TMI Blog2016 (4) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... was not true. The Assessing Officer has observed that the remuneration paid to those family members was also more than arm’s length remuneration. The facts of the case clearly show that the assessee society was engaged in siphoning of money under the garb of carrying out charitable activity in the name of education. Thus we are of considered opinion that the members of the management committee has siphoned off or misappropriated the income of the Society and thus the activity of the Society, cannot be termed as genuine and the Society in the garb of charitable activity of education, is engaged in enriching its members through undue means. It is evident that the Commissioner of Income Tax has not found the object of the society and genuineness of its activities as satisfactory, and refused the registration as per section 12AA(1)(b)(ii) of the Act. - Decided against assessee - ITA No. 5581/Del/2014 - - - Dated:- 30-3-2016 - Sh. H. S. Sidhu, Judicial Member And Sh. O. P. Kant, Accountant Member For the Appellant : Sh. K. Sampath, Advocate For the Respondent : Sh. Amit Mohan Govil, CIT (DR) ORDER Per O. P. Kant, A. M. This appeal of the assessee is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commissioner of Income-tax, Haldwani and submitted that the assessee society has become a means of siphoning money by the society members and thus objects and activity of the society are no longer genuine, and hence the Commissioner of income tax has rightly refused to grant registration to the assessee. 5. We have heard the rival submissions and perused the material on record. The Commissioner of Income-tax while refusing the registration, noted as under: 2. It runs an educational institution in the name of Tempton college at Kashipur. In the past, it had made application before the Chief Commissioner of income tax, Dehradun seeking approval under section 10 (23C)(vi) of the IT Act, 1961 (on 29/03/2011). The same was rejected by the order dated 28/03/2012, holding that its activities appeared to be non-genuine and commercial in nature. In this case, survey under section 133A of the IT Act, 1961 was conducted on 4th August 2010. It was found that 4 ladies, being family members of the members of the management committee were being paid salaries without rendering any services. On being asked about this, the accountant had stated that they were family members or close ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld produce any leave application under the plea that the application may be made available only after the teachers join the school. 4.1 The Accountant of the school who used to manage all the accounts and financial affairs was also asked in his statement on oath to explain the reason as to why the four lady teachers have not put their signature in the attendance register. The Accountant had stated in his statement on oath as under: On the basis of facts and findings during the course of survey proceedings as well as during the course of assessment proceedings of the case, it has been established that all the four lady teachers were actually not employed nor they performed any teaching activity in the college. As such, it was confirmed that there was diversion/concealment of the income of the society by way of showing payment of salary to the following family members and close relatives of the members/chairman of the society. S. No. Name of the family member Relation with member/chairman Amount of salary paid (per month) 1. Smt. Sonal Agarwal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Singh Education Society versus CIT (2009) 118 ITD 207 (ASR) 6. CIT versus Spring Dale education society (2011) 204 Taxmann 11 (P H) 7. DIT versus JITO Channai chapterr (2012) 204 Taxmann 157 (Madras) 8. CIT versus Bharat Sewa Sansthan (2013) 217 Taxmann 337 (All) 9. CIT versus State Urban Development Agency (2013)218 Taxman 146(All) 10. CIT versus RS Bajaj society (2014) 222 Taxmann 111(All) 7. In the case of Fifth-Generation Education Society (supra), the Hon ble High Court of Allahabad in the writ petition of the assessee society, who did not carry out any charitable activity, held that merely because the objects of a charitable trust are general, they do not cease to be charitable. It is also not the requirement of section 12A that any activity should be carried on by the charitable Society for obtaining registration. 8. In the case of assessee in hand, the activities were carried for a long time and registration has been refused on the ground of non genuineness of the objects/activities of the assessee and thus the facts of the case in hand are different from the facts of the above cited case and thus the ratio laid down is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable Trust versus Commissioner of income tax (supra) the issue of refusal to grant approval to assessee trust under section 80G(5) of the Act on the ground that the assessee trust had acted in contravention of section 11(5) of the Act was not held to be justified. Since the issue in dispute in the present case is registration under section 1 AA of the Act, the ratio of the cited judgments is not applicable over the facts of the assessee. 12. In the case of Guru Gobind Singh Educational Society versus Commissioner of income tax (supra) the assessee was an educational society and was granted registration under section 12AA(3) of the Act, however subsequently the Commissioner found various irregularities in activities of the assessee society, mainly (i) assessee had opened bank accounts in the names of its members with the motive of transferring concealed business income from its books to bank accounts of members, (ii) there was dispute amongst members of society regarding management of society, (iii) assessee had debited a sum of ₹ 49 Lacs in its books of accounts as advance for land without furnishing complete details , and in view of these irregularities, he cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that object clause of the deed contained provision for domestic and overseas markets and also for settlement of disputes by arbitration and therefore assessee s object was not charitable in accordance with section 2(15) of the Act, however the Hon ble court has held that object of the society was to propagate nonviolence and tenets of truth and to encourage universal spiritual upliftment as preached by Tirthankar Bhagwants and what was stated about settlement of dispute was only incidental thereto which could not be stated to be commercial in nature and thus the assessee was entitled for registration under section 12AA of the Act. The facts of the present case are different from the facts of the cited case. 15. In the case of Commissioner of Income Tax versus Bharat Sewa Sansthan (supra) the assessee, a Society registered under section 12A of the Act, was denied exemption by the Assessing Officer observing that (i) huge amounts spent by the assessee and passed on to two other organization had no obvious link with charitable purpose and their immediate hidden purpose was to benefit members of the society and (ii) President and Treasurer of society had occupied a building, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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