expenditure account of the society for the financial years 2000-01 to 2002-03, and concluded that the assessee was not carrying on any charitable activity as its dominant object was to earn profits under the garb of 'education'. The Commissioner had further observed that the assessee was charging substantial fee from the students and was making huge profits. The order passed by the Commissioner further disclosed that the surplus had been transferred to the capital fund of the assessee. It had been further clarified in the finding of the Commissioner that no expenditure was made by the assessee for the charitable purpose. [Para 6] Mere imparting education for primary purpose of earning profit cannot be said to be a charitable activity as interpreted by the Apex Court in Municipal Corpn. of Delhi v. Children Book Trust [1992] 3 SCC 390. In the expression 'charitable purpose', charity is soul of the expression. Mere trade and commerce in education cannot be said to be a charitable purpose" 5. Self Employers Service Society Vs CIT [20001 113 Taxman 703 (Kerala)/r200n 247 ITR 18 (Kerala)/r20001164 CTR 449 (Kerala) Where Hon'ble Kerala H....
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..... G. D. Singla Charitable Trust vs. CIT (I.T.A. No.594/2013) where Hon'ble I.T.A.T. Amritsar held that benefit of registration u/s 12AA cannot be granted to a trust that is controlled by a single family." 6. We have heard the rival parties and have gone through the material placed on record. We find that it is undisputed fact that the assessee was a charitable institution, registered u/s 12A of the Act vide registration granted by the learned CIT (Exemptions) vide order dated 26/03/1999. A search & seizure operation happened on the premises of the assessee as well as on the trustees wherein from the premises of the trustees and assessee, certain incriminating documents including cash was found. The assessee claimed before the authorities that such cash was gifted to assessee by various students. In view of the search, the assessee as well as the trustees were required to file their income tax returns u/s 153A of the Act which the assessee as well as trustees duly complied. In the meantime, with a view to make settlement with the Department, the assessee filed application with Settlement Commission on 05/01/2017 and which was admitted by Settlement Commission on 17/01/2017. H....
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....below: "7.2 The contention that no view can be formed regarding the eligibility of registration u/s 12AA pending final order passed by Income tax settlement Commission .(ITSC in short), it has to be noted trust that for the purpose of cancelling the registration u/s 12AA, only the material found during search and the admitted facts by trust before settlement commission have been relied whereas the ITSC would be only quantifying the undisclosed income which admittedly included the socalled cash gifts received by the trust from students. As may be seen from the facts narrated, the proceedings for cancellation of registration u/s 12AA are based on admitted facts only and not on the quantum of taxable income which were to be assessed or assessable by ITSC. The fact that the cash was out of cash gifts from students was prima facie accepted by ITSC when it passed the order u/s 245D(2) while admitting the application u/s 245C(1) based on SOF filed by "trust and hence the assessee cannot rescind the admitted facts for any reason whatsoever. Once the facts of receiving cash gifts from students have been admitted before ITSC, which has been verified by assessee to be correct, the sa....
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.... again is independent of proceeding for registration under 12AA, which were never the subject matter of adjudication before ITSC or for that matter before the SC also. Hence, the pendency of writ petition on entirely different grounds will have no bearing to the continuation of 12AA cancellation proceedings. As Hon'ble SC has not granted stay on 12AA proceedings other than the proceedings by ITSC on the application filed by assessee, nor the assessee has filed any document showing that the 12AA notice has been made subject matter of challenge before any court, the plea of the assessee is therefore unacceptable. Moreover, the assessee's stand appears to be contradictory because on one hand the assessee is claiming that the matter is before settlement commission and nothing can be presumed at this stage, whereas on the other hand the assessee itself challenged the validity of proceedings before Settlement Commission before High Court and on being unsuccessful has filed an SLP. Therefore, once the assessee itself is contesting the validity of the proceedings before settlement commission, how can it then take immunity on grounds that proceedings are pending before settlement co....
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....llowed to be further proceeded with under sub-section (2D) of section 245D, the Settlement Commission, in respect of such application shall have such exclusive jurisdiction upto the date on which the application is rejected, or, not allowed to be proceeded with, or, declared invalid, or, not allowed to be further proceeded with, as the case may be.] (3) Notwithstanding anything contained in sub-section (2) and in the absence of any express direction to the contrary by the Settlement Commission, nothing contained in this section shall affect the operation of any other provision of this Act requiring the applicant to pay tax on the basis of self-assessment in relation to the matters before the Settlement Commission. (4) For the removal of doubt, it is hereby declared that, in the absence of any express direction by the Settlement Commission to the contrary, nothing in this Chapter shall affect the operation of the provisions of this Act in so far as they relate to any matters other than those before the Settlement Commission." 6.2 The bare reading of the provision of section 245F leads us to hold that once an application is filed before the Settlement Co....
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....(hereinafter referred as the "Trust") was granted registration u/s 12A of the I T Act vide Commissioner of Income Tax, Bareilly order no. F.No.12A/110(2)/99-00 dated 26.06.1999 w.e.f. 26.05.1998. The trust, as part of its educational activity, runs various medical institutions and its associate institutions inter-alia provide medical treatment to patients. Dr. Keshav Kumar Agarwal is the main trustee and Chairman of the Trust while his spouse Dr. Lata Agarwal is a trustee and gives professional services to the trust. There are two other trustees Dr. Ashok Agarwal and Dr. Kiran Agarwal of the trust. Dr. Ashok Agarwal is the President of the Trust and Dr. Kiran Agarwal also gives professional services to the trust and all the four trustees are taking professional fees or salary from the trust. The assessee trust has been running various paramedical courses and it also started MD/PG course in addition to paramedical courses. 2. From the perusal of records it is noted that a search and seizure operation u/s 132 of the Income-tax Act, 1961, (hereinafter referred to as the 'Act') was carried out in this case on 18.09.2014 in this case along with other cases of Rohilkhand....
