9911796707
TMI Blog2022 (8) TMI 727X X X X Extracts X X X X X X X X Extracts X X X X ..... leading to the controversy emanate from the record are that the assessee trust was formed vide trust deed dated 01st April, 1990 with the main object to provide education and set up research centers in the field of medical science. The assessee trust was granted registration under section 12A on 29.01.1999 and was also granted approval under section 80G(5) on 13.10.2009. Thereafter a search and seizure action under section 132 of the Act was carried out in respect of Jeevan Jyoti Group and assessee trust was also claimed to have been covered under the said search and seizure action. Pursuant to the search and seizure action under section 132 of the Act, the Assessing Officer issued notice 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of the same by the successor " Pr. CIT" by virtue of 2nd notice dated 20.12.2018 (and that too on the ground that were similar to the issues raised in 1st show cause notice dated 123.07.2019)are wholly vitiated; 2. Order dated 29.03.2019 passed by the Pr. CIT, cancelling the registration granted to the appellant earlier under section1 2 A and withdrawal of notification (approving donations for exemption under section 80G (5) in the hands of the donors) based on the assumption that appellant had been a person subjected to search and seizure action' within the meaning of section 132(1) of the Act, is wholly misplaced as is evident from the particulars of Panchnamas and other 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 unju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT, to allow it (the appellant) to take such additional grounds and/or to delete the grounds as had been taken hereinbefore." 4. The ground no. 1 is regarding validity of the impugned order passed by the Pr. CIT due to two show cause notices were issued. The learned AR of the assessee has submitted that the Pr. CIT issued two show cause notices dated 13.07.2017 and 20.12.2018. The assessee has duly replied the first show cause notice dated 13.07.2017 vide letter dated 01.08.2017 and thereafter no action was taken for cancellation of registration on the basis of the first show cause notice dated 13.07.2017. He has thus pleaded that it is deemed 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 notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust, instead of replying as how the assessee trusts fulfills for registration u/s 12A, has been more harping on irrelevant issues by picking some lines here and there out of context or raising the technical issues of validity of search or assessments u/s 153A in case of trust or restrictions for use of material facts admitted by applicant before ITSC or that in view of earlier reply given on 1.8.2017, there was no scope of issue of fresh show cause notice u/s 12AA93), etc. as regards the contention that the earlier show cause notice dated 18/7/2017 was earlier concluded in view of show cause on 20/12/2018, the same is totally incorrect. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant material on record. The validity of the search is not an issue to be considered and decided in the present appeal filed against the order under section 12AA(3) of the Act. The assessee has already approached the Hon'ble High Court against the notices issued under section 153A but could not succeed. Further the matter was carried to this Tribunal against the assessment orders passed under section 153A which were set aside to the record of the CIT(A) for passing the fresh order. Therefore, the objections of the assessee against the validity of the proceedings initiated under section 153A is irrelevant so far as the order 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 fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Rs. 65 Lac would not amount to render the activity of the assessee not genuine or not being carried out in accordance with the objects of the trust. As regards, the allegation of granting benefit or working for the benefit of the trustees of the assessee trust namely Dr. Ashwani Kumar Bansal and Dr. Vandana Bansal as well as their family members, the said observation of the Pr. CIT is not based on correct facts. He has submitted that certain transactions of payments to the companies owned by the trustees of the assessee on duly recorded in the books of accounts however, these transactions are only repayment of the amounts 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther contended that the Pr. CIT has referred and relied upon the newly introduced section 115 TD w.e.f. 1.6.2016 for the purpose of taxing the accredited income due to conversion into for not eligible for registration under section 12AA from the date on which the registration was granted till the date of cancellation of registration. He has submitted that the said section is introduced for the purpose of levy of exit tax where the charitable institution ceases to exist or convert into non charitable organization whereas in the case of the assessee there is no such conversion or cessation of trust. The trust is still 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 3 of section 12AA did exist to satisfy the Pr. CIT to pass the impugned order cancelling the registration of the assessee trust. The