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TMI Blog2023 (9) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... s illegal and not valid. Therefore, the Ld. Counsel submits that as the order passed by the PCIT cancelling the registration was held to be illegal and not valid, the order granting registration u/s 12AA to the assessee got restored and, therefore, the reassessments made by the Assessing Officer u/s 143 r.w.s. 147 denying exemption u/s 11/12 will not survive. 3. Ld. DR supported the orders of the authorities below. 4. Heard rival submissions, perused the orders of the authorities below and the decision of the Tribunal in ITA No. 6054/Del/2018 dated 03/09/2020. The assessee is a charitable trust and was established in the year 2003. The assessee was granted registration u/s 12AA on 02/04/2005. The Ld. PCIT vide order dated 01/03/2016 withdrew the registration granted to the assessee u/s 12AA of the Act on 01/03/2016. Assessee challenged the order of the Ld. PCIT in withdrawing registration u/s 12AA of the Act and the Tribunal by order dated 03/01/2017 set aside the order of the Ld. PCIT passed on 01/03/2016 and restored the proceedings to the Ld. PCIT to decide afresh. The Ld. PCIT thereafter passed order on 27.10.2017 cancelling the registration granted u/s 12AA of the Act to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 11 and 12 of the I.T. Act. It is further noted that due to nexus of corruption by way of bribe and criminal misconduct by the assessee trust, registration of the trust was can ceiled since inception u/s 12AA(3) of the Income Tax Act; 1961. A Charitable trust conduct must be at par with its provision of trust deed and as, per existing law. Its misconduct and desire * to defy rules and norms have been exposed by virtue of the bribe activities. Such incidents cannot be classified as charitable by any reckoning. Such organizations which do not carry any charitable activity cannot be granted registration. In these facts & circumstances, I am satisfied that the activities of the trust axe not genuine and not being carried out in accordance with the objects of the trust. Accordingly, after affording reasonable opportunity to the trust, registration granted u/s 12A vide order dated 02.04.2005 to the assessee trust is cancelled since inception." 38. In the background of ail these developments, the case of the assessee is being examined. 39. The aims & objects of the trust are as under: "i) To, establish, maintain, run, develop, improve, extend, undertake, promote, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Adult education centres and coaching centers for moral upliftment, educational skills towards self reliance. xiv) To grant stipend, scholarships or any other assistance or otherwise to deserving students or scholars in the field of education with special emphasis on the following specialties Medicine, Pharmacy, Computer Science, Engineering, Agriculture Environmental sciences and banking. The trustees reserve the right to grant stipends or scholarships in any field of Education that they deem fit in any part of India. xv) To lift the poor from the curses of poverty, hunger, illiteracy and diseases by starting and carrying out concentrated and intensive programmes. 4. i) To borrow, raise loans from any person, bank or financial institution in such a manner as the Trustees shall think proper or convenient for the furtherance of objects of the Trust and for this purpose the Trustees may secure repayment of these loans. To reach this objective Trustees will always try to have a balanced budget, so that revenues and expenses balance and not produce losses. The objective of the operations of the Trust is not to create a losing operations, but to operate the minimum charges for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.1 [(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] [(4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any lime under section 12AA as it stood before its amendment by the Finance (No. 2)' Act, 1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless- (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous years do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]]" 44. The Ld. PCIT, did not have record of activities which are not in accordance with the objects of the trust. The entire order of the Id. POT is based on the appraisal report of DDIT(Inv.) only. We do not find mention of any material being referred by the Id. PCIT and its applicability to any of the provisions of Section 2(15) and/or Section 12AA(3) while revoking the registration. The Act envisages where a trust or an institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T passed on 01/03/2016 and 27/10/2017 withdrawing the registration u/s 12AA of the Act, the reassessments made by the Assessing Officer u/s 147/143 on the ground that the PCIT had withdraw the registration u/s 12AA of the Act will not stand and there has to be a fresh assessment in the light of the order of the Tribunal restoring the registration u/s 12AA of the Act. Thus, we set aside the order of the Ld. CIT(Appeals) and restore all these assessments to the file of the Assessing Officer for denovo assessments in the light of the decision of the Tribunal in restoring the registration granted to the assessee u/s 12AA of the Act. The Assessing Officer is directed to complete the denovo assessments for the assessment years 2009-10 to 2013-14 after providing adequate opportunity of being heard to the assessee. 6. We make it clear that the Ld. Counsel for the assessee has only argued and submitted that the Tribunal had restored registration u/s 12AA and, therefore, the reassessments made denying exemption u/s 11/12 will not stand. No other argument has been advanced by the Ld. Counsel and the appeals are decided only on this point. 7. In the result, all the appeals of the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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