TMI Blog2008 (5) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 and also registered under section 12AA of the Income-tax Act. It was engaged in imparting higher and professional education without any discrimination of creed, caste, language and place of birth etc., to the members of the society. In the earlier years also, the society was granted registration under section 80G( v ) of the Income-tax Act, 1961. Director of IT(E) vide its letter dated 1-7-2005 had allowed the continuation of registration under section 80G( vi ) for the period 5-1-2005 to 31-1-2007. The assessee-society was also registered under section 12A read with section 12AA of the Act. On 28-12-2006, the assessee-society filed application in Form No. 10G, seeking continuation of registration under section 80G of the Act. The Director of Income-tax (Exemption) issued letter dated 30-3-2007 requiring the assessee to submit following documents/explanation on 17-4-2007 : (1)Note on activities of the trust since the inception/last three years along with supporting documentary evidence. (2)Certificate from Managing Trustee that there is no change in the objectives or activities of the trust. In case there has been any change in objectives/activities that may be pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were as per the requirement for approval of an institution or fund under section 80G, as stipulated under rule 11AA of the Income-tax Rules, 1962. He further submitted that assessee-society was not only registered under the Society Registration Act but also under section 12AA of the Income-tax Act, 1961, and was engaged in imparting higher and professional education without any discrimination of creed, caste, language and place of birth and capacity etc., of the members of the society. He further contended that the assessee-society was not only registered under section 12AA of the Act but also was granted exemption under section 80G(5)( vi ) of the Act by the DIT(E) for the period from 5-1-2005 to 31-1-2007, vide order dated 1-7-2005. Our attention was also drawn to the order of registration under section 12A read with section 12AA of the Act, by the DIT(E), vide letter dated 1-7-2005. During the year under consideration, the assessee-society was in the process of development and establishment of educational unit by the name of Shri Ram Institution of Management and Technology at Plot No. 48B, Sector Knowledge Part-III, Greater Noida, UP, which was an institutional peace of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication filed by the assessee. He further submitted that even where an institution engaged in charitable activities and receives donations from the persons, in respect of whom identity is not established, the Income-tax Law as it stands before the amendment made by the Finance Act, 2006, with effect from 1-4-2007, do not deny the exemption of such income, if the same has been applied for charitable purposes. As per learned AR, the amendment has been brought by the Finance Act, 2006 with effect from 1-4-2007, wherein sub-section (7) has been inserted in section 13 of the Act and section 115BBC of the Act has been introduced, to the effect that in case of anonymous donation or contribution no exemption under section 11 shall be granted rather such donations or contribution shall be taxed at maximum marginal rates of tax. Since the amendment has been made prospective from 1-4-2007, the same cannot be applied during the period falling prior to it. The learned AR drawn our attention to various confirmations of the donors filed along with the affidavit, in support of the contentions that all the donations were genuine, and stated that these confirmations and affidavits goes to the root o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , statements of donations received during the financial years 2003-04, 2004-05 and 2005-06, list of unsecured loans as on 31-3-2006, copies of confirmation certificates, copy of lease deed dated 26-5-2005 and copy of correction deed dated 28-12-2005. No any defects in these documents were pointed out by the DIT(E), however, he denied the application only on the plea that there was information with the Investigation Wing to the effect that some of the persons who have given donations to the society were entry providers. Accordingly, the DIT(E) concluded that donations so received was not genuine. There is no denial to the fact that information of the Investigation Wing was used by the DIT(E) in back of the assessee, no notice to the assessee was issued asking the correctness of information gathered by Investigation Wing or allowing the assessee to cross-examine the statement given by any of such donor. It does not only goes against rule of natural justice but also goes against the legal requirement as laid down under proviso to sub-rule (5) of rule 11AA, which clearly castes a burden on the DIT(E) while rejecting any application filed under section 80G, to record in writing the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case are such that adverse inference against the assessee without allowing the assessee to cross-examine such person and deciding the veracity of his statement, would be unlawful and against the principles of natural justice and clear mandate of proviso to rule 11A(5). Hon ble Punjab Haryana High Court in case of CIT v. FCS International Marketing (P.) Ltd. [2006] 203 CTR 601 , held that assessee is not expected to undergo the process in endless litigation on account of inaction on the part of the Assessing Officer. For these laches of the revenue, the assessee cannot be penalized. As there was no change in the facts and circumstances vis-a-vis the object of the assessee-society which was promotion of the education and the same were duly recognized by the department by allowing registration under section 11AA as well as granting registration under section 80G vide order dated 1-7-2005, there was no justifiable reasons for declining the continuation of registration so applied for. Even if donors were found to be not genuine, as per the amendment brought in by the Finance Act, 2006, whereby sub-section (7) has been inserted in section 13 of the Act and section 115BBC of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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