TaxTMI 
TaxTMI 
2023 (8) TMI 1521
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....2012-13, when all the three years are distinct and separate, that the assessee has filed appeal before CIT ( Appeals ) Bareilly, for which part hearing was done and each appeal was submitted separately. 3. Because the learned C.I.T (Exemption) Lucknow erred that Orders for three years Order passed u/s 143(3) / 147 Dated 30.03.2016 AY 2010-11 29,64,780-/ AY 2011-12 16,53,625/- AY 2012-13 16,18,916/- passed by ITO (Exemption) Bareilly (Sahtosh Kr Pandey) has not been taken into consideration and no Remark is passed in her Order. The addition is baseless and bad in eyes of Law, treating the Educational Society as AOP by Assessing Officer. 4. Because the learned C.I.T (Exemption) Lucknow has mentioned in her Order on p 3 Para 5 that no Proper Adjournment was sought. Whereas due to clerical mistake the PDF file of previous Application was attached in email for seeking adjournment as against the Adjournment Application made for 08.12.2020. Where Mr Alok Anchal had a Surgery and was unable to move due to medical directions. 5. Because the learned C.I.T ( Exemption) Lucknow erred in law in not making any fresh ground of investigation before compiling the Order and cancellin....
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....Income Tax Officer (Exemptions) Bareilly and the Joint Commissioner of Income Tax (Exemptions). Lucknow on the basis of details submitted during the course of assessment proceedings for the A.Y. 2010-11, 2011-12 and 2012-13 have recommended for cancellation of registration u/s 12AA of the IT Act granted by the Commissioner of Income Tax, Bareilly on 22-02-2001. The assessee was requested to furnish its reply on date 01/09/2016 at 11:00 AM On 30-08-2016 Shri Sanjay Saxena CA/AR of the assessee society appeared and sought adjournment for 13-09-2016 On 14-09-2016 Shri Sanjay Saxena, CA/AR of the applicant society again sought the adjournment for 13-10-2016. However, nobody attended on the given date nor any request seeking adjournment was filed. On 27-10-2016, the assessee was accorded another opportunity fixing the date of compliance on 16-11-2016. In response, the applicant vide letter dated nil submitted as under: 1. The day to day operations in the bank accounts in the name of Sri Ram Murti Anchal Memorial Society had been prohibited by the department by invoking provisions under section 226(3) of I.T. Act, 1961 and to continue the affairs of the school, the bank accounts....
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....ute of industrial Technology vs. CIT, Orissa High Court, Order dated 01.10.2010. (II) Amended Form No. 31 along with certified copy of order dated 15/11/2016 of learned CIT(E), Lucknow in the case of Sri Ram Murti Anchal Memorial Educational Trust. (III) Paper book containing following particulars: (i) Certificate of registration u/s 12A(a) dated 22/02/2001 granting registration w.e.f. 01/07/1996 (ii) Certificate of renewal of society as issued by Registrar of Societies dated 24/03/2011 (iii) Memorandum of Society (iv) Copy of assessment order for assessment year 2010-11, 2011-12 and 2012-13. (v) Copy of audited accounts with report for assessment year 2010-11, 2011-12 and 2012-13. (A.2.1) Earlier in the case of Sri Ram Murti Anchal Memorial Educational Trust ("SRMAMET" for short), the learned CIT(E) had passed a separate order dated 15/11/2016 rejecting the application of SRMAMET for registration under section 12A of the IT Act. SRMAMET, though worded and sounding similar, is different from the assessee "Shri Ram Murti Anchal Memorial Educational Society" ('SRMAMES' for short). The relevant portion of the aforesaid order dated 15/11/2016 is reproduced below: "1. T....
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.... 2009-10 by the Dy. CIT Circle-1, Bareilly and the accounts of the society named Shri Ram Murti Anchal Memorial Educational Society (Don & Dona Convent School) Shahjahanpur opened in the name of members of the management committee comprising Mr. Alok Anchal and others for the utilisation of the society's funds which is admitted by them in the affidavit dated 13.03.2014 sworn in before the ITO Ward-2, Shahjahanpur during the course of assessment proceedings in the personal case of Mr. Alok Anchal, Member of society. From the above facts, it is quite clear that the funds of the aforementioned society were channelized directly/indirectly for the benefit of the members of the management committee and thus the applicant society clearly stands in direct violation of the Section 13(1)(c) of the Income Tax Act, 1961. It is worth noting here that the bank accounts in the name of Sri Ram Murti Anchal Memorial Society had been attached by the Income Tax Department by invoking provisions u/s 226(3) of the Income fax Act, 1961 and henceforth the society not having left with any option decided against paying the demand raised and complying by the law instead an entirely new institution was c....
