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2016 (9) TMI 213 - ITAT DELHI

2016 (9) TMI 213 - ITAT DELHI - TMI - Registration of the assessee society u/s 12AA(3) & (4) cancelled - allegations of the ld. Pr. CIT that the funds were siphoned off for the purpose other than the activities to achieve the objects of the assessee Society - Held that:- No verification was made from the students to substantiate that laptops/computers claimed to be distributed amongst the students were not given to them and even the recovery from the students towards the cost of the said laptops .....

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al or computers or laptops etc. Therefore, the allegations of the ld. Pr. CIT that the funds were siphoned off for the purpose other than the activities to achieve the objects of the assessee Society are not sustainable. In the present case nothing is brought on record to substantiate that the assessee was not running the educational institutions for imparting the education which is a charitable activity. - In the present case, it is an admitted fact that the assessee had been granted regis .....

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dence of receipt of donation or capitation fee was found during the search and the presumption u/s 292C of the Act were rebutted by denial of the assessee that the purchases of the material for construction of the building and computers/laptops for distribution amongst the students were made through some of associated concerns of the trustees at the reasonable rate which were even lower than the market rate. The Banks granted the term loans to the assessee trust for the construction of building .....

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t. - Decided in favour of assessee - ITA No. 2734/Del/2015 - Dated:- 29-7-2016 - Sh. N. K. Saini, AM And Ms. Suchitra Kamble, JM For The Assessee : Sh. K. Sampath & V. Rajakumar, Advs. For The Revenue : Sh. Sunil Chander Sharma, CIT DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee, directed against the order dated 27.03.2015 of Principal CIT(Central), Kanpur (in short Pr. CIT). 2. The only ground raised in this appeal reads as under: That on the facts and in the circumstances .....

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ety u/s 12AA(3) & (4) of the Income Tax Act, 1961 (hereinafter referred to as the Act). 4. Facts of the case in brief are that the assessee is running Educational Institutions, a search operation was carried out on 26.04.2012 at the premises of the assessee. During the course of search certain documents were found and seized. The ld. Pr. CIT issued a show cause notice dated 30.01.2015 u/s 12AA(3) of the Act to the assessee and asked to explain/clarify as to why the registration u/s 12AA of t .....

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un A/c No. 705020110000202, Bank of India, Dehradun A/c No. 3898002100021547, Punjab National Bank, Roorkee A/c No. 3898002100012538, Punjab National Bank, Ramnagar, Roorkee A/c No. 469002100000119, Punjab National Bank, Dehradun A/c No. 1175002100009790, Punjab National Bank, Kaulagarh, Dehradun 5. The ld. Pr. CIT was of the view that the said accounts were operated by the employees on behalf of Sh. Sanjay Bansal and there were huge deposits and withdrawals in those bank accounts for the purpos .....

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written reply detailing the actual transaction with society/Sh. Sanjay Bansal and had categorically denied of having issued the invoice and supplying anything. The ld. Pr. CIT observed that a term loan of ₹ 224.64 lakhs was sanctioned by the PNB, NAV, Saharanpur to the society to be reimbursed in lieu of 800 laptops worth ₹ 299.52 lakhs for distributing to the students and the details furnished by the bank revealed that those laptops were purchased vide invoice No. 1984 dated 16.10. .....

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ld. Pr. CIT pointed out that the aforesaid company informed that the invoice No. 1984 dated 16.10.2008 was not issued by the company. He also pointed out that a fresh term loan of ₹ 245.00 lakhs for purchase of 950 laptops worth ₹ 355.68 lakhs to be distributed to the students was sanctioned / disbursed by the bank in favour of the assessee society who furnished an Invoice No. SM 09-10/1331 dated 04.12.2009 of M/s Strategic Marketing, Rajpur Road, Anekant Place, Dehradun to the bank .....

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f Manager, PNB, Avas Vikas Branch, Saharanpur. 7. The ld. Pr. CIT also pointed out that a further term loan of ₹ 262 lakhs was sanctioned by the PNB, NAV, Saharanpur to the assessee society for purchase of 1050 laptops worth ₹ 393.12 lakhs to be distributed to the students of the institute from M/s CAD ARENA, near Hostel Royal Palace, Roorkee. According to the ld. Pr. CIT, M/s CAD ARENA was not an authorized distributor of HPISPL for supply of laptops in North India and the said comp .....

