AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1502
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....s established in 2003 and registration was granted u/s. 12AA of the Act on 19.3.2003 and subsequently u/s. 12AB on 24.9.2021. The original name of the trust was Bheemaneni Educational System Trust. The main objects of the trust of educational activities are as under :- "(a) To promote establish and conduct activities in the fields of education, literacy, science, technology, fine arts, tourism, environmental science, adventure culture, social, medical public health and/ or any other service activities to promote all round development of the general public and of the nation. (b) To this end establish, promote, maintain manage, takeover and / or render assistance to schools, colleges, institutions, hospitals, research establishments in the areas of medicine, engineering, science & technology, social sciences, literature, entrepreneurial units, and such other institutions for the benefit of all sections of people without any discrimination of caste, creed, race or religion. (c) To assist, promote, establish, run, takeover and or manage orphanage, rescue and/ or half-way homes for destitute, aged and the inform and/or senior citizens without discrimination of....
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....s sons name. The ld PCIT further noted that as per the Board Resolution and documents seized during the search, it shows that trustee will pay the advance back to the trust which they have taken for purchase of the land and thus the land so purchased would be encumbered property of the trustees. The PCIT held that the implication of the same transaction is that the trustees never intend to transfer the land back to the trust. The ld. PCIT also extracted the ledger account of the trustees to show that the funds have never been returned nor the land is transferred to the trust. 08. During the search proceedings at the residence of Mrs. Bharathi S., some incriminating documents were found showing the expenses of the trust which clearly show that the assessee trust has transferred money in the name of various trustees without any purpose. The findings were recorded in para 3.1.11 to 3.1.13. It is also noted that the assessee trust wrote off the advance of Rs. 46,40,68,935 without actual transfer of the land. The ld. PCIT noted that a total sum of Rs. 145,41,60,713 was transferred to the trustees starting from FY 2014-15 to 2021-22. These funds have never been returned nor the proper....
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....lation as mandated u/s. 12AB(4) of the Act which is sine quo non for such cancellation. 6. The PCIT (Central) has erred in cancelling the registration of the assessee-trust with retrospective effect from 01.04.2014 which is impermissible in law. 7. The appellant craves leave to add to, amend, alter or delete the foregoing grounds of appeal. 13. As per letter dated 25-11-2024 assessee also raised an additional ground of appeal as under :- "ADDITIONAL GROUND OF APPEAL Following ground of appeal is without prejudice to grounds of appeal raised in the appeal memo: 1. The Ld. PCIT (Central) has erred in not appreciating that the reference made by the Assessing Officer under second proviso to S. 143(3) of the Act is bad in law for the following reasons and hence Ld. PCIT had no jurisdiction to pass the impugned order. a. The Assessing Officer had not selected the return of income for scrutiny by issuing a notice u/s 143(2) of the Act and hence he was not in the session of the assessment proceedings. b. The Assessing Officer had not carried out any inquiry nor issued any show cause notice in respect of issues under consider....
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....nd does not survive as it has not been raised before the learned lower authorities. 17. We have carefully considered the rival contention and perused the orders of the learned that lower authorities as well as the application for additional ground raised before us and the contention raised by the learned authorised representative encountered by the learned CIT DR, we are inclined to admit this additional ground as it is legal in nature going to the root of the matter and does not require further investigation of facts. Accordingly, we admit this additional ground of appeal which would be adjudicated at the appropriate time. Arguments of the LD AR 18. On the merits of the case on the concise ground raised by the assessee, Countering the findings of the ld. PCIT, Shri Vijay Mehta, CA, Shri Likith R. Prakash and Shri Avinash Mallya, Advocates, advanced various arguments and referred to various paper books filed before us. 19. Mr. Vijay Mehta, the ld. AR submitted 9 propositions on legal issues stating that reference made by the AO to the ld. PCIT is bad in law and further the order passed by the ld. PCIT is also bad in law. The written gist of such proposition was also pla....
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.... per clause (a), e (i) and e (ii) which is applicable for all years. 20. The learned authorised representative immediately stated that the relevant dates for his argument as under :- Sr No Particulars Date 1 Date of search 23 June 2022 2 Registration granted under section 12A of the act 19 March 2003 3 Registration renewed according to the new provisions of the act 24 September 2021 4 Order passed under section 127 16 September 2022 5 Notice for reopening issued under section 148 of the act 20 March 2023 6 Return filed by the assessee 6 April 2023 7 Reference made by the assessing officer for assessment year 2015 - 16, 2016 - 17 and 2019 - 20 5 March 2024 8 Reference made by the assessing officer for assessment year 2022 - 23 19 February 2024 9 Time limit available under section 153(2) of the act Up to 31st of March 2024 10 Time limit available for issuance of notice under section 143(2) of the act 30 June 2024 21. The ld. AR furnished 3 sets of paperbooks. The 1st set of PB of 122 pages is containing certificate of registration, various correspondence with the AO and also the s....
