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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 ..... followed accounting entries as gross irregularities for the following reasons: (i) That Ld. CIT(E) grossly erred in Rejecting the Application for Registration on account of non-furnishing of details of Vehicle and other Expenses of Rs. 2,31,831/- & Rs. 3,31,499/- which in fact is elaborated along with supporting documents. (ii) The Ld. CIT(E) grossly erred in Rejecting the Application for Registration on account of Non-furnishing details of examination Expenses which in fact is elaborated along with supporting documents. (iii) The Ld. CIT (E) grossly erred in Rejecting the Application for Registration on account of Non-Furnishing details of Specific Donation of Rs. 25,00,000/- for Gold Medal by the Donees which are teachers/Professors of colleges 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Audited as it is covered u/s 10(23C)(iiiab). The reply of the assessee is not acceptable on following grounds:- -- 0n perusal of Unaudited Balance Sheet and I/E Accounts for FY 2 2020-21, it is observed that as per I/E accounts the assessee has received total funds of Rs 2,91,00,000/- and expenses has been made of Rs 15,91,486/- and accounts have not been audited. -- Further, Rule 2C of the IT Rules is applicable for application submitted by the assessee and as per Rule 2C(2)(g), the assessee is required to submit the annual accounts for last three years. -- The assessee has been established through Chhattisgarh Vishwavidyalaya Adhiniyam 1973 and As per clause no 48(1)- The accounts of the University shall at least once every year at intervals of not more than fifteen months be 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recently Hon'ble Supreme Court in the case of CIVIL APPEAL NO. 3795 OF 2014 M/S NEW NOBLE EDUCATIONAL SOCIETY APPELLANT(S) VERSUS THE CHIEF COMMISSIONER OF INCOME TAX 1 AND ANR. RESPONDENT(S), Para 62 held that- The second proviso by sub-clause (ii) requires the Commissioner to make such enquiries to specify about the genuineness of the activities of the fund, trust or institution and compliance of such requirements of other laws in force by such fund, trust or institution. Upon considering the materials the Commissioner or the concerned authority can pass an appropriate order granting approval for a specific period of time or reject the application. The second proviso importantly indicates that before granting approval to any fund, trust or institution, the Commissioner or the concerned authority 'may call for such 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 resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has alleged that Ld. CIT(E) has grossly erred in rejecting the application of registration on the ground of unaudited accounts. As per the applicable statutes, the audited clause applied on the assessee university only after three years of existence. Further, it is submitted that the FY 2020- 21 was the first complete year of university during these period accounts of the university are not required to be audited as it is covered u/s 10(23C). It is further argued by the Ld. AR that as per Rule 2(C) of the Income Tax Rules. The applicant, who has been in existence during any years or year prior to the FY in which the application for registration is made, self-satisfied copy of the annual accountof the applicant relating to such prior year or years (not being more than three years immediately proceedings the year in which said application is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The observations to the contrary in American Hotel (supra) appear to have overlooked the discretion vested in the Commissioner or the relevant authority to look into past history of accounts, and to discern whether the applicant was engaged in fact, 'solely' in education. American Hotel (supra) excluded altogether inquiry into the accounts by stating that such accounts may not be available. Those observations in the opinion of the court assume that only newly set up societies, trusts, or institutions may apply for exemption. Whilst the statute potentially applies to newly created organizations, institutions or trusts, it equally applies to existing institutions, societies or trust, which may seek exemption at a later point. At the same time, this court is also of the opinion that the Commissioner or the concerned authority, while considering an application 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 imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within her jurisdiction to call for such details / documents / information or so as to make such inquiries as she thinks necessary in order to satisfy herself about the genuineness of activities of such fund or trust or university or institutions, as the case may be. 13. Similarly, as per the judicial pronouncement in the case of the New Noble Education Society (supra) by the hon'ble Apex Court, Ld. CIT(E) was within her powers to ask for such information, so as to establish and ascertain the genuineness of the assessee institution and the manner of its functioning, the Commissioner is free to call for the audited accounts or other such documents for recording satisfaction that the society / trust / institutions is genuinely working in achieving of their objects. The Commissioner is not in any manner constrained from examining the accounts and other related 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, surp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h may, with the previous approval of the Governor, audit all receipts and expenditures of any University established under this Act, where the grant or loan to such University from the Consolidated Fund of the State, in a financial year is not less than rupees one crore. (1-b) Where the receipts and expenditure of an; University is, by virtue of the fulfillment of the condition specified in sub-section (1-a), audited by the Accountant General, Chhattisgarh in a financial year, he shall continue to audit the receipts and expenditure of that University for a further period of two years notwithstanding that the condition specified in sub-section (1-a) is not fulfilled during any of the two subsequent years. (2)The copy of the audited accounts together with the audit report shall be submitted by the Executive Council to the [* * *] [Omitted 'Court' by Act No. 14 of 2005.], 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, rath ..... X X X X Extracts X X X X X X X X Extracts X X X X
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