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TMI Blog2020 (1) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice must exhibit the thought process and application of mind by the ld. CIT(E) and thus an expression of the satisfaction of ld. CIT(E) even though the same may be signed by the DCIT (Hqr.) or any other subordinate authority. However, where the ld. CIT(E) has delegated his powers to any other authority to issue show cause notice and it is based on the satisfaction of that other authority and not of ld. CIT(E), it won t satisfy the mandatory condition. The language and tenor of the show cause notice do clearly exhibit the thought process and application of mind by the ld. CIT(E) with inputs from the ITO (Hqr.) and the Assessing officer, and thus an expression of his satisfaction of the proposed action to withdraw the exemption so granted to the assessee university. - The legal proposition so emerging from the said decision in fact supports the case of the Revenue. Genuineness of activities of the institution - Held that:- Similarly, we also note that the cancellation of registration granted to any educational institution under Section 12AA(3) of the Act can happen in two scenarios; one where the activities of the educational institution are not genuine and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(E), Jaipur dated 14.09.2016 withdrawing the approval granted to the assessee u/s 10(23C)(vi) of the Income Tax Act. 2. The assessee is a University established under a statute by the State of Rajasthan vide Act No. 6 of 2008 namely, Singhania University Pacheri Bari (Jhunjhunu) Act, 2008. The assessee University was granted exemption under Section 10(23C)(vi) of the Income Tax Act vide Notification No.06/2009 dated 29.07.2009 for the Assessment Year 2009-10 onwards. During the assessment proceedings for the A.Y. 2013-14, the Assessing officer made a reference to the Ld. CIT(E) for withdrawal of exemption under Section 10(23C)(vi) of the Income Tax Act. Thereafter, a show cause notice no. F.No./10/CIT(E)/JPR/Withdwl-10(23C)(vi)/2015-16/648 dated 3.05.2016 was issued asking the assessee University to show cause as to why the exemption granted under Section 10(23C)(vi) of the Income Tax Act should not be withdrawn. The assessee University submitted its reply dated 06.06.2016 to the aforesaid show cause notice. However, the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in (2013) 15 SCC 677. 5.3 That the CIT (Exemptions) erred on facts and in law and acted without jurisdiction in overlooking that the Appellant is empowered to award degrees in all courses of education which are sui-generis valid and is not required to obtain prior approval of other authorities as held by the Hon'ble Apex Court and various High Courts. 6. That the CIT (Exemptions) erred on facts and in law alleging that the appellant was not existing solely for educational purposes on the ground that the appellant was running a hospital: 6.1 That the CIT (Exemptions) erred on facts and in law in holding that the expense debited in the relevant assessment year was towards construction of a hospital whereas the expense was debited towards construction of a building comprising of classrooms, labs and library which is evident from the Tehsildar report, relied upon by the CIT (Exemptions), itself. 6.2 That the CIT (Exemptions) erred on facts and in law in not appreciating that practical training and hospital teaching amounts to imparting education. 6.3 That the CIT (Exemptions) err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val submissions as well as relevant material on record. There is no dispute that the additional ground raised by the assessee is purely legal in nature and goes to the root of the matter. It is also not disputed that no new facts are required to be examined nor any further enquiry is needed for adjudication of the issue raised in the additional ground. Further, this is first appeal against the impugned order and not a case of raising a fresh plea for the first time before the Tribunal without raising the same before the first appellate authority. Accordingly, in the facts and circumstances of the case when the additional ground raised by the assessee is purely legal in nature and does not require any new facts to be examined or further enquiry to be conducted for adjudication of this issue, then in view of the decision of Hon ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT(supra), we admit the additional ground raised by the assessee for adjudication. 8. Firstly, we shall take up the additional ground of appeal wherein the assessee University has challenged the validity of the show-cause notice. In this regard, the ld. AR has submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the jurisdiction assumed by the prescribed authority based on the invalid notice become invalid and consequential order passed by the authority is invalid and void an initio for want of jurisdiction. Further, invalid show cause notice vitiates the proceedings and consequential order. Hence, we are of the considered opinion that the impugned order passed by the ld. CIT(E) is invalid and liable to quash on this ground. 