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....e above decision. He further submitted that if such reference is not made, the assessment would have become time barred and therefore a reference was in fact made to buy the time for making the assessment. He referred to various timelines and submitted that in this case notice u/s. 148 of the Act was issued on 20.3.2023 and notice u/s. 143(2) was issued on 26.6.2024 by asking one year more from the end of the year in which notice was issued. Otherwise by 31.3.2024, the time limit for assessment by notice u/s. 143(2) would have been over. Thus the reference was made just to buy time for making the assessment, which would otherwise have become time barred. 24. The 2nd argument was that the reference was made by the ld. AO without arriving at the satisfaction of specified violation. He further submitted that it to be the satisfaction of the AO and not of anybody else. In the present case for all these years, such satisfaction of the AO is missing as it merely relied up on the findings of the Search. He referred to the reference made by the ld AO for all the four years and submitted that not a single inquiry, information sought from assessee, was carried out. Even the figures mentio....
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.... have retrospective character or intent. (ii) In Global Health Research and Management Institute versus the PCIT Jaipur in ITA No. 397/Jodh/2019 dated 25 January 2023 wherein in paragraph No. 11 and 13 the identical view is taken. (iii) Mahadevia Charitable Trust versus PCIT Jaipur in ITA No. 396/Jodh/2019 for assessment year 2019 - 20 dated 25 January 2023 at page No. 19 a similar view was taken. (iv) In Heart Foundation of India, Mumbai versus Commissioner of Income Tax Central, Pune in ITA No. 1524/Mumbai/2023 dated 27 July 2023 in paragraph No. 9 has also held that there cannot be a retrospective application of such provisions of cancellation (v) Islamic Academy of Education v. PCIT(Central) in ITA No. 610/Bang/2023 dated 28 February 2024 in paragraph No. 8.4 has held accordingly that registration cannot be cancelled retrospectively. vi) Decision of the honourable Madras High Court in case of Auro Lab Limited versus ITO (2019) 411 ITR 308 vii) Maa Jagat Janani Seva Trust versus Commissioner of Income Tax Exemption (2024) 208 ITD 120 dated 16/7/2024 wherein in paragraph No. 5 the coordinate bench has held that retrospectively....
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....Bench. The ld. CIT(DR) also made a written statement stating the rebuttal of judicial precedents relied upon by the assessee. In such rebuttal, the ld. CIT(DR) also relied upon several Circulars and judicial precedents. 34. On the issue that whether the learned principal Commissioner of income tax is empowered to cancel the registration already granted or not she referred to the provisions of section 127 of the act and further referred to the provisions of section 12 double a of the act and submitted that the principal Commissioner is empowered to deal with the cases pertaining to the registration under section 12 AA/12 AB under the income tax act 1961. She submitted that if such empowerment was not to be legislatively envisaged in the said authority would not have been mentioned in the statute in the provisions of the act itself. In the absence it was her submission that statute in no way precludes the principal Commissioner from deciding the registration when the jurisdiction of the case lies with the said principal Commissioner. She further referred to circular No. 23/2022 dated 3 November 2022 wherein rationalisation of the provisions of charitable trust and institutions has....
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....rther the annual accounts of the trust are available with the assessing officer which clearly shows that there is a diversion of funds in the case of the assessee. In the proposal he has mentioned the details about the amount advanced to the trustees and related parties. It was mentioned that it is the satisfaction of the assessing officer which is required to be seen. She referred to paragraph No. 7 of the proposal wherein it was stated that evidence gathered during the search and the submission of the assessee that the assessee has applied its income for purposes other than for the purpose of the objects of the trust and further the assessee has generated cash through bogus billings and utilise the same towards personal interest of the trustees, he has sent a proposal. And therefore, there is no need that first the learned assessing officer should have issued notices under section 143(2) of the act before sending the proposal. 36. It was further submitted that the allegation made by the assessee that the reference for cancellation of the registration is made purely to give an extended time for completion of scrutiny assessment is devoid of any merit, no such evidence are produ....
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....as the proposal of the learned AO which clearly says that the land is purchased in the name of the trustees of the trust, such land has never been transferred to the trust account, such as land is still being held in the name of the trustees, the funds of the trust have been used for purchase of those lands and therefore there is a clear-cut violation of the provisions of section 13 of the act. She extensively referred the orders of the learned principal Commissioner of income tax. Clarification sought during hearing 40. Subsequently we have put the case for the clarification before the parties and it was asked that whether the learned principal Commissioner of income tax has exercised its powers retrospectively or not. The query that was raised is that assessee has challenged that the provisions of section 12AB(4) though inserted with effect from 1 April 2022 but it is argued that that period prior to that would not be covered by the order of the learned principal Commissioner of income tax for cancellation of the registration. 41. The learned authorised representative submitted a note on August 11, 2025 wherein he submitted that that the provisions have been inserted wit....
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....istration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,- (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall,- (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous ye....