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....vities of the trust are ingenuine as the primary motive of formation of the said applicant trust was not charity but a carefully planned move to bypass law and evade tax liabilities. The above arguments render the application deficient and this deficiency is not curable. This is fatal to the claim of the applicant. 4. In the case of CIT vs National Institute of Aeronautical Engineering Education Society 2009, 181 Taxman 205 (Uttarakhand) it was held that Clause (a) of sub-section (1) of section 12AA empowers the CIT to call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of the activities of the trust or institution and may also make such inquiries, as he may deem necessary in this behalf. Said provision in section 12AA makes it clear that CIT is not supposed to allow registration with blind eyes. On perusal of the Income and Expenditure Account of the previous years it is found that the sole objective of the company is to make huge profits by undertaking the business of medical services in a totally profit oriented manner. 'Charity' is the soul of the expression 'charitable purp....
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.... (B) Separately assessment orders were passed by the Assessing Officer in the case of the assessee for assessment years 2010-11, 2011-12 and 2012- 13 each dated 30/03/2016, taking the view that the assessee was neither entitled for exemption u/s 10(23C)(iiiad) nor u/s 11 of the IT Act. The relevant portions of the aforesaid assessment orders are reproduced below for ease of reference: ASSESSMENT YEAR 2010-11 In the instant case re-assessment proceedings was initiated u/s 147 of the I.T. Act, 1961 by the then ITO-II, Shahjahanpur after recording reasons as under : "It has been gathered from records and report of ITI of this office Shri Mukesh Kumar that the assessee society has not filed return of income for the year under consideration A.Y. 2010-11. The filing of income is mandatory according to section 139 of I.T. Act, in such cases of assessee society which enjoys income from imparting education through school (namely Don & Dona Convent at Mohalla Jhanda Kalah, Shahjahanpur) and claimed exemption of income under section 10(23C). The assessee society, as evident from records, has filed return of income upto F.Y. 2007-8 relevant to A.Y. 2008-09 claiming exemption under s....
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....s 10(23C)(iiiad), nor u/s 11 of the income tax act, 1961 in ITR-7 for A.Y. 2010-11. On perusal of the reply filed by the assessee it is seen that exemption u/s 10(23C)(iiiad), of the income tax act, 1961 is sought. However the assessee society is also registered u/s 12A of the Income Tax Act,1961 vide order dated 22.02.2001 effective from 01.07.1996. Also in the computation of income submitted, the society has claimed exemption u/s 11 of the income tax act, 1961, the assessee society has also obtained audit report in form 10B dated 30.09.2010 in respect of financial year ending on 31.03.2010 from M/S S.K. Saxena & company which is submitted to this office on 14.03.2016. 4. This office has received a letter F.No. AEFPA3638F/ITO1(4)/ SPN/2015-16/1115 dated 11.03.2016 from ITO Shahjahanpur along with copy of the affidavit dated 08.03.2016 of Mr. Alok Anchal submitted by him before the ITO-1(4), Shahjahanpur. In the affidavit the deponent has shown in that "he had opened bank account in Vijya Bank bearing account no.714901011000426 for society's funds in his personal name as the society's bank account had been seized by the income tax department for recovery of demand for ea....
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....In view of there of no disallowance an another expenses is being made. 9. As regard claim of assessee for exemption u/s 10(23C)(iiiad) of the income tax act, 1961 as claimed under cover letter dated 18.02.2016, the society is not existing solely for the purposes of education. It has enured benefit to the member of the management committee as they have utilized the funds of the society for their personal benefit which is evident from the affidavit dated 08.03.2016 placed on file and deposed by the Manager of the Society Shri Alok Anchal before the ITO-1(4), Shahjahanpur. Moreover, in any case the provisions of section 10(23C) also require application of income to the extent of 85% of the gross receipts for the educational purposes. From the discussion in para 8 above, the application is at 70.34% of the gross receipts during the year. In the light of this fact and profit motive of the society, the assessee is not entitled for exemption u/s 10(23C) (iiiad) of the IT Act. 10. From the aforesaid discussion, it is seen that the assessee society is neither entitled for exemption u/s 10(23C)(iiiad) nor u/s 11 of the IT Act 1961." ---------------------------------------------------....
