TMI Blog2022 (9) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion requires proper appraisal of facts by the ld.CIT(E). Similarly, the allegation that the address of the partnership firm and that of the assessee are same in our opinion cannot be a ground for denying the benefit of registration u/s. 12AA - So far as the allegation of the ld.CIT(E) that the genuineness of the books of accounts are doubtful is concerned, we find merit in the arguments of assessee that the cash withdrawals so made were utilized for payment of salary and various other expenses and there is no violation of section.40A(3) of the I.T.Act. We find from the order of the PCIT that he has granted registration u/s. 12AA for the period from the AY 2022-23 to AY 2026-27. We are of the considered opinion that the matter requires a revisit to the file of the PCIT for deciding the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA No.1825/Hyd/2019 - - - Dated:- 6-9-2022 - Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member For the Assessee : Shri Narayana, P.S., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... athi Educational Societies and Mythri Enterprises. From the pamphlets published by NRH Carriers Developers and assessee, he noted that both are claiming identical activity from the same premises. He therefore held how the so called Charitable entity can have MOU with business entities?. 5. The ld.CIT(E ) noted that most of the payments are in cash including the rent and salary. Further, there were self withdrawals from the bank of huge amounts. The assessee did not produce corresponding bills to establish the genuineness of the expenditure, despite being asked to do so. He noted that the assessee has made certain advances which the assessee could not explain. He noted that an amount of Rs. 1 lakh has been shown as short term advance from Mr. Karthik. Although, Mr. Karthik was working as faculty on a salary of Rs. 18,000/- per month, the assessee failed to explain as to why an amount of Rs. 1 lakh has been received from Mr. Karthik. He further noted that bills and vouchers for expenses such as rent advance, advance for system, advance for Falukuma-Nagulbanda Rent were not produced. The assessee also failed to substantiate as to why it has claimed that it has performed activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and evidences produced. 7) The case laws cited by the Learned Commissioner of Income Tax(Exemptions), Hyderabad are not relevant to the facts of the Appellant. 8) Any other ground that may be urged during the time of the hearing. 7. The learned Counsel for the assessee strongly challenged the order of the learned CIT (E) in denying the grant of registration u/s 12AA of the I.T. Act. So far as the allegation of the learned CIT (E) that undue benefit has been given to the President and the Treasurer is concerned, he submitted that both of them are qualified professionals having requisite skills and competencies. The President, (Ms. V. Kranthi) had earlier worked with A.P. Productivity Council and has taken VRS to set up own training units. The assessee has ten training centres and the President Treasurer are looking after all the 10 centres. He submitted that Mr. Y.V. Chandra Babu, who is a retired Bank Manager, has been appointed to head a Center at Kerala with a salary of Rs.45,000/-p.m. Since the President and Treasurer are looking after 10 centres in all and the President has been paid an honorarium of Rs.50,000/-p.m. and the Treasurer Rs.40,000/- p.m th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llotment, the entire project is being implemented by the assessee only and the role of the MoU partners is Nil. 11. So far as the allegation of the learned CIT (E) that how can charitable entity have MoU with business entities is concerned, the learned Counsel for the assessee referring to various examples such as MoU by Dr. Reddy s Foundation with Dr. Reddy s Laboratories, Apollo Foundation with The Apollo Hospitals; Premji Foundation with WIPRO etc., submitted that merely because the assessee had MoU with certain entities cannot be a ground to question the genuineness of the activities of the assessee. 12. So far as the next allegation of learned CIT (E) regarding genuineness of the books are concerned, the learned Counsel for the assessee submitted that the same is also incorrect. He submitted that the cash withdrawals were made out of which salary payments were made to different individuals and not to a single person as alleged. Relevant vouchers were also produced before the learned CIT (E). He submitted that the cash payments are well within the permissible limits u/s 40A(3) of the Act. 13. So far as the allegation of the learned CIT (E) regarding the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of the case. Therefore, the grounds raised by the assessee be allowed and the assessee be granted registration u/s 12A of the Act. 18. The learned DR, on the other hand, heavily relied on the order of the learned CIT (E) in rejecting the registration claimed u/s 12A/12AA. He submitted that the learned CIT (E) had thoroughly discussed the issue and referred to various violations by the assessee for which he denied the grant of registration u/s 12A. Therefore, the order of the learned CIT (E) rejecting the grant of registration u/s 12A to the assessee be upheld and the grounds raised by the assessee should be dismissed. 19. We have heard the rival arguments made by both the sides, perused the order of the learned CIT (E) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both the sides. We find the assessee in the instant case filed Form No.10A seeking registration u/s 12A on 13.3.2019. The learned CIT (E) rejected the application for grant of registration on the ground that the assessee has given undue benefit to the President Treasurer and has thus violated the provisions of section 13 of the I.T. Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly appreciated by the ld. CIT(E) while denying registration u/s.12AA of the I.T.Act. The various allegations made by the ld.CIT(E) while denying registration u/s. 12AA of the I.T.Act have been addressed by the ld. Counsel for the assessee, which in our opinion requires verification and proper appreciation of facts by the ld.CIT(E). So far as the allegations of the ld.CIT(E) that the assessee trust has paid undue advantage to the President and Secretary is concerned, it is the submission of the ld. Counsel for the assessee that they are looking after 10 centers and the salary paid to them is commensurate with their qualification and the area of operation and therefore, the same in our opinion requires proper appraisal of facts by the ld.CIT(E). Similarly, the allegation that the address of the partnership firm and that of the assessee are same in our opinion cannot be a ground for denying the benefit of registration u/s. 12AA of the I.T.Act. So far as the allegation of the ld.CIT(E) that the genuineness of the books of accounts are doubtful is concerned, we find merit in the arguments of the ld. Counsel for the assessee that the cash withdrawals so made were utilized for payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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