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....pal Commissioner or Commissioner (i) notices that there are occurrences of one or more specified violation during any previous year or (ii) a reference has been received from the assessing officer under the second proviso to subsection (3) of section 143 for any previous year or (iii) if the such cases have been selected in accordance with the risk management strategy formulated by the board from time to time for any previous year, the principal Commissioner shall call for documents and information from the trust, make enquiry according to his own wisdom to satisfy himself that there is a specified violation and then he can pass an order in writing cancelling the registration of such trust after affording an opportunity of being heard for such previous year and all subsequent previous year if he is satisfied that one or more specified violations have taken place. If after enquiry he is satisfied that that there is no such violation, and he is not satisfied about the occurrence of one or more specified violation then he may refuse to cancel the registration. On the passing of the order, he will forward a copy of such order to the assessing officer as well as to the assessee trust. ....
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....aning that can be assigned to the Explanation is that 'case' means entire proceedings under the Act. Nothing suggests that it should be only restricted to assessment only. Therefore, all these functions and powers assigned in the juridical hierarchy would also be available to the PCIT. Further the ld. CIT(DR) has submitted a letter dated 19.1.2024 wherein a reference was made to Notification No.52/2014 dated 22.10.2024 and then it is stated that the above Notification makes it clear that the CIT(E) does not exercise any jurisdiction in respect of persons claiming exemption u/s. 11 & 12 of the Act which have been assigned to the AO, subordinate to the PCIT u/s. 127 of the Act. Therefore para 2.13 of that letter clearly says that CIT(E) does not have any power to cancel the registration, there it is crystal clear that it is only the PCIT who will have the power to cancel the registration when an order u/s. 127 is passed. Further if it is held that only CIT ( Exemption) has such power than the whole mechanism provided by the second proviso to section 143(3) would also fail. Therefore, we are of the considered and firm view that the proper and correct interpretation of the Noti....
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....Act was issued on 6.11.2023. First notice u/s. 143(2) of the Act was issued on 26.6.2024. By this notice the AO has communicated to the assessee that the return of income filed by the assessee for AY 2015-16 on 6.4.2023 requires certain clarifications and therefore return of income has been selected for scrutiny. 52. Similarly for AY 2016-17 notice u/s. 148 of the Act was issued on 28.3.2023. Pursuant to that the assessee filed its return of income on 6.4.2023. Notice u/s. 142(1) of the Act was issued on 4.8.2023 and further the notice u/s. 143(2) r.w.s. 147 was issued on 26.6.2024. 53. Similarly for AY 2019-20 notice is issued u/s. 148 on 31.3.2023 in response to which the assessee filed its return of income on 6.4.2023. Notice u/s. 142(1) was issued on 4.8.2023 and notice u/s. 143(2) r.w.s. 147 of the Act was issued on 26.6.2024. 54. We find that the ld. AO has made a reference to the PCIT (Central), Bengaluru on 5.3.2024. Therefore, the contention of the assessee is that without issuing a notice u/s. 143(2) of the Act, how the ld. AO could have recorded a satisfaction that there is a specific violation as mentioned in the Explanation to section 12AB(4) of the Act. 55....
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....g the explanation of the assessee and then reaching at a conclusion that there is a specified violation as prescribed in Explanation to section 12AB(4) of the Act and then only the AO could have invoked the second proviso to section 143(3) of the Act. In view of the above facts, we do not subscribe that the AO has reached at a satisfaction for AYs 2015-16, 2016-17 and 2019-20 about specified violation. Therefore, for these reasons. We quash the order of the ld. PCIT cancelling the registration of the trust for AYs 2015-16, 2016-17 and 2019-20. 56. With respect to the order cancelling the registration for AY 2022-23, we find that the proposal was sent on 19.2.2024 wherein the notice u/s. 143(2) of the Act was issued to the assessee on 31.5.2023 on the return of income filed by the assessee on 30.9.2022. Therefore, on this ground, the order passed by the ld. PCIT on 30.9.2024 with respect to the AY 2022-23 is correctly passed. Whether the Powers granted for cancellation with effect from 1/4/2022 applies only from AY 2022-23. 57. The next ground raised by the ld. AR is that the ld. PCIT has cancelled the registration for AYs 2015-16, 2016-17 and 2019-20 by an order dated 30.9....
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....rigger reassessment u/s. 147 subject to the time limits provided u/s. 149 of the Act. Therefore, according to this authoritative commentary, the retrospective powers are also available to cancel the registration even prior to the AY 2022-23. 60. The Notes on Clauses to the Finance Bill, 2022 wherein this amendment was brought into by amendment to clause (vii) also states that these amendments take effect from 1.4.2022. 61. Further the Memorandum also states that these amendments take effect from 1.4.2022. It does not refer to any assessment year. 62. Further the CBDT Circular No. 23/2022 dated 3.11.2022 in para 9.3.3 has categorically held that such provisions are effective from 1.4.2022, irrespective of assessment year. 63. Therefore, neither in the Memorandum of Finance Bill, Notes on Clauses and the CBDT Circular says that these amendments are effective only from assessment year 2022-23. 64. It is also plausible that from 1/4/2022 the ld CIT is empowered to cancel the registration if reference is received or if he notices Suo moto. It is the effective date of granting power to an authority and not applicability of a provision from a particular assessment year. ....
