TMI Blog2016 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... urvive and endure. In absence of such finding by the Learned CIT, we are of the view that he was not justified in cancelling the registration granted to the appellant-assessee under section 12AA of the Income-tax Act, 1961. We thus while setting aside such cancellation order of the Learned CIT questioned before us restore the registration granted under sec. 12AA - Decided in favour of assessee - ITA No. 941/Del/2013 - - - Dated:- 26-4-2016 - SHRI I.C. SUDHIR AND SHRI O.P. KANT For The Assessee : S/Shri Dinesh Gupta, CA Raja Kumar, Adv. For The Department : Shri A.K. Saroha, CIT(DR) ORDER PER I.C. SUDHIR: JUDICIAL MEMBER The appellant Indian Education Society (the Society for short) has preferred this appeal against the cancellation of registration under section 12AA of the Income-tax Act, 1961 by the Learned CIT on the following four grounds: 1. On the facts and in the circumstances of the case and in law, the CIT erred in holding that the Assessee society did not exist for educational purposes, without assigning any cogent reasoning for this conclusion; 2. On the facts and in the circumstances of the case and in law, the CIT erred in or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in CIT vs. S. Khader Khan Son (2013) 352 ITR 480 (SC) and the Hon ble Delhi High Court in CIT vs. Dhingra Metal Works (2011) 328 ITR 384(Del.) and the Hon ble Kerala High Court in Paul Mathews Sons vs. CIT (2003) 263 ITR 101(Ker.) and of the Hon ble Madras High Court in (2008) 300 ITR 157(Mad.). 3.3 In the survey several documents and papers including accounting papers, registers and voucher were impounded. These papers relate to the period beginning with 2011and extend up to the date of the very survey i.e. 28.02.2012. All these papers are discussed in detail in about 70 pages of the impugned order while withdrawing registration. The seriousness of the charge in terms of the withdrawal order is that the activities of the society/institution are not genuinely carried out for charitable purposes and further are not being carried on in accordance with the avowed aims and objectives of the Society. The several alleged irregularities on the financial front have been discussed at pages 4 to 70 of the impugned order, which are arising out of several day-book entries and vouchers of the various educational institutions run from one central office of the Society. What is added ult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualified and clean. These audited accounts have been filed with the returns of the income for the respective years with the Assessing Authorities. These accounts have been scrutinized under section 143(3) of the Act during the assessment proceedings by the respective Assessing Officers year after year. No defect or deficiency of any nature serious or otherwise, impairing on the claim for the conduct of charity in the educational field has been noticed or reported by the Assessing Officers. Copies of the assessment orders for the Assessment years 2009-10, 2010-11, 2011-12 2012-13 have separately been field. Each of these orders categorically records the findings of the Society carrying out education activities. No other activity has either been notice or reported in the Assessment Orders. These orders take note of the survey and to the seizure of the numerous documents therein termed uncharitably and erroneously as incriminating. The Assessing Officer choose to follow the baseless, unverified and unsubstantiated allegations made in the impugned order of withdrawal of registration. The audited accounts have been completely ignored by the Assessing Officer in this year. The assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that on page 71 of the impugned order there is a charge for non-supply of information and explanation. That occurred because on the basis scanty/disparate details sought peremptorily and on the spot such that the needful could not be done. All that was however, done during the course of the assessment. There is nothing wrong with constitution and composition of the society. Allegations to this effect as are contained at page 73 of the impugned order are wrong. So long as the objectives of the Society are carried out in terms of the declared mandate, no objection can be raised as to the constitution and composition. The designation of the Chairman or President is interchangeable. Both of them refer to the head of the Society. By whichever designation the person is addressed makes no difference to the Society or to its objects. The allegation that the other office bearers are there for the name sake only is anomalous and as misleading. Each of the office bearers has carried out his responsibilities to the best of his abilities so as to enable the Society to achieve its avowed goal. 4.5 The Learned AR also furnished following parawise answers to the specific allegations lab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usted inter se between the different three entities belonging to the different Institutions and only if so done would it balance. Cash is maintained compendiously. The assessments framed after the survey with the exception of the last one where the Assessing Officer has chosen to go by the findings of the CIT in the cancellation of order and has refused to look to the records as best ignored. Otherwise nothing of that sort has been pointed out in any year by any authority. vii. There are no discrepancies either in the assets or in the services procured by the Society. All allegations in this regard are imaginary and anamolous. viii. The salaries paid to the staff is on actual basis. Nobody has pocketed anything at anytime. All claims of salary as per the books of accounts have been allowed without any demur by the concerned Assessing Officer. The allegation is totally meaningless. ix, x xi These allegations have already been referred to in the earlier part of the narrative and are not repeated here in the interest of brevity. xii. The accounts have been maintained in the regular course of the Society s activities. No fault has been found with them by the statutory audito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rogative of the AO during the assessment. In CIT vs. Surya Educational Charitable Trust (2011) 203 Taxman 53 (P H) it has been held that the CIT ought not to concern himself and with application of funds. Beyond examining the genuineness of the pursuit of the avowed objects there is nothing else falling to the fold of the Commissioner for scrutiny or comments in an issue like this. He placed reliance on the decisions in the case of Tamil Nadu Cricket Association vs. DI(E) (2014) 360 ITR 633 (Mad); CIT vs. Baba Kartar Singh Dukki Educational Trust (2014) 221 Taxman 493 (P H); CIT vs. Jankiji Education Society (2013) 219 Taxman 69 (P H). 