Rajasthan Vikas Sansthan, JODHPUR V. CIT - II, JODHPUR

ITA 11/JODH/2011

• Counselvise Citation: 1123314 RSA 2011
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-12-2011
• Assessment Year: misc
• Appeal Filed On: 17-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R H GOHEL
• Keywords: Gift; Depreciation; Charitable institution; Opportunity of being heard; Earning of tax free income; Source of fund; Retrospective amendment; Corroborative evidences; Cancellation of registration; Capital expenditure
• Section: 80G; 12A; 12AA; 148; 12; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR (BEFORE SHRI R.K. GUPTA AND SHRI .N.L. KALR A ) ITA NO.11/JODH/2011 U/S 12AA(3) M/S. RAJASTHAN VIKAS SANSTHAN VS. THE CIT -II TEESRA PAHAR BUILDING JODHPUR IST A ROAD, SARDARPURA, JODHPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: SHRI R.H. GOHEL DATE OF HEARING: 08-12-2011 DATE OF PRONOUNCEMENT: ORDER PER N.L. KALRA, AM:- THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD.CIT-II, JODHPUR U/S 12AA(3) DATED 27-12-2010 FOR THE ASSESSMENT YEAR 2 006-07. 2.1 THE FACTS OF THE CASE ARE THAT A SSESSEE IS AN EDUCATIONAL SOCIETY REGISTERED ON 23.09.1999 WITH THE REGISTRAR OF SOCIETIES, JODHPUR . THE MAIN OBJECT OF THE SOCIETY IS TO IMPART EDUCATION AS EVIDENT FROM THE BYE LAWS OF TH E SOCIETY. THE SOCIETY SOLELY EXISTS FOR CHARITABLE PURPOSE AND NOT FOR THE PURPOSE OF PROFI T. IN PURSUANCE OF THESE OBJECTS, SOCIETY AT PRESENT IS RUNNING NINE INSTITUTIONS AS DESCRIBE D BELOW:- S.NO NAME OF EXISTING COLLEGE COURSE OFFERED APPROVAL AUTHORITY DATE OF START 1 VYAS NURSING INSTITUTE. INTAKE: 60 STUDENTS DURATION: THREE YEAR G.N.M (NURSING) INDIAN NURSING COUNCIL, GOVT OF INDIA, & RAJASTHAN NURSING COUNCIL, JAIPUR 2001 2 VYAS DENTAL COLLEGE & B.D.S DENTAL COUNCIL OF IND IA, 2006 2 HOSPITAL INTAKE: 100 STUDENTS DURATION: FIVE YEAR MINISTRY OF HEALTH & FAMILY WELFARE, NEW DELHI & RUHS, JAIPUR. 3 VYAS INSTITUTE OF MANAGEMENT INTAKE: 90 STUDENTS DURATION: TWO YEAR FULL TIME M.B.A PGDBM ALL INDIA COUNCIL OF TECHNICAL EDUCATION, NEW DELHI(AICTE) & RTU, KOTA 2006 4 VYAS INSTITUTE OF ENGG & TECHNOLOGY INTAKE: 420 STUDENTS DURATION: FOUR YEAR ENGG. DEGREE ALL INDIA COUNCIL OF TECHNICAL EDUCATION, NEW DELHI(AICTE) & RTU, KOTA 2007 5 VYAS B.ED. COLLEGE INTAKE: 200 STUDENTS DURATION: ONE YEAR B.ED. NATIONAL COUNCIL FOR TEACHER EDUCATION(NCTE) & J.N. VYAS UNIVERSITY, JODHPUR 2007 6 VYAS ENGG COLLEGE FOR GIRLS INTAKE: 360 STUDENTS DURATION: FOUR YEAR B. TECH ALL INDIA COUNCIL OF TECHNICAL EDUCATION, NEW DELHI(AICTE) & RTU, KOTA 2008 7 VYAS COLLEGE OF COMMERCE & BUSS. ADM. DURATION: THREE YEAR INTAKE: 200 STUDENTS B.B.A/B.COM (HONS.) GOVT. OF RAJASTHAN & J.N. VYAS UNIVERSITY, JODHPUR 2008 8 VYAS PG DENTAL COLLEGE FOR EIGHT BRANCHES- INTAKE: 24 STUDENTS DURATION: THREE YEAR M.D.S PG COLLEGE DENTAL COUNCIL OF INDIA, MINISTRY OF HEALTH & FAMILY WELFARE, NEW DELHI & RUHS, JAIPUR. 2011 9 VYAS COLLEGE OF NURSING INTAKE: 40 STUDENTS DURATION: THREE YEAR B. SC (NURSING) INDIAN NURSING COUNCIL, GOVT OF INDIA, & RAJASTHAN NURSING COUNCIL, JAIPUR & RUHS JAIPUR 2011 THE ASSESSEE SOCIETY MOVED AN APPLICATION FOR REGIS TRATION U/S 12A OF THE INCOME TAX ACT ON 07.03.2001 WHICH WAS GRANTED BY LD. CIT, JODHPUR VIDE ITS ORDER DT. 08.01.2002 W.E.F. 07.03.2001 THEREAFTER, ASSESSEE SOCIETY APPLIED FOR EXEMPTION U/S 10(23C)(VI) ON 23.03.2005 FOR A.Y. 05-06 ONWARDS BUT THE SAME WAS DENIED BY CCIT, JODHPUR AS PER ITS FINDING RECORDED IN PARA 15-16 OF THE ORDER DT. 27.07.2009 WHICH IS REPRODUCED ON PAGE 2-3 OF THE ORDER OF CIT U/S 12AA(3). IN THIS EX-PARTE ORDER, CCIT OBSERVED THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 11 TO 13, AU DITED ACCOUNTS ARE DEFECTIVE, PERSON CONNECTED WITH THE MANAGEMENT HAVE GOT THE BENEFIT FROM THE SOCIETY FUNDS & IT IS 3 HAVING ADEQUATE SURPLUS BALANCES EVERY YEAR WHICH I S SIPHONED OF BY THE OFFICE BEARERS OR PERSON NEARER TO THEM. 2.2 AFTER THE CCIT, JODHPUR DENIED THE EXEMPTION U/ S 10(23C)(VI), A SHOW CAUSE NOTICE DT. 22.09.2009 WAS ISSUED BY CIT, JODHPUR TO THE ASSESSEE SOCIETY FOR CANCELLING THE REGISTRATION GRANTED U/S 12AA. THE SHOW CAUSE N OTICE IS REPRODUCED AT PAGE 3-6 OF THE ORDER. THIS NOTICE WAS REPLIED VIDE LETTER DATE D 02.12.2009 . THEREAFTER, VARIOUS OTHER ENQUIRIES WERE MADE IN THE MONTH OF OCT & NOV 10 WH ICH WERE REPLIED BY THE ASSESSEE & THE RELEVANT BOOKS OF ACCOUNTS & VOUCHERS WERE ALSO PRODUCED ON 28.10.2010 & ON SUBSEQUENT DATES. THE LD. CIT, JODHPUR PASSED AN OR DER U/S 12AA(3) ON 27.12.2010 CANCELLING THE REGISTRATION GRANTED U/S 12A(A) OF T HE I.T. ACT, 1961 W.E.F. A.Y. 02-03 BY DRAWING VARIOUS INFERENCES & MAKING VARIOUS OBSERVA TIONS WITHOUT ISSUING ANY SPECIFIC SHOW CAUSE NOTICE TO THE ASSESSEE. SUMMARILY, THE O BSERVATIONS OF CIT FROM PAGE 6-136 OF THE ORDER IS AS UNDER:- (I) ASSESSEE PRODUCED THE COMPUTERIZED BOOKS OF ACCOUNT S BUT THE SAME WERE EITHER NOT SUPPORTED WITH BILLS/VOUCHERS OR WHERE T HE BILLS/VOUCHERS WERE PRODUCED I.E. FOR F.Y. 05-06 TO F.Y. 07-08, THE SAM E WERE INCOMPLETE. THEREFORE, IN THE ABSENCE OF SUPPORTING/COMPLETE BI LLS/VOUCHERS, IT IS NOT POSSIBLE TO JUDGE AS TO WHETHER THE EXPENDITURE HAS BEEN INCURRED FOR CHARITABLE/EDUCATIONAL ACTIVITIES OR FOR THE PURPOS E OF EARNING PROFITS. (II) ASSESSEE SOCIETY HAS INCURRED HUGE EXPENDITURE ON A DVERTISEMENT FOR RECRUITING THE FACULTIES & LURING THE STUDENTS WHIC H IS NOT REQUIRED FOR SPREADING THE EDUCATION. THE ADVERTISEMENT EXPENDIT URE IS INCURRED ONLY TO INCREASE THE PROFITS/RECEIPTS OF THE INSTITUTE WHIC H IN TURN RESULTED INTO HIGHER PROFITS/BENEFITS TO THE OFFICE BEARERS. THUS , THE MOTIVE OF THE ASSESSEE IS TO HAVE MORE AND MORE PROFITS & CHARITY WAS NOT THE OBJECT. (III) THE ASSESSEE SOCIETY IS GENERATING HUGE SURPLUS YEA R AFTER YEAR RIGHT FROM THE VERY BEGINNING & HAD THE SOCIETY WOULD HAVE REA LLY BEEN INVOLVED IN THE CHARITABLE/EDUCATIONAL ACTIVITIES, THE PROFITS WOULD HAVE BEEN MINIMUM. THUS, THE MOTIVE OF EDUCATION IS PROFIT & NOT CHARITABLE. 4 (IV) THE RENT PAID BY ASSESSEE SOCIETY TO SH. MANISH VYA S, THE CHAIRMAN OF THE SOCIETY, IS EXCESSIVELY HIGH SINCE AS PER THE RENT DEED DT. 22.06.2001, SH. MANISH VYAS ONLY ALLOWED THE SOCIETY TO CONSTRUCT T HREE FLOORS ABOVE THE GROUND FLOOR ON A LAND OWNED BY IT FOR WHICH ALREAD Y AN ADVANCE OF RS. 8.49 LACS WAS GIVEN BY THE SOCIETY TO HIM. FURTHER, THE DETAILS OF EDUCATIONAL QUALIFICATIONS & PAST EXPERIENCE HAS NO T BEEN PROVIDED TO JUSTIFY THE SALARY PAYMENT MADE TO SH. MANISH VYAS, SMT. ASHA VYAS (WIFE OF THE CHAIRMAN) & SH. RAJ KUMAR VYAS. THEREF ORE, THE FUNDS/INCOME OF THE TRUST IS UTILIZED FOR THE BENEF IT OF SPECIFIED PERSONS REFERRED IN SECTION 13(3). (V) IN 149 PARAS STARTING FROM PARA 9 TO PARA 157, VARI OUS OBSERVATIONS WERE MADE IN RESPECT OF THE INCOME & EXPENDITURE ACCOUNT & BALANCE SHEET TO HIGHLIGHT THAT EXPENDITURE INCURRED/ADVANCES GIVEN ARE NOT FOR THE PURPOSE OF THE OBJECT OF RUNNING EDUCATIONAL INSTITUTIONS B UT FOR THE BENEFITS OF THE PERSONS REFERRED IN SECTION 13(3) & THEREFORE THE P ROVISIONS OF SECTION 13(1)(C)/13(1)(D)/11(5) ARE VIOLATED. 2.3 IN THE MEANWHILE, ASSESSEE SOCIETY AGAIN MOVED AN APPLICATION U/S 10(23C)(IV) ON 13.09.2010 FOR GRANT OF EXEMPTION FROM A.Y. 07-08. THE LD. CCIT AFTER TAKING INTO CONSIDERATION THE OBJECTIONS RAISED IN THE EARLIER ORDER DENYING THE EXEMPTION AS WELL AS THE ORDER OF CIT WITHDRAWING THE REGISTRATION U/S 1 2A HAS GRANTED THE EXEMPTION FOR A.Y. 07-08 ONWARDS. IT MAY BE NOTED THAT AO FOR A.Y. 05 -06, VIDE ORDER DT. 29.08.2007 HAS ASSESSED THE INCOME AT NIL U/S 11 AFTER EXAMINING T HE ISSUE OF SURPLUS FUND/DIVERSION OF FUND/UTILIZATION OF INCOME. FURTHER, AO IN THE ORDE R PASSED U/S 148 FOR A.Y. 07-08 TO A.Y. 09-10, HAS ASSESSED THE INCOME OF THE ASSESSEE AT NIL U/S 10(23C)(IV) VIDE ORDER DTD. 30.11.2010. 2.4 BEFORE PROCEEDING FURTHER, IT WILL BE USEFUL TO REPRODUCE THE OBSERVATIONS OF THE LD. CIT AND THE SUBMISSIONS OF THE ASSESSEE. PARA NO. OBSERVATION OF CIT-II ACTUAL FACTS & SUBMISSIONS 9. ASSESSEE DEBITED A SUM OF RS.12,770/- ON 09.03.2008 ON ACCOUNT OF TRAVEL FROM JODHPUR TO INDORE. THERE IS NO VOUCHER NOR THERE IS ANY BILL THE EXPENDITURE IS INCURRED FOR TRAVELING EXPENSES OF SH. MANISH VYAS FROM JODHPUR TO INDORE ON 09.03.2008 FOR INSPECTION OF 5 AVAILABLE IN THIS REGARD. IT IS ALSO NOT KNOWN AS T O WHO TRAVELLED TO INDORE AND WHAT WAS THE PURPOSE. IN THE ABSENCE OF ANY EVIDENCE IT COULD NOT BE SAID THAT THE ABOVE STATED EXPENDITURE INVOLVED CHARITABLE ACTIVITY. OTHER EDUCATION INSTITUTION FOR UNDERSTANDING THEIR SYSTEM FOR BETTER COMPLIANCE & IMPLEMENTATION AT THE INSTITUTION RUN BY THE ASSESSEE SOCIETY. 10. BILL NO. 14755 DT. 09.03.2008 OF HOTEL PARK PLAZA, JODHPUR AMOUNTING TO RS.1,639/- FOR FOUR PERSONS INCLUDES EXPENDITURE ON LIQUOR. ASSESSEE COULD NOT EXPLAIN WHO DINED AT HOTEL. CONSUMPTION OF LIQUOR IS MISUTILIZATION OF TRUST FUND THIS EXPENDITURE IS INCURRED FOR DINNER PROVIDED TO PERSONS WHO VISITED THE INSTITUTIONS FOR INSPECTION. THIS IS A NORMAL COURTESY PROVIDED TO THE PERSONS COMING FOR INSPECTION. IT CAN NOT BE SAID TO BE MISUTILIZATION OF TRUST FUND. 11. PAYMENT OF TELEPHONE EXPENSES OF SMT. MEENU DEVI (CORRECT NAME C, MEENU KUMARI) FOR RS.354/- ON 12.02.2008 IS MADE IN CASH. THE TRUST COULD NOT EXPLAIN ANY RELATIONSHIP BETWEEN THE CHARITABLE ACTIVITY OF THE TRUST AND THE PAYMENT OF TELEPHONE EXPENSES OF SMT. MEENU DEVI. IN WHAT WAY SMT. MEENU IS CONNECTED WITH THE TRUST COULD NOT BE EXPLAINED BY THE TRUST. ADMITTEDLY, THE TRUS T FUNDS WERE NOT UTILIZED FOR CHARITABLE ACTIVITIES BUT REPRESENTS PERSONAL EXPENDITURES. SMT. C- MEENU KUMARI WAS A PROFESSOR IN DENTAL COLLEGE DRAWING SALARY OF RS. 45,000 P.M. THE TRUST HAS PROVIDED THE FACILITIES OF HOUSE RENT, TELEPHONE ETC TO HER & THEREFORE PAYMENT OF TELEPHONE EXPENSES IS MADE BY IT. IT IS NOT A MISUTILIZATION OF FUND 12. IT IS FOUND THAT THE MAIN PROMOTER OF THE TRUST SHRI MANISH VYAS RESIDES AT PLOT NO. 481A, KAILASH APARTMENT, 4 TH A ROAD, NALA, JODHPUR. THE VOUCHER FILE REVEALS PAYMENT OF ELECTRICITY BILL OF THE SAID RESIDENCE FOR RS.646/- PAID ON 12.02.2008 BY THE TRUST. THUS, PERSONAL EXPENDITURE OF SHRI MANISH VYAS WERE MET BY THE TRUST FUNDS.. SHRI MANISH VYAS DO NOT RESIDES AT 481A, 4 TH A ROAD NALA, JODHPUR. INFACT DR. RAVI KUMAR PROFESSOR & EMPLOYEE OF THE DENTAL COLLEGE RESIDES AT ABOVE PLACE & RS. 646/- INCURRED FOR ELECTRICITY EXPENSES ARE REIMBURSED AS PER TERMS & CONDITIONS. 13. IN THE VOUCHER FILE A SLIP WAS FOUND RELATING T O PAYMENT OF RENT OF DR. SUMAN K.S. AS BELOW:- DR. SUMAN K. S. JANUARY RENT- RS.1750/- FEBRUARY RENT- RS.3500/- ONE MONTH ADVANCE- RS.3500/- TOTAL RS.8750/- NO EXPLANATION COULD BE GIVEN BY THE TRUST FOR PAYMENT OF THE RENT AS ABOVE WHICH WAS A PERSONAL OBLIGATION OF DR. SUMAN. DR. SUMAN K. S. WAS EMPLOYEE OF DENTAL COLLEGE DRAWING SALARY OF RS.40,000/- P.M. SHE IS HEAD OF DEPTT. AND EXPENSES RS.3500/- P.M. ARE RELATED TO HOUSE RENT. 14. PERUSAL OF THE VOUCHER FILE REVEALS THAT DR. ME ENA KUMARI RESIDED AT A314, SARASWATI NAGAR, BASANI, JODHPUR. SHE HAD A TATA SKY CONNECTION PAYMENT FOR WHICH AMOUNTING TO RS.2,499/- VIDE BILL NO. 20 DATED 12.02.2008 WAS MADE BY THE TRUST. ADMITTEDLY, THE TRUST FUNDS WERE UTILIZED FO R PROVIDING ENTERTAINMENT TO DR. MEENA KUMARI AT DR. MEENA KUMARI WAS EMPLOYEE OF DENTAL COLLEGE. TATA SKY CONNECTION WAS PROVIDED AT HER RESIDENCE AS A FACILITY SO THAT SHE CAN USE VARIOUS PROGRAMMES FOR FURTHERANCE OF EDUCATIONAL ACTIVITIES AT COLLEGE. THIS CAN NOT BE CONSIDERED AS PAYMENT FOR NON CHARITABLE ACTIVITY. 6 HER RESIDENCE AND THIS CANNOT BE CONSIDERED AS AN EXPENDITURE WHICH CAN INVOLVE ANY CHARITABLE ACTIVITY. 15. PLACED ON FILE IS A RESTAURANT BILL FOR RS.890/ - DATED 06.10.2007 OF HOTEL AJIT BHAWAN, JODHPUR. NO DETAILS COULD BE FURNISHED BY THE TRUST AS TO WHO WERE THE PERSONS WHO DINED OR HAD FOOD AT HOTEL AJIT BHAWAN AND HOW IT INVOLVES CHARITABLE ACTIVITY. ADMITTEDLY, THE TRUST FUNDS WERE DIVERTED FOR NON-CHARITABLE ACTIVITIES. RESTAURANT BILL RS.890/- DT.06.10.2007 INCURRED FOR OUTSIDE EDUCATION INSPECTION TEAM. THIS IS NORMAL COURTESY EXPENDITURE & NOT DIVERSION OF FUND FOR NON CHARITABLE ACTIVITY. 16. VERIFICATION OF THE VOUCHER FILE SHOWED PAYMENT TO M/S. HOTEL SHRI RAM EXCELLENCY AMOUNTING TO RS.2,115/- FOR GUEST SHRI UPENDRA JAIN. THE ASSESSEE COULD NOT ASSIGN ANY REASON NOR COULD PROVE AS TO WHO IS SHRI UPENDRA JAIN AND IN WHAT WAY HE IS RELATED WITH THE ACTIVITIES OF THE TRUST. SHRI UPENDRA JAIN WAS INVITED TO JOIN THE COLLEGE & THE EXPENDITURE OF HIS STAY WAS BORNE BY THE ASSESSEE WHICH IS MOST REASONABLE & GENUINE. 17. ASSESSEE TRUST MADE DONATION OF RS.5,000/- AND RS.500/- ON 25.09.2007 AND 20.09.2007 TO SINDHI WELFARE AND MEDICAL SOCIETY WHICH IS NON CHARITABLE EXPENSES. THE ASSESSEE TRUST COULD NOT GIVE ANY DETAILS AS TO WHETHER THE SAID SOCIETY IS AN APPROVED INSTITUTION U/S 80G(5) OF THE ACT AS ALSO REGISTERED U/S 11 AND 12 OF THE ACT. DONATION IS MADE AS PER PERSONAL DESIRE OF MANISH VYAS SINDHI WELFARE & MEDICAL SOCIETY IS REGISTERED U/S 12A OF THE IT ACT AND ENGAGED IN SOCIAL MEDICAL WELFARE TO GENERAL PUBLIC. SHRI MANISH VYAS IS NOT RELATED TO THIS TRUST. SUCH DONATION IS GIVEN AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. 18. ASSESSEE TRUST PAID SALARY TO SHRI N.K. DAVE FR OM OCTOBER ONWARDS @ RS4,500/- PER MONTH. HOWEVER, THE FACTS FURTHER REVEALS THAT THE SAID SHRI N.K. DAVE PROVIDED CASH LOAN OF RS.35,000/- TO THE ASSESSEE TRUST (MBA COLLEGE) ON 05.09.2007 WHICH WAS RETURNED BY THE TRUST IN CASH ON 19.09.2007. THE ASSESSEE TRUST COULD NOT GIVE ANY DETAILS OR EVIDENCES IN RESPECT OF THE SERVICES PROVIDED BY SHRI N.K. DAVE AND UNDER WHAT CIRCUMSTANCES CASH LOAN WAS RECEIVED AND REPAID BACK IN VIOLATION OF THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT. SHRI NK DAVE IS EMPLOYED IN VYAS INSTITUTE OF MANAGEMENT. HE IS CASHIER. HE GAVE TEMPORARY LOAN OF RS. 35,000/- WHICH WAS REPAID. THIS WOULD NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. 19. ASSESSEE PURCHASED A TRACTOR ON 31.08.2007, BUT THERE EXISTS A TRACTOR REPAIR BILL OF RS.410/- DATE D 12.06.2007 FOR WHICH LD. AR COULD NOT GIVE ANY REPLY. THERE ARE TWO PROBABILITIES IN THIS REGARD, ONE IS THAT THE TRACTOR WAS ACTUALLY PURCHASED PRIO R TO 31.08.2007 OR ALTERNATIVELY THE TRACTOR REPAIR BILL IS NOT GENUINE. THIS PROVES THAT BOOKS OF ACCOUNTS ARE INCORRECT. THE TRACTOR WAS PURCHASED IN THE MONTH OF MAY 2007 BUT REGISTRATION WAS COMPLETED ON 31.08.2007. IN BETWEEN TRACTOR WAS PLIED ON WHICH REPAIRING EXPENDITURE WAS INCURRED. THIS WAS RECORDED IN THE BOOKS WHICH ITSELF PROVES THAT ACCOUNTS ARE CORRECT. 20. DURING THE COURSE OF VERIFICATION, IT WAS FOUND THAT IN B.ED. COLLEGE, THE ASSESSEE TRUST HAD GUEST THE B.ED COLLEGE WAS STARTED DURING THIS PERIOD AND REGULAR STAFF COULD NOT BE 7 FACULTY CONSISTING OF 6 LADIES. OUT OF THE 6 LADIES , 5 WERE PAID SALARY @ RS.12,000/- PER MONTH WHILE ONE LADY WAS PAID SALARY @ RS.10,000/- PER MONTH. A TOTAL SALARY OF RS.70,000/- HAS BEEN DEBITED IN THE BOOKS OF ACCOUNTS VIDE VOUCHER DATED 15.11.2007. ON VERIFICATION, IT WAS FOUND THAT THERE ARE NO STAMP RECEIPTS AND NO ADDRESSES OF THE LADIES ARE AVAILABLE. IT IS ALSO NOT KNOWN A S TO FOR WHICH MONTH THE SALARIES WERE GIVEN TO THE 6 LADIES. IT IS ALSO FOUND THAT ONE SINGLE PEN WAS USED FOR PUTTING SIGNATURES BY ALL THE LADIES. THE TRUST COULD NOT TELL EVEN THE SUBJECTS WHICH WERE TAUGHT BY THE 6 LADIES AND TO WHICH YEAR STUDENTS. THE EXPENDITURE AS ABOVE THUS REMAINED TO BE PROVED IN AS MUCH AS THE TRUST COULD NOT GIVE EVIDENCES TO SHOW THAT THE EXPENDITURE OF RS.70,000/-WAS INCURRED FOR THE PURPOSE OF CHARITABLE/EDUCATIONAL PURPOSES. APPOINTED. THEREFORE, GUEST FACULTIES WERE INVITED FOR WHICH THE PAYMENT IS MADE. THE PAYMENT IS MADE ON VOUCHER ON WHICH SIGNATURE HAS BEEN OBTAINED. THERE IS NO MATERIAL TO ALLEGE THAT THE EXPENSES ARE NOT GENUINE. ALL THE PAYMENTS ARE FULLY JUSTIFIED & REMARKS GIVEN BY LD CIT II ARE NOT HAVING ANY EVIDENCE. 21. ASSESSEE PURCHASED ELECTRIC ITEMS FROM ONE M/S. CHOUDHARY ELECTRICALS, PAL ROAD, JODHPUR. A CLOSE ANALYSIS OF THE SERIAL NO. OF THE BILLS AND T HE DATES WOULD REVEAL THAT THE SAID CONCERN PROBABLY SOLD GOODS ONLY TO THE ASSESSEE TRUST AND NOBODY ELSE. IT IS FURTHER FOUND THAT ALL THE BILLS CONTAI N SAME HANDWRITING PATTERN, SAME PEN AND SAME INK. THUS, THE GENUINENESS OF THE PURCHASES IS IN GRAVE DOUBT. ON BEING ASKED, THE ASSESSEE TRUST MERELY STATED THAT IT CAN BE A COINCIDENCE. THE OBSERVATION OF THE CIT IS ONLY ON SURMISES & CONJECTURES. M/S. CHOUDHARY ELECTRICALS IS A RETAILER AND HARDLY ANY PERSON ASK FOR A BILL FROM HIM. HE ISSUES THE BILL ONLY WHEN THE CUSTOMER REQUIRE. IT IS FOR THIS REASON THAT BILLS ARE IN CONTINUITY. HOWEVER, THIS DOES NOT MEAN THAT PURCHASES ARE NOT GENUINE. 22. DURING THE VERIFICATION OF THE VOUCHER FILE, IT WAS FOUND TO CONTAIN A BILL NO. 235 DATED 03.05.2006 OF M/S. INDUSTRIAL SUPPLIERS. THIS BILL IS DULY ENTERED AND DEBITED IN THE BOOKS OF ACCOUNTS. ALONG WITH THIS BILL A SLIP HAS BEEN FOUND ANNEXED WHICH SHOWS EARLIER AND OLD OUTSTANDING BILLS AS BELOW:- BILL NO. AMOUNT (RS.) 3073 37,617 3075 4,592 3171 44,858 31769 56,904 428 574 THE ASSESSEE TRUST WAS REQUESTED TO SHOW THE RELEVANT ENTRIES OF THE BILLS MENTIONED AS ABOVE IN THE BOOKS OF ACCOUNTS. THE ASSESSEE TRUST COULD SHOW ENTRY OF BILL NO. 428 AMOUNTING TO RS.574/- ONLY. NONE OF THE OTHER BILLS WERE FOUND DEBITED BILL NO. 3073, 3075, 3171 & 3176 AGGREGATES TO RS. 1,43,971/-. THESE BILLS PERTAIN TO F.Y. 05-06. AS PER THE LEDGER ACCOUNT OF INDUSTRIAL SUPPLIERS IN M/S VYAS DENTAL COLLEGE & HOSPITAL, THERE IS OPENING BALANCE OF RS. 1,53,032/- WHICH COVERS THIS AMOUNT. CIT HAS ACCEPTED THAT THESE ARE OLD OUTSTANDING BILLS AS PER THE SLIP. THUS, NO ADVERSE VIEW CAN BE DRAWN ON THE BASIS OF SUCH SLIPS. 8 IN THE BOOKS OF ACCOUNTS. 23. PLACED ON RECORD IS A BILL NO. 1575 DATED 26.03.2008 FOR TRAVELING BY AIR FROM DELHI TO JODHPUR FOR RS.3,875/- OF M/S. SUNCITY TOURS AND TRAVELS, JODHPUR. THE ASSESSEE TRUST COULD NOT EXPLAIN AND GIVE DETAILS AS TO WHO WAS THE PERSON IN WHOSE NAME THE TICKET WAS BOOKED AND IN WHAT WAY THE SAID EXPENDITURE IS RELATED TO CHARITABLE / EDUCATIONAL ACTIVITIES PURSUED BY THE TRUST. THE EXPENDITURE IS INCURRED FOR TRAVELLING FROM JODHPUR TO DELHI BY SHRI MANISH VYAS FOR VISIT TO DENTAL COUNSEL OF INDIA IN CONNECTION WITH THE WORK OF DENTAL COLLEGE. 24. IT WAS FOUND THAT THE ASSESSEE TRUST INCURRED EXPENDITURE OF RS.26,065/- FOR REPLACING TYRE ETC. FOR VEHICLE NO. RJ14-7C-5249 VIDE BILL NO. 6318 DATED 20.03.2008 OF M/S. TYRE PLACE, JODHPUR. THE SAID VEHICLE IS A PERSONAL CAR AND USED FOR PERSONAL PURPOSES OF THE TRUSTEE. THE SAID EXPENDITURE CANNOT BE TERMED AS INCURRED FOR PURSUING CHARITABLE ACTIVITIES. LIKEWISE, THERE IS AN EXPENDITURE OF RS.5,456/- FOR PURCHASE OF CAR COVERS FROM M/S. FRIENDS CAR DECOR VIDE BILL NO. 1148 DATED 15.03.2008. THE SAID EXPENDITURE HAS NOTHING TO DO WITH ANY CHARITABLE OR EDUCATIONAL ACTIVITIES. THIS ATTRACTS SECTION 13(1)(C). CAR NO. RJ 14 7C 5249 IS REGISTERED IN THE NAME OF ASSESSEE SOCIETY. CAR IS USED FOR THE ACTIVITIES OF THE TRUST & THEREFORE ASSUMPTION OF CIT THAT IT IS FOR THE PERSONAL PURPOSE OF TRUSTEES IS DEVOID OF ANY MERIT. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 25. THE TRUST INCURRED EXPENDITURE OF A SUM OF RS.18,032/- ON ACCOUNT OF AIR TRAVEL OF SHRI SHYAM VYAS AND SMT. PUSHPA VYAS VIDE BILL NO. 13001 DATED 02.02.2008 OF M/S. SUNCITY TOURS & TRAVELS FOR TRAVEL TO DELHI AND BACK TO JODHPUR. ON BEING INQUIRED, THE ACCOUNTANTS PRESENT BEFORE ME STATED THAT SHRI SHYAM VYAS AND SMT. PUSHPA VYAS ARE UNCLE AND AUNTY OF SHRI MANISH VYAS WHO IS MAIN PROMOTER AND CHAIRMAN OF THE TRUST. THIS ATTRACTS SECTION 13(1)(C). SHRI SHYAM VYAS IS HONORARY CONSULTANT OF THE ASSESSEE TRUST. HE WENT TO DELHI FOR TAKING INTERVIEW OF VARIOUS FACULTIES. THIS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED ON CALLING THESE PERSONS TO JODHPUR FROM DELHI. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 26. ASSESSEE SPENT A SUM OF RS.10,680/- FOR AIR TRA VEL TO DELHI VIDE BILL NO. 1375 DATED 15.02.2008 OF M/S. SUNCITY TOURS & TRAVELS, JODHPUR IN RESPECT OF SHRI MANISH VYAS, SHRI SHYAM VYAS AND SMT. PUSHPA VYAS. SHRI MANISH VYAS IS MAIN PROMOTER OF THE TRUST. THIS ATTRACTS SECTION 13(1)(C). AS EXPLAINED IN PARA 25 ABOVE, THE EXPENDITURE OF RS.10,680/- IS MOST REASONABLE AND HAS OTHERWISE SAVED THE EXPENDITURE WHICH THE ASSESSEE SOCIETY WOULD HAVE INCURRED. 