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se order dated 09.08.2010. Therefore, the three documents namely Proforma Invoice No. J9AD109932, the alleged letter by Sh. Naman Patil and purchase order No.DBIT/Order/09-10/198 dated 09.08.2010 were the only documents made available by the bank in support of purchase of 1050 laptops in support of the end term loan of ₹ 262 lakhs disbursed to the society. According to the ld. Pr. CIT, the assessee society had not purchased any laptop/computer and the invoice/other documents furnished by i .....

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nk of Bikaner & Jaipur, Saharanpur Road, Dehradun M/s CAD ARENA Proprietor Sh. Sunil Dandriyal R/o 194, Dharampur Danda, Dehradun with Bank of India, Rajpur Road, Dehradun M/s Pawan Kumar & Co. Proprietor Pawan Kumar R/o 194, Dharampur Danda, Dehradun with PNB, 45-Subhash Road, Dehradun M/s Negi Builders & Suppliers Proprietor Mukesh Negi, R/o Dhalwala near Doon Steel, Rishikesh with PNB Kaulagarh Road, Dehradun 8. The ld. Pr. CIT observed that Sh. Sanjay Bansal in connivance with hi .....

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the partnership firm M/s Drishti Builders and Developers. He also pointed out that Sh. Sanjay Bansal had made a disclosure of ₹ 4,02,25,780/- as undisclosed investment in the aforesaid funds in the return filed u/s 153A of the Act and that Sh. Sanjay Bansal and Smt. Seema Bansal had also disclosed ₹ 86,00,000/- as undisclosed investments in purchase of properties which prima facie proved that the funds of the assessee society had been utilized for personal/non charitable purposes. T .....

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he cost of repetition, the same is not reproduced herein. The ld. Pr. CIT also stated that the documents seized during the course of search revealed that Sh. Sanjay Bansal had made cash payments of about ₹ 35 to 40 crores to the outgoing trustees for taking over the control and management of the institute and polytechnic college. He also mentioned that OD facility of ₹ 30 crores from PNB, Saharanpur was channeled through Delhi Parties and an amount of ₹ 292 lakhs was paid to th .....

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nted out that the aforesaid OD account was opened on 29.09.2010 and within a period of 20 days, the OD facility had been availed to the tune of ₹ 30 crores and the said amounts had either directly been paid from the OD account/term loan account by issuing cheques in favour of the above named persons for transferring the amount to other accounts of the assessee society/DBIT/Saraswati Hostel, thereafter, issuing cheques from those accounts in favour of the above mentioned persons. The ld. Pr .....

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Mohan Goyal ₹ 50 lakhs M/s Mind and Soul Fitness Pvt. Ltd., ₹ 75 lakhs Manishi Tower Pvt. Ltd., ₹ 1.50 crores Sh. Sunil Jalan, ₹ 5.50 crores 11. The ld. Pr. CIT observed that the assessee not only had given the advances for business purposes but also had given the interest free loans to the aforesaid parities who had been known through Sh. Chand Kishore Aggarwal uncle of Sh. Sanjay Bansal, therefore, the funds of the assessee society had been diverted for non-educational .....

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d by giving interest free loan/advances for noneducational purposes. Therefore, the affairs of the assessee trust were not being carried out as per objectives of the trust and moreover, the activities were carried out in a manner that the provisions of Section 11 & 12 of the Act did not apply to exclude either whole or part of income due to operation of sub-Section (1) of Section 13 of the Act. The ld. Pr. CIT asked the assessee to submit the explanation/clarification, if any, as to why regi .....

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s, Uttarakhand. Further, the society was renewed by Registrar of Societies on 13/08/2014 for 5 years w.e.f. 14/05/2014. A copy of Registration Renewal Certificate is attached herewith as Annexure "A" Page 1. b) The name of the society has been framed as "Uttarakhand Uthan Samiti" which indicates that this Society will always endeavor for the growth of Educational base of this state Uttarakhand". Similary the name of the Institutes/Colleges have been titled as "Dev B .....