11. It was submitted that the aforesaid decision of the Tribunal has since been upheld by the Hon ble Rajasthan High Court in D.B.I.T.A. No. 172/2018 and which has been affirmed by the Hon ble Supreme Court of India in SLP No. 4190/2019. It was submitted that the present case is squarely covered by the aforesaid Modern Education School Society case in which in an identical manner show cause notice Under 13th proviso of Section 10(23C)(vi) was issued by Income Tax Officer (Hqrs.) instead of the prescribed authority and the consequential order was held to be void ab initio for want of jurisdiction. Thus, as per the finding of this Tribunal in the Modern School Society case, the show cause notice dated 03.05.2016 is invalid for want of jurisdiction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned by the ITO(Hqrs.) for and on behalf of the ld. CIT(E) by taking prior approval from the ld. CIT(E) vide order sheet entry dated 03.05.2016. It was submitted that the ITO(Hq.)/AC/DC(Hq.) does not have any independent power to issue such notices. They act on behalf of ld. CIT(E) while issuing these notices and prior to issuance of notices approval/permission was taken on order sheet/note sheet from the ld. CIT(E), Jaipur. 15. It was further submitted by the ld CIT/DR that on perusal of records, it is noticed that the draft of show cause notice was not only perused by the ld. CIT(E), but corrections were also made by him and after making corrections/modifications, the same was approved by the ld CIT(E) which brings out the thought process and application of mind by the ld CIT(E) in issuance of the show cause notice. The language of the show cause notice also strengthens the fact that the notice was issued as per direction and the satisfaction of the ld. CIT(E). Therefore, the notice issued and consequential order passed by the ld. CIT(E) were valid and within jurisdiction. It was further submitted that ld. CIT(E), Jaipur personally conducted the hearing as visib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case. 17. Regarding the case law relied upon by the assessee in the case of Modern School Society Vs CIT(E), Jaipur in ITA No. 1118/JP/2016, the ld. CIT/DR further submitted that in that case, it has inter-alia been observed by the Tribunal as follows: The language and tenor of the show cause notice do not exhibit any thought process of ld. CIT(E). The matter would have been different if the show cause notice brings out the thought process and application of mind by the ld.CIT(E)but was only signed by the DCIT (Hqr.) . Therefore, in order to demonstrate due application of mind on the part of the CIT(E), Jaipur, the original folder relating to assessee was produced before the Bench during the course of hearing with specific mention of the draft of show-cause notice put up for approval of CIT (E) vide order sheet dated 03.05.2016 (mentioned as DFA- Draft For Approval) and copy of said order-sheet has already been submitted as part of paper book on 05.03.2018. It was submitted that the corrections were made to each page of the said notice by CIT(E) himself as evidence from the changes/additions to text made in his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provision of law has been correctly issued. No defect was mentioned by the assessee till the completion of the proceedings. Once assessee has participated actively in the proceedings and principal of natural justice regarding opportunity of being heard has been observed, it precludes himself from raising procedural defects in notice. The irregularities, if any got cured by subsequent conduct of the assessee. Section 292BB is curative in nature which cures all infirmities in notice, if responded. In support, reliance was placed on the decision of Coordinate Bench in case of Chandra Bhan vs. Assistant Commissioner of Income Tax (in ITA No. 4/Agra/2002 dated 13.10.2005) wherein it was held that: It is seen that the assessee appeared before the ld. AO through his Authorized Representative from time to time and various aspects of the case were discussed the assessee was accorded full opportunity to produce or cause to be produced any evidence on which the assessee would rely in support of the return u/s 158BC. The assessee was given full opportunity to substantiate all his claims. Thus, the want of issue of notice u/s 143(2) on the part of the AO, if there is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal institution has not- (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution- (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved, it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to issue show cause notice and therefore, it is based on the satisfaction of the DCIT (Hqr.) and not of ld. CIT(E). para 2 and 6 of the impugned show cause notice clearly manifest that it was issued by the DCIT (Hqr.) and not by the CIT(E). The language of the show cause notice does not give any impression or inference that it is an expression of the satisfaction of ld. CIT(E). The Kolkata Bench of this Tribunal in case of Arun Kanti vs. CIT (supra) while considering the issue of validity of show cause notice issued u/s 263 of the Act not signed by the ld. CIT has observed in para 5 and 5.1 as under:- A similar view was taken by the Kolkata Bench of this Tribunal in case of M/s Assam Bangal Carriers vs. CIT (supra) in paras 7 and 8 as under:- 7. We have considered the rival submissions. A perusal of the records shows that the show cause notice u/s 263 of the Act dated 26.02.2013 was signed by A.C.I.T.