Chirayu Charitable Foundation, Bhopal V. PCIT (Central), Bhopal

ITA 179/Ind/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5145 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-01-2021
• Assessment Year: misc
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: SUMIT NEMA SR GAGAN TIWARI; PIYUSH PARA
• Keywords: Search and seizure; Document seized; Charitable institution; Opportunity of being heard; Principle of natural justice; Question of law; Reasonable cause; Assessment record; Cancellation of registration; Documents seized
• Section: 143(3); 153A; 133(6); 12A; 12AA; 250; 274; 64; 43; 48; 73; 72; 13; 22; 131; 68; 132; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.179/IND/2019 REVENUE BY SHRI S.S. MANTRI, CIT APPELLANT BY S/ SHRI SUMIT NEMA, SR. ADVOCATE, GAGAN TIWARI & PIYUSH PARASHAR, ADVS DATE OF HEARING 0 5 .01.2021 DATE OF PRONOUNCEMENT . 0 2 .202 1 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE IS DIRECTED AGAINST THE ORDER OF PR. COMMISSIONER OF I NCOME TAX (CENTRAL)(IN SHORT LD. PCIT], BHOPAL DATED 26.12. 2018 WHICH IS ARISING OUT OF THE ORDER U/S 12AA R.W.S. OF THE INC OME TAX ACT 1961(IN SHORT THE ACT) DATED 29.11.2002 GRANTED B Y CIT, BHOPAL. CHIRAYU CHARITABLE FOUNDATION,BHOPAL INDORE HIGHWAY, BHAISAKHEDI, BHOPAL VS. PCIT (CENTRAL), BHOPAL (APPELLANT) (REVENUE ) PAN NO.AAAAC3656P CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 2 2. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS AND AS NARRATED BY LD. SENIOR COUNSEL FOR THE ASSESSEE REF ERRING TO RELEVANT DOCUMENTS PLACED IN THE PAPER BOOK ARE THAT THE ASS ESSEE IS A CHARITABLE SOCIETY REGISTERED UNDER M.P. SOCIETIES REGISTRATION ACT, 1973 SINCE 26.05.2001. THE MAIN OBJECT OF THE SOCI ETY IS TO CARRY OUT CHARITABLE ACTIVITIES IN MEDICAL AND EDUCATION FIELD. IN ORDER TO RUN THE SOCIETY FOR CARRYING OUT THESE OBJECTS IT H AS ESTABLISHED VARIOUS COLLEGES AND HOSPITALS NAMELY CHIRAYU MEICA L COLLEGE & HOSPITAL, BHOPAL, CHIRAYU COLLEGE OF NURSING, CHIRA YU COLLEGE OF PARA MEDICAL AND CHIRAYU CANCER HOSPITAL. THESE COLLEGES HAVE COURSES OF MBBS, MD, B.SC NURSING. POST B.SC. NURSI NG. GNM, MSC. NURSING, AND VARIOUS COURSES UNDER PARAMEDICAL COLLEGE LIKE DMIT, BMLT AND PHYSIOTHERAPY ETC. THE MEDICAL COLLE GE AND HOSPITAL RUN BY THE ASSESSEE ARE APPROVED BY MEDICA L COUNCIL OF INDIA (MCI), NEW DELHI. INDIAN NURSING. COUNCIL. ST ATE NURSING COUNCIL. DIRECTOR MEDICAL EDUCATION (DME). MADHYA P RADESH MEDICAL SCIENCE UNIVERSITY, JABALPUR AND BARKATULAH UNIVERSITY, BHOPAL. 3. THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION U/S 1 2AA OF THE INCOME TAX ACT ON 29.11.2002 EFFECTIVE FROM 1.4.200 2. SEARCH & CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 3 SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT A T VARIOUS PREMISES OF CHIRAYU GROUP AND ITS ASSOCIATES ON 4.1 1.2016. THIS ACTION WAS CARRIED OUT SUBSEQUENT TO THE SEARCH CON DUCTED BY CENTRAL BUREAU OF INVESTIGATION (IN SHORT `CBI) O N 4.11.2016 AT THE RESIDENCE OF FAMILY MEMBER OF DIRECTOR AND PROMOTER OF VARIOUS ENTITIES OF CHIRAYU GROUP. CASH OF RS.36,00,000/- A ND JEWELLERY AND VALUABLES AMOUNTING APPROXIMATELY RS.1.80 CRORE WERE FOUND BY THE CBI AT THE SAID PREMISE. 4. SUBSEQUENTLY AFTER THE SEARCH AND SEIZURE OPERATION THE LD. A.O. VIDE LETTER F. NO. ACIT(CENTRAL)/GWALIOR /REPO RT/2018-19 DATED 5.12.2018, DULY RECOMMENDED BY THE ADDL CIT(CENTRAL),BHOPAL MADE THE FOLLOWING PROPOSAL FOR CANCELLATION OF REGISTRATION GRANTED U/S 12A TO THE ASSESSEE TRUST WHICH HAS BEEN REFERRED BY LD. PCIT IN THE IMPUGNED ORDER. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION S OME DOCUMENTS WERE FOUND SHOWING DONATIONS RECEIVED BY CHIRAYU FOUNDA TION FROM VARIOUS ENTITIES. AMONGST THE DOCUMENTS FOUND FROM PREMIS E LOCATED AT BHAINSKHEDI, NEAR BAIRAGARH, BHOPAL-INDORE HIGHWA Y, BHOPAL WHICH HAVE BEEN SEIZED AND INVENTORISED, DONATIONS AMOUN TING TO RS.50 LACS AND MORE IS AS FOLLOWS:- CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 4 S.NO. DONATION RECEIVED FROM AMOUNT DATE 1. THAKUR EDUCATION TRUST (AACTT4004F) 1,00,00,000 12.06.2013 THAKUR HOUSE, ASHOK NAGAR, KAND IVILI (E), MUMBAI-400101 2. THAKUR EDUCATION TRUST (AACTT4004F) 60,00,000 14.06.2013 THAKUR HOUSE, ASHOK NAGAR, KAND IVTLI (E), MUMBAI-400101 3 . ZAGDU SINGH CHARITABLE TRUST 1,00,00,000 10.06.2013 (AAATZOI41P) THAKUR HOUSE, ASHOK NAGAR, KAND IVILI (E), MUMBAI-400101 4 . ZAGDU SINGH CHARITABLE TRUST 1,00,00,000 17.06.2013 (AAATZOI41P) THAKUR HOUSE, ASHOK NAGAR, KAND IVILI (E), MUMBAI - 4 00 101 - --1 5 . UDODASMUNDHRASEVASANSTHAN 50,00,000 10.05.2013 6 . REDI PORT LTD (AADCR6980N) 10 7, 50,00,000 21.062013 EARNEST HOUSE, NARIMAN POINT, NC PA MARG. MUMBAI - 400021 7 . REDI PORT LTD (AADCR6980N) 10 7, 50,00,000 28.06.2013 EARNEST HOUSE, NARIMAN POINT, NC PA MARG. MUMBAI - 400021 8 . PACIFIC EXPORTS (AALFP 3826C) 1, DO, 00, 000 08.05.2013 1302, DHEERAJ GOURAV HEIGHTS-I, ADARSH NAGAR, ANDHERI (W), MUMBAI-400053 CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 5 9. RIVIERA INFOWAY LTD (AACCR2329G) 9 TH 8,15,90,000 01.07.2011 FLOOR, NAVJEEVAN COMMERCIAL PREMISES, LAMINGTON ROAD, MUMBAI- 400008 TOTAL 14,25,90,000 FURTHER ENQUIRIES WERE MADE INTO THE LARGE DONATIO NS ON THE BASIS OF THE SEIZED MATERIAL WHICH REVEALED THE FOLLOWING: (I) THAKUR EDUCATION TRUST IN ITS RETURN OF INCOM E FOR A. Y. 2014-15 HAS SHOWN GROSS TOTAL INCOME OF RS. 300/-. ZAGDU SI NGH CHARITABLE TRUST IN ITS RETURN FOR A. Y. 2013-14 HAS FILED NIL GROSS TOTAL INCOME. FURTHER, ZAGDU SINGH CHARITABLE TRUST AND THAKUR EDUCATION T RUST HAVE THE SAME REGISTERED ADDRESS AS EVIDENT FROM THE SEIZED DOCUM ENTS. FURTHER, FROM THE DOCUMENTS SEIZED, COPIES OF RESOLUTION OF BOTH THE ABOVEMENTIONED TRUSTS WERE FOUND WHICH ARE OF THE SAME DATE I.E. 0 3.06.2013. ALL THE ABOVE CIRCUMSTANCES ALONG WITH THE FAILURE OF ASSES SEE TO FURNISH ANY DETAILS OR CONFIRMATION OF DONATIONS RECEIVED ARE S UGGESTIVE OF MANIPULATION AND SHOW THAT THE DONATIONS ARE SUSPEC T. (II) CORPUS DONATION OF RS. 8,15,90,000/- HAS BEEN RECEI VED BY CHIRAYU CHARITABLE FOUNDATION FROM RIVIERA INFOWAY LTD ON 01.07.2011. THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTS/CONFIR MATION OF THE SAME. FROM ENQUIRY CONDUCTED, IT HAS BEEN OBSERVED THAT M /S RIVIERA INFOWAY LTD HAS FILED RETURN OF A. Y. 2012-13 DECLARING GROSS TOTAL INCOME OF RS. 2,022/-. THIS DOES NOT JUSTIFY THE HUGE AMOUNT OF D ONATION MADE BY THE SAID COMPANY. FURTHER, AS THE ASSESSEE HAS FAILED T O FURNISH ANY DETAILS OR CONFIRMATION OF DONATIONS RECEIVED, THE SAME REM AINS UNEXPLAINED. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 6 (III) DONATION OF RS. 50,00,000/- HAS BEEN RECEIVED FROM UDODAS MUNDHRA SEVA SANSTHAN. SINCE THE ASSESSEE WAS RELUCTANT IN PROVIDING ANY DETAILS OF CORPUS DONATIONS RECEIVED BY IT, THIRD PARTY ENQ UIRY WAS CONDUCTED ON TEST CHECK BASIS. ON A COMMISSION SENT TO ADIT(INV. )- 2(4) KOLKATA IT WAS FOUND THAT THE REGISTERED OFFICE OF UDODAS MUNDHRA SEVA SANSTHAN AT 1 ST FLOOR, YAMUNA BHAWAN, 55 EZRA STREET, KOLKATA IS AN ADDRESS OF MANY COMPANIES/FIRMS WHICH AS PER THE REPORT OF ADIT(INV .)-2(4) KOLKATA IS IDENTICAL TO TYPICAL JAMA-KHARCHI ENTITY. UPON SUMM ON OF THE ADIT (LNV.)- 2(4) KOLKATA NO ONE ATTENDED NOR ANY REPLY WAS FILE D. THE FACTS UNEARTHED DURING THE COURSE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT REVEAL THAT THE - TRUST DID NOT ACT IN A FAIR MANNER AND COLLECTED DONATIONS FROM PARTIES WHO ARE FOUND TO BE NONEXISTENT. THE ELIGIBILITY OF REGISTRATION IS NOT ONLY BASED ON OB JECTS OF THE TRUST, BUT ALSO ON THE GENUINENESS OF ACTIVITIES OF THE TRUST. THOU GH THE TRUST OBJECTS ARE CHARITABLE IN NATURE, ITS ACTIVITIES ARE NOT CARRIE D OUT IN ACCORDANCE WITH ITS OBJECTS WHICH IS EVIDENT FROM THE FACTS GATHERED DU RING SEARCH AND POST SEARCH INVESTIGATION AS MENTIONED ABOVE. FROM THE DISCUSSION ABOVE, IT IS APPARENT THAT THE ASSESSEE HAS NOT CARRIED OUT ITS ACTIVITIES AS PER THE PROVISIONS OF SECTION 12AA OF THE INCOME TAX ACT, 1961, HENCE, IT IS REQUESTED THAT THE REGI STRATION U/S 12A OF THE ACT OF THE ASSESSEE SOCIETY BE CANCELLED. 5. ON THE BASIS OF THE ABOVE PROPOSAL LD. PCIT ISSU ED FOLLOWING SHOW SHOW CAUSE NOTICE DATED 6.12.2018 TO THE ASSES SEE SOCIETY CONFRONTING THE ASSESSEE WITH VARIOUS INFORMATION F OUND DURING THE COURSE OF SEARCH AND ALSO ASKING THE ASSESSEE WHY A CTION SHOULD NOT BE TAKEN TO CANCEL THE REGISTRATION GRANTED U/S 12AA OF THE ACT. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 7 OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) 48, ARERA HILLS, HOSHANGABAD ROAD, BHOPAL - 462011 F.NO. PCIT(CENTRAI/BPL/12A/2018-19/ 4303 DATED: 06/12/2018 TO M/S CHIRAYU CHARITABLE FOUNDATION, 11, PROFESSOR COLONY, BHOPAL - 462 00 3 SIR, SUB:- CANCELLATION OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 IN THE CASE OF CHIRAYU CHARITABLE FOUNDATION, BHOPAL- PAN:AAAAC3656P -SHOW CAUSE - REG. THE TRUST, 'CHIRAYU CHARITABLE FOUNDATION' WAS GRAN TED REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 BY COMMISSIONER OF INCOME TAX, BHOPAL VIDE ORDER DATED 29.11.2002 FROM ASSESSMENT YEAR 20 03-04 ONWARDS. ACCORDINGL Y THE ASSESSEE TRUST IS CLAIMING EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF INCOME APPLIED FOR CHAR ITABLE AND RELIGIOUS PURPOSE IN INDIA DURING EVERY YEAR SINCE ITS INCEPT ION. SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CARR IED OUT AT THE VARIOUS PREMISES OF CHIRAYU HEALTH GROUP AND ITS ASSOCIATES ON 04/11/2016. SEARCH WARRANT WAS ALSO EXECUTED BY THE CENTRAL BUR EAU OF INVESTIGATION (CBI) ON 04/11/2016 AT HOUSE NO. 11, PROFESSOR COLO NY, BHOPAL WHICH IS THE RESIDENCE OF FAMILY MEMBERS OF DIRECTORS AND PR OMOTERS OF VARIOUS ENTITIES OF CHIRAY U GROUP. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION BY THE INVESTIGATION UNIT OF INCOME TAX D EPARTMENT ON 04/11/2016, VARIOUS DOCUMENTS WERE SEIZED FROM PREM ISES LOCATED AT BHAINSKHEDI, NEAR BAIRAGARH, BHOPAL-INDORE HIGHWAY, BHOPAL THE SEIZED DOCUMENTS ESTABLISH THAT THE ASSESSEE TRUST HAD REC EIVED LARGE DONATIONS FROM VARIOUS ENTITIES AND POST SEARCH ENQUIRES CATE GORICALLY REVEAL THAT THE ASSESSEE HAS FAILED TO FURNISH THE CONFIRMATION OF DONATIONS RECEIVED AND THE DONATIONS REMAINS UNEXPLAINED AND SUSPECT. FURT HER POST SEARCH ENQUIRIES ESTABLISH THAT THE ACTIVIT I ES OF THE ASSESS EE TRUST ARE AGAINST THE B YLAWS AND OBJECTS OF THE CHARITABLE AND RELIGIOUS PURPOS ES HENCE, THE REGISTRA TI ON OF THE TRUST DESERVES TO BE CANCELLED U / S 12A/12AA{3'1 R.W. S . 13 OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING ISS UES: CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 8 AS PER SEIZED DOCUMENTS, THE ASSESSEE TRUST HAS REC EIVED DONATION FR OM VARIOUS ENTITIES AMOUNTING TO RS 14,25,90,000/- WHICH INCL UDE DONATION OF RS. 6,10,00,000 - /PERTAINS TO THE F Y 2013-14 AND RS 8,15,90,00 0 /- PERTAINS TO THE F Y. 2011-12. ENQUIRIES M ADE INTO THE LARGE DONATIONS REVEALED THAT SOME ENTITIES WHO HAD GIVEN LARGE DONATIONS TO THE TR U ST HAVE FILED THEIR RETURN OF INCOME SHOWING VERY N OMINAL INCOME AND THE ASSESSEE TRUST FAILED TO FURNISH ANY DETA I LS OR CONFIRMATION O F DONATIONS RECEIVED WHICH S H OWS THAT THE DONATIONS ARE SUSPECT. ACCORDINGLY, YOU ARE HEREBY GIVEN AN OPPORTUNIT Y OF BEING HEARD AS PER SECTION 12AA(31 OF THE INCOME TAX ACT, 1961 TO PRESENT YOURSELF IN PERSON OR THROUGH AN AUTHORIZED REPRESENTATIVE ON 1 4/12/2018 AT 11.00 A.M. BEFORE THE PR.COMMISSIONER OF INCOME T AX ,,(CENTRAL ), BHOPAL TO EXPLAIN AS TO WHY REGISTRATION OF THE TRUST FOR A VA ILING EXEMPTION U / S 11 OF THE INCOME TAX ACT, 1961 MAY NOT BE CAN C ELLED U/ S 12AA(31 R.W.S. 13 OF THE INCOME TAX ACT, 1961. IN CASE NO REPLY IS RECEI VED BY THE STIPULATED DATE, IT WILL BE PRESUMED THAT YOU NOTHING TO SAY I N THE MATTER AND THE CASE WILL BE DECIDED ON THE BASIS DOCUMENTS AND INFORMA TION AVAILABLE ON RECORD IN THIS OFFICE. IT IS ALSO WORTHWHILE TO MENTION THAT THIS OPPORTUN ITY IS THE FIRST AND FINAL OPPORTUNITY GRANTED TO YOU TO EXPLAIN YOUR CA SE CONSIDERING THE LEGAL FACT THAT THE ASSESSMENT PROCEEDINGS U /S 153A OF THE INCOME TAX ACT, 1961 OF THE ASSESSEE TRUST IS GETTING TIME BARRED BY LIMITATION ON 31.12.2018. SD/- (VINOD KUMAR) PR. COMMISSIONER OF INCOME TAX(CENTRAL) BHOPAL 6. ON RECEIVING THE ABOVE REFERRED SHOW CAUSE NOTIC E THE ASSESSEE FILED DETAILED REPLY PLACED AT PAGE 3 TO 8 OF THE P APER BOOK DATED 17.3.2020 WHEREIN THE ASSESSEE MADE SUBMISSION WITH REGARD TO THE VARIOUS COLLEGES AND HOSPITALS RUN BY THE SOCIE TY AND ALSO REFERRED TO THE DOCUMENTS AND INFORMATION IN ORDER TO PROVE THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 9 IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE D ONORS STATING THAT THE ASSESSEE IS CONSISTENTLY CARRYING OUT THE CHARITABLE ACTIVITIES AS PER THE OBJECTS AND ALSO FURTHER PLAC ED RELIANCE ON VARIOUS DECISIONS. IT WAS ALSO SUBMITTED BY THE AS SESSE THAT REGULAR ASSESSMENT PROCEEDINGS WERE CONDUCTED MUCH PRIOR TO THE SEARCH AND ALL THE DOCUMENTS WITH REGARD TO THE REC EIPT OF DONATION WERE FURNISHED BEFORE THE ASSESSING AUTHORITY WHO H AS ACCEPTED THE SAME AND THE ASSESSMENTS WERE DULY COMPLETED WITHOU T MAKING ANY ADDITION ON THIS ISSUE OBSERVING THAT THERE IS NO CONCRETE MATERIAL/EVIDENCE WHICH MAY PROVE THAT THE ALLEGED DONATION ARE NOT GENUINE AND ACTIVITIES OF THE TRUST ARE NOT CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. IT WAS CONTENDED BEFORE THE LD. PCIT THAT THE PROPOSAL FOR CANCELLATION OF REGISTRATION U/S 12AA IS MERELY BASED ON SUSPICION WHICH IS NEITHER ALLOWABLE NOR JUSTIFIABLE. 7. HOWEVER THE SUBMISSION MADE BY THE ASSESSEE COUL D NOT CONVINCE LD. PCIT AS HE WAS OF THE OPINION THAT FIR STLY THE ALLEGED DONATIONS RECEIVED ARE NOT GENUINE AND SECONDLY REF ERRING TO THE ALLEGED IRREGULARITY IN ADMISSION PROCESS OBSERVED BY CBI AT CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 10 CHIRAYU MEDICAL COLLEGE, BHOPAL CAME TO THE CONCLUS ION THAT THE REGISTRATION GRANTED U/S 12AA OF THE ACT DESERVES T O BE CANCELLED AND ACCORDINGLY INVOKED THE PROVISIONS OF SECTION 1 2AA(3) OF THE ACT RETROSPECTIVELY WITH EFFECT FROM 1.4.2011. 8. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE IMPUGNED ORDER OF LD. PCIT CANCELLI NG THE REGISTRATION U/S 12AA OF THE ACT RAISING FOLLOWING GROUNDS OF APPEAL: (1 ) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE ORDER U/S.12AA(3) OF THE LEARNED PCIT CANCELLING TH E REGISTRATION OF ASSESSEE U/S.12AA IS WHOLLY UNJUSTIFIED AND UNLAWFU L AND, THEREFORE, BE QUASHED. (2) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FI NDINGS OF THE LEARNED PCI T FOR CANCELLING THE REGISTRATION OF THE ASSESSEE ARE WRONG OPPOSED TO FACTS, UNJUSTIFIED AND UNLAWF U L AND. THEREFORE, ALL SUCH FINDINGS BE QUASHED AND THE ORDER PASSED BY TH E LEARNED PCI T U/S.12AA(3) BE KINDLY CANCELLED. (3) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ACTIVITIES OF THE