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TMI Blog2023 (8) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... cancellation of registration. It has nothing to do with the assessments based on such surrender, which have already attained finality. As manifest that the edifice of cancellation of registration has been erected on the statement of the trustee recorded during the course of survey action. Arguendo, it is presumed that the contents of the statement have a binding force and has evidentiary value, still it does not bring the case within any of the specified violation . The 15th proviso to section 10(23C) unambiguously provides that - the Principal Commissioner shall, pass an order in writing cancelling the approval of such fund or institution or trust if he is satisfied that one or more specified violation has taken place. Thus, it is established that the occurrence of one or more specified violations is sine qua non for cancellation of registration. Since the assessee did not commit any specified violation, we are satisfied that the impugned order, cancelling the registration, is untenable. The same is, therefore, overturned. Both the sides are in agreement that the facts and circumstances of the other appeal by the related trust in are mutatis mutandis similar. Following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trusts. Returns were accordingly filed thereafter, duly incorporating the income offered by the trustee. The assessments also got completed consequently. Thereafter, the Assessing Officer (AO) made a reference to the Pr.CIT, Nagpur for cancellation of registration granted to the assessee-trust u/s. 10(23C)(vi) of the Act. Acting on the same, the ld. Pr.CIT cancelled the registration. Such cancellation was done for the assessment years 2009-10 onwards. Thereafter, a corrigendum was issued by the ld. Pr.CIT, Nagpur on 08-05-2023, specifically mentioning that the cancellation of the registration was for the assessment years 2009-10 to 2019-20. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard both the sides and gone through the relevant material on record. At the outset, the ld. AR submitted that the Pr.CIT passed the order under clause (b)(ii) of 15th proviso to section 10(23C) of the Act, which provision was substituted by the Finance Act, 2022 w.e.f. 01-04-2022. It was claimed that the amended 15th proviso could not have applied to the assessment years anterior to the amendment. Since the proceedings pertained to the A.Yrs.2009-10 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfied that one or more specified violation has taken place. The crux of the provision is that if registration was earlier granted u/s. 10(23C)(vi) and thereafter, the AO makes a reference to the Pr.CIT for any previous year, the Pr. CIT shall pass an order cancelling the approval of the trust, if he is satisfied that one or more specified violations occurred. The term specified violation has been defined in Explanation 2, which runs as under : For the purposes of this proviso, the following shall mean specified violation , (a) where any income of the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has been applied other than for the objects for which it is established; or (b) the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has income from profits and gains of business, which is not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or (c) any activity of the fund or institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnecting surrender of income with deficient vouchers; and then deficient vouchers with the fact that the funds were diverted and misappropriated and resultantly not applied wholly and exclusively to the objects for which the assessee was established. This is how, he held that the assessee made specified violation in terms of clause (a) to (c) of the Explanation 2. We have noted above that the proposal to cancel the registration u/s. 10(23C) emanated from the AO, who linked it with the survey action and the statement of Ms. Flavia Albuquerque accepting additional income of Rs. 9.00 crore. The ld. Pr. CIT has heavily banked on certain questions from the statement and rather reproduced the same in his order to fortify his view of cancellation. Thus, it is manifest that the entire case of cancellation of registration is premised on the statement of Ms. Flavia Albuquerque recorded on the date of survey. Ex consequenti, it becomes crucial to examine the statement, a copy of which has been placed at page 267 onwards of the paper book. 11. In response to question no.4, she submitted that: The books of account (vouchers and musters) of Cambridge School is maintained in this premises onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdrawals and family savings. There is nothing amiss in the reply nor has it been displaced by any of the Revenue authorities. 13. The ld. Pr.CIT has accentuated on question nos. 14 to 16 to justify the cancellation of registration. Thus, it becomes necessary to elaborately examine these questions. 