TaxTMI 
TaxTMI 
2024 (9) TMI 1308
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....gally and factually in treating various consistently followed accounting entries as gross irregularities for the following reasons: (i) That Ld. CIT(E) grossly erred in Rejecting the Application for Registration on account of non-furnishing of details of Vehicle and other Expenses of Rs. 2,31,831/- & Rs. 3,31,499/- which in fact is elaborated along with supporting documents. (ii) The Ld. CIT(E) grossly erred in Rejecting the Application for Registration on account of Non-furnishing details of examination Expenses which in fact is elaborated along with supporting documents. (iii) The Ld. CIT (E) grossly erred in Rejecting the Application for Registration on account of Non-Furnishing details of Specific Donation of Rs. 25,00,000/- for Gold Medal by the Donees which are teachers/Professors of colleges paid Received in Bank Account detailed list was submitted along with Mobile Numbers. Ground No. 3: That the Ld. CIT(E) erred in law and facts by applying the ratio of the Supreme Court decision in New Noble Educational Society v. CCIT [2022] 143 taxmann.com 276 as the genuineness of the appellant is not under dispute as the Ld. CIT (E) has neither disp....
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....ll the funds are received through State Government for Salary & Infrastructure development. The Accounts of the University is not Required to be Audited as it is covered u/s 10(23C)(iiiab). The reply of the assessee is not acceptable on following grounds:- -- 0n perusal of Unaudited Balance Sheet and I/E Accounts for FY 2 2020-21, it is observed that as per I/E accounts the assessee has received total funds of Rs 2,91,00,000/- and expenses has been made of Rs 15,91,486/- and accounts have not been audited. -- Further, Rule 2C of the IT Rules is applicable for application submitted by the assessee and as per Rule 2C(2)(g), the assessee is required to submit the annual accounts for last three years. -- The assessee has been established through Chhattisgarh Vishwavidyalaya Adhiniyam 1973 and As per clause no 48(1)- The accounts of the University shall at least once every year at intervals of not more than fifteen months be audited by the Examiner of Local Funds Accounts of State. as it is established through it which is in violation to second proviso clause (ii)(a)(B) to section 10(23C) of the Act. 2. Regarding Vehicle ....
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....fter referring to the judgment of Hon'ble Apex Court in the case of New Noble Education Society, Ld. CIT(E) had rejected the application of assessee, narrating the following observations: (6) - Recently Hon'ble Supreme Court in the case of CIVIL APPEAL NO. 3795 OF 2014 M/S NEW NOBLE EDUCATIONAL SOCIETY APPELLANT(S) VERSUS THE CHIEF COMMISSIONER OF INCOME TAX 1 AND ANR. RESPONDENT(S), Para 62 held that- The second proviso by sub-clause (ii) requires the Commissioner to make such enquiries to specify about the genuineness of the activities of the fund, trust or institution and compliance of such requirements of other laws in force by such fund, trust or institution. Upon considering the materials the Commissioner or the concerned authority can pass an appropriate order granting approval for a specific period of time or reject the application. The second proviso importantly indicates that before granting approval to any fund, trust or institution, the Commissioner or the concerned authority 'may call for such documents' including audited annual accounts or information from the fund, or trust or institution etc., as is deemed necessary for recording satisf....
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....e aforesaid order of Ld. CIT(E), the assessee prefer to carry this matter by way of an appeal before us, so has filed the present appeal. 7. At the out, Ld. AR of the assessee after reiterating the aforesaid facts of the case has alleged that Ld. CIT(E) has grossly erred in rejecting the application of registration on the ground of unaudited accounts. As per the applicable statutes, the audited clause applied on the assessee university only after three years of existence. Further, it is submitted that the FY 2020- 21 was the first complete year of university during these period accounts of the university are not required to be audited as it is covered u/s 10(23C). It is further argued by the Ld. AR that as per Rule 2(C) of the Income Tax Rules. The applicant, who has been in existence during any years or year prior to the FY in which the application for registration is made, self-satisfied copy of the annual accountof the applicant relating to such prior year or years (not being more than three years immediately proceedings the year in which said application is made) for which such accounts have been made up are to be accompanied a/with the application in form 10AB. It is the su....
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....formation which can be legitimately called or requisitioned for consideration at the stage of approval of an application, the inference is clear: the Commissioner or the concerned authority's hands are not tied in any manner whatsoever. The observations to the contrary in American Hotel (supra) appear to have overlooked the discretion vested in the Commissioner or the relevant authority to look into past history of accounts, and to discern whether the applicant was engaged in fact, 'solely' in education. American Hotel (supra) excluded altogether inquiry into the accounts by stating that such accounts may not be available. Those observations in the opinion of the court assume that only newly set up societies, trusts, or institutions may apply for exemption. Whilst the statute potentially applies to newly created organizations, institutions or trusts, it equally applies to existing institutions, societies or trust, which may seek exemption at a later point. At the same time, this court is also of the opinion that the Commissioner or the concerned authority, while considering an application for approval and the further material called for (including audited statements), should confin....
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....able on record and case laws referred to by the either parties. In the present case on perusal of the order of Ld. CIT(E), it transpired that the assessee was unable to furnish necessary information / details before the Ld. CIT(E), who was well within her jurisdiction to call for such details / documents / information or so as to make such inquiries as she thinks necessary in order to satisfy herself about the genuineness of activities of such fund or trust or university or institutions, as the case may be. 13. Similarly, as per the judicial pronouncement in the case of the New Noble Education Society (supra) by the hon'ble Apex Court, Ld. CIT(E) was within her powers to ask for such information, so as to establish and ascertain the genuineness of the assessee institution and the manner of its functioning, the Commissioner is free to call for the audited accounts or other such documents for recording satisfaction that the society / trust / institutions is genuinely working in achieving of their objects. The Commissioner is not in any manner constrained from examining the accounts and other related documents to see the pattern of income and expenditure. Ld. AR's contentio....
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.... accounts of University shall at least once every year at intervals of not more than fifteen months be audited by the Examiner of Local Fund Accounts of the State. (1-a) Notwithstanding anything contained in sub-section (1), the Accountant General, Madhya-Pradesh may, with the previous approval of the Governor, audit all receipts and expenditures of any University established under this Act, where the grant or loan to such University from the Consolidated Fund of the State, in a financial year is not less than rupees one crore. (1-b) Where the receipts and expenditure of an; University is, by virtue of the fulfillment of the condition specified in sub-section (1-a), audited by the Accountant General, Chhattisgarh in a financial year, he shall continue to audit the receipts and expenditure of that University for a further period of two years notwithstanding that the condition specified in sub-section (1-a) is not fulfilled during any of the two subsequent years. (2)The copy of the audited accounts together with the audit report shall be submitted by the Executive Council to the [* * *] [Omitted 'Court' by Act No. 14 of 2005.], the Commissioner, Hig....