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....gh ITI of this office on 30.01.2016. In compliance of this notice, assessee filed its return of income on 17.02.2016 declaring total income at Nil. Accordingly, notice u/s 143(2) was issued on 18.02.2016 fixing the date of compliance on 29.02.2016. In response to the notice Shri Sanjay Saxena, CA, attended from time to time and submit written submission along with necessary details/documents. Books of accounts along with bills/ vouchers etc. were produced and test checked. The society is running an educational institution in the name & style "Don & Dona Convent." 2. The society had not filed any income tax return u/s 139(1), for the year under reference. 3. In the return filed, in response to notice u/s 148, it has been found that the assessee neither claimed exemption u/s 10(23C) (iiiad), nor u/s 11 of the income tax act, 1961 in ITR-7 for A.Y. 2011- 12. On perusal of the reply filed by the assessee it is seen that exemption u/s 10(23C)(iiiad), of the income tax act, 1961 is sought. However the assessee society is also registered u/s 12A of the Income Tax Act,1961 vide order dated 22.02.2001 effective from 01.07.1996. As the computation of income submitted, the society ha....
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....w. 8. As per the audited consolidated balance sheet the gross receipt of the assessee society amounted Rs. 99,70,602/- and the society has applied an amount of Rs. 83,16,977/- for the charitable purposes during the year as per the audit report submitted on 14.03.2016. The application for charitable purposes thus, works out to 83.41% which is less than the S5% as required under the provision of the under income tax act, 1961. It is also seen that out of total expenses of Rs. 83,16,977/-, Rs. 26,76,063/- is on account of depreciation and Rs. 46,27,152/- on salary of staff, the aggregating Rs. 73,03,215/-. In view there of no disallowance of other expenses is being made. 9. As regard claim of assessee for exemption u/s 10(23C) (iiiad) of the as claimed under cover letter dated 18.02.2016, the society is not existing solely for the purposes of education but for purpose of profit of the manager of the society as discussed above. It has enured benefit to the member of the management committee as they have utilized the funds of the society for their personal benefit which is evident from the affidavit dated 13.03.2014 placed on file and deposed by the Manager of the Society Shri Alo....
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....3 has escaped from assessment as stipulated under section 147 of Income Tax Act, 1961." Notice u/s 148 of the I.T, Act, 1961 was issued on 30.03.2014 through registered the then Income Tax officer Shahjahanpur, Notices u/s 142(1) dated 12. 05.2014 was issued by the then A.O. which was served upon the assessee. Due to change of incumbent on accounts of change of jurisdiction, notice u/s 142(1) were issued on 17.11.2015, 22.12.2015, fixing the date of compliance on 26.11.2015, 05.01.2016, respectively which were returned back with postal remark "R". The notice u/s 142(1) of the I.T. Act, 1961 dated 29.01.2016 was also served through ITI of this office on 30.01.2016, fixing date of compliance on 19.02.2016. In compliance of this notice, assessee filed its return of income on 17.02.2016 declaring total income at Nil. Accordingly, notice u/'s 143(2) was issued on 18.02.2016 fixing the date of compliance on 29.02.2016.In response to the notice Shri Sanjay Saxena, CA, attended from time to time and submit written submission alongwith necessary details / documents. Books of accounts alongwith bills/ vouchers etc. were produced and test checked. The society is running an educ....
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....hat the assessed had a cash balance of Rs. 29,48,387/-, and advance to Mr. Rs. 1,94,69,964/-. The assessee society had given advance to Shri Alok Anchal Rs. 1,63,08,933/- up to 31.03.2011, the balance amount of Rs. 31,61,031/-has been paid further during the year. Since the assessee had not operated any bank account during the year how the amount has been advanced to him, who is a managing trustee of the society, is not under stood. It clearly shows that the transaction have been recorded in the accounts without any basis. This shows that the affairs of the society are not being managed in a prudent manner. It also can not be ruled out about miss utilization of society fund by the managing persons showing such large advances. 7. The aforesaid act, of the assessee clearly established that it is not compliant with the Law. 8. As per the audited consolidated balance sheet the gross receipt of the assessee society amounted Rs. 99,77,656/- and the society has applied an amount of Rs. 83,59,140/- for the charitable purposes during the year as per the audit report submitted on 14.03.2016. The application for charitable purposes thus, works out to 83.78 % which is less than the 85% a....
