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2018 (6) TMI 1571 - AT - Income TaxRegistration u/s 12AA cancelled - non charitable activities - Search & seizure action was carried out at the premises of the trust - incriminating documents revealed that the trust is run for the purposes of profit and not solely for educational purposes - Object of the trust - huge amount was collected from students, in cash without issuing any receipts and without entering them in the regular books of accounts - HELD THAT:- The authorities granting exemptions are duty bound to verify for any such violations. As the tax concessions involve a sacrifice of public revenue, it becomes imperative to ensure the tax concessions are not abused and enjoyed only by those charitable Trusts which actually deserve. The assessee trust has carried its activities which invited the search and seizure action by the Revenue, which resulted in unearthing of evidences, inter alia, that the assessee collected huge amount from students, in cash , without issuing any receipts and without entering them in the regular books of accounts maintained by the trust. When the assessee, a public charitable trust, has not kept clear and accurate accounts of the trust-property and failed to furnish with full and accurate information as to the impugned amount and state of the trust property, a finding was arrived that the impugned sum was lying with the Managing Trustee and others during the said period, which have not been used for the objects of the assessee trust. These facts have not been disproved. All these activities violate the provisions of the Indian Trusts Act, the Income Tax Act etc and hence the assessee’s case clearly falls within the mischief of all the above clauses of Section 4 of the Indian Trusts Act. - Decided against assessee Interest free advance given to sister concern - advances to prohibited persons - HELD THAT:- M/s Prathyusha Associates Shipping Pvt. Ltd. (PASPL), is a prohibited person, to whom ₹ 6 crore of the assessee’s money was advanced free-ofinterest etc are not disputed. Though, the assessee claimed to have ; advanced towards cost of construction of the buildings for the trust, awarded the contract to them on competitive bidding etc, it has not laid contemporaneous material substantiating its contentions before the Ld. PCIT as well as before the Ld. CIT(A) When the payment was made to a prohibited person, when its rationale is being questioned, the onus is on the assessee to place adequate contemporaneous material to show that how it quantified the project costs and on whose advice, when and how it went for bidding , how many bids were received , whether the impugned person had adequate experience in similar projects but assessee not laid any such contemporaneous material. As regards the payment to Ms Prathyusha, the daughter of Managing Trustee the Appellant had not produced any documentary evidence as to the functioning of the lady, nature of work allotted to her, what are the official matters which she attends everyday etc., and as to how such a huge salary of ₹ 4,92,000 is reasonable. In the circumstances the action of the AO does not warrant any interference. - decided against assessee
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