second issue arises is whether the cancellation of registration shall be applicable retrospective or prospective. As regards the conditions as prescribed under sub section 3 of section 12AA of the Act, the Pr. CIT has cited number of transactions and activities of the assessee which he considered as not being carried out in accordance with the objects of the assessee trust but in his view the activities of the assessees are being carried out for the benefit of the 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is that the assessee trust has received loans and advances from those concerns which is more than the repayment amount as cited by the Pr. CIT. We find that there are loan and advances received by the assessee trust from the group concerns in which the trustees of the assessee trust are 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/- Navjeevan Pediatrics Pvt Ltd 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sused the other PANs allotted to the assessee. Therefore, if there is a violation of the provisions of the law by taking multiple PANs, the consequences of such violation are provided under the Act itself but so long there is no misuse of those PANs it cannot be presumed that the activities of the assessee are not genuine. In view of the above facts and circumstances of the case, we uphold the cancellation of the registration as well as granted under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Interpretation of the said provision has to be harmonious rather than being prejudicial to the institutions as it would instigate and create a fear of the income Tax Department. I find support in my opinion from the following cases with reference to the issue of cancellation or withdrawal of registration with retrospective effect: A. In the case of Oxford Academy for Career Development (supra), it was thus observed that: 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 pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the act of cancellation of registration has serious civil consequences. In absence of any legislative intent expressed to suggest that the legislature had empowered the CIT to cancel the assessee's registration under s. 12A of the Act with retrospective effect,, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground 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 followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 12,55,72,780/- 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/- 2.2 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 ay's: 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 ay's : 2007-08 to 2013-14. The ld. Pr. CIT(E) has recorded in his order dated cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the trust running in crores are shown as ' Amount applied for charitable purposes' in each year , but no details of such charitable purposes are furnished during assessment proceedings for verification. The ld. Pr. CIT(Central) further observed in the said SCN that as per Balance Sheet of the assessee for ay: 2013-14, the assessee has given advance of Rs. 89,50,000/- to Dr. A K Bansal through Jyoti Hospital Private Limited , and an advance of Rs. 46,24,790/- to Dr. Vandana Bansal through Jyoti Hospital Private Limited, which evidences that the trust is diverting funds for the benefits of the trustee. It was further observed by ld. Pr. CIT(Central) in the SCN that the assessee has diverted the sale proceeds of assets of the trust for repayment of outstanding bank loans of the trustee's group concern and not utilized for betterment of charitable trust. The assessee had sold Building of Jeevan Jyoti Public School at Bheerpur , and Building of Jeevan Jyoti Nursing School at Apna-gaon , Rewa Road , Allahabad in September, 2017, and sale proceeds utilized for payment of bank loans of trustee's group concern. The ld. Pr. CIT(Central) further observed in SCN that in ay: 2011-12 , on seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Panchnama's prepared by the Authorized Officers) where name of the assessee appeared. The assessee claimed that it had already objected before the AO as to framing of assessment u/s 153A of the 1961 Act, because as per assessee it was never searched by Revenue u/s 132(1) of the 1961 Act. The assessee also submitted before ld. Pr. CIT(Central) in response to SCN, that notwithstanding the inherent illegality of proceedings u/s 153A of the 1961 Act, the assessee has filed an application for settlement before ITSC on 24.02.2015 and sum of Rs. 65 lacs were declared as an additional income for ay's: 2007-08 to 2014-15. The assessee also submitted that disclosure of this additional income of Rs. 65 lacs was primarily made with reference to seized material which indicated investment in construction of school building and other infrastructure of the assessee-trust, exclusively used for the purposes of imparting education. It was claimed that such seized material already formed part of the report prepared by the AO under Rule 9 filed with ITSC. The assessee also claimed that the assessee's case has been abated by ITSC vide order dated 17.08.2016 by invoking provisions of Section 245HA of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) observed that the assessee was approved u/s 80G(5) and it was obligated