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TMI Blog2022 (8) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... o cancel registration with retrospective effect i.e. from the date when the assessee infringes conditions subject to which registration under section 12A was granted and misused the status of the registered trust. Third Member HELD THAT:- the main aspect which has to be taken note of is the principle that the grant of registration u/s12A of the Act, does not automatically enable an assessee to claim exemption u/s 11 12 of the Act. The AO even in a case, where a trust or charitable organization for which registration u/s 12A of the Act subsists has to go in to the question, as to whether the income has been applied for charitable purposes and to the extent contemplated by Sec.11 12 of the Act. Even in a case, where the trust or charitable organization applies its income for charitable purposes, but does not have registration u/s 12A of the Act, such trust or charitable organization cannot claim the benefit of Sec.11 12 of the Act. The apprehensions expressed by the learned AM have to be addressed or looked into in accordance with law and the parties should be left to explore remedies open to them in law. Therefore, I agree with the learned JM that the impugned order canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 153A for the assessment years 200708 to 2013-14. In response to the notices issued under section 153A, the assessee filed return of income. Thereafter, the assessee also filed an application under section 245(C) of the Act before Income Tax Settlement Commission (in short ITSC ) on 24th February, 2015 disclosing income of Rs. 65,00,000/- on account of anonymous donations and invested in the building and offered the same to tax under section 115BBC. The application filed by the assessee under section 245C was rejected by the ITSC and consequently the assessments were completed under section 143(3) read with section 153A on 8.8.2017. Though the assessee has challenged the validity of the assessments and additions made by the Assessing Officer in the separate proceedings however, the same is not a subject matter of the present appeal or having any relevance to the present appeal filed against the order passed under section 12AA(3) and section 80G of the Income Tax Act. Thereafter, the Pr. CIT (Central Lucknow) issued show cause notice dated 13th/18th July, 2017 and asked the assessee to show cause as to why the registration granted under section 12A may not be cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r relevant information given in Annexure I hereto; 3. The appellant had maintained books of account as defined in section 2 (12A) of the Act, as had been brought on the statute books by the Finance Act 2001, w.e.f. 1.6.2001, and utilization as had been found to be recorded there, for construction of school building and improvement of infrastructure incidental thereto, meant solely education purposes and, view to the contrary as has been taken by the Pr. CIT is wholly erroneous, uncalled for ad unjustified; 4. The Pr. CIT has erred in law and on facts in passing the impugned order dated 29.03.2019, on the allegations to the following effect, that a. The appellant was in receipt of unaccounted/unrecorded donations as admitted by it in its application filed before the Hon ble income Tax Settlement Commission under section 245C; b. Owning to non-availability/non-maintenance of details of donors/donations, the receipts shown under the head donation were unproved C. Such unaccounted/unproved receipts, amounted to profiteering, resulting into diversion of funds for the benefit of Trustees; d. The extent of application for charitable purposes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be withdrawn. The subsequent show cause notice dated 20.12.2018 for the cancellation of registration is not valid when the first show cause notice issued on the same grounds deemed to have been withdrawn. Therefore, the impugned order passed by the Pr. CIT is not valid as there was no valid show cause notice. 5. On the other hand, learned DR has submitted that the first show cause notice was issued on 13th July, 2017 and thereafter there was a change of the incumbent at the post of Pr. CIT which necessitated the second show cause notice granting opportunity to the assessee. The learned CIT DR has pointed out that this issue was also raised by the assessee during the proceedings under section 12AA(3) and the Pr. CIT has decided the same. She has relied upon the impugned order of the Pr. CIT. 6. We have considered the relevant submissions as well as relevant material on record. There is no dispute that after the search and seizure action under section 132 of the Income Tax Act. The Assessing Officer initiated the proceedings under section 153A of the Income Tax Act pursuant to the search and seizure action initiated. During the pendency of the assessment proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reply dated 1/8/2017 was submitted but thereafter no order whatsoever was passed by the then incumbent, who got transferred on 25/8/2017, since there was a change in incumbent, it was necessary to issue the fresh show cause notice granting opportunity to the assessee. This fact was duly communicated to assessee also on 29/1/2019. Hence the presumption that the next show cause notice was beyond the scope, is fallacious. The facts which are being used to decide the validity of registration u/s 12A are only the undisputed facts admitted by assessee trust in its own application before the ITSC filed after the notices issued u/s 153A in case of trust. Without prejudice, the assessee had gone upto High court challenging the validity of notices u/s 153A but failed to succeed. The issue of limitation of assessment u/s 153A cannot have any implication on deciding the question whether the trust was carrying its activities as per the object for which it was granted the registration. The CIT(A), it filed an appeal to ITAT. The ITAT has now set aside the matter to CIT(A)for passing fresh orders. The very fact that the assessee carried the matter to ITAT which has not yet held the orders to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed under section 12AA(3) and 80G(5) is concerned. The Pr. CIT has referred and considered the facts and material detected as a result of search and seizure action under section 132(1) of the Income Tax Act and consequent application of the assessee filed under section 145C before the ITSC. The evidentiary value of the material found during the search and seizure action revealing unaccounted money received by the assessee trust cannot be affected by the reason of the search and seizure action challenged by the assessee. Further certain material and facts as considered by the Pr. CIT while passing the impugned order are otherwise admitted by the assessee in the application filed under section 245C as well as the same are the part of the books of accounts of the assessee so far as the violation of the provisions of section 13(3) of the Income Tax Act. Accordingly, we do not find any merit or substance in the ground no. 2 of the assessee s appeal. 11. The ground nos. 3 to 9 are regarding challenging the impugned order on the merits and particularly on the issue that the points raised by the Pr. CIT would not amount to the activity of the assessee trust are not genuine or ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts received by the assessee trust and therefore it is not the transaction for giving the benefit or advances to the concerns of the trustees of the assessee but it is only the repayment of the money received from these entities. He has referred to balance-sheet as on 31st March, 2013 and submitted that though as per Schedule 9, the assessee has given loans and advances to the two trustees total amounting to Rs. 1,35,74,709/- however, at the same time, the assessee trust has also taken loan and advances from the same group and having closing balance from Jyoti Medi Services Ltd., Navjeevan Pediatric Vandana Women Hospital total amounting to Rs. 1,43,62,411/-. Therefore, the amount of loan and advances received by the assessee from the group entities is more than the amount paid by the assessee. He has then referred to the certain amounts paid by the Jyoti Hospital Nursing School to Jyoti Hospital Pvt. Ltd to the tune of Rs. 33,26,382/- during the financial year 2010-11 and submitted that the Pr. CIT took this as amount paid by the assessee trust to the companies owned by the trustees of the assessee whereas this amount is not the loan and advance given to the company but it is on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll in existence. Hence this section is not applicable in the case of the assessee. The learned AR has also raised an issue that the Pr. CIT has cancelled the registration with retrospective effect from 1.4.2006 which is not valid in view of the various binding precedents on this issue. He has relied upon the following decisions as under:- 1. ACIT Vs. Agra Development Authority (2018) 90 taxman.com 282 (Allahabad)/[2018]407 ITR 562. 