TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 176
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....)(if) as applied vide Form 10AB on 23.09.2025 vide order, dated 25.11.2025. 2. That the Ld. CIT (Exemptions) has erred in not granting the registration u/s 12A(1 )(ac)(ii) relying upon the earlier year order of the society, dated 25.11.2025 where the registration already granted to the assessee u/s 10 (23C)(vi) had been cancelled. 3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 4. The impugned order passed in ITA 1634/CHD/2025 is very brief, which reads as under : Sir/ Madam/ M/s, This is to inform you that your application in Form No.(10AB) vide Acknowledgment No.-781099760230925 Dated 23/09/2025 has been cancelled on 25/11/2025 by CIT EXEMPTIONS CHANDIGARH with following Remarks: The application filed is being cancelled as non maintainable as the registration granted to the applicant vide Unique Registration No. AADTS6234PC20097 dated 24.09.2021 by CPC has been cancelled vide order DIN ITBA/EXM/F/EXM50/202 5-26/1082976188(1) dated 25.11.2025. This is a system generated document and does not require any signature. JAISHREE SHARMA C....
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.... note in the earlier paragraph while referring the registration granted in 2009. 6.1 The ld. CIT (E) was of the view that under the Risk Management System of the Department, case of the assessee has been flagged on account of receipt of huge cash of more than Rs.20 Crore. Therefore, a Show Cause Notice dated 20.06.2025 was issued to the assessee inviting its explanation to explain the source of cash deposits made alongwith name and PAN of donor, if any. The ld. CIT (E) mainly called for explanation of the assessee on four counts, namely; a) justification and source of cash deposits made alongwith name and PAN of donor, if any. b) Documentary evidences showing that the activities of the Trust/Institution continue to remain same and genuine which are aligned to its stated objects. She also called for bank statement of three years alongwith financial notes. c) In the last ground, which is residuary in nature, she given opportunity to the assessee to submit any clarification which it deemed necessary. 6.2 The copy of this Show Cause Notice is available on page 225 of the Paper Book. Thereafter, ld. CIT (E) has issues second notice dated 25.07.2025 where....
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....e in triplicate. One copy is being retained by the student, second copy by the bank and third copy is being deposited in the school. The assessee Society has been maintaining its accounts wing-wise, namely, separate bank account for KG, Primary and for Senior Wing at both the schools, namely Moga as well as Kanyakumari. The school did not receive any cash, rather parents have deposited the fees in the bank which has been transmitted to the school. The fees can be collected through deposits, net banking, UPI, cheque etc. 8.1 The ld. counsel for the assessee drew our attention towards page 10 of the impugned order and submitted that ld. CIT (E) has given reference to the name of one Jayarin and alleged that two fee slips for the same period have been attributed to this student. According to the ld. CIT (E), it is not a correct data. The ld. counsel for the assessee drew our attention towards page No. 495 of the Paper Book where bank statement is available. He, thereafter, drew our attention towards page No. 508 of the Paper Book where fee slips are available and submitted that there is no contradiction. Similarly, he drew our attention towards page No. 545 and thereafter page No. ....
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....which were brought to the notice of ld. CIT (E) also, hence, it was contended that assessee had entered into a bonafide transaction for purchase of land so that new building can be established. But somehow, it went into litigation. The parties to the Agreement are not related to the Management of the Society. In other words, no one falls within the definition of 'specific person' contemplated in Section 13(3) of the Income Tax Act. The ld. CIT (E) has erred in drawing adverse inference simply for the reason that Agreement is non-registered agreement but a valid agreement can always be entered into without getting it registered under the Indian Registration Act. 8.3 The ld. CIT (E) thereafter made reference to various payments and drawn inference that these were not necessary for running the educational institution. He emphasized that any proceedings of this nature are not required to go into the details of day-today expenses. The primary role of the ld. CIT (E) was to find out whether any specified violation has been committed by the assessee or not. All these aspects can be looked into during the assessment proceedings and assessee has undergone scrutiny assessment for 4-5 year....
