9911796707
TMI Blog2021 (2) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to run the society for carrying out these objects it has established various colleges and hospitals namely Chirayu Meical College & Hospital, Bhopal, Chirayu College of Nursing, Chirayu College of Para medical and Chirayu Cancer Hospital. These colleges have courses of MBBS, MD, B.Sc Nursing. Post B.Sc. Nursing. GNM, MSc. Nursing, and various courses under paramedical college like DMIT, BMLT and physiotherapy etc. The medical college and hospital run by the assessee are approved by Medical Council of India (MCI), New Delhi. Indian Nursing. Council. State Nursing Council. Director Medical Education (DME). Madhya Pradesh Medical Science University, Jabalpur and Barkatulah University, Bhopal. 3. The assessee society was granted registration u/s 12AA of the Income Tax Act on 29.11.2002 effective from 1.4.2002. Search & seizure action u/s 132 of the Act was carried out at various premises of Chirayu group and its associates on 4.11.2016. This action was carried out subsequent to the search conducted by Central Bureau of Investigation (In short `CBI') on 4.11.2016 at the residence of family member of Director and promoter of various entities of Chirayu Group. Cash of Rs. 36,00,000/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered address as evident from the seized documents. Further, from the documents seized, copies of resolution of both the abovementioned trusts were found which are of the same date i.e. 03.06.2013. All the above circumstances along with the failure of assessee to furnish any details or confirmation of donations received are suggestive of manipulation and show that the donations are suspect. (ii) Corpus Donation of Rs. 8,15,90,000/- has been received by Chirayu Charitable Foundation from Riviera Infoway Ltd on 01.07.2011. The assessee has not submitted any documents/confirmation of the same. From enquiry conducted, it has been observed that M/s Riviera Infoway Ltd has filed return of A. Y. 2012-13 declaring gross total income of Rs. 2,022/-. This does not justify the huge amount of donation made by the said company. Further, as the assessee has failed to furnish any details or confirmation of donations received, the same remains unexplained. (iii) Donation of Rs. 50,00,000/- has been received from Udodas Mundhra Seva Sansthan. Since the assessee was reluctant in providing any details of corpus donations received by it, third party enquiry was conducted on test check basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards. Accordingly the assessee trust is claiming exemption u/s 11 of the Income tax Act, 1961 on account of income applied for charitable and religious purpose in India during every year since its inception. Search and seizure action u/s 132 of the Income tax Act, 1961 was carried out at the various premises of Chirayu Health Group and its associates on 04/11/2016. Search warrant was also executed by the Central Bureau of Investigation (CBI) on 04/11/2016 at House No. 11, Professor Colony, Bhopal which is the residence of family members of Directors and Promoters of various entities of Chirayu Group. During the course of search and seizure operation by the Investigation Unit of Income tax Department on 04/11/2016, various documents were seized from premises located at Bhainskhedi, Near Bairagarh, Bhopal-Indore Highway, Bhopal The seized documents establish that the assessee Trust had received large donations from various entities and post search enquires categorically reveal that the assessee has failed to furnish the confirmation of donations received and the donations remains unexplained and suspect. Further post search enquiries establish that the activities of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment proceedings were conducted much prior to the search and all the documents with regard to the receipt of donation were furnished before the assessing authority who has accepted the same and the assessments were duly completed without making any addition on this issue observing that there is no concrete material/evidence which may prove that the alleged donation are not genuine and activities of the trust are not carried out in accordance with the objects of the society. It was contended before the Ld. PCIT that the proposal for cancellation of registration u/s 12AA is merely based on suspicion which is neither allowable nor justifiable. 7. However the submission made by the assessee could not convince Ld. PCIT as he was of the opinion that firstly the alleged donations received are not genuine and secondly referring to the alleged irregularity in admission process observed by CBI at Chirayu Medical College, Bhopal came to the conclusion that the registration granted u/s 12AA of the Act deserves to be cancelled and accordingly invoked the provisions of Section 12AA(3) of the Act retrospectively with effect from 1.4.2011. 8. Aggrieved assessee is now in appeal before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unlawful hence all such findings be quashed and order of the learned PCIT u/s.12AA(3) be kindly cancelled. (8) That on the facts & in the circumstances of the case and in law, the findings of the learned PCIT that the provisions of section 13 are applicable are wholly wrong, opposed to facts and are unlawful and. therefore, such findings be quashed and it be held that the provisions of section 13 are not at all applicable. 