2. Indian Medical Trust Vs. Pr. CIT, Jaipur (2019) 108 taxman.com 93 (Rajasthan) 414 ITR 296. 3. Oxford Academy for Career Development Vs. CCIT [2019] 315 ITR 382 (Allahabad). 13. On the other hand, the learned CIT DR has submitted that the assessee itself has admitted the receipt of unexplained donations not recorded in the books of accounts which is an activity not for achieving the objects of the assessee trust rather for the benefits of the trustees of the assessee. The unaccounted and anonymous donations surrendered by the assessee in the application under section 145C before the ITSC and offer to tax under section 115BBC itself established the fact that the activity of the assessee are not genuine and are not being carried out in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified persons as given in section 13(3) and specifically the trustees of the assessee trust as well as the concerns in which the trustees are having substantial interest. Basically these two grounds are referred by the Pr. CIT for cancellation. The Pr. Commissioner has also cited the reason for cancellation as the assessee trust has sold all its educational institutions and consequently the activities of the assessee trust cease to exist. The Pr. CIT has held that the assessee admitted in the application filed before ITSC that voluntary donation received from public have not been accounted for in the books of accounts of the trust. Therefore, the surrender of this amount of Rs. 65 Lac and offered to tax under section 115BBC led the Pr. CIT to reach the conclusion of Pr. CIT that the assessee trust has earned unaccounted receipts, profiteering and allowing the income of the trust for personal uses of the trustees. It is pertinent to note that so long the trust was running the educational institutions and imparting education through the various institutions the main activity of the assessee trust remains charitable in nature though there are certain violations on account of una ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 49,42,061/- Vandana Women Hospital Rs. 11,90,000/- Total Rs. 1,43,62,411/- 16. Thus it is a matter of record that the assessee trust received loan and advance from the group concerns total amounting to Rs. 1,43,62,411/- which were subsequently repaid by the assessee to the tune of Rs. 1,35,74,709/-. Therefore, the payment made by the assessee to that extent is nothing but repayment of earlier loan and advances and this would not even amount to violation of provisions of section 11(5) or 13 of the Income Tax Act. Therefore, these transactions cannot be regarded as the activities of the assessee are only for the benefit of the trustees of the assessee trust. The Pr. CIT then referred to the fact that the assessee sold the Jeevan Jyoti Public School and Jeevan Jyoti Nursing School in the month of September, 2017 and the sale proceedings were utilized for repayment of outstanding bank loans of the group concerns in which the trustees are having substantial interest and consequently it violates the conditions of section 11(3). Though the assessee has contended that repayment of the loan util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 12A as well as approval granted under section 80G(5). 17. As regards the second issue whether the cancellation shall have with retrospective effect w.e.f. 1.4.2006 as held by the Pr. CIT or would be retrospective. The assessee has relied upon the various decisions which are relevant on this point. The Hon'ble jurisdiction High Court in the case of ACIT vs. Agra Development Authority (supra) has held in para 50 to 52 as under:- 50. Then, there is nothing in the language of Section 12AA(3) of the Act that may suggest registration of the assessee may be cancelled with retrospective effect. The use of the words or have obtained registration at any time under Section 12-a of the Act added by amendment w.e.f. 01.06.2010 only indicate that the Commissioner was vested with the power to cancel a registration that may have been granted to an assessee at any time prior to the aforesaid amendment itself. However, it does not indicate that thereby the Commission had been empowered to cancel the registration of the assessee with retrospective effect i.e. with effect from a date prior to the date of issuance of the order/notice to cancel the registration. 51. Clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.In the instant case, the petitioner is a registered society, which was earlier granted registration under Section 12A on 1-4-1999. A survey was conducted at the business premises on 20-09-2002, from where documents were impounded. The registration was cancelled from the assessment years 2000-01 and 2001-02 for the reasons that the surplus was quite heavy. In the impugned order, it was mentioned by the CIT that there was an unusual huge margin and the petitioner was engaged in the commercial activities rather than charitable. As per the balance-sheet, huge amount from the student was charged. The profit margin embodied in the charges taken from the students are so huge and it proves the profit motive of the petitioner. The funds were misused by the president and his family members of the petitioner. 20. The expression charitable purposes is defined in Section 2(15) of the IT Act, 1961. It is of the inclusive nature as revealed in the language. Earlier the words the advancement of any other object of general public utility in this definition were succeeded by the words not involving the carrying on of any activity for profit . These words were omitted by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. 53. Therefore, we are of the view that the cancellation of the assessee s under s. 12A of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the CIT in this case, thus, question No.1 is answered in the negative that is in favour of the assessee and against the Revenue. 29. Thus, it is more than clear that section 12AA(3) of the Act of 1961, doesn t suggest or in any way contemplate that the registration of the assessee may be cancelled with retrospective effect. And therefore, this court is of the view that the cancellation of registration can only be prospective. 19. Accordingly, in the facts and circumstances of the case and following the binding precedents as cited above, we modify the impugned order of the Pr. CIT so far as the cancellation of the registration with retrospective effect from 1.4.2006 and cancellation of the approval under section 80G w.e.f. 13.10.2009 and hold that the cancellation would be with effect from the previous year in which the assessee has sold the education institutions and the activities of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized with Central Circle by Revenue u/s 127 of the 1961 Act. The assessee was registered u/s 12A of the 1961 Act and had since been claiming exemption u/s 11 and 12 of the 1961 Act, on the strength of registration granted by ld. CIT , Allahabad on 29.01.1999 , u/s 12A of the 1961 Act. Pursuant to search and seizure operations conducted by Revenue u/s 132 of the 1961 Act, the assessee was issued notices by AO u/s 153A of the 1961 Act. In response to notice issued u/s 153A by Revenue , the assessee filed its return of income claiming exemption u/s 11 and 12 of the 1961 Act. The Revenue has claimed that several incriminating documents pertaining to assessee-trust were also found and seized during the aforesaid search and seizure operations conducted by Revenue. While assessment proceedings were in progress, the assessee filed application before the Income Tax Settlement Commission(ITSC) , New Delhi on 24.02.2015, wherein additional income of Rs. 65,00,000/- was disclosed by the assessee-trust for the assessment years 2007-08 to 2014-15, as detailed hereunder: S.No. Assessment Year Additional Income declared before ITSC (In Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Act by ITSC. Thereafter , the AO completed assessment for ay: 2007-08 to 201415 and the income assessed in the hands of the assessee for ay: 2007-08 to 2013-14, were to the tune of 34,43,24,119/-, as detailed hereunder:- S.No. Assessment Year Income declared (In Rs.) Income Assessed (in Rs.) Date of Assessment Order Assessment Order passed u/s 1. 