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....fied violation as covered in Explanation to section 12AB(4) of the Act. He further submits that assessee has filed two submissions on 25.3.2024 & 24.7.2024 wherein it was submitted that there is no specified violation by the assessee. It was further stated that the order passed by the ld. PCIT is merely based on the material found during the course of search and no independent enquiry has been carried out. The ld. AR further referred to the meaning of the satisfaction and he submitted that the meaning of 'satisfaction' is greater than the word 'approval'. He submits that assessee has retracted the statement and therefore, the importance of " satisfaction" increases. He submits that the show cause notice of the ld. PCIT as well as reference made by the ld. AO are the same. He further stated that para 1 onwards it is identical. It was further stated that even the provisions of the Act are stated in the similar fashion. 69. The ld. CIT(DR) vehemently submitted that the ld. AO during the course of assessment proceedings sent a proposal for cancellation of the approval on 19.2.2024 and further the Addl. CIT also forwarded the above proposal to the PCIT. The proposal c....
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....:- "10. Satisfaction of the Assessing Officer 10.1 It is seen from the evidences gathered during the search and the submissions of the assessee that the assessee has applied its income for purposes other than for the objects of the trust and further the assessee has generated cash through bogus billings and utilized the same towards personal interest of the trustee!) 10.2 Therefore, I, being the assessing officer of M/s. Rukmini Educational Charitable Trust, am satisfied that the assessee, being a trust referred to in section 11 of the Act has committed specified violations as defined in clauses (a) and (b) of Explanation to sub- section (4) of section 12AB r.w.s 143(3) of the Act for the AY 2022- 23. 10.3 As per the provisions of section 143(3), the Assessing Officer is required to send a reference to the Principal Commissioner if he is satisfied that the trust has committed specified violations as defined in Explanation to sub-section (4) of section 12AB. The assessment proceedings in the case of M/s. Rukmini Educational Charitable Trust is pending before me for the AYs 2015-16, 2016-17, 2019-20 u/s 147 of the IT Act, 1961 and for A, Y.2022-23 ....
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....y on the basis of the search material and not his own satisfaction. Therefore, the order of the ld. PCIT based on such borrowed satisfaction of the ld. AO which makes the reference unsustainable, naturally the order passed on such reference is also unsustainable. Accordingly, the order passed u/s. 12AB(4) of the Act cancelling the registration for AY 2022-23 by the impugned order dated 30.9.2024 is not sustainable and hence quashed. 72. We state that we have not examined the merits of the case but restored the registration of the assessee u/s 12 AA of the Act by quashing the order passed by the ld PCIT cancelling the registration on reference made by the ld AO. The merits of the case would be dealt with separately in the assessment proceedings, without being influenced by this order. 73. In view of the above decision, the appeals filed by the assessee are partly allowed. Pronounced in the open court on this 04th day of November, 2025. ============= Document 1 REFERENCE FOR CANCELLATION OF APPROVAL GRANTED U/S 12A IN THE CASE OF M/S RUKMINI EDUCATIONAL CHARITABLE TRUST FOR THE AY 2019-20 1. Introduction 1.1 The Assessee Trust, Rukmini Educational Charitable Socie....
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....aju 1 Shrt Umesh S Raju Trustee 2 Document 2 3 Shri Bhaskar N Raju Trustee 4 Smt. Aarthi B Raju Trustee 1.5 A search action u/s. 132 of the Income Tax Act, 1951 was conducted by the DDIT(Inv). 1(3), Bangalore on 23.06.2022 in the case of M/s Divyasree Infrastructure Projects Pul (AADCD3654M), M/s Shyamaraju & Company (India) Pvt Ltd. (SRIPL)( AACC56562L), Ruk- Educational Charitable Trust(AABTR1107Q) and other related entities. 1.6 As part of search proceedings in the case of the assessee, search u/s 132 of the Inch tax Act, 1961 were carried out at office premises of Divyasree Group and Rukmin! Educati Charitable Trust at (a) No.11, 'A' Wing, 8th Floor, O' Shaugnessy Road, Divyasree Chambers, Bangel 560025, (b) Rukmini Knowledge Park, Kattigenahalll, SH 104, Srinivasa Nagar, Bengaluru-560064 (c) Reva Independent PU college ,No. 48A, 11th Cross, near CBI Office, Ganganh Lakshmayya Layout, Vishveshvaraiah Nagar, Bengaluru .- 560024 . (d) Residence of Mrs. Bharathi S. (Senior Finance and Accounts Manager in Ruke Educational Charitable Trust) at No. 45 & 46A, 4th Cross, SVS Homes, Next to BSI Compound, Bengaluru-64. (e) Residence of Mr. M Vasu, ....