27. ASSESSEE INCURRED FOLLOWING EXPENDITURES: RS.8,400/- FOR PURCHASE OF THREE TYRES FROM M/S. S.R. ENTERPRISES, JODHPUR VIDE BILL NO. 3276 DATED 04.02.2008 FOR VEHICLE NO. RJ19-CA-1677 (ASCENT). RS.1,816/- FOR REPAIR OF TATA SAFARI CAR (RJ14-7C- 5249) FROM M/S. JODHPUR MOTORS VIDE BILL DATED THE COLLEGE OF THE SOCIETY IS SITUATED AT ABOUT 20 KM AWAY FROM JODHPUR HEAD QUARTERS AND REGULAR CONNECTIVITY WITH THEM IS POSSIBLE WITH THE HELP OF VARIOUS VEHICLES. MAINTENANCE OF CAR LOG BOOK IS NOT PRACTICABLE. THE VEHICLES ARE REGISTERED IN THE NAME OF ASSESSEE SOCIETY & USED FOR THE 9 29.01.2008. RS.50,445/- FOR PURCHASE OF BATTERIES FOR TATA SAFARI CAR FROM M/S. ADARSH BATTERIES VIDE BILL NO. 1383 DATED 03.01.2008. RS.10,561/- FOR REPAIR OF ASCENT CAR FROM M/S. DHOOT SERVICES PVT. LTD. VIDE BILL DATED 08.10.2007. RS.12,528/- FOR REPAIR OF TATA SAFARI FROM M/S. JODHPUR MOTORS VIDE BILL DATED 23.05.2007. RS.9,282/- FOR REPAIRING OF INDICA CAR RJ19-2C- 0716 FROM M/S. JODHPUR MOTORS VIDE BILL DATED 07.06.2007. RS.3,462 FOR REPAIRING OF TATA SAFARI CAR FROM M/S. JODHPUR MOTORS VIDE BILL DATED 07.05.2007. RS.19,285/- PAID FOR CAR INSURANCE OF TATA SAFARI VIDE CHEQUE NO. 284515 DATED 22.05.2007. NO CAR LOG BOOKS HAVE BEEN MAINTAINED BY THE TRUST TO PROVE THAT ALL THE EXPENSES INCURRED ON REPAIRING, INSURANCE, BATTERIES, DIESEL ETC. WERE INCURRED WHOLLY & EXCLUSIVELY FOR THE PURPOSE OF CHARITABLE ACTIVITIES. THIS ATTRACTS SECTION 13(1)( C). ACTIVITIES OF THE TRUST & THEREFORE ASSUMPTION OF CIT THAT THESE EXPENSES ARE NOT INCURRED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF CHARITABLE ACTIVITIES IS DEVOID OF ANY MERIT. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 28. ASSESSEE INCURRED EXPENDITURE OF RS.4,770 ON ACCOUNT OF AIR TRAVEL OF SHRI MANISH VYAS FROM MUMBAI TO JODHPUR VIDE BILL NO. 1207 DATED 10.01.2008 OF M/S. SUNCITY TOURS & TRAVELS. THE LD. AR COULD NOT GIVE ANY REASON AS TO THE PURPOSE OF JOURNEY & THUS THE SAME IS PERSONAL IN NATURE FOR THE PURPOSE OF WHICH TRUST FUNDS ARE UTILIZED. THIS ATTRACTS SECTION 13(1)(C). SHRI MANISH VYAS IS THE TRUSTEE OF THE SOCIETY. HE WENT TO MUMBAI FOR TAKING INTERVIEW OF VARIOUS FACULTIES. THIS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED ON CALLING THESE PERSONS TO JODHPUR FROM MUMBAI. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 29. ASSESSEE INCURRED AN EXPENDITURE OF RS.7,775/- VIDE BILL NO. 1226 DATED 15.01.208 OF M/S. SUNCITY TOURS & TRAVELS FOR TRAVEL OF SHRI SHYAM VYAS AND SMT. PUSHPA VYAS FROM DELHI TO JODHPUR. SINCE BOTH THESE PERSONS ARE UNCLE & AUNT OF SH. MANISH VYAS, THEIR AIR TRAVEL HAD NOTHING TO DO WITH THE CHARITABLE ACTIVITIES. THIS ATTRACTS SECTION 13(1)(C). SHRI SHYAM VYAS IS HONORARY CONSULTANT OF THE ASSESSEE TRUST. HE WENT TO DELHI FOR TAKING INTERVIEW OF VARIOUS FACULTIES. THE EXPENDITURE OF RS. 7,775/- IS MOST REASONABLE AND HAS OTHERWISE SAVED THE EXPENDITURE WHICH THE ASSESSEE SOCIETY WOULD HAVE INCURRED. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 30. ASSESSEE INCURRED EXPENDITURE OF RS.3,390/- VID E BILL NO. 1961 DATED 08.11.2007 OF M/S. RAHUL TRADERS FOR PROVIDING TATA SKY CONNECTION AT B- 10, KAMLA NEHRU NAGAR, JODHPUR WHICH IS RESIDENTIAL PREMISES OF SHRI MANISH VYAS. THUS, THE PERSONAL EXPENDITURE OF THE MAIN TRUSTEE IS MET OUT OF TRUST FUNDS & THIS ATTRACTS SECTION 13(1)(C). THE ADDRESS OF THE RESIDENTIAL PREMISES OF SHRI MANISH VYAS WAS WRONGLY MENTIONED ON THE BILL. THE EXPENDITURE IS INCURRED ON PROVIDING TATA SKY CONNECTION FOR BOYS HOSTEL AT VILLAGE KUDI, JODHPUR. 10 31. ASSESSEE SOCIETY PURCHASED A MOBILE TELEPHONE (NOKIA N73 MODEL) FOR RS. 15,000/- FROM M/S. SHOPPERS POINT, JODHPUR WHICH WAS ONE OF THE LATEST MOBILE AVAILABLE AT THAT TIME & HAD THE OBJECT OF THE TRUST IS OF CHARITABLE, THEN IT COULD HAVE PURCHASED A LOWER PRICED MOBILE PHONE. FURTHER, NO DETAIL AS TO IN WHOSE POSSESSION THE MOBILE PHONE IS & SIM INSERTED IS GIVEN. THUS, THE FUNDS WERE UTILIZED FOR PURCHASING EXPENSIVE GADGETS TO TAKE CARE OF THE PERSONAL NEEDS OF THE TRUSTEES WHICH HARDLY HAD ANY ELEMENT OF CHARITY. THIS ATTRACTS SECTION 13(1)(C). THE MOBILE PHONE WAS PURCHASED FOR SHRI MANISH VYAS WHO IS THE CHAIRMAN OF THE ASSESSEE SOCIETY. HE IS TO REPRESENT THE SOCIETY AT VARIOUS PLATFORMS. THE SAME IS USED BY HIM FOR THE ACTIVITIES OF THE TRUST. ONLY BECAUSE THE COST OF SUCH PHONE IS HIGH, IT CAN NOT BE CONCLUDED THAT THE SAME IS FOR HIS PERSONAL NEED. RATHER, A GOOD MOBILE PHONE IS REQUIRED NOT ONLY FOR EFFICIENT WORKING BUT ALSO THE SAME HAS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED HAD IT PURCHASED A LOWER QUALITY MOBILE PHONE. 32. ASSESSEE INCURRED EXPENDITURE OF RS. 22,433/- O N ACCOUNT OF TRAVELLING OF SHRI MANISH VYAS, SMT. ASHA VYAS (WIFE) AND SHRI SOURABH VYAS (SON) FROM MUMBAI TO GOA VIDE BILL OF M/S. SUNCITY TOURS & TRAVELS. THE SAME HAD NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST & THUS IT IS A LEISURE TRIP BY THE ENTIRE FAM ILY OF SH. MANISH VYAS WHICH WAS FUNDED BY THE TRUST. THIS ATTRACTS SECTION 13(1)(C). SHRI MANISH VYAS & SMT. ASHA VYAS ARE THE TRUSTEES OF THE SOCIETY. THEY WENT TO GOA FOR MEETINGS WITH THE GOA DENTAL COLLEGE & HOSPITALS AT GOA FOR UNDERSTANDING THEIR SYSTEM FOR BETTER COMPLIANCE & IMPLEMENTATION AT THE INSTITUTION RUN BY THE ASSESSEE SOCIETY. SH. SOURABH VYAS ACCOMPANIED THEM SINCE HE IS JUST 5-7 YEARS OLD & HE COULD NOT HAVE BEEN LEFT ALONE AT HOME. 33. ASSESSEE INCURRED EXPENDITURE ON AIR TRAVEL OF SHRI MANISH VYAS, SMT. ASHA VYAS AND SHRI SOURABH VYAS FROM JODHPUR TO MUMBAI FOR RS. 12,213/- VIDE BILL NO. 778 DT. 04.10.2007 OF M/S. SUNCITY TOURS & TRAVELS FOR. THE TRAVEL OF WIFE & ASSESSEE HAD NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THU S, THE SAME IS FOR PERSONAL PURPOSE & ATTRACTS SECTION 13(1)(C). SHRI MANISH VYAS & SMT. ASHA VYAS ARE THE TRUSTEES OF THE SOCIETY. THEY WENT TO MUMBAI FOR TAKING INTERVIEW OF VARIOUS FACULTIES. THIS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED ON CALLING THESE PERSONS TO JODHPUR FROM MUMBAI. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 34. ASSESSEE PAID A DONATION OF RS.72,000/- TO MANDALESHWAR MAHADEV VIDE CHEQUE NO.139995 DATED 28.03.2008. NO PURPOSE OF EDUCATIONAL/CHARITABLE ACTIVITIES COULD BE EXPLAINED BY MAKING SUCH DONATION. THUS, DONATING SUCH A HUGE SUM WAS A PERSONAL DESIRE WHICH HAD NO CONNECTION WITH THE ACTIVITIES OF THE TRUST. FURTHER, NO DETAILS AS TO APPROVAL OF INSTITUTION U/S 11/80G WERE GIVEN & NO MINUTES OF THE BOARD MEETING WERE AVAILABLE TO PROVE THAT THE DONATION WOULD PROPAGATE & ENLARGE THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THE DONATION IS GIVEN BY WAY OF ACCOUNT PAYEE CHEQUE TO A TEMPLE. THE SAME IS A SOCIAL OBLIGATION OF THE SOCIETY WHERE IT IS FUNCTIONING. SHRI MANISH VYAS IS NOT RELATED TO THE TEMPLE. SUCH DONATION IS GIVEN AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. FURTHER, THE STUDENTS OF THE HOSTEL ALSO KEEP ON VISITING THE TEMPLE FOR OFFERING PRAYERS. 35. THE ASSESSEE INCURRED FOLLOWING EXPENDITURE ON THE MOBILE PHONE OF SH. MANISH VYAS:- MOBILE NO. 9414126800 IS WITH SH. MANISH VYAS WHICH IS USED BY HIM FOR THE ACTIVITIES 11 (I) RS. 2,608/- ON 26.03.2008 FOR MOBILE NO. 9414126800 (II) RS.741/- ON 20.03.2008 FOR MOBILE NO. 9314074300 (III) RS.443 ON 20.03.2008 FOR MOBILE NO. 9928884401 THESE EXPENDITURE INCURRED ON MOBILE PHONE OF SHRI MANISH VYAS ARE PERSONAL IN NATURE WHICH ARE FUNDED BY THE TRUST FUNDS. THUS, THE FUNDS WERE UTILIZED FOR NON-CHARITABLE ACTIVITIES. OF THE TRUST. MOBILE NO. 9314074300 ALTHOUGH IS IN THE NAME OF SH. MANISH VYAS BUT THE SAME IS USED BY SH. SHANTILAL DHANDIYA WHO IS THE TRUSTEE OF THE SOCIETY & THE PHONE IS USED BY HIM FOR SUPERVISING THE WORK RELATED TO THE CONSTRUCTION OF BUILDING. MOBILE NO. 9928884401 IS ALSO USED FOR THE ACTIVITIES OF THE TRUST. 36. A BILL FOR PURCHASE OF CHAIR OF GODREJ FOR RS.13,613/- FROM M/S. JODHPUR METALS PVT. LTD. VIDE BILL NO. 2591 DATED 05.11.2007 WAS FOUND IN THE NAME OF SHRI RAJENDRA CHOUDHARY. HOWEVER, IT COULD NOT BE EXPLAINED AS TO HOW THE PAYMENT WAS MADE BY THE SOCIETY WHEN THE CHAIR WAS PURCHASED FOR SH. RAJENDRA CHOUDHARY. NO EVIDENCE WAS FILED AS TO HOW HE IS ASSOCIATED WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THUS, THE FUNDS OF THE TRUST WERE MISUTILIZED. THIS ATTRACTS SECTION 13(1)(C). SHRI RAJENDRA CHOUDHARY WAS THE HEALTH MINISTER OF RAJASTHAN WHO FREQUENTLY VISITED THE ASSESSEE SOCIETY FOR STUDENTS WELFARE. THE CHAIR WAS PURCHASED BY THE SOCIETY FOR HIS SEPARATE CHAMBER IN THE SOCIETY & ACCORDINGLY HIS NAME WAS MENTIONED IN THE BILL BUT THE PAYMENT WAS MADE BY THE SOCIETY. 36A. EXPENDITURE OF RS. 750/- VIDE BILL NO. 222 DAT ED 06.11.2007 OF M/S. GEETA PRINTERS WAS INCURRED FOR PURCHASE OF DIWALI GREETING CARDS. NO SAMPLE OF THE CARD OR THE LIST OF THE PERSONS TO WHOM SUCH CARDS WERE GIVEN IS PROVIDED & THUS THE SAME IS A PERSONAL EXPENDITURE OF SH. MANISH VYAS WHICH HAD NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THE DIWALI GREETING CARDS HAVE BEEN DISTRIBUTED TO VARIOUS FACULTIES/DONORS ASSOCIATED WITH THE ACTIVITIES OF THE TRUST. DISTRIBUTING SUCH CARDS IS A COMMON PHENOMENON & IS AN ESSENTIAL PART OF THE EDUCATIONAL INSTITUTION WHERE LARGE PUBLIC INCLUDING PROMINENT PERSONS ARE CONNECTED FOR ACHIEVEMENTS OF AIMS & OBJECTS OF THE SANSTHAN. 37. ASSESSEE INCURRED EXPENDITURE OF RS. 8,840/- VI DE BILL NO. 727 DATED 20.09.2007 OF M/S. SUNCITY TOURS & TRAVELS FOR TRAVELLING OF SHRI MANISH VYAS AND SHRI RAJENDRA CHOUDHARY FROM JODHPUR TO DELHI. THE RELEVANCE OF TRAVEL OF SHRI RAJENDRA CHOUDHARY COULD NOT BE EXPLAINED & THUS THE TRUST FUNDS WERE MISUTILIZED & HAD NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. SHRI MANISH VYAS & SHRI RAJENDRA CHOUDHARY WENT FROM JODHPUR TO DELHI FOR VISITING THE DENTAL COUNSEL OF INDIA IN CONNECTION WITH THE WORK OF DENTAL COLLEGE. AS STATED IN POINT NO. 36 ABOVE, SHRI RAJENDRA CHOUDHARY WAS THE HEALTH MINISTER OF RAJASTHAN WHO FREQUENTLY VISITED THE ASSESSEE SOCIETY FOR STUDENTS WELFARE & THUS HIS VISIT TO DELHI ALONG WITH SHRI MANISH VYAS DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. 38. ASSESSEE PURCHASED SUKAM INVERTER (1400 VA) AND BATTERIES FOR RS.14,624/- AND HOME UPS FOR RS.7,693/- FROM M/S. MEHTA ENGINEERING VIDE BILL NO. 286 DATED 12.06.2007 BUT THE SAME WERE INSTALLED AT THE RESIDENCE AND NOT IN ANY INSTITUTE . INVERTER/BATTERY & UPS IS INSTALLED AT THE RESIDENCE OF PRINCIPAL OF THE DENTAL COLLEGE. THE PRINCIPAL UNDERTOOK VARIOUS ACTIVITIES OF THE SOCIETY FROM ITS RESIDENCE ALSO & THUS THERE IS NO MISUTILIZATION OF THE SOCIETYS 12 THUS, THE TRUST FUNDS HAVE BEEN MISUTILIZED. THIS ATTRACTS SECTION 13(1)(C). FUND. 39. TRAVELLING EXPENDITURE FROM JODHPUR TO UDAIPUR OF RS.5,229/- VIDE BILL NO. 338 DATED 01.06.2007 OF M/S. SUNCITY TOURS & TRAVELS HAS BEEN INCURRED ON TRAVELLING OF SHRI SOURABH VYAS AND SMT. ASHA VYAS, WHO IS THE SON AND WIFE OF SHRI MANISH VYAS. THE SAID EXPENDITURE IS INCURRED MERELY BECAUSE THESE TWO PERSONS ARE THE FAMILY MEMBERS OF THE TRUSTEES. THUS, THE FUNDS ARE MISUTILIZED & THIS ATTRACTS SECTION 13(1)(C). SMT. ASHA VYAS IS THE TRUSTEE OF THE SOCIETY. SHE ALONG WITH SH. MANISH VYAS (TRUSTEE) & SH. SAURABH VYAS (SON WHO IS JUST 5-7 YEARS OLD) TRAVELLED TO UDAIPUR FOR THE PURPOSE OF ATTENDING A FUNCTION OF UDAIPUR DENTAL COLLEGE. THEREFORE, THIS TRIP CAN NOT BE SAID TO BE OF PERSONAL NATURE AS DEVELOPING FRATERNITY WITH OTHER COLLEGES IS A PART OF EDUCATIONAL ACTIVITIES. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 40. ASSESSEE INCURRED EXPENDITURE OF RS. 5,630/- FO R AIR TRAVEL EXPENSES OF THE ABOVE STATED TWO PERSONS FROM JODHPUR TO DELHI VIDE BILL NO. 223 DATED 04.05.2007. THUS, THE FUNDS OF THE SOCIETY WERE UTILIZED FOR MEETING THE PERSONAL NEEDS OF THE FAMILY MEMBERS OF THE TRUSTEE & THIS ATTRACTS SECTION 13(1)(C). SMT. ASHA VYAS IS THE TRUSTEE OF THE SOCIETY. SHE VISITED DELHI FOR CONFERENCE WITH THE DENTAL COUNSEL OF INDIA IN CONNECTION WITH THE WORK OF DENTAL COLLEGE. SH. SOURABH VYAS ACCOMPANIED HER SINCE HE IS JUST 5-7 YEARS OLD & THUS HE COULD NOT BE LEFT ALONE AT HOME. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 41. ASSESSEE INCURRED AN EXPENDITURE OF RS. 3,270/- VIDE BILL NO. 03 DATED 02.04.2007 OF M/S. SUNCITY TOURS & TRAVELS FOR AIR TRAVEL OF SHRI SOURABH VYAS FROM DELHI TO JODHPUR. THE EXPENDITURE CAN NOT BE CONSIDERED AS CHARITABLE & THIS ATTRACTS SECTION 13(1)(C). SINCE SH. SOURABH VYAS IS JUST 5-7 YEARS OLD & COULD NOT BE LEFT ALONE AT HOME, HE ACCOMPANIED WITH HIS PARENTS WHO WENT TO DELHI FOR CONFERENCE WITH THE DENTAL COUNSEL OF INDIA IN CONNECTION WITH THE WORK OF DENTAL COLLEGE. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 42. TRAVELLING EXPENDITURE OF RS. 10,275/- WAS INCURRED ON TRAVELLING OF SHRI MANISH VYAS AND HIS WIFE SMT. ASHA VYAS FROM DELHI TO JODHPUR VIDE BILL DATED 02.04.2007 OF M/S. SUNCITY TOURS & TRAVELS. NO SUPPORTING EVIDENCE WAS FILED AS TO HOW SMT. ASHA VYAS IS RELATED TO THE ACTIVITIES OF THE SOCIETY & THUS HER TRAVEL EXPENDITURE WAS INTENTIONALLY, INCORRECTLY & WRONGLY FUNDED BY THE TRUST. THIS ATTRACTS SECTION 13(1)(C). SMT. ASHA VYAS IS THE TRUSTEE OF THE SOCIETY. SHE VISITED DELHI FOR CONFERENCE WITH THE DENTAL COUNSEL OF INDIA IN CONNECTION WITH THE WORK OF DENTAL COLLEGE. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 43. ASSESSEE PAID A SUM OF RS. 2,100/- ON 27.06.200 7 TO LANGAR COMMITTEE, PUNJAB- BRANCH JODHPUR AS DONATION FOR BABA AMARNATH YATRA. THE DONATION RECEIPT DOES NOT SHOW ANY APPROVAL U/S 80G OF THE ACT. THUS, THERE IS NO ELEMENT OF CHARITY IN THE SAID EXPENDITURE & IT WAS GIVEN BY SH. MANISH VYAS OR ANY OTHER TRUSTEE IN HIS PERSONAL CAPACITY BY DRAWING THE FUNDS FROM THE TRUST. THIS ATTRACTS SECTION 13(1)(C). THE DONATION IS GIVEN BY THE SOCIETY AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. SHRI MANISH VYAS IS NOT RELATED TO THE CONCERN WHERE THE DONATION IS GIVEN. IT IS GIVEN AS A MEASURE OF SOCIAL WELFARE. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 44. ASSESSEE INCURRED EXPENDITURE OF RS.22,000/- ON DINING TABLE WAS PURCHASED FOR USE IN THE 13 PURCHASE OF DINNING TABLE FROM M/S. RIGHT CHOICE. THE AMOUNT WAS PAID BY CHEQUE NO. 125623 DATED 28.06.2007. THE SAME IS PERSONAL IN NATURE & HAS NOTHING TO DO WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. RESIDENCE OF INCHARGE OF DENTAL COLLEGE & THUS NO PERSONAL ELEMENT IS INVOLVED IN IT. 45. ASSESSEE SOCIETY PURCHASED A MOBILE TELEPHONE FOR RS. 22,000/- VIDE BILL NO. 14483 DT. 15.06.07 FROM M/S. SHOPPERS POINT, JODHPUR. PURCHASING SUCH COSTLY PHONE WAS ESSENTIALLY MEANT TO SHOW THE PERSONAL STATUS OF THE TRUSTEES WHEN THE PU RPOSE COULD HAVE BEEN MET BY PURCHASING A LOW END MOBILE PHONE FOR RS. 1500/- OR SO. FURTHER, NO DETAIL AS TO IN WHOSE POSSESSION THE MOBILE PHONE IS & SIM INSERTED IS GIVEN. THUS, SUCH EXTRAVAGANT EXPENDITURE PROVES THAT THE OBJECT OF THE TRUST WAS NOT CHARITABLE/EDUCATIONAL ACTIVITIES. THIS ATTRACT S SECTION 13(1)(C). THE MOBILE PHONE WAS PURCHASED FOR SENIOR EXECUTIVE OF DENTAL COLLEGE WHO HAS TO REPRESENT HIMSELF FOR VARIOUS ACTIVITIES OF THE SOCIETY. THE SAME IS USED BY HIM FOR THE ACTIVITIES OF THE TRUST. ONLY BECAUSE THE COST OF SUCH PHONE IS HIGH, IT CAN NOT BE CONCLUDED THAT THE SAME IS FOR HIS PERSONAL NEED. RATHER, A GOOD MOBILE PHONE IS REQUIRED NOT ONLY FOR EFFICIENT WORKING BUT ALSO THE SAME HAS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED HAD IT PURCHASED A LOWER QUALITY MOBILE PHONE. 46. ASSESSEE PAID A SUM OF RS. 50,000/- TO ICICI FO R PRUDENTIAL LIFE INSURANCE OF SHRI MANISH VYAS VIDE CHEQUE NO. 284528 DATED 28.05.2007 WHICH SHOWS THAT THE PERSONAL INSURANCE EXPENDITURE OF SHRI MANISH VYAS WAS MET OUT OF THE TRUST FUNDS. EVEN NO ENTRY FOR RETURNING THE SAID AMOUNT BY HIM TO THE SOCIETY WAS FOUND. THUS, THE FUNDS ARE UTILIZED FOR FULFILLING THE PERSONAL NEEDS OF SH. MANISH VYAS. THE AMOUNT WAS DEBITED TO ADVANCE AGAINST IMPREST (MANISH VYAS) ACCOUNT. THIS IS A RUNNING ACCOUNT. SUBSEQUENTLY, THE AMOUNT HAS BEEN PAID BACK BY SH. MANISH VYAS & AS ON 31.03.09, THERE IS A CREDIT OF RS. 3,92,902/- IN HIS ACCOUNT WITH THE ASSESSEE SOCIETY. THUS, THERE IS NO BENEFIT PROVIDED BY THE SOCIETY TO SH. MANISH VYAS 47. FROM THE CASH BOOK, IT IS EVIDENT THAT THERE IS WITHDRAWAL OF CASH OF RS.50,000/- ON 11.05.2007 BY CHEQUE NO. 284506. THE CASH BOOK FURTHER SHOWS DEPOSIT OF CASH OF RS.50,000/- IN THE BANK ON 12.05.2007 WHICH IMPLIES THAT THE CASH WITHDRAWAL WAS UTILIZED FOR RE-DEPOSITING THE SAME IN THE BANK ON THE NEXT DAY. HOWEVER, THE VOUCHER SHOWS THAT THE CHEQUE NO. 284506 WAS PAID TO ONE SHRI TRENDER T.P. IT IS FOUND THAT AS PER VOUCHER THE CHEQUE NO. 284506 WAS GIVEN TO SHRI TRENDER T.P. WHILE ON THE OTHER HAND THROUGH THE SAME CHEQUE CASH WAS WITHDRAWN AND IT WAS RE-DEPOSITED NEXT DAY. THE TWO ACTS ARE NOT POSSIBLE & THUS THE BOOKS HAVE NOT BEEN MAINTAINED PROPERLY, CORRECTLY & CONTAIN FALSE ENTRIES & DO NOT GIVE A TRUE PICTURE OF THE AFFAIRS OF THE TRUST. IT IS A SELF CHEQUE WHEREBY RS. 50,000/- WAS DRAWN FROM THE CANARA BANK ACCOUNT OF RVS ON 11.05.2007. THE VOUCHER SHOWS THE NAME OF SH. TRENDER T.P., SINCE THE CASH WAS WITHDRAWN FROM THE BANK FOR ADVANCING THE SAME TO HIM. HOWEVER, SINCE NO ADVANCE WAS GIVEN TO HIM, THE CASH WAS REDEPOSITED IN THE BANK ACCOUNT ON 12.05.2007. BOTH THE ENTRY OF WITHDRAWAL OF CASH FROM BANK & DEPOSIT OF CASH IN BANK IS VERIFIABLE FROM CASH BOOK & BANK ACCOUNT & THEREFORE PRESUMPTION OF CIT THAT BOOKS ARE NOT MAINTAINED PROPERLY IS INCORRECT. 48. CASH BOOK SHOWS WITHDRAWAL OF CASH OF RS.30,000/- ON 10.04.2007 BY CHEQUE NO. THE CORRECT CHEQUE NO. IS 294724. IT IS A SELF CHEQUE WHEREBY RS. 30,000/- WAS 14 294024. THE SAID WITHDRAWAL REMAINED UNUTILIZED AND UNSPENT ON 10.04.2007 AND THEREFORE THE CLOSING CASH BALANCE ON 10.04.2007 INCREASED CORRESPONDINGLY. HOWEVER, THE VOUCHER AS MAINTAINED BY THE ASSESSEE HIMSELF SHOWS PAYMENT OF RS. 30,000/- TO MANDAL ON THE NEXT DAY BY CHEQUE NO. 294024. THUS, THE CASH BOOK IS DEFECTIVE, FAULTY & MISLEADING & THE SAME DOES NOT GIVE A TRUE PICTURE OF THE AFFAIRS OF THE TRUST . DRAWN FROM THE CANARA BANK ACCOUNT OF RVS ON 13.04.2007. THE SAME WAS DULY REFLECTED IN THE CASH BOOK OF RVS. THE VOUCHER SHOWS THE NAME OF MANDAL SINCE CASH WAS WITHDRAWN FROM THE BANK FOR ADVANCING THE SAME TO HIM. HOWEVER, SINCE NO ADVANCE WAS GIVEN TO HIM, IT WAS REDEPOSITED IN THE BANK ACCOUNT ON 19.04.2007. BOTH THE ENTRY OF WITHDRAWAL OF CASH FROM BANK & DEPOSIT OF CASH IN BANK IS VERIFIABLE FROM CASH BOOK & BANK ACCOUNT & THEREFORE PRESUMPTION OF CIT THAT BOOKS ARE NOT MAINTAINED PROPERLY IS INCORRECT. 49. ASSESSEE PURCHASED GOLD COINS ON 08.07.2007 FOR RS. 28,719/- VIDE BILL NO. 429 FROM M/S. TANISHQ, JODHPUR. SINCE THE SAME IS NOT REFLECTED IN THE BALANCE SHEET AS AN ASSET, IT IS EITHER GIVEN AS GI FT WHICH BY NO STRETCH OF IMAGINATION CAN BE TREATED FOR CHARITABLE PURPOSE OR RETAINED BY THE TRUSTEES IN THEIR INDIVIDUAL CAPACITY, THEREBY MISUTILIZING THE FUNDS OF THE SOCIETY. THIS ATTRACTS SECTION 13(1)(C). THE GOLD COINS WERE DISTRIBUTED FOR BEST TEACHING AWARD TO THE FACULTIES OF THE SOCIETY FOR RECOGNIZING THEIR EFFORTS WHICH THEY HAVE PUT IN FOR THE EDUCATIONAL ACTIVITIES OF THE SOCIETY & TO BOOST THEIR MORALE. THUS, THE EXPENDITURE IS WHOLLY FOR CHARITABLE PURPOSE & SECTION 13(1)(C) IS NOT VIOLATED. 50. ASSESSEE PAID BUS HIRE CHARGES TO SHRI RAM SING H @RS.12,000/- PER MONTH. HOWEVER, NO TAX WAS DEDUCTED NOR ANY LEDGER ACCOUNT WAS OPENED & THE AMOUNTS WERE DIRECTLY DEBITED IN THE CASH BOOK. THUS, THE BOOKS ARE NOT MAINTAINED CORRECTLY & PROPERLY. THIS ATTRACTS SECTION 13(1)(C). SHRI RAM SINGH IS THE DRIVER OF THE COLLEGE BUS. HE IS PAID SALARY IN CASH WHICH IS DIRECTLY DEBITED TO THE EXPENSES ACCOUNT & THEREFORE THERE IS NO NEED TO OPEN HIS LEDGER ACCOUNT. NO TDS WAS REQUIRED TO BE DEDUCTED AS HIS INCOME IS BELOW THE TAXABLE LIMIT. 51. ASSESSEE PURCHASED TITAN GENTS WRIST WATCH ON 11.08.2007 FOR RS. 2,745/- VIDE BILL NO. 6387 FROM M/S. SAINIK TIMES. THE NAME OF THE PERSON TO WHOM SAID WRIST WATCH WAS GIVEN WAS NOT PROVIDED & THUS THE EXPENDITURE CAN NOT BE CONSIDERED TO BE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE SOCIETY. THIS ATTRACTS SECTION 13(1)(C). THE TITAN GENTS WRIST WATCH WAS PURCHASED FOR GIVING THE SAME AS AN AWARD TO THE BEST STUDENT WHICH WAS DISTRIBUTED ON 15.08.2007. THUS, THE EXPENDITURE IS WHOLLY FOR CHARITABLE PURPOSE & SECTION 13(1)(C) IS NOT VIOLATED. 52. ASSESSEE PURCHASED 25 WRIST WATCHES ON 16.07.2007 FOR RS. 10,625/- VIDE BILL NO. 6132 FROM M/S. SAINIK TIMES. THE NAME OF THE PERSONS TO WHOM THE SAID WRIST WATCHES WERE GIVEN WAS NOT PROVIDED & THUS THE EXPENDITURE CAN NOT BE CONSIDERED TO BE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE SOCIETY. THIS ATTRACTS SECTION 13(1)(C). 