(HQ)-XXI, Kolkata and not by C.I.T. The question regarding validity of the order passed u/s 263 of the Act when the show cause notice u/s 263 of the Act is not signed and issued by C.I.T. and had come for consideration before this Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing fresh assessment. Now we can also refer to the notice u/s. 263 of the Act issued to the assessee. This notice was signed as under:- Yours faithfully Sd/- Vikramaditya (Vikramaditdya) ACIT, Hqrs., Burdwan, For Commissioner. From the above, it is clear that the said notice u/s. 263 of the Act ha s not been signed by the Commissioner of Income Tax rather it has been signed by ACIT, Hqrs., Burdwan. The Hon ble Allahabad High Court in the case of Rajesh Kumar Pandey (supra) has expounded that when the Ld. CIT has not recorded his satisfaction, but it was the satisfaction of the Income Tax Officer (Technical) who is not competent to revise his order u/s. 263 of the Act, the order passed was liable to be set aside. The relevant portion of the order of Hon ble Allahabad High Court reads as under:- 6. On perusal of the aforesaid provisions, it will be abundantly clear that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is accordingly quashed and the appeal of the assessee is allowed. In view of the above conclusion, the other grounds of appeal are not taken into consideration. The Hon ble Allahabad High Court in case of CIT vs. Rajesh Kumar Pandey (supra) while dealing with the validity of notice and applicable of the provisions of section 299BB has observed as under:- 299BB Notice deemed to be valid in certain circumstances- Where as assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was-- (a) not served upon him; or (b) not served upon time in time; or (c) served upon him in an improper manner; Provided that nothing contained in this section shall apply where the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the order sheet, the show-cause notice was finally issued to the assessee which was signed by the ITO(Hqs) on behalf of ld CIT(E), Jaipur. The draft of the show-cause notice and the corrections/modification so made by the ld CIT(E) are part of the records and are not extraneous material as so contended by the ld AR. The only rational basis to discern the language and thought process of the ld CIT(E) is either to watch him dictating the language of the show-cause to his juniors or to see his personal notings/corrections on the draft so prepared and put up for his review and approval. In the instant case, his notings/corrections are clearly apparent from the records so produced before us by the ld CIT/DR which reflects his mind and satisfaction to the proposed action. In light of these undisputed facts which are clearly emerging from the records, we are of the considered view that the language and tenor of the show cause notice do clearly exhibit the thought process and application of mind by the ld. CIT(E) with inputs from the ITO (Hqr.) and the Assessing officer, and thus an expression of his satisfaction of the proposed action to withdraw the exemption so granted to the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant University is recognised under Section 2(f) of the University Grants Commission Act, 1956 which empowers the Appellant University under Section 22 of the UGC Act to grant degrees in all courses of education and impart education in all courses of education. It is respectfully submitted that the UGC Act, being a specific statute governing the universities in the country and being a Central Act, overrides and prevails over inconsistent provisions of any State Act. 27. It was submitted that the Appellant University received exemption under Section 10(23C)(vi) of the Income Tax Act vide Notification No.06/2009 dated 29.07.2009 for the Assessment Year 2009-10 onwards. It was submitted that the Appellant University s entitlement for exemption under Section 10(23C)(vi) is as a University and not as other educational institution. It was further submitted that the said exemption was granted to the Appellant University without any condition i.e. for imparting education and not for only some limited courses. It is reiterated that all the universities are established with the sole object of education. The universities being established by a statute are State/Public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition mentioned in the clause (vi) of Sec. 10(23C) that the society must exists solely for education is violated and also university has not carried out the activities as per the objects by running courses beyond its objects and approved by State Legislature as well as prescribed authority under Section 10(23C)(vi). Therefore, its activities cannot be held as genuine charitable activities. Therefore, the Proviso 13th of Sec. 10(23C) is attracted. In the light of the discussion made above, exercising the power given under the above said Proviso, it is held that the activities of the Appellant are not genuine as being carried out beyond the approved objects and it is not an educational institution which is existing solely for educational purposes, therefore, exemption under Section 10(23C)(vi) granted earlier vide Notification No.01/2008-09 dated 04.04.2008 is hereby withdrawn. 31. The CIT(E) has further explained his reasoning in Paragraphs 6.2 and 6.3 of the impugned Order that how the society has ceased to exist solely for education and the activities of the Appellant University are beyond its objects as under: 6.2 From the reply of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. It is submitted that even factually, there is nothing on record to show that the courses run by the Appellant University are invalid rather as a matter of fact, the pass-out students of the Appellant University are well placed and employed in various State/ Central Government and Private jobs and the pass-out students going abroad for higher studies and jobs get their degrees verified and certified by the State Government itself as valid degrees for visa and scholarship purposes. Thus, the whole case of the CIT(E) is based on his own assumptions and surmises and contrary to the correct factual and legal position. 