9. With regard to the above grounds Ld. Senior Counsel for the assessee apart from referring to the written submission submitted that firstly there is no iota of evidence to show that the assessee society is not carrying out its activities as per the objectives of the trust, secondly the identity, genuineness and creditworthiness of the donors has been duly proved at multiple occasions before the assessing authority, thirdly the alleged allegation about the education in Chirayu Medical College has still not reached its finality and there was no justification to cancel the registration u/s 12AA of the Act of the society which is running so many colleges and hospitals purely for charitable purpose as provided in Section 2(15) of the Act and fourthly that those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Govt. as well as State Govt. for treatment of its employees. Similarly, it is recognized by many reputed institutions and corporations etc. All these facilities have helped the people of state in living and enjoying better life. It is, therefore, submitted that the assessee is carrying out the activities genuinely and in accordance with the objects of the society. The assessee submits that such charitable institutions do need the help of rich and affluent as well as philanthropist. These persons contribute to the charitable institutions for the welfare of the society. Thus, donations are received by such societies including the assessee society. Donations may range from very small amounts to very large amounts. That the assessee has obtained large donations totaling Rs. 14,25,90,000. Large donations do not mean that they are not genuine. In any case, it is submitted, that all such donations are genuine and obtained through banking channel only. The claim that the assessee failed to furnish the confirmation of donation received is altogether incorrect. The assessee has been regularly assessed u/s 143(3) of the Income Tax Act, 1961. Not only the confirmations but other docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmations and other documents of the donors establishing the genuineness of the donations. Even, this submission of the assessee seems not to have been considered before concluding that the assessee failed to furnish any details or confirmation of donation received hence the same are suspect. It is, therefore, submitted that the assessee furnished the confirmations and other documents thrice and thus, cancellation of registration is unlawful. It has also been observed that some entities who had given large donations to the assessee have filed their return of income showing very nominal income. It is apparent that this is not the concern of the assessee. Someone wishing to donate to the assessee society is always welcome and it is up to the donor how he/she or it arranges the fund. It is only later that other documents of the donors are sought and that is just in order to establish the identity of the donor to the deptt. Just because some entities have filed their return of income showing very nominal income doesn't make the donations unexplained or suspect. Reflecting nominal income in the return of income may be because of the various provisions of the Income Tax Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used against the appellant have been made available to the appellant. In fact there is no such material with the department. In any case, copies of the confirmations and other documents related to the donations were filed with the CIT. These show beyond doubt that the donations are genuine, explained and not suspect. 11. The seized documents contained in LPS 10 fully establish the fact that donations are genuine in view of the provisions of section 292C of the Income Tax Act, 1961. It is reiterated that in the regular assessment proceedings conducted much prior to search, above documents were furnished and receipts of donation were examined and genuineness was accepted and the assessments were completed. It is submitted that section 13 is for assessment and not for registration. There is no concrete material / evidence which may prove that activities are not genuine or the activities are not carrying on in accordance with the objects of the society. The cancellation is based on suspicion and suspicion alone, which is neither lawful nor justified. The assessee further submits that application of section 13 is for the assessment of income while granting the exemption of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90000. The copy of the bank account of the company along with the acknowledgment of return for A.Y. 2009-10 was also furnished in the said regular assessment proceedings. In the said regular assessment, the genuineness of the receipt of money of Rs. 72890000 was accepted and accordingly the assessment order was passed much prior to the search. The assessee submits that all the above documents exist on the assessment record of the assessee of A.Y. 2011-12. 