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TMI Blog2017 (6) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Further, as noted above, the mandate of section 119(1) comes with a rider, i.e., that no order, instruction or directions of the Board shall be as to interfere with the discretion of the Appellate Authority in exercise of his appellate functions. In the case at hand, however, the order under appeal nowhere states that the issuance of Circular No. 14/2015, dated 17.08.2015 interferes with his appellate functions in any manner, whatsoever. Thus, evidently, the ld. CIT (E) is not correct in holding that the CBDT Circulars are merely “guidelines to be normally followed”. We are sanguine that the authorities and officers employed in the execution of the Act, shall follow the mandate contained in section 119(1) of the Act in letter and spirit. Considering the above undisputed facts, the ld. CIT (E) is also found to have erred in observing in para 12, i.e., the concluding para of his order, that the application filed u/s. 10(23C)(vi) was, “at best infructuous”. In view of the preceding observations, it, obviously, is not so. For the foregoing discussion, the grievance of the assessee is found to be justified. It is accepted as such. The order under appeal is reversed. Appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n application under section 10(23C)(vi) instead of making attempts to bypass the same; that the applicant has taken the refrain that issues flagged are to be seen at the time of assessment and not registration; that in the first place this is a matter of approval under section 10(23C)(vi) and not registration; that there is a major difference between the terms 'approval' and 'registration' and the first (approval) involves a grater scale of scrutiny; that this further becomes topical when we witness that the approval once granted is there till perpetuity unless withdrawn; that this aspect particularly becomes relevant in the case of an applicant whose case has been rejected earlier by the CCIT vide order dated 30.09.2010 and where many things necessary to enquire into genuineness of activities have not been furnished on same pretext. 5. The learned CIT (E), in paras 10.2 to 12 of the impugned order, further observed as under:- 10.2. The applicant's case is further exacerbated by its refusal to provide details as asked for on the basis that the same were voluminous. Bank statements were not supplied first on the basis of what period is needed to be looked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointment or removal of trustee. It would not be out of place to mention that the said circulars are guidelines to be normally followed and can't be seen to be overriding the statutory provisions. The Act allows the prescribed authority to conduct any enquiries that is deemed necessary. The prescribed authority is allowed to conduct enquiries keeping in mind the instructions provided by the CBDT in arriving at a fair conclusion. Notwithstanding the above, it would be relevant to mention that the Supreme Court's direction is that the twin prime conditions have to be satisfied which regrettably in the case of the applicant can't be done in the absence of relevant documents submissions regarding the activities that had been asked for. It is difficult to verify the genuineness of the activities of the trust. The applicant assessee has failed to discharge the onus, as laid down by judicial precedents in case of beneficial clauses in the taxation statute, to prove that its income is free from the exigibility of taxes by resorting to. 12. In the instant case, given all of the above and in particular the pendency of appeal in the Hon'ble High Court vis-a-vis ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overned by the same Memorandum of Association, wherein the ITAT had held while allowing the exemption u/s 10(23C)(iiiab) that the institutions are solely engaged in the educational activities; that it was further brought to the notice of the CIT (E), in para 9.2 of the order that the department had allowed the exemption to the assessee u/s 10(23C)(iiiad), recognizing it as educational institution solely engaged in educational activity; that despite these facts in para 11 of the order, the CIT (E) refused to abide by the Board Circular No. 14, by giving the following findings:- It would not be out of place to mention that the said circulars are guidelines to be normally followed and cannot be seen to be overriding the statutory provisions. The Act allows the prescribed authority to conduct any enquiries that is deemed necessary. The prescribed authority is allowed to conduct enquiries keeping in mind the instructions provided by the CBDT in arriving at a fair conclusion . 8. It was further contended that it is strange that despite the Board's Circular, which is binding on the CIT (E) he has shown gross administrative and judicial indiscipline by going against the circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional purpose and that it is generating unreasonable surplus. This observation of the CIT (E) is based on enquiries conducted by invoking second proviso to section 10(23C). The contention of the assessee is that the ld. CIT (E) has erred in not following the CBDT Circular No. 14/2015, dated 17.08.2015 (APB 104 105). 12. In American Hotel Lodging Associate, Educational Institute's case (supra), it has been held that at the time of granting approval u/s. 10(23C)(vi) of the Act, the prescribed authority has to be satisfied that the institution exists during the relevant year solely for educational purposes and not for profit; that once the prescribed authority is satisfied about the fulfilment of these criteria, i.e., the threshold precondition of actual existence of an Educational Institution u/s. 10(23C)(vi), it would not be justified in denying the approval on other grounds, especially where the compliance depends on events that have not taken place on the date on which the application for grant of approval has been made; that, however, the prescribed authority is eligible to grant approval u/s. 10(23C)(vi), subject to such terms and conditions, as deemed necessary, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that by virtue of the second proviso to section 10(23C), the CIT (E) is allowed to conduct any enquiry, vis-a-vis the genuineness of the activities of the applicant for approval u/s. 10(23C)(vi), and that it is on the basis of such enquiry, that the grant of the approval would depend. 18. In this regard, firstly, as observed, section 119(1) creates a clear statutory mandate that the authorities of the department who are employed for the execution of the Act, are enjoined to follow the Circulars issued by the CBDT. Now, in this situation, the ld. CIT (E) is, obviously, wrong in observing that the Circulars of the CBDT cannot override the provisions of the Act and this, in the face of the particular circular under reference, i.e., CBDT Circular No. 14/2015, dated 17.08.2015, inasmuch as, as discussed hereinabove, it seeks to carry out the ratio laid down in American Hotel Lodging Association Educational Institute (supra), by the Hon'ble Supreme Court, which is to the effect that once the prescribed authority is satisfied of the existence of the applicant u/s. 10(23C)(vi), as an Educational Institution, grant of approval cannot be refused under the provisos to section 10(23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground that he has refused to carry out the terms contained in the Circular. The judgment in Bela Singh Daulat Singh (supra) was passed way back in 1966. Ever since, and even before this judgment, the statutory mandate of section 119(1) has repeatedly been stressed by the Courts and Tribunals all over the country. 21. In Union of India v. Azadi Bachao Andolan [2003] 263 ITR 703 (SC), it has been held that a Circular, like the one under consideration herein, which does not specifically state that it is issued u/s. 119 of the Act, has still to be treated as one so issued. 22. The binding nature of the Board's Circulars has been reiterated by the Hon'ble Supreme Court in Azadi Bachao Andolan (supra). 23. Thus, evidently, the ld. CIT (E) is not correct in holding that the CBDT Circulars are merely guidelines to be normally followed . We are sanguine that the authorities and officers employed in the execution of the Act, shall follow the mandate contained in section 119(1) of the Act in letter and spirit. 24. The ld. CIT (E) has, in paras 7 10.1 of the impugned order, observed that the case of the applicant has already been rejected earlier by the CCIT vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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