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.... IT Act. We are dealing with a situation of cancellation of registration granted earlier u/s 12AA of the IT Act. Relevant provisions regarding cancellation of registration are contained in section 12AA(3) and 12AA(4) of the IT Act read with section 13(1) and section 13(3) of the IT Act; which is reproduced below for the ease of ready reference: Section-12AA (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: (4) Without prejudice to the provisions of sub-section (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 ....
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.... a Hindu undivided family, a member of the family; (cc) any trustee of the trust or manager (by whatever name called) of the institution; (d) any relative of any such author, founder, person, member, trustee or manager as aforesaid; (e) any concern in which any of the persons referred to in clauses (a), (b), (c), (cc) and (d) has a substantial interest. (D.1) Some facts that emerge from perusal of aforesaid orders, referred to in foregoing paragraphs (A.1), (A.2.1) and (B) of this order, are as under: (i) Demand of Rs. 19,42,860/- raised after assessment order u/s 144 of IT Act for assessment year 2009-10 by DCIT, Bareilly and subsequently the accounts were attached u/s 226(3) of IT Act for recovery of said demand and demand of earlier years. Attachment u/s 226(3) of IT Act is still in place as on the date of hearing on 06/07/2023. The financial transactions of the assessee was confirmed by learned Counsel for the assessee at the time of hearing. (ii) School, named Don & Dona Convent School ('DDCS for short'), located at Shahjahanpur of Shri Ram Murti Anchal Memorial Educational Society (SRMAMES), the assessee, was transferred to Shri Ram Murti Anchal Memorial Educat....
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....return of income for assessment year 2010-11, 2011-12 and 2012-13 on its own. When notices were issued by the Assessing Officer u/s 148 r.w.s. 147 of IT Act; and u/s 142(1) of IT Act. (v) (B.2) On perusal of aforesaid assessment orders for assessment year 2010-11, 2011-12 and 2012-13, it is also evident that numerous notices sent by the Assessing Officer through post were refused by the assessee, and were returned back by postal officials to Income Tax Department. (D.1.1) The case laws on which the learned Counsel for the assessee placed reliance (mentioned in foregoing paragraph (A.2.1) of this order, fail to advance the case of the assessee. The decisions in the cases of Commissioner of Income Tax (Exemptions) vs. Shri Shirdi Sai Darbar Charitable Trust (Dharamshala) 395 ITR 576 (P&H), ITAT Delhi Bench order in the case of Bhartiya Kisan Sangh vs. CIT(E) in I.T.A. No.6721/Del/2015, ITAT Delhi Bench order in the case of Sahid Munshi Ram Memorial Education Society vs. CIT [2017] 59 ITR (Trib) 40 (Delhi) and order of ITAT Jaipur Bench in the case of IMC of ITI Chhabra vs. CIT(E) in I.T.A. No.816/JP/2015 deal with cases regarding initial grant of registration u/s 12AA of the IT Ac....
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.... attachment of bank accounts (not just existing ones, but any account that might be opened in future) of the assessee; the assessee has employed a subterfuge of using the bank account of an individual (Mr. Alok Anchal). This collusive arrangement is devised by the assessee and the aforesaid individual; to defeat the lawful process of recovery of tax dues of the assessee. The assessee went a step further. The assessee (SRMAMES) entered into collusive arrangement with aforesaid SRMAMET whereby school by the assessee (aforesaid Don and Dona Convent School, ("DDCS" for short) was transferred to aforesaid SRMAMET; and application for registration u/s 12AA of the IT Act was made by SRMAMET; in order to make SRMAMES lose significane in running of the school; with the larger aim of frustrating lawful recovery of tax dues of the assessee. In aforesaid order dated 15/11/2016 rejecting application of SRMAMET seeking registration [referred to in foregoing paragraph (A.2.1) of this order], it has been stated in paragraph 3 that entirely new institution (SRMAMET) was created by way of a trust which was formed by the same management committee as that of the earlier society (SRMAMES i.e. the asses....