12.3. It is submitted that the assessment for AY 2012-13 was also completed as scrutiny assessment u/s 143(3) on 24.03.2014 in the normal course. It is submitted further that in the course of regular assessment proceedings, on specific query from the A.O., the assessee had furnished confirmation letter of the donor company confirming the donation of Rs. 81590000 along with the ackd. of return for AY 2012-13. In the said regular assessment, the genuineness of the receipt of money from the aforesaid company and the genuineness of transaction of donation was accepted and, accordingly, the scrutiny assessment order was passed much prior to the search. The assessee submits that all the above documents exist on the assessment record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of post search enquiry, detailed investigation was done by Investigation Wing. The assessee submits that the assessee has no knowledge as to what was the outcome of such detailed investigation. The A.O. has also not supplied the copy of material, which were adverse to the assessee and used in the assessment against the assessee. The said material has never been confronted. From the reading of the para 11.5(a), it prima facie appears that there was nothing against the assessee because the A.O. simply says with respect to amount of Rs. 81590000 that the donor company has filed the return showing the gross total income of Rs. 2022 and this is the sole reason for not accepting the donation. The genuineness of none of the documents as furnished in the course of post search assessment proceedings and pre-search assessment proceedings has been doubted by the A.O. In the search also, no incriminating material was found which showed that it is the assessee's income which came to the assessee under the garb of donation and, therefore, the addition of Rs. 81590000 is wholly unlawful and unjustified and warrants deletion. The assessee submits that the income is not the sole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Kandivili (E), Mumbai - 400101 10000000 2014-15 Udodas Mundhra Seva Santhan (AAATU0983C) 5000000 Total 41000000 13.2. In the course of assessment proceedings in support of the genuineness of the transactions, following documents were furnished (a) With respect to donation from Thakur Educational Trust (AACTT4004F) - Rs. 10000000 + Rs. 6000000 Confirmation letter (Seized document) Certified copy of resolution of the donor giving donation (Seized document) Appeal by the assessee to the donor for giving donation. (Seized document) Copy of the notice u/s.133(6) dated 18.07.2016 issued by assessing officer (Dy. Commissioner of Income Tax (Exemption)-2(1), Mumbai) of Thakur Educational Trust for confirmation of donation given to the assessee. This letter was issued by the A.O. of the Thakur Educational Trust in connection with the assessment proceedings pending for A.Y. 2014-15 of the said trust. Copy of reply of the assessee in compliance to notice u/s. 133(6) to DCIT (Exemption)-2 (1), Mumbai. (b) With respect to donation from Zagdu Singh Charitable Trust (AAATZ0141P) - Rs. 10000000 + Rs. 1000000 Confirmation letter (Seized document) Appeal by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by her from the donors and no such material has been confronted to the assessee. From the reading of the order it is apparent that the donors have confirmed giving the donation to the assessee, thus, there is no denial from the donors regarding giving the donation. 13.4. In the course of assessment proceedings, the assessee submitted the profile of the Thakur Educational Trust and Zagdu Singh Charitable Trust. This profile is available on the web site of the Thakur group of institutions. It is submitted that this group is running 16 educational institutions at Kandivali, western suburb of Mumbai wherein over 40000 students are studying, which itself proves the worth of the donor institutions. The copy of institution's profile as available on the web site was also filed. The assessee submits that the returned income which has been seen by the learned CIT/AO is only after exemptions available u/s 11 / 12 of the Act. It may be appreciated that the assessee had also submitted the notices issued by the assessing officer of the said two institutions. These notices fully establish the fact that the institutions are genuine institutions and are regularly assessed to tax. 13.5. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harchi entity without having any cogent evidence is suspicion and presumption only which cannot be a part of judicial analysis. In big cities like Delhi, Mumbai etc., common addresses is normal phenomenon. In those cities, even a table is shared by more than one person. Thus, this could not be a ground for raising a suspicion. It is further submitted that in the course of assessment, the Inspector's report was neither shown nor confronted, and, therefore, the order is nullity. The Apex Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise CIVIL APPEAL NO. 4228 OF 2006 [2015] 127 DTR (SC) 241, held that "Not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected." 13.7. The findings in the order u/s 12A are not justified because the assessee has placed every possible evidence before the learned CIT and the A.O. in support of its contention that the receipt of corpus donation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Pvt. Ltd. reported in 159-ITR-78(SC). 