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....essee during post search proceedings): Document 4 Land & Land Advance to Trustses Financial Year Dr.P.Shyama Raju Mr. Umesh 5 kaju 31.03.2015 31.03.2016 31.03.2017 259787742 20000000 31.03.2010 175544614 31.03. 2020 -1403969G 31.03.2021 244505363 44000000 31.03.2022 472500001 158590000 1189997822 220190000 Grand Total 1869187823 land Transferred To RECT( Annexurg A) 780695555 land & land Advance [ Annexure i) G51.052355 1481748941 Fund Transfer to Vendor for Sy No 27 -62561118 Land Detalls Financial year Survey No. Amount 31.09.2021 280 221707905 BL 08.2021 231/2 94919715 51 CB.2022 27 97513000 31. 03.2022 116 366535935 Annexure A 780696555 Land Advance transferred to Parties Particulars Amount Land & Land advance 221012306 Land & Land advance Pruthvi Sy No. 35/2 358000000 Land & Land advance Sy No. 85/2 Ramya 72000000 Annexure B 651052386 Total A+B 1431748941 RUKMINI EDUCATIONAL CHARITABLE TRUST Divyatren Chambers %* Wing. 11 OShaugnesty Road Land Advance Groun Summery 1-Apr-18 lp 314418-19 Birilaulara Coco Dr P Stycmoraju Aal Advance Butange 4.85 06.009 00 Dá»....
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.... his son's name only. The relevant part of the statement of Shri. P Shayamaraju dated 25.06.2022 is reproduced hereunder Q8. P'lenta stato whether the properties were purchased is the name of trust or trustce or the individuals. Ans. "The properties have been purchased In my name & my son's (Shri Deresh S Raju) nome in our individual copocity, by utilizing the fiindgivin by trust. The details of the property purchased by mo & my sun is tabulated as lelow. Purchaser St. Vendor Nma Registration date Syed Zatild Sy No 27 -(5.19 /g) 7/11/2015 Umash S Itou Sy Ito 230.(4.38 Ar) K S Mahedra Umash S Riu 29/06/2020 Showtha R Kuruar Ambita Mahendra P Shyamonje 20/12/2020 11. Umrsh S Die 26/07/2021 Juindustan Ny NO 35/2(16 (8) ask. 6.2020 1 Document 6 acet Estoto 1 Q9. Please furatsh the details of silo consideration pold toward purchase of properties as mentioned in answer to proviens questita. Aus. I am not aware about the exact amount of solo consideration paid towand purchase of these properties. The details in respect of consideration pald toward purchase of these properties is available with Surl ....
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....3. 000 09 D 30,00,000 0G DI 7.76.33.000.00 Dr 30,00,000 00 De Grane Total Document 8 RUKMINI EDUCATIONAL CHARITABLE TRUST Dlvywaren Chambers, A Wing . 11 O'Shaugnoswy flood Land Advance Group Summary Partioutary Dasning Dr P Miyamoraju -Land Aulvence 11 75 09 000 54 CM Dị P. Sligamenraju Land Advance-2 4,20.00 DO CD DE 2.40, 20.000 00 2.00,00.800 CD b 2.00. 00 008 00 30,00.00G (b (3) Klaren Reddy Lane Land Advance. G. Chefs Raju Land Aduntice - Umes's S Rito VENKATECINVARA ENTENMIESES 1 50.000 19 1 RUKMINI EDUCATIONAL CHARITABLE TRUST Dipasted Chambers, "A"Wing 11 O'Shaugnesay Road Land Advance Dr P Sitemanju -Land Advance 11,75:00.000.00 CM 11 75 00 000 00 Dr P GMvamaraju Aabd Advchce-2 7.20.00.000 00 Or 10:00 69:000 00 Dr P Shyama Ray Lend Advance -3 4,50,00,000.06 De EAM Consultanll Kristina Reddy Land Land Acvance- 5 Dhoje Raça Land Novance -Ureth S Rijg Land Nevance -Lmesh S Raju SY No 27 Land Advares (POR ) Survay Ne. 220231 VENKATESHWAAA ENTERPRISES 21.00,000.00 CF 1,59,000,00 Dr 9.91.000 00 Dr 5 00 4,60.01,000 00 A 40 00 000 00 8,75,23,000.00 Dv 25. 95.00.000 0....
