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TMI Blog2018 (5) TMI 2054X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed by the Revenue has already been dismissed by the Tribunal and upheld by the Hon'ble High Court and the assessee society is imparting education which is not in dispute, therefore, ld. CIT, in our opinion, is not justified in cancelling the registration granted earlier by invoking provisions of section 12AA(3) of the I.T. Act. The addition, if any, can be made by the Assessing Officer in the regular assessment but registration cannot be cancelled only on the basis of certain violations by the trustees unless and until it is proved that the assessee trust is not fulfilling its main object of imparting education. As relying on M/S. ISLAMIC ACADEMY OF EDUCATION [ 2015 (9) TMI 450 - KARNATAKA HIGH COURT] and considering the fact that the assessee trust is imparting education as per its main objects, we are of the opinion that the ld. CIT is not justified in cancelling the registration u/s 12AA(3) of the I.T. Act. We accordingly set-aside the order of the ld. CIT and restore the registration granted earlier. Decided in favour of assessee. - ITA No. 1721/Del/2015 - - - Dated:- 30-5-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... py of the order of the ld. CIT(A) as well as the order of the Tribunal and argued that the Tribunal has verified and after examining various issues has already found that there is no ground for revoking of exemption u/s 11 of the I.T. Act. Therefore, proceedings for withdrawal of exemption u/s 12A may be dropped. 5. However, ld. CIT observed that the order of the Tribunal is not acceptable and an appeal has been filed before the Hon ble High Court challenging the same. It also came to the notice of the Department that the assessee has withdrawn its writ petition before the Hon ble High Court challenging the withdrawal of exemption u/s 10(23C)(iv) and the writ petition has been dismissed as withdrawn. He, therefore, again asked the assessee to explain its position afresh in reference to its withdrawal of writ petition challenging the order of the DGIT withdrawing approval u/s 10(23C)(iv) of the I.T. Act. There was no response from the side of the assessee. The ld. CIT thereafter proceeded to decide the issue on merit. He observed that DGIT while considering the assessee s case for continuation of exemption granted u/s 10(23C)(iv) has pointed out certain irregularities in the affa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case, the learned CIT(Exemptions) has erred both on facts and in law in cancelling the registration granted under Section 12A(a), solely on the basis of observation made by the AO during the assessment proceedings. 3. On the facts and circumstances of the case, the learned CIT(Exemptions) has erred both on facts and in law in cancelling the registration on the basis of findings given by the AO in assessment proceeding despite the fact that the such findings of the AO stands reversed by the CIT(A) and Hon'ble ITAT has confirmed the order of CIT(A). 4. The act of the learned CIT(Exemption) in not following the order of Hon'ble ITAT is in disregard to the principle of judicial discipline whereby the lower authorities are bound to follow the order of the higher authorities. 5. On the facts and circumstances of the case, the learned CIT(Exemptions) has erred both on facts and in holding that the activities of the assessee is not as per law and are not genuine. 6. That the appellant craves leave to add, amend or alter any of the grounds of appeal. 7. Ld. counsel for the assessee referring to the decision of the Hon ble Karnataka High Court in the case of CIT vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (1) or has obtained registration at any time under section 12A as 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 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. 12. We find the ld. CIT cancelled the registration granted earlier basically on the following grounds :- (a) The Assessing Officer in the assessment proceedings for assessment years 2009-10 and 2010-11 had noted a large number of discrepancies in the accounts and affairs of the assessee society and rejected the claim of exemption and held its income to be taxable of AOP. (b) The DGIT has withdrawn the approval u/s 10(23C)(vi) on account of various irregularities pointed out by him and holding that the activities of the institution ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine and was not being carried out in accordance with the objects of the trust? 5. The learned counsel for the revenue assailing the impugned order contended that the material on record discloses that cash was found in the residential premises of the Chairman which was offered to tax by the Trust. A sum of ₹ 3.5 Crores is admitted to be a bogus entry and offered to tax. Advances are made to the family members of the Trust out of the Trust fund which are kept outside the accounts and reflected in the coded words. The activities of the Trust are not carried out in accordance with law and contrary to the provisions of the Income Tax Act. Therefore, he submits that a case for cancellation is made out and the Tribunal erroneously setaside the CIT order. 6. Per contra, learned counsel appearing for the assessee submitted that when once the genuineness of the Trust is not disputed and when the object of the Trust namely imparting education has been carried on uninterruptedly, a case for cancellation of the Trust is not made out. If there are violations, such as not accounting the money received which was found in the possession of the Trustees, bogus entries in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivities of the Trust or Institution are not genuine; and (2) The activities of the Trust or Institution are not being carried out in accordance with the objects of the Trust or Institution. Only if the Commissioner is satisfied that any one of these conditions exists, then he shall pass an order in writing cancelling the registration of such Trust or Institution. Therefore what follows is, except the aforesaid two grounds and on no other ground, an order cancelling registration of the Trust could be passed. 8. 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 the students who are studying in the College. The College is recognized by the Medical Council of India, State of Karnataka and all other statutory authorities. Therefore, it cannot be said that the Trust is not genuine. Admittedly, the students are being admitted every year. Students are studying in all courses. Thus the object of the constitution of the Trust namely imparting ..... X X X X Extracts X X X X X X X X Extracts X X X X
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