to issue proper receipts to donors under clause (c) of Section 80G(5)(i) so as to enable donors to claim deduction under the 1961 Act. It was further observed that the assessee was under obligation to maintain separate books of accounts for receipts as per clause (iv) of Section 80G(5) and also account for such receipts in such books of accounts to fulfill the conditions for applying such receipts for charitable purposes as per objects of the trust and also clause (b) of Section 12A(1) of the 1961 Act which deals with conditions for registration. It was further observed by ld. Pr. CIT(Central) that cash donations were not recorded in the books of accounts and hence it could not be said that true and correct books of accounts were maintained by assessee. It was further observed that one of the condition of registration is that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt transferred) Rs. 20,26,382/- to M/s Jyoti Hospital Pvt. Ltd.(amount advanced) 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). (ii) Further as per schedule-5 of fixed assets the assessee has transferred the funds for investment in assets as capital expenditure. The details of transaction in trust is as under:- Building under construction at Bheerpur Rs. 2,77,98,129/- Building under construction for Aapna Gaon Rs. 5,25,69,129/- However, as per the latest information, the Jeevan Jyoti Public Scholl building at Bheerpur and Jeevan Jyoti Nursing School building Apnagaon, Rewa Road , Allahabad are already sold in September 2017 and sale proceeds are utilized for repayment of outstanding bank loans of the trustee's group concerns and not utilized for the purposes of the trust of the charitable trust. The capital assets of the trust have therefore been transferred and the funds therefrom have not been utilized for purposes of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Anr. v. Director of Enforcement & ors. (1985) 155 ITR 166(SC). The ld. Pr. CIT(Central) also rejected the contentions of the assessee that the admission of additional income by assessee before ITSC cannot be used in any other proceedings, as in the opinion of ld. Pr. CIT(Central) admission of additional income by assessee in an application filed before ITSC will bind the assessee and it cannot now retract from its own admission merely because its application before ITSC had abated, in the proceedings conducted for cancellation of registration u/s 12AA of the 1961 Act. The ld. Pr. CIT(Central) also rejected the contentions of the assessee that source of receipts is not relevant and what is relevant is only utilization of receipts as contended by assessee before ld. Pr. CIT(Central). It was observed by ld. Pr. CIT(Central) that if sources are not to be seen , then provisions of Section 2(15) would be rendered otiose. It was observed that test of utilization would come into play only when the test of source is not under question. The ld. Pr. CIT(Central) observed that the source of unaccounted receipts under the garb of anonymous donations itself is under grave suspicion , as also g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period commencing from financial year 2006-07 relevant to ay: 2007-08 till ay:2014-15. The ld. Pr. CIT(Central) held that cancellation of registration u/s 12AA(3) is to be given effect retrospectively from the date from which the assessee-trust was found to be violating conditions of 12A registration i.e. 01.04.2006. The ld. Pr. CIT(Central) referred to Constitution Bench of Hon'ble Supreme Court decision in the case of Commissioner of Custom(Import) v. Dilip Kumar and Company (2018) 95 taxmann.com 327(SC), to hold that provisions of Section 12AA(3) is to be interpreted strictly.He also referred to decision of Hon'ble Karnataka High Court in the case of Navodaya Education Trust v. UOI, w.p. no. 34683472/2018. The decision of Bangalore-tribunal in the case of Vidya Sewa Sangathna v. CIT, Hubli 71 taxmann.com 152 was also referred by ld. Pr. CIT(Central) , to hold that registration granted u/s 12A can be cancelled with retrospective effect subject to specified conditions as specified in Section 12AA(3). The ld. Pr. CIT(Central) also referred to Hon'ble Supreme Court having admitted SLP in the case of PCIT v. JIS Foundation 257 Taxman 261 (SC). It was also observed by Ld. Pr. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of hearing , and hence for the sake of brevity the same are not repeated. 4. So far as ground number 1 and 2 raised by the assessee in memo of appeal filed with tribunal, which concerns itself with raising challenge to second notice issued by ld. Pr. CIT(Central) proposing to cancel registration u/s 12AA(3) , and also raising challenge to legality of search conducted by Revenue u/s 132 (1) against the assessee , I am in agreement with decision of my ld. Brother Hon'ble Judicial Member , and there is no divergence of my view on the same vis-à-vis view of my ld. Brother Hon'ble Judicial Member. Thus, accepting the view of my ld. Brother Hon'ble Judicial Member as discussed in para 4 to 10 of his order dated 20.10.2021, I dismiss ground number 1 and 2 raised by assessee in memo of appeal filed with tribunal. I order accordingly. 