25 WRIST WATCHES WERE PURCHASED FOR DISTRIBUTING THE SAME AS AN AWARD TO THE BEST STUDENTS HAVING HIGHEST ATTENDANCE. THUS, THE EXPENDITURE IS WHOLLY FOR CHARITABLE PURPOSE & SECTION 13(1)(C) IS NOT VIOLATED. 53. ASSESSEE PAID A SUM OF RS. 17,300/- TO SHRI NARESH SUTHAR FOR FURNITURE PURCHASED ON 19.06.2007. FROM THE BILL, IT IS EVIDENT THAT HE WA S THE ADVANCE WAS GIVEN BY SH. MANISH VYAS FROM HIS PERSONAL FUNDS & WHEN THE SUPPLIER SUBMITTED THE BILL, PAYMENT WAS SHOWN TO 15 PAID AN ADVANCE OF RS. 9,000/-. HOWEVER, THE CASH BOOK DOES NOT SHOW ANY ENTRIES OF ADVANCE PAID TO HIM. THEREFORE, THE BOOKS OF ACCOUNTS ARE FAULTY, UNRELIABLE, INCORRECT & MANIPULATED. HIM FOR RS. 17,300/- OF WHICH RS. 8,300/- WAS PAID TO THE SUPPLIER & RS. 9,000/- TO MANISH VYAS. THIS DOES NOT MAKE THE BOOKS UNRELIABLE. 54. A BUS REPAIR VOUCHER FOR BUS NO. 314 FOR RS.53,000/- AS PAID TO SHRI HUKMA RAM ON 15.06.2007. THE SAID VOUCHER ALSO SHOWS THAT ONE SHRI SHANTILAL JI HAD AN IMPREST ACCOUNT WITH THE TRUST. HOWEVER, NO PAYMENT HAS BEEN SHOWN TO SHRI HUKMA RAM IN THE CASH BOOK OR EVEN THROUGH THE IMPREST ACCOUNT OF SHRI SHANTILAL JI. ONLY JOURNAL ENTRIES HAVE BEEN POSTED WHEREAS THE VOUCHER SHOWS CASH PAYMENT OF RS.53,000/- TO SHRI HUKMA RAM. ALL THE RUNNING & MAINTENANCE OF COLLEGE BUSES ARE LOOKED AFTER SHRI SHANTILALL JI. HE MADE PAYMENT OF RS.53,000/- TO SH. HUKMARAM WHICH WAS DEBITED TO HIS ACCOUNT BY CREDITING THE IMPREST ACCOUNT OF SHRI SHANTILAL JI. SINCE, PAYMENT WAS MADE BY SH. SHANTILAL JI FROM HIS PERSONAL FUNDS, QUESTION OF SHOWING IT IN THE CASH BOOK OF THE ASSESSEE DOES NOT ARISES. 55. ASSESSEE PURCHASED SWEETS FROM M/S. JODHPUR SWEETS VIDE BILL NO. 5523 DATED 06.07.2007 FOR RS.460/-. THE PURPOSE OF THE TRUST IS CHARITABLE & THUS WELCOMING VISITORS OR FACULTIES ETC. LAVISHLY BY PROVIDING KAJU KATLI OR FRIED KAJUS CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY. THE EXPENDITURE IS INCURRED ON VISITORS/FACULTIES WHO VISITED THE INSTITUTIONS FOR INSPECTION. THIS IS A NORMAL COURTESY PROVIDED TO THE PERSONS COMING FOR INSPECTION. IT CAN NOT BE SAID TO BE MISUTILIZATION OF TRUST FUND. 56. ASSESSEE ADVANCED AN AMOUNT OF RS.14.5 LACS TO M/S. AGARWAL ASSOCIATES AND AGENCIES ON 22.02.2006 WHICH WAS RETURNED TO THE TRUST ON 08.06.2006. NO INTEREST WAS CHARGED BY THE TRUST. THE PARTNERS/PROMOTERS OF THE SAID CONCERN ARE FRIENDS OF SH. MANISH VYAS & THUS SCARCE FUNDS OF THE TRUST WERE PARTED AWAY FOR PROVIDING BENEFITS TO OTHER ENTITY/THIRD PARTY WHICH HAD NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES PURSUED BY THE TRUST. THIS ATTRACTS SECTION 13(1)(D). M/S AGARWAL ASSOCIATED & AGENCIES ARE ENGAGED FOR CONSTRUCTION OF DENTAL COLLEGE & THEREFORE THE ADVANCE WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS SUBSEQUENTLY RETURNED BACK. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT INVESTMENT/DEPOSITS. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 57. ASSESSEE PURCHASED SOME MATERIAL OF RS. 1,83,365/- FROM M/S RAJ DISTRIBUTORS. FROM PERUSAL OF ANNEXURE A2, IT IS EVIDENT THAT OUT OF RS. 1,83,365/-, ADVANCE OF RS. 75,000/- IS GIVEN BY WAY OF CHEQUE & RS. 10,000/- IS GIVEN BY WAY OF CASH ON 14.06.2006 THROUGH SH. SHANTILAL JI & BALANCE RS. 98,365/- IS SHOWN AS DUE. HOWEVER, CASH ADVANCE OF RS. 10,000/- IS NEITHER REFLECTED IN CASH BOOK NOR IN IMPREST ACCOUNT OF SH. SHANTILAL JI. THUS, THE SAME IS GIVEN OUT OF UNRECORDED FUNDS/INCOME OF THE TRUST. RS.10000/- CAN GIVEN BY SHRI SHANTILAL JI OUT OF HIS PERSONAL FUNDS & THEREFORE THIS AMOUNT IS NOT REFLECTED IN THE CASH BOOK. HOWEVER, WHEN FINAL PAYMENT WAS MADE TO THE PARTY, IMPREST ACCOUNT OF SHANTILAL JI WAS CREDITED BY RS. 10,000/-. 58. ASSESSEE REQUESTED BANK TO ISSUE DD OF RS. 30 LACS IN FAVOUR OF M/S AGARWAL TRADING CO., JODHPUR ON ACCOUNT OF PURCHASE OF LAB EQUIPMENTS. HOWEVER, NO EQUIPMENTS WERE PAYMENT WAS MADE DIRECTLY BY BANK TO THE PARTY AS A PART OF DISBURSEMENT OF TERM LOAN AGAINST SUPPLY OF LABORATORY EQUIPMENT. HOWEVER, SINCE THE PARTY COULD NOT SUPPLY 16 PURCHASED & RS. 30 LACS WERE RECEIVED BACK BY THE SOCIETY. THUS, THE AMOUNT ADVANCED IS A LOAN ON WHICH NO INTEREST WAS CHARGED CAUSING FINANCIAL LOSS TO THE TRUST. THE BOOKS ARE THUS NOT RELIABLE & FALSE. THEREFORE, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). THE GOODS, THE AMOUNT WAS RETURNED BACK BY THEM. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT/DEPOSITS OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 59. ASSESSEE ADVANCED RS. 15,00,750/- TO M/S. PREM SALES CORPORATION ON 30.03.2007 ON ACCOUNT OF CLASSROOM FURNITURE. HOWEVER, THE SAID CONCERN NEVER DEALT IN FURNITURE/WOOD & THE SAID ADVANCE WAS ALSO RETURNED VIDE CHEQUE DT. 07.09.2007. THUS, THE AMOUNT ADVANCED IS ESSENTIALLY A LOAN ON WHICH NO INTEREST IS EVER CHARGED. THEREFORE, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). ADVANCE GIVEN TO M/S. PREM SALES CORPORATION IS TOWARDS SUPPLY OF CLASSROOM FURNITURE. THE ADVANCE WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH IS RETURNED BACK AS HE COULD NOT SUPPLY THE SAME. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 60. A PAPER WAS FOUND (LETTER PAD OF M/S. GAURAV COMPUTERS, JAIPUR) WHICH SHOWED RECEIPT OF ADVANCE BY M/S. GAURAV COMPUTERS, JAIPUR TO THE TUNE OF RS.7,45,000/- BY CHEQUE NO. 277188 DATED 20.03.2007 FROM THE TRUST FOR SUPPLY OF COMPUTERS TO VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY. HOWEVER, THE SAID CHEQUE WAS DEPOSITED IN THE CURRENT ACCOUNT 3119 OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY ITSELF. THUS, ADVANCE GIVEN TO M/S. GAURAV COMPUTERS IS FALSE & INCORRECT & THE SAME WAS OUT OF UNRECORDED INCOME. ASSESSEE HAS DISBURSED A TERM LOAN OF RS. 7,45,000/- BY CANARA BANK ON 29.03.2007 WHICH WAS CREDITED IN THE ACCOUNT OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY. THIS AMOUNT WAS THEREAFTER TRANSFERRED TO ACCOUNT NO. 3119 OF RAJASTHAN VIKAS SANSTHAN (RVS). EARLIER THE PAYMENT WAS TO BE MADE TO GAURAV COMPUTERS FOR WHICH AN ADVANCE RECEIPT WAS OBTAINED FROM HIM BUT SINCE PAYMENT WAS NOT MADE TO HIM, THIS RECEIPT HAS NO EFFECT. THUS, WHEN NO ADVANCE WAS GIVEN TO M/S. GAURAV COMPUTERS, QUESTION OF HAVING MADE PAYMENT OUT OF UNRECORDED INCOME DO NOT ARISE. 61. ASSESSEE GAVE ADVANCE OF RS. 15,50,750/- TO M/S . AGARWAL TRADING CO. ON 30.03.2007 WHICH WAS RETURNED BY IT IN NEXT YEAR. THERE IS NO INTEREST INCOME ON THE SAID LOAN. SINCE, THE PARTNERS/PROPRIETORS OF M/S. AGARWAL TRADING CO. ARE FRIENDS OF SH. MANISH VYAS PROVIDING LOAN TO THEM CAN NOT BE CONSIDERED AS CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THU S, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 13(5). PAYMENT WAS MADE DIRECTLY BY BANK TO THE PARTY AS A PART OF DISBURSEMENT OF TERM LOAN AGAINST SUPPLY OF LABORATORY EQUIPMENT. HOWEVER, SINCE THE PARTY COULD NOT SUPPLY THE GOODS, THE AMOUNT WAS RETURNED BACK BY THEM. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT/DEPOSITS OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 62. AS PER LEDGER ACCOUNT ASSESSEE MADE PURCHASES I T IS A SELF CHEQUE WHEREBY RS. 1,12,000/- 17 FROM M/S. P.M. GLASS & COMPANY IN FY 2007-08 SHOWING PAYMENT OF RS.1,12,000/- BY WAY OF CHEQUE NO. 140216. HOWEVER, BANK ACCOUNT SHOWED THAT THE CHEQUE WAS SELF & CASH WAS WITHDRAWN BY SH. MANISH VYAS BUT THE LEDGER ACCOUNT OF SH. MANISH VYAS DOES NOT SHOWN ANY SUCH ENTRY OF HANDING OVER THE CASH TO M/S. P.M. GLASS & COMPANY. THUS, INCORRECT & FALSE ENTRIES WERE MADE IN BOOKS OF ACCOUNTS & THE BOOKS ARE TOTALLY MISLEADING, FALSE & DIRECT BENEFIT WAS TAKEN BY THE TRUSTEE OUT OF TRUST FUNDS. WAS DRAWN FROM THE CANARA BANK ACCOUNT OF VYAS DENTAL COLLEGE & HOSPITAL ON 10.01.2008. HOWEVER, INSTEAD OF DEBITING THE SAME IN THE CASH BOOK & CREDITING THE BANK, IT WAS DIRECTLY DEBITED TO THE ACCOUNT OF M/S. P.M. GLASS & COMPANY BY CREDITING THE BANK ACCOUNT. THEREFORE, PRESUMPTION OF CIT THAT BOOKS ARE NOT MAINTAINED PROPERLY IS INCORRECT. 63. A BILL NO. 120 DT. 17.06.2007 OF RS. 5.5 LACS F OR FITTINGS IN MECHANICAL LAB AND FOUNDRY WORK OF M/S. SHANTI LAL SUPPLIERS & BILL NO.121 DATED 19.06.2007 OF SAME PERSON WAS FOUND. THERE IS NO GR NO. ETC. STATED ON THE BILLS. THE BILL CONTAINS STAMPS OF ENTERED & HYPOTHECATED TO CANARA BANK BUT THE SAME WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF TRUST. THUS, UNACCOUNTED CONSTRUCTION TOOK PLACE, PAYMENT OF WHICH REMAINED TO BE RECORDED IN THE BOOKS. NO PAYMENT MADE TO THE PARTY & THUS THERE IS NO CONTRAVENTION OF SECTION 13(1)(C). 64. A BILL NO. 19/06 DT. 16.07.2007 OF RS. 7,82,950 OF M/S. ROSHAN ALI ELECTRICAL SUPPLIERS WAS FOUND. THERE IS NO GR NO. ETC. STATED ON THE BILL. THE BIL L CONTAINS STAMPS OF ENTERED & HYPOTHECATED TO CANARA BANK BUT THE SAME WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF TRUST. THUS, PAYMENTS WERE MADE OUT OF BOOKS OF ACCOUNTS. NO PAYMENT MADE TO THE PARTY & THUS THERE IS NO CONTRAVENTION OF SECTION 13(1)(C). 65. A BILL NO. 17 DT. 30.06.2007 OF RS. 10.25 LACS & ANOTHER BILL DT. 30.06.2007 FOR RS. 37,80,000/- OF M/S JORA RAM BUILDERS PVT. LTD. WAS FOUND. THE BILL CONTAINS STAMPS OF PAID, ENTERED & HYPOTHECATED TO CANARA BANK BUT THE SAME WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF TRUST. THUS, PAYMENTS WERE MADE OUT OF BOOKS OF ACCOUNTS & BOOKS OF ACCOUNTS ARE UNRELIABLE, FALSE & MISLEADING. NO PAYMENT MADE TO THE PARTY & THUS THERE IS NO CONTRAVENTION OF SECTION 13(1)(C). 66 ANOTHER BILL OF M/S. SHANTILAL SUPPLIERS BEARING NO. 108 DATED 23.05.2007 FOR RS.6 LACS WAS FOUND WHICH WAS ISSUED BY M/S. SHANTILAL SUPPLIERS IN FAVOUR OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR SUPPLY OF 20 LAB TABLES WITH FITTING. THE BILL CONTAINS STAMPS OF ENTERED & HYPOTHECATED TO CANARA BANK BUT THE SAME WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF TRUST. THUS, PAYMENTS WERE MADE OUT OF BOOKS OF NO PAYMENT MADE TO THE PARTY & THUS THERE IS NO CONTRAVENTION OF SECTION 13(1)(C). 18 ACCOUNTS & BOOKS OF ACCOUNTS ARE UNRELIABLE, FALSE & MISLEADING. 67. THE DUTY REGISTER OF SWEEPERS, ATTENDERS, SECUR ITY GUARDS ETC. FOR THE MONTH OF APRIL 07 TO MARCH 08 IS APPARENTLY NEW. IT CONTAINS ALMOST THE SAME HANDWRITING FOR ALL THROUGHOUT THE YEAR. NONE ATTENDED ON SUNDAYS INCLUDING THE SECURITY PERSONNEL. NO SWEEPERS OR ATTENDERS OR SECURITY PERSONS ATTENDED ON 15.08.07 BUT ALL OF THEM ATTENDED THE OFFICE ON 26.01.08. THIS SHOWS THAT THE PERSON MAKING THE REGISTER FORGOT TO STRIKE THE NAMES ON 26JAN. THUS, THE ENTIRE REGISTER WAS MADE AT ONE STOKE FOR ENTIRE YEAR & THE PERSON MAKING THE REGISTER FORGOT THAT SECURITY PERSONS ARE REQUIRED TO ATTEND ON SUNDAYS & ON OTHER HOLIDAYS ALSO. THE SWEEPERS, ATTENDERS, SECURITY GUARDS ETC. WAS UNDER THE SUPERVISION OF JAI RAM. HE USE TO KEEP THEIR ATTENDANCE IN HIS DIARY & THEREAFTER ON THE BASIS OF INFORMATION SUPPLIED BY HIM, THE ACCOUNTS DEPARTMENT PREPARED THE REGISTER COMPUTERIZED WHEREIN THE NAME OF THE PERSON, NO. OF DAYS, RATE/DAY & AMOUNT WAS FED INTO THE COMPUTER & PRESENT/ABSENT OF EACH LABOUR WAS MARKED BY PEN. THIS DOES NOT MAKE THE REGISTER BOGUS. 68. INTERNAL VOUCHERS OF VYAS DENTAL COLLEGE & HOSPITAL WERE FOUND WHICH SHOW CASH PAYMENT OF RS. 75 LACS TO M/S. JORA RAM BUILDERS PVT. LTD./JAI MEHRA ON ACCOUNT OF CONSTRUCTION BY VYAS DENTAL COLLEGE & HOSPITAL. HOWEVER, OUT OF SAME ONLY CASH PAYMENT OF RS. 15 LACS IS FOUND RECORDED IN THE BOOKS OF ACCOUNTS & REMAINING RS. 60 LACS PAID TO M/S. JORA RAM BUILDERS PVT. LTD./JAI MEHRA IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. THUS, THE TRUST HAS ENTERED INTO HUGE UNRECORDED TRANSACTIONS IN THE BUILDING CONSTRUCTION ACTIVITY FOR WHICH UNRECORDED FUNDS/INCOMES/DONATIONS WERE UTILIZED. THE BOOKS OF ACCOUNTS ARE THEREFORE UNRELIABLE, FALSE. THESE VOUCHERS ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AS NO PAYMENT IS MADE AGAINST THESE VOUCHERS WHICH IS EVIDENT FROM THE FACT THAT THE SIGNATURE OF THE RECIPIENT IS NOT THERE ON THE VOUCHERS. HAD THE ASSESSEE ENTERED THESE VOUCHERS IN THE BOOKS OF ACCOUNTS THERE WOULD HAVE BEEN A CASE OF MISUTILIZATION OF FUNDS BUT NOT WHEN SUCH VOUCHERS ARE NOT ENTERED. THEREFORE, ON THE BASIS OF THIS VOUCHER NO ADVERSE INFERENCE SHOULD BE DRAWN. IN RESPECT OF PAYMENT VOUCHER DT. 11.12.2007 WHICH IS DULY RECEIPTED BY THE CONTRACTOR, THE SAME IS ENTERED IN BOOKS ON 13.12.2007. THIS IS ONLY A CLERICAL MISTAKE. OTHERWISE, ASSESSEE HAD ENOUGH CASH BALANCE BETWEEN 11.12.2007 TO 13.12.2007. HENCE, ON THE BASIS OF THESE UNSIGNED & UNRECORDED VOUCHERS, NO ADVERSE INFERENCE SHOULD BE DRAWN. 69. THE LEDGER ACCOUNT OF M/S JORA RAM BUILDERS IN THE BOOKS OF RVS FOR F.Y. 07-08 SHOWS THAT ASSESSEE RECEIVED RS.1,48,00,000/- FROM THE SAID CONCERN. THE ACCOUNT OF M/S JORA RAM BUILDERS FOR SUBSEQUENT YEAR DO NOT SHOW ANY RETURN OF MONEY AT ALL TO HIM. THERE IS NO LOAN ACCOUNT IN THE LEDGERS OF ASSESSEE TRUST. THUS, ON ONE HAND TRUST PAID MONEY TO M/S JORA RAM BUILDERS FOR CONSTRUCTION ACTIVITY & ON OTHER HAND RECEIVED THE SAME BACK. EXCESSIVE PAYMENT WAS MADE TO HIM. BY THIS ACT, EXCESSIVE, BOGUS & FALSE DEPRECIATION AGAINST THE CONSTRUCTION WORK, AS PER THE DIRECTIONS OF THE ASSESSEE, BANK RELEASED THE PAYMENT DIRECTLY TO THE CONTRACTOR. HOWEVER, SINCE THE CONTRACTOR DID NOT CARRIED OUT THE WORK UPTO THAT STAGE, PART AMOUNT GIVEN BY BANK TO HIM WAS CALLED BACK FROM THE CONTRACTOR & CREDITED TO HIS ACCOUNT. AS AND WHEN THE WORK PROGRESSED FURTHER, HE WAS MADE PAYMENT BY THE SOCIETY. THERE IS NO BASIS FOR CIT TO HOLD THAT EXPENDITURE ON BUILDING CONSTRUCTION 19 WAS CLAIMED ON BUILDINGS WHICH DO NOT EXISTS. FURTHER, ONE PAYMENT OF RS. 7 LACS BY VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY DO NOT FIND ITS WAY IN THE BANK ACCOUNT OF M/S JORA RAM BUILDERS. IT WAS DEPOSITED IN THE CURRENT ACCOUNT 3149 OF CANARA BANK & CHEQUES WERE ISSUED TO DIFFERENT CONSTITUENT COLLEGES OF TRUST. HAS BEEN INFLATED. THE AMOUNT HAS BEEN PAID BACK TO THE CONTRACTOR IN SUBSEQUENT MONTHS. CURRENT ACCOUNT 3149 IS THE ACCOUNT OF THE CONTRACTOR JORA RAM. 70. VOUCHERS (ANNEXURE A57 TO A92) WERE FOUND IN CASE OF VYAS DENTAL COLLEGE & HOSPITAL SHOWING RECEIPT OF CASH OF RS. 70 LACS FROM HEAD OFFICE (RVS ACCOUNT) FOR CONSTRUCTION WORK. HOWEVER, ON PERUSAL OF HO ACCOUNT IN BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL, ONLY RECEIPT OF CASH OF RS. 55LACS WERE FOUND RECORDED & REMAINING CASH OF RS. 15 LACS WERE NOT RECORDED. THUS, THERE ARE UNDECLARED SOURCES OF INCOME, UNDECLARED FLOW OF FUNDS & BOOKS OF ACCOUNTS CONTAIN INCOMPLETE ENTRIES & THUS UNRELIABLE & MISLEADING. ALL THESE VOUCHERS ARE IN RESPECT OF INTER TRANSFER ACCOUNT FROM VDCH TO RVS & THEREFORE IF SOME OF THE VOUCHERS ARE NOT ENTERED IN ACCOUNTS OF BOTH THE UNITS, IT DOES NOT MAKE ANY DIFFERENCE AS THE VOUCHER WAS PREPARED FOR TRANSFERRING THE AMT. BUT ULTIMATELY THE AMT. WAS NOT TRANSFERRED. 71. MOBILE TELEPHONE BILL OF RS.376/- PERTAINING TO SHRI MANISH VYAS (MOBILE NO. 9314074300) WAS PAID BY THE TRUST ON 10.03.2007. THUS, PERSONAL OBLIGATIONS OF THE MAIN TRUSTEE WERE MET BY THE TRUST FUNDS. THIS ATTRACTS SECTION 13(1)(C). SHRI MANISH VYAS IS THE CHAIRMAN OF THE ASSESSEE SOCIETY WHO REPRESENTS THE SOCIETY AT VARIOUS PLATFORMS. HIS MOBILE BILL WAS BORNE BY THE SOCIETY SINCE THE SAME IS USED BY HIM FOR THE ACTIVITIES OF THE TRUST. THUS, THE EXPENDITURE IS WHOLLY FOR CHARITABLE PURPOSE & SECTION 13(1)(C) IS NOT VIOLATED. 72 SHRI MANISH VYAS (TRUSTEE), SMT. ASHA VYAS (WIFE) AND SHRI SOURABH (MINOR SON) TRAVELLED FROM MUMBAI TO AHMADABAD. THE EXPENDITURE OF RS.4,797/- RELATING TO THE ABOVE TRIP WAS MADE TO M/S. SUNCITY TOURS & TRAVELS OUT OF THE TRUST FUNDS VIDE CHEQUE NO.274087 DATED 07.03.2007.NO EVIDENCES WERE FILED AS TO WHY THE AIR TRAVEL EXPENDITURE OF SMT. ASHA VYAS AND SHRI SOURABH VYAS WAS MET OUT OF THE TRUST FUNDS WHEN THEY HAD NO CONNECTION WITH THE ACTIVITIES OF THE TRUST. THUS, THE FUNDS WERE MISUTILIZED FOR NON CHARITABLE ACTIVITIES. THIS ATTRACTS SECTION 13(1)( C). SMT. ASHA VYAS IS THE TRUSTEE OF THE SOCIETY. SHE ALONG WITH SH. MANISH VYAS (TRUSTEE) & SH. SAURABH VYAS (SON WHO IS JUST 5-7 YEARS OLD) TRAVELLED TO AHMADABAD FOR THE PURPOSE OF ATTENDING A FUNCTION OF A DENTAL COLLEGE IN AHMADABAD. THEREFORE, THIS TRIP CAN NOT BE SAID TO BE OF PERSONAL NATURE AS DEVELOPING FRATERNITY WITH OTHER COLLEGES IS A PART OF EDUCATIONAL ACTIVITIES. THUS, SECTION 13(1)(C) IS NOT VIOLATED 73. A BILL NO. 2319 DATED 12.04.2007 OF M/S. JODHPU R METALS PVT. LTD. (ANNEXURE A93) WAS FOUND ACCORDING TO WHICH VYAS COMMERCE & B.ED. COLLEGE PURCHASED 180 STUDENT DESKS @ RS.1,500/- PER DESK FOR A TOTAL SUM OF RS.3,03,750/-. ON THE SAID BILL, IT IS NOTED THAT CASH OF RS. 1 LACS IS GIVEN WHILE A SUM OF RS. 30,000/- WAS GIVEN VIDE CHEQUE NO. 277199 DT. 11.04.07. HOWEVER, THE BOOKS DO NOT SHOW ANY EARLIER, IT WAS DECIDED TO PAY RS. 1 LACS IN CASH & RS. 30,000/- BY CHEQUE TO M/S JODHPUR METAL PVT. LTD. & ACCORDINGLY WHEN THE BILL WAS RECEIVED, SOCIETY WROTE THE SAME ON IT. HOWEVER, LATER IT WAS AGREED THAT THE ENTIRE PAYMENT TO HIM WOULD BE RELEASED THROUGH TERM LOAN ACCOUNT OF THE SOCIETY. ACCORDINGLY, FULL PAYMENT OF RS. 3,03,750/- WAS GIVEN TO HIM ON 10.05.2007. 20 CASH PAYMENT OF RS. 1 LACS TO M/S. JODHPUR METALS PVT. LTD. THUS, THE CASH IS PAID OUT OF UNRECORDED FUNDS & BOOKS OF ACCOUNTS ARE UNRELIABLE. 74. AS PER LETTER DATED 19.05.2008 GIVEN TO CHIEF GENERAL MANAGER, CANARA BANK, JODHPUR, ASSESSEE TRUST MADE PAYMENT OF RS.1.76 LACS ON 19.05.2008 BY CHEQUE TO M/S. AGARWAL TRADING CO. JODHPUR FOR PURCHASE OF ANATOMY LAB EQUIPMENTS BUT M/S. AGARWAL TRADING CO. NEVER DEALT IN SUPPLYING LAB EQUIPMENTS AND ON THE CONTRARY IT DEALT ONLY IN PAPER. HOWEVER, IT IS ALS O A FACT THAT ASSESSEE HAD CATEGORICALLY STATED TO TH E BANK THAT IT HAD PURCHASED LAB EQUIPMENTS & THUS IT CAN NOT BE SAID THAT NO GOODS WERE PURCHASED. THEREFORE, EITHER THE PAYMENT FOR THE SAME IS MADE OUT OF UNRECORDED FUNDS OR INCORRECT/FALSE INFORMATION WAS GIVEN TO BANK. THUS, THERE IS MISUTILIZATION OF FUNDS & IT CAN NOT BE SAID THAT TRUST IS ENGAGED IN CHARITABLE/EDUCATIONAL ACTIVITIES. PAYMENT WAS MADE DIRECTLY BY BANK TO THE PARTY AS A PART OF DISBURSEMENT OF TERM LOAN AGAINST SUPPLY OF LABORATORY EQUIPMENT. HOWEVER, SINCE THE PARTY COULD NOT SUPPLY THE GOODS, THE AMOUNT WAS RETURNED BACK BY THEM. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT/DEPOSITS OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 75. TRUST MADE PAYMENT OF RS. 6,392/- TO M/S. DHOOT SERVICES PVT. LTD. VIDE BILL DATED 15.02.2007 WHICH WAS ISSUED IN THE NAME OF SHRI MANISH VYAS FOR REPAIR OF A HUNDAI CAR. THUS, THE EXPENDITURE IS PERSONAL IN NATURE & REPRESENTS MISUTILIZATION OF THE TRUST FUNDS IN FAVOUR OF TRUSTEE. THIS ATTRACTS SECTION 13(1)(C). CAR IS USED FOR THE ACTIVITIES OF THE TRUST & THEREFORE ASSUMPTION OF CIT THAT IT IS FOR THE PERSONAL PURPOSE OF TRUSTEE IS DEVOID OF ANY MERIT. THE EXPENDITURE OF RS. 6,392/- IS MOST REASONABLE & GENUINE. THUS, SECTION 13(1)(C) IS NOT VIOLATED 76. ASSESSEE SOCIETY PURCHASED A MOBILE TELEPHONE (NOKIA N73 MODEL) FOR RS. 21,442/- FROM M/S. MIRCHUMAL ELECTRONICS. NO DETAIL AS TO IN WHOSE POSSESSION THE MOBILE PHONE IS & SIM INSERTED IS GIVEN. THUS, THE SCARCE FUNDS OF TRUST WERE LAVISHLY USED FOR PURCHASE OF EXPENSIVE MOBILE HANDSETS WHEN THE PURPOSE COULD HAVE BEEN ACHIEVED BY PURCHASING LOW PRICED MOBILE SET. THIS ATTRACTS SECTION 13(1)(C). THE MOBILE PHONE WAS GIVEN TO SENIOR EXECUTIVE OF THE COLLEGE OF ENGINEERING. HE IS TO REPRESENT THE SOCIETY AT VARIOUS PLATFORMS. THE SAME IS USED BY HIM FOR THE ACTIVITIES OF THE TRUST. IT IS A NORMAL COURSE OF CHARITABLE ACTIVITIES SINCE THE MOBILE TELEPHONES ARE ESSENTIAL PART OF EDUCATIONAL PROGRAMME. ONLY BECAUSE THE COST OF SUCH PHONE IS HIGH, IT CAN NOT BE CONCLUDED THAT THE SAME IS FOR HIS PERSONAL NEED. RATHER, A GOOD MOBILE PHONE IS REQUIRED NOT ONLY FOR EFFICIENT WORKING BUT ALSO THE SAME HAS SAVED THE EXPENDITURE WHICH THE ASSESSEE WOULD HAVE OTHERWISE INCURRED HAD IT PURCHASED A LOWER QUALITY MOBILE PHONE. 77. TRUST MADE PAYMENT OF RS. 6,729/- FOR REPAIR OF CAR NO. RJ19-CA-1677 TO M/S. DHOOT SERVICES PVT. LTD. VIDE BILL DATED 09.09.2006. ANOTHER CAR IS USED FOR THE ACTIVITIES OF THE TRUST & THEREFORE ASSUMPTION OF CIT THAT IT IS FOR THE PERSONAL PURPOSE OF TRUSTEE IS DEVOID OF ANY 21 REPAIR BILL DT. 19.12.06 OF RS. 3,297/- FOR THE SAM E CAR WAS PAID. PERSONAL USE OF THE CAR CAN NOT BE RULED OUT & THUS IT REPRESENTS MISUTILIZATION OF TH E TRUST FUNDS IN FAVOUR OF TRUSTEE. THIS ATTRACTS SECTION 13(1)(C). MERIT. THE EXPENDITURE OF RS. 6,729/- & RS. 3,297/- IS MOST REASONABLE & GENUINE. THUS, SECTION 13(1)(C) IS NOT VIOLATED 78. ASSESSEE PURCHASED A SAMSUNG SLIM 29 COLOR TV FROM M/S. RAHUL TRADERS VIDE BILL NO. 1054 DATED 22.11.2006. THE BILL STANDS IN THE NAME OF SH. MANISH VYAS BUT THE PAYMENT WAS MADE BY THE TRUST. THUS, THE SAME WAS UTILIZED FOR PERSONAL PURPOSES. THIS ATTRACTS SECTION 13(1)(C). THE SAMSUNG SLIM COLOUR TV WAS PURCHASED FOR BOYS HOSTEL. HOWEVER, NAME OF MANISH VYAS WAS WRITTEN ON THE BILL SINCE ORDER WAS GIVEN BY HIM. THUS, SECTION 13(1)(C) IS NOT VIOLATED. 