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tute of Pharma & Research. v. Dev- Bhoomi Institute of Management & Studies. Saharanpur: i. Dev- Bhoomi Group of Institution (Engineering College) ii. Dev-Bhoomi Institute of Polytechnic iii. Dev-Bhoomi Institute of Professional Studies. d) The courses offered by the Institutes are B.Tech in CSE, Civil, EEE, ME and ECE, BBA, MBA, BCA, MCA, BSC-IT, M.Pharma, B. Pharma, D. Pharma, Diploma in polytechnic courses such as Civil, CSE, EC, EE, ME-A. All these courses offered at the colleges are .....

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nts, computers, peripherals and all other miscellaneous requirements for annual extensions of approval and affiliation by respective statutory bodies. It is apparently evident that the society has been incurring recurring expenses along with incremental (developmental) expenses to meet the expansion requirement of all these courses as per the norms of aforesaid statutory bodies. f) We shall humbly like to submit that every year new construction, extension of Academic facilities, addition of labo .....

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7500 Thus the total constructed area is approx 6,27,500 square feet and the cost incurred is approx ₹ 33 Crores, which is totally justified considering the average rate of construction per square feet which is in fact quite low as compared to what would have been charged by an outside Contractor, since the management has got the construction done themselves they have been able to keep the cost so low. Besides the above building construction lot of other construction like the following have .....

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Nos.9. 7. Basket Ball Court in Dehradun & Saharanpur Campus:-4Nos. 8. Lawn Tennis Curt in Dehradun & Saharanpur Campus:- 2Nos. 9. Badminton Court in Dehradun & Saharanpur Campus:-7 Nos. 10. Cement Road at various places in Dehradun & Saharanpur Campus. We shall humbly like to submit that Uttarakhand Utthan Samiti has proposed and implemented a scheme for its employees whereby they can contribute to the growth and development of institution through petty building constructions an .....

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ciates & Engineers for several years, Sh. Sanjay Bansal acted as an introducer to get a bank account opened in the name of M/s Fortech Computers. Also Purchases of computers, laptops and accessories were made by the society from him because the rates offered by him were competitive than the other vendors dealing in the same industry. It was only incidental that the proprietor of M/s Fortech Computers happened to be Sh. Sanjay Bansal's employee. It was in the best interest of the society .....

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02100008302 of Dev Bhoomi Institute of Technology through account payee cheques. The computers/laptops and accessories were purchased from M/s Fortech Computers in bulk and later on the price quoted by the firm was paid through account payee cheques. Further, we shall like humbly submit that your goodself have mentioned in the notice that withdrawals from account of M/s Fortech Computers have been made by Sunil Dandriyal, Atul, Neeraj Tyagi and Sushil Kumar who have been alleged to be employees .....

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nt on whether the books of accounts were maintained by him or not. That is best known to him only. The firm supplied computers, laptops and accessories to the society and payments were made through account payee cheques against bills issued by the vendor. The society had purchased computers/ laptops from the firm without going into the subject as to what is being done in the firm. The computers/laptops and accessories were received from the firm which have been accounted for in the books of soci .....

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enerator Room & Platform. 18. Labor living room tin shaded. 19. Advertisement Boards (100Nos.) Grouting all over Uttarakhand. 20. Side Elevation Steps in Saharanpur Campus in each Building. Any contention of the Income Tax Department that some of the vendors bills are not verifiable is not at all justified because if the same are removed from the cost of construction then the building cannot be constructed at such low cost, without the material supplied by those alleged vendors the Building .....

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us. Copy for norms of AICTE norms for the same for FY 2005- 06, 2006-07, 2007-08, 2008-09, 2009-10, (same as 2008-09), 2010-11 (same as 2009-10)FY 2011-12, FY 2012-13, are attached herewith as Annexure B, Page No. 2 to 40. Further year wise Approval copy is dully attached for both DEHRADUN and SAHARANPUR Campus as Annexure C Page No. 41 to Page 179. We shall further like to submit that it has been alleged that Mr. Sanjay Bansal siphoned off society's funds which were alleged to have been uti .....

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n these are not reproduced herein. As regards to the query relating to term loan and the investments in the property, the submissions of the assessee before the ld. Pr. CIT were as under: OBSERVATION REGARDING TERM LOAN As regards your query related to Term Loan A/c No. 1175001C00000378, we shall like to submit that as alleged, the society, Uttarakhand Uthan Samiti has not submitted any fabricated invoice to the bank. Computers, Peripherals & Accessories were purchased against it from M/s Fo .....