6. The Guahati High Court in the case of Raichand Kothari (HUF) v/s. CIT reported in 223-ITR-250 7. Hon'ble Patna High Court in the case of Addl. CIT v/s. Hanuman Agarwal reported in 151-ITR-150/151 8. Hon'ble Patna High Court in the case of Saraogi Credit Corporation v/s. CIT reported in 103-ITR-344 9. Hon'ble ITAT Cochin Bench in the case of G.G. Films v/s. ITO reported in 45-TTJ-644. 10. Hon'ble ITAT Delhi Bench in the case of Kamal Engineering Works v/s. ITO reported in 52-TTJ (Del) -75. 11. Hon'ble ITAT Rajkot Bench in the case of ACIT v/s. Radhey Shyam Bansal reported in (2000) 68 TTJ (Rajkot) 136 12. Hon'ble ITAT Ahmedabad Bench in the case of ITO v/s. Meghjibhai Virjibhai Patel reported in 11-TTJ-367 13. Hon'ble ITAT Indore Bench in the case of ITO v/s. Pradeep Kumar Badjatya & Co. reported in 25-ITC-147 11. Ld. Departmental Representative vehemently argued referring to the following finding of Ld. PCIT mentioned in the impugned order:- "5. Accordingly, a show cause notice was issued to the assessee vide this office letter F.No.PCIT(Central)/BPLl12A/2018-19/4303 dated 06112/2018 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nselling were given 4 days time till 29tll September to get admission, the College Level Admission Committee on 28tll September admitted 19 new students who were not from the allotment list at all. 32 new students were admitted on 29th September and 4 students on 30 September without any merit and without following any criteria. All these admissions were made without following the due process. IV. Investigation revealed that as in the case of Index Medical College, the college forwarded list of admitted students to DME, which was very much different from the Allotment List of DME which was dishonestly countersigned and forwarded by NM Srivastava. the then Joint Director 0/0 DME to the concerned University to which this Pvt. Medical College was affiliated and to MCI and thereby abetted regularization of these illegal admission. V Investigation further revealed that as in the case of Index Medical College, this Medical College also did not adhere to the rules/regulations of reservations (SC/ST, etc.). VI. During investigation. it was revealed that most of the students allotted to the medical college in the 1st round of DME counselling had never reported in the college yet the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AA (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A {IS it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Principal Commissioner or Commissioner is satisfied that the activities of. such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration o/such trust or institution Provided that no order under this sub-section shall he passed unless such trust or institution has been given a reasonable opportunity q/being heard. VW.. 10. After careful consideration of the facts of the case it is seen that the assessee trust is generating cash by manipulation of admission process by admitting non deserving candidates in place of meritorious & deserving candidates. The cash so generated is channelized in the books of the assessee trust in the form of donations from a er entities who have no creditworthiness. Thakur Education Trust, from whom the assessee Trust has shown a donation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other similar institutions, centres and establishments for providing services, treatment, care and medical relief and also to co-operate and coordinate with existing ones. II. To establish, run, manage, develop, own acquire, open, purchase, undertake, improve, equip, promote, initiate, encourage, subsidies, sponsor, maintain and organize schools, college, diploma courses, computer centres, academics etc. to educate and train the people in vocational, art, culture, religion and technical field as also to impart training, instructions and exercise, give practical exposure and organize seminars, classes, workshops etc. Ill. To educate and promote general and specialized awareness in the public regarding medical science, hygiene and sanitation for bringing about improvement in the overall health scenario of the country. IV. To establish and promote Research and technological institutes for the advancement of science and technology specially in the field of medical science and engineering. V. The promotion of medical science, education, literate and advancement of the various technologies in this field and to use various advanced methods, equipment, machines for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We observe that on 4.11.2016 search warrant was executed by the Central Bureau of Investigation (In short 'CBI') at the premises of the director and promoter of Chirayu group at 11, Professor Colony, Bhopal. Cash and jewellery were found. Income Tax Department was informed. Search and Seizure operation u/s 132 of the Act was carried out on the very same day i.e. 4.11.2016 at various premises of Chirayu Health group and certain documents and other materials were seized. Based on these evidence and material Addl. CIT (Central), Bhopal made a proposal for cancellation of