TMI Blog2011 (5) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... venience. 2. In all these appeals, the assessee has taken six grounds of appeal. However, the sole issue involved in all these appeals for all Assessment Years under consideration is that the Commissioner of Income-tax was wrong in entertaining jurisdiction u/s 263 of the Act by setting aside the assessment order and directing the Assessing Officer to reframe the orders de novo, in accordance with law, as he had passed order u/s 12AA(3) on 16.3.2010 withdrawing registration granted u/s 12AA from Assessment Year 2001-02 onwards. 3. At the very outset, the ld. A.R. of the assessee Shri G. Baskar submitted that the Tribunal in assessee s own case in ITA No. 444/Mds/2010 vide order dated 24.12.2010 vacated the order of the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought to counter as to how in view of withdrawal of registration, the assessment order is stillnot erroneous and rpejudicial to the interest of revenue. The relevant fact is to consider whether the assessment order is erroneous and prejudicial to the interest of the revenue or not due to the withdrawal of Registration u/s.12AA(3). After consideration of the facts and circumstances of the case and replies of the assesee I have come to the conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue for the followign reasons:- (i) As per Section 12 of the I.T.Act, 1961, provisions of section 11 and section 12 shall not apply in relation to the income of any Trust or Institution if there is no app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the receipts in such fixed assets should not have been allowed as a deduction even to the extent of 50% which makes the order erroneous as well as prejudicial to the interest of revenue because, if consequential benefit u/s.11 is to be withdrawn because of the withdrawal of the registration, the assessment would bring in larger revenue. Hence, after a careful consideration of facts and circumstances of the case, the order of cancellation u/s.12AA, the assessment order and the replies of the assessee, I set aside the assessment order with the direction tot he TO to reframe the order de novo in accordance with law after giving adequate opportunity tot he assessee to be heard andafter fproper verification of the facts and evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose persons who have given big amounts by way of donations presumably for allotment of seats in professional institutions. As far as, the assessee-trust is concerned, the violation is that of Anti Capitation Fees Act which is not a violation under the provisions of the I.T. Act. Therefore enquiries should be made against the assessee through a process permitted under Tamilnadu Prohibition of Capitation Fees Act. The income-tax Act cannot be punitive against the assessee on that ground. 19. As argued by the assessee-trust, there is no apparent distinction between legal and illegal income under the provisions of the I.T. Act. If the income is taxable, it should be taxed. If the assessee has not applied the capitation fees collected even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered trust. The registered office of the trust is the residence of the trustees. Therefore, it is very premature to hold that the cash found in the registered office/residential houses amounted to diversion of funds. It is only a holding of funds and not application or diversion of funds. All the balance cash remained with different educational institutions. Therefore, the cash found and seized in the course of search is not a ground to make an allegation that the trustees have diverted the funds of the assesseetrust for activities other than charitable activities. 22. The assessee has furnished the details of payments made by Dr. C.K.Velayuthan Nair towards capitation fee for obtaining a medical seat for his daughter as reflect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r educational purposes in the hands of the assessee-trust through the medium of the trustee. Anyhow, there is no illegality in these matters. All these transactions are reflected in the books of account. The case of the Commissioner of Income-tax would have been better if there is nothing on record to show that huge amount on lease deposits received by Dr. Velayuthan Nair were used for the personal benefit of Dr. Velayuthan Nair or his family members or relatives. Revenue has also no case that Mr. Prasad had used money for his personal purposes. 24. In the facts and circumstances of the case and in the light of the decision of the Hon ble Karnataka High Court in the case of Director of Income-tax (Exemptions) another vs. Sri Belimath ..... X X X X Extracts X X X X X X X X Extracts X X X X
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