2007-08 Nil 51,95,230/- 08.08.2017 153A read with Section 143(3) 2. 2008-09 Nil 2,81,70,980/- 08.08.2017 153A read with Section 143(3) 3. 2009-10 Nil 1,40,62,700/- 08.08.2017 153A read with Section 143(3) 4. 2010-11 Nil 2,25,97,490/- 08.08.2017 153A read with Section 143(3) 5. 2011-12 Nil 12,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CN issued by ld. Pr. CIT(Central) , was that the assessee had deviated in performing any work for charitable cause and its activities are not being carried out in accordance with the objects of the trust. That the search and seizure operations u/s 132 of the 1961 Act was carried out by Revenue and in pursuance to search , assessments were framed by AO, who reported that during assessment proceedings the assessee has not given any details of donations received such as name and address of donors, amount of donation etc. which can prove the genuineness of donation of receipts, and which as per the AO indicates that these donations or receipts are not genuine and are part of undisclosed taxable income of the trustees, the AO had further reported that the assessee has during settlement proceedings declared total additional undisclosed income of Rs. 65,00,000/- for ay: 2007-08 to 2014-15, which itself reveals that the group is involved in concealment of taxable income, which was utilized for investments in properties and other investments, thirdly the AO reported that as per return of income of the assessee, huge receipts of the trust running in crores are shown as Amount applied for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.CIT(A) upheld the additions as were made by AO, in the first round of litigation. The ld. Pr. CIT(Central) then observed in his order dated 29.03.2019 that observation of ld. CIT(A) in first round of litigation strengthens the fact that the assessee is not doing any charitable activities, and is diverting funds for trustee s benefits. The ld. Pr. CIT(Central) observed that the activities of the trust was not involved wholly in charitable activities; moreover the assessee was involved in business profits for the benefit of Dr. Ashwani Kumar Bansal and Dr. Vandana Bansal(Wife) and their family members, who are trustees of the assessee, and the assessee is involved in such activities which are contrary to the objective of the assessee-trust. 2.4 The assessee submitted before ld. Pr. CIT(Central) that since inception, it is engaged in charitable purposes and is engaged in imparting education , through various institutions set up by it , from time to time. The assessee also claimed that it was never searched u/s 132(1) of the 1961 Act by Revenue, as there was no warrant of authorization (as per particulars given in the Panchnama s prepared by the Authorized Officers) where name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his SCN concerning diversion of funds of assessee for benefit of trustees and/or group entities , as well diversion of sale proceeds of assets of the assessee for repayment of loans of group entities, the assessee chose not to reply despite several opportunities granted by ld. Pr. CIT(Central). 2.5 The ld. Pr. CIT(Central) considered the submissions filed by the assessee in response to the aforesaid SCN . The ld. Pr. CIT(Central) observed that sufficient opportunity was given to the assessee. The ld. Pr. CIT(Central) observed that the assessee was in receipt of cash money , which was not recorded in books of accounts of the assessee. The ld. Pr. CIT(Central) observed that the assessee has admitted in settlement application that voluntary donation were received from public which has not been accounted for in books of accounts of the assessee trust. The ld. Pr. CIT(Central) also observed that names of donors, addresses or the amounts of donation received from such persons have not been given by assessee before AO during assessment proceedings nor the same were given in application filed before ITSC. The ld. Pr. CIT(Central) observed that the assessee was approved u/s 80G(5) and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of exemption u/s 11 and such unaccounted receipts are not of the nature as specified un Section 11(1)(a) of as well as in Section 12(1) of the 1961 Act, and hence consequently it could not be said that the said amounts were utilized for the purposes and objects of the trust nor it could be said that the activities of the asseseetrust were genuine or being carried out as per objects of the trust deed. The ld. Pr. CIT(Central) further held that the assessee has applied its funds for the benefit of trustees and their family members or related entities. The ld. Pr. CIT(Central) quoted some instances of diversion of funds in its order dated 29.03.2019 at para 4.3 at page 14/15, as under: i) In trust balance sheet at schedule-9 of advance of A.Y. 2013-14 the assessee has given loan advance to trustee as under:- Rs. 89,50,000/- to Dr. A.K.Bansal through Jyoti Hospital Pvt. Ltd. Rs. 46,24,790/- to Dr. Vandana Bansal through Jyoti Hospital Pvt. Ltd. In A.Y. 2011-12, on several occasions , Jyoti Hospital Nursing School made payment to trustee s company as under:- Rs. 13,00,000/- to M/s Jyoti Hospital Pvt. Ltd. (amount transferred) Rs. 20,26,382/- to M/s Jy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to succeed. The ld. Pr. CIT(Central) further observed that issue of limitation of assessment u/s 153A cannot have any implication on deciding the question whether the assessee trust was carrying on its activities as per the objects of the trust for which it was granted registration. The ld. Pr. CIT( Central) further observed that the appeal filed by assessee before ld. CIT(A) was dismissed. The assessee then filed second appeal with tribunal , and now the matter is set aside by tribunal to the file of ld. CIT(A) for passing fresh orders. It was observed by ld. Pr. CIT(Central) that tribunal has not held the order the appellate order passed by ld. CIT(A) in first round of litigation to be null and void, there is no merit on the issue raised by assessee on validity of search assessment u/s 153A, more so when these are not relevant for the purposes of these proceedings u/s 12AA which are independent. The ld. Pr. CIT(Central) further observed that even if search assessment are held to be bad in law, still material which was collected during search or otherwise, could still be used for any other proceedings under the 1961 Act. The reference was drawn by ld. Pr. CIT(Central) to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the trust deed. It was further observed by ld. Pr. CIT(Central) that test prescribed u/s 11 regarding application of such receipts/income to charitable purposes also fails in the case of assessee. It was observed that Section 11(1)(a) stipulates that to extent of such income applied to such purposes in India and also to extent to which the income so accumulated or set apart is not in excess of 15% of the income from such property , would impliedly require maintenance of accounts comprising of all receipts and expenses pertaining to the objects/purposes of the trust. It was observed that when receipts or expenses are not recorded in books of accounts maintained by assessee, the test of the income applied for such purposes and computation of limit of 15% of income for accumulation would also fail. Thus, it could not be said that the activities of the trust were carried genuinely as per the charitable objects of the trust deed. The ld. Pr. CIT(Central) also rejected the contentions of the assessee that registration u/s 12A cannot be withdrawn retrospectively. The ld. Pr. CIT(Central) observed that the facts admitted by assessee in its SOF filed before ITSC indicates that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being satisfied held that the assessee-trust does not exist solely for charitable purposes and that the activities of the assessee trust were not being carried genuinely as per the charitable objects of the trust deed. Thus, the registration granted u/s 12A by ld. CIT, Allahabad order granting registration No. 1/98-99 dated 29.01.1999, was cancelled by ld. Pr. CIT(Central) w.e.f. from 01.04.2006 by invoking provisions of Section 12AA(3) of the 1961 Act, vide orders dated 29.03.2019 . Further ld. Pr. CIT(Central) was pleased to cancel registration granted u/s 80G(5) of the 1961, w.e.f. date when it was granted on 13.10.2009, vide orders dated 29.03.2019. 