14. Question no.14 by the survey team was: From the verification and perusal of loose paper bundle No.1 it is observed that on some vouchers there is only signature of recipient is mentioned but details of recipient, amount and signature of trustee/accountant and details of expenses are not mentioned. In some instances, amount is mentioned but no other details are mentioned while in some instances neither sign of principal, accountant nor of the trustee are on the vouchers. Kindly explain the discrepancies . The trustee expressed her inability to substantiate the said discrepancies. We need to highlight the nature of discrepancy in the vouchers from the question raised by the survey team. Firstly, it restricted itself to the vouchers anent to Bonus and perks etc. to staff and secondly, these vouchers were duly signed by the recipients. The only deficiency recorded by the survey t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pancy. The question and the answer again show that there was nothing wanting on the part of the assessee. Another connected question no.38 was about the expenses booked under the head bonus, allowances and perks for A.Y. 2013-14 in the case of St. Lawrence Education Trust. She again replied that: We used to pay salary, bonuses and allowances to non-teaching staff in cash during those years as they used to demand in cash. We accept the anomaly of the expenses. However, it is not that entire expenses in March are bogus. It is possible that some expenses incurred in earlier months that were left to be debited earlier might have booked in the month of March. However, we are not able to substantiate all such debits and are also not able to produce all the vouchers in respect of the above expenses debited in March 2013. However, in order to cover up the discrepancies and omissions and commissions I have already agreed for the disallowances in this regard and also agreed to pay taxes on the surplus emerging out of such disallowances . The answer is self explanatory. 16. Through question no.16, she was asked that: you have booked substantial amount under head bonus, allowances and per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the students of the school. She gave the reply, which has been tabulated in the statement, giving an account of monthly fees charges from KG to 10th standard ranging between Rs. 5,200/- to Rs. 5,600/-. She further submitted that: This monthly fees includes tuition fee, bus fee, mess fee sport other activities fee . Question No.28, which is again quite relevant, was directed at enquiring as to whether school was charging any amount other than the fees mentioned above from the students, to which reply was given in negative. Question no.37 was about the details of teaching and non-teaching staff working at Cambridge School, Aurangabad, to which she responded by giving necessary details. 18. Once again her statement was recorded on 06-03-2019, that is, after the survey action, whose copy has been placed at pages 277 and 278 of the paper book. The emphasis was again on expenses incurred in respect of bonus, allowances and perks, whose vouchers did not contain complete details. 19. In addition to the non-incriminating answers given by the trustee in her statement and our separate comments thereto supra, there are certain other crucial factors, which need to be taken note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the specified violation towards the trust etc. having income from profits and gains of business , which is not incidental to the attainment of its objects. This clause deals with the receipt of income. The entire case of the Revenue is founded only on deficient vouchers for expenses. There is not even an iota of indication, either in the survey statement or in the impugned order, that the assessee earned any income from profits and gains that was not incidental to the attainment of its objectives. 23. Explanation 2(c) deals with a specified violation of any activity of the trust etc. which is either not genuine or is not carried out in accordance with all or any of conditions subject to which the approval was granted. The condition precedent for the applicability of this clause is the carrying out of any activity , which is either not genuine or not in accordance with its objectives. Obviously, the assessee carried out only the activity of imparting education, which was not found to be non-genuine. Such activity was carried out in accordance with the conditions subject to which the assessee was approved. There is no evidence or reference to any material indicating tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken only if a person, who, inter alia, is required to have his statement recorded, either refuses or evades to do so. It is only then that the income-tax authority gets all the powers under section 131(1) including examining him on oath . When we view the ingredients of section 131 in conjunction with section 133A, it becomes overt that whereas the statement u/s. 131(1) is recorded on oath, statement u/s. 133A is not recorded on oath. It goes without saying that a statement not recorded under oath has no evidentiary value. The Hon ble Supreme Court in CIT vs. S. Khader Khan Son (2013) 352 ITR 480 (SC), after noting that section 133A does not empower any income-tax authority to examine any person on oath, thus held that such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. When we consider the recording of statement por una parte in the course of survey u/s. 133A and por otra parte in the course of search u/s. 132(4), the distinction becomes more glaring. Like the statement under section 131(1), section 132(4) also provides that the authorized officer may, during the course of search or seizure, e ..... 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