registration granted u/s 12AA of the Act and in this proposal reference was made only with regard to donations received by Chirayu Charitable Foundation questioning the genuineness of transaction and creditworthiness of the donors. Ld. PCIT accordingly issued show cause notice to the assesee asking the assessee to explain the genuineness of donations from various entities received during financial year 2011-12 and 2013-14. The main observation of Ld. PCIT in the show cause notice was that the donors giving huge donations are having very nominal income which raises doubt on the creditworthiness of the donors. Apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. (1A) All applications, pending before the Principal Chief Commissioner or Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Principal Commissioner or Commissioner and the Principal Commissioner or Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day. (2) Every order granting or refusing registration under clause (b) of subsection (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A. (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PCIT/CIT needs to be satisfied that the activities of such trust institution or are not being carrying out in accordance with the objects. Going through the show cause notice we find that the only allegation mentioned is with regard to genuineness of donation received by the trust. There is no mention about any charge against the trust/institution showing that its activities are not being carried out for charitable purpose or its activities are beyond the scope provided in the aims and objects provided in the trust. It is noteworthy that the assessee society is running various hospitals and colleges namely "Chirayu Meical College and Hospital", Bhopal, "Chirayu College of Nursing", "Chirayu College of Para Medical" and "Chirayu Cancer Hospital" which apart from running 750 bedded multi specialty hospital is also imparting education to around 2000 students in various colleges having courses of MBBS, MD, B.Sc Nursing. Post B.Sc. Nursing. GNM, MSc. Nursing, and various courses under paramedical college like DMIT, BMLT and physiotherapy etc. Ld. PCIT has not made any observation nor any concrete finding with necessary investigation and information about any of these colleges and hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its college that too for particular course there is an allegation by few students about the irregularity in the admission process, the overall working of the society running for carrying out charitable activities imparting education and medical relied cannot be doubted. 24. In our view CBI charge sheet cannot be relied upon by the Ld. PCIT as it does not form part of show cause notice. Since the alleged charge was beyond the scope of show cause notice and is also vague and without any detail it cannot form basis to cancel the registration u/s 12AA of the Act. We observe that Ld. PCIT has not adhered to the principles of natural justice since the assessee was not provided with reasonable opportunity to defend its case. The reply given by the assessee during the course of impugned proceedings was only with reference to the issue of genuineness of donations received mentioned in the show cause notice issue. If any new issue was adopted as a basis to cancel the registration u/s 12AA of the Act Ld. PCIT was duty bound to issue a second show cause notice to provide opportunity to the assessee to defend itself as held in the case of UMC Technologies Ltd. v. Food Corporation of India, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission and has only observed that there is an irregularity in granting admission and imposed fine for the similar kind of admission made in the year 2013. This order of AFRC has also been challenged by the college management before the Hon'ble High Court of M.P at Jabalpur by filing writ petition No.10857/2015 and Hon'ble court had granted stay on 23.7.2015 which is still continuing. The said stay order is extracted below:- WP-10857-2015 (CHIRAYU CHARITABLE FOUNDATION FOR CHIRAYU MEDICAL COLLEGE AND HOSPITAL BHOPAL Vs THE STATE OF MADHYA PRADESH) Order dated 23.7.2015 "Shri Ajay V. Gupta, learned counsel for the petitioner. Admit. Issue notice to the respondent on payment of process fee within one week returnable in four weeks. Having heard Shri Gupta on the question of interim relief, we find that imposition of fine in question is contrary to provisions of Section 4(9)(c) and (d) of the M.P. Niji Vyasayik Shikshan Sansthan (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Sansodhan Adhiniyam, 2013. Keeping in view the aforesaid, the recovery of the impugned order of fine from the petitioner institute shall remain stayed till the next date of listing." 