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TMI Blog2012 (8) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... rabad has power to cancel the registration granted u/s. 12AA of the Act and considering the facts and circumstances of the case, we confirm the order of the CIT (Central), Hyderabad. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11 & 13 of the Income Tax Act, 1961, the assessee-society is not entitled for registration u/s 12A/12AA of the Income Tax Act, and has suggested that the registration granted earlier to the society should be cancelled. 4. Considering the proposal received from the Assessing Officer, a show cause notice was issued to the assessee-society as to why the registration granted earlier u/s 12A/12AA by the Commissioner of Income-tax-II, Hyderabad shall not be cancelled u/s 12AA(3) of the I.T. Act. In response to the show cause notice, the Authorized Representative of the assesseesociety filed a written submission. It was submitted that the society exists purely for educational purpose and all the activities of the society are for running the colleges and institutions. It was also submitted that the society had not collected any fees in addition to the fees prescribed under law. The additional fees was collected by consultant as per their declaration under section 132(4). The said funds were utilized for the purpose of education only. This was validated by them in their application before the Settlement Commission. It was further stated that no funds of the society were utilized fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authorities from time to time. Since the Commissioner has not shown any evidence to state that the society is not a genuine entity nor any evidence was brought on record that the activity of society are not in accordance with the objects, the order of cancellation of order u/s. 12AA(3) is bad in law. 8. Further he relied on the order of Chennai Bench of this Tribunal in the case of Sarvodaya Hakkiya Pannai in ITA No. 594/Mds/2011. He submitted that this order of the Tribunal is confirmed by the Madras High Court reported in 20 Taxman 546. In the above order the Chennai Bench held as under: "5. We have considered the rival submissions. A perusal of the order of the learned CIT shows that when the return of the assessee for the assessment years 2008-09 to 2010-11 were verified, it was noticed that the assessee society was engaged in the purchase and sale of books. It was for this purpose that the learned CIT had decided to look into the question of section 12A registration 3 which is granted to the assessee. There is no recording in the order of the learned CIT that the activities of the assessee trust were not genuine or that the assessee society was not doing any activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is having power to cancel the same when the objects of the trust or institution remain on paper but actual activities of such trust or institution are contrary to the said objects or fictitious or fraudulent or not genuine or not within the scope of its object clause, the registration authority is vested with the power of cancellation. However, where the objects of the trust or institution, which were the basis of grant of registration are altered or not adhered to the very foundation of registration collapses and in that event the registration authority cannot close its eyes to continue such activity of the assessee and they have to be awake and the registration has to be cancelled. In the present case, as seen from the facts narrated by the CIT (Central), Hyderabad, the assessee is collecting the capitation/donation for admitting the students to the institution and also the seized material reflects violation of object clause of the assessee. 11. It is also on record that the seized material found during the course of search marked as JB/AA/1 to JB/AA5 that there is a collection of donation/capitation fee. Further unexplained cash and jewellery were found and seized from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document evidencing payment of capitation fees in cash was also found though the assessee has denied the claim. This means that part of the document relating to regular fee is admitted whereas the part containing details of capitation fees which was received in cash and not recorded in the books of account is not admitted even though plethora of evidences are available in this regard. 14. In these circumstances, the assessee cannot be considered as a trust engaged in charitable activities. The objects of the trust have been violated in a wholesome manner and the basis on which registration is granted no longer survives or holds good, would call immediate interference by the registration granting authority. In these circumstances, the registration authority cancels the registration. The argument placed before us by learned AR is superficial which cannot be considered. The CIT (Central), Hyderabad considering the entire facts of the case found that there is violation of the provisions of section 2(15) of the Act and the case cannot be called as a trust and it is carrying on the activities in a commercial manner for which registration u/s. 12A cannot be continued. In our opinion, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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