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....ount of R$ 36,65,35." to the Vendor. For the said purchase, the Trust had given advance to the Trustee without board resolution, which is against the objectives of the Trust. 3.13 Subsequently, RECT wrote-off, the advance of Rs 45,40,68,935/- in its books and made ! entries clemming that land bearing Sy. No. 116 and 27 were its assets, without transferring Khata No. and titles. The said entry did not result in actual transfer and shall only be charact." as an internal adjustment. 3.14 Therefore, from the above discussion, it is noticed that the Trust had transferred an am of Rs 145,41,60,713/- from the FY 2014-15 to 2021-22 to the trustees as tabulated hereunder stranstorredifram trustees (Amountin) 2014-15 7,16,00,000/- 7,16,00,000/- 2015-15 59,33,000/- 59,33,000/- 2017-18 25,97,87,740/- 2,00,00,000/- 27,97,87,700/- 2018-19 17,65,44,610/- 17,65,44,610/- Document 11 2020-21 24,48,05,363/- 4,40,00,000/- 28,98,05,363/- 2021-22 47,29,00,000/- 15,85,90,000/- 63,14,90,000 Sub-Total 115,40,37,713/- 30,01,23,000/- 145,41,60,713/- Total funds transferred from charitable trust, RECT to trustees (Amount in Rs.) 145,41,60,713/- 3.15 However, the trus....
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....al parties. In some of the purchase transactions, while payment through banking channels would be made to the purchase party, however, no actual delivery of material takes place. Instead, the purchase party retums back the cash to RECT against the payment received by IL after deducting GST due and some commission. However, In her reply submitted vide letter Document 12 dated 20.12.2022 she has retracted her statement fully on the issue of bogus billings as depr by her during the course of search proceedings which is merely an afterthought. 4.3 During the search proceedings, Mr. Vasu (Finance Officer of RECT) was asked to produc. supporting documents against the expenses incurred towards constructing the fixed asset. response, he submitted sample copies of Journal Vouchers, Payment Vouchers and salt Invoices for the purchase of construction materials from M/s Rock & Stone, M/s Meenakshi k. Corporation, M/s Chowdeshwari Enterprises, M/s Taneswar Enterprises and M/s AR & Sons examination of the submitted documents (Joumal Vouchers) during the search proceedings, it . noticed that IGN (inward Goods notes) were available for one or two vendors, (in the case of ! Rock and stone an....
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....ka pleca, which you are salting I have found that three bills Erve been Inadvertently included In the file which are in fact genuine and have inward goods nate attched. Please consider comoving these three bille from your calculations. They are noted ar below; 1. 27-9-2018 : Panchamukhi Granitos : Ra. 185259 2. 26-9-2019 : AR & Sons : Ra. 135402 3. 10-12-2020 : AR & Sons : Rs. 1062217 I am also furnishing the revised list of bogus bills as annexure 10. Q.72 I have gone through tho bills and have considered your submission regarding the same. A revised year wise calculation after removing these three hills is presented below: Bogus Purchase 16-17 13119023 17-18 138457830 18-19 115154100 19-20 178 189257 20-21 155 854451 21-22 257999389 Please confirm. Ans Sir, I confirin the somio. .. 8 This Issue was elaborately discussed under sworn statements of Mr. M. Vasu, Mrs Bharathi S, Ars Rajani P (Sr. Executive, Purchase department) and Mrs. Madhavi L(Assistant Superintendent an accounts department), and all of them have confirmed the same. During the search Document 14 proceedings, certain other evidences were also found. On analysis of su....
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....on of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (il) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation .- For the purposes of this sub-section, the following shall mean "specified violation",- (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or Institution has Income from profits and gains of business which is not Incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or Institution has applied a....
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....hout giving effect to the order passed by the Principal Commissioner or Commissioner under clause (it) or clouse (Ili) of the fifteenth proviso to ciause (23C) of section 10 or cinuse (ii) or ciouse (iii) of sub-section (4) of section 12AB: 7. Satisfaction of the Assessing Officer 7.1 It is seen from the evidences gathered during the search and the submissions of the assessee that the assessee has applied its income for purposes other than for the objects of the trust and further the assessee has generated cash through bogus billings and utilized the same towards personal interest of the trustees. 7.2 Therefore, I, being the assessing officer of M/s. Rukmini Educational Charitable Trust, am satisfied that the assessee, being a trust referred to in seetion 11 of the Act has committed specified violations as defined in clauses (a) and (b) of Explanation to sub-section (4) of section 12AB r.w.s 143(3) of the Act for the AY 2022-23. 7.3 As per the provisions of section 143(3), the Assessing Officer is required to send a reference to the Principal Commissioner If he is satisfied that the trust has committed specified violations as defined in Explanation to sub-section (4) of....
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....nd during the search the evidence unearthed have revealed the occurrence of following specified violations; (i) Diversion of trust funds to trustees for purchase of lands in their individual capacity /advances to related entities, (ii) bogus expenditure to generate cash (iii) generation of cash through bogus billings/invoicing, including unaccounted and unexplained cash transactions across the years. 3.1 DIVERSION OF CHARITABLE TRUST FUNDS FOR PURCHASE OF PROPERTIES IN THE NAME OF TRUSTEES 3.1.1 On perusal of seized documents and other evidence and statements recorded, it is seen that Mr. P. Shyamaraju and Mr. Umesh S. Raju (Trustees of M/s. Rukmini Educational Charitable Trust) had purchased properties using the funds diverted from the assessee Trust as under: SI. No. Survey No. Name of the Vendor {Mr./Mrs./Ms.) Name of the Purchaser (Mr./Mrs./Ms.) Date of Registration Amount (Rs.) 1. Sy No 27 Syed Zahid Ali Umesh S. Raju 08.09.2014 7,50,00,000/- (5.19 Acres) 2. Sy No 230 G. Doddaiah P. Shyamaraju 29.06.2020 20,79,00,000/- Sannagangamma SI. No. Survey No. Document 19 4.38 Acres) D. Kantharaju Divya D 3 ĮSy No 231/2 (1.30 Ac....