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oan for the purpose for which it was sanctioned i.e. purchase of laptops. As regards your query related to Term Loan A/C No. 117500IC00000411, we shall like to submit that as alleged, no bogus expenditure has been claimed by the society. Purchases have been genuinely made against invoice no. SM 09-10/1331 from M/s Strategic Marketing, 29/3, Rajpur Road, Anekat Palace, Dehradun and the same can be duly verified from the Photocopy of stock register maintained by the society, submitted above & .....

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related to Term Loan A/c No. 117500IC00000448, we shall like to submit that as alleged, no forgery has been done by the society with the bank. The society has genuinely made purchase of laptops/computers from the firm M/s Cad Arena, Dharampur Danda, Dehradun (Prop. Mr. Sunil Dandriyal) amounting to ₹ 368.12 Lacs. The above invoices are genuine and are correctly incorporated in the regular books of the society. The society has submitted above invoices to the bank. We are not aware who had s .....

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have been received from M/s Cad Arena, Dharampur Danda, Dehradun. The allegation that the society has not purchased any laptops against the Term Loan of ₹ 262 Lacs is totally wrong and the sanctioning of loan by bank is totally justified. As regards your goodself s allegation that the accounts have been opened by Mr. Sanjay Bansal, in the name of Fortech Computer Systmes, M/s Rana Steels, Cad Arena, Pawan Kumar & Co and Negi Builder & Suppliers we deny the said allegation and conf .....

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r the purposes for which it was sanctioned and for the furtherance of the objects of the society. 13) OBSERVATION REGARDING INVETSMENT IN PROPERTY In point no. 13 of your letter dated 30,01.2015, your goodself has alleged that Sanjay Bansal has diverted the fund of society for investment in immovable properties. Also it has been alleged that the funds have been transferred to M/s Ganga Realtors Pvt. Ltd. for purchase of plots in their individual names and on these plots construction of flats und .....

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m their proprietorship firms namely Saraswati Hostel and Srishti Sales respectively. The payments for purchase of land have been made from their respective bank accounts. Mr. Sanjay Bansal runs a hostel under the name "Saraswati Hostel" from where hostel receipts are derived. These receipts are credited in the bank account of the proprietorship firm. Similarly Mrs. Seema Bansal runs a canteen under the name "Srishti Sales" and provides mess facilities to the students. The inc .....

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he proprietorship firms of Sanjay Bansal and Seema Bansal. The disclosure made during search has no relation with society. Thus, the allegations imposed by your goodself that the society funds have been utilized for personal/noncharitable purposes are totally denied. 14) In point no. 14 of your notice dated 30.01.2015, your goodself have provide a list of loan account of society between period FY 2006-07 to FY 2010-11 and have alleged that the amounts credited in the bank accounts of the fictiti .....

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e No. 569 to 578: From the above details it is clear that all the loans and OD accounts have been used for furtherance of objects of the society. The allegations made are without any basis, material or evidence. There are no credits in the bank account of any fictitious concerns much less from the Term Loans and OD of the society nor any expenditure in the nature of alleged bogus purchases were booked from such non-existing concerns. 15) In point no. 15 of your notice dated 30.01.2015, your good .....

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in your notice has been paid and therefore the allegation is denied. The documents referred by your goodself are not clear in the notice and in any case do not show that any payment has been made. Therefore your goodself are requested to kindly let us know the basis of the allegation. In any case society has got nothing to do with the allegations mentioned in point no, 16 to your notice. 17)(a) Regarding your query related to M/s Universal Iron Store we shall like to submit that as alleged by y .....

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d Bill No. 7547 dated 01.11.2010 and alleged Bill No. 7891 dated 19.02.2011 for ₹ 1,38,597/- and no such expenditure has been recorded in books of accounts of the society. As aforesaid, bills amounting to ₹ 30,100/- and Rs, 33,597/- have only been claimed. Since both the bills have been correctly claimed in the books of society, the allegation that bogus expenses of ₹ 2,30,100/- and ₹ 1,38,597/- have been claimed through these bills is completely denied. b) In reference t .....