ASSESSEE ARE GENUINE AND ARE BEIN G CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AND, THERE FORE, THE PROVISIONS OF SECTION 12AA(3) ARE NOT APPLICABLE. HENCE THE ORDER OF PCI T IS UNLAWFUL AND, THEREFORE, BE QUASHED. (4) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF LEARNED PCIT U/S.12AA(3) IS UNLAWFUL BECAUSE THE SAID ORDER HAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 11 BEEN PASSED WITHOUT CONFRONTING THE MATERIALS COLLE CTED BY THE DEPARTMENT BEHIND THE BACK OF THE ASSESSEE, HENCE THE ORDER BE QUASHED. (5) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDINGS IN PARA 7 OF THE ORDER ARE WHOLLY WRONG AN D OPPOSED TO FACTS. THE SAID FINDINGS HAVE BEEN RECORDED IN THE ORDER WITHO UT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE TO SUBMIT ITS EXPLANATI ON IN DEFENCE AND HENCE THE FINDINGS BE QUASHED. THE SAID FINDINGS OF THE L EARNED P CI'T ARE ALSO WRONG BECAUSE THE ALLEGATIONS OF CBI DID NOT FIND P LACE IN THE SHOW CAUSE NOTICE DATED 06.12.2018 ISSUED BY THE LEARNED PCIT. (6) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT BE HELD THAT THE DONATION RECEIVED BY THE ASSESSEE INSTITUTION ARE GENUINE DONATIONS AND ARE FULLY SUPPORTED BY THE DOCUMENTAR Y EVIDENCES AND, THEREFORE, THE FINDINGS OF THE LEARNED PCIT THAT THE DONATIONS ARE NOT GENUINE ARC WHOLLY WRONG, UNJUSTIFIED, OPPOSED TO F ACTS AND UNLAWFUL AND. THEREFORE, THE FINDINGS OF THE LEARNED PCIT BE QUAS HED. (7) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDINGS OF THE LEARNED PC I 'T IN PARA 6, 8, 9 10 & 11 OF THE ORDER ARE WHOLLY WRONG. UNJUSTIF I ED, OPPOSED TO FACTS AND UNLAWFUL HENCE ALL SUCH FINDINGS BE QUASHED AND ORDER OF THE LEARNED PC I T U/S.12AA(3) BE KINDLY CANCELLED. (8) THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE FINDINGS OF THE LEARNED PC IT THAT THE PROVISIONS OF SECTION 13 ARE APPLICABLE ARE WHOLLY WRONG, OPPOSED TO FACTS AND A RE UNLAWFUL AND. THEREFORE, SUCH FINDINGS BE QUASHED AND IT BE HELD THAT THE PROVISIONS OF SECTION 13 ARE NOT AT ALL APPLICABLE. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 12 9. WITH REGARD TO THE ABOVE GROUNDS LD. SENIOR COU NSEL FOR THE ASSESSEE APART FROM REFERRING TO THE WRITTEN SUBMIS SION SUBMITTED THAT FIRSTLY THERE IS NO IOTA OF EVIDENCE TO SHOW T HAT THE ASSESSEE SOCIETY IS NOT CARRYING OUT ITS ACTIVITIES AS PER T HE OBJECTIVES OF THE TRUST, SECONDLY THE IDENTITY, GENUINENESS AND CREDI TWORTHINESS OF THE DONORS HAS BEEN DULY PROVED AT MULTIPLE OCCASIO NS BEFORE THE ASSESSING AUTHORITY, THIRDLY THE ALLEGED ALLEGATION ABOUT THE EDUCATION IN CHIRAYU MEDICAL COLLEGE HAS STILL NOT REACHED ITS FINALITY AND THERE WAS NO JUSTIFICATION TO CANCEL T HE REGISTRATION U/S 12AA OF THE ACT OF THE SOCIETY WHICH IS RUNNING SO MANY COLLEGES AND HOSPITALS PURELY FOR CHARITABLE PURPOSE AS PROV IDED IN SECTION 2(15) OF THE ACT AND FOURTHLY THAT THOSE ISSUES REF ERRED BY LD. PCIT IN THE IMPUGNED NOTICE ARE TO BE DEALT BY THE ASSES SING OFFICER IN THE REGULAR ASSESSMENT PROCEEDINGS SINCE THESE ISSU ES HAVE NO BEARING ON THE CONTINUATION OF THE REGISTRATION GRA NTED U/S 12AA OF THE ACT . 10. THE WRITTEN SUBMISSION FILED BY THE ASSESSEE A RE REPRODUCED BELOW:- IT IS SUBMITTED THAT THE ASSESSEE SOCIETY IS A REGI STERED CHARITABLE SOCIETY UNDER M.P. SOCIETIES REGISTRATION ACT, 1973. THE SA ID SOCIETY WAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 13 REGISTERED ON 26.05.2001. THE MAIN OBJECTS OF THE S OCIETY INCLUDE HEALTH AND EDUCATION, THE SOCIETY, THEREFORE, ESTABLISHED A COLLEGE AND HOSPITAL KNOWN AS CHIRAYU MEDICAL COLLEGE AND HOSPITAL, BH OPAL. LATER, THE SOCIETY ALSO ESTABLISHED CHIRAYU COLLEGE OF NURSIN G, CHIRAYU COLLEGE OF PARAMEDICAL AND CHIRAYU CANCER HOSPITAL. THESE C OLLEGES HAVE COURSES OF MBBS, MD, B.SC NURSING, POST B.SC. NURSI NG, GNM, MSC. NURSING, AND VARIOUS COURSES UNDER PARAMEDICAL COLL EGE LIKE DMLT, BMLT AND PHYSIOTHERAPY ETC. IT IS FURTHER SUBMITTED THAT THE MEDICAL COLLEGE AN D HOSPITAL OF THE ASSESSEE IS APPROVED BY MEDICAL COUNCIL OF INDIA (M CI), NEW DELHI, INDIAN NURSING COUNCIL, STATE NURSING COUNCIL, DIRE CTOR MEDICAL EDUCATION (DME), MADHYA PRADESH MEDICAL SCIENCE UNI VERSITY JABALPUR AND BARKATULLAH UNIVERSITY BHOPAL. THE ASSESSEE SUB MITS THAT IN ITS VARIOUS COURSES, THE TOTAL NUMBER OF STUDENTS I.E. 1705 ARE STUDYING IN THE INSTITUTIONS. EVERY YEAR, STUDENTS ARE ADMITTED . HUGE INVESTMENT IS MADE FOR CONSTRUCTION OF BUILDINGS FOR HOUSING THE COLLEGE, HOSTEL AND TO PROVIDE OTHER FACILITIES TO THE STUDENTS WHO ARE ST UDYING IN THE COLLEGE. APART FROM THIS, HOSPITAL RUN BY THE SOCIETY IS A M ULTI SPECIALTY 750 BEDDED HOSPITAL CATERING TO THE HEALTH OF THE PEOPL E OF THE STATE. IT HAS ULTRA MODERN FACILITIES AND IS PLAYING A VERY IMPOR TANT ROLE IN THE HEALTH SECTOR OF BHOPAL AND ADJOINING AREA. MODERN FACILIT IES INCLUDING KIDNEY TRANSPLANT, COCHLEAR IMPLANT, ADVANCED CATH LAB, OP EN HEART SURGERY ETC. ARE AVAILABLE AT THE HOSPITAL, HELPING THE PAT IENTS