33. It was submitted that question of law that whether the degrees awarded by the Appellant University in courses of A.N.M., G.N.M. and B.Ed. are valid is well settled and fully covered by the judgments of the Hon'ble Rajasthan High Court at Jodhpur in cases titled Rajasthan Nursing Counil vs Singhania University Others ( D.B.S.A.W No. 671/2018), Sunil Bishnoi Ors. v. State of Rajasthan Ors., S.B. Civil Writ Petition No.8149/2015 (decision on A.N.M. and G.N.M. courses) and Shanti Lal v. State of Rajasthan, S.B. Civil Writ Petition No.9198/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahesh Yogi Vedic Vishwavidyalaya v. Sate of M.P. Ors. reported in (2013) 15 SCC 677 in which it has been held that neither the State Government nor the State Legislature is empowered to regulate running of courses by a university or to require the university to take State Legislature s or State Government s approval for running any courses. 35. In Maharshi Mahesh Yogi case (supra), Section 4 of the Maharshi Mahesh Yogi Act was similar to Section 4 of the Singhania University Act to the effect that it required the Maharshi Mahesh Yogi University to take prior approval of the State Government before starting courses not mentioned in the Maharshi Mahesh Yogi University Act. Section 4 of the Maharshi Mahesh Yogi Act is reproduced hereinbelow for convenience of ready reference: 4. The University shall have the following powers, namely:- (i) to provide for instruction only in all branches of Vedic Learning and Practices including Darshan, Agam Tantra, Itihas, Puranas, Upvedas and Gyan-Vigyan and the promotion and development of the study of sanskrit as the University may from time to time determine and to make provision for researc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parting education, while promotion of Vedic learning is one of the primary objectives of the University. Any attempt on the part of the State to interfere with the said main object viz., imparting of education, would amount to an infringement of the Fundamental Right guaranteed under the Constitution. Consequently, the amendment, which was introduced under the 1995 Act to Section 4(1) and also the insertion of the proviso, has to be held ultra-vires. (Page 184 Paper Book 2) 105. In our considered opinion, Section 12 of the University Grants Commission Act, 1956 would encompass apart from determining the course contents with reference to which the standard of teaching and its maintenance is to be monitored by the University Grants Commission, would also include the infrastructure that may be made available, either in the University or in other campuses, such as the centers, in order to ensure that such standard of education, teaching and examination, as well as research are maintained without any fall in standard. Therefore, while upholding the conclusion of the Division Bench that it is beyond the legislative competence of the State Legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... un all such courses as it may determine. Further, Section 4 speaks about undertaking research and studies and not running of courses which are two different things. It is submitted that running of courses is related to awarding of degrees. Reference in this regard may be made to Section 2(w) of the University Act which provides as under: 2. Definitions: (w) student of the University means a person enrolled in the University for taking a course of study for a degree, diploma or other academic distinction duly instituted by the University, including a research degree Thus, the aforesaid makes it amply clear that it is upon the Appellant University to determine all such courses that it would want to run and award degrees in. 40. It was submitted that the Appellant University is empowered under the UGC Act and the Singhania University Act to impart education and award degrees to its pass-out students in all courses of education, including medical courses, establish specialized laboratories or other units for research and instructions, and do all such acts as may be required for the object of education. Refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not contained in the statute would lead to perversion of the basic purpose for which such exemption have been granted to educational institutions. Knowledge in contemporary times is technology driven. Educational institutions have to modernize, upgrade and respond to the changing ethos of education. Education has to be responsive to a rapidly evolving society. The provisions of Section 10(23C) cannot be interpreted regressively to deny exemptions. So long as the institution exists solely for educational purposes and not for profit, the test is met. 42. Reference was also drawn to the judgment of the Hon'ble Supreme Court in the case of Oxford University Press v. CIT, (2001) 3 SCC 359 wherein the Hon'ble Court held that in case of a university, the condition required to be satisfied for exemption under Section 10(23C)(vi) (earlier Section 10(22)) is that the university should imparting education in India and should be existing as not for profit only. Thus, when it is not in dispute that the Appellant University is imparting education and existing as not for profit only, then