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your notice have got anything to do with the society. c) In reference to Rishiraj Building Material Supplier, we shall like to submit that we are not aware who has submitted these bills and for what purpose. Mr. Sanjay Bansal has not submitted any such bill to the bank nor has it been recorded in the books of accounts of society. Thus, the allegation is denied. d) In reference to your query no 17(c) on page 13 of questionnaire dated 30.01.2015 related to Pawan Kumar, we shall like to submit that .....

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been given by your goodself in the impugned notice, society is not in position to make further submission in this regard. 18) In respect of your query no. 18 on page 13 of questionnaire dated 30.01.2015 regarding OD A/c 1709009300044883 of ₹ 30 crores and Term Loan A/c 170900IC00000025 of ₹ 8 crores, we shall like to submit that the above loans were taken for the furtherance of objects of the society and were utilized for the same. Payments to various parties of Delhi were made for .....

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cified time, the amounts paid would be returned interest-free to the society on expiration of the specified period. Since the projects could not be executed the advance given to parties was returned back to the society. The advance was paid for furtherance of the objects of the society and on non-execution of agreement the amount was returned back within prescribed time and thus no interest was charged. A copy of ledgers evidencing return of amount is attached subsequently. Therefore it is clear .....

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new colleges. Further the amount has been received back from the Party. As also mentioned by your goodself, no cash withdrawals have been made from their accounts which prove it is genuine transaction. A copy of MOU executed with the party and ledger Account evidencing return of payment is attached herewith as Annexure Q, Page No 579 to 582. b) Ashwat Furniture: ₹ 1.96 crores were paid from bank accounts of society and Saraswati Hostel (Proprietorship concern of Sanjay Bansal) for purchas .....

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evidencing return of payment is attached herewith as Annexure R, page No. 583 to 586. c) M/s Chand Sons Education City Pvt. Ltd. and M/s CKSR Impex International Pvt. Ltd.: The amounts of ₹ 3.66 crores and ₹ 3.44 crores were paid by Sh. Sanjay Bansal to M/s Chand Sons Education City Pvt. Ltd. and M/s CKSR Impax International Pvt. Ltd. respectively for setting up of school/college with the party. The MOU was executed for a time period and if the conditions were not fulfilled before t .....

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hat interest would be charged only if the party does not return back the amount within specified period of expiry of MOU. Since the amount was received back within the stipulated time, no interest was charged. The society cannot comment on utilization of funds by the parry. A copy of MOU executed with the party and ledger Account evidencing return of payment is attached herewith as Annexure T, page No 599 to 606. e) Birj Mohan Goyal: As regards advance of ₹ 50 lacs given to Sh. Brij Mohan .....

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videncing return of payment is attached herewith as Annexure U, page No. 607 to 612. f) M/s Mind & Soul Fitness Pvt. Ltd. : As regards advance of ₹ 75 lacs given to M/s Mind & Soul Fitness Pvt. Ltd., we shall like to submit that the advance was given by the society for establishing gymnasium, purchasing lands in region of Delhi/Gurgaon. The terms of MOU Provided that interest would be charged only if the party does not return back the amount within specified period of expiry of MOU .....

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Delhi/Gurgaon. The terms of MOU provided that interest would be charged only if the party does not return back the amount within stipulated time, no interest was charged. The society cannot comment on utilization of funds by the party. A copy of MOU executed with the party and ledger Account evidencing return of payment is attached herewith as Annexure W, page No. 622 to 625. h) Sh. Sunil Jalan: The advance of ₹ 5.5 crores was given for purchase of land in Delhi/Gurgaon region for setting .....

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rom the above submissions that the society is being run in consonance with the objectives of the society for which it was established and all the conditions stipulated in section 11 & 12 of Income Tax Act, 1961 are being compiled by the society. Thus it is requested to your goodself that the registration granted u/s 12A by the CIT may not be cancelled," 14. The ld. Pr. CIT after considering the submissions of the assessee observed that that assessee had not been able to indicate any jus .....

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ith the objective of the trust or institution. According to the Pr. CIT, the registration in this case had been granted for the purpose of education and therefore, in order to determine the genuine activity of education was being carried out or not, it was important to see what activities had been carried out, out of the funds, loan and admission fee received by the trust from various sources and if all the funds were used by the trust for the purpose of education it can be said that activities .....