IN TIMELY TREATMENT AND IN AVOIDING THE UNNECESSARY TRIPS TO METROS. SI MILARLY, CHIRAYU CANCER HOSPITAL HOUSES THE ULTRA MODERN VITAL BEAM LINEAR ESCALATOR, PET-SCAN, GAMA CAMERA, DUAL CT-SCAN 16 SLICE ETC. T HE SOCIETY ALSO ORGANIZES FREE CAMPS FOR THE NEEDY AND POOR. TREATM ENT IS AVAILABLE TO PATIENTS UNDER THE SCHEMES OF THE GOVT. AT LOW COST . THE HOSPITAL IS RECOGNIZED BY THE CENTRAL GOVT. AS WELL AS STATE GO VT. FOR TREATMENT OF ITS EMPLOYEES. SIMILARLY, IT IS RECOGNIZED BY MANY REPU TED INSTITUTIONS AND CORPORATIONS ETC. ALL THESE FACILITIES HAVE HELPED THE PEOPLE OF STATE IN CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 14 LIVING AND ENJOYING BETTER LIFE. IT IS, THEREFORE, SUBMITTED THAT THE ASSESSEE IS CARRYING OUT THE ACTIVITIES GENUINELY AND IN ACC ORDANCE WITH THE OBJECTS OF THE SOCIETY. THE ASSESSEE SUBMITS THAT SUCH CHARITABLE INSTITUTI ONS DO NEED THE HELP OF RICH AND AFFLUENT AS WELL AS PHILANTHROPIST. THE SE PERSONS CONTRIBUTE TO THE CHARITABLE INSTITUTIONS FOR THE WELFARE OF T HE SOCIETY. THUS, DONATIONS ARE RECEIVED BY SUCH SOCIETIES INCLUDING THE ASSESSEE SOCIETY. DONATIONS MAY RANGE FROM VERY SMALL AMOUNTS TO VERY LARGE AMOUNTS. THAT THE ASSESSEE HAS OBTAINED LARGE DONATIONS TOTA LING RS. 14,25,90,000. LARGE DONATIONS DO NOT MEAN THAT THEY ARE NOT GENUINE. IN ANY CASE, IT IS SUBMITTED, THAT ALL SUCH DONATIONS ARE GENUINE AND OBTAINED THROUGH BANKING CHANNEL ONLY. THE CLAIM TH AT THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION OF DONATION RECE IVED IS ALTOGETHER INCORRECT. THE ASSESSEE HAS BEEN REGULARLY ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961. NOT ONLY THE CONFIRMATIONS BU T OTHER DOCUMENTS OF THE DONORS INCLUDING COPIES OF THEIR ITRS, BANK STATEMENTS, RESOLUTIONS, FINANCIAL STATEMENTS ETC. - WHEREIN TH E DONORS HAVE ACCEPTED AND CONFIRMED HAVING GIVEN DONATIONS - HAVE BEEN SU BMITTED DURING THE REGULAR ASSESSMENT PROCEEDINGS AND THESE ARE AVAILA BLE IN THE RECORDS OF THE DEPTT. THESE HAVE BEEN DULY CONSIDERED BY THE A SSESSING OFFICER AND AFTER APPLYING HIS MIND AND BEING SATISFIED WITH TH E EXPLANATIONS FURNISHED, ASSESSMENT ORDERS HAVE BEEN MADE. IT IS THEREFORE REITERATED THAT ALL THE DONATIONS ARE GENUINE AND THE CONFIRMA TIONS ARE NOT ONLY AVAILABLE BUT HAVE BEEN SUBMITTED DURING THE REGULA R ASSESSMENT PROCEEDINGS ALSO. THERE IS NO CORROBORATIVE MATERIA L TO SHOW THAT DONATIONS ARE EITHER NOT GENUINE OR THAT CONFIRMATI ONS WERE NOT AVAILABLE OR THAT THESE WERE NOT FURNISHED. THE CONTENTION OF THE ASSESSEE IS THAT THE CONDITIONS ENVISAGED U/S 12A/12AA(3) R.W.S. 13 OF THE INCOME TAX ACT, 1961 ARE NOT FULFILLED AND THEREFORE CANCELLAT ION OF THE REGISTRATION WILL BE NEITHER JUSTIFIED NOR LAWFUL. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 15 IN FACT, IT HAS BEEN OBSERVED BY CIT THAT VARIOUS D OCUMENTS WERE SEIZED FROM THE PREMISES OF THE ASSESSEE SOCIETY AND THAT THESE DOCUMENTS ESTABLISH THAT THE ASSESSEE HAS RECEIVED LARGE DONA TIONS FROM VARIOUS ENTITIES. IT IS SUBMITTED THAT THE SAME SEIZED DOCU MENTS CONTAINED ALL THE CONFIRMATIONS AND OTHER DOCUMENTS OF THE DONORS. IN FACT, SEIZED MATERIAL FROM THE SAID PREMISES MARKED AS LPS-10 CONTAINED A LL SUCH CONFIRMATIONS IN ORIGINAL AND OTHER DOCUMENTS INCLU DING ITRS, BANK STATEMENTS, RESOLUTIONS, FINANCIAL STATEMENTS OF TH E DONORS. THUS, IT IS APPARENT THAT ALL THE CONFIRMATIONS WERE AVAILABLE WITH THE DEPTT. ITSELF, IN FACT, IN ORIGINAL. IT IS INCOMPREHENSIBLE HOW TH E SAME DOCUMENTS I.E. CONFIRMATIONS ETC. SHOW THAT LARGE DONATIONS HAVE B EEN RECEIVED BY THE SOCIETY AND AT THE SAME TIME IT IS CLAIMED THAT NO SUCH DETAIL OR CONFIRMATIONS WERE FURNISHED. IT IS, THEREFORE, REI TERATED THAT THE SEIZED MATERIAL WAS IN CUSTODY OF THE DEPTT. AND IT CONTAI NED ALL THE CONFIRMATIONS AND OTHER DOCUMENTS AS ABOVE SAID AND THUS, THERE IS NO GROUND TO TREAT THE SAID DONATIONS AS UNEXPLAINED A ND SUSPECT. IT IS FURTHER SUBMITTED THAT APART FROM THE ABOVE S AID TWO OCCASIONS REFLECTING THAT THE DETAIL AND CONFIRMATIONS OF THE DONORS WERE AVAILABLE WITH THE DEPTT., THE ASSESSEE FILED A SUBMISSION DT . 26.11.2018 ON 04.12.2018 ENCLOSING THEREWITH ALL THE DETAILS, CON FIRMATIONS AND OTHER DOCUMENTS OF THE DONORS ESTABLISHING THE GENUINENES S OF THE DONATIONS. EVEN, THIS SUBMISSION OF THE ASSESSEE SEEMS NOT TO HAVE BEEN CONSIDERED BEFORE CONCLUDING THAT THE ASSESSEE FAILED TO FURNI SH ANY DETAILS OR CONFIRMATION OF DONATION RECEIVED HENCE THE SAME AR E SUSPECT. IT IS, THEREFORE, SUBMITTED THAT THE ASSESSEE FURNISHED TH E CONFIRMATIONS AND OTHER DOCUMENTS THRICE AND THUS, CANCELLATION OF RE GISTRATION IS UNLAWFUL. IT HAS ALSO BEEN OBSERVED THAT SOME ENTITIES WHO HA D GIVEN LARGE DONATIONS TO THE ASSESSEE HAVE FILED THEIR RETURN O F INCOME SHOWING VERY CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 16 NOMINAL INCOME. IT IS APPARENT THAT THIS IS NOT THE CONCERN OF THE ASSESSEE. SOMEONE WISHING TO DONATE TO THE ASSESSEE SOCIETY IS ALWAYS