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....me of Mr. Umesh S. Raju. He further stated that, the charitable trust could not buy agricultural land in its name. Therefore, the trust gave funds to its trustees, (i.e., Mr. P. Shyamaraju & Mr. Umesh S. Raju) as a land advance for purchase of agricultural land. Consequently, Mr. Umesh S. Raju purchased agricultural lands in their name. 3.1.5" During the search proceedings, Mr. M. Vasu was asked to state whether the titles of properties were transferred in the name of Rukmini Educational Charitable Trust. In response, he stated that properties purchased by the trustees using trust money have not been transferred to Rukmini Educational Charitable Trust by any registered transfer/sale deed. Mr. P Shyamaraju in his sworn statement confirmed that the properties were purchased in his name & his son's (Mr. Umesh S. Raju) name in their individual capacities, by utilizing the funds given by the Document 22 Trust. Mr. P. Shyamaraju also stated that the titles of said properties are still in his & his son's name only. The relevant part of the statement of Shri. P Shayamaraju dated 25.06.2022 is reproduced hereunder : Q8. l'lease stale whether the properties were purchased is the na....
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....e it is evident that the trust has made payment on behalf of the trustees towards advance/purchase of land which was against the objectives of the trust. RECT-2015-16 - (From 1-Apr-2015) Duyainte Chamiurs "2" sông 11 O'S2:sucressy Read Advance From Trustees Grac Summary Calanca Date Balance 8 91 82 950 06 15 00 500 00 0 12.00 000 00 C 1:02 000 00 CF * 15 00.000 50 2 80 86 256 00 275 96 867 90 Grand Total 6.53.55.554.00 CF 11,52.03.200.00 3.91.36.862.00 6.89 83.621.00 C 15 00 500 00 0 12.00 000 00 C Document 24 RUKMINI EDUCATIONAL CHARITABLE TRUST Dryyasree Ceamters, A"Wing, 11 O'S-avinessy Rand Bancaire-25 Land Advance Grovp Bummary Par ........ Opening Transactions Balance De P Shyararitu -Land Advance 11 75 00 000 00 D: P Shyamaraja -Land MErance-2 4 90 00 000 00 Dr P Shyama Raus Lang Advance 3 2 00 20 000 DC ERM Consultants 3 00 009 00 01 1 15.23 000 00 D> 2 00 56 000 00 VENKATESHWARA ENTERPRISES Grand Total 1,41 82.000.00 De 20.54-00,066 00 RUKMINI EDUCATIONAL CHARITABLE TRUST Drawee Charters A"Weg OShaugnessy Most Dangsiers 25 Land Advance Grove Tevsery De P Shyamaros 1 and Aleance? ....
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....h S Raju (Amount in Rs.) Year wise funds transferred from charitable trust, RECT to trustees (Amount in Rs.) 2014-15 7,16,00,000/- 7,16,00,000/- 2015-16 59,33,000/- 59,33,000/-, 2017-18 25,97,87,740/- 2,00,00,000/- 27,97,87,740/- 2018-19 17,65,44,610/- 17,65,44,610/- 2020-21 24,48,05,363/- 4,40,00,000/- 28,98,05,363/- 2021-22 47,29,00,000/- 15,85,90,000/- 63,14,90,000 Document 27 Sub-Total 115,40,37,713/- 30,01,23,000/- 145,41,60,713/- Total funds transferred from charitable trust, RECT to trustees (Amount in Rs.) 145,41,60,713/- 3.1.14 The trustees have neither returned the amount, nor transferred the property in the name of the Trust, which indicates that there is no intention to transfer these lands to the Trust. It is also seen that Trustees had not utilized full advance, received from the Trust for the purpose of purchase_of the lands. As tabulated above, they received Rs 145,41,60,713/- as advance from the trust and utilized amount to the extent of Rs 121,06,96,555/- to purchase the lands in their names. The Trust/ the Authorized representative has not given any explanation with respect to the resulting unutilized amount of Rs 24,34,64,158/ -. ....
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.... to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being carried out by the trust or institution- (i) is not genuine; or (i) is not being carried out in accordance with all or any of the conditions Document 29 subject to which it was registered; or (t) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1). and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality. (5) The order under....