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.... over the country through the operators who gives accommodation entries in various forms, after taking cash as the assessee trust is also entitled to take donations which are exempted u/s 80G. The assessment orders of the assessee for A.Y. 2009-10 to 2015-16 were about to completed, before which the assessee trust filed application before the Settlement Commission on 5/1/2017, as a result of which the final assessment orders in the case of the trust could not be passed. Though initially, Dr Keshav Aggarwal had admitted the cash found in search to be his undisclosed income but subsequently in the application filed by the trust before Settlement application, the assessee trust claimed the same to be its own receipts and disclosed assessment year wise additional income to the tune of Rs. 34,14,30,274/- for A.Y. 2009-10 to 2015-16 before the settlement commission, which inter alia also included the income on account of cash of 20.80 Cr found during the search. 2.2 As regards, source of additional income, it was stated by the applicant trust in para 3.3 of page no. 27 of the Settlement Application that the additional income offered by it in Settlement Application has arisen to ....
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....f his father Shri Krishna Kumar Agarwal. The additional income so worked out on the basis of the seized documents was therefore, offered in the hands of the applicant trust after setting off the amounts applied towards object of the applicant trust. 2.4 During the post search enquiries, the investigations were made into the genuineness of the corpus donations received by M/s Rohilkhand Educational & Charitable Trust as mentioned in report submitted to settlement commission under rule 9. In some of the cases the donor was not found on the address while in certain cases no such concern was found existing on the address. During the assessment proceedings as well, the verification of corpus donation was undertaken by issuing statutory notices to the donors, most of which are Delhi based but all the notices have been returned unserved "by the postal authorities with remarks "Left", "Refused" and "No such person on the address" and "insufficient address". Apparently, the alleged donors were apparently non- genuine in nature. This leads to my conclusion that the trust accepted capitation fee from its students in cash and part of it was routed it through banks introducing the same....
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....admissions to students but at the same time they are unrecorded in accounts or recorded by routing the same as corpus donation. In either situation such capitation fee /gifts /donations do not form the part of receipts for purposes of computation of income under section 11 also. In the case of the present trust also the so-called cash gifts were not fully recorded (other than those which were recorded in the garb of bogus corpus donations from the parties). In absence of such amounts being completely recorded in books of accounts, such amounts could not be said to be utilised for the purposes and objects of the trust or that the activities of the trust genuine and being carried as per objects of the trust deed." 6.4 Therefore, in view of the above findings, we hold that issue of cancellation of registration u/s 12A arose from the search conducted on the assessee and there was no other reason to initiation of proceedings for cancellation of registration therefore, as per the provisions of section 245D read with order of Hon'ble Delhi High Court in the case of Tahiliani Design Pvt. Ltd. (supra), all the powers of income tax authorities including power to cancel the registratio....
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....rt and if so, whether in the said report the aforesaid aspect of violation of Section 269ST of the Act has been reported; if it is so, the Settlement Commission would have jurisdiction to pass orders with respect to violation alleged of Section 269ST also. However neither counsel has instructions on the said aspect. C. It is not deemed necessary to adjourn the hearing to enable counsels to take instructions on the aforesaid aspect, because the powers of the Settlement Commission under Section 245D(4) also extend to "examining such further evidence as may be placed before it or obtained by it" and the Settlement Commission in the present case is still seized of the matter and would be within its rights to, if so deems apposite, also deal with the aspect of violation of Section 269ST of the Act and either to grant exemption from penalty therefore or to pass such other order as it thinks fit in relation thereto as well and it is felt that the said power and jurisdiction of the Settlement Commission should not be permitted to be interdicted by the impugned order. D. In this context we may also notice that the notices under Section 153 A as well as under Section 271DA ....
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....d immunity with respect thereto only in the matter of undisclosed income and in our view would cover also penalties under other provisions of the Act, detection whereof has the same origin as the origin of undisclosed income. H. Not only so, the words "in relation to the case" and "with respect to the case" used in the aforesaid provisions, are words of wide amplitude and which, in our opinion, in the facts of the present case may allow the Settlement Commission to, notwithstanding the petitioner having not expressly referred to the notice dated 30th September, 2019 and proceedings for violation of Section 269ST pending against it in its application, pass such orders as it may thinks fit in relation / with respect thereto and the said powers of the Settlement Commission cannot be permitted to be interdicted by the impugned order. We reiterate that the proceedings of violation of Section 269ST, as per the notice dated 30th September, 2019, are a result of what was found in the search and survey qua the petitioner and are capable of being treated as part and parcel of the case taken by the petitioner by way of application to the Settlement Commission. Supreme Court,....
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.... of Income Tax Vs. Income Tax Settlement Commission (2014) 360 ITR 407 (Delhi). 14. Once it is so, the Settlement Commission, under the proviso to Section 245F(2), with effect from 1st November, 2019 when the petitioner admittedly made the application under Section 245C before it, had the exclusive jurisdiction to deal with the matter relating to violation of Section 269ST of the Act also and the respondent, on 4th November, 2019 did not have the jurisdiction to impose penalty for violation of Section 269ST on the petitioner and the impugned order is without jurisdiction and liable to be set aside and is hereby quashed. 15. We are of the view that it should be left to the Settlement Commission to, in exercise of its powers under Section 245D(4), Section 245F and Section 245H, consider whether the matter of penalty for violation of Section 269ST of the Act is to be looked into by the Settlement Commission while deciding the application of the petitioner, or not. 16. We accordingly direct, that without prejudice to the right of the Income Tax Authorities to contend before the Settlement Commission that the petitioner having not disclosed the aforesaid facts....