27. We thus obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led all relevant information and documents to show that the identity and genuineness of the donors as well as the creditworthiness of them to give donation to the society are proved. It is also brought to our notice that regular books of accounts have been maintained by the society which are duly audited. The assessment years during which some donations were received are mentioned in the impugned order have already been examined by the assessing authorities during the regular assessment proceedings prior to the search and assessee was successful in satisfying the assessing officer about the identity and genuineness of the donors and their creditworthiness. Even in the seized material marked as LPS 10 found during the course of search, contained confirmations in original and other documents including Income Tax Returns, Bank statements, Board resolutions, Financial statements of the alleged donors etc. Again this information were filed on 26.11.2018 & 4.12.2018. It is also interesting to note that during the course of search conducted at the premises of the assessee society various documents were found regarding to the donation of Rs. 8,15,90,000/- and Rs. 4,10,00,000/- received dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus total sum of Rs. 8,15,90,000/- shown as unsecured loan was transferred to the groups donation account through a journal entry passed on 29.8.2011. The assessment of the assessee was completed u/s 143(3) of the Act for Assessment Year 2011-12 on 18.3.2014 in normal course and during the course of proceedings confirmation of loan creditors were filed, copy of bank account of M/s Riviera Infoway Ltd along with its Income Tax Return for Assessment Year 2009-10 was furnished. On the strength of these documents Ld. A.O was satisfied with the identity and creditworthiness of the donor company and genuineness of the transaction of loan. Similarly assessment for Assessment Year 2012-13 was completed u/s 143(3) of the Act on 24.3.2014 and no addition was made on the amount received from the alleged donor i.e. M/s Riviera Infoway Ltd . Subsequently all the documents filed before the Ld. A.O which form part of the assessment were also found by the search team. However during the assessment proceedings carried out after issue of notice u/s 153A of the Act amount of donation was added by the Ld. A.O to the income of the assessee by giving reference to the detailed investigation done by In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... donor for giving donation. (Seized document) 33. We observe that two trusts namely Thakur Educational Trust and Zagdu Singh Charitable Trust which have given donation of Rs. 1.60 crores and Rs. 2.00 crores during financial year 2013-14 as submitted by Ld. Senior Counsel for the assessee and now both these trusts relates to Thakur group of institutions running 16 educational institutions at Kandivili, Mumbai wherein over 40000 students are studying and the institution profile is available at public platform i.e. on the web site. We fail to understand that how can Ld. PCIT could remain unsatisfied with the identity and genuineness of such donation as well as creditworthiness of such two well established trusts. 34. It is also observed that in case of donor namely Udodas Mundhra Seva Sansthan which have given donation of Rs. 50 lakhs on 10.5.2013 was issued notice u/s 133(6) of the Act which was duly complied that the donor have confirmed to have given donation to the assessee. 35. Our finding with regard to the alleged donations received by the trust is that the assessee has supplied all necessary information to prove the identity and genuineness of the donors and their creditwor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case." (iv) The co-ordinate Bench of Rajkot in the case of ACIT v/s. Radhey Shyam Bansal reported in (2000) 68 TTJ (Rajkot) 136. "The CIT (A) has clearly stated in his order that the confirmatory letters were filed by all the three depositors. The AO did not make any further investigation with the depositors to find o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthentic material available with him which could throw some light on this issue, the same may be given to the assessee so that specific' reply on the same could be submitted on it, besides denying the allegations leveled against him. For the sake of reference, we extract para 8 as under:- 8. That your goodself has, in your notice dated 13/11/2015, alleged that the assessee has received a donation of Rsl,00,00,000/- from M/s Herbicure Health Care Bio Herbal Research Foundation in the A/Y 2011-12 by paying an amount of Rs. 1,00,00,000/- in cash to M/s Herbicure Health Care Bio Herbal Research Foundation itself. This allegation is totally untrue as nothing of this sort has been written or mentioned in the confirmation, given by M/s Herbicure Health Care Bio Herbal Research Foundation. Till date no evidence to the contrary has been made available to the assessee which could substantiate your honour's allegation that the amount ofRs. 1,00,00,000/- was paid by the assessee in cash to the donor in exchange of donation received by cheque. However, in case, there is any authentic material available with your honour which could throw some light on this issue, the same may be give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act by the assessee :- * CIT v. Apeejay Education Society [2015] 59 taxmann.com 102 (Punj. & Har.) * Cancer Aid & Research Foundation v. DIT (Exemption) [2014] 66 SOT 86/49 taxmann.com 537 (Mum. - Trib.) * CIT (Exemptions) v. Cancer Aid & Research Foundation Income Tax Appeal No.505 of 2015 * Prabodhan Shikshan