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TMI Blog2024 (9) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the AR that audit for FY 2020-21 was not carried out for the reason that the assessee institution was notified under the audit list on 13.12.2022 by whereas on perusal of records, it is revealed that the books of the assessee for completed FY 2021-22 were got audited on 30.09.2022 i.e., before the date of aforesaid notification dated 13.12.2022, however, the audit of FY 2020-21 was not carried out, therefore, such contention that the audit was not conducted on account of assessee s non-inclusion in the audit list is found to be untenable and incomprehensible. Regarding vehicle expenses also no plausible explanation or supporting evidence could be furnished before us, rather the vouchers shown to us which were debited under the said head are found to be irrelevant for which Ld. AR had tried to explain that there was a mistake in booking the said expenses under proper head of account and genuineness of such expenses should not be doubted. For examination expenses AR contention that these are confidential expenses and relevant information was shown to the ITO-Exemption, Bilaspur at the time of physical verification was found to be bereft of any supporting evidence, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleges paid Received in Bank Account detailed list was submitted along with Mobile Numbers. Ground No. 3: That the Ld. CIT(E) erred in law and facts by applying the ratio of the Supreme Court decision in New Noble Educational Society v. CCIT [2022] 143 taxmann.com 276 as the genuineness of the appellant is not under dispute as the Ld. CIT (E) has neither disputed nor took cognisance of the available information and evidence. Ld. CIT(E) made rejection based on unsubstantiated, vague and factually incorrect findings. Ground No. 4: That the appellant graves leave to add, amend, alter or delete all or any of the grounds of appeal at the time of hearing of the appeal. 3. The brief facts of the case are that the assessee has filed an application u/s 10(23C)(iii) in form No. 10AB for registration / approval under the new provisions of Income Tax Act, 1961. To verify the objects and activities of the assessee, notices were issued to submit relevant documents / information. In response to the said notices, the assessee has furnished reply s which were placed on record by the Ld. CIT(E). Considering the documents submitted by the assessee, Ld. CIT(E) has issued an authorization letter for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... audited by the Examiner of Local Funds Accounts of State. as it is established through it which is in violation to second proviso clause (ii)(a)(B) to section 10(23C) of the Act. 2. Regarding Vehicle Expenses the assessee submitted that the payments are mostly small payments for fuel and other payments and not liable for TDS. However, on perusal of Ledger Copy submitted As per the above clause it is clear that the accounts of the assessee were also required to be audited for the F.Y. 2020-21 as per the Chhattisgarh Vishwavidyalaya Adhiniyam 1973 by which the assessee was established and non following the above Act attracts the violation of any other law time being in force which is also material for the objects of the assessee by the is noticed that the Vehicle Expenses also includes Payments to Sailandra Dubey Rs. 2,31,831/- and Payment to Prakash Kumar Tripathi Rs 3,31,499/-. The referred amounts have not been paid for the purposes of vehicle expenses but the same was paid towards other purposes which have not been explained by the assessee and no supporting documents has been submitted by the assessee for these payments. 3. Regarding details of examination expenses of Rs. 1,03,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents including audited annual accounts or information from the fund, or trust or institution etc., as is deemed necessary for recording satisfaction about the genuineness of the activities. The judgment in American Hotel (supra) dealt extensively with the effect of the provisos to Section 10(23C). While doing so, the court made certain remarks with respect to the effect of these provisos characterizing a few of them as those dealing with the stage of considering applications for approval or registration and other as those dealing with application of income or receipts of the trust. In respect of the latter, this court was of the opinion that the question of application of income or profits could arise only at the stage of assessment. The court was also of the opinion that the audited books of accounts would be of little or no relevance at the stage of registration or approval. Having regard to the plain terms of the second proviso to Section 10(23C), which refers to the procedure for approval of applications including those made by trusts and institutions imparting education, one can discern no such restrictions. From the pointed reference to 'audited annual accounts as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made) for which such accounts have been made up are to be accompanied a/with the application in form 10AB. It is the submission that as per the sub clause g of rule 2C(2). The requirement is of furnishing the self-certified accounts and not the audited accounts. In this respect, it is also submitted by the Ld. AR that since the auditor was not appointed for the said year under the Chhattisgarh Vishwavidyalaya Adhiniyam, 1973 as per clause 48(1), therefore, the accounts could not be got audited, therefore, the same should not be considered as a violation to section proviso clause (ii)(a)(B) to section 10(23C) of the Act. Therefore, the objection raised by the Ld. CIT(E) was not in accordance with the bylaws made under Chhattisgarh Vishwavidyalaya Adhiniyam, 1973, accordingly, such observation is of Ld. AR is liable to be rejected. 8. The next contention raised by the Ld. AR that the observation of Ld. CIT(E) regarding rejecting the application for registration on account of nonfurnishing of details of Vehicle and other Expenses of Rs. 2,31,831/- Rs. 3,31,499/- was an erroneous observation as in fact the same are elaborated a/w supporting documents. Similar contentions were raised re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for approval and the further material called for (including audited statements), should confine the inquiry ordinarily to the nature of the income earned and whether it is for education or education related objects of the society (or trust). If the surplus or profits are generated in the hands of the assessee applicant in the imparting of education or related activities, disproportionate weight ought not be given to surpluses or profits, provided they are incidental. At the stage of registration or approval therefore focus is on the activity and not the proportion of income. If the income generating activity is intrinsically part of education, the Commissioner or other authority may not on that basis alone reject the application. 9. Referring to the aforesaid paragraph, Ld. AR putting his emphasis on the same has averred that while disposing of the application of the assessee seeking approval for registration u/s 10(23C), it is the observation of Hon'ble Apex Court that at this stage focus should be on the objects and activities of the assessee institution and not the disproportion of income, accordingly, it is the submission that the reliance of Ld. CIT(E) on the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated documents to see the pattern of income and expenditure. Ld. AR's contentions that the analogy originated from the case of New Noble Education (supra) is not applicable in the present case as the Commissioner was required to look into the genuineness of the education and related activities imparted by the assessee, surplus and profit are only incidental, therefore, disproportionate weight ought not to be given to such factors, we do not find any merit in the said averment of the Ld. AR, as the overall analogy drawn from the order of Hon'ble Apex Court in the case of New Noble Education Society (supra) was that the audited annual accounts of the assessee are one of the information which can be legitimately called or requisitioned for consideration at the stage of approval of application to draw an inference regarding the genuineness of the activities of the assessee institutions. Referring to the aforesaid settled position of law, in the present case as the assessee was unable to furnish necessary information or explanation before the Ld. CIT(E). The order of rejection passed by Ld. CIT(E), wherein elaborate discussion was made regarding the failure of the assessee in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.], the Commissioner, Higher Education and the State Government. The State Government shall, as soon as may be, cause the same to be laid on the table of the State Legislative Assembly. 14. Regarding vehicle expenses also no plausible explanation or supporting evidence could be furnished before us, rather the vouchers shown to us which were debited under the said head are found to be irrelevant for which Ld. AR had tried to explain that there was a mistake in booking the said expenses under proper head of account and genuineness of such expenses should not be doubted. For examination expenses Ld. AR contention that these are confidential expenses and relevant information was shown to the ITO-Exemption, Bilaspur at the time of physical verification was found to be bereft of any supporting evidence, thus, the observations of Ld. CIT(E), that the assessee failed to provide relevant detailed and explanations on the above-mentioned points could not be reasonably refuted. Further, no corroborative evidence such as any letter / request showing purpose from the donee qua the donation offered by various teachers and professors for the purpose of honouring gold medallist students could be f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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