3. Aggrieved by the orders dated 29.03.2019 passed by ld. Pr. CIT(Central) u/s 12AA(3) and 80G(5) of the 1961 Act, the assessee filed first appeal with tribunal. This appeal was heard by Division Bench of the tribunal through video conferencing through virtual court. My ld. Brother Hon ble Judicial Member has reproduced grounds of appeal raised by assessee in memo of appeal filed with the tribunal , and for sake of brevity, the same are not reproduced by me in this order. My ld. Brother Hon ble Judicial Member has recorded in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 12A of the Income-tax Act, 1961 by Revenue, vide Commissioner of Income-tax , Allahabad order registration number 1/98-99 dated 29.01.1999 , and the assessee was also granted approval u/s 80G(5) of the 1961 Act , vide orders dated 13.10.2009. The assessee was created on 01.04.1990 and as part of its educational activities , it has claimed to be engaged in running various institutions and schools, i.e.- (i) Jyoti Hospital Nursing School (ii) Jeevan Jyoti Institute of Paramedical Sciences (iii) Jeevan Jyoti Public School (iv) Ascent Institute of Management Technology As claimed by Revenue, there was a search and seizure operations conducted u/s 132 of the 1961 Act in the case of the assessee along with other cases of the Jeevan Jyoti Group on 29.05.2012 at the registered office of the assessee at 162, Bai-kaBagh, Allahabad, U.P.. The cases of the group were centralized with Central Circle by Revenue u/s 127 of the 1961 Act. The assessee has on the other hand disputed that the assessee was never searched by Revenue. The assessee was registered u/s 12A of the 1961 Act and had since been claiming exemption u/s 11 and 12 of the 1961 Act, on the strength of registrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, without recording in the books of accounts of the appellant trust and such utilization in educational activities were spread over in the ay s : 2007-08 to 2014-15 and worked out to be Rs. 65 lacs in aggregate. Proceeding further, the Revenue on its part filed Report in Rule 9 in the case of the assessee before ITSC , and total additions to the income of the assessee to the tune of Rs. 10,37,96,184/- were proposed by Revenue , as in view of Revenue the assessee was not engaged in charitable activities, rather it was engaged in the business activities for the benefit of its main trustees, namely Dr. Ashwani Kumar Bansal and Dr. Vandana Bansal or entities related to the trustees. It is pertinent to mention that these additions to income vide Report in Rule 9 were , inter-alia, proposed to be made to income of the assessee by Revenue based on disclosures of Rs. 65 lacs made by the assessee before ITSC as well based on incriminating material seized during the course of search and seizure operations conducted by Revenue u/s 132 of the 1961 Act. The ITSC on its part passed an order dated 17.08.2016, u/s 245D(4) of the 1961 Act abating the applications before ITSC and restored the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessed by AO in the hands of the assessee for ay s: 2007-08 to 2013-14 were aggregating to the tune of Rs.34.43 crores, as against income declared by assessee of Rs. Nil for each of these assessment years. It is pertinent to mention that additions to the income of the assessee for ay s: 2007-08 to 2013-14 were made by AO while framing aforesaid assessments , mainly , inter-alia, on ground of (i) declaration made by assessee before ITSC of additional income of Rs. 65 lacs ,(ii) income based on incriminating material seized during the course of search and seizure operations conducted by Revenue u/s 132 of the 1961 Act, and (iii) denial of exemption u/s 11 and 12 of the 1961 Act by bringing to tax income declared by assessee in its return of income which was claimed exempt by the assessee . It is also pertinent to mention here that the assessee did not furnish details called for by the AO during the course of assessment proceedings conducted by AO, and hence the AO was constrained to frame assessments based on material on record, despite several opportunities granted by AO to assessee to furnish the details/explanations/evidences etc. during the course of assessment proceedings . Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts are to be audited and since the assessee is not recording its receipts in its books of accounts, it could not be said that the accounts reflect true and correct state of affairs and hence the assessee has violated conditions of registration u/s 12A of the 1961 Act. It was further observed that the assessee s income was exempt u/s 11 of the 1961 Act and hence there was no need to keep such donations out of books. The assessee has not furnished the names and addresses of donors , date and amount received from donors were also not given by the assessee .The ld. Pr. CIT(Central) observed that these cash donations cannot be said to be received out of genuine activities in the absence of details furnished by assessee. The ld. Pr. CIT(Central) also rejected the contentions of the assessee that these cash donations can be taxed as anonymous donations u/s 115BBC without cancelling registration of the assessee. It was observed that Section 115BBC deals with taxability of anonymous donations which are otherwise accounted for in books of accounts and not with the receipts/ donations which are not at all accounted for in books of accounts. It was observed by ld. Pr. CIT(Central) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her charges as approved by Government or AICTE etc. and are illegal receipts causing wreckage at the very fundamental of education system in our country and hence by no stretch of imagination, these ill-gotten receipts can be allowed to be recovered and educational institutions who are engaged in raising these ill-gotten money cannot be allowed to be given benefit of exemption u/s 11 and 12 of the 1961 Act . Since, I am setting aside the order dated 29.03.2019 passed by ld. Pr. CIT(Central) for denovo consideration and passing of fresh order(s) regarding cancellation of registration u/s 12AA(3) and withdrawal of approval u/s 80G(5) after considering entire material on record , the assessee is directed to produce all the relevant details of the donations and all other sums so received in the form of Building Fund, Corpus Fund, Development Fund, Donations etc. to prove that these are genuine receipts , and are neither bogus nor have any nexus/co-relation with the admission of students in the institutions run by the assessee. The ld. Pr. CIT(Central) shall verify whether there exists any nexus of these receipts with the admission of students in the institution run by the assessee, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely explained vis- -vis- reference to books of accounts and flow of money. The assessee has claimed itself to be a charitable entity and there is a prohibition that trustees and their relatives, concerns in which they or their relatives are interested shall not derive any benefit from the charitable trust. Reference is drawn to Section 13(2) and 13(3) of the 1961 Act. I have gone through the audited financial statements of the assessee for the financial year 200607 to 2017-18, which are placed in paper book(s) at page 254 to 524 and 730-741, and I have observed that several transaction of substantial amounts have been conducted by assessee, with Jyoti Hospitals Private Limited, Dr. Ashwani Kumar Bansal and Dr Vandana Bansal. The assessee has claimed exemption of income u/s 11 and 12 , by getting itself registered u/s 12A of the 1961 Act and the onus is on the assessee to prove by cogent evidences that no benefit was derived by trustees , their relatives or concerns in which they are interested etc. and provisions of Section 13(2) and 13(3) are not hit, and merely making balled and general statement is not sufficient nor is it sufficient to say that group entities have advanced mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years had since been passed , when the tribunal passed the appellate order dated 21.12.2018 and restored the matter back to the file of ld. CIT(A) and in my considered view the adjudication of these appeals by ld. CIT(A) and its outcome has direct bearing on the adjudication of cancellation of registration of the assessee u/s 12AA(3) and 80G(5) of the 1961 Act . In the interest of justice, it will be important that ld. CIT(A) expeditiously adjudicate all the appeals of the assessee which are pending before it , as the outcome of these appeals has in my considered view direct bearing on the decision regarding cancellation of registration u/s 12AA(3) and 80G(5) of the 1961 Act . In any case, the ld. Pr. CIT while denovo deciding the cancellation of registration u/s 12AA and 80G(5) of the 1961 Act will consider all the aspects covered by AO while framing assessment against the assessee for the relevant ay s, as it is well settled that material seized or collected by Revenue can be utilized for framing assessment or in any other proceedings conducted against the tax-payer. The decision of Hon ble Supreme Court in the case of Dr. Pratap Singh v. Director of Enforcement (1985) 155 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inadvertently obtained or was any misuse of multiple PAN and registration u/s 12A was made or attempted by assessee to derive undue benefits. It is also pertinent to mention here that a letter dated 10.02.2020 was received by tribunal (copy annexed to this order) , in which one Mr. Amresh Kumar Singh S/o Shri Vijay Bahadur Singh Residence of Village Tikaria Khurd, Post Khemipur, District Pratapgarh,U.P. , current address 16G/53G , Kazipur, Naini , Praygraj(U.P.) Phone No. 7355738401, has stated that he was former employee of Jeevan Jyoti Hospital and in his name businesses were shown by the assessee and he is facing huge tax demand. He has stated in the letter that entire information to this effect was already given to department. It is further stated by said Mr. Amrish Kumar Singh in the said letter that the assessee is not a charitable institution as is claimed by assessee. This letter dated 10.02.2020 was forwarded by Division Bench of the tribunal to both the rival parties for filing their response , in the hearing held by Division Bench of Allahabad-tribunal , on 11.02.2020. The Division Bench passed following interim order dated 11.02.2020 which stood recorded in order she ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court in the case of CIT(E) v. Batanagar Education and Research Trust , reported in (2021) 129 taxmann.com 30(SC) is relevant, wherein Hon ble Supreme Court held as under: This appeal challenges the judgment and order dated 9-10-2018 passed by the High Court at Calcutta in ITA No. 116 of 2018 setting aside (i) the order dated 25-2-2016 passed by Commissioner of Income Tax (Exemption) ( CIT for short) cancelling registration of the respondent Trust ( Trust , for short) under section 12AA of the Income-tax Act, 1961 ( the Act for short); and (ii) the order dated 13-9-2017 passed by the Income Tax Appellate Tribunal ( the Tribunal , for short) dismissing appeals arising therefrom. 2. The Trust was registered under section 12AA of the Act vide order dated 6-8-2010 and was also accorded approval under section 80G(vi) of the Act. 3. In a survey conducted on an entity named School of Human Genetics and Population Health, Kolkata under section 133A of the Act, it was prima facie observed that the Trust was not carrying out its activities in accordance with the objects of the Trust. A show cause notice was, therefore, issued by the CIT on 4-12-2015. 4. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pincha provided us with the details of the donors, cheque of the donations, letters of corpus donations etc. He also provided us with the names and bank a/c. details of the seven (7) persons, mentioned in Answer 13 to whom money has to be returned back through RTGS. He also collected the money receipts/80G certifications on behalf of the donors. Q. 19. The ledger copy for the period from 1-4-2014 to 4-9-2014 in respect of General Fund of your trust having details of the donors is being shown to you to identify the bogus donations along with bogus donors. Ans. After going through the list of the donors appeared in such ledger it is understood that the Donors whose names are written in capital letters under the sub-head Donation-13 , Donation-I and Donations-II having total amount of Rs. 6,03,07,550/- is bogus and out of which Rs. 5,96,29,973/- was returned back through RTGS to the above mentioned seven (7) persons following the instructions of the mediators. 5. On the basis of the material on record, the CIT came to the following conclusions: 6.1. The intention of the legislature to grant registration u/ss 12AA and 80G, to give the benefit u/s 11 to enco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celled the registration granted under section 12AA of the Act w.e.f. 1-4-2012. Consequently, the approval granted to the Trust under section 80G of the Act was also cancelled. 6. The matter was carried in appeal by the Trust by filing Income Tax Appeal Nos.756 912/Kol/2016 before the Tribunal. After considering the entire material on record, the Tribunal concluded as under: 13. We have given a very careful consideration to the rival submissions. It is clear from the statements of Secretary and Treasurer of SHG and PH that they were accepting cash and giving bogus donations. In the statement recorded in the survey conducted in the case of SHG and PH on 27-1-2015, it was explained that SHG PH's source of income was the money received in the form of donations from corporate bodies as well as from individuals. In the said statement it was explained that there were about nine brokers who used to bring donations in the form of cheque/RTGS to SHG and PH. The Donations received would be returned by issue of cheque/RTGS in the name of companies or organization specified by the nine brokers. SHG and PH would receive 7 or 8% of the donations amount. It was also stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ? (ii) Whether statement recorded in the course of survey under section 133A of the Act has any probative or evidentiary value? 8. It was submitted on behalf of Trust that it had received donations from various donors and the Trust was under no obligation to verify the source of the funds of the donor or whether those funds were acquired by performance of any unlawful activity. It was further submitted that the funds were applied for the purposes of trust and that there was no evidence to suggest that those funds were applied for any illegal or immoral purposes or that the Trust was a namesake and some other activities were being carried out. 9. After considering rival submissions, the High Court allowed the appeal with following observations: On the basis of the evidence and the authorities cited before the adjudicating bodies below, we say that the respondent revenue has not been able to establish the case so as to warrant cancellation of the registration of the appellant trust under section 12AA(3) of the Act. The respondent also has not been able to prove any complicity of the appellant trust in any illegal, immoral or irregular activity of the donors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs. In the above case before Hon ble Supreme Court, the trust was registered u/s 12AA of the 1961 Act vide order dated 06.08.2010 and it was also accorded approval u/s 80G(vi) of the 1961 Act, the survey u/s 133A of the 1961 Act took place on the entity namely School of Human Genetics and Population Health, Kolkata , and SCN was issued by CIT on 04.12.2015 proposing cancellation of registration . The CIT cancelled registration u/s 12AA and 80G with effect from 01.04.2012 , as it transpired that for financial year 2011-12 and onwards , the aforesaid tax-payers was engaged in accepting bogus donation which were by way of accommodation entries. The Hon ble Supreme Court reversed the decision of Hon ble High Court and held that the aforesaid tax-payer completely misused the registration granted u/s 12AA and 80G of the 1961 Act and Hon ble Supreme Court held that an entity which is misusing the status conferred upon it by Section 12AA of the 1961 Act is not entitled to retain and enjoy said status. The Hon ble Supreme Court held that the authorities were therefore, right and justified in cancelling the registration u/s 12AA and 80G of the 1961 Act. Thus, in view of authoritative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of Pronouncement : 20.05.2022 ORDER The Hon ble President vide order dated 31.1.2022 has nominated me as a Third Member on the point of difference between the members of the division Bench, under section 255(4) of the Income Tax Act, 1961 (Act). 