5. So far as ground number 3 to 9 are concerned, my ld. Brother Hon'ble Judicial Member has given his findings and conclusion in para 14 to 19 of his order dated 20.10.2021. In nut-shell, my ld. Brother Hon'ble Judicial Member has upheld cancellation of registration u/s 12A and withdrawal of approval u/s 80G(5) with effect from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 Act. Pursuant to search and seizure operations as claimed to be conducted by Revenue u/s 132 of the 1961 Act which is although disputed by the assessee, the AO issued notices to the assessee, u/s 153A of the 1961 Act. In response to notices 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 ITSC , New Delhi on 24.02.2015 u/s 245C, wherein additional income of Rs. 65,00,000/- was disclosed by the assessee-trust for the assessment years' 2007-08 to 2014-15 in SOF filed with ITSC, 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 5,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for ay: 200708 to 2014-15 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 12,55,72,780/- 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/- As could be seen that the income in aggregate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80G(5) and it was obligated to issue proper receipts to donors under clause (c) of Section 80G(5)(i) so as to enable donors to claim deduction under the 1961 Act. It was further observed by ld. Pr. CIT(Central) that the assessee was under obligation to maintain separate books of accounts for receipts as per clause (iv) of Section 80G(5) and also account for such receipts in such books of accounts to fulfill the conditions for applying such receipts for charitable purposes as per objects of the trust and also clause (b) of Section 12A(1) of the 1961 Act which deals with conditions for registration. It was further observed by ld. Pr. CIT(Central) that cash donations were not recorded in the books of accounts and hence it could not be said that true and correct books of accounts were maintained by assessee. It was further observed by ld. Pr. CIT(Central) that one of the condition of registration is that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee on the other hand is advancing arguments, that there is no relevance of seeing the sources of receipts. This argument of the assessee is fallacious and is hereby rejected. I have observed while going through the audited accounts of the assessee and institution run by it, for the financial year 2006-07 onwards, which are placed in paper book(s) at page number 254 to 524 and page 730732 , that the assessee has received large sums of money towards Donations, Corpus funds, Building fund , Development fund etc. which stood credited in its books of accounts. It is not uncommon that 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 the students, while admitting students in the institution, which sum(s) of money so raised are much in excess of fees and other 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rustee'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 inter-related parties who are hit by Section 13(2) and 13(3) of the 1961 Act are to be separately explained vis-à-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 benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue as to diversion of funds to group entities. The onus is on assessee to bring on record all cogent material in its defense. The assessee had filed first appeal before ld. CIT(A) against assessment orders passed by AO pursuant to search for all these ay's , which stood dismissed by ld. CIT(A) in first round of litigation , vide separate appellate orders all dated 10.07.2018, passed by ld. CIT(A) for ay's: 2007-08 to 2013-14. The assessee filed second appeal with Division Bench of Allahabadtribunal, who 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 ay's : 2007-08 to 2013-14. These appeals for ay: 2007-08 to 201314 are stated to be presently lying pending before ld. CIT(A) for fresh adjudication , in pursuance to directions of tribunal vide appellate orders dated 21.12.2018. Almost three 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted based on facts and circumstance of the case , a comprehensive order covering all aspects/issues having bearing on cancellation of Registration u/s 12AA(3) and approval u/s 80G(5) of the 1961 Act need be passed, covering all the instances of infringement of conditions attached to registration u/s 12A. This would require detailed analysis of the financial statements and the other relevant material by the authorities. The assessee on its part is directed to file all relevant details and co-operate in the proceedings, otherwise presumption will be drawn against the assessee. Reference is once again drawn to provision of Section 114(g) of The Indian Evidence Act, 1872. Since, I am setting aside matter back to the file of ld. Pr. CIT for denovo determination of the matter, the issue of multiple PAN and registration u/s 12A obtained by assessee shall also be looked into by ld. Pr. CIT to see whether it was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint also lead to serious prejudice , harassment and inconvenience to the person against whom such frivolous complaint is filed, and such frivolous complaints also have its own legal consequences against the person who has filed such frivolous complaint. Now , coming to the contentions of the assessee