the required test under Section 10(23C)(vi) is met and there is no legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount of receipts of the previous year applied during the previous year ₹ 16,62,08,293/- 3. Amount to the extent of 15% of the total receipts = 15% of ₹ 21,44,86,849/- ₹ 3,21,73,027/- 4. Amount of receipts exceeding 15%, accumulated in accordance with clause (a) of the third proviso to Section 10(23C) ₹ 1,61,05,529/- iii. Without prejudice, it is submitted that during the course of hearing before the Hon'ble Tribunal, the Ld. DR accepted the submission of the Appellant University in this regard and submitted that the grievance of the CIT(E) in this regard was that no explanation was given earlier which has been satisfied now. 45. It was further submitted that the Ld. CIT/DR relying on the judgment of the Maharshi Mahesh Yogi case (supra) submitted that the Apex Court has settled that the State Government has no power to impose restrictions on the university and it is the UGC that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Section 3 of the UGC Act consists of institutions that are not statutory bodies but their status has been upgraded to be deemed to be a University i.e. like the Sam Higginbottom University, a Deemed University. Thus, both are two different and distinct classes. Reference may be made to paragraph 1of the Sam Higginbottom case (supra). The finding of the Hon'ble Court that prior approval of UGC is required for running courses applies to Deemed Universities. Regarding the universities which have been established by a State Act, such as the Appellant University, the position is very clear that no prior approval of UGC is required and such university can run all courses as per Section 22 of the UGC Act. Thus, by Ld. DR s own submissions, the Appellant University s case is proved and it is settled that the Appellant University does not require either the permission of the State Government or the UGC for running of courses. As submitted above, Appellant University is an autonomous, self-regulated, statutory body established by State Act with the sole object of education and empowered to impart education in all courses of education. 48. Without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. It was submitted by the ld CIT DR that the ld AR has contended that approval u/s 10(23C)(vi) of the Act has been granted to it because of its status of being a university , as it was established by an Act of State Legislature and so long, it is imparting education and its existence is not for profit only, it is entitled for exemption u/s 10(23C)(vi) of the Act. In this regard, it was submitted that in the case of Visvesvaraya Technological University vs ACIT [2016] 68 taxmann.com 287 (SC), the assessee-University had been constituted under the Visveswaraiah Technological University Act, 1994 ('VTU Act') and the issue before the Hon ble Apex Court was whether the assessee university was eligible for exemption u/s 10(23)(iiiab) of the Act. It has been held by the Hon ble Apex Court that the entitlement for exemption under section 10(23C)(iiiab) is subject to two conditions. Firstly the educational institution or the university must be solely for the purpose of education and without any profit motive. Secondly, it must be wholly or substantially financed by the government. Both conditions will have to be satisfied before exemption can be granted under the aforesaid provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an University Act, 1981 should seek prior approval of AICTE to start a department for imparting a course or programme in technical education or a technical institution as an adjunct to the University itself to conduct technical courses of its choice and selection? The Hon ble Apex Court after analyzing the provisions of AICTE Act has concluded that the said Act has made a distinction between a University and a technical institution . The Hon ble Apex Court has also held that the Regulations made by the AICTE under section 10(1)(k) of AICTE Act requiring a University also to seek its prior approval for starting a new programme or course in technical education cannot be enforced against a University as it is not in consonance with the provisions of AICTE Act. 54. It may be mentioned that in the instant case, the assessee has also started MD (Doctor of Medicine) courses, which is covered by the provisions of Indian Medical Council Act, 1956 (IMC Act). Further, provisions of section 10A of IMC Act specifically prohibit establishment of an medical institution or starting of a new course of study without the previous approval of the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any amendment is required then it has to go to the competent authority. Although, the university is an autonomous body yet it is always regulated through the clauses of the respective Act passed by legislature for its enactment and it cannot perform any activity beyond its respective Act. It is not only the approval granted by the State Government but the approval U/s 10(23C)(vi) of the Act which was also granted based on the objects presented before the prescribed activity. Any Departure from the approved objects needs prior approval of the prescribed authority and in the present case, the assessee university has violated the regulations laid down in the Act beyond its approved objects, which were definitely the subject matter of approval of exemption U/s 10(23C)(vi) of the Act. Referring to the objects of the university and the Gazette