2. The appeal by the Assessee before the Tribunal was against an order dated 29.3.2019 passed by the Pr.CIT(Central) (PCIT) cancelling registration granted to the Assessee u/s.12AA(3) w.r.e.f 1.4.2006 withdrawing approval granted to the Assessee u/s. 80G(5) of the Act, w.r.e.f. from the date on which the approval was granted i.e., 13.10.2009. The Hon ble JM took the view that registration u/s.12AA(3) and approval u/s.80G(5) was rightly cancelled by the PCIT. The Hon ble JM held that the registration/approval can be cancelled only prospectively i.e., from the previous year in which the Assessee sold the educational institutions and the activities of the Assessee ceased to exist. The Hon ble Accountant Member however took the view that the order cancelling of registration u/s.12A and withdrawing approval u/s.80G(5) has to be set aside remand to the CIT(E) for consideration de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made or attempted by assessee to derive undue benefits. 3. There was a difference of opinion on the question framed projecting the point of difference between the Hon ble JM and the Hon ble AM. At the time of hearing before me, the parties agreed that the following question, can be considered as reflecting the point of difference between the Hon ble JM and Hon ble JM: Whether in the facts and circumstances of the case and in law, the order passed by ld. Principal Commissioner of Income-tax, Central, Lucknow cancelling registration of the assessee u/s 12AA(3) w.e.f. 01.04.2006 and withdrawing approval granted u/s 80G with effect from 13.10.2009 is liable to be upheld but prospectively with effect from the date when the assessee sold its educational institution and consequently activities are claimed to have ceased to exist viz. financial year 2017-18(assessment year 2018-19) , or is liable to be set aside to the file of ld. Principal Commissioner of Income-tax for deciding afresh the entire issue of cancellation of registration u/s 12AA(3) and approval granted u/s 80G(5) of the Income-tax Act, 1961 retrospectively from the date since when the assessee misused its status o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. 2013-14 5,00,000 2,07,500 8. 2014-15 5,00,000 1,80,000 6. So far as sources of the said additional income offered by assesse before ITSC, the assessee has claimed that the said additional income offered by it in settlement application filed before ITSC has arisen out of variety of sources, one such sources being donation received from public at large. The assessee further claimed that these donations so received by it were meant for construction of school building and other infrastructure as also for other educational activities, and the same were directly invested in such activities, without recording in the books of accounts of the appellant trust and such utilization in educational activities were spread over in the Assessment Years : 2007-08 to 2014-15 and worked out to be Rs. 65 lacs in aggregate. The Revenue on its part filed Report in Rule 9 in the case of the assessee before ITSC, and total additions to the income of the assessee to the tune of Rs. 10,37,96,184/- were proposed by Revenue, as in view of Revenue the assessee was not engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y s , which stood dismissed by ld. CIT(A), vide separate appellate orders all dated 10.07.2018, passed by ld. CIT(A) for Assessment Years: 2007-08 to 2013-14. The assessee filed second appeal with Division Bench of Income Tax Appellate Tribunal, Allahabad, wherein tribunal restored the matter back to the file of ld. CIT(A) for fresh adjudication, vide composite order dated 21.12.2018 passed by tribunal in ITA No. 322 to 328/Alld/2018 for Assessment Years : 2007-08 to 2013-14. 10. It is the aforesaid background of facts, the PCIT issued Show Cause Notice(SCN) for cancellation of registration u/s 12AA(3) , dated 13/18.07.2017. After considering the reply of the assessee to the show cause notice, the PCIT passed the order dated 29.3.2019, impugned in the appeal, cancelling registration granted to the assesee u/s 12AA(3) w.e.f. 01.04.2006 and withdrawing approval granted u/s 80G with effect from 13.10.2009. 11. Though number of instances have been cited by the PCIT in the impugned order for cancelling registration, three reasons have been cited as principal reasons for cancelling registration. The first reason was that the activities of the assessees are being carried out for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstantial interest. The assessee has not disputed these transactions of transfer of funds or advance given to the trustees. However, the explanation of the assessee was that the assessee trust has received loans and advances from those concerns which is more than the repayment amount as cited by the PCIT. the Hon ble JM held that there are loan and advances received by the assessee trust from the group concerns in which the trustees of the assessee trust were having substantial interest and the details of the amount of loans and advances received by the trust as per the balance-sheet as on 31st March, 2013 as under:- Jyoti Mediservices Limited Rs. 82,30,350/- NavjeevanPediatrics Pvt Ltd Rs. 49,42,061/- Vandana Women Hospital Rs. 11,90,000/- Total Rs. 1,43,62,411/- The Hon ble JM therefore held that it was a matter of record that the assessee trust received loan and advance from the group concerns total amounting to Rs. 1,43,62,411/- which were subsequently repaid by the assessee to the tune of Rs. 1,35,74,709/-. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncellation of registration granted under section 12A of the Income Tax Act. In view of the above facts and circumstances of the case, the Hon ble JM upheld the order of cancellation of the registration as well as granted under section 12A as well as approval granted under section 80G(5). 15. As regards the second issue whether the cancellation shall have with retrospective effect w.e.f. 1.4.2006 as held by the Pr. CIT or would be retrospective, the Hon ble JM held relied on the decision of the Hon ble Jurisdiction High Court in the case of ACIT vs. Agra Development Authority (2018) 90 taxman.com 282 (All) 407 ITR 562(All) wherein it was held in para 50 to 52 as under:- 50. Then, there is nothing in the language of Section 12AA(3) of the Act that may suggest registration of the assessee may be cancelled with retrospective effect. The use of the words or have obtained registration at any time under Section 12-a of the Act added by amendment w.e.f. 01.06.2010 only indicate that the Commissioner was vested with the power to cancel a registration that may have been granted to an assessee at any time prior to the aforesaid amendment itself. However, it does not indicate that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval u/s.80G(5) of the Act. The first reason given by him for doing so are that in the application filed by the assessee before the ITSC it had admitted receipt of donations but in assessment proceedings as well as in the proceedings for cancellation of registration u/s.12AA(3), the assessee did not provide details of donations or sums received but to prove its genuineness, like name and address of the person, purpose of donation etc. According to the Hon ble AM there is evidence of the assessee having received, from FY 2006-07 onwards, large sums of money towards, donations, corpus funds, building fund, Development fund etc., which stood credited in its books of accounts. Educational institutions in India illegally demand capitation fee and other forced amount of money by way of corpus fund, building fund, development fund, donations etc., from students/parents of students, while admitting students in the institution. These receipts are illegal causing wreckage and very fundamental of education system in our country. Therefore, the matter should be set aside for de novo consideration by the PCIT. The Hon ble AM further directed the assessee to provide the relevant