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....f judgement of Hon'ble Apex Court in the case of CIT, Patiala vs Yadvindra Public School Association SLP C No. 34221/2025 order dated 24.11.2025 181 taxmann.com 285 (SC) 13 Copy of judgement of Hon'ble Delhi High Court in the case of CIT, Exemption vs IILM Foundation 174 Txman.com 605 (Del HC) 9. The ld. CIT DR, on the other hand relied upon the order of the ld. CIT (E) and pointed out that ld. CIT (E) has made reference to specific violations regarding collection of fees, advance made to J.J. Construction Company. It is to be appreciated that assessee did not get the Agreement registered and failed to safeguard the interests of the Society. He emphasized that it is to be appreciated that in a casual approach, huge amounts of the Society were being siphoned. Hence, it falls within the ambit of 'specified violation' as contemplated in 15th Proviso to Section 10(23C)(vi) of the Act. 9.1 Similarly, he made reference to details of expenses considered by the ld. CIT (E) and referred it in tabular form in the order. According to the ld. CIT DR, there was no necessity to incur such expenses for running the educational institution. Therefore, ld. CIT (E) has rightly can....
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....cified violation has taken place; (iii) pass an order in writing refusing to cancel the approval of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution, on or before the specified date, 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 fund or institution or trust or any university or other educational institution or any hospital or other medical institution. Explanation 1.-For the purposes of this proviso, "specified date" shall mean the day on which the period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) expires. Explanation 2.-For the purposes of this proviso, the following shall mean "specified violation",- (a) where any income of the fund or institution or trust or any university or other educ....
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.... maintained and if assessee failed to maintain this, it would be a 'specified violation' for cancellation of registration. 10.3 Clause (c) of the Explanation further provides that activities of such institution should be genuine. They should be carried out in accordance with objectives of the trust/society/university etc. In other words, if activities are not being carried out in accordance with the Memorandum of Association, then registration could be cancelled. 10.4 Sub-clause (d) further contemplates that if any other law is being infringed by the institution, society, trust, university, hospital, then registration could be cancelled. In other words, the assessee trust ought to have adhere the allied laws while fulfilling its objectives and there should not be any breach of any other law. 10.5 Under clause (e), it has been provided that such registration would have not been obtained by withholding the information or submitting false information. If some incorrect information is being presented before the competent authority, then later on, registration could be cancelled. 11. In the light of above, let us examine the reasons assigned by the ld. CIT(E) for cancelling ....
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.... the bank. The collection of the fees is more than Rs.20 crore and ld. CIT(E) has unnecessarily drawn adverse inference by referring one or two small discrepancies. ld. CIT(E) thereafter shown apprehension at the end of the bank that how they can give a certificate that bank has not taken any cash from the assessee for deposit after such a long time. It is pertinent to note that bank has given the certificate on the basis of record maintained by it. It cannot be brushed aside by simply expressing some suspicion over it. Either ld. CIT(E) could call for that record and verify and then record a finding about the factual inaccuracy in those certificates but simply they cannot be rejected in the manner done in the impugned order. 12. The next reason assigned by the ld. CIT(E) is that assessee society has made payments of lease rent to Smt. Vijaya Jebakumar. However, in the balance sheet, society has shown building as the fixed asset. On a careful examination of the finding of ld. CIT(E), we are of the view that ld. CIT(E) has failed to appreciate the controversy. The land was owned by Smt. Vijaya Jebakumar. This was given on lease to the society with a permission to raise building. ....