Notification dated 29.03.2008 of the Government of Rajasthan, the ld. CIT/DR submitted that the assessee university is approved to undertake courses as per scheduled-II of the Gazette Notification. It was submitted that it is not an open ended schedule and inclusive in nature. Rather all the courses which the university can con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - maintenance of student attendance register and the documentary evidence in support of actual classroom activities, in absence of which it cannot be ascertained whether income is being applied for the stated objects or not. Further, certain discrepancies were noticed in Form 10BB regarding accumulation of the funds under Section 11(2) of the Act and the assessee has failed to offer any explanation in that regard and our reference was drawn to the contents of para 9 and 10 of the order of the ld. CIT(E) wherein he has finally concluded his observations which are reproduced as under:- 9 In the case of applicant the condition mentioned in the clause (vi) of Sec. 10(23C)(vi) that the society must exists solely for education is violated and also the university has not carried out the activities as per the objects by running courses beyond its objects and approved by State legislature as well as prescribed authority us 10(23C)(vi). Therefore its activities cannot be held as genuine charitable activities. Therefore, the proviso 13th of Sec. 10(23C)(vi) is attracted. In the light of the discussion made above, exercising the power given under the above said Proviso, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (iv) or sub-clause (v) 87 [or sub-clause (vi) or sub-clause (via)] shall make an application in the prescribed form 88 and manner to the prescribed authority 89 for the purpose of grant of the exemption, or continuance thereof, under sub-clause (iv) or sub-clause (v) 90 [or sub-clause (vi) or sub-clause (via)] : 91 [Provided further that the prescribed authority, before approving any fund or trust or institution or any university or other educational institution or any hospital or other medical institution, under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), may call for such documents (including audited annual accounts) or information from the fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, as it thinks necessary in order to satisfy itself about the genuineness of the activities of such fund or trust or institution or any university or other educational institution or any hospital or other medical institution, as the case may be, and the prescribed authority may also make such inquiries as it deems necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any one or more of the forms or modes specified in sub-section (5) of section 11:] Provided also that the exemption under sub-clause (iv) or subclause (v) shall not be denied in relation to any funds invested or deposited before the 1st day of April, 1989, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 5[1993] : 6 [Provided also that the exemption under sub-clause (vi) or subclause (via) shall not be denied in relation to any funds invested or deposited before the 1st day of June, 1998, otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 if such funds do not continue to remain so invested or deposited after the 30th day of March, 2001:] 7 [Provided also that the exemption under sub-clause (iv) or subclause (v) 6[or sub-clause (vi) or sub-clause (via)] shall not be denied in relation to voluntary contribution, other than voluntary contribution in cash or voluntary contribution of the nature referred to in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the maximum amount which is not chargeable to tax in any previous year, such trust or institution or any university or other educational institution or any hospital or other medical institution shall get its accounts audited in respect of that year by an accountant as defined in the Explanation below sub-section (2) of section 288 and furnish along with the return of income for the relevant assessment year, the report of such audit in the prescribed form14 duly signed and verified by such accountant and setting forth such particulars as may be prescribed:] 15 [Provided also that any amount of donation received by the fund or institution in terms of clause (d) of sub-section (2) of section 80G 16[in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (5C) of that section, in the manner specified in that clause, or] which has been utilised for purposes other than providing relief to the victims of earthquake in Gujarat or which remains unutilised in terms of sub-section (5C) of section 80G and not transferred to the Prime Minister's National Relief Fund on or before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer:] 21 [Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be 22[made on or before the 30th day of September of the relevant assessment year] from which the exemption is sought :] 23 [Provided also that any anonymous donation referred to in section 115BBC on which tax is payable in accordance with the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the University has not applied its income in accordance with third proviso or has not invested or deposited its funds in accordance with the third proviso or the activities of the University are not genuine or are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved initially. These are the only scenarios which have to be examined in the facts of each case by the ld CIT(E) before he decides to invokes the exemption granted earlier. In other words, the power to withdraw the exemption is circumscribed by and subject to satisfaction of one or more of the above conditions and the ld CIT(E) cannot travel beyond the same. Similarly, we also note that the cancellation of registration granted to any educational institution under Section 12AA(3) of the Act can happen in two scenarios; one where the activities of the educational institution are not genuine and secondly, where the activities of the educational institution are not being carried out in accordance with the objects for which the educational institution has been established. 