details of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tees and their relatives, concerns in which they or their relatives are interested shall not derive any benefit from the charitable trust. Reference is drawn to Section 13(2) and 13(3) of the 1961 Act. I have gone through the audited financial statements of the assessee for the financial year 2006-07 to 2017-18, which are placed in paper book(s) at page 254 to 524 and 730-741, and I have observed that several transaction of substantial amounts have been conducted by assessee, with Jyoti Hospitals Private Limited, Dr. Ashwani Kumar Bansal and Dr Vandana Bansal. The assessee has claimed exemption of income u/s 11 and 12 , by getting itself registered u/s 12A of the 1961 Act and the onus is on the assessee to prove by cogent evidences that no benefit was derived by trustees , their relatives or concerns in which they are interested etc. and provisions of Section 13(2) and 13(3) are not hit, and merely making balled and general statement is not sufficient nor is it sufficient to say that group entities have advanced more sum of money to assessee than what is advanced by the assessee to the trustees , their relatives or concerns in which trustees are interested , and hence consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M, the above decision of Hon ble Supreme Court has to be read as conferring power on the revenue to cancel registration with retrospective effect for the following reasons: In the above case before Hon ble Supreme Court, the trust was registered u/s 12AA of the 1961 Act vide order dated 06.08.2010 and it was also accorded approval u/s 80G(vi) of the 1961 Act, the survey u/s 133A of the 1961 Act took place on the entity namely School of Human Genetics and Population Health, Kolkata , and SCN was issued by CIT on 04.12.2015 proposing cancellation of registration . The CIT cancelled registration u/s 12AA and 80G with effect from 01.04.2012 , as it transpired that for financial year 2011-12 and onwards, the aforesaid tax-payers was engaged in accepting bogus donation which were by way of accommodation entries. The Hon ble Supreme Court reversed the decision of Hon ble High Court and held that the aforesaid tax-payer completely misused the registration granted u/s 12AA and 80G of the 1961 Act and Hon ble Supreme Court held that an entity which is misusing the status conferred upon it by Section 12AA of the 1961 Act is not entitled to retain and enjoy said status. The Hon ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding those who first heard it. 23. As a third member, I have to confine myself to the point of difference between the members who constituted the Division Bench. The point of difference is firstly on the question whether the order of CIT(E) cancelling registration u/s.12AA(3) of the Act has to be upheld as was the opinion of the Hon ble JM or the impugned order has to be set aside to the CIT(E) for examining de novo serious allegations made against the assessee and calling upon the assessee to divulge all information to CIT(E) to enable CIT(E) to pass a comprehensive order, as proposed by the Hon ble AM. The second point of difference is as to whether the registration granted u/s.12A can be cancelled with retrospective effect as was opined by the learned AM or can be cancelled only prospectively, as was held by the learned JM. 24. On the first point of difference, I may first refer to the provisions of Sec.12AA(3) of the Act, which reads thus: (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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A of the Act subsists has to go in to the question, as to whether the income has been applied for charitable purposes and to the extent contemplated by Sec.11 12 of the Act. Even in a case, where the trust or charitable organization applies its income for charitable purposes, but does not have registration u/s 12A of the Act, such trust or charitable organization cannot claim the benefit of Sec.11 12 of the Act. The apprehensions expressed by the learned AM have to be addressed or looked into in accordance with law and the parties should be left to explore remedies open to the them in law. Therefore, I agree with the learned JM that the impugned order cancelling registration has to be upheld and there is no necessity to set aside the impugned order and remand the issue for de novo examination by the CIT(E). 26. On the question whether the registration already granted can be cancelled retrospectively, I find that the decisions referred to by the Hon ble JM rendered by the Hon ble Allahabad High Court in the case of Agra Development Authority (supra) and the Hon ble Rajasthan High Court in the case of Indian Medical Trust Vs. PCIT (supra) are decisions rendered in cases whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In Madhav Rao Jiwaji Rao Scindia Bahadur and Ors. v. Union of India this Court cautioned: It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment . 27. I, therefore, agree with the view of the learned JM that under section 12AA(3) of the Act, registration granted under section 12A of the Act cannot be cancelled with retrospective effect. 28. The appeal will now be listed before the Division Bench for passing orders in accordance with the majority opinion. Pronounced in the open court on the date mentioned on the caption page. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 12A and withdrawing approval under section 80G(5) has to be set aside and the matter be remanded to the record of the Pr. CIT(Exemption) for consideration de novo. The learned Accountant Member also took a view that the Pr. CIT(Exemption) has powers to cancel registration with retrospective effect i.e. from the date when the assessee infringes conditions subject to which registration under section 12A was granted and misused the status of the registered trust. Accordingly the question of difference was referred by the Hon'ble President, vide order dated 31.01.2022 to the Third Member (Hon'ble Vice President, Bangalore Zone, Bangalore). As the Members of Division Bench framed separate question of difference the Hon'ble Third Member framed the question / point of difference and decided the same vide order dated 20.5.2022 as under:- 3. There was a difference of opinion on the question framed projecting the point of difference between the Hon ble JM and the Hon ble AM. At the time of hearing before me, the parties agreed that the following question, can be considered as reflecting the point of difference between the Hon ble JM and Hon ble JM: Whether i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment years 2007-08 to 2014-15, as detailed hereunder: S.No. Assessment Year Additional Income declared before ITSC (In Rs.) Tax Paid (In Rs.) 1. 2007-08 10,00,000 6,31,000 2. 2008-09 10,00,000 5,94,000 3. 2009-10 10,00,000 5,57,000 4. 2010-11 10,00,000 5,20,000 5. 2011-12 10,00,000 4,83,000 6. 2012-13 5,00,000 2,25,000 7. 2013-14 5,00,000 2,07,500 8. 2014-15 5,00,000 1,80,000 6. So far as sources of the said additional income offered by assesse before ITSC, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nil 1,40,62,700/- 08.08.2017 153A read with Section 143(3) 4. 2010-11 Nil 2,25,97,490/- 08.08.2017 153A read with Section 143(3) 5. 2011-12 Nil 12,55,72,780/- 08.08.2017 153A read with Section 143(3) 6. 2012-13 Nil 9,01,24,550/- 08.08.2017 153A read with Section 143(3) 7. 2013-14 Nil 5,86,00,389/- 08.08.2017 Section 143(3) Total Nil 34,43,24,119/- 9. The assessee filed first appeal before ld. CIT(A) for all these ay s , which stood dismissed by ld. CIT(A), vide separate appellate orders all dated 10.07.2018, passed by ld. CIT(A) for Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re certain violations on account of unanimous unaccounted donations received by the assessee which were surrendered before the Income Tax Settlement Commission and offered to tax under section 115BBC. Therefore, this is purely a matter of assessment and does not fall in the ambit of the activities of the assessee not being carried out in accordance with the objects of the assessees trust or the activities of the assessee trust are not genuine. 