WELCOME AND IT IS UP TO THE DONOR HOW HE/SHE OR IT ARRANGES THE FUND. IT IS ONLY LATER THAT OTHER DOCUMENTS OF THE DONORS AR E SOUGHT AND THAT IS JUST IN ORDER TO ESTABLISH THE IDENTITY OF THE DONO R TO THE DEPTT. JUST BECAUSE SOME ENTITIES HAVE FILED THEIR RETURN OF IN COME SHOWING VERY NOMINAL INCOME DOESNT MAKE THE DONATIONS UNEXPLAIN ED OR SUSPECT. REFLECTING NOMINAL INCOME IN THE RETURN OF INCOME M AY BE BECAUSE OF THE VARIOUS PROVISIONS OF THE INCOME TAX ACT, 1961 ALLO WING EXEMPTIONS AND DEDUCTIONS OF VARYING SORTS INCLUDING, OF COURSE, T HE CASE WHERE ONE CHARITABLE SOCIETY GIVES DONATION TO ANOTHER SOCIET Y. SUCH DONOR SOCIETY MAY HAVE NOMINAL OR NIL INCOME. THUS, JUST BECAUSE NOMINAL INCOME HAS BEEN REFLECTED DOESNT MAKE THE ASSESSEE OR ITS DON ATION SUSPECT AND THEREFORE, CANCELLATION OF REGISTRATION CANNOT BE P ROCEEDED THROUGH ON SUCH GROUND. EVEN OTHERWISE THIS IS AN ISSUE TO BE CONSIDERED IN ASSESSMENT QUA VIOLATION OF SECTION 11 OR 13 AND IS NOT AN ISSUE RELEVANT FOR CANCELLATION OF REGISTRATION. IT HAS ALSO BEEN OBSERVED THAT POST SEARCH ENQUIRIE S ESTABLISHED THAT THE ACTIVITIES OF THE TRUST ARE AGAINST THE BYE LAWS AN D OBJECTS OF THE CHARITABLE AND RELIGIOUS PURPOSES. BUT, NO SPECIFIC MENTION HAS BEEN MADE REGARDING THE ACTIVITY(S) WHICH WERE AGAINST T HE BYE LAWS AND OBJECTS OF THE CHARITABLE AND RELIGIOUS PURPOSES. T HE SHOW CAUSE NOTICE OR THE ORDER DOES NOT INFORM THE SPECIFIC ACTIVITY WHICH WAS SO FOUND, BEING AGAINST THE BYE LAWS AND OBJECTS OF THE SOCIE TY. IT IS VEHEMENTLY SUBMITTED THAT THERE IS NO EVIDENCE THAT THE ACTIVI TIES OF THE ASSESSEE SOCIETY ARE NOT GENUINE OR THAT THEY ARE NOT IN ACC ORDANCE WITH THE OBJECTS AND BYE LAWS OF THE SOCIETY. FURTHER, JUST QUOTING THAT THE ACTIVITIES OF THE ASSESSEE ARE AGAINST THE BYE LAWS AND OBJECTS WOULDNT SERVE THE PURPOSE OF JUSTICE. CANCELLATION OF REGIS TRATION CANNOT BE DONE ON SUCH FLIMSY AND NON-EXISTENT GROUNDS. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 17 IT CAN BE SEEN FROM THE NOTICE/ORDER THAT THE ISSUE RAISED TO CLAIM THAT THE ASSESSEE DESERVED CANCELLATION IS JUST NOTHING BUT SUSPICION. TWICE IN THE NOTICE IT HAS BEEN BROUGHT OUT THAT THE DONATIO NS ARE SUSPECT. THUS, THERE IS ONLY SUSPICION. THERE IS NO ESTABLISHMENT OF THE FACT. IT IS RESPECTFULLY SUBMITTED THAT CANCELLATION OF REGISTR ATION U/S 12AA(3) R.W.S. 13 OF THE INCOME TAX ACT, 1961 IS NOT POSSIBLE ON S USPICION. THERE IS NO SATISFACTION THAT THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT S OF THE INSTITUTION. IN THE ORDER IT IS OBSERVED THAT CERTAIN POST SEARC H ENQUIRES WERE MADE WHICH REVEALED THAT THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION OF DONATIONS RECEIVED OR WHICH ESTABLISHED THAT THE AC TIVITIES OF THE ASSESSEE ARE AGAINST THE BYE LAWS AND OBJECTS OF THE CHARITA BLE AND RELIGIOUS PURPOSES. BUT, NO MATERIAL REGARDING THE SAID POST SEARCH ENQUIRIES WHICH HAS BEEN USED AGAINST THE APPELLANT HAVE BEEN MADE AVAILABLE TO THE APPELLANT. IN FACT THERE IS NO SUCH MATERIAL WI TH THE DEPARTMENT. IN ANY CASE, COPIES OF THE CONFIRMATIONS AND OTHER DOCUMENTS RELATED TO THE DONATIONS WERE FILED WITH THE CIT. THESE SHOW B EYOND DOUBT THAT THE DONATIONS ARE GENUINE, EXPLAINED AND NOT SUSPECT. 11. THE SEIZED DOCUMENTS CONTAINED IN LPS 10 FULLY ESTABLISH THE FACT THAT DONATIONS ARE GENUINE IN VIEW OF THE PROVISIO NS OF SECTION 292C OF THE INCOME TAX ACT, 1961. IT IS REITERATED THAT IN THE REGULAR ASSESSMENT PROCEEDINGS CONDUCTED MUCH PRIOR TO SEARCH, ABOVE D OCUMENTS WERE FURNISHED AND RECEIPTS OF DONATION WERE EXAMINED AN D GENUINENESS WAS ACCEPTED AND THE ASSESSMENTS WERE COMPLETED. IT IS SUBMITTED THAT SECTION 13 IS FOR ASSESSMENT AND NOT FOR REGISTRATI ON. THERE IS NO CONCRETE MATERIAL / EVIDENCE WHICH MAY PROVE THAT ACTIVITIES ARE NOT GENUINE OR THE ACTIVITIES ARE NOT CARRYING ON IN ACCORDANCE WI TH THE OBJECTS OF THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 18 SOCIETY. THE CANCELLATION IS BASED ON SUSPICION AND SUSPICION ALONE, WHICH IS NEITHER LAWFUL NOR JUSTIFIED. THE ASSESSEE FURTHER SUBMITS THAT APPLICATION OF SE CTION 13 IS FOR THE ASSESSMENT OF INCOME WHILE GRANTING THE EXEMPTION O F DEDUCTION U/S. 11 & 12 OF THE ACT AND IT IS NOT FOR THE PURPOSE OF TH E CANCELLATION OF REGISTRATION U/S.12AA(3) OF THE ACT. IN SUPPORT OF IT RELIANCE IS PLACED ON FOLLOWING DECISIONS:- (I) HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ISLAMIC ACADEMIC OF EDUCATION REPORTED IN 229 TAXMAN 274 ( KARN). (II) HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RED RO SE SCHOOL REPORTED IN (2007) 163 TAXMAN 19 (ALL) (III) KRUPANIDHI EDUCATIONAL TRUST VS. DIT (E) 152 TTJ 673. (IV) PRABODHAN PRASARAK SHIKSHAN SANTHAN VS. DCIT 152 ITD 473 (PUNE) (V) RAJASTHAN VIKAS SANSTHAN VS. CIT REPORTED IN 78 DTR 411 (RAJ) SUBMISSIONS TO CONTRADICT THE ALLEGATION THAT THE D ONATION OF RS. 81590000 IS UNEXPLAINED CORPUS DONATION U/S. 68 : 12.1. THE ADDITION OF RS. 81590000 IS WITH RESPEC T TO THE DONATION RECEIVED BY THE ASSESSEE FROM THE DONOR M/S. RIVIER A INFOWAY LTD (PAN: AACCR2329G). THE ASSESSEE FILED THE COPY OF LEDGER ACCOUNT OF THE AFORESAID PERSON IN ITS BOOKS OF ACCOUNTS. FROM THE PERUSAL OF THE LEDGER ACCOUNT, IT WOULD BE SEEN THAT IN F.Y. 2010-11 (RE LEVANT A.Y. 2011-12), THE ASSESSEE HAD RECEIVED RS. 72890000 (ALL THROUGH BANKING CHANNELS) FROM THE SAID PERSON AND THIS RECEIPT OF MONEY IN T HAT YEAR IN THE BALANCE SHEET AS AT 31.03.2011 WAS SHOWN AS UNSECUR ED LOAN. IN F.Y. 2011-12 (RELEVANT A.Y. 2012-13), THE ASSESSEE FURTH ER RECEIVED RS. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 19 8700000 (ALL THROUGH BANKING CHANNELS) FROM THE SAI D DONOR. THUS, THE TOTAL AMOUNT RECEIVED FROM THE SAID PERSON WAS RS. 81590000. THE ASSESSEE SUBMITS THAT THEREAFTER, ON THE STRENGTH O F RESOLUTIONS OF THE BOARD AND OF EXTRA ORDINARY GENERAL MEETINGS OF MEM BERS OF THE SAID COMPANY, THE RECEIPT OF MONEY RS. 81590000 WAS TAKE N AS CORPUS DONATION (COPY OF RESOLUTIONS WERE DULY FILED). THE JOURNAL ENTRY ACCORDINGLY WAS PASSED IN THE BOOKS OF ACCOUNT ON 2 9.08.2011 AND THEN THE ASSESSEE HAD ISSUED A RECEIPT TO THE SAID COMPA NY FOR RECEIVING DONATIONS. THE COPY OF RECEIPT WAS ALSO DULY FILED. 12.2. IT IS SUBMITTED THAT THE ASSESSMENT FOR A. Y. 2011-12 WAS COMPLETED AS SCRUTINY ASSESSMENT U/S 143(3) ON 18.0 3.2014 IN THE NORMAL COURSE. IT IS SUBMITTED FURTHER THAT IN THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, ON SPECIFIC QUERY FROM THE A.O., THE CONFIRMATION OF ALL LOAN CREDITORS ALONG WITH ALL R ELATED DOCUMENTS WERE FURNISHED WHICH, INTER ALIA, INCLUDED THE CONFIRMAT ION LETTER OF THE SAID COMPANY GIVING AN AMOUNT OF RS. 72890000. THE COPY OF THE BANK ACCOUNT OF THE COMPANY ALONG WITH THE ACKNOWLEDGMEN T OF RETURN FOR A.Y. 2009-10 WAS ALSO FURNISHED IN THE SAID REGULAR ASSESSMENT PROCEEDINGS. IN THE SAID REGULAR ASSESSMENT, THE GE NUINENESS OF THE RECEIPT OF MONEY OF RS. 72890000 WAS ACCEPTED AND A CCORDINGLY THE ASSESSMENT ORDER WAS PASSED MUCH PRIOR TO THE SEAR CH. THE ASSESSEE SUBMITS THAT ALL THE ABOVE DOCUMENTS EXIST ON THE A SSESSMENT RECORD OF THE ASSESSEE OF A.Y. 2011-12. 12.3. IT IS SUBMITTED THAT THE ASSESSMENT FOR AY 2012-13 WAS ALSO COMPLETED AS SCRUTINY ASSESSMENT U/S 143(3) ON 24.0 3.2014 IN THE NORMAL COURSE. IT IS SUBMITTED FURTHER THAT IN THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS, ON SPECIFIC QUERY FROM THE A.O., THE ASSESSEE HAD FURNISHED CONFIRMATION LETTER OF THE DONOR COMP ANY CONFIRMING THE DONATION OF RS. 81590000 ALONG WITH THE ACKD. OF RE TURN FOR AY 2012-13. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 20 IN THE SAID REGULAR ASSESSMENT, THE GENUINENESS OF THE RECEIPT OF MONEY FROM THE AFORESAID COMPANY AND THE GENUINENESS OF T RANSACTION OF DONATION WAS ACCEPTED AND, ACCORDINGLY, THE SCRUTIN Y ASSESSMENT ORDER WAS PASSED MUCH PRIOR TO THE SEARCH. THE ASSESSEE S UBMITS THAT ALL THE ABOVE DOCUMENTS EXIST ON THE ASSESSMENT RECORD OF T HE ASSESSEE OF AY 12-13. 12.4. LATER, A SEARCH TOOK PLACE AT THE ASSESSEE S PREMISES ON 04.11.2016. IN THE COURSE OF SEARCH, THE DOCUMENTS WHICH RELATED TO DONATION WERE FOUND AND SEIZED. THE SAID SEIZED DOC UMENTS ARE (I) RECEIPT ISSUED BY CHIRAYU CHARITABLE FOUNDATION TO M/S. RIVIERA INFOWAY PVT LTD (HEREINAFTER REFERRED TO AS DONOR COMPANY ) WITH RESPECT TO THE DONATION OF RS. 81590000 (II) THE COPY OF AUDITED F INAL ACCOUNTS & AUDIT REPORT FOR A.Y. 2012-13 OF THE DONOR COMPANY (III) COPY OF ACKNOWLEDGEMENT OF RETURN OF DONOR COMPANY FOR A.Y. 2013-14 (IV) THE COPY OF AUDITED FINAL ACCOUNTS & AUDIT REPORT FOR A .Y. 2013-14 OF THE DONOR COMPANY (V) COPY OF RESOLUTIONS PASSED BY TH E BOARD OF THE DONOR COMPANY AND ALSO THE COPY OF RESOLUTIONS PASSED BY THE MEMBERS OF THE DONOR COMPANY IN EXTRA ORDINARY GENERAL MEETING AND ALSO THE COPY OF NOTICE OF EXTRA ORDINARY GENERAL MEETING ALONG WITH EXPLANATORY STATEMENT AS PER THE PROVISIONS OF THE COMPANIES AC T. IT IS SUBMITTED THAT ALL THE DOCUMENTS AS REFERRED TO IN THIS PARA, ARE NOT INCRIMINATING MATERIALS BUT ARE IN FACT DOCUMENTS ESTABLISHING TH E GENUINENESS OF THE AFORESAID DONATION. 12.5. THE ASSESSEE SUBMITS THAT THEREAFTER, PURSU ANT TO THE PROVISIONS OF SECTION 153A, THE ASSESSMENT PROCEEDINGS WERE CO NDUCTED FOR A.Y. 2012-13 AND IN THE COURSE OF ASSESSMENT PROCEEDINGS , ALL THE ABOVE DOCUMENTS REFERRED IN PARA 4 ABOVE, AND ALSO ALL OT HER DOCUMENTS REFERRED TO IN PARA 2 & 3 ABOVE WERE AGAIN FURNISHE D BEFORE THE LEARNED A.O. THE ASSESSEE HAD ALSO FURNISHED A DETAILED REP LY IN SUPPORT OF THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 21 GENUINENESS OF THE DONATION VIDE LETTER DATED 26.11 .2018. IN THE SAID LETTER, THE ASSESSEE SUBMITTED BEFORE THE LEARNED A .O. THAT ALL THE DONATIONS OF THE ASSESSEE REFLECTED IN THE ACCOUNTS ARE GENUINE DONATION AND THE ASSESSEE HAS SUBMITTED EVERY POSSIBLE EVIDE NCE IN THIS REGARD AND FURTHER SUBMITTED IN PARA-2 OF THE SAID