62. The legislature has thus envisaged a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... university as a charitable institution under section 12AA of the Act vide its order dated 28.06.2017 with effect from 1.04.2016. The impugned notification for exemption under section 10(23C)(vi) was withdrawn vide order dated 14.09.2016 (with effect from AY 2013-14). Subsequently, the assessee moved an application seeking registration under section 12AA on 13.12.2016 and registration under section 12AA was granted on 28.06.2017 with effect from April 1, 2016. 65. Though these are two independent provisions, there are similarities in the sense that at the time of grant of registration/approval, the genuineness of the activities are examined by the ld CIT(E) in both the cases and similarly, at the time of withdrawal, the test of non-genuineness is applied in both the cases, as we have noted earlier. In the instant case, we wonder how the University can be said to be carrying on non-genuine activities by conducting such courses resulting in withdrawal of exemption under section 10(23C)(vi) and conducting the same courses as genuine activities resulting in grant of approval under section 12AA of the Act within a span of less than a year when the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and Single Judge held that Medical Council of India Regulations were mandatory and had to be complied with. The Division Bench upheld the order of the Single Judge. Thereupon, the assessee-trust approached the Apex Court by filing a special leave petition and the matter was still pending before the Supreme Court. In the meantime, the Chief Commissioner taking a view that illegality in admission was committed by the assessee-trust in the year 2008, and, a profit motive in the same could not be ruled out, rejected the assessee's application filed under section 10(23C)(vi) of the Act. In the above facts, the Hon ble High Court has ruled in para 5 to 10 which are reproduced as under:- 5. Having heard the learned counsels, this Court is of the opinion that the since question of legality of the admissions made by the petitioner Trust is still a matter sub judice before the Apex Court, of course, the Rajasthan High court has held against the petitioner Trust that such admissions were not made in accordance with law vide judgment of learned Single Judge as aforesaid and affirmed by the Division Bench, it cannot be said finally yet that petitioner has committed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust's application for approval under Section 10(23C)(vi) and (via) for A.Y. 2008-09 onwards. Sd/- (Mukesh Bhanti) Chief Commissioner of Income-tax, Udaipur. 7. The subsequent order granting such approval passed on 17/1/2011 subject to usual conditions reads as under: - In exercise of powers conferred on me by the sub-clause (vi) of clause (23C) of Section 10 of the Income tax Act, 1961 (43 of 1961) read with rule 2CA of the I.T. Rules, 1962, I Chief Commissioner of Income tax, Udaipur hereby accord approval to M/s. Geetanjali University Trust, Udaipur (PAN: AAATG9525E) for the purpose of the said section for the assessment year 2010-11 and onwards subject to conditions mentioned hereunder: 8. If the alleged illegal admissions made by the petitioner Trust in the year 2008-09 could be a valid criteria or relevant consideration for denying approval under section 10(23C) of the Act, such alleged illegal admissions continued in the subsequent years also as those students continued to be in the college for subsequent years also and the same authority on the same se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be strictly guided by such considerations and only on non-fulfillment of such conditions, the action for withdrawal of exemption can be taken. As we have noted above, the assessee university is carrying out genuine education activities and there is thus no violation of any such conditions by the assessee university which can form the basis for withdrawal of approval as so provided in the 13th provisio to section 10(23C)(vi) of the Act. 71. It is also relevant to note that in this case of Geetanjali University, the approval was initially denied and subsequently granted on the same facts by the appropriate authority and the Hon ble High Court has held that: if the alleged illegal admissions made by the petitioner Trust in the year 2008-09 could be a valid criteria or relevant consideration for denying approval under section 10(23C) of the Act, such alleged illegal admissions continued in the subsequent years also as those students continued to be in the college for subsequent years also and the same authority on the same set of facts, once denied the approval and subsequently granted such approval for subsequent years. This incongruity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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