4.9 The Learned AR contended that registration granted under section 12AA of the Act cannot be cancelled for any collateral or oblique reasons. It is only when the registered objectives are not pursued or that the very pursuit of activities is bogus or sham then only a cancellation order can survive and endure. This is submitted in terms of the authorities in CIT vs. Sarvodaya Ilakkiya Pannai (2012) 343 ITR 300 (Mad); Chaturvedi Har Prasad Educational Society (2011) 45 SOT 108 (Luck); Maharashtra Academy of Engineering Educational Research v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act on 18.12.2012 was done after a most detailed and deep consideration of the material and evidence collected during the course of the survey operation. He submitted that the cancellation order was perfectly valid. The survey revealed that the Appellant had masked itself as a charitable society imparting education, whereas in actual fact it existed for the benefit of the office bearers of the Society. 5.1 The several discrepancies in the accounts as listed in the impugned order and as referred to supra were cited by the Ld. CIT-DR as material sufficient for the cancellation of the registration granted to the society ab initio. 5.2 The Ld. CIT-DR quoted extensively instances from the impugned order where from it was clear that the cash of the society was appropriated without any authorization and was siphoned off in lieu of the bogus salary and bogus expenses. He also drew our attention to the factum of cheques being paid across the counter even though they were shown in the accounts as account-payee cheques. 5.3 Receipts were being shown as fee receipts so as to balance the post dated expenses. Cash was taken away from one set of books of one Institute to another In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant s society as well as certain provisions of law. 5.7 The Ld. CIT-DR emphasised that it was established beyond doubt, that the activities of the Society were neither genuine nor were the activities of the Society carried out in accordance with the objects of the Society as stated in the Memorandum. Since from inception the control and management was with the same group of persons it was a clear case of exploitation in the name of Charity. Neither were the activities genuineness nor were the pursuit of objects authentic. In the end it was pleaded by the Ld. CIT-DR that it was a fit case for revocation of the cancellation order with effect from 01.04.2008 and that the order must be upheld. 6. In the rejoinder the Ld. Counsel for the Appellant stated that whatever was being urged on behalf of the Department in defence of the impugned order was not borne by the subsequent assessments. All that was pointed out were accounting mistakes. He relied upon the assessment orders for the AYs 2009-10 to 2011-12, all of which were framed after the survey, to submit that the sole activity pursed by the Society was educational. Further for the AY 2012-13 the AO had failed to weigh the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT passed an order under sec. 12AA(3) cancelling registration on the ground that the assessee was engaged in purchase and sale of books which was a commercial activity. On appeal, the ITAT set aside order of the Learned CIT holding that none of the conditions under sec. 12AA(3) of the Act were violated and, therefore, satisfaction which was arrived at by Learned CIT was not justified. The order of the ITAT was upheld by the Hon'ble Madras High Court. Hon'ble High Court held that the only reason given by the Learned CIT to cancel the registration was that the activities of the trust were not charitable and, therefore, the trust was not entitled to exemption under sec. 11 and consequently cancelled the registration granted under sec. 12AA of the Act. It was held that when the trust was registered with definite objects, carrying on such activities would be in terms of the object for which the registration was made. In fact, if those activities are not carried on, the trust may violate the objects for which the registration was granted. Under section 12AA, the Learned CIT is empowered to grant or refuse the registration and after granting registration he would be empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the office bearers of the appellant society recorded during the course of survey proceedings and the documents/papers impounded during the course of that survey. The assessee tried to reply these allegations but the Learned CIT was not satisfied therewith. Before the ITAT also, the assessee has tried to meet out those allegations briefly summarized in the submissions of the Learned AR in para No. 4.5 above. In the assessments for the assessment years 2009-10 to 2010-11, the Assessing Officer has granted the claimed exemption in view of the registration granted to the assessee vide order dated 23.9.2008. The Assessing Officer has, however, not extended the benefit of exemption in the assessment for the assessment year 2012-13 in view of the impugned order whereby the Learned CIT has withdrawn the registration. Under section 12AA of the Act, a review what is open to scrutiny is only the pursuit of objects as registered. In the case of CIT vs. Surya Educational Charitable Trust (supra) it has been held by the Hon'ble jurisdictional Punjab Haryana High Court that the Learned CIT ought not to concern himself with the application of funds beyond examining the genuineness of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