79. TRUST PURCHASED ONE LADIES AND ONE GENTS WATCH FOR RS.8,990/- FROM M/S. SAINIK TIME HOUSE VIDE BILL NO. 2385 DATED 14.11.2006. NO DETAILS WERE FILED AS TO HOW THE ELEMENT OF CHARITY IS INVOLVED IN THE SAID EXPENDITURE. THIS ATTRACTS SECTION 13(1)(C). THE WATCHES WERE PURCHASED FOR DISTRIBUTING THE SAME AS BEST PERFORMANCE AWARD OF THE FACULTIES. THUS, THE EXPENDITURE IS WHOLLY FOR CHARITABLE PURPOSE & SECTION 13(1)(C) IS NOT VIOLATED. 80. BALANCE SHEET OF F.Y. 05-06 SHOWS CORPUS BUILDING FUND OF RS. 9,23,000/- & CORPUS FUND OF RS. 54,06,657/-. DURING F.Y. 06-07, ASSESSEE RECEIVED MONEY OF RS. 1,23,23,500/- FROM SHRI O.P. CHOUDHARY OF USA. THUS, THE POSITION AS ON 31.03.2007 IS RS. 54,06,657/- (CORPUS BUILDING FUND) & RS. 1,23,23,500/- (CORPUS FUND). THE FOLLOWING ERRORS ARE NOTED- - CORPUS FUND OF RS. 54,06,657/- IN F.Y. 05-06 WAS CONSIDERED AS CORPUS BUILDING FUND IN F.Y. 06-07. SUCH CHANGE IN HEADS COULD NOT BE EXPLAINED & THUS THE FUNDS GIVEN FOR SPECIFIC PURPOSE IS NOT UTILIZED FOR THE PURPOSE FOR IT IS GIVEN. - NO EXPLANATION WAS GIVEN AS TO HOW THE SUM OF RS. 9,23,000/- VANISHED IN F.Y. 06-07 - NO EVIDENCE IN THE FORM OF TELEPHONIC TALKS/EMAILS/LETTERS COULD BE FURNISHED TO PROVE SUCH A HUGE CONTRIBUTION BY SHRI O.P. CHOUDHARY OF USA TO ASSESSEE. NOTHING COULD BE STATED AS TO HOW SHRI O.P. CHOUDHARY BECAME AWARE ABOUT THE ACTIVITIES OF TRUST. THE QUESTION AS TO WHETHER HE EVER TRAVELLED TO JODHPUR AFTER OR BEFORE MAKING DONATION REMAINED UNANSWERED. FURTHER, A LETTER (ANNEXURE A94-A97) WAS FOUND WHICH IS SIGNED BY SHRI O.P. CHOUDHARY AS MOU FOR ADVANCE OF LOAN. THE REPAYMENT TERMS ARE ALSO STATED. THUS, THE FUNDS RECEIVED FROM SHRI O.P. CIT WRONGLY HELD THAT CORPUS FUND OF RS. 54,06,657/- IN F.Y. 05-06 WAS CONSIDERED AS CORPUS BUILDING FUND IN F.Y. 06-07 & THAT RS.9,23,000/- SHOWN AS CORPUS BUILDING FUND IN F.Y. 05-06 VANISHED IN F.Y. 06-07. THE POSITION OF THE SAME AS EVIDENT FROM BALANCE SHEET IS AS UNDER:- B/S AS ON 31.03.2005 (PB 334) CAPITAL FUND RS.1,61,93,816/- BUILDING FUND (CORPUS) RS. 9,23,000/- B/S AS ON 31.03.2006 (PB 303) CAPITAL FUND RS.2,12,64,441/ - BUILDING FUND RS. 9,23,000/ - CORPUS FUND-BUILDING RS. 54,06,657/- B/S AS ON 31.03.2007 (PB 270) CAPITAL FUND RS.2,53,09,002/ - BUILDING FUND RS. 9,23,000/ - CORPUS FUND-BUILDING RS. 54,06,657/- CORPUS FUND RS.1,23,23,500/- FROM THE ABOVE, IT CAN BE NOTED THAT THERE IS NO CHANGE IN THE HEADS & THE CORPUS FUND- BUILDING OF RS.54,06,657/- RECEIVED IN F.Y. 05-06 IS TREATED AS SUCH IN F.Y. 06-07 ALSO. THE SECOND OBSERVATION OF CIT AS TO HOW THE BUILDING FUND OF RS. 9,23,000/- VANISHED IN F.Y. 06-07 IS ALSO INCORRECT AS EVIDENT FROM THE POSITION OF BALANCE SHEET ABOVE IN WHICH THE BUILDING FUND OF RS. 9,23,000/- IS SHOWN AS ON 31.03.07. 22 CHOUDHARY AS LOAN IS TREATED AS CORPUS BY THE ASSESSEE SOCIETY. THE BOOKS OF ACCOUNTS THUS CANNOT BE TREATED AS CORRECT & RELIABLE. DR. O. P. CHOUDHARY USA HAVE MADE DONATION FOR CORPUS FUND & BUILDING FUND OF SANSTHAN. THE OTHER OBSERVATION MADE BY CIT ARE IRRELEVANT 81. VOUCHER FILE SHOWS THAT GRANITE WAS PURCHASED FROM M/S KANHAIYA GRANITES FOR RS. 49,054/- BUT PAYMENT IS MADE BY CHEQUE FOR RS. 36,865/-. THE DIFFERENCE IS PAID IN CASH WHICH IS UNRECORDED. 82. PURCHASE OF GRANITE WAS MADE FROM DIFFERENT PARTIES FOR RS. 1,02,090/- BUT PAYMENT WAS MADE BY CHEQUE FOR RS. 76,781/- ONLY. 83 PURCHASE OF GRANITE SLAB WAS MADE FOR RS. 34,706/- BUT THE SAME IS NOT FOUND RECORDED IN THE BOOKS. 84. PAPER SHOWS PURCHASE OF GRANITE FOR THE AMOUNT MENTIONED IN S.NO. 81, 82, 83 TOTALING RS. 1,85,850/-. PAYMENT FOR RS. 76,167/- IS MADE BY CHEQUE, RS. 50,000/- IN CASH & BALANCE IS RS. 56,683/-. CASH PAYMENT IS NOT FOUND RECORDED IN BOOKS. THUS, THERE EXISTS UNRECORDED INCOME & UNRECORDED EXPENDITURE. THE KACHA SLIPS ARE ONLY A WORKING OF THE AMOUNT PAYABLE TO THE PARTIES BUT AFTER NEGOTIATION HE REVISED THE BILL FOR LESSER AMOUNT WHICH IS DULY RECORDED IN THE BOOKS OF ACCOUNTS. EVEN IF IT IS HELD THAT DIFFERENCE HAS BEEN PAID OUT OF BOOKS, THE ACTIVITIES OF THE INSTITUTION CAN NOT BE HELD TO BE NON GENUINE AS THE DIFFERENCE HAS BEEN PAID BY OFFICE BEARERS FROM THEIR OWN SOURCES & NOT CLAIMED FROM INSTITUTION. IN ANY CASE, IF ASSESSEE HAS CLAIMED LESSER EXPENDITURE, NO ADVERSE VIEW ON THE GENUINENESS OR ITS OBJECTS CAN BE TAKEN. 85. ASSESSEE PURCHASED GRANITE FROM M/S. ARUNA GRANITE & MARBLES VIDE BILL NO. 56 DATED 04.09.2006 FOR A TOTAL SUM OF RS.17,888/- (636 SQ. FT. @ RS.25/- PER SQ. FT). HOWEVER, THE TOTAL QTY. AS PER KACHA BILL WORKS OUT TO 346 SQ. FT. WHEREAS THE TOTAL QTY STATED IN THE PAKKA BILL IS 636 SQ. FT. THERE IS DIFFERENCE IN ACTUAL RATE CHARGED & RATE STATED IN THE BILL. FURTHER, NO ENTRY OF BILL NO. 5 6 IS FOUND IN THE LEDGER ACCOUNT OF M/S. ARUNA GRANITE & MARBLES IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL/VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY/RVS. THUS, BOOKS ARE MANIPULATED, FALSE, MISLEADING. THE TOTAL QTY. AS PER KACHA BILL IS ONLY AN ESTIMATE BUT ULTIMATELY GRANITE WAS PURCHASED AT QTY. AS REFLECTED IN PAKKA BILL. FURTHER, PAYMENT FOR GRANITE PURCHASED FROM M/S ARUNA GRANITE & MARBLES WAS MADE BY CHEQUE NO. 290690 ISSUED IN NOV 06 AS EVIDENT FROM THE BANK ACCOUNT OF RVS. INSTEAD OF PASSING THE ENTRY IN THE LEDGER ACCOUNT OF M/S ARUNA GRANITE & MARBLES, SOCIETY DIRECTLY DEBITED THE BUILDING ACCOUNT BY CREDITING THE BANK ACCOUNT. THIS CAN NOT BE A REASON FOR HOLDING THAT BOOKS ARE MANIPULATED, FALSE, MISLEADING 86. AS PER ANNEXURE A113, IT IS FOUND THAT TOTAL MATERIAL PURCHASED BY ASSESSEE FROM M/S. R.R. MARBLE HOUSE WAS FOR RS. 4,15,676/- WHICH IS TRANSPORTED BY TRUCK NO. RJ19-1G-7216. HOWEVER, IN THE PAKKA BILL, THE AMOUNT STATED IS ONLY RS. 1,31,482/- PAYMENT FOR WHICH IS MADE BY CHEQUE ON 23.12.2005. THERE ARE DISCREPANCIES IN THE QUANTUM OF DISPATCH/RATE/MONEY AS PER PAKKA & KACHA BILL. THUS, THE ASSESSEE TRUST OBTAINED MANIPULATED BILLS & MADE PAYMENTS FOR PURCHASE OF MARBLES ETC. OUT OF UNRECORDED FUNDS. THESE PAPERS SHOW THAT ACTUAL PAYMENT IS MORE THAN RECORDED IN THE BOOKS OF ACCOUNTS. IF SUCH DIFFERENTIAL PAYMENT IS MADE BY OFFICE BEARERS OUT OF THEIR OWN SOURCES & NOT CLAIMED FROM INSTITUTION, IT CAN NOT BE SAID THAT THERE IS ANY VIOLATION OF SECTION 13(1)(C) & FOR THIS REASON GENUINENESS OF THE ACTIVITIES CARRIED OUT BY INSTITUTION CAN NOT BE DOUBTED. IN ANY CASE, IF ASSESSEE HAS CLAIMED LESSER EXPENDITURE, NO ADVERSE VIEW ON THE GENUINENESS OR ITS OBJECTS CAN BE TAKEN 23 87. ASSESSEE HAS TAKEN DONATIONS FOR ADMISSIONS INT O ITS DENTAL COURSE AND SUCH DONATIONS ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE SAME IS EVIDENT FROM ANNEXURE A118 WHICH SHOWS OTHER DUES D & D A/C. ANNEXURE 119 IS HANDWRITTEN LIST OF STUDENTS WHICH GIVE DETAILS OF CERTAIN AMT. & AGAINST CERTAIN FIGURES LETTER D IS STATED. THI S IMPLIES THAT DONATIONS REACHED THE HANDS OF TRUSTEES FOR THEIR PERSONAL BENEFITS & WAS NOT SPENT FOR CHARITABLE/EDUCATIONAL ACTIVITIES. SOMETIMES THE OFFICE BEARERS HAS RECEIVED DONATION FROM STUDENTS BUT SUCH DONATION HAS BEEN UTILIZED FOR THE PAYMENT OF OBJECTS OF THE TRUST AS IS EVIDENT FROM PAPERS FOUND WHICH SHOWS THAT THOUGH THE ACTUAL AMOUNT PAID AGAINST CONSTRUCTION WORK IS HIGHER BUT BILLS ARE OF LESSER AMOUNT & ACCORDINGLY RECORDED IN BOOKS. THUS, AMOUNT OF DONATION HAS BEEN UTILIZED FOR THE OBJECTS OF INSTITUTION. EVEN OTHERWISE, IF THE OFFICE BEARERS ARE POCKETED, SOME AMOUNT OF DONATION, THE REGISTRATION OF THE TRUST CAN NOT BE CANCELLED. RATHER, THOSE PERSONS WHO MISAPPROPRIATED THE FUNDS CAN BE BROUGHT TO TAX AS HELD BY RAJASTHAN HIGH COURT IN CASE OF DCIT VS. COSMOPOLITAN EDUCATION SOCIETY 244 ITR 0494 88. THE BOOKS OF ACCOUNT OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR F.Y. 2007-08 SHOWS THAT THE TRUST GAVE A LOAN OF RS.4 LACS TO SHRI PARASMAL JI FROM ITS CANARA BANK TERM LOAN ACCOUNT NO. 2536 ON 29.05.2007. THE SAME WAS REPAID IN TWO INSTALLMENTS (RS.2 LACS ON 06.07.2007 AND RS.2 LACS ON 10.07.2007). NO INTEREST WAS CHARGED. THEREFORE, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). SHRI PARASMAL JI IS ENGAGED IN THE FINISHING/PAINT WORK OF BUILDINGS. PAYMENT WAS MADE DIRECTLY BY BANK TO THE PARTY AS A PART OF DISBURSEMENT OF TERM LOAN FOR PAINT WORK OF COLLEGE/INSTITUTION. HOWEVER, SINCE THE PAINTING WORK WAS ULTIMATELY NOT GIVEN TO HIM, THE AMOUNT WAS RETURNED BACK BY THE PARTY. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT/DEPOSITS OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 89. FROM THE ACCOUNT OF RAJASTHAN VIKAS SANSTHAN IN THE BOOKS OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR FY 2007-08, IT IS FOUND THAT A CHEQUE NO. 277608 OF RS. 8 LACS WAS ISSUED FROM CANARA BANK ACCOUNT NO. 3119 ON 27.04.2007 THE NARRATION BELOW IT SHOWS THAT THE SAID CHEQUE IS ISSUED TO CHAIRMAN FOR PURCHASE OF EQUIPMENT. NO DETAILS COULD BE FURNISHED REGARDING THE EQUIPMENTS PURCHASED BY THE TRUST. THIS ATTRACTS SECTION 13(1)(C). IT IS A SELF CHEQUE WHEREBY RS.8 LACS WAS DRAWN FROM THE CANARA BANK ACCOUNT OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY (VIET). THE SAME WAS DULY RECORDED IN THE CASH BOOK OF VIET. FROM THERE, THE AMOUNT OF RS. 8 LACS WAS TRANSFERRED TO RAJASTHAN VIKAS SANSTAHN (RVS) & UTILIZED FOR THE OBJECTS OF THE TRUST. 90. LEDGER ACCOUNT OF RAJASTHAN VIKAS SANSTHAN IN BOOKS OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR THE FY 2007-08 SHOWS THAT VIET RECEIVED CASH OF RS.6 LACS FROM CHAIRMAN IMPREST ON 12.07.2007. HOWEVER, NO IMPREST ACCOUNT COULD BE FOUND IN THE NAME AND STYLE OF THIS IS TRANSFER OF INTERNAL FUNDS FROM RAJASTHAN VIKAS SANSTAHN (RVS) TO VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY (VIET). THE SAME IS DULY RECORDED IN THE BOOKS OF ACCOUNTS & UTILIZED FOR THE OBJECTS OF THE TRUST. NARRATION WRONGLY MENTIONED. 24 CHAIRMAN IMPREST ACCOUNT OR MANISH JI IMPREST ACCOUNT. THUS, THE RECEIPT OF CASH OF RS. 6 LACS HAS NOT BEEN EXPLAINED PROPERLY. 91. LEDGER ACCOUNT OF RAJASTHAN VIKAS SANSTHAN IN THE BOOKS OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY SHOWS AN ENTRY DATED 10.09.2007 ACCORDING TO WHICH CHEQUE NO. 132394 FROM CANARA BANK ACCOUNT NO. 3119 WAS ISSUED TO SHRI GAURAV FOR RS. 15 LACS. THE BOOKS DO NOT HAVE THE LEDGER ACCOUNT OF SH. GAURAV. THUS, RS.15 LACS IS NOT RELATED TO ANY CHARITABLE/EDUCATIONAL ACTIVITY. IT IS A SELF CHEQUE WHEREBY RS. 15 LACS WAS DRAWN FROM THE CANARA BANK ACCOUNT NO. 3119 OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY (VIET). THE SAME WAS THEN TRANSFERRED FROM THE BANK BOOK OF VIET TO RAJASTHAN VIKAS SANSTAHN (RVS) & UTILIZED FOR THE OBJECTS OF THE TRUST. THE NARRATION MENTIONS THE NAME OF SH. GAURAV SINCE CASH WAS WITHDRAWN BY HIM. 92. BOOKS OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR FY 2006-07 SHOWS THAT EXPENDITURE OF RS.13,23,404/- WAS INCURRED ON ACCOUNT OF LAND DEVELOPMENT. THE ACCOUNT SHOWS THAT THE ENTIRE WORK WAS GOT DONE BY THE TRUSTEES/MANAGERS THEMSELVES & AMT. WAS PAID DIRECTLY TO THE LABOURERS. NO SPECIFIC DETAILS COUL D BE FURNISHED AS TO WHAT WORK WAS DONE. ASSESSEE SOCIETY IS HAVING LAND OF ABOUT 50 BIGHAS WHERE PROPER LEVELING, TREE PLANTATION & OTHER RELATED WORK IS REQUIRED TO BE DONE. THE SAME WAS DONE THROUGH OWN LABOURS AND ATTENDANCE WAS RECORDED IN MUSTOR ROLL. THUS, THE OBSERVATION OF CIT IS INCORRECT. 93. LEDGER ACCOUNT OF SH. SUDHANSHU KASLIWAL IN THE BOOKS OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR FY 2006-07 SHOWS THAT THE TRUST PROVIDED A SUM OF RS. 1 LACS TO SH. SUDHANSHU KASLIWAL ON 29.03.2007 BY WAY OF CHEQUE. THE SAID ADVANCE WAS ADJUSTED IN F.Y. 07-08 TOWARDS LEGAL AND CONSULTANCY PROVIDED BY HIM. NO DETAILS WERE FURNISHED AS TO WHAT LEGAL & CONSULTANCY SERVICES WERE PROVIDED. SHRI SUDHANSHU KASLIWAL IS A LEGAL CONSULTANT OF SANSTHAN & PAYMENT MADE TO HIM IS DULY RECORDED IN THE BOOKS OF ACCOUNTS. 94. ASSESSEE ADVANCED RS. 15 LACS TO M/S. AGARWAL POLYSACKS VIDE CHEQUE NO. 577951 ON 20.05.2006. THE SAID ADVANCE WAS RETURNED VIDE CHEQUE NO. 103080. NO INTEREST IS EVER CHARGED. THEREFORE, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). ADVANCE WAS GIVEN TO M/S. AGARWAL POLYSACKS TOWARDS SUPPLY OF LAB EQUIPMENTS. IT WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS RETURNED BACK AS HE COULD NOT SUPPLY THE EQUIPMENTS. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 95. ASSESSEE MADE DONATION OF RS.21,000/- TO MANDALESHWAR MAHADEV VIDE CHEQUE NO.148573 DATED 09.03.2007. NO PURPOSE OF EDUCATIONAL/CHARITABLE ACTIVITIES COULD BE EXPLAINED BY MAKING SUCH DONATION. FURTHER, NO DETAILS AS TO APPROVAL OF INSTITUTION U/S 11/80G THE DONATION IS GIVEN BY WAY OF ACCOUNT PAYEE CHEQUE TO A TEMPLE. THE SAME IS A SOCIAL OBLIGATION OF THE SOCIETY WHERE IT IS FUNCTIONING. SHRI MANISH VYAS IS NOT RELATED TO THE TEMPLE. SUCH DONATION IS GIVEN AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES 25 WERE GIVEN. THIS ATTRACTS SECTION 13(1)(C). NOT MAK E THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. FURTHER, THE STUDENTS OF THE HOSTEL ALSO KEEP ON VISITING THE TEMPLE FOR OFFERING PRAYERS. 96. BOOKS OF ACCOUNTS OF RVS SHOWS THAT ADVANCE OF RS. 15 LACS IS GIVEN TO SHRI G.R. GOYAL FOR PURCHASE OF PLOT VIDE CHEQUE NO. 065482 ON 18.10.2005. THE SAME WAS RETURNED IN THE MONTH OF MAY 06. NO INTEREST WAS CHARGED. NO LAND WAS PURCHASED. THUS, SUM OF RS. 15 LACS WAS MERELY A LOAN TO SHRI G.R. GOYAL & TRUST FUNDS WERE NOT UTILIZED FOR CHARITABLE ACTIVITIES. THEREFORE, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). SHRI G.R. GOYAL IS A PROPERTY DEALER AT JAIPUR. THE SOCIETY IN ORDER TO DEVELOP A NEW COLLEGE PROJECT AT JAIPUR ADVANCED HIM RS. 15 LACS FOR PURCHASING A LAND THEREIN. HOWEVER, SINCE HE COULD NOT PURCHASE THE SAME, HE RETURNED THE ADVANCE. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 97. BOOKS OF ACCOUNTS OF RVS FOR FY 2003-04 SHOWS OPENING DEBIT BALANCE OF RS.3 LACS IN THE NAME OF SHRI PRAKASH MOOTHA. NOTHING COULD BE SAID AS TO WHEN EXACTLY THE TRUST GAVE LOAN OF RS. 3 LACS TO HIM AS NO BOOKS PRIOR TO FY 03-04 WAS MADE AVAILABLE. THE SAID AMOUNT WAS RECEIVED IN CASH IN FY 06-07. THERE IS VIOLATION OF SECTION 269SS/269T. TRUST FAILED TO GIVE THE IDENTITY OR GENUINENESS OF TRANSACTION. NO INTEREST WAS CHARGED. THEREFORE, SECTION 13(1)(D) IS ATTRACTED I N AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). SHRI PRAKASH MOOTHA IS A PROPERTY DEALER AT JODHPUR. THE SAID ADVANCE WAS GIVEN TO HIM FOR PURCHASING A LAND. HOWEVER, SINCE HE COULD NOT PURCHASE THE SAME, HE RETURNED THE ADVANCE. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 98. ASSESSEE PAID SALARY OF RS. 96,000/- TO SH. RAJ KUMAR VYAS. NO DETAILS WERE FURNISHED FOR WORK PERFORMED/QUALIFICATIONS. THUS, THERE IS NO NEXUS BETWEEN SALARY PAID TO HIM & CHARITABLE/EDUCATIONAL ACTIVITIES OF TRUST. THIS ATTRACTS SECTION 13(1)(C). SH. RAJ KUMAR VYAS IS TREASURER OF THE ASSESSEE SOCIETY. 99. ASSESSEE PAID SALARY OF RS. 1,20,000/- TO SMT. ASHA VYAS. NO DETAILS WERE FURNISHED FOR WORK PERFORMED/QUALIFICATIONS. THUS, THERE IS NO NEXUS BETWEEN SALARY PAID TO HIM & CHARITABLE/EDUCATIONAL ACTIVITIES OF TRUST. THIS ATTRACTS SECTION 13(1)(C). SMT. ASHA VYAS IS DIPLOMA IN COMPUTER SCIENCE. SHE IS MANAGING DAY TO DAY COMPUTER REQUIREMENTS OF THE SOCIETY & HANDLING OTHER COMPUTER RELATED WORK. BESIDES SHE IS ALSO ASSISTING SH. MANISH VYAS IN DAY TO DAY ADMINISTRATION & THUS SALARY PAID TO HER IS REASONABLE. 100. LEDGER ACCOUNT OF ADVANCE AGAINST IMPREST (MANISH VYAS) IN ASSESSEES BOOKS FOR FY 2007- 08 SHOWS PAYMENT OF RENT FOR RAJ VILAS APARTMENT, JAIPUR/SBI CARD/CREDIT CARD/ADVANCE INCOME TAX OF MANISH VYAS. THUS, THE TRUST FUNDS WERE MISUTILIZED. THIS ATTRACTS SECTION 13(1)(C). THE AMOUNT WAS DEBITED TO ADVANCE AGAINST IMPREST (MANISH VYAS) ACCOUNT. THIS IS A RUNNING ACCOUNT. SUBSEQUENTLY, THE AMOUNT HAS BEEN PAID BACK BY SH. MANISH VYAS & AS ON 31.03.09, THERE IS A CREDIT OF RS. 3,92,902/- IN HIS ACCOUNT WITH THE ASSESSEE 26 SOCIETY. THUS, THERE IS NO BENEFIT PROVIDED BY THE SOCIETY TO SH. MANISH VYAS 101. VYAS DENTAL COLLEGE & HOSPITAL GAVE LOAN OF RS.12 LACS TO M/S. AGARWAL POLYSACKS LTD. ON 22.02.2006 VIDE CHEQUE NO. 687491 WHICH IS OUTSTANDING UPTO 31.03.2009. THERE IS NO INTEREST INCOME ON THE SAID LOAN. SINCE, THE DIRECTOR OF M/S. AGARWAL POLYSACKS LTD. IS A FRIEND OF SH. MANISH VYAS PROVIDING LOAN TO THEM CAN NOT BE CONSIDERED AS CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THUS, SECTION 13(1)(D) IS ATTRACTED IN A S MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). ADVANCE WAS GIVEN TO M/S. AGARWAL POLYSACKS TOWARDS SUPPLY OF LAB EQUIPMENTS. IT WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS RETURNED BACK AS HE COULD NOT SUPPLY THE EQUIPMENTS. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 102. LEDGER ACCOUNT OF CHAIRMAN IMPREST FOR PURCHASE OF EQUIPMENTS IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2006-07 SHOWS THAT SH. MANISH VYAS WAS PAID RS. 13 LACS IN NOV 06 WHICH WAS RETURNED BY HIM IN THE MONTH OF NOV/DEC 06/JAN 07. NO EQUIPMENT WAS PURCHASED BY HIM & THE ENTIRE ADVANCE WAS RETURNED. THUS, FUNDS REMAINED WITH SH. MANISH VYAS FOR QUITE A LONG TIME & UTILIZED BY HIM FOR HIS PERSONAL EXPENDITURE. THIS ATTRACTS SECTION 13(1)(C). ASSESSEE HAVE MADE HUGE INVESTMENT OF MORE THAN RS.40 CRORES DURING THE PERIOD 2001-02 TO 2010-11 AND TO MANAGE SUCH HUGE INVESTMENTS, AN ADVANCES OF RS. 13 LACS IS VERY NEGLIGIBLE WHICH IS GENERALLY GIVEN SO THAT EQUIPMENTS CAN BE PURCHASED IN A PHASED MANNER ON TIMELY BASIS. FROM THE DATE WHEN THE ADVANCES WERE GIVEN & WHEN IT WAS SUBSEQUENTLY RETURNED TO THE SOCIETY, IT IS EVIDENT THAT SUCH A NEGLIGIBLE ADVANCE OF RS. 13 LACS IS AVAILABLE WITH SH. MANISH VYAS FOR A PERIOD OF 2 MONTHS ONLY & WAS RETURNED WHEN THE FUNDS WERE NOT REQUIRED. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THUS, SECTION 13(1)(C) IS NOT VIOLATED 103. ASSESSEE ADVANCED LOAN OF RS. 1 LACS TO SHRI NARPAT SINGH VIDE CHEQUE NO. 288314 ON 13.06.2006 WHICH WAS RETURNED ON 23.07.2006 OF RS. 50,000/- & ON 25.07.2006 OF RS. 50,000/-. NO INTEREST WAS CHARGED. NO NEXUS COULD BE ESTABLISHED BETWEEN THE LOAN GIVEN & CHARITABLE/EDUCATIONAL ACTIVITIES PURSUED BY THE TRUST & THUS FUNDS WERE UTILIZED FOR NON CHARITABLE/NON EDUCATIONAL ACTIVITIES. THUS, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). WORK RELATED TO LEVELING, FENCING, CLEANING, AND PLANTATION WERE UNDER PROGRESS. IN ORDER TO MANAGE ADEQUATE FLOW & AVAILABILITY OF CASUAL LABOURS ON TIME, AN ADHOC ADVANCE OF RS. 1 LACS WAS GIVEN TO SHRI NARPAT SINGH. HOWEVER, SINCE NO ADDITIONAL LABOURS WERE REQUIRED TO BE HIRED, THE SAID ADVANCE WAS RETURNED. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 104. TRUST PROVIDED A SUM OF RS. 10 LACS & 15 LACS TO SHRI SHANTILAL ON 02.05.2006 & 07.05.2006 RESPECTIVELY OUT OF ITS CANARA BANK TERM LOAN ACCOUNT NO. 2068. HOWEVER, INSTEAD OF MAKING THE AMOUNT PAID BY BANK TO SH. SHANTI LAL WAS NOT UTILIZED BY HIM & THEREFORE WITHIN A PERIOD OF 2-3 DAYS, HE RETURNED BACK THE AMOUNT WHICH IS DULY RECORDED IN THE BOOKS. 27 PAYMENT TO VARIOUS PERSONS ON ACCOUNT OF CONSTRUCTION, SHRI SHANTILAL DEPOSITED THE SUM OF RS. 10 LACS & 15 LACS IN THE HEAD OFFICE CURRENT ACCOUNT ON 05.05.2006 & 10.05.2006. THUS, ON ONE HAND SHRI SHANTILAL RECEIVED THE AMOUNT AS EXPENDITURES FROM THE TERM LOAN ACCOUNT NO. 2068, BUT INSTEAD OF MAKING PAYMENTS TO CONTRACTORS ETC. THE SAME WERE DEPOSITED IN HEAD OFFICE CURRENT ACCOUNT. THE AMOUNT IS REROUTED IN THE BOOKS OF ACCOUNTS. THIS ATTRACTS SECTION 13(1)(C). SH. SHANTI LAL LOOKS AFTER THE CONSTRUCTION WORK & HE IS NOT AN INTERESTED PERSON AS DEFINED IN SECTION 13(3). THUS, SECTION 13(1)(C) IS NOT VIOLATED. 105. VYAS DENTAL COLLEGE & HOSPITAL GAVE LOAN OF RS.7.5 LACS TO M/S. AGARWAL TRADING CO. ON 14.02.2006 VIDE CHEQUE NO. 687479 WHICH WAS RETURNED BY IT ON 14.04.2006. THERE IS NO INTEREST INCOME ON THE SAID LOAN. SINCE, THE PARTNERS/PROPRIETORS OF M/S. AGARWAL TRADING CO. ARE FRIENDS OF SH. MANISH VYAS PROVIDING LOAN TO THEM CAN NOT BE CONSIDERED AS CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THU S, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 11(5). ADVANCE WAS GIVEN TO M/S. AGARWAL TRADING CO. TOWARDS SUPPLY OF LAB EQUIPMENTS. IT WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS RETURNED BACK AS HE COULD NOT SUPPLY THE EQUIPMENTS. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 106. ASSESSEE PAID A DONATION OF RS. 31,000/- TO MANDALESHWAR MAHADEV VIDE CHEQUE NO.578532 DATED 10.03.2006. THE DONATIONS WERE MADE TO MANDALESHWAR MAHADEV EARLIER ALSO WHICH THE ASSESSEE FAILED TO EXPLAIN. NO PURPOSE OF EDUCATIONAL/CHARITABLE ACTIVITIES COULD BE EXPLAINED BY MAKING SUCH DONATION. THE DONATION IS GIVEN BY WAY OF ACCOUNT PAYEE CHEQUE TO A TEMPLE. THE SAME IS A SOCIAL OBLIGATION OF THE SOCIETY WHERE IT IS FUNCTIONING. SHRI MANISH VYAS IS NOT RELATED TO THE TEMPLE. SUCH DONATION IS GIVEN AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. FURTHER, THE STUDENTS OF THE HOSTEL ALSO KEEP ON VISITING THE TEMPLE FOR OFFERING PRAYERS. 107 IN THE BOOKS OF ACCOUNTS OF VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2005-06, IT WAS FOUND THAT THE LEDGER ACCOUNT OF ADVANCE FOR LAND SHOWS RECEIPT OF CASH OF RS.20 LACS FROM SHRI PAPU RAM, JAWATA RAM ETC. ON 08.08.2005 WHICH WAS SUBSEQUENTLY REPAID IN INSTALLMENTS OF RS. 15 LACS AND RS. 5 LACS, BOTH IN CASH, ON 20.03.2006 AND 22.03.2006. NO DETAILS WERE PROVIDED AS TO WHICH LAND AND BELONGING TO WHOM WAS PROPOSED TO BE SOLD TO SHRI PAPU RAM, JAWATA RAM ETC. AS ALSO THE AGREEMENTS ENTERED INTO FOR THE SAID SALE. THUS, RECEIPT OF CASH OF RS. 20 LACS & ITS REPAYMENT REPRESENT LOAN TRANSACTION IN CASH EVEN IF THE TRANSACTIONS ARE CONSIDERED TO BE IN VIOLATION OF SECTION 269SS/269T, IT COULD NOT HAVE ANY EFFECT ON THE GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE TRUST IN AS MUCH AS ASSESSEE HAS FIRST RECEIVED THE AMOUNT & THERE\AFTER IT WAS PAID BACK. 28 WHICH ATTRACTS SECTION 269SS/269T. 108. FROM THE LEDGER ACCOUNT OF SHRI MANISH VYAS (MANAGING TRUSTEE) IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2005-06, IT IS EVIDENT THAT VYAS DENTAL COLLEGE & HOSPITAL RECEIVED A SUM OF RS. 50,000/- FROM SHRI MANISH VYAS VIDE CHEQUE NO. 278190 ON 02.12.2005 & ON THE SAME DATE VYAS DENTAL COLLEGE & HOSPITAL PAID A SUM OF RS. 2,10,000/- TO SHRI MANISH VYAS VIDE CHEQUE NO.702141. SUBSEQUENTLY, A JOURNAL ENTRY WAS PASSED FOR RS. 1,60,000/- ON 31.03.2006 WITH THE NARRATION BEING CHEQUE GIVEN TO MANISH VYAS TRANSFERRED TO RVS. THEREFORE, IT SHOWS THAT THE TRUST FUNDS REMAINED WITH SHRI MANISH VYAS AND WERE NOT UTILIZED FOR CHARITABLE/EDUCATIONAL ACTIVITIES. THIS ATTRACTS SECTION 13(1)(C). IN THE BOOKS OF ACCOUNTS OF RVS, SH. MANISH VYAS WAS A CREDITOR THEREFORE THE DEBIT BALANCE IN VDCH OF SHRI MANISH VYAS WAS TRANSFERRED TO HIS ACCOUNT IN RVS. EVEN AFTER THIS TRANSFER SHRI MANISH VYAS HAS A CREDIT BALANCE OF RS. 16,57,5000/- AS ON 31.03.2006 (P.B. 305). THUS THREE IS NO BENEFIT TO MR. VYAS. 109. BOOKS OF ACCOUNTS OF VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2005-06 SHOWS THAT THE TRUST MADE PAYMENT OF RS.50,000/- TO SHRI M.P. JHA (ADVOCATE OF DELHI) FOR PROFESSIONAL FEES VIDE CHEQUE NO.687483 ON 15.02.2006. NO DETAILS WERE FURNISHED AS TO WHAT EXACT SERVICES WERE RENDERED BY SHRI M.P. JHA. SHRI M.P. JHA IS AN ADVOCATE IN DELHI TO WHOM THE PROFESSIONAL FEES OF RS. 50,000/- IS PAID FOR OBTAINING APPROVAL FROM AICTE OR MEDICAL/DENTAL COUNCIL OF INDIA. FROM THE PERUSAL OF LEDGER ACCOUNT, IT IS EVIDENT THAT THE FEES PAYMENT IS MADE AFTER PROPER DEDUCTION OF TAX AT SOURCE. 110. VYAS DENTAL COLLEGE & HOSPITAL GAVE LOAN OF RS.10 LACS TO M/S. PREM SALES CORPORATION ON 14.02.2006 VIDE CHEQUE NO. 687480 WHICH WAS RETURNED IN JULY 2006. THERE IS NO INTEREST INCOME ON THE SAID LOAN. SINCE, THE DIRECTOR OF M/S. PREM SALES CORPORATION IS A FRIEND OF SH. MANISH VYAS, PROVIDING LOAN TO THEM CAN NOT BE CONSIDERED AS CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. THU S, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 13(5). ADVANCE GIVEN TO M/S. PREM SALES CORPORATION IS TOWARDS SUPPLY OF CLASSROOM FURNITURE. THE ADVANCE WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH IS RETURNED BACK AS HE COULD NOT SUPPLY THE SAME. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 111. LEDGER ACCOUNT OF PROFESSIONAL FEE APPEARING IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2005-06, CONTAINS A JOURNAL ENTRY DATED 31.03.2006 AS FEES OF RS.7,95,785/- IN THE NAME OF S. BHANDARI & CO., JAIPUR. HOWEVER, THE ACCOUNT OF S. BHANDARI & CO., JAIPUR SHOWS PAYMENT OF RS.2 LACS+ RS.2 LACS+ RS.1.75 LACS+ RS. 1 LACS+ RS.5,100/- (TDS)+ RS.29,325/- (TDS) AGGREGATING TO RS.7,09,425/-. THUS, IN THE ACCOUNT OF PROFESSIONAL FEES A SUM OF RS.7,95,785/- IS FOUND DEBITED WHEREAS IN THE ACCOUNT OF S. FROM THE PERUSAL OF LEDGER ACCOUNT OF PROFESSIONAL EXPENSES OF RS. 7,95,785/-, IT IS EVIDENT THAT FEES OF RS. 6,75,000/- IS PAID TO M/S S. BHANDARI & CO. & REMAINING RS. 1,20,785/- IS PAID TO PAWAN SHARMA. CIT HAS WRONGLY TAKEN THE PROFESSIONAL FEES PAID TO M/S S. BHANDARI & CO. FOR RS. 7,09,425/- AS AGAINST RS. 6,75,000/-. THE BALANCE OF RS. 34,425/-IS ADVANCE GIVEN TO THEM FOR BILLS ARE YET TO BE RECEIVED. FURTHER, CIT IS ONLY CONFINED TO DECIDE WHETHER THE PROFESSIONAL 29 BHANDARI & CO. THE FIGURE MENTIONED IS RS.7,09,425/-. THUS, THE DISCREPANCY COULD NOT BE EXPLAINED. FURTHER, THE PAYMENT TO S. BHANDARI & CO. FOR PREPARING LOAN PAPERS IS EXTREMELY HUGE, UNWARRANTED & EXCESSIVE. FEES CLAIMED WAS ACTUALLY AND FACTUALLY EXPENSED OR NOT AND WHETHER IT WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF CHARITABLE ACTIVITIES. REASONABLENESS OF THE EXPENDITURE CAN BE CONSIDERED ONLY FROM THIS LIMITED ANGLE FOR THE PURPOSE OF DETERMINING WHETHER IN FACT AMOUNT WAS SPENT OR NOT. 112. AS PER BOOKS OF ACCOUNTS OF M/S. VYAS DENTAL COLLEGE & HOSPITAL FOR FY 2007-08, IT WAS FOUND THAT THE ASSESSEE INCURRED A TOTAL EXPENDITURE OF RS.43,37,140/- ON ACCOUNT OF EXTRA LABOUR. OUT OF THE ABOVE SUM, EXPENDITURE TO THE EXTENT OF RS.2,37,140/- WAS INCURRED BY SHRI SHANTILAL JI. THE REMAINING EXPENDITURE OF RS.41,00,000/- REPRESENTS CASH PAID TO THE LABOURERS AS PER THE MUSTER ROLL REGISTER ON VARIOUS DATES STARTING FROM 31.07.2007 TO 31.03.2008. ANNEXURE A121 TO A136 SHOWS THAT THE NAME OF LABOURERS/NUMBER OF DAYS OF WORKING/ TOTAL AMOUNT PAID IS PRINTED ON THE MUSTOR ROLL SHEETS. IT IS NOT UNDERSTOOD AS TO HOW THE ASSESSEE HAD PREDICTED THE NUMBER OF DAYS FOR WHICH A LABOURER WOULD WORK. LETTER P (FOR PRESENT) HAS BEEN WRITTEN BY SAME PEN ALL THROUGHOUT BOTH THE MONTHS. SAME LABOUR HAS PUT HIS SIGNATURE IN ONE MONTH & THUMB IMPRESSION IN ANOTHER MONTH. THUS, THE MUSTOR ROLL IS FAKE/NON GENUINE & CONSEQUENTLY FALSE EXPENDITURE OF RS. 41 LACS HAVE BEEN CLAIMED IN THE NAME OF CONSTRUCTION. THIS ATTRACTS SECTION 13(1)(C). THE WORK OF EXTRA LABOURS WAS UNDER THE SUPERVISION OF JAI RAM WHO WAS SUPPLYING THE LABOUR. HE USE TO KEEP THE ATTENDANCE OF LABOURS IN HIS DIARY & THEREAFTER ON THE BASIS OF INFORMATION SUPPLIED BY HIM, THE ACCOUNTS DEPARTMENT PREPARED THE MUSTOR SHEET COMPUTERIZED WHEREIN THE NAME OF THE PERSON, NO. OF DAYS, RATE/DAY & AMOUNT WAS FED INTO THE COMPUTER & PRESENT/ABSENT OF EACH LABOUR WAS MARKED BY PEN. THIS DOES NOT MAKE THE MUSTOR ROLL BOGUS. ON THESE MUSTOR SHEETS, SIGNATURE/THUMB IMPRESSION IS DULY TAKEN & THE DIFFERENCE IN SOME SIGNATURE IS BECAUSE OF THE FACT THAT ON VERIFICATION OF LABOUR SUPPLIER, PAYMENT IS MADE TO THE LABOUR ON BEHALF OF THAT PERSON WHO HAS PUT THE SIGNATURE WHICH IS A GENERAL PRACTICE. THE ENTIRE EXPENDITURE IS CAPITALIZED IN THE BOOKS OF ACCOUNTS. NO MATERIAL IS BROUGHT BY CIT TO ASSUME THAT THE EXPENDITURE ON BUILDING CONSTRUCTION IS INFLATED & THEREFORE IT CAN NOT BE SAID THAT EXPENDITURE CLAIMED IS FALSE WHICH BENEFITED THE TRUSTEES. 113. ASSESSEE PURCHASED TV/REFRIGERATOR FROM M/S. RAHUL TRADERS VIDE BILL NO. 2136 DATED 22.01.2008 FOR RS.13,800/- , VIDE BILL NO. 2178 DATED 07.02.2008 FOR RS.14,030/- & VIDE BILL NO 2198 DATED 14.02.2008 FOR PERSONAL USE OF DR. SUMANTH K., DR. MEENA KUMARI & DR. GOPAL CHOUDHARY RESPECTIVELY. THUS, THEIR PERSONAL OBLIGATIONS WERE MET OUT OF THE TRUST FUNDS & FUNDS OF THE TRUST WERE UTILIZED FOR NON CHARITABLE/NON EDUCATIONAL ACTIVITIES. DR. SUMANTH K., DR. MEENA KUMARI & DR. GOPAL CHOUDHARY ARE THE SENIOR FACULTY MEMBERS OF THE SOCIETY & SUCH FACILITIES HAVE BEEN PROVIDED TO THEM AS PERQUISITES. THEREFORE IT IS NOT A MISUTILIZATION OF FUND. 114. NO DETAILS COULD BE FURNISHED WITH REGARD TO T HE TRAVELLING EXPENDITURE BOOKED IN VYAS DENTAL COLLEGE & HOSPITAL FOR F.Y. 2007-08 IN RESPECT OF THE FOLLOWING BILLS:- THESE ARE THE PAYMENTS MADE TO TRAVEL AGENTS TOWARDS AIR TICKETS PURCHASED FOR VISIT OF VARIOUS FACULTIES TO THE INSTITUTION OF THE ASSESSEE. THERE IS NO FOREIGN TRAVEL 30 10.05.2007- METRO AIR SERVICES PVT. LTD. BILL DATED 07.04.2007- RS.2,36,166 10.11.2007- METRO AIR SERVICES PVT. LTD. BILL DATED 07.11.2007- RS.2,35,000 FURTHER, NO DETAILS COULD BE FURNISHED WITH REGARD TO AN ENTRY DATED 26.11.2007 IN THE LEDGER ACCOUNT OF TRAVELLING EXPENSES WHICH SHOWS PAYMENT OF RS. 82,000/- VIDE CHEQUE NO. 133472 TO UMMED CLUB. INVOLVED. FURTHER, PAYMENT TO UMMED CLUB WAS MADE ON ACCOUNT OF CONFERENCE ORGANIZED OF DCI. 115. LEDGER ACCOUNT OF C.P. MINES & MINERALS IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2005-06 SHOWS THAT ASSESSEE TRUST MADE PAYMENT OF RS. 2,09,000/-. HOWEVER, THE CHEQUES WERE ISSUED IN THE NAME OF 4 PARTIES & NOT C.P. MINES & MINERALS. FURTHER, IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL, A JOURNAL ENTRY HAS BEEN PASSED ON 310.3.2006 BY DEBITING THE BUILDING- KOTA STONE. PAYMENT OF RS. 2,09,000/- WAS MADE TOWARDS PURCHASE OF KOTA STONES & ON INSTRUCTION OF C.P. MINES & MINERALS, PAYMENT WAS MADE DIRECTLY TO THE PARTIES STATED BY THEM. SINCE, THE BUILDING CONSTRUCTION WAS AT VYAS DENTAL COLLEGE & HOSPITAL, THE AMOUNT SO PAID WAS TRANSFERRED FROM SOCIETY TO THE DENTAL COLLEGE WHERE IT WAS CAPITALIZED IN BUILDING ACCOUNT. CIT HAS SIMPLY DOUBTED THE ENTRIES WHICH DOES NOT MAKE THE PAYMENT NON GENUINE. 116. LEDGER ACCOUNT OF ELECTRICITY EXPENSES IN TH E BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2005- 06 SHOWS PAYMENT OF RS.1,662/- AND RS.7,683/- ON 23.08.2005 FOR FLAT NO. 503 AND 506 WHICH BELONGS TO SH. MANISH VYAS. FURTHER, EXPENDITURE OF RS. 754/- WAS INCURRED ON 23.08.2005 FOR PLOT NO. 3&4, NIRMAN NAGAR, JAIPUR BELONGING TO SHRI MANISH VYAS. THE FLATS OF SHRI MANISH VYAS AT JAIPUR ARE UTILIZED AS JAIPUR OFFICE OF THE SANSTHAN WHICH IS BEING MAINTAINED FOR BETTER LIAISON WITH STATE GOVT. OF RAJASTHAN. THUS, THE EXPENDITURE IS MOST REASONABLE & JUSTIFIED & INCURRED ONLY FOR THE ACTIVITIES OF THE SOCIETY. 117. THE LEDGER ACCOUNT OF GENERAL AND OFFICE EXPENSES IN THE LEDGER BOOK OF RAJASTHAN VIKAS SANSTHAN FOR FY 2005-06 SHOWS PERSONAL EXPENDITURES CLAIMED TO EXTENT OF RS. 24,700/-. THE TRUST COULD NOT FURNISH THE DETAILS OF THE SAID EXPENDITURE & ITS NEXUS WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES. THIS ATTRACTS SECTION 13(1)(C). THE GIFTS HAVE BEEN DISTRIBUTED TO VARIOUS FACULTIES/DONORS/STAFF ASSOCIATED WITH THE ACTIVITIES OF THE TRUST. THE SAME IS A COMMON PHENOMENON & IS AN ESSENTIAL PART OF THE EDUCATIONAL INSTITUTION WHERE LARGE PUBLIC INCLUDING PROMINENT PERSONS ARE CONNECTED FOR ACHIEVEMENTS OF THE AIMS & OBJECTS OF THE SANSTHAN. 118. ASSESSEE CLAIMED LEGAL & PROFESSIONAL EXPENDITURE OF RS.86,175/-, RS.68,493/-, RS.2,500/- AND RS.28,872/- IN THE NAME OF SHRI M.R. SINGHVI, ADVOCATE, SHRI S.L. GUPTA, SHRI SURESH SURANA AND SHRI S.C. GUPTA RESPECTIVELY. HOWEVER, IT FAILED TO FILE THE DETAILS OF THE SERVICES RENDERED & THE PURPOSE. THUS, THE PAYMENT MADE HAD NO RELATION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES. SERVICES OF SHRI M.R. SINGHVI, SHRI S.L. GUPTA & SHRI S.C. GUPTA WERE TAKEN TO ARGUE THE CASE IN THE JUDICIAL AUTHORITY FOR DENTAL COLLEGE REGISTRATION. THE CASE WAS ALSO WON BY THE SOCIETY ON ACCOUNT OF TAKING THE SERVICES OF SUCH RENOWNED PROFESSIONALS. AS FAR AS PAYMENT TO SHRI SURESH SURANA IS CONCERNED, THE SAME IS ON ACCOUNT OF AUDIT FEES WHICH IN NO MANNER CAN BE NON- 31 CHARITABLE. 119. ASSESSEE CLAIMED EXPENDITURE OF RS.20,614/- ON ACCOUNT OF REPAIR & MAINTENANCE IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2005-06. FROM THE SAME, IT CAN BE NOTED THAT A GOOD AMOUNT WAS SPENT FOR REPAIR OF MATIZ CAR WHICH IS NOT OWNED BY THE TRUST. NO PETROL EXPENDITURE IS DEBITED. THUS, REPAIR & MAINTENANCE HAVE NO CONNECTION WITH THE CHARITABLE/EDUCATIONAL ACTIVITIES OF THE TRUST. SINCE THE CAR IS NOT REGISTERED IN THE NAME OF THE SOCIETY, NO PETROL EXPENDITURE IS CLAIMED IN THE BOOKS. HOWEVER, SUCH CAR IS OCCASIONALLY HIRED WHEN THE OTHER VEHICLES ARE NOT AVAILABLE & ANY REPAIRING EXPENDITURE INCURRED DURING THAT TIME IS BORNE BY THE SOCIETY SINCE THE CAR IS USED FOR THE ACTIVITIES OF THE SOCIETY. 120. IT IS FOUND THAT TRAVELLING EXPENSES IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2005-06 (AS PER TABLE GIVEN ON PAGE 104 OF THE ORDER) IS NOT RELATED WITH EDUCATIONAL/CHARITABLE ACTIVITIES OF THE TRUST IN THE ABSENCE OF DETAILS. FURTHER, IT IS FOUND THAT PAYMENTS WERE MADE OUT OF TRUST FUNDS TOWARDS HSBC CARD OF MANISH VYAS. THE MATTER IS OLD & THEREFORE THE VOUCHERS APPEAR TO HAVE BEEN MISPLACED BUT FOR THIS REASON, THE EXPENDITURE CAN NOT BE HELD AS NON RELATABLE TO EDUCATIONAL ACTIVITIES. THE ENTIRE TRAVELLING EXPENDITURE IS INCURRED FOR THE ACTIVITIES OF THE SOCIETY. AS FAR AS PAYMENT FOR HSBC CARD OF MANISH VYAS IS CONCERNED, IT IS TO BE NOTED THAT THE AMOUNT WAS DEBITED TO ADVANCE AGAINST IMPREST (MANISH VYAS) ACCOUNT. THIS IS A RUNNING ACCOUNT. SUBSEQUENTLY, THE AMOUNT HAS BEEN PAID BACK BY SH. MANISH VYAS. THUS, THERE IS NO BENEFIT PROVIDED BY THE SOCIETY TO SH. MANISH VYAS 121. FROM THE LEDGER ACCOUNT CHAIRMAN IMPREST ACCOUNT IN THE BOOKS OF VYAS INSTITUTE OF MANAGEMENT FOR FY 2006-07, IT IS EVIDENT THAT TRUST RECEIVED A TOTAL SUM OF RS. 3,01,000/- FROM SH. MANISH VYAS WHILE IT ADVANCED RS. 4 LACS TO HIM. THUS, SUBSTANTIAL FUNDS REMAINED WITH HIM & UTILIZED FOR HIS PERSONAL NEEDS. VIN PAID RS. 4,00,000/- TO MANISH VYAS FOR PURCHASE OF EQUIPMENT / BOOKS BUT SINCE THE SAME WAS NOT PURCHASED IT WAS REPAID BACK. THUS THERE IS NO VIOLATION OF SEC 13 (1)(C). 122. IN THE BOOKS OF ACCOUNTS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004-05, IT IS SHOWN THAT TRUST MADE ADVANCES OF RS.50,00,000/- AND RS.50,00,000/- TO SHRI RAMESH AGARWAL FOR PURCHASE OF LAND VIDE CHEQUE NO.24374 AND 24375 ON 13.09.2004 AND 14.09.2004 RESPECTIVELY. HOWEVER, NO LAND WAS PURCHASED AND THE AMOUNTS WERE RETURNED BACK IN JAN/FEB 2005. NO DOCUMENT OR AGREEMENT COULD BE FURNISHED ON THE BASIS OF WHICH THE LAND PROPOSED TO BE SOLD COULD BE IDENTIFIED. FUNDS WERE DIVERTED. THUS, SECTION 13(1)(D) IS ATTRACTED IN AS MUCH AS FUNDS WERE INVESTED/DEPOSITED OTHERWISE IN MODES SPECIFIED U/S 13(5). ADVANCES FOR PURCHASES OF LAND WAS GIVEN TO SHRI RAMESH AGARWAL FOR OWN CITY OFFICE AT SARDARPURA, JODHPUR. THE PROPOSED CITY OFFICE WAS HAVING INVESTMENT OF MORE THAN RS.6 CRORES BUT SINCE THE DEAL COULD NOT MATERIALIZE, THE ADVANCES WERE RETURNED BACK. THE ADVANCES ARE MOST REASONABLE. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 123. PERUSAL OF THE LEDGER ACCOUNT SMT. ASHA VYAS IF ONLY SALARY IS CREDITED IN FY 03-04 & 32 IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2003-04 SHOWS THAT SALARY OF RS.1,20,000/- HAS BEEN CREDITED IN HER NAME. THE TOTAL CREDIT BALANCE INCLUDING THE OPENING BALANCE AMOUNTED TO RS.1,60,000/- AS ON 31.03.2004. PAYMENT OF RS. 2,80,000/- WAS MADE FROM MONTH OF NOV 04 & SALARY OF RS. 1,20,000/- FOR F.Y. 04-05 WAS CREDITED IN HER ACCOUNT IN 31.03.2005. NO REASONS WERE FURNISHED AS TO WHY NO PAYMENT WAS MADE IN FY 03-04 & WHY ONLY SALARY WAS CREDITED. NO EDUCATIONAL QUALIFICATIONS & BASIS FOR PROVIDING SALARY WAS PROVIDED. THIS ATTRACTS SECTION 13(1)(C). PAYMENT WAS MADE SUBSEQUENTLY, THAT DOES NOT MEAN THAT THE EXPENDITURE IS NOT RELATABLE TO EDUCATIONAL ACTIVITIES. SMT. ASHA VYAS IS THE TRUSTEE OF THE ASSESSEE SOCIETY & REASONABLE SALARY IS BEING PAID TO HER FOR HER SERVICES RENDERED TO THE SOCIETY. 124. LEDGER ACCOUNT OF BIRD TRAVELS PVT. LTD. IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004- 05 SHOWS PAYMENT TO THE SAID CONCERN AMOUNTING TO RS.69,166/- VIDE CHEQUE NO.24369 DATED 05.06.2004 ON ACCOUNT OF TRAVELLING EXPENSES. NO DETAILS COULD BE FURNISHED IN THIS REGARD AS TO WHO TRAVELLED AND THE PLACE TRAVELLED. THUS, THE SAME IS NOT RELATED WITH EDUCATIONAL/CHARITABLE ACTIVITI ES OF THE TRUST IN THE ABSENCE OF DETAILS. 125. LEDGER ACCOUNT CROWN TOURS LTD. IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004-05 SHOWS THAT THE TRUST MADE PAYMENTS OF RS.59,948/-, RS.12,333/-, RS.1,03,335/- AND RS.14,373/- TO THE SAID CONCERN ON ACCOUNT OF TRAVELLING EXPENSES. NO DETAILS COULD BE FURNISHED IN THIS REGARD NOR IT COULD BE CONFIRMED AS TO WHETHER THE EXPENDITURE INCLUDED ANY FOREIGN TRAVEL. THUS, THE FUNDS OF THE TRUST WERE NOT UTILIZED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF CHARITABLE/EDUCATIONAL ACTIVITIES IN THE ABSENCE OF DETAILS. THE MATTER IS OLD & THEREFORE THE VOUCHERS APPEAR TO HAVE BEEN MISPLACED BUT FOR THIS REASON, THE EXPENDITURE CAN NOT BE HELD AS NON RELATABLE TO EDUCATIONAL ACTIVITIES. THE ENTIRE TRAVELLING EXPENDITURE IS INCURRED FOR THE ACTIVITIES OF THE SOCIETY. 126. LEDGER ACCOUNT GENERAL & OFFICE EXPENSE IN T HE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004- 05 SHOWS EXPENDITURE OF RS. 11,000/- PAID TO MARWAR ASHRAM SEWA SAMITI, RS. 1,500/- TO RAJ VILAS SOCIETY & RS. 1,037/- TO JVVNL, JAIPUR. NO DETAILS WERE FURNISHED AS TO WHETHER MARWAR ASHRAM SEWA SAMITI IS APPROVED OR REGISTERED TRUST U/S 11 AND 12 OF THE ACT AND HOW THE DONATION CAN BE CONSTRUED AS A CHARITABLE/EDUCATIONAL ACTIVITY. LIKEWISE, PAYMENTS TO RAJ VILAS SOCIETY WHICH IS RESIDENCE OF SHRI MANISH VYAS AT JAIPUR CANNOT BE THE DONATION OF RS. 11,000/- IS GIVEN AS A MEASURE OF SOCIAL RESPONSIBILITY WHICH DOES NOT MAKE THE ACTIVITY OF THE ASSESSEE NON CHARITABLE. SHRI MANISH VYAS IS NOT RELATED TO THE SAMITI. FURTHER, PAYMENT TO RAJ VILAS SOCIETY & JVVNL IS ALSO RELATED TO CHARITABLE ACTIVITIES OF THE TRUST SINCE JAIPUR OFFICE OF THE SANSTHAN IS MAINTAINED THERE. 33 CONSIDERED TO BE A CHARITABLE ACTIVITY FOR THE REASON THAT THE SAME REPRESENTS PERSONAL EXPENDITURE/OBLIGATION OF SHRI MANISH VYAS. SIMILAR IS THE CASE FOR PAYMENT OF RS.1,037/- TO JVVNL, JAIPUR. THUS, THE TRUST FUNDS WERE UTILIZED FOR NON-CHARITABLE/NON-EDUCATIONAL ACTIVITIES. 127. LEDGER ACCOUNT HOTEL CITY VIEW IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004-05 SHOWS THAT THE TRUST GAVE LOAN OF RS. 5,000/- AND RS.1,00,000/- ON 01.1.2005 AND 01.02.2005, RESPECTIVELY. THE SAID LOAN WAS RETURNED ON 05.03.205 VIDE CHEQUE NO.56247 (RS.1,05,000). NO INTEREST WAS CHARGED. THUS, THERE IS VIOLATION OF SECTION 11(5) R.W.S 13(1)(D). THE LOAN TO HOTEL CITY VIEW WAS GIVEN IN THE INTEREST OF THE ASSESSEE SOCIETY IN AS MUCH AS VARIOUS VISITORS/FACULTIES VISITING THE ASSESSEE STAY THERE FOR WHICH THEY PROVIDE THE STAY FACILITY AT CONCESSIONAL RATES. THE AMOUNT WAS ALSO ADVANCED FOR TEMPORARY PERIOD OF 35 DAYS ONLY & THEREFORE SUCH ADVANCE GIVEN IN THE INTEREST OF SOCIETY IS NOT A VIOLATION OF SECTION 11(5). THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 128. PERUSAL OF LEDGER ACCOUNT OF SHRI MANISH VYAS IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR THE FY 2004-05 SHOWS THAT THE TRUST MADE SUBSTANTIAL ADVANCES AS ALSO PAYMENT OF HIS CREDIT CARDS WHICH ARE FOR PERSONAL BENEFIT ATTRACTING SECTION 13(1)(C). SH. MANISH VYAS HAS INCURRED VARIOUS EXPENDITURE THROUGH HIS CREDIT CARD IN RESPECT OF VARIOUS TRAVELS UNDERTAKEN BY HIM FOR THE PURPOSE OF THE SOCIETY. SUCH EXPENDITURE IS CREDITED IN HIS ACCOUNT ON SUBMISSION OF BILLS/DETAILS AGAINST WHICH PAYMENT HAS BEEN MADE TO HIM IN CASH AS DETAILED IN THE ORDER. THIS IS NOT A BENEFIT TO MANISH VYAS & THEREFORE SECTION 13(1)(C) IS NOT ATTRACTED. 129. LEDGER ACCOUNT OF REPAIR & MAINTENANCE EXPENSES IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004-05 SHOWS THAT THE TRUST PAID A SUM OF RS.1,00,000/- ON 18.02.205 VIDE CHEQUE NO.51236 FOR CHANGE OF ENGINE OF AMBASSADOR CAR. THERE IS NO AMBASSADOR CAR REFLECTED IN THE BALANCE SHEETS OF THE ASSESSEE TRUST OR ITS CONSTITUENT COLLEGES. THUS, REPAIR EXPENSES INCURRED IN RESPECT OF AN ASSET WHICH DOES NOT BELONG TO THE ASSESSEE TRUST AND WHICH HAS NOT BEEN USED BY THE TRUST CANNOT BE CONSIDERED AS LAID OUT FOR THE PURPOSES OF CHARITABLE/EDUCATIONAL ACTIVITIES. AMBASSADOR CAR IS OWNED BY SH., MANISH VYAS BUT SINCE THE CAR IS EXCLUSIVELY USED FOR THE ACTIVITIES OF THE SOCIETY, EXPENDITURE ON THIS CAR IS BORNE BY THE SOCIETY. 