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.... Club House & Hotels. There are roughly 11 expenses referred by the ld. CIT(E). Assessee has explained each and every expenditure as to why it was incurred. For example, with regard to the expenses of Rs.50,000/-, it was submitted that Auditors have visited the school of the assessee in Markhandan. Their arrangement of stay was at Kanyakumari which is roughly 50 kms. away from the school. On their arrangements, assessee has spent the money. This is an expenditure which is necessary one in ordinary course of running the educational institution. Similarly, all the expenses incurred by the assessee were amounts for running the institution. They do not fall anywhere in a 'specified violation'. Their status could be examined by the AO while scrutinizing the return of the assessee. To our mind, ld. CIT(E) has made reference to irrelevant details which cannot be under the scope of investigation for cancellation of the registration. She has just expressed her doubts about the issue whether these expenses were incurred wholly and exclusively for the objectives of the society but, she cannot sit in the chair of the Management who has to run the Institution and decide which expenditure is nec....
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....) K.Wollen Manufacturers v. CIT [1969] 72 ITR 612 (SC); Aluminium Corp. of India Ltd. v. CIT [1972] 86 ITR 11 (SC) and CIT v. Panipat Woollen & General Mills Co. Ltd. [1976] 103 ITR 66 (SC)). But it must not suffer from the vice of collusiveness or colourable devices. 13.3 Ld. CIT (E) did not adopt the above approach while appreciating the small-small expenditures of the assessee Society. There is nothing unusual in it. Therefore, these reasons are not worthy of credence for cancelling the registration. 13.4 The last reason assigned by the ld. CIT(E) is with regard to the payment of Rs.8 Cr to J.J. Construction Co. It is pertinent to note that assessee has duly entered into an agreement for purchase of 4 acres of land. The ld. CIT(E) has observed that description of land mentioned in the Agreement to Sell is not similar to the one available in the status-quo order. When it was confronted to the assessee, it was pointed out that though in the Agreement, complete land was agreed to be sold to the assessee, however on an enquiry, it came to notice that exact land is 2.5 acres instead of 4 acres exhibited in the Agreement. There is a dispute of this remaining land as to whether i....
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....nd if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said Section 53A. 9. Section 17(1A) of the 1908 Act declares in no uncertain terms if a contract executed in part performance of an agreement is unregistered, it shall have no effect for the purpose of Section 53A of the 1882 Act. Section 17(1A) does not refer to much less prohibit the filing of a suit for specific performance or leading of such a contract into evidence. 10. The Amendment Act also introduced a proviso to Section 49 of the Indian Registration Act, to clarify the effect of non-registration of a contract executed in terms of Section 53-A of the Transfer of Property Act. Section 49 of the Registration Act 1908, reads as follows:- "49. Effect of non-registration of documents required to be registered.-- No document required by Section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring su....
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.... an unregistered contract/agreement to sell that contains a clause recording part performance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement; (b) the proviso to Section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract." 13.5 Thus, an unregistered agreement does not have any adverse bearing on the rights of the parties. It is a valid contract which can be enforced by way of a suit for specific performance. The assessee has already filed an application to amend the nature of its suit from 'permanent injunction' to 'specific performance' also. It is also pertinent to note that after 2018, an amendment has been made in Specific Relief Act whereby an assessee could claim the refund of the earnest money, if any paid. It is also pertinent to note that in a land deal, there can be a litigation at any time but it cannot be alleged that assessee has knowing....
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....1981) read with rule 2CA of Income Tax Rules. 1962. 1. the Chief Commissioner of Income Tax. Ludhiana region, Ludhiana hereby accord approval to "Sacred Heart Educational Soclely. Desanj Road, Moga" for the purpose of the said sub-clause for the F.Y. 2007-08 relevant to the Asstt. Year 2008-09 onwards subject to the following conditions namely :- The assessee will apply its Income or accumulate for application, wholly and exclusively to the objects for which it is established in accordance with clause (o) of third proviso to clause-23C of Section 10 of the I.T. Act. 1961. (H) The assessee will not invest or deposit its funds (other than voluntary contributions received and maintained in the forms of jewellery, furniture etc.) for any period during the previous years relevant to the assessment years mentioned above otherwise than in any one or more of the forms or modes specified in sub-section (5) of Section 11. This order will not apply in relation to any income being profits and gains of business unless the business is incidental to the ottainment of the objectives of the assessee and separate books of accounts are maintained in respect of such business. (iv) The asse....