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show cause notice. The ld. Pr. CIT was of the view that the assessee had not been able to provide any justification for mis-management of the funds of the trust for the purpose other than education and when confronted with evidence which were found and were admissible in terms of Section 292C of the Act, the assessee had only pointed out that those documents did not belong to it or did not indicate any wrong doing on its part which was merely statement not substantiated by any evidence. The ld. .....

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the assessee can be cancelled even in the case when it is found that the certain income received by the assessee trust was not exempted u/s 11 of the Act, due to certain provisions of Section 13(1) of the Act becoming operative. The ld. Pr. CIT observed that the evidence found during the course of search were considered to be belonging to the assessee and the contents of such documents were true, the assessee had not been able to rebut any of the evidence or information found by the AO indicatin .....

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gistration u/s 12A of the Act was cancelled and exemption was disallowed in arbitrary manner by the ld. Pr. CIT without providing adequate reasonable opportunity and in violation of the principle of natural justice. It was further submitted that the explanations and evidences furnished against the unfounded allegation were not given due consideration and findings were given unilateral, without material and evidences on record. It was also submitted that the assessee society had been running educ .....

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society and those concerns were bogus and payments of the assessee society to them for such bogus transactions were siphoned off money by Sh. Sanjay Bansal was nothing but a wild guess and fallacious allegations. It was further submitted that their bank accounts were opened with KYC documents etc. which had been duly accepted by the bank, regular operation of the bank accounts had taken place and none of those documents and realities was countered by the ld. Pr. CIT while cancelling the registra .....

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enuine and were effected for the furtherance of the objects of the society. The funds were strictly used for the promotion of the objects of the society only, the building was constructed and the laptops were distributed among the students (numbering around 800) which also physically existed and were verifiable. It was further submitted that the bank loans were taken and utilized by the assessee for its objects of the assessee society as evidenced by the existing building, computers, laptops dis .....

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objects of the assessee Society, like provision of Hostel accommodation for students etc. It was contended that the assessee furnished overwhelming evidences for purchase of 800 laptops from M/s Fortech Computer System including bills, payments by account payee cheques receipt of 800 laptops and their distributions amongst students, intimation to the bank regarding receipt of 800 laptops and payments to M/s Fortech for the same etc. The aforesaid evidences were not contradicted by the ld. Pr. C .....

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l the statutory norms of building, lab equipments, computers, accessories, peripherals and affiliation by statutory bodies like AICTE and that every year additional construction, extension of academic, addition to lab equipment, computers and peripherals were mandatory for approval and extension and affiliation. However, the ld. DIT(E) failed to appreciate these factual aspects and wrongly concluded that the construction of building, purchase of computers, laptops etc. were bogus and nonexistent .....

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were fictitious or bogus, particularly when, those transactions were made with them in the interest of the society as the rates offered by them were reasonable and even lower than the rates of other concerns and the assessee Society did not want to take further burden at that stage because it was engrossed in several other tasks and also to ensure timely compliance, so as to be able to start the next session on time. It was further stated that even the assessee society had been benefited from th .....

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to what would have been charged by an outside contractor and similarly, the computers, accessories, peripherals were also purchased at reasonable rates and even lower than what would have been charged by other concerns. Therefore, the ld. Pr. CIT without looking into the aforesaid facts and without pointing out anything excessive, unreasonable or wrong, straightaway gave an unfounded and unsubstantiated findings that construction, purchases, etc. were bogus. It was submitted that even no benefi .....

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ken thereof and ignored in order to pass an adverse order with pre-conceived notions and to justify the search conducted in this case. It was further stated that merely because certain statements were obtained from the owners of the supplier firms under duress, coercion, undue influence, threat etc, the denial of the transaction could not have resulted in the transaction being held as bogus. Particularly when, the transactions were supported by bills, payments by account payee cheques, entries i .....

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were dummies of Sh. Sanjay Bansal who was the real owner then also the only way for the department was to add income from those transactions in his hands. It was submitted that Sh. Sanjay Bansal surrendered a substantial income which would cover any such addition. It was pointed out that the ld. Pr. CIT at page no. 10 of his order mentioned that he confronted Sh. Sanjay Bansal to all the aforesaid facts but he did not file any explanation, and then he proceeded to narrate one sided details and e .....