that the registration granted u/s 12A of the 1961 Act cannot be cancelled with retrospective effect, in my considered view, this argument cannot be accepted as , in case it is found that the assessee has infringed the conditions of registration and misused the registration u/s 12A of the 1961 Act from earlier period , the Revenue shall be within its power to cancel registration u/s 12AA(3) from the earlier date from which misuse of the registration or infringement of conditions of registration u/s 12A took place. The Recent decision of Hon'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 25-2-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twana Syndicate 2. P.C. Sales Corporation 3. Kalyani Enterprises 4. Riya Enterprises 5. Laxmi Narayan Traders 6. Hanuman Traders 7. Rani Sati Trade-cum-Pvt. Limited These payments were booked as capital expenditure under the head Building. Q. 14. In response to the earlier question you have stated that you were "instructed". Who gave you the instruction? Ans. I can remember only one name right now, that is Shri Gulab Pincha, Mob No. 9831015157. He was the key person for providing a large part of bogus donation received which was immediately returned back to the different parties in the guise of payments towards capital expenditure in building. We do now know any details in respect of the donors on behalf of whom Shri Gulab Pincha acted as a middleman. Shri 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e received through corpus donation in cash beyond-the-objects. The society was found to be involved in hawala activities. (e) Corpus donation received is not voluntary, merely an accommodation entry and fictitious. (f) Activities of the trust are not genuine as well as not being carried out in accordance with its declared objects. Assessee's case is covered within the 60th limb of Section 12AA(3). (g) Even ingenuine and illegal activities carried on by assessee through money laundering do not come within the conceptual framework of charity vis-avis activity of general public utility envisaged the Income Tax Act as laid down in section 2(15)." The CIT, therefore, invoked the provisions of section 12AA(3) of the Act and cancelled 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celled u/s. 12AA(3) of the Act, and was rightly cancelled by the CIT(E). We therefore, uphold his orders and dismiss both the appeals by the Assessee." With this view, the appeals preferred by the Trust were dismissed. 7. The Trust being aggrieved, filed Income Tax Appeal No. 116 of 2018 before the High Court. By its order dated 4-7-2018, following questions were framed as substantial questions of law: "(i) Whether the Tribunal and the Commissioner of Income Tax (Exemptions) were right in law in directing the cancellation of registration of the Appellant granted under section 12AA to the Appellant Trust on the ground that the Trust had received bogus donation from School of Human Genetics and Population Health? (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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under sections 12AA and 80G of the Act. 12 The High Court completely erred in entertaining the appeal under Section 260A of the Act. It did not even attempt to deal with the answers to the questions as aforesaid and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid. In our view, this appeal, therefore, deserves to be allowed. 13. Setting aside the judgment and order presently under challenge, we allow this appeal and restore the order passed by the CIT and the Tribunal. No 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 y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 162, Lowther Road, Bai Ka Bagh, Allahabad. PAN : AAAJJ 4359 H Vs. The Principal Commissioner of Income-Tax (Central), Lucknow. APPELLANT RESPONDENT Assesseeby : Shri. Gourav Bansal,CA Revenue by : Shri. Ramendra Kumar,CIT(DR) Date of hearing : 04.05.2022 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination of the matter, the issue of multiple PAN and registration u/s 12A obtained by assessee shall also be looked into by ld. Pr. CIT to see whether it was inadvertently obtained or was any misuse of multiple PAN and registration u/s 12A was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 7. The ITSC on its part passed an order dated 17.08.2016, u/s 245D(4) of the Act abating the applications before ITSC and restored the proceedings back t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut for the benefit of the 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. The second reason given was 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 that the assessee trust has earned unaccounted receipts, profiteering and allowing the income of the trust for personal uses of the trustees. The third reason cited by the PCIT was that the assessee trust has sold all its educational institutions and consequently the activities of the assessee trust ceased to exist. 