Prasarak Sanstha v. Dy. CIT [2014] 44 taxmann.com 33/[2015] 152 ITD 473 (Pune - Trib.) * Tamil Nadu Cricket Association v. DIT (Exemption) [2014] 360 ITR 633/221 Taxman 275/[2013] 40 taxmann.com 250 (Mad.) 12. Therefore, in view of our aforesaid discussion, on the preliminary point itself, we find that the impugned order of the Commissioner cancelling the registration u/s. 12AA(3) of the Act is bereft of a valid jurisdiction. (iii)The Hon'ble Karnataka High Court in the case of CIT Vs. Islamic Academic of Education reported in 229 Taxman 274 (Karn) held as under :- In the instant case, the material on record shows that the Trust has established educational institution and imparting medical education. Every year, students are admitted. Huge investment is made for construction of buildings for housing the college, hostel and to provide other facilities to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. While considering the registration under section 12AA, the scope of enquiry of the Commissioner would be limited to the aforesaid extent only." (v)The decision of Krupanidhi Educational Trust Vs. DIT (E) - 152 TTJ 673, wherein it is held as under :- The DIT(E) in the order u/s 12AA(3) of the Act, do not make out any case, which can show the activities of the assessee are not genuine or that the activities of the assessee are not being carried out in accordance with the objects of the trust or institution. The fact that the Assessee was paying commission to persons who solicit students for studying in the Assessee's institution cannot lead to the conclusion that the Assessee is not imparting education. Similarly purchase of a BMW car, borrowing of loans from Sindhi Financiers, non maintenance of regular books of accounts, violations of provisions of Sec.13(1)( c) of the Act in as much as the trustees were paid enormous salary are all by way of passing reference having norelevance to whether or not the Assessee was pursuing education as its main object. There are no facts brou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trospective. A provision is retrospective when it takes away a right which has vested or accrued in the past. The effect of the provision is to empower the commissioner to cancel the registration of the trust where he is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust or Institution. This could not by any stretch of imagination be regarded as retrospective alternation of the law. In the case before us, as per the amendment by the Finance Act, 2010, the Commissioner has claimed to be empowered to initiate steps for the cancellation of the registration of a trust or Institution where the activities of the trust or institution are not genuine or are not being carried out in accordance with the objects thereof even in relation to a trust which was registered under S. 12A as it then stood." So basic requirement for invoking S. 12AA(3) is that the activities of the trust are not genuine and are not being carried out in accordance with the objects of the trust. The CIT has recorded her findings in the order u/s 12AA(3) that the trust is imparting knowledge at cost and therefore, not a charitable Trust with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to grant registration u/s 12AA and cancellation of registration u/s 12AA (3) of the Act. The power to cancel registration already granted u/s.12AA of the Act is contained in Sec. 12AA(3) of the Act and it reads as follows: "(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." The provisions of section 12AA of the Act, deals with procedure for registration of trust/institutions. As per said section, the Commissioner shall look into the objects of the trust and its activities and satisfy himself about that the objects of the trust are charitable in nature and its activities are genuine and such activities are carried out in accordance with its objects. Sub-section (3) inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablish that there was any illegal activity or infringement of law so as to doubt the genuineness of the activities. 38. On perusal of the judgments and decisions referred herein above, we find that they are squarely applicable on the facts of the instant appeal and the issue raised before us and thus favours the assessee. Before concluding we would like to summarise our findings and observations in following manner:- (i) As regards the alleged donations received from various concerns mentioned in the impugned order, we are satisfied with the identity of the alleged donors, genuineness of the transaction of giving donatiion to the assessee trust since most of the alleged donors are either charitable trusts or known to the Directors/ Promoters and the transactions being carried out through banking channel and we are also satisfied with the creditworthiness of the alleged donors as they have sufficient financial strength to provide the donation to the assessee trust, (ii) As regards the alleged irregularity in education process noted by CBI the matter is still subjudice with the court and the order of Regulatory Authority namely Admission Fee Regulatory Committee stand stayed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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