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00s of teachers to carry out the objectives, its campus spread out over an area of above 10,00,000 sq. ft. and nothing was brought on record to suggest that the activity was not genuine. It was further submitted that the allegations of abstraction of funds were fallacious and fictitious by ignoring clinching material and incontrovertible evidences filed during the course of assessment proceedings. Therefore, the registration could not have been cancelled u/s 12AA of the Act. The reliance was pla .....

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T and reiterated the observations made in the said order. It was further submitted that the funds of the assessee Society were siphoned off by the promoters/trustee which was apparent from the documents found during the course of search. It was further submitted that the trustee of the assessee Society namely, Sh. Sanjay Bansal opened various bank accounts in the names of the employees or the concerns associated with them and all the withdrawals were through the bearer cheque which were diverted .....

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e students and even the purchases were inflated. Therefore, the objectives for which the assessee Society was established were not fulfilled. It was pointed out that the trustee of the assessee Society surrendered the income during the course of search for the reasons that the unaccounted income was earned by the assessee society by violating the provisions of the Act, therefore, the registration was rightly cancelled under the provisions of Section 12AA of the Act. 17. We have considered the su .....

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nging to the assessee society and during the course of search incriminating documents were found, on the basis of those incriminating documents, Sh. Sanjay Bansal one of the trustee surrendered the income. Thereafter, the ld. Pr. CIT initiated the proceedings for cancellation of the registration already granted u/s 12A of the Act by invoking the provisions of Section 12AA of the Act and issued show cause notice dated 30.01.2015 to the assessee u/s 12AA(3) of the Act. The ld. Pr. CIT was not conv .....

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inion, only on this basis that a person introduces someone to open the bank account cannot be held to be the owner of that bank account, particularly when, the said account is operated by the person in whose name the bank account was opened. In the present case, the assessee constructed the building which was in existence and nothing was brought on record to establish that the assessee was not in possession of the building constructed by obtaining the term loan from various banks, even the loan .....

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e market rate rather the claim of the assessee was that those were purchased at a lesser ate then the market rate which benefited the assessee Society. In the present case, it is also noticed that no verification was made from the students to substantiate that laptops/computers claimed to be distributed amongst the students were not given to them and even the recovery from the students towards the cost of the said laptops/computers has not been doubted. In the present case, the trustee of the as .....

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IT that the funds were siphoned off for the purpose other than the activities to achieve the objects of the assessee Society are not sustainable. In the present case nothing is brought on record to substantiate that the assessee was not running the educational institutions for imparting the education which is a charitable activity. The AICTE made the inspection and found that proper building was there to run the educational institutions and the computers/laptops were given to the students, there .....

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ault and there is no finding contrary to the above facts by the ld. Pr. CIT in the impugned order. It is an admitted fact that the registration is granted u/s 12A of the Act, if a trust/society is created wholly for charitable purposes or an institution is established wholly for such purposes, the said registration can be cancelled u/s 12AA(3) of the Act if the ld. Pr. CIT or CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accorda .....

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the assessee than proper action would have been taken u/s 11 or 13 of the Act. 18. On a similar issue the Hon ble Allahabad High Court in the case of CIT Vs Babu Mohan Lal Arya Smarak Educational Trust (supra) held as under: Where in course of search carried out at assessee s premises, certain documents were found indicating some receipt of cash against admission of students in various courses run by assessee trust, in view of act that presumption under section 292C was rebutted by denial of as .....

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he would grant registration. In the event, upon an inquiry, the Commissioner was not satisfied, he could refuse registration. Similarly, under subclause (3) of the section 12AA, the registration can be cancelled on the ground that the Commissioner was satisfied that the activities of such trust was not genuine or was not being carried out in accordance with the objects of the trust. The fact that some activities, which were not solely carried out for charitable purpose could not be a ground for .....

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Niketan Dham, Public Charitable Trust (2013) 38 Taxmann.com 342 (supra) held as under: 6. A perusal of Section 12AA(3) of the Act, reveals that a precondition to cancellation of registration are findings that activities of the trust are not genuine or are not being carried out, in accordance with objects of the trust. Thus, before cancelling registration, a Commissioner is required to record a finding that activities of the trust are not genuine or are not being carried out, in accordance with o .....

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