12. In the appeal filed by the assessee against the order of the PCIT, the Hon'ble JM took the view that the surrender of a sum of Rs. 65 Lac and offered to tax under section 115BBC before the ITSC was not relevant to cancel registration granted to the assessee because, so long as the trust was running educational institutions and imparting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. On the PCIT action in making reference 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 proceeds 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 utilized for the construction of the building of these educational institutions is nothing but application of the income / fund for charitable purpose however, even if the assessee has violated the provisions of section 11(3) the consequences of the same would be that the said amount would not be eligible for exemption under section 11 and 12 of the Income Tax Act and will be assessed to tax. Therefore, the Hon'ble JM held that the this is again a subject matter of assessment and cannot be regarded as the activities of the assessee are not ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of the order/notice to cancel the registration. 51. Clearly, the act of cancellation of registration has serious civil consequences. In absence of any legislative intent expressed to suggest that the legislature had empowered the Commissioner to cancel the assessee's registration under Section 12-A of the Act with retrospective effect, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground for cancellation has not arising out of allegation of fraud, collusion or misrepresentation. 52. Therefore, we are of the view that the cancellation of the assessee's registration under Section 12-a of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the Commissioner in this case. Thus, question no.1 is answered in the negative that is in favour of the assessee and against the revenue." 16. He also referred to similar view expressed by the Hon'ble Allahabad High Court and Hon'ble Rajasthan High Court rendered in the case of Oxford Academy for Career Development Vs. CCIT (2019) 315 ITR 382 (All) in the case of Indian Medical Trust vs. Pr. CIT 414 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are neither bogus nor have any nexus/co-relation with the admission of students i the institutions run by the assessee. He also directed the PCIT to verify whether there exists any nexus of these receipts with the admission of students in the institution run by the Assessee and also whether the fees charged by institutions, run by assessee is in accord with the fees approved by Government. 18. The second reason given by the Hon'ble AM for setting aside the matter to the PCIT for de novo consideration is on the aspect of Advances/loans given to the Trustees by the Trust through Jyothi Hospital. The conclusions of the Hon'ble AM on this aspect was as follows: "It is also one of the contentions of the Revenue that the assessee has given advance of Rs. 89,50,000/- to Dr. A K Bansal through Jyoti Hospital Private Limited , and an advance of Rs. 46,24,790/- to Dr. Vandana Bansal through Jyoti Hospital Private Limited, which evidences that the trust is diverting funds for the benefits of the trustee. It is also the grievance of Revenue that in ay: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ysis of financial records and other relevant material to arrive at decision whether or not any benefit was derived by trustees or their relatives or entities associated with them to see whether there were or were not violation of Section 13(2) and 13(3) of the 1961 Act and in case of violations consequences will follow. The onus is on the assessee to bring on record all cogent material in connection therewith in its defense , to explain all the transactions entered into by it with its trustees, their relatives and /or entities associated/connected therewith, as provided u/s 13(2) and 13(3) of the 1961 Act." (emphasis supplied) 19. The third reason given by the Hon'ble AM is the allegation with regard to the diverting sale proceeds of assets of the trust for repayment of outstanding bank loans of the trustee's group concern and not utilizing the same for the betterment of charitable objects of trust. According to the Hon'ble AM these allegations are serious allegations and the onus was on the Assessee to bring on record cogent material in its defence. 20. On the question whether registration can be cancelled with retrospective effect, the Hon'ble AM was of the view that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Court in Batanagar Education and Research Trust(supra), this contention of the assessee that registration u/s 12AA cannot be cancelled with retrospective effect stood rejected. It will all depend based on evidence brought on record that since when the assessee misused its status conferred u/s 12AA and 80G, accordingly the registration can be cancelled with effect therefrom when the assessee started misusing its status conferred u/s 12AA of the 1961 Act. Thus, based on detailed reasoning as outlined above in my order in preceding para, I am setting aside the order dated 29.03.2019 passed by ld. Pr. CIT(Central) , Lucknow cancelling registration u/s 12AA(3) w.e.f. 01.04.2006 and withdrawal of approval u/s 80G(5) of the 1961 Act and restoring the matter back to file of ld. Pr. CIT for considering afresh issue of cancellation of registration u/s 12AA(3) and withdrawal of approval u/s 80G(5) of the 1961 Act. Needles of say that ld. Pr. CIT shall give proper and adequate opportunity of being heard to the assessee in set aside remand proceedings , and evidences/explanations submitted by assessee in its defense shall be admitted by ld. Pr. CIT in the in the interest of justice and ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." 