13. With regard to the second ground for cancellation of the registration is cited by the Pr. CIT viz., giving advance or transfer of fund by the assessee trust to the trustees namely Dr. A.K Bansal and Dr. Vandana Bansal through Jyoti Hospital Pvt. Ltd., the Hon ble JM took the view that the assessee has not disputed the transactions of advance to Dr. A.K. Bansal and Dr. Vandana Bansal as these amounts of Rs. 13,20,26,382/- were transferred by the assessee trust to Jyoti Hospital Pvt. Ltd. Similarly, a sum of Rs. 1,35,74,790/- were also treated as the benefit given to the trustees through the concerns in which they have substantial interest. The assessee has not disputed these transactions of transfer of funds or advance given to the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as the activities of the assessee are not genuine or are not being carried out in accordance with the objects of the assessee trust. Therefore, to the extent of these transactions and incidents as discussed above, the Hon ble JM held that these transactions would fall in the ambit of section 12AA(3) of the Income Tax Act so as to invite the cancellation of registration. 14. However, the Hon ble JM held that when the assessee has sold all its educational institutions in the year 2017 itself then it would amount to cessation of the charitable activities of the assesse trust and therefore, the assessee trust would no longer be entitled for the benefit of section 11 and 12 of the Income Tax Act. Once the charitable activity of the assessee are ceased to exist, the same would fall in the category that the activities are not being carried out in accordance with the objects of the trust. Hence the undisputed fact of sale of all the educational institutions by the assessee trust would definitely lead to disentitlement of benefit under section 11 and 12 of the Act and consequently cancellation of registration granted under section 12A of the Income Tax Act. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2019) 315 ITR 382 (All) in the case of Indian Medical Trust vs. Pr. CIT 414 ITR 296 (Raj). Accordingly, the Hon ble JM modified the order of the PCIT in so far as the cancellation of the registration with retrospective effect from 1.4.2006 and cancellation of the approval under section 80G w.e.f. 13.10.2009 and held that the cancellation would be with effect from the previous year in which the assessee has sold the education institutions and the activities of the assessee cease to exist and therefore not being carried out in accordance with the objects of the assessee trust. In conclusion, the cancellation of registration under section 12A as well as withdrawal of approval under section 80G(5) were upheld but with effect from the financial year in which the activity of the assessee ceased to exist. 17. The Hon ble AM took the view in paragraph 5.2 of his order that he differs from the decision of the Hon ble JM for the reason that the matter needs to be set aside and resorted to the file of the PCIT for denovo consideration of issue of cancellation of registration u/s. 12AA(3) and withdrawal of approval u/s.80G(5) of the Act. The first reason given by him for doing so are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nursing School made payment to trustee s company as under:- Rs. 13,00,000/- to M/s Jyoti Hospital Pvt. Ltd. (amount transferred) Rs. 20,26,382/- to M/s Jyoti Hospital Pvt. Ltd.(amount advanced) It is contended by Revenue that from the above facts it is evident that the trust is diverting fund for the benefits of trustees or related entities of the trustees and hence the activities of the trust are not being genuinely carried as per the objects of the trust and also violating the conditions of clause (ii) of 80G(5). The assessee has given a balled and general statement before the Bench that from the other group entities, the sum received by assessee was higher and hence there is no net amount advanced by the assessee to trustee. This arguments is also fallacious, as every entity is a separate entity and hence all the transactions with interrelated parties who are hit by Section 13(2) and 13(3) of the 1961 Act are to be separately explained vis- -vis- reference to books of accounts and flow of money. The assessee has claimed itself to be a charitable entity and there is a prohibition that trustees and their relatives, concerns in which they or their relatives are inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r registration can be cancelled with retrospective effect, the Hon ble AM was of the view that in the light of the decision of the Hon ble Supreme Court in the case of CIT(E) Vs. Batanagar Education and Research Trust, 129 Taxmann.com 30(SC). In that case the assessee trust enjoyed registration u/s.12A of the Act vide order dated 6.8.2010. Consequent to a Survey u/s133A of the Act by the revenue on 24.8.2015, it transpired that the trust did not carry out its activities in accordance with objects of the Trust. A show cause notice u/s.12AA(3) of the Act for cancellation of registration was issued by the CIT(E) dated 4.12.2015 and by an order dated 25.2.2016 the CIT(E) cancelled the registration granted to the trust w.e.f 1.4.2012. On appeal by the Assessee to the Tribunal against the said order, the Tribunal upheld the same. On appeal against the order of the Tribunal, the Hon ble Calcutta High Court reversed the order of the Tribunal. On further appeal by the Revenue to the Hon ble Supreme Court, the order of the CIT(E) was upheld and the order of the High Court was reversed. 21. According to the Hon ble AM, the above decision of Hon ble Supreme Court has to be read as conferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted by assessee in its defense shall be admitted by ld. Pr. CIT in the in the interest of justice and adjudicated on merits in accordance with law. I order accordingly. 22. I have heard the submissions of the learned counsel for the Assessee and the learned DR. Their submissions were in support of the order of the learned JM and learned AM, respectively. The submissions went to the extent of even questioning the validity of the order passed by the CIT(E) u/s.12AA(3) of the Act. Section 255 (4) of the Act provides as follows: (4) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President of the Appellate Tribunal for hearing on such point or points by one or more of the other members of the Appellate Tribunal, and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case, including those who first heard it. 23. As a third member, I have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts on the other conclusions in the impugned order of the CIT(E) viz., receipt of bogus donations and use of trust funds for the personal benefit of the trustees. As I have already stated the scope of the powers u/s. 12AA(3) of the Act are limited and even if on one ground the order is sustained, there is no necessity to go into other grounds on which the grant of registration was cancelled by the CIT(E). Therefore, no purpose will be served by setting aside the order and remanding the same to CIT(E) to pass a more comprehensive order. The apprehensions expressed by the learned AM in his order are all matters which may not be germane to the question of cancellation of registration as the cancellation of registration is upheld on one ground viz., sale of the very institution which was to carry out the charitable activities. In this regard, the main aspect which has to be taken note of is the principle that the grant of registration u/s12A of the Act, does not automatically enable an assessee to claim exemption u/s 11 12 of the Act. The AO even in a case, where a trust or charitable organization for which registration u/s 12A of the Act subsists has to go in to the question, as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be cancelled with retrospective effect. Therefore it cannot be said that the ratio laid down in the aforesaid decision is to the effect u/s. 12AA(3) of the Act, registration granted can be cancelled with retrospective effect. Ratio Decidendi ordinarily means the reason for deciding the case. It must come from disputes of law, not disputes of fact. Ratio Decidendi must be argued in court and the facts of the precedent case shape the level of generality to which the later courts decide the level of generality. The law in this regard is very clear as would be evident from the observations of the Hon ble Supreme Court (in para 37 of its judgment) in the case of Commissioner of Income-Tax vs M/s. Sun Engineering Works (P.) Ltd. 1992 Supp 1 SCR 732 ..It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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