130. LEDGER ACCOUNT OF TRAVELLING ADVANCE IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004- 05 SHOWS THAT THE TRUST PAID A SUM OF RS.4,45,000/- AND RS.4,56,000/- VIDE CHEQUE SHIR MANISH VYAS TRUSTEE VISITED USA FOR PROCUREMENT OF CORPUS FUND FROM U. S. DONORS AND TO DEVELOP THE LATEST EDUCATION PROGRAMMES. BECAUSE OF THIS VISIT, THE 34 NO.24366 AND CHEQUE NO. NIL DATED 10.05.2004 AND 20.05.2004, RESPECTIVELY FOR AMERICA TOUR. NO DETAILS WAS FURNISHED IN RESPECT OF THIS TRIP. THIS ATTRACTS SECTION 13(1)(C). SOCIETY WAS ABLE TO PROCURE CORPUS FUNDS AGGREGATING RS. 1.23 CRORES IN F.Y. 06-07. THUS, THIS IS NOT A BENEFIT U/S 13(1)(C) RATHER IT IS FOR THE OBJECTS OF THE SOCIETY. 131. LEDGER ACCOUNT TRAVELLING EXPENSES AS FOUND IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2004-05 SHOWS PAYMENT THROUGH CREDIT CARDS. THESE PAYMENTS ARE IN VIOLATION OF SECTION 13(1)(C). SH. MANISH VYAS HAS INCURRED VARIOUS EXPENDITURE THROUGH HIS CREDIT CARD IN RESPECT OF VARIOUS TRAVELS UNDERTAKEN BY HIM FOR THE PURPOSE OF THE SOCIETY. SUCH EXPENDITURE IS CREDITED IN HIS ACCOUNT ON SUBMISSION OF BILLS/DETAILS AGAINST WHICH PAYMENT HAS BEEN MADE TO HIM IN CASH AS DETAILED IN THE ORDER. THIS IS NOT A BENEFIT TO MANISH VYAS & THEREFORE SECTION 13(1)(C) IS NOT ATTRACTED 132. BOOKS OF ACCOUNTS OF RAJASTHAN VIKAS SANSTHAN FOR THE FY 2003-04 SHOWS PAYMENT OF RS.17,723/- ON ACCOUNT OF FESTIVAL EXPENSES PAID TO TAJ HARI MAHAL HOTEL. M/S. TAJ HARI MAHAL HOTEL IS A FIVE STAR HOTEL & THUS IT CAN NOT BE SAI D TO BE FOR CHARITABLE PURPOSE. SIMPLY BECAUSE PAYMENT IS MADE TO TAJ HARI MAHAL HOTEL WHICH IS A FIVE STAR HOTEL WOULD NOT MAKE THE EXPENDITURE NON CHARITABLE. 133. LEDGER ACCOUNT TRAVELLING EXPENSES IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR THE FY 2003-04 SHOWS THAT AN EXPENDITURE OF RS.6,050 AND RS.3,850/- WERE INCURRED BY THE TRUST FOR PAYMENT MADE TO CHOKHI DHANI ON 15.12.2003 AND 24.12.2003, RESPECTIVELY. THE PURPOSE OF THE VISIT WAS PURELY PERSONAL AND GOT NO RELATIONSHIP WITH THE OBJECTS OF THE TRUST. THUS, THE FUNDS OF T HE TRUST WERE UTILIZED FOR NON-CHARITABLE/NON- EDUCATIONAL ACTIVITIES. THIS EXPENDITURE IS INCURRED FOR DINNER PROVIDED TO PERSONS WHO VISITED THE INSTITUTIONS FOR INSPECTION. THIS IS A NORMAL COURTESY PROVIDED TO THE PERSONS COMING FOR INSPECTION. IT CAN NOT BE SAID TO BE MISUTILIZATION OF TRUST FUND. 134. LEDGER ACCOUNT M/S. AGARWAL TRADING CO. IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR THE FY 2008-09 SHOWS THAT M/S. AGARWAL TRADING CO. HAD AN OPENING DEBIT BALANCE OF RS.30 LACS AS ON 01.04.2008. THE ASSESSEE TRUST FURTHER ADVANCED A SUM OF RS.11,76,000/- TO M/S. AGARWAL TRADING CO. AND THEREFORE, THE TOTAL AMOUNT ADVANCED TO IT AMOUNTED TO RS.41,76,000/- (RS.30,00,000 + RS.11,76,000). AS AGAINST THE ABOVE, M/S. AGARWAL TRADING CO. RETURNED THE MONEY AGGREGATING TO RS.30 LACS. THUS, M/S. AGARWAL TRADING CO. HAD A CLOSING DEBIT BALANCE OF RS.11,76,000/- AS ON 08.08.2008. THE TRANSACTIONS WITH M/S. AGARWAL TRADING CO. ARE IN THE NATURE OF LOAN TRANSACTIONS ON WHICH THE TRUST DID NOT CHARGE ANY INTEREST. THUS, THERE IS ADVANCE WAS GIVEN TO M/S. AGARWAL TRADING CO. TOWARDS SUPPLY OF LAB EQUIPMENTS. IT WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS RETURNED BACK AS HE COULD NOT SUPPLY THE EQUIPMENTS. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 35 VIOLATION OF SECTION 11(5) R.W.S 13(1)(D). 135. LEDGER ACCOUNT OF M/S. ANUPAM AGENCIES IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR THE FY 2007-08 SHOWS THAT A SUM OF RS.13 LACS WAS PAID TO M/S. ANUPAM AGENCIES ON 18.03.2008 WHICH WAS RETURNED ON 28.04.2008 TO THE TRUST. THE ACCOUNT FOR THE FY 2008-09 ALSO SHOWS THAT THE TOTAL PURCHASES MADE BY THE TRUST FROM M/S. ANUPAM AGENCIES WERE TO THE EXTENT OF RS.3,04,443/- ONLY FOR WHICH THE ASSESSEE MADE PAYMENTS OF RS.3,03,350/-. THIS SHOWS THAT THE AMOUNT OF RS.13 LACS WAS GIVEN AS A LOAN TO M/S. ANUPAM AGENCIES. NO DETAILS AND REASONS COULD BE FURNISHED AS TO WHY SUCH HUGE AMOUNT OF RS.13 LACS WAS GIVEN TO M/S. ANUPAM AGENCIES PARTICULARLY WHEN NO SIGNIFICANT PURCHASES WERE MADE IN THE SUBSEQUENT YEARS. THUS, THERE IS VIOLATION OF SECTION 11(5) R.W.S 13(1)(D). M/S ANUPAM AGENICES SUPPLIES ELECTRONIC GADGETS/ELECTRICAL EQUIPMENTS TO THE SOCIETY. ADVANCE OF RS. 13 LACS WAS GIVEN ON 18.03.2008 AGAINST SUCH SUPPLIES. HOWEVER, SINCE THE ORDER WAS CANCELLED, AMT. WAS RECEIVED BACK ON 28.04.2008. THUS, THERE IS NO VIOLATION OF SECTION 13(1)(D). 136. LEDGER ACCOUNT OF FAIR TOOLS IN THE BOOKS OF VYAS DENTAL COLLEGE & HOSPITAL FOR THE FY 2008- 09 SHOWS THAT THE ASSESSEE ISSUED A CHEQUE NO.310129 FOR RS.10 LACS IN FAVOUR OF M/S. FAIR TOOLS ON 21.11.2008 WHICH WAS RETUNED BACK BETWEEN 24.11.2008 TO 26.02.2009. NO DETAILS COULD BE FURNISHED AS TO WHETHER THE AMOUNT OF RS.10,00,000/- WAS GIVEN AS ADVANCE TOWARDS ANY PURCHASE OR SERVICES ETC. OR IT REPRESENTS LOAN. THUS, THE TRANSACTIONS WITH M/S. FAIR TOOLS ARE IN THE NATURE OF LOAN TRANSACTIONS. NO INTEREST WAS RECEIVED BY THE TRUST ON ADVANCE OF RS.10 LACS. THUS, THERE IS VIOLATION OF SECTION 11(5) R.W.S 13(1)(D). M/S FAIR TOOLS SUPPLIES MECHANICAL/LAB EQUIPMENTS TO THE SOCIETY. ADVANCE OF RS. 10 LACS WAS GIVEN ON 21.11.2008 AGAINST SUCH SUPPLIES. HOWEVER, SINCE THE ORDER WAS CANCELLED, AMT. WAS RECEIVED BACK BETWEEN 24.11.2008 TO 26.02.2009. THUS, THERE IS NO VIOLATION OF SECTION 13(1)(D). 137. IT IS FOUND FROM THE BOOKS OF VYAS INSTITUTE O F ENGINEERING & TECHNOLOGY FOR THE FY 2008-09, THAT THERE IS OPENING DEBIT BALANCE OF RS. 23,50,750/- IS THERE. FURTHER ADVANCE OF RS. 10 LACS WAS GIVEN ON 02.08.2008 & RS. 13 LACS WAS RETURNED BY IT ON 18&19.06.2008. THUS, THERE IS CLOSING BALANCE OF RS. 20,50,750/- WHICH WAS LYING WITH IT WITHOUT ANY INTEREST. THE TRANSACTION S WITH M/S. AGARWAL TRADING CO. ARE IN THE NATURE OF LOAN TRANSACTIONS ON WHICH THE TRUST DID NOT CHARGE ANY INTEREST. THUS, THERE IS VIOLATION OF SECTION 11(5) R.W.S 13(1)(D). ADVANCE WAS GIVEN TO M/S. AGARWAL TRADING CO. TOWARDS SUPPLY OF LAB EQUIPMENTS. IT WAS GIVEN IN THE INTEREST OF THE ASSESSEES SOCIETY WHICH WAS RETURNED BACK AS HE COULD NOT SUPPLY THE EQUIPMENTS. THESE ENTRIES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THIS IS NOT A CASE OF INVESTMENT OR DEPOSIT OF THE FUNDS OF THE SOCIETY. THEREFORE, SECTION 11(5) IS NOT ATTRACTED & CONSEQUENTLY THERE IS NO VIOLATION OF SECTION 13(1)(D). 138. LEDGER ACCOUNT GENERAL EXPENSES IN THE BOOKS AMOUNT OF RS. 45,000/- WAS PAID TO SH. 36 OF VYAS INSTITUTE OF ENGINEERING & TECHNOLOGY FOR THE FY 2008-09 SHOWS THAT THE TRUST INCURRED AN EXPENDITURE OF RS.45,000/- VIDE CHEQUE NO.308817 ON 08.11.2008 FOR PURCHASE OF KIRANA GOODS FOR MAKING SWEETS. WHEN THE RELEVANT BANK BOOK WAS LOOKED INTO, IT WAS FOUND THAT IT DOES NOT CONTAIN THE NAME OF THE PARTY TO WHOM THE CHEQUE WAS ISSUED. IN ANY CASE, IT IS EVIDENT FROM THE NARRATION THAT KIRANA GOODS WERE PURCHASED FOR MAKING SWEETS TO THE EXTENT OF RS.45,000/-. THE TRUST COULD NOT CONVEY THE OCCASION FOR WHICH SWEETS TO THE EXTENT AS ABOVE WERE PREPARED. PARAS BY BEARER CHEQUE AGAINST SUPPLY OF SWEETS ON OCCASION OF DEEPAWALI WHICH IS DISTRIBUTE TO VARIOUS FACULTIES/STAFF. SUCH EXPENDITURE INCURRED IN COURSE OF THE NORMAL ACTIVITIES OF TRUST DO NOT ATTRACT SECTION 13(1)(C). 139. LEDGER ACCOUNT OF M/S. OMWAY BUILDERS PVT. LTD. IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR THE FY 2006-07 SHOWS THAT THE TRUST MADE AN ADVANCE OF RS.6.5 LACS ON 24.04.2006 BY CHEQUE TO M/S. OMWAY BUILDERS PVT. LTD. PERUSAL OF THE ACCOUNT OF THE ABOVE PARTY IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR THE FY 2007-08 SHOWS THAT THE AMOUNT WAS RETURNED IN INSTALLMENTS OF RS.2 LACS, RS.2 LACS AND RS.2.5 LACS. THE ENTRIES DO NOT SUGGEST CHARGING OF ANY INTEREST BY THE TRUST. THE FACTS ALSO SHOWS THAT AL L THE THREE CHEQUES WERE ISSUED IN THE NAME OF SHRI MANISH VYAS WHO ENCASHED THE SAME AND DEPOSITED THE CORRESPONDING AMOUNTS IN THE BOOKS OF THE ASSESSEE TRUST. CONSEQUENTLY, THE CASH BALANCE IN THE CASH BOOK INCREASED. THIS FACT SUGGESTS THAT THE RETURN OF LOAN AMOUNT BY M/S. OMWAY BUILDERS PVT. LTD. WAS NOT BY WAY OF ACCOUNT PAYEE CHEQUE/DD. THUS, THE FUNDS OF THE TRUST WERE NOT UTILIZED FOR CHARITABLE/EDUCATIONAL ACTIVITIES. M/S OMWAY BUILDERS PVT. LTD. IS ONE OF THE BUILDING CONTRACTOR OF THE SOCIETY. HE WAS PROVIDED AN ADVANCE FOR CARRYING OUT THE WORK BUT SINCE HE DIDNT CARRIED OUT THE SAME AMOUNT WAS RETURNED BY HIM WRONGLY IN THE NAME OF MANISH VYAS. THEREFORE, THE SOCIETY DEBITED THE IMPREST A/C OF MANISH VYAS BY CREDITING TO THE ACCOUNT OF OMWAY BUILD LTD. THIS AMOUNT WAS IMMEDIATELY WITHDRAWN BY MANISH VYAS FROM HIS BANK A/C DEPOSITED WITH THE SOCIETY. THUS, THERE IS NO VIOLATION OF 11(5) R.W.S 13(1)(D). 140. LEDGER ACCOUNT OF NIRWAN CHARITABLE TRUST IN THE BOOKS OF RAJASTHAN VIKAS SANSTHAN FOR FY 2003-04 SHOWS OPENING BALANCE OF RS.93.5 LACS. IT IS NOT KNOWN AS TO WHEN EXACTLY THE TRUST ADVANCED THE SUM OF RS.93.5 LACS TO M/S. NIRWAN CHARITABLE TRUST. IT IS FOUND THAT THE ASSESSEE TRU ST IN THE FY 2003-04 FURTHER PROVIDED FUNDS TO NIRWAN CHARITABLE TRUST AMOUNTING TO RS.30,75,000/-. THUS, THE TOTAL MONEY ADVANCED TO NIRWAN CHARITABLE TRUST AS ON 31.03.2004 WAS RS.1,24,25,000/-. IN F.Y. 04-05, FURTHER PAYMENTS OF RS. 3.5 LACS WERE MADE & RS. 1.27 CRORES WERE RECEIVED BACK LEAVING A BALANCE OF RS. 75,000/- AS NIRWAN CHARITABLE TRUST IS ANOTHER CHARITABLE TRUST REGISTERED UNDER SEC.12A THEREFORE SUCH TEMPORARY ADVANCE TO OTHER CHARITABLE TRUST PURSUING SIMILAR OBJECT CANT BE SAID TO BE MISUTILIZATION OF THE FUNDS OF THE TRUST AS GIVING ADVANCE TO CHARITABLE TRUST IS ALSO ONE OF THE OBJECT OF THE SOCIETY. THUS, THERE IS NO VIOLATION OF 11(5) R.W.S 13(1)(D). FURTHER, ADVANCING INTEREST FREE TEMPORARY LOAN BY ONE SOCIETY TO ANOTHER SOCIETY HAVING SIMILAR OBJECTS, WOULD NOT AMOUNT TO AN INVESTMENT OR DEPOSIT ATTRACTING SECTION 13(1)(D) AS HELD BY DELHI HIGH COURT 37 ON 31.03.2005. HUGE ADVANCE WERE GIVEN WITHOUT CHARGING ANY INTEREST. THUS, THE FUNDS OF THE TRUST WERE NOT UTILIZED FOR CHARITABLE/EDUCATIONAL ACTIVITIES. THUS, THERE IS VIOLATION OF SECTION 11( 5) R.W.S 13(1)(D). IN CASE OF DIT(EXEMPTIONS) VS. ACME EDUCATIONAL SOCIETY 326 ITR 146 141. MOBILE PHONE NO. 9414367720 BELONGING TO ONE SHRI KAMAL PAREEK EX-ACCOUNTANT WAS GOT RECHARGED BY THE TRUST FOR RS.550/- ON 29.12.2006. THUS, THE TRUST FUNDS WERE UTILIZED FOR BENEFIT OF A PERSON WHO HAD NOTHING TO DO WITH THE CHARITABLE OR EDUCATIONAL ACTIVITIES OF THE TRUST. THIS IMPLIE S THAT THE TRUST FUNDS WERE NOT UTILIZED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF EDUCATION OR CHARITY. THE OBSERVATION OF CIT THAT SH. KAMAL PAREEK IS EX-EMPLOYEE OF THE SOCIETY IS INCORRECT. HE LEFT THE SOCIETY IN FEB 2008 & THUS RECHARGE EXPENDITURE OF RS. 550/- BORNE BY SOCIETY ON 29.12.2006 CAN NOT BE SAID TO BE FOR NON CHARITABLE PURPOSE. 142. THERE IS DIFFERENCE IN THE AMOUNT OF SALARY CREDITED TO THE ACCOUNT OF DR. B.R. SINGHVI AND THE AMOUNT ACTUALLY PAID. IT IS FURTHER FOUND THAT A SUM OF RS.25,000/- AS ABOVE WAS PAID VIDE CHEQUE NO. 27769, BUT THIS CHEQUE WAS SELF AND ENCASHED BY SHRI MANISH WHO IS FOUND TO BE CHAIRMAN AND MAIN TRUSTEE OF THE SAID TRUST. NO ANSWER COULD BE FURNISHED BY THE ASSESSEE TRUST AS TO WHY THE CHEQUE WAS ENCASHED BY SHRI MANISH AND WAS NOT ENCASHED BY DR. SINGHVI TO WHOM THE SALARY CHEQUE IS CLAIMED TO HAVE BEEN GIVEN. NO TAX WAS DEDUCTED AT SOURCE AND THERE ARE NO STAMP RECEIPTS AVAILABLE WITH THE TRUST WHICH COULD PROVE EVEN THE GENUINENESS OF THE SALARY PAYMENT. NO CONFIRMATION IN THIS REGARD COULD BE PRODUCED BY THE ASSESSEE TRUST. IT THEREFORE GOES TO PROVE THAT AT LEAST THE SUM OF RS.25,000/- CLAIMED TO HAVE BEEN PAID TO DR. SINGHVI AS SALARY DID NOT REACH HIS HANDS AND ON THE CONTRARY IT WENT BACK TO SHRI MANISH. EVEN AS PER FINDING OF CIT THE SALARY CREDITED TO HIS ACCOUNT HAS BEEN PAID. THERE IS NO EVIDENCE THAT DR. D.R. SINGHVI HAS NOT RECEIVED SUCH SALARY & THEREFORE THE OBSERVATION OF CIT THAT FUNDS WERE UTILIZED FOR PERSONAL BENEFITS IS INCORRECT. 143. IN SIMILAR MANNER, THERE IS DIFFERENCE IN THE AMOUNT OF SALARY CREDITED TO THE ACCOUNT OF SHRI O.P. GOYAL AND THE AMOUNT ACTUALLY PAID. NO TAX WAS DEDUCTED AT SOURCE AND NO CONFIRMATION FOR PAYMENT OF SALARY COULD BE FILED. NO STAMP RECEIPTS WAS EVER OBTAINED NOR PLACED BEFORE ME IN RESPECT OF PAYMENT OF SALARY IN CASH TO SHRI O.P. GOYAL. EVEN AS PER FINDING OF CIT THE SALARY CREDITED TO HIS ACCOUNT HAS BEEN PAID. THERE IS NO EVIDENCE THAT SHRI O.P. GOYAL HAS NOT RECEIVED SUCH SALARY & THEREFORE THE OBSERVATION OF CIT THAT FUNDS WERE UTILIZED FOR PERSONAL BENEFITS IS INCORRECT. 144. VOUCHERS OF GENERAL EXPENSES OF RS.22,314/- DATED 14.12.2006 WERE FOUND. PERUSAL OF CASH BOOK ALSO SHOWED PAYMENT OF CASH OF RS.22,314/- TO SHRI GAURAV PANWAR AGAINST BILL. HOWEVER, EARLIER, IT WAS DECIDED TO PAY ADVANCE OF RS.11,000/- TO SH. GAURAV PANWAR. HOWEVER, LATER IT WAS AGREED THAT THE ENTIRE PAYMENT TO HIM WOULD BE RELEASED ON 38 ALONG WITH THE SAID VOUCHER CERTAIN KACHA BILLS WERE ALSO FOUND ANNEXED AS ALSO THE HISAB GIVEN ON 11.11.2006 BY SHRI GAURAV PANWAR WHICH SHOWS THAT SHRI GAURAV PANWAR WAS GIVEN CASH ADVANCE OF RS.10,000/- (NO DATE STATED) AND RS.1,000/- ON 15.09.2006. HOWEVER, THE CASH BOOK DID NOT SHOW ANY CASH ADVANCE GIVEN TO SHRI GAURAV PANWAR ON TWO DATES AS ABOVE. THE KACHA BILLS AND HISAB ADMITTEDLY PROVES THAT ADVANCES AS ABOVE WERE GIVEN TO SHRI GAURAV PANWAR, BUT THEY WERE NOT ENTERED IN THE CASH BOOK. THIS PROVES THAT ADVANCES WERE MADE OUT OF UNRECORDED FUNDS. THE HISAB & BILLS ANNEXED WITH GENERAL EXPENSES FURTHER SHOWS PAYMENT MADE FOR SWEETS & RECHARGING THE MOBILE BILL OF DR. RAKESH VYAS. THUS, TRUST FUNDS WERE NOT UTILIZED FOR CHARITABLE PURPOSE. SUBMISSION OF BILLS & THUS RS. 22,314/- WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS. FURTHER, PAYMENT OF RECHARGE COUPONS OF FACULTY MEMBERS DOES NOT MAKE THE ACTIVITIES NON CHARITABLE. 145. VOUCHER FILE SHOWED RECHARGING OF MOBILE NO. 9414367728 ON14.11.2006. NO DETAILS COULD BE FURNISHED IN RESPECT OF THE PERSONS TO WHOM THE MOBILE BELONGED. THE NEXUS BETWEEN CHARITABLE ACTIVITY AND RECHARGING OF MOBILE ALSO COULD NOT BE PLACED ON RECORD. THUS, THE TRUST FUNDS WERE UTILIZED FOR PERSONAL EXPENDITURE AND NOT FOR CHARITABLE ACTIVITIES. AS EXPLAINED IN PARA 141 ABOVE THE EXPENSES OF MOBILE-9414367728 RELATES TO KAMAL PAREEK ACCOUNTANT & THEREFORE PAYMENT FOR RECHARGING HIS MOBILE IS BORNE BY SOCIETY. THIS CAN NOT BE SAID TO BE FOR NON CHARITABLE PURPOSE. 146. ASSESSEE TRUST PURCHASED BOOKS WORTH RS.2,47,000/- FROM M/S. DELHI BOOK STORE VIDE BILL NO. 959 DATED 22.04.2006. THE PAYMENT OF RS.2 LACS WAS MADE BY DEMAND DRAFT ON 26.04.2006, WHILE THE BALANCE AMOUNT OF RS.47,000/- WAS PAID IN CASH ON 30.04.2006. NO CASH RECEIPT OR STAMP RECEIPT IN SUPPORT OF THE CASH PAYMENT OF RS.47,000/- COULD BE PRODUCED. THE ASSESSEE ALSO COULD NOT EXPLAIN THE REASONS FOR MAKING PAYMENT IN CASH OF RS.47,000/-. THUS, THE ASSESSEE FAILED TO CONCLUSIVELY PROVE THAT THE SUM OF RS.47,000/- WAS PAID TO M/S. DELHI BOOK STORE ONLY AND IT DID NOT GO FOR ANY OTHER NON- CHARITABLE/NON-EDUCATIONAL PURPOSES. PAYMENT OF RS. 47,000/- IN CASH OUT OF TOTAL PAYMENT OF RS. 2,47,000/-, WITHOUT ANY CONTRARY EVIDENCE CAN NOT BE SAID TO BE FOR NON CHARITABLE/NON EDUCATIONAL PURPOSE. FURTHER, IF PAYMENT IS MADE IN CASH, IT DOESNT MAKE THE ACTIVITIES OF THE TRUST NON- GENUINE & THEREFORE ON THE BASIS OF SUCH CASH PAYMENT, NO ADVERSE INFERENCE CAN BE DRAWN 147. ASSESSEE MADE CERTAIN PURCHASES OF RS. 81,930/ - FROM SH. PRAKASH INDUSTRIES, OUT OF WHICH PAYMENT OF RS. 51,930/- IS MADE IN CASH. THERE IS CONTINUITY IN SERIAL NUMBER OF BILLS ISSUED WHICH SHOWED THAT PRAKASH INDUSTRIES EXISTED ONLY FOR TRUST . THE OBSERVATION OF THE CIT IS ONLY ON SURMISES & CONJECTURES. SH. PRAKASH INDUSTRIES IS A RETAILER AND HARDLY ANY PERSON ASK FOR A BILL FROM HIM. HE ISSUES THE BILL ONLY WHEN THE CUSTOMER REQUIRES. IT IS FOR THIS REASON THAT BILLS ARE IN CONTINUITY. HOWEVER, THIS DOES NOT MEAN THAT PURCHASES 39 ARE NOT GENUINE. FURTHER, IF PAYMENT IS MADE IN CASH IN SUBSEQUENT YEARS AGAINST THE SUPPLY OF GOODS, IT DOESNT MAKE THE ACTIVITIES OF THE TRUST NON-GENUINE & THEREFORE ON THE BASIS OF SUCH CASH PAYMENT, NO ADVERSE INFERENCE CAN BE DRAWN. 148. BILL DATED 22.04.2005 OF SHRI SOURABH GUPTA WH O GAVE ARCHITECTURAL SERVICES TO THE ASSESSEE TRUST INCLUDES PAYMENT OF PROFESSIONAL CHARGES OF RS. 3 LACS, SERVICE TAX RS. 30,600/- =RS. 3,30,600/- LESS ADVANCE RECEIVED RS. 1 LACS & REMAINING DUE OF RS. 2,30,000/-. NO ENTRY OF ADVANCE OF RS. 1 LACS WAS FOUND IN BOOKS. THUS, ADVANCE SO PAID WAS GIVEN OUT OF UNRECORDED INCOME. BILL OF RS.3,30,600/- IS DULY ENTERED IN THE BOOKS OF ACCOUNTS. ADVANCE PAYMENT OF RS.1,00,000/- WAS MADE BY SH.MANISH VYAS FROM HIS OWN SOURCES AND THEREFORE SAID ADVANCE IS RIGHTLY NOT RECORDED IN BOOKS OF ACCOUNT. THIS DOESNT MAKE BOOKS OF ACCOUNT INCORRECT/FALSE. 149. ASSESSEE MADE CERTAIN PURCHASES OF RS. 1,24,999/- FROM M/S NAVKAR LUMINOUS, PAYMENT OF WHICH WAS MADE IN CASH IN SUBSEQUENT YEARS. ASSESSEE COULD NOT EXPLAIN AS TO WHY PAYMENTS IN CASH WAS MADE. 150. TRUST PURCHASED GOODS FROM M/S. KALYAN ALUMINUM VIDE BILL NO. 63 IN SEPTEMBER, 2006 FOR A SUM OF RS.1,56,236/-, PAYMENT OF WHICH WAS MADE IN CASH IN SUBSEQUENT YEARS. ASSESSEE COULD NOT EXPLAIN AS TO WHY PAYMENTS IN CASH WAS MADE. 151. ASSESSEE PURCHASED ELECTRICAL EQUIPMENTS ON 25.04.2007 FROM M/S. UTTAM BHARAT PVT. LTD. FOR A SUM OF RS.2,30,164/-. A PAYMENT OF RS.1,05,165/- WAS MADE ON 25.04.2007 BY WAY OF DEMAND DRAFT. THE REMAINING PAYMENT WERE MADE IN CASH. ASSESSEE COULD NOT EXPLAIN AS TO WHY PAYMENTS IN CASH WAS MADE. 152. TRUST MADE PURCHASES OF EQUIPMENTS FROM M/S. PERFECT DENTAL EQUIPMENTS PVT. LTD. FOR WHICH CASH PAYMENT OF RS.50,000/- WAS MADE ON 12.08.2007. THE QUERIES AS STATED EARLIER REMAINED TO BE REPLIED SATISFACTORILY BY THE ASSESSEE TRUST. IF PAYMENT IS MADE IN CASH IN SUBSEQUENT YEARS AGAINST THE SUPPLY OF GOODS, IT DOESNT MAKE THE ACTIVITIES OF THE TRUST NON-GENUINE & THEREFORE ON THE BASIS OF SUCH CASH PAYMENT, NO ADVERSE INFERENCE CAN BE DRAWN. 153. ASSESSEE MADE PAYMENT OF ELECTRICITY BILL OF RS.2,180/- ON 11.06.2007 PERTAINING TO DR. SURESH. THIS MEANS THAT THE TRUST FUNDS WERE UTILIZED FOR MAKING PAYMENTS OF ELECTRICITY EXPENSES OF AN INDIVIDUAL. THE TRUST HAS PROVIDED THE FACILITIES OF ELECTRICITY; TELEPHONE ETC TO HIM& THEREFORE PAYMENT OF ELECTRICITY EXPENSES IS MADE BY IT. IT IS NOT A MISUTILIZATION OF FUND 154. TRUST MADE PAYMENT OF RS.561/- ON ACCOUNT OF MOBILE RECHARGE ON 17.04.2007 OF SHRI KAMAL PAREEK (MOBILE NO. 9414367728). THE TRUST COULD NOT EXPLAIN AS TO WHAT ELEMENT OF CHARITABLE AS EXPLAINED IN PARA 141 & 145 ABOVE THE EXPENSES OF MOBILE-9414367728 RELATES TO KAMAL PAREEK ACCOUNTANT & THEREFORE PAYMENT FOR RECHARGING HIS MOBILE IS BORNE 40 ACTIVITY WAS INVOLVED IN THE ABOVE STATED EXPENDITURE. THE NEXUS BETWEEN THE CHARITABLE ACTIVITY AND THE EXPENDITURE ON ACCOUNT OF MOBILE RECHARGING REMAINED TO BE ESTABLISHED. IN SIMILAR MANNER, THE TRUST PAID A SUM OF RS.397/- FOR AIRTEL MOBILE BILL DATED 14.04.2007. THUS, THE TRUST FUNDS WERE UTILIZED FOR PERSONAL EXPENDITURE AND NOT FOR CHARITABLE ACTIVITIES. BY SOCIETY. THIS CAN NOT BE SAID TO BE FOR NON CHARITABLE PURPOSE. 155. ASSESSEE INCURRED TRAVELLING EXPENDITURE OF RS.19,373/- FOR SHRI RAMESH TAYAL AND MISS PRIYA SAHANI ON 11.04.2007 FROM JODHPUR- MUMBAI-JODHPUR. THE TRUST COULD NOT EXPLAIN ELEMENT OF CHARITABLE ACTIVITY AND THE PURPOSE OF JOURNEY. THUS, TRUST FUNDS WERE UTILIZED FOR PERSONAL EXPENDITURE AND NOT FOR CHARITABLE ACTIVITIES. PRIYA SAHANI WAS INVITED TO JOIN THE COLLEGE. AS & WHEN HER APPOINTMENT AS A FACULTY MEMBER IN THE SOCIETY WAS CONFIRMED, SHE WENT TO MUMBAI & CAME BACK ALONG WITH HER HUSBAND SHRI RAMESH TAYAL & THUS THE TRAVELLING EXPENDITURE WAS BORNE BY THE ASSESSEE WHICH IS MOST REASONABLE & GENUINE. 156. ASSESSEE TRUST MADE PURCHASE OF LAB MATERIAL F ROM M/S. UTKARSH PVT. LTD. IN EARLIER YEARS. THE OPENING CREDIT BALANCE AS ON 01.04.2007 WAS RS.2,01,851/-. FURTHER PURCHASE OF RS.37,639/- AND RS.25,515/- WERE MADE ON 30.04.2007 AND 05.09.2007, RESPECTIVELY. THE PAYMENT OF THE SAID AMOUNT WAS MADE IN CASH. NO STAMP RECEIPTS, WHICH COULD EVIDENCE RECEIPT OF CASH, COULD BE SHOWN OR PRODUCED BY THE TRUST. IF PAYMENT IS MADE IN CASH, IT DOESNT MAKE THE ACTIVITIES OF THE TRUST NON-GENUINE & THEREFORE ON THE BASIS OF SUCH CASH PAYMENT, NO ADVERSE INFERENCE CAN BE DRAWN. 