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....mpugned issue, either in person or through your Authorized Representative in this office on 26.03.2024 at 11.30am. In case you do not wish to attend in-person, you may file your submissions online or hard copy in this office on or before the above specified date, and the same would be duly considered. If you do not avail this opportunity, it will be presumed that you have nothing to say in the impugned matter and the issue will be decided on the basis of the facts available on records and on merits of the case. SREENIVAS TIMMANNA BIDARI PCIT (Central), Bengaluru (in casa the document is dallaly stoned please refer Digty Cignocre at the bottom of the page: Document 31 5. Response of the assessee trust: In response to Show Cause Notice dated 13.03.2024, the assessee has filed written submission on 26.03.2024 and the same is perused. It is seen that second letter is a summary of the comprehensive explanation filed in first letter. After perusal of submission filed by the assessee, certain further details/clarifications were called for and accordingly the details are furnished by the assessee. The details available on record and all the submissions made by the assessee hav....
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.... Sy.No.27 by again by enclosing the Ledger Account Extracts in the books of RECT vis-a-vis its trustee Document 32 pertaining to Sy.No.27 vis-a-vis its trustee viz., Sri.Umesh S. Raju which are accordingly highlighted. iv) RECT vide letter dated 24/07/2024 in para 2.10 stated that the Audited Balance Sheet of RECT for the year ended 31/03/2022 wherein the land in Sy.No.27 that was brought into the books as the lands of RECT by crediting the trustee account and debiting the land account as stated while addressing the issue for the Assessment year 2015-16. v) RECT vide letter dated 24/07/2024 in para 2.9 has stated that almost after 9 years pursuant to the acquisition of land in Sy.No.27 on 08/09/2014 which ran into litigation in reference to O.S. No. 1302/2006 and in O.S. No.491/2014. Pursuant to the search on 23/06/2022 and to certain extent the litigation having been resolved, wherein the Statutory authorities thereafter only had issued the Khata on 10/01/2023 as stated while addressing the issue for the Assessment year 2015-16. vi) Lastly, RECT vide letter dated 24/07/2024 in para 2.12 had stated that prior to the Current search on 23/06/2022, wherein there was an....
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.... to the factual position, however, it has vehemently denied that above constitutes "diversion of funds of assessee trust. The gist of the explanation of the assessee is Document 34 as under; (a) The Assessee Trust has stated that it had transferred a sum of Rs. 59,33,000/- during FY 2015-16 to its Trsutee Sri. Umesh S Raju for acquisition(registration) of agricultural lands. That the land was purchased by for and on behalf of RECT and not for his individual benefit. That there was a need to acquire additional tracts of lands for expansion of Education Campus and Infrastructure Developments. As per provisions of Karnataka Land Reforms Act Assessee Trust were estopped from acquiring agricultural lands. For this reason and to comply with all formalities, approvals and sanctions the land was purchased in the name of Trustee. That certain sums were paid directly to the vendors from the Banking Channels of RECT and some of the payments were paid to the vendors qua its trustees. (b) That, the respective amounts advanced for the acquisition of the lands were debited in the ledger accounts of the trustee Sri Umesh S. Raju, in the books of assessee trust. That pursuant to the afore....
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.... of the Assessee Trust as on date, which has been clarified by him in his letter of clarification and retraction dated 25.11.2022. (h) That the minutes of the assessee trust make it clear that the assessee trust will provide advance to the trustees to purchase agricultural land and the trustees shall hold acquire the lands purely, exclusively and wholly for the purposes of the trust alone. That there are no instances nor are there any intent that the trustees never intended to transfer the lands back to the trust. That the transfer of land should be completed during the FY 2024-25. 6.1.2 During the search proceedings, Mr. M. Vasu (DGM, Finance) was asked to state whether the title of property purchased in individual names of trustee was legally transferred in the name of Rukmini Educational Charitable Trust. In response, he stated that the property purchased by the trustee using funds of the trust has not been transferred to the trust i.e. Rukmini Educational Charitable Trust by any registered transfer/sale deed. Mr. P Shyamaraju in his sworn statement has confirmed that the properties have been purchased in his name and in name of his son (Mr. Umesh S. Raju) in their individ....
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....re neither verified nor authenticated by any third party regarding the date, content etc and the possibility of these Minutes of meetings being after thought cannot be ruled out. (e)The trustees had more than two years time after the search action u/s 132 viz on 23.06.2022; during which time the said land could have been transferred by way of registered transfer deed to the assessee trust, but no such transfer has been made. This unwillingness or failure to transfer of land, goes to support and justify the finding that there was never any intention to transfer the land to assessee trust. As per the well-known adage, the proof of the pudding is in the eating; similarly, the proof of the argument advanced by the assessee trust/trustees would be the transfer of the land to assessee trust, the argument fails the test of credibility. Document 37 (f)Though the assessee trust and trustees claim to have purchased the land in individual name of trustee to eventually transfer to the assessee trust, there has been no transfer in 10 long years, their own conduct disproves their explanations. (g)The trustees or the assessee trust have not been able to furnish well-reasoned, logical an....