25. The above provision was inserted by the Finance (No.2) Act, 2004 w.e.f. 1.10.2004. The scope of the power under the aforesaid provision is limited to only cancellation of registration granted u/s.12A. The learned AM has not expressed opinion that the facts brought out in the impugned order are incorrect or insufficient to cancel registration granted u/s.12A of the Act and that further probe is necessary to bring out facts so that a comprehensive order can be passed covering all aspects. I am of the view that the conclusion of the learned JM that because of sale of the educational institution in the year 2017, the assessee can no longer be considered as trust existing for the purpose of carrying out charitable activities and hence not entitled to the benefits of Sec.11 and 12 of the Act, is sufficient to uphold the impugned order of the CIT(E) and no useful purpose will be served by bringing in facts 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that u/s.12AA of the Act, registration granted cannot be cancelled with retrospective effect. The learned AM has however placed reliance on decision of Hon'ble Supreme Court in the case of CIT(E) Vs. Batanagar Education and Research Trust (supra). In that case as we have already noticed, 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. It is no doubt true that in that case the registration was cancelled with retrospective effect. The question whether registration granted can be cancelled with retrospective effect was never an issue, as the Assessee in that case never challenged or contended that registration cannot be cancelled with retrospective effect. Therefore it cannot be said that the ratio laid down in the aforesaid decision is to the effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AMIT KOCHAR, ACCOUNTANT MEMBER ITA No.73/ALLD/2019 Assessment Years: 2007-08 Jeevan Jyoti Charitable Trust, 162, Bai Ka Bagh, Allahabad, U.P. TAN/PAN: AAATJ4359H v. Pr. Commissioner of Income Tax, Central, Lucknow (Appellant) (Respondent) Appellant by: Sh. Gaurav Bansal, C.A. Respondent by: Sh. Ramendra Kumar Vishwakarma, CIT DR Date of hearing: 03.06.2022 Date of pronouncement: 03.06.2022 ORDER GIVING EFFECT OF THIRD MEMBER VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 29th March, 2019 passed by the Pr. CIT (Central Lucknow) under section 12AA(3) and Section 80G(5) of the Income Tax Act. Though the assessee filed total thirteen appeals against the single impugned order passed by the Pr. CIT (Central Lucknow) however, at the time of hearing, the twelve appeals in ITA Nos. 74 to 85/Alld/2019 were de-clubbed and tagged separately as those appeals were found not maintainable being repeated and nonest appeals and dismissed by this Tribunal vide separate order dated 16.09.2021. Accordingly the appeal in ITA No. 73/Alld/2019 is taken as an appeal against the impugned order and the hearing was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 of charitable trust conferred upon it by Section 12A of the Income-tax Act,1961? 4. I have heard both the parties. It is necessary for me to briefly give a background of facts that led to the passing of the impugned order. The Assessee was granted registration u/s 12A of the Income-tax Act, 1961 (hereinafter called "the Act"), 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 was 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 5. There was a search and seizure operations conducted u/s 132 of the Act in the case of the assessee along with other cases of the Jeevan Jyoti Group, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO. The assessee filed Miscellaneous Application before ITSC against the order of ITSC dated 17.08.2016, but the M.A. stood rejected by ITSC, vide order dated 20.01.2017, passed u/s 245D(6B) of the 1961 Act by ITSC. 8. Thereafter, the AO completed assessment for ay: 2007-08 to 2014-15 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 12,55,72,780/- 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 fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 above facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase 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 that in the application filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany 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-à-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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 conferring power on the revenue to cancel registration with retros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 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 to confine myself to the point of difference between the members who const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 whether the income has been applied for charitable purposes and to the extent contempl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid 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 colour from the questions involved in the case in which it is rendered and while applying ..... X X X X Extracts X X X X X X X X Extracts X X X X
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