157. THERE IS A EXECUTIVE COMMITTEE REPORT DATED 30.09.2005 FOR AY 2004-05 ACCORDING TO WHICH, IT IS FOUND THAT FREE HEALTH AND MEDICAL CHECKUP CAMPS WERE ORGANIZED BY THE TRUST AT NEARBY VILLAGES AND FREE MEDICINES WERE GIVEN. BESIDES THAT 70 DENTAL CHECKUP CAMPS WERE ORGANIZED FOR DENTAL AWARENESS. IN SIMILAR MANNER MORE THAN 70 AWARENESS PROGRAMMES WERE CONDUCTED FOR SCHOOLS, COLLEGES, WOMEN GROUPS, INDUSTRIAL WORKERS AND CITIZENS RESIDING IN SLUMS FOR THE HEALTH CARE AND HEALTH AWARENESS. HOWEVER, IT IS FOUND THAT NOT EVEN A SINGLE PAISA EXPENDITURE INCURRED ON VARIOUS ACTIVITIES WAS DEBITED IN BOOKS OF ACCOUNTS. THUS, WORKS/PROJECTS/CAMPS WERE DEFINITELY UNDERTAKEN BUT PAYMENT WAS MADE OUT OF UNRECORDED SOURCES OF INCOME. ALL THE ACTIVITIES WERE CARRIED OUT BY USING OWN INFRASTRUCTURE FACILITIES AND THEREFORE NO SEPARATE EXPENDITURE IS DEBITED IN BOOKS OF ACCOUNTS. THIS RATHER SHOWS THAT ONLY GENUINE EXPENDITURE IS CLAIMED BY SOCIETY AND NO BENEFIT IS PROVIDED TO OFFICE BEARERS. S.N. PARTICULARS COMMENTS BY THE RAJASTHAN VIKAS SANSTHA N 41 1. COMPLETE BOOKS OF ACCOUNT NOT PRODUCED BOOKS OF ACCOUNT WERE PRODUCED TIME AND AGAIN IN CO URSE OF HEARING. BOOKS ARE MAINTAINED IN NORMAL COURSE O F BUSINESS AND ARE DULY AUDITED BY FIRM OF CHARTERED ACCOUNTANTS . KINDLY SEE PAGE NO. 6 PARA 4 OF THE C IT ORDER MENTIONING DATE 2. ADVERTISEMENT EXPENSES NOT JUSTIFIED MEDIUM OF COMMUNICATION IN MODERN TIME WITH PUBLIC AND TARGET STUDENTS IS PRESS. EXPENDITURE ON ADVERT ISEMENT WHOLLY LAID OUT FOR THE PURPOSE OF THE SOCIETY. MOS T OF THE AMOUNT SPENT WAS ON ADVERTISEMENT FOR FACULTY AND S TAFF . ADVERTISEMENT EXPENSES WERE ALSO INCURRED ON STATUT ORY ADVERTISEMENT FOR ADMISSION IN COLLEGE FOR BENEFIT OF STUDENTS. 3. ASSESSEE TRUST IS HAVING HUGE PROFIT THE WORD PROFIT WAS WRONGLY USED BY THE LD.CIT IN THE ORDER PASSED. ON FACTUAL MATRIX THERE WAS NO SURPLU S AS IS EVIDENT FROM TABLE ENCLOSED . IT EXHIBITS THAT AFTE R METING CAPITAL EXPENDITURE ON EDUCATION INFRASTRUCTURE DEVELOPMENT THERE WAS DEFICIT IN THE BOOKS OF THE S OCIETY IN MOST THE YEARS 4. SALARIES PAID TO THE TRUSTEE THE REMUNERATION WAS PAID AS STRAY INSTANCES TO THE EFFECT BEARER OF THE SOCIETY. PAYMENT WAS NOT GRATUITOUS B UT WAS FOR ACTUAL SERVICES RENDERED. SUCH PAYMENT IS STOPP ED FROM ASSESSMENT YEAR 2007-08 5. SOME PETTY TRAVELLING AND OTHER EXPENSES RELATED TO TRUSTEE ARE DEBITED TO TRUST A/C NO PERSONAL TRAVELLING OR OTHER EXPENDITURE WAS DEB ITED IN THE BOOKS OF THE SOCIETY. THE OFFICE BEARER OF SOCI ETY UNDERTAKEN TRAVEL FOR APPROVAL OF VARIOUS PROJECTS WITH CONCERNED DEPARTMENT AND MINISTRIES. SECTION 13 NO WHERE PROHIBITS REIMBURSEMENT OF ACTUAL EXPENDITURE INCURRED ON CARRYING OUT THE DUTIES BY THE OFFICE B EARER/ TRUSTEE 6. NO INTEREST CHARGED FORM THE ADVANCES MADE TO SOME CONCERNS ALL THE ADVANCES WERE MADE FOR THE PURPOSE OF CAPIT AL GOODS FOR CARRYING OUT THE AIMS AND OBJECTS OF THE SOCIETY. IT IS NORMAL CUSTOM TO NOT CHARGE INTEREST ON ADVAN CES FOR SUPPLIES AND CONTRACT 7. DONATION RECEIVED FROM USA THE SOCIETY IS REGISTERED UNDER FOREIGN CONTRIBUTIO NS REGULATION ACT WITH THE MINISTRY OF HOME AFFAIRS, GOVT. OF INDIA. HENCE LAWFULLY ACCEPTED DONATION FROM FOR EIGN SOURCES. MOREOVER, THERE IS NOTHING WRONG IN GETTIN G CONTRIBUTION FROM ABROAD. 8. SOME KATCHHA BILLS/ INOVICES GRANITE/MARBLE NO INCRIMINATING DOCUMENT WAS FOUND IN COURSE OF T HE PROCEEDING BY CIT. ALL PURCHASES RELATING TO CONSTR UCTION WORK ARE DULY RECORDED IN THE BOOKS OF THE SOCIETY 9. DONATION FROM STUDENTS ARE NOT RECORDED THERE WAS REAL MIS-IMPRESSION ON PART OF THE LD. CI T IN INFERRING RECEIPT OF ANY DONATION FROM STUDENT ON ADMISSION. NO EVIDENCE WAS PLACED ON RECORD. SUSPIC ION CANNOT TAKE PLACE OF PROOF. NO EVIDENCE WHATSOEVER WAS MUSTERED BY CIT 42 10 LAND DEVELOPMENT EXPENSES DEBITED ENVIRONMENT PROTECTION AND GREE EARTH ARE NEED OF H OUR. THE SOCIETY IS OWNER OF MORE THAN 49 BIGHAS LAND AT PALI ROAD, JODHPUR. INVESTMENT WAS MADE ON MEASURE FOR CONSERVATION OF NATURE BY UNDERTAKING HUGE PLANTATI ON IN THE CAMPUS AREA 11. NO EXPENDITURE INCURRED FOR FREE MEDICAL RURAL CAMPS SOCIETY REGULARLY HOLD MEDICAL CAMPS, HEALTH AWAREN ESS CAMPS IN JODHPUR CAMPUS AND THE NEARBY VILLAGES FRO M TIME TO TIME. THE LD. CIT RAISED OBJECTIN AS NO SEP ARATE EXPENDITURE IS FOUND DEBITED IN THE BOOKS. THE SOCI ETY HAS ITS OWN TEAM OF EXPERTS INCLUDING DOCTORS AND PARA MEDICS FOR WHICH NO SEPARATE EXPENDITURE IS REQUIRED TO BE INCURRED. MOREOVER, THE VEHICLES OWNED ARE USED HEN CE NO SEPARATE VEHICLE HIRE EXPENDITURE FOUND DEBITED IN THE SOCIETY BOOKS. THE FACT IS VERIFIABLE FROM RECORD A ND FIELD INQUIRIES. THERE IS NOTHING ON RECORD BROUGHT BY TH E LD. CIT TO SUBSTANTIATE THAT NO SUCH ACTIVITY WAS DONE. 2.5 THE LD. AR HAS FILED THE FOLLOWING SUBMISSIONS 1.SECTION 12AA(3) WHICH GIVES POWER TO THE CIT T O WITHDRAW THE REGISTRATION READS AS UNDER:- (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D 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 COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSE D UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. FROM THE PLAIN READING OF THIS SECTION, IT CAN BE N OTED THAT REGISTRATION CAN BE WITHDRAWN ONLY WHEN THE COMMISSIONER IS SATISFIED T HAT ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE INSTITUTION. FURTHER, SECTION 12AA(3) IS INTRODUCED IN THE STATUES BOOKS W.E.F. 01.10.2004 & THE POWER TO WITHDRAW THE REGISTRATION GRANTED U/S 12A HAS BEEN INTRODUCED IN THE STATUTES BOOKS W.E.F. 01.06.2010. THEREFORE, THE ISSUE IN THE PRESENT CASE IS WHETHER REGISTRATION GRANTED U/S 12A CAN BE WITHDRAWN FROM THE RETROSPECTIVE EFFECT & IN WHAT CIRCUMSTANCES IT CAN BE SAID THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR NOT CARRIED OUT IN ACCORDANCE WITH I TS OBJECT. WHETHER SECTION 12AA(3) HAS RETROSPECTIVE EFFECT 43 (I) THERE IS NO DISPUTE AS TO THE FACT THAT ASSESSEE WA S GRANTED REGISTRATION U/S 12A(1)(A) FROM A.Y. 01-02. THE TITLE OF THIS SECTION AT THAT TIME WAS CONDITIONS AS TO REGISTRATION OF TRUST. WITH EFFE CT FROM 01.06.2007, THE TITLE OF THE SECTION HAS BEEN SUBSTITUTED AS CONDITION F OR APPLICABILITY OF SECTION 11 & 12. SIMULTANEOUSLY, SUB CLAUSE (AA) TO SECTIO N 12A(1) IS INTRODUCED W.E.F. 01.06.2007. (II) SECTION 12AA WAS INTRODUCED W.E.F 01.04.1997. TITLE OF THIS SECTION IS PROCEDURE FOR REGISTRATION. SUB CLAUSE (B) OF SECTION 12AA(1 ) GIVES POWER TO CIT, WHERE APPLICATION IS MADE UNDER CLAUSE (A) OR CLAUS E (AA) OF SECTION 12A(1) TO PASS AN ORDER REGISTERING THE INSTITUTION. HOWEVER, W.E.F. 01.10.2004 SUB SECTION (3) OF THIS SECTION GIVES POWER TO WITHDRAW THE REGISTRATION GRANTED UNDER SUB CLAUSE (B) OF SUB SECTION (1). THIS SUB S ECTION IS FURTHER AMENDED WHEREBY A POWER HAS BEEN GIVEN W.E.F 01.06.2010 TO CANCEL THE REGISTRATION OBTAINED UNDER SECTION 12A. (III)THERE IS NO DISPUTE AS TO THE FACT THAT ASSESS EE WAS GRANTED REGISTRATION U/S 12A(1)(A). THE POWER TO WITHDRAW SUCH REGISTRATION HAS BEEN BROUGHT IN THE STATUTES BOOKS W.E.F. 01.06.2010. FURTHER, SECTION 12AA(3) ITSELF HAS BEEN BROUGHT IN THE STATUTES BOOKS W.E.F. 01.10.2004. TH E OBJECT OF THIS PROVISION NOT CLARIFACTORY OR EXPLANATORY & THEREFORE CIT DO NOT HAVE INHERENT POWER TO WITHDRAW OR REVOKE THE REGISTRATION ALREADY GRANTED WITH RETROSPECTIVE EFFECT. THE SECTION CAN BE APPLIED ONLY PROSPECTIVELY. THER EFORE, CANCELLATION OF REGISTRATION GRANTED VIDE ORDER DT. 08.01.2002 FOR A.Y. 01-02 ONWARDS IS BAD IN LAW. (IV) RELIANCE IN THIS CONNECTION IS PLACED ON THE FOLLOW ING CASES:- DIT (EXEMPTIONS) VS. MOOL CHAND KHAIRATI RAM TRUST 199 TAXMAN 1(DEL) : THE RELEVANT PARA 6 TO 11 OF THE ORDER IS REPRODU CED AS UNDER: 6. AT THE OUTSET, IT MAY BE PERTINENT TO THE NOTE T HAT THE TITLE OF S. 12A CONDITIONS FOR APPLICABILITY OF SS 11 AND 12 WAS SUBSTITUTED W.E.F 1 ST JUNE, 2007 IN PLACE OF PREVIOUS TITLE CONDITIONS AS TO R EGISTRATION OF THE TRUST ETC.. IT MEANS THAT PRIOR TO 1 ST JUNE, 2007 , THIS SECTION ITSELF PROVIDED CONDITIO NS REGARDING REGISTRATION OF TRUST ETC. IT IS NOTED HE RE BECAUSE OF THE SUBSTITUTION OF THE PRESENT TITLE, THIS SECTION NO LONGER PROVID ES FOR REGISTRATION OF TRUST ETC. A SPECIAL PROVISION HAS BEEN ENACTED IN S.12AA PROV IDING FOR PROCEDURE FOR REGISTRATION OF TRUST ETC. W.E.F. 1 ST APRIL, 1997. IT IS ALSO NOTED THAT S. 12A WAS INSERTED IN THE STATUTE BOOK BY FINANCE ACT, 1972 W .E.F. 1 ST APRIL, 1973. IT WAS OMITTED AND WAS ONCE AGAIN RESTORED W.E.F. 1 ST APRIL, 1989. SEC.12A, AS IT STOOD AT THE TIME WHEN IT PROVIDED FOR THE REGISTRA TION OF TRUST, NOWHERE PROVIDED FOR CANCELLATION OF THE REGISTRATION ONCE GRANTED. IT IS ALSO PERTINENT TO NOTE THAT THE WORDS SUCH TRUST OR INSTITUTION I S REGISTERED UNDER S 12AA WERE ALSO SUBSTITUTED IN THIS SECTION W.E.F. 1 ST APRIL, 1997. IN FACT, THIS SECTION 44 EVEN NOW NOWHERE STIPULATES ABOUT THE CANCELLATION OR WITHDRAWAL OF THE REGISTRATION, ONCE GRANTED UNDER THE SAID SECTION. IT IS ONLY UNDER S. 12AA, WHICH CAME IN THE STATUTE BOOK W.E.F. 1 ST APRIL, 1997 THAT THE FRESH PROCEDURE FOR REGISTRATION OF THE TRUST OR INSTITUTION IS PRE SCRIBED. EVEN UNDER THIS S. 12AA, THERE WAS NO PROVISION FOR CANCELLATION OF RE GISTRATION ONCE GRANTED TILL THE ENACTMENT OF SUB-S. (3) W.E.F. 1 ST OCT., 2004. THIS SUB S. (3) PROVIDES THAT WHEN A TRUST OR AN INSTITUTION HAS BEEN GRANTED REG ISTRATION UNDER CL. (B) OF SUB-S. (1) AND SUBSEQUENTLY THE CIT IS SATISFIED TH AT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CAS E MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUC H TRUST OR INSTITUTIONS. A PLAIN READING OF THIS PROVISION WOULD SHOW THAT S. 12AA EMPOWERED THE CIT TO GRANT THE REGISTRATION IN THOSE CASES WHERE THE ASS ESSEE APPLIED FOR SUCH REGISTRATION UNDER SUB-S. (1) PROVIDES THAT THE CIT ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE IN CL. (A) OR CL. (AA) OF SUB-S.(1) OF S. 12A, SHALL- (A) .. (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTIVES O F THE TRUST OR INSTITUTIONS AND THE GENUINENESS OF ITS ACTIVITIES,- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION, (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR THE INSTITUTION. 7. FROM THE CONJOINT READING OF SUB-S. (1) CL. (B) AND SUB-S. (3) OF S. 12AA, IT WOULD BE SEEN THAT THE CANCELLATION OF THE REGISTRA TION WAS PROVIDED WHERE THE REGISTRATION WAS GRANTED UNDER CL. (B) OF SUB-S. (1 ). FURTHER CANCELLATION UNDER SUB-S. (3) WAS ALSO PROVIDED WHERE THE REGIST RATION WAS OBTAINED AT ANY TIME UNDER S. 12A [MAY BE UNDER CL. (A) OR CL. (AA) OF SUB-S. (1) OF S. 12A]. BUT THIS POWER OF CANCELLATION OF REGISTRATION OBTAINED UNDER SEC 12A CAME TO BE INCORPORATED BY WAY OF AMENDMENT INTRODUCED BY THE FINANCE ACT, 2010 W.E.F. 1 ST JUNE, 2010, THE POWER VESTED WITH THE CIT TO CANCE L OR WITHDRAW THE REGISTRATION GRANTED TO THE ASSESSEE UNDER S. 12A(A ) IN THE YEAR 1974. 8. SIMILAR QUESTION ALSO AROSE BEFORE THE ALLAHABAD H IGH COURT IN CIT VS. MANAV VIKAS AVAM SEWA SANSTHAN, IT APPEAL NO. 161 O F 2007 DECIDED ON 24 TH FEB.,2010, WHERE IN THE RELIANCE WAS PLACED IN THE CASE OF LUCKNOW BENCH IN OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CHIEF CIT (2009) 226 CTR (ALL) 606: (2009) 29 DTR (ALL) 160 : (2009) 315 ITR 382 ( ALL), WHEREIN IT WAS HELD AS UNDER:- REGARDING CANCELLATION OF REGISTRATION WHICH WAS GRANTED ON 1 ST APRIL, 1999 UNDER S. 12A OF THE ACT, IT IS TRUE THAT THERE WAS NO EXPRESS PROVISION IN S. 12A OF THE ACT FOR CANCELLATION OF THE REGISTRATION. THE A PPLICABILITY OF S.21 OF THE 45 GENERAL CLAUSES ACT, 1897 WAS DISCUSSED BY THE UTTR ANCHAL HIGH COURT IN THE CASE OF WELHAM BOYS SCHOOL SOCIETY (SUPRA), WHERE IT WAS OBSERVED THAT ANY ORDER PASSED BY THE CIT UNDER S. 12A IS A QUASI JUD ICIAL ORDER, WHICH DOES NOT FALL IN THE CATEGORY OF ORDERS MENTIONED IN S. 21 OF THE GENERAL CLAUSES ACT, 1897 BY RELYING THE RATIO LAID DOWN IN THE CASE OF GHAURUL HASAN VS. STATE OF RAJASTHAN AIR 1987 SC 107. THE HIGH COURT OBSERVED THAT BY VIRTUE OF S. 21 OF THE GENERAL CLAUSES ACT, 1897 THE CIT HAD NO POWER TO RESCIND THE ORDER PASSED EARLIER BY THE CIT GRANTING REGISTRATION TO THE PETITIONERS SOCIETY. IT MAY BE MENTIONED THAT S. 12AA(3) WAS INCORPORATED W.E.F . 1 ST OCT., 2004 TO EMPOWER THE CIT TO CANCEL THE REGISTRATION GRANTED TO A TRU ST OR INSTITUTION. THE SAME IS NOT APPLICABLE RETROSPECTIVELY AND IN THE ASSESSEE S CASE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION. THE OBJECT OF THIS PROVI SION IS NOT CLARIFICATORY OR EXPLANATORY, SO PRIOR TO THAT DATE, THE AUTHORITIES GRANTING REGISTRATION HAD NO INHERENT POWER TO WITHDRAW OR REVOKE THE REGISTRATI ON ALREADY GRANTED. THE ORDER CANCELLING THE REGISTRATION GRANTED TO TRUST OR INSTITUTION UNDER S. 12AA OF THE ACT BEING A QUASI-JUDICIAL ORDER DOES NOT FALL WITHIN THE CATEGORY OF ORDERS MENTIONED UNDER S. 21 OF THE GENERAL CLAUSE ACT, 18 97, WHICH PROVIDES THAT THE POWER CONFERRED ON AN AUTHORITY EMPOWERS TO ISSUE O RDERS INCLUDING THE POWERS TO RESCIND SUCH ORDERS AND THE CIT WOULD NOT HAVE T HE POWERS TO RESCIND THE ORDER PASSED BY THE CIT EARLIER GRANTING THE REGIST RATION TO A TRUST OR AN INSTITUTION. 9. LEARNED COUNSEL APPEARING FOR THE ASSESSEE ALSO RE LIED UPON THE CASE OF BHARTI VIDYAPEETH VS. ITO (2008) 119TTJ (PUNE) 261 : (2008) 14 DTR (PUNE)(TRIB) 454, WHEREIN IT WAS HELD UNDER: SEC.12AA(3) EMPOWERS THE CIT TO CANCEL THE REGISTR ATION IF HE IS SATISFIED THAT THE ACTIVITIES OF TRUST OR INSTITUTION ARE NOT GENU INE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INST ITUTION AS THE CASE MAY BE. THE COMBINED READING OF BOTH THE SECTIONS MAKE IT CLEAR THAT THE REGISTRATION CAN BE CANCELLED ONLY IN THOSE CASES WHERE THE REGISTRATIO N GRANTED UNDER S. 12A. IN THE ABSENCE OF SUCH POWER, IN OUR OPINION, THE REGISTRA TION GRANTED UNDER S. 12A CANNOT BE WITHDRAWAL OR CANCELLED. 10. IN ADDITION TO THIS, LEARNED COUNSEL ALSO RELIED U PON THE DECISIONS OF THE TRIBUNAL IN THE CASES OF GURU NANAK PUBLIC SCHOOL V S. DIRECTOR OF IT (EXEMPTIONS), IN IT APPEALS NOS. 3267AND 3268 OF 20 08AND THE CASE OF KAPOOR EDUCATIONAL SOCIETY VS. CIT(2010) 134 TTJ= (LUCKNOW ) 250 : (2010) 44 DTR (LUCKNOW)(TRIB) 97. THERE IS NO NEED TO REPRODUCE W HAT HAS BEEN HELD IN THESE CASES AS THE SUM AND SUBSTANCE OF THESE CASES IS AL SO THAT THE CIT HAS NO POWER UNDER S. 12AA(3) TO CANCEL THE REGISTRATION GRANTED UNDER S. 12A(A). OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CCIT 315 ITR 382 (ALL.) SEC. 12 AA(3) WAS INCORPORATED IN THE ACT W.E.F 01. 10.2004 AND NOT APPLICABLE RETROSPECTIVELY. REGISTRATION GRANTED TO THE ASSESSEE ON 01.04.1999 COULD NOT THEREFORE BE CANCELLED BY CIT BY INVOKING POWERS UNDER SECTION 12AA(3). 46 KAPOOR EDUCATION SOCIETY VS. CIT 134 TTJ 250 (LUC.) AMENDMENT OF SEC. 12 AA(3) BY FINANCE ACT, 2010 W.E .F. 01.06.2010 IS PROSPECTIVE IN NATURE AND IF ANY TRUST/ INSTITUTION HAS BEEN REGISTERED PRIOR TO 01.10.2004 EITHER U/S 12A OR 12AA, CIT HAS NO POWER TO CANCEL REGISTRATION U/S 12AA(3). IN THE INSTANCE CASE REGISTRATION WAS GRANTED TO ASSESSEE SOCIETY ON 01.03.1999 I.E. MUCH PRIOR TO 01.10.2004 WHEN SE C.12AA(3) WAS INSERTED. THEREFORE, CIT HAS NO JURISDICTION TO CANCEL THE RE GISTRATION GRANTED TO THE ASSESSEE SOCIETY U/S 12A. BHARTI VIDHYAPEETH VS. ITO 119 TTJ 261 (PUNE) COMBINED READING OF BOTH SECTIONS 12AA(3) AND 12AA (1) (B) MAKES IT CLEAR THAT REGISTRATION CAN BE CANCELLED ONLY IN THOSE CA SES WHERE REGISTRATION HAS BEEN GRANTED UNDER SUB SECTION (1)(B) OF SECTION 12 AA. THEREFORE REGISTRATION GRANTED U/S 12A CANNOT BE WITHDRAWN OR CANCELLED BY CIT BY INVOKING PROVISIONS OF SECTION 12AA(3). FURTHER PROVISIONS O F SEC. 12AA(3) WHICH WERE BROUGHT UNDER STATUTE BOOK BY THE FINANCE (NO. 2) ACT, 2004, AFFECTING VALUABLE RIGHTS OF THE ASSESSEE ARE SUBSTANTIVE IN NATURE AND HAVE NO RETROSPECTIVE EFFECT. WHETHER ACTIVITIES OF THE INSTITUTION ARE GENUINE O R NOT OR WHETHER THE SAME ARE CARRIED OUT IN ACCORDANCE WITH ITS OBJECT OR NOT (I) FOR GRANT OF REGISTRATION U/S 12AA, COMMISSIONER IS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE INSTITUTION AND THE GENUINENESS OF IT S ACTIVITIES. WHAT IS REQUIRED TO BE CONSIDERED FOR GRANT OF REGISTRATION U/S 12AA IS TO BE AGAIN CONSIDERED AT THE TIME OF WITHDRAWAL OF REGISTRATION. IN THE PRES ENT CASE, THERE IS NO DISPUTE ABOUT THE OBJECT OF THE INSTITUTION WHICH IS TO IMP ART EDUCATION. THERE IS ALSO NO DISPUTE THAT ASSESSEE IS RUNNING VARIOUS EDUCATI ONAL INSTITUTIONS WHERE EDUCATION IN DIFFERENT COURSES ARE IMPARTED. THESE INSTITUTIONS ARE AFFILIATED WITH DIFFERENT UNIVERSITIES/GOVERNMENT AUTHORITIES. CIT AT PAGE 2 PARA (D) HAS ALSO ACCEPTED THAT ALL THE OBJECTS OF THE TRUST REL ATES TO EDUCATION. THEREFORE, VARIOUS OBSERVATIONS OF CIT THAT HUGE EXPENDITURE O N ADVERTISEMENT IS INCURRED/ BENEFIT IS PROVIDED TO OFFICE BEARERS/ FU NDS ARE NOT PROPERLY UTILIZED/ THERE IS SURPLUS/ BOOKS NOT PROPERLY MAINTAINED ARE IRRELEVANT ISSUES IN EXAMINING AS TO THE GENUINENESS OF THE ACTIVITIES F OR THE PURPOSE OF CANCELLATION OF REGISTRATION U/S 12AA(3). THE MANNE R IN WHICH THE FUNDS ARE UTILIZED OR BENEFIT IS PROVIDED TO THE OFFICE BEARE RS IS LEFT TO THE AO FOR ASSESSMENT STAGE IN COMPUTING THE INCOME OF THE TRU ST. FOR THIS RELIANCE IS PLACED ON THE FOLLOWING CASES: MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RE SEARCH (MAEER) VS. CIT 133 TTJ & 706(PUNE) INVESTIGATION WING OF IT DEPARTMENT IN SEARCH AND S URVEY FOUND THAT ASSESSEE TRUST WAS TAKING DONATION AND CAPITATION FEES FOR A DMISSION THOUGH PROHIBITED 47 UNDER MAHARASHTRA EDUCATIONAL INSTITUTIONS (PROHIBI TION OF CAPITATION FEES) ACT, 1987. CANCELLATION OF REGISTRATION UNDER SEC. 12AA (3) ON THAT BASIS IS NOT JUSTIFIED. LANGUAGE USED IN SEC. 12AA(3) ONLY C ONFINES TO ENQUIRE ABOUT THE ACTIVITIES OF THE TRUST AND ITS GENUINENESS, WH ICH MEANS, IN CONSONANCE WITH THE OBJECTS FOR WHICH CREATED AND THOSE OBJECT S AS ALSO ACTIVITIES SHOULD NOT BE A CAMOUFLAGE BUT PURE, SINCERE, CHARITABLE A ND FOR PUBLIC UTILITY AT LARGE. CIT NOT TO ENTER INTO THE AREA OF INVESTIGAT ION OF SOURCE OF INCOME AND ALSO APPLICATION OF INCOME, SO THAT THE AMOUNT OF C ORRECT EXEMPT INCOME BE PREJUDGED . CIT HAS FAILED TO ESTABLISH THAT ANY PART OF THE I NCOME/RECEIPT OF THE TRUST WAS IN ANY MANNER MISUTILIZED BY THE TRUS TEES FOR THEIR PERSONAL BENEFIT I.E. NOT IN FULFILLMENT OF THE OBJECT OF TH E TRUST. CHATURVEDI HAR PRAKASH EDUCATIONAL SOCIETY VS. CIT 134 TTJ 781 (LUCKNOW) AS PER SEC. 12AA(3) REGISTRATION GRANTED TO ANY TRU ST OR SOCIETY UNDER 12AA(1)(B) CAN BE CANCELLED ONLY IF THE CIT IS SATI SFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NO T BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS THEREOF. IN THE INSTANT CASE, IT IS NOT THE CASE OF THE CIT THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. THUS, BOTH THE CONDITIONS LAID DOWN IN SUB SEC. (3) OF SEC. 12AA F OR CANCELLATION OF REGISTRATION ARE NOT SATISFIED. OBJECTS PER SE CANNOT BE RE-EXAMINED UNDER THE PROVISIONS OF SUB SEC. (3) OF SEC. 12AA. ACTION TAKEN BY THE CIT DID NOT FALL WITHIN THE PARAMETERS OF SUB SEC. (3) OF SEC. 12AA. HENCE IMPUGNED ORDER IS ILLEGAL AND UNSUSTAINABLE. H. P. GOVERNMENT ENERGY DEVELOPMENT AGENCY VS. CIT 134 TTJ 33 (CHANDIGARH) POWER OF THE CIT TO CANCEL THE REGISTRATION IS CIRC UMSCRIBED BY THE CONDITIONS PRESCRIBED IN 12AA(3 ). SUCH POWER DOES NOT PERMIT WHOLESALE REVIEW OF THE INGREDIENTS WHICH HAVE BEEN CONSIDERED BY THE CIT W HILE GRANTING REGISTRATION UNDER SEC. 12AA . AT THE TIME OF CANCELLING THE REGISTRATION UNDER SEC.12AA(3), THE CIT HAS ONLY TO SATISFY HIMSELF AB OUT THE TWO CONDITIONS PRESCRIBED THEREIN NAMELY, ACTIVITIES ARE NOT GENUI NE OR THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. TAGORE CHILDREN ACADEMY ITA NO. 103/JP/09 DATED 19. 06. 2009 (JAIPUR BENCH) HON BLE ITAT IN PARA 4 TO 6 OF THE ORDER HELD AS U NDER:- 4.ON THE CONTRARY WE FIND SUBSTANCE IN THE CONTENT IONS OF THE LD.AR THAT FOR GRANTING OF REGISTRATION U/S 12A COMMISSIONER IS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE INSTITUTION AND THE GENUINENESS OF IT S ACTIVITIES AS PRESCRIBED U/S 12AA. IN PRESENT CASE THERE IS NO DISPUTE THAT THE ASSESSEE IS RUNNING THE EDUCATIONAL INSTITUTION AT SURAJGARH, DISTT. JHUNJH UNU, WHERE IT IMPARTS EDUCATION UPTO 12 TH STANDARD AND IS AFFILIATED WITH RAJASTHAN BOARD OF SENIOR SECONDARY EDUCATION. IN THESE CIRCUMSTANCES THE OBS ERVATION OF CIT THAT THE 48 ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE IS WI THOUT BASIS AND THE CANCELLATION OF REGISTRATION ON THAT GROUND IS MISC ONCEIVED. 5.WE ALSO CONCUR WITH THE SUBMISSIONS OF THE LD. AR THAT THE COMMISSIONER HAS NOT PROPERLY APPRECIATED PROVISIONS OF SEC.13. SEC. 13 IS NOT MEANT FOR ALLOWING REGISTRATION U/S 12A. EVEN SECTION 13(1) P ROVIDES THAT PROVISION OF SEC.11 AND 12 SHALL NOT OPERATE TO EXCLUDE FROM THE TOTAL INCOME, ANY PART OF THE INCOME WHICH IS USED OR APPLIED DIRECTLY OR IND IRECTLY FOR THE BENEFIT OF SPECIFIED PERSONS WITHOUT ADEQUATE SECURITY OR WITH OUT ADEQUATE INTEREST OR BOTH AS PROVIDED U/S 13(1)(C) AND 13(2)(A). THUS AP PLICATION OF THIS SECTION IS FOR ASSESSMENT AND NOT FOR REGISTRATION. 6.WE FURTHER FIND SUBSTANCE IN THE SUBMISSIONS OF T HE LF. AR THAT IN THE PRESENT CASE EVEN THERE IS NO VIOLATION OF SECTION 13(1)(C) OR 13(2)(A & B). THE LOAN TO SMT. AKHALAWAT & SHRI SURENDER SINGH WAS GIVEN IN A Y 2004-05 WHICH WAS REPAID BY THEM IN AY 2007-08. THE LOAN OF RS.15 LAC S TO SHRI TARUN ACKHLAWAT WAS ALSO GIVEN IN EARLIER YEARS WAS REPAI D ON 24.12,2007 FOR RS.10 LACS AND ON 19.11.2008 FOR RS.5 LACS ALONGWITH INTE REST OF RS.3,59,343/-. THUS NO SUM CONTINUED TO BE LENT TO SPECIFIED PERSONS DU RING AY 2007-08 WITHOUT ADEQUATE SECURITY OR ADEQUATE INTEREST. IN ANY CASE AS EXPLAINED ABOVE APPLICATION OF SEC.13 IS FOR COMPUTING THE INCOME O F THE INSTITUTION AND NOT FOR GRANT OF REGISTRATION. THE ITAT IN CASE OF JHUNJHUN U ACADEMY SAMITI IN ITA 730 & 731/JP/01 DATED 30.03.2006 WITH REFERENCE TO EXEMPTION U/S 10(23)(C)(IIIAD) HAS OBSERVED THAT GIVING LOAN TO T HE OFFICE BEARER OF THE INSTITUTION IS NOT THE REQUIREMENT OF EXEMPTING INC OME UNDER THAT SECTION. FURTHER THE OBSERVATION THAT IT HAS NOT MOVED APPLI CATION FOR APPROVAL U/S 10(23)(C)(VI) IS IRRELEVANT. SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. D IRECTOR OF INCOME-TAX (EXEMPTIONS) 285 ITR 327 (KAR.): FOR THE PURPOSE OF REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX A CT, 1961, WHAT THE AUTHORITIES HAVE TO SATISFY THEMSELVES ABOUT IS THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND HOW THE INCOME DERI VED FROM THE TRUST PROPERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSE AND N OT THE NATURE OF THE ACTIVITY BY WHICH THE INCOME WAS DERIVED BY THE TRUST. SUFFI CIENT SAFEGUARD IS PROVIDED UNDER THE ACT FOR CANCELLATION OF REGISTRATION OBTA INED BY THE ASSESSEE IN THE EVENT OF ITS MISUSING THE PROVISIONS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) REJECTED TH E APPLICATION FOR REGISTRATION OF THE ASSESSEE, A CHARITABLE TRUST, O N THE GROUND THAT IT WAS CARRYING ON ITS ACTIVITY BY LETTING OUT THE MARRIAG E HALL ON HIRE. THE TRIBUNAL ON APPEAL HELD THAT THE HIRING OF THE CHOULTRY WAS NOT FOR ATTAINMENT OF OTHER OBJECTS, BUT SEEMED TO BE THE MAIN OBJECT SO FAR PU RSUED BY THE ASSESSEE AND THEREFORE THE ASSESSEE WAS NOT ESTABLISHED WHOLLY F OR CHARITABLE PURPOSES. ON APPEAL: 49 HELD, ALLOWING THE APPEAL, THAT THE AUTHORITIES HAD NOT KEPT IN MIND THE MANDATORY PROVISIONS. THEY HAD NOT APPLIED THEIR MI ND IN THE WAY THEY WERE EXPECTED TO, BEFORE PASSING THE ORDERS. THEREFORE, BOTH THE ORDERS COULD NOT BE SUSTAINED AND THE MATTER WAS REMANDED TO THE DIRECT OR OF INCOME-TAX (EXEMPTIONS) FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW. II SO FAR AS THE VARIOUS OBSERVATIONS OF CIT TO ALL EGE THAT ASSESSEE HAS PROFIT MOTIVE AND THERE IS VIOLATION OF SECTION 11 AND 13 OF THE ACT WE ARE TO SUBMIT AS UNDER: A. AT THE OUTSET WE MAY SUBMIT THAT AFTER THE ORDER OF CIT WITHDRAWING REGISTRATION U/S 12AA, THE ASSESSEES APPLICATION F OR EXEMPTION U/S 10(23C)(VI) WAS CONSIDERED AND DECIDED BY LD. CCIT, JODHPUR. THE ASSESSEE, BEFORE THE LD. CCIT, BROUGHT THE FACT OF THE CANCEL LATION OF REGISTRATION U/S 12AA (3) BY THE LD. CIT AND ALSO EXPLAINED HOW THE ACTIVITIES OF THE TRUST ARE GENUINE AND AS PER ITS OBJECT. (PB 31-35). CONSIDERING THE SAME THE LD. CCIT GRANTED EXEMPTION U/S 10(23C)(VI) VIDE NOTIFICATION DATED 06.09.2011 (PB 30) F ROM AY 2007-08. IN VIEW OF THESE FACTUAL DEVELOPMEN T, THE ORDER OF LD. CIT CANCELLING THE REGISTRATION GRANTED U/S 12A(1)(A) D ESERVES TO BE QUASHED. B. THE LD. CIT AT PAGE 2 PARA 1 OF THE ORDER HAS MENTI ONED THAT ENTIRE AFFAIRS OF THE SOCIETY ARE CONTROLLED BY SH. MANISH VYAS AND H IS FAMILY MEMBER. IT IS SUBMITTED THAT APART FROM THE FOUR FAMILY MEMBERS O F SH. MANISH VYAS THERE ARE THREE OTHER TRUSTEES WHO ARE NOT FROM THE FAMIL Y OF MR. VYAS. ITAT AHEMDABAD BENCH IN CASE OF JUPITER MEDICAL RESEARCH CENTRE TRUST VS. DIT 128 TTJ 118 HAS HELD MERELY BECAUSE ALL THE TRUSTEES ARE MEMBE RS OF ONE FAMILY IT CANNOT BE SAID THAT TRUST IS NOT A PU BLIC TRUST AND FOR THIS REASON REGISTRATION U/S 12AA CANNOT BE CANCELLED. C. THE LD. CIT AT PAGE 2 PARA 2 HAS REFERRED ABOUT THE REJECTION OF APPLICATION U/S 10(23)(C) BY CCIT VIDE ORDER DATED 27.09.2009. IT I S SUBMITTED THAT ON THIS ANALOGY REGISTRATION CANNOT BE CANCELLED U/S 12AA(3 ) AS HELD BY ALLAHABAD BENCH IN CASE OF SUNBEAM ENGLISH SCHOOL SOCIETY VS. CIT 129 ITD 299 WHERE IT WAS HELD THAT PROCEEDINGS U/S 11 AND 10(23 )(C) ARE INDEPENDENT TO EACH OTHER, THEREFORE, THE REJECTION OF APPLICATION FOR GRANT OF EXEMPTION U/S 10(23(C) (VI) CANNOT BE A BASIS FOR CANCELLING THE REGISTRATION U/S 12A. IT MAY ALSO BE NOTED THAT SUBSEQUENTLY THE LD. CCIT, JODHP UR HAS GRANTED EXEMPTION U/S 10(23)(C)(VI) FROM AY 2007-08 VIDE NOTIFICATION DATED 06.09.2011 (PB 30). D. CIT AT PAGE 3 TO 6 HAS REFERRED TO THE SHOW CAUSE N OTICE ISSUED BY HIM AS ALSO THE EXAMINATION OF BOOKS OF ACCOUNTS. THIS SHOW CAU SE NOTICE WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 02.12.2009 (PB 36 39) AND BOOKS OF ACCOUNTS WERE PRODUCED BEFORE HIM. AFTER DETAILED EXAMINATIO N OF THE BOOKS, ONE OF THE REASONS GIVEN BY CIT FOR CANCELLING THE REGISTRATIO N AT PARA 6 OF THE ORDER IS THAT CHARITY DOES NOT DEMAND HUGE ADVERTISEMENT EXP ENSES. IT IS SUBMITTED THAT 50 FOR THIS REASON REGISTRATION CANNOT BE CANCELLED AS SUCH ADVERTISEMENT EXPENDITURE HAS BEEN INCURRED IN PURSUANCE OF THE O BJECT OF THE TRUST WHEREBY IT IS MADE KNOWN TO THE PUBLIC ABOUT THE VARIOUS IN STITUTIONS RUN BY THE ASSESSEE SOCIETY, ADMISSION OF NEW BATCHES, ITS ACH IEVEMENT IN THE FIELD OF EDUCATION, FOR APPOINTMENT OF VARIOUS FACULTIES ETC . THIS IS AN ESSENTIAL EXPENDITURE FOR PURSUING THE OBJECTS OF THE SOCIETY . E. AT PARA 7 OF THE ORDER LD. CIT HAS OBSERVED THAT A SSESSEE HAS EARNED HUGE SURPLUS YEAR AFTER YEAR AND THEREFORE MOTIVE OF EDU CATION IS PROFIT AND NOT CHARITABLE. HOWEVER HE HAS FAILED TO TAKE INTO CONS IDERATION THAT SUCH SURPLUS HAS BEEN UTILIZED FOR THE OBJECTS OF THE TRUST. THE ASSESSEE SOCIETY UTILIZED THE SURPLUS FOR INCURRING THE CAPITAL EXPENDITURE AND A FTER CONSIDERING THE SAME THERE IS HARDLY ANY SURPLUS AS CAN BE NOTED FROM TH E FOLLOWING TABLE. ASSTT. YEAR GROSS RECEIPTS SURPLUS % OF SURPLUS CAPITAL EXPENDITURE REMARKS 2001-02 2771959 285944 10.3% 1656090 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2002-03 5546800 2467054 44.5% 521889 EXEMPTION U/S 10(23C)(III AD) 2003-04 8415137 4494954 53.4% 520650 EXEMPTION U/S 10(23C)(III AD) 2004-05 9073646 3336391 36.8% 1172000 EXEMPTION U/S 10(23C)(III AD) 2005-06 12041873 5318470 44.2% 12746495 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2006-07 10078927 5278033 54.4% 39898671 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2007-08 19896628 4518049 22.7% 53532694 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2008-09 50051818 8092828 16.2% 126932855 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2009-10 105935962 40829990 38.5% 69153101 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS 2010-11 153039936 28399677 18.6% 94943465 CAPITAL EXPENDITURE ARE MUCH HIGHER THAN SURPLUS IN CASE OF BABA GANDHA SINGH EDUCATIONAL TRUST VS. CIT 138TTJ 1 (CHD.) IT WAS HELD THAT CIT WAS NOT JUSTIFIED IN CANCELLIN G REGISTRATION U/S 12AA(3) FOR THE REASON THAT ASSESSEE GENEREATED SUR PLUS YEAR AFTER YEAR AND WAS ENGAGED IN PROFIT MAKING AS A DOMINANT OBJECTIV E UNDER THE GRAB OF EDUCATION. IT IS HELD THAT MERELY BECAUSE THE ASSES SEE HAS GENERATED SURPLUS INCOME AFTER MEETING EXPENDITURE IN ITS EDUCATIONAL ACTIVITIES SUCH ACTIVITY CANNOT BE REGARDED AS DOING TRADE AND COMMERCE IN THE NAME OF EDUCATION, SO AS TO INVITE CANCELLATION OF REGISTRATION U/S 12 AA(3). FURTHER RELIANCE IS 51 PLACED IN CASE OF PINEGROVE INTERNATIONAL CHARITABLE TRUST & OTHERS V S. UOI 37 DTR 105 (P& H) F. THE CIT AT PARA 8 OF HIS ORDER HAS OBSERVED THAT AS SESSEE HAS MADE PAYMENT OF RENT AND SALARY MADE TO THE OFFICE BEARERS OF TH E SOCIETY WHICH IS A CLEAR VIOLATION OF SECTION 13(1)(C). IT IS SUBMITTED THAT SEC. 13(1)(C) IS APPLICABLE SUBJECT TO SECTION 13(2) WHEREBY THE OFFICE BEARERS OF THE TRUST CAN BE PAID REASONABLE AMOUNT OF SALARY/ RENT. THE PAYMENT MADE TO SH. MANISH YAS, ASHA VYAS AND RAJKUMAR VYAS IS VERY REASONABLE AS CAN BE NOTED FROM THE FOLLOWING TABLE: S.NO. PARTICULARS AMOUNT REMARKS 1. RENT TO MANISH VYAS RS. 70000/- PER MONTH PRESENTLY ABOUT 6000 SQURE FEET AREA IN THE MAIN 1 ST A ROAD, SARDARPURA JODHPUR IS GIVEN ON RENT T O THE SOCIETY. THE FAIR RENTAL VALUE OF THIS AREA IS MUCH MORE THAN WHAT IS PAID BY THE SOCIETY. IN EARLIER YEARS RENT PAID WAS MUCH LOWER. THE REDUCTION IN TH E RENT IN AY 2005- 06 WAS FOR THE REASON THAT A PART OF THE PREMISES WAS VACATED WHICH WAS AGAIN T AKEN ON RENT IN THE SUBSEQUENT YEAR. 2. SALARY TO MANISH VYAS RS. 10000/- PER MONTH UP TO 2005- 06 HE LOOKS AFTER THE OVERALL ADMINISTRATION OF THE VARIOUS INSTITUTIONS RUN BY THE SOCIETY. CONSIDERIN G HIS TIME AND EFFORE SALARY PAID @ RS.10,000/- PER MONTH IS QUITE REASONABLE. 3. SALARY TO ASHA VYAS RS. 10000/- PER MONTH UP TO 2005- 06 SHE IS DIPLOMA IN COMPUTERS SCIENCE. SHE WAS LOOKING AFTER THE COMPUTER MANAGEMENT AND ALSO ASSISTING SH. MANISH VYAS IN DAY TO DAY ADMINISTRATION. CONSIDERING THIS THE SALA RY PAID TO HER IS REASONABLE. 4. SALARY TO RAJKUMAR VYAS RS. 5000/- PER MONTH UP TO 2005- 06 HE IS IN- CHARGE OF STUDENT DISCIPLINE. THE SALARY PAID TO HIM IS REASONABLE. EVEN AS A PERCENTAGE OF GROSS RECEIPT SUCH PAYMENT IS VERY NOMINAL AS CAN BE NOTED FROM THE FOLLOWING TABLE: ASSTT. YEAR GROSS RECEIPTS PAYMENT TO OFFICE BEARERS PERCENTAGE 2002-03 5546800 306000 5.51% 2003-04 8415137 460000 5.47% 2004-05 9073646 540000 5.95% 2005-06 12041873 348000 2.89% 52 2006-07 10078927 636000 6.31% 2007-08 19896628 516000 2.59% 2008-09 50051818 1000000 1.99% 2009-10 105935962 1015440 0.96% 2010-11 153039936 1462000 0.96% G. CIT IN PARA 9 TO PARA 158 OF HIS ORDER HAS RAISED V ARIOUS ISSUES TO POINT OUT THAT BENEFIT HAS BEEN PROVIDED TO THE OFFICE BEARER S, THERE IS VIOLATION OF SEC. 11(5) READ WITH SECTION 13(1)(D), THERE IS VIOLATIO N OF SECTION 13(1)(C), THERE IS MISAPPROPRIATION OF FUNDS BY THE OFFICE BEARERS, TH E BOOKS OF ACCOUNTS ARE NOT CORRECT ETC. THE SUBMISSION IN RESPECT OF EACH OF T HESE OBSERVATIONS IS ENCLOSED. FROM THE SAME IT CAN BE NOTED THAT ON THE BASIS OF THESE OBSERVATIONS IT CANNOT BE SAID THAT THE ACTIVITIES OF THE INSTIT UTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. EVEN IF IT IS ASSUMED THAT THERE IS ANY CONTRAVENTION OF SEC. 11 AND SEC. 13, IT IS TO BE CONSIDERED BY THE ASSESSING OFFICER AT THE STAGE OF ASSESSMENT FOR COMPUTING THE INCOME AND FOR THAT REASON REGISTRATION OF THE SOCIETY U/S 12A CANNOT BE CANCELLED. FOR THIS RELIANCE IS PLACED ON THE FOLLO WING CASES: CIT VS. RED ROSE SCHOOL 163 TAXMAN 19 (ALL.) REGISTRATION U/S 12AA DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET THE INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEA R FOR THE PURPOSE OF DETERMINATION OF TAX LIABILITY, BUT IT ONLY ENTITLE S THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY OF COMMISSIONER SHALL REM AIN RESTRICTED TO THE EXAMINATION AS TO WHETHER THE ASSESSEE, WHO HAS MOV ED THE APPLICATION FOR REGISTRATION U/S 12AA, IS ACTUALLY IN THE ACTIVITIE S WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE I NSTITUTION HAS TO BE SEEN, KEEPING IN VIEW THE OBJECTS THEREOF, WHICH NECESSAR ILY MEANS THAT COMMISSIONER SHALL SATISFY HIMSELF ABOUT THE FACT T HAT ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABLISHING AND RUNNING THE SCHOOL IS TH E OBJECT OF THE SOCIETY, AS GIVEN IN BYE-LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHED A SCHOOL WHERE EDUCATION IS IMPARTED AS PER RULES AND THE FACTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIV ITY. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITY CANNOT BE STRETCHED BEY OND THIS. DCIT VS. COSMOPOLITAN SOCIETY 244 ITR 494 (RAJ) IT WAS HELD THAT IF THERE WAS ANY MISUTILISATION OR MISMANAGEMENT, ACTION COULD BE TAKEN AGAINST THE MANAGEMENT OF THE SOCIET Y BUT IT IS NOT POSSIBLE TO SAY THAT ANY AMOUNT OF THE FUNDS OF THE SOCIETY WAS NOT UTILIZED FOR EDUCATIONAL PURPOSE AND FOR THAT REASON EXENMPTION U/S 10(22) CANNOT BE DENIED. GURU GOBIND SINGH EDUCATIONAL SOCIETY 118 ITD 207 ( ASR.) 53 IT WAS HELD THAT FOR ANY IRREGULARITY OR ILLEGALITY COMMITTED BY ITS MEMBERS, A SOCIETY, WHICH IS A JUDICIAL ENTITY HAVING INDEPEND ENT EXISTENCE, CANNOT BE HELD LIABLE. FURTHER WHEN THERE IS NO FINDING RECOR DED THAT THE INCOME OF THE SOCIETY HAS FLOAT TO ITS MEMBER, IRREGULARITIES COM MITTED BY THE MEMBERS IN THEIR INDIVIDUAL CAPACITY CANNOT BE HELD AGAINST TH E SOCIETY FOR THE PURPOSE OF CANCELLATION OF REGISTRATION. THE OBSERVATIONS OF T HE COMMISSIONER THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT GENUINE OR THAT THE SOCIETY HAS EARNED PROFIT OR THAT IT HAD CLANDESTINELY TRANSFER RED ITS PROFITS TO ITS MEMBERS WHO HAD NOT PAID TAX THEREON, OR THAT ASSESSEE SOCI ETY WAS NOT EXISTING FOR CHARITABLE PURPOSE OR THAT THE ACTIVITIES OF THE AS SESSEE WERE NOT GENUINE OR THAT THEY WERE NOT CARRIED OUT IN ACCORDANCE WITH T HE OBJECTS OF THE SOCIETY WERE NOT JUSTIFIED. THE OBJECT OF THE ASSESSEE SOCI ETY INFACT, HAD NOT BEEN DOUBTED ATALL. NO SPECIFIC OR EVEN GENERAL CHARGES HAVE BEEN ALLEGED THAT THE SOCIETY HAD NOT BEEN CARRYING ON ITS ACTIVITIES AS PER ITS OBJECTS. SO MUCH SO, IN THE ASSESSMENT COMPLETED AFTER PASSING OF THE IMPUG NED ORDER THE RETURN INCOME OF THE SOCIETY HAS BEEN ACCEPTED. IN THESE F ACTS THE REGISTRATION GRANTED TO THE SOCIETY CANNOT BE CANCELLED U/S 12AA(3). 2.6 ON THE OTHER HAND, THE LD. DR RELIED UPON THE DETAILED ORDER OF THE LD.CIT(A). IT WAS POINTED OUT BY THE LD. DR THAT LD. CIT HAS NOT ICED SEVERAL DISCREPANCIES AND HAS ALSO NOTICED THAT TRUST IS NOT COMPLYING WITH VARIOUS PR OVISIONS OF ACT. THE ACTIVITY OF THE TRUST IS NOT BEING CARRIED OUT IN ACCORDANCE WITH T HE OBJECTS OF THE TRUST. THE TRUST IS EXISTING ONLY FOR EARNING THE PROFITS AS IT WAS NOT ICED BY THE LD. CIT THAT THERE HAS BEEN SURPLUS IN EACH YEAR.. 2.7 WE HAVE HEARD BOTH THE PARTIES. IT IS NOWHERE P ROVIDED THAT THE TRUST CANNOT BE CONSTITUTED BY A FAMILY AND IT IS ALSO NOT PROVIDED UNDER THE ACT THAT TRUST WILL NOT HAVE NUMBER OF INSTITUTIONS. THE SURPLUS BEING GENERATED IS UTILIZED FOR THE PURPOSE OF OBJECTS OF THE TRUST. IN THE CASE OF THE TRUST, ONE HAS TO ASCERTAIN THE RECEIPT AND PAYMENT ACCOUNT. IN CASE THE ASSESSEE TRUST RAISES LOAN THEN REPAYME NT OF LOAN IS ALSO AN APPLICATION OF INCOME. IT IS NOWHERE PROVIDED IN THE TRUST DEED TH AT AT THE TIME OF DISSOLUTION OF THE TRUST, THE FUNDS WILL VESTS IN VYAS FAMILY. THE REGISTRATI ON CAN BE CANCELED ON THE GROUND THAT THE ACTIVITY OF THE TRUST ARE NOT GENUINE OR ARE NO T BEING CARRIED OUT IN ACCORDANCE WITH THE 54 OBJECT OF THE TRUST. IN CASE THERE ARE VIOLATIONS A S MENTIONED IN SECTION 11 AND 13 OF THE ACT. THUS THE AO WHILE MAKING ASSESSMENT CAN DENY T HE EXEMPTION TO THE TRUST. FOR GETTING THE EXEMPTION U/S 11, REGISTRATION IS PRE-R EQUISITE. HOWEVER, REGISTRATION IS NOT A GUARANTEE FOR EXEMPTION. IN CASE THE TRUST FAILS TO COMPLY WITH THE REQUIREMENTS AS MENTIONED IN SECTION 11 AND 13 OF THE ACT THEN EXEM PTION CAN BE DENIED. IN RESPECT OF FAILURE MENTIONED IN SECTION 11 AND 13 IN A PARTICU LAR YEAR, IT CANNOT BE SAID THAT REGISTRATION IS TO BE CANCELLED. SURPLUS IN EDUCATI ONAL ACTIVITIES IS NOT RELEVANT FOR CANCELLING THE REGISTRATION. THE EDUCATION ITSELF I S CHARITABLE OBJECT AND IF THE SURPLUS IS UTILIZED FOR THE PURPOSE OF CHARITABLE ACTIVITIES T HEN IT CANNOT BE SAID THAT REGISTRATION IS TO BE DISALLOWED. THE GROUND ON WHICH THE REGISTRATION CANNOT BE REFUSED, CANNOT BE CONSIDERED AS A GROUND FOR CANCELLING THE REGISTRAT ION. THE ITAT PUNE BENCH IN THE CASE OF MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RESEARCH VS CIT 133 TTJ 706 HAD AN OCCASION TO CONSIDER THE ISSUE OF CANCELLATI ON OF REGISTRATION WHERE IT WAS ALLEGED THAT THE SOCIETY WAS RECEIVING DONATIONS AND CAPITA TION FEES FOR ADMISSION. IT WAS HELD IN THAT CASE THAT LD. CIT HAS TO CONSIDER THE GENUINEN ESS OF THE ACTIVITIES OF THE TRUST AND NOT TO CONSIDER THE SOURCE OF INCOME. THE PROFIT EARNIN G AND MISUSE OF THE INCOME DERIVED BY THE TRUST FROM ITS CHARITABLE ACTIVITIES MAY BE GRO UND FOR REFUSING THE EXEMPTION ONLY WITH RESPECT TO THAT PART OF INCOME BUT CANNOT BE T AKEN TO BE SYNONYMOUS TO THE GENUINENESS OF THE ACTIVITIES. A WORTH-NOTING OBSER VATION WAS MADE BY THE HON'BLE COURTS THAT IF ESTABLISHING AND RUNNING OF SCHOOL I S THE OBJECT OF THE SOCIETY AS GIVEN IN ITS BYE-LAWS THEN IT HAS SATISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHOOL WHERE EDUCATION IS IMPARTED,AS PER RULE OF FACTUM OF ESTABLISHING A ND RUNNING OF SCHOOL IS GENUINE ACTIVIT. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CAN NOT BE STRETCHED BEYOND THIS. THE 55 PROVISIONS OF SECTION 13 CAN BE INVOKED ONLY AT TH E TIME OF COMPUTATION OF TOTAL INCOME IN THE CASE OF A PERSON WHO IS CLAIMING EXEMPTION U /S 11 OR 12 BY THE AO AND NOT BY THE LD.CIT. WHILE CONSIDERING THE APPLICATION FOR REGIS TRATION U/S 12AA. THE ITAT DELHI BENCH IN THE CASE OF AGGARWAL MITRA MANDAL TRUST VS DIT (EXEMPTION) 109 TTJ 128 OBSERVED THAT IT IS NOT THE LEGISLATIVE INTENTION A S REFLECTED IN THE SCHEME LAID DOWN IN SECTION 11, 12, 12A, 12A AND 13 OF THE ACT. IN CANC ELLING REGISTRATION WHEN GENUINENESS OF THE ACTIVITIES AND NATURE OF THE OBJECT BEING CH ARITABLE ARE NOT IN DOUBT, THE VALUATION OF SECTION 13 IS IN THE DOMAIN OF THE AO WHILE MAKING THE ASSESSMENT. THE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS COSMOPOLITAN EDU CATION SOCIETY, 244 ITR 494 HAD AN OCCASION TO CONSIDER AS TO WHETHER ANY MISUTILISATI ON OR MISMANAGEMENT CAN BE CONSIDERED AS A GROUND FOR REFUSING THE REGISTRATIO N. THE HON'BLE HIGH COURT HELD THAT IF THERE IS ANY MISUTILISATION OR MISMANAGEMENT THEN A CTION CAN BE TAKEN AGAINST THE MEMBER OF THE SOCIETY IF THE FUND OF THE SOCIETY HA S BEEN UTILIZED FOR EDUCATIONAL PURPOSES THEN REGISTRATION SHOULD NOT BE REFUSED AN D OVERALL VIEW IS TO BE TAKEN WITHOUT BEING HYPER TECHNICAL IN GRANTING EXEMPTION INCLUDI NG THE OBJECTS OF THE SOCIETY. SIMILAR FINDING HAS BEEN GIVEN BY THE ITAT HYDERABAD BENCH IN THE CASE OF 49 TTJ 146. 2.8 THE ITAT LUCKNOW BENCH IN THE CASE OF CHATURVED I HAR PRAKASH EDUCATONAL SOCIETY VS CIT, 134 TTJ 781 HAD AN OCCASION TO CONS IDER AS TO WHETHER THE CANCELLATION OF REGISTRATION U/S 12AA(3). IT HAS BEEN OBSERVED B Y THE ITAT LUCKNOW BENCH THAT CIT CANNOT REFUSE THE ORDER OF HIS PREDECESSOR ONCE THE REGISTRATION HAS BEEN GRANTED. IT MEANS THAT THE OBJECTS OF THE TRUST ARE CHARITABLE. THE I TAT LUCKNOW BENCH HAS GONE TO THE EXTENT TO SAY THAT LD. CIT BECOMES FRUCTUOUS OFFICI O AND THEREFORE, THE ORDER U/S 12AA(3) IS ILLEGAL AND UNSUSTAINABLE. 56 2.9 WE HAVE ALSO NOTICED THAT LD. CCIT, JODHPUR HAS ALLOWED EXEMPTION U/S 10(23) OF THE ACT. BEFORE THE LD. CCIT, IT WAS POINTED OUT THAT REGISTRATION WAS CANCELLED U/S 12AA(3) BY THE LD. CIT. THE LD. CCIT HAS ALLOWED TH E REGISTRATION WHICH MEANS THT THE ACTIVITY OF THE TRUST ARE GENUINE AND AS PER ITS OB JECT. THE ADVERTISEMENT EXPENSES IF GENUINE AND HAVE BEEN PAID TO SON OF THE SELLER OF THE SOCIETY THEN THIS CANNOT BE MADE A GROUND FOR DISALLOWING EXEMPTION. REFERENCE IS MADE TO THE ORDR OF THE ITAT CHANDIGARH BENCH IN THE CASE OF YOUNG SCHOLARS EDUCATIONAL SOC IETY VS ITO 12 ITR (TRIBUNAL) 640. IN RESPECT OF THE PAYMENT MADE TO THE PERSONS COVE RED U/S 13(3), THE ASSESSEE HAS ALREADY EXPLAINED THE REASONABLENESS. THE REASONABLENESS IS ACTUALLY TO BE SEEN BY THE AO AND NOT BE THE LD. CIT WHILE ALLOWING REGISTRATION OR C ANCELING THE REGISTRATION. THUS LOOKING TO THE ABOVE DISCUSSIONS, WE HOLD THAT THE LD. CIT WAS NOT JUSTIFIED IN CANCELLING THE REGISTRATION. THE ORDER PASSED BY THE LD. CIT U/S 1 2AA(3) IS CANCELLED AND APPEAL IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16-1 2-2011 SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR DATED: 16/12/2011 MISHRA COPY TO: 1. M/S. RAJASTHAN VIKAS SANSTHAN, JODHPUR 2. THE CIT -II, JODHPUR 3.THE CIT 5.THE D/R 5.THE GUARD FILE (ITA NO. 11/JODH/2011) A.R.. ITAT: JODHPUR 57