LETTER THAT IN CASE, SHE (A.O.) DOUBTS THE GENUINENESS OF THE TRANSACTIONS AND THE DOCUMENTS FURNISHED, THEN THE ASSESSEE MADE A SPECIFIC REQUES T TO KINDLY GET THE VERIFICATION DONE BY ISSUE OF SUMMONS U/S. 131/133( 6) OF THE ACT TO THE CONCERNED DONOR PERSON. THE REQUEST WAS AGAIN REPEA TED VIDE LETTER DATED 28.12.2018. HOWEVER, WITHOUT COMMUNICATING T HE OUTCOME OF THE ENQUIRY, THE AO MADE THE ADDITION OF THE DONATION OF RS. 81590000. IN THE ASSESSMENT ORDER, IN PARA 11.5(A), THE A.O. MEN TIONS THAT DURING THE COURSE OF POST SEARCH ENQUIRY, DETAILED INVESTIGATI ON WAS DONE BY INVESTIGATION WING. THE ASSESSEE SUBMITS THAT THE A SSESSEE HAS NO KNOWLEDGE AS TO WHAT WAS THE OUTCOME OF SUCH DETAIL ED INVESTIGATION. THE A.O. HAS ALSO NOT SUPPLIED THE COPY OF MATERIAL , WHICH WERE ADVERSE TO THE ASSESSEE AND USED IN THE ASSESSMENT AGAINST THE ASSESSEE. THE SAID MATERIAL HAS NEVER BEEN CONFRONTED. FROM THE R EADING OF THE PARA 11.5(A), IT PRIMA FACIE APPEARS THAT THERE WAS NOTH ING AGAINST THE ASSESSEE BECAUSE THE A.O. SIMPLY SAYS WITH RESPECT TO AMOUNT OF RS. 81590000 THAT THE DONOR COMPANY HAS FILED THE RETUR N SHOWING THE GROSS TOTAL INCOME OF RS. 2022 AND THIS IS THE SOLE REASO N FOR NOT ACCEPTING THE DONATION. THE GENUINENESS OF NONE OF THE DOCUMENTS AS FURNISHED IN THE COURSE OF POST SEARCH ASSESSMENT PROCEEDINGS AND PR E-SEARCH ASSESSMENT PROCEEDINGS HAS BEEN DOUBTED BY THE A.O. IN THE SEARCH ALSO, NO INCRIMINATING MATERIAL WAS FOUND WHICH SHO WED THAT IT IS THE ASSESSEES INCOME WHICH CAME TO THE ASSESSEE UNDER THE GARB OF DONATION AND, THEREFORE, THE ADDITION OF RS. 815900 00 IS WHOLLY UNLAWFUL AND UNJUSTIFIED AND WARRANTS DELETION. THE ASSESSE E SUBMITS THAT THE INCOME IS NOT THE SOLE CRITERIA FOR DOUBTING THE GE NUINENESS. THE BALANCE SHEET ITSELF SHOWS THE INFLOW & OUTFLOW OF THE FUND S AND THE PROFIT OF THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 22 COMPANY IS NOT THE SOLE FACTOR FOR ASSESSING THE AV AILABILITY OF LIQUID FUNDS. THE DONOR COMPANY WAS ALSO ASSESSED TO TAX. THE PAN WAS GIVEN AND ALSO THE ACKNOWLEDGEMENT OF FILING OF THE RETUR N. THUS, THE ASSESSEE HAS COMPLETELY DISCHARGED ITS BURDEN IN EXPLAINING ITS TRANSACTIONS WITH THE DONOR COMPANY. IT IS VERY RELEVANT AND IMPORTAN T TO MENTION HEREIN THAT IN THE REGULAR SCRUTINY ASSESSMENT OF THE ASSE SSEE COMPLETED MUCH BEFORE THE SEARCH FOR A.Y. 2011-12 & 2012-13, ALL T HE TRANSACTIONS WERE ACCEPTED AS GENUINE AND IN THE SEARCH, NOTHING WAS FOUND TO DISPROVE THEIR GENUINENESS. 12.6. THE ASSESSEE SUBMITS THAT THE FURTHER FINDI NGS OF THE CIT ARE WHOLLY WRONG AND FALSE. THE ASSESSEE SUBMITS THAT A LL THE SAID FINDINGS ARE WHOLLY FALSE, INCORRECT, BASELESS AND WITHOUT A NY CONCRETE MATERIALS/POSITIVE EVIDENCE. NO SUCH EVIDENCE LEGAL LY ADMISSIBLE IN LAW HAS BEEN REFERRED TO IN THE ORDER. THE BOOKS OF ACC OUNTS SHOWS THE DONATION RECEIPTS HAVE BEEN DULY RECORDED IN THE BO OKS AND USED WHOLLY AND SOLELY FOR THE PURPOSES OF THE INSTITUTION. ALL THE FINDINGS OF THE CIT ARE BASED ON SUSPICION AND SUSPICION ALONE AND WITH OUT ANY COGENT MATERIAL TO SUPPORT HIS FINDINGS, HENCE THE FALSE A ND BASELESS FINDINGS BE QUASHED. THE APEX COURT IN THE CASE OF STATE OF KE RALA VS. M.M. MATHEW REPORTED IN (1978) 42 STC 348 (SC) HELD STRONG SUS PICION, STRANGE COINCIDENCE AND GRAVE DOUBTS CANNOT TAKE THE PLACE OF LEGAL PROOF. THIS DECISION HAS BEEN REFERRED TO AND RELIED UPON BY TH E JURISDICTIONAL APPELLATE TRIBUNAL, INDORE IN THE CASE OF ASHA DEVI GOYAL & OTHERS VS. ACIT REPORTED IN 32 ITC 386/394 (IND). 13. SUBMISSIONS TO CONTRADICT THE ALLEGATION OF RS. 41000000 BEING UNEXPLAINED DONATION : 13.1. THE FOLLOWING AMOUNTS OF DONATION HAVE BEEN TREATED AS UNEXPLAINED AND ADDED AS INCOME U/S. 68:- CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 23 A.Y. DONATION RECEIVED FROM AMOUNT 2014 - 15 THAKUR EDUCATIONAL TRUST (AACTT4004F) THAKUR HOUSE, ASHOK NAGAR, KANDIVILI (E), MUMBAI 400101 10000000 2014 - 15 THAKUR EDUCATIONAL TRUST (AACTT4004F) THAKUR HOUSE, ASHOK NAGAR, KANDIVILI (E), MUMBAI 400101 6000000 2014 - 15 ZAGDU SINGH CHARITABLE TRUST (AAATZ0141P) THAKUR HOUSE, ASHOK NAGAR, KANDIVILI (E), MUMBAI 400101 10000000 2014 - 15 ZAGDU SINGH CHARITABLE TRUST (AAATZ0141P) THAKUR HOUSE, ASHOK NAGAR, KANDIVILI (E), MUMBAI 400101 10000000 2014 - 15 UDODAS MUNDHRA SEVA SANTHAN (AAATU0983C) 5000000 TOTAL 41000000 13.2. IN THE COURSE OF ASSESSMENT PROCEEDINGS IN SU PPORT OF THE GENUINENESS OF THE TRANSACTIONS, FOLLOWING DOCUMENT S WERE FURNISHED (A) WITH RESPECT TO DONATION FROM THAKUR EDUCATIONAL T RUST (AACTT4004F) RS. 10000000 + RS. 6000000 CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 24 CONFIRMATION LETTER (SEIZED DOCUMENT) CERTIFIED COPY OF RESOLUTION OF THE DONOR GIVING DO NATION (SEIZED DOCUMENT) APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DONA TION. (SEIZED DOCUMENT) COPY OF THE NOTICE U/S.133(6) DATED 18.07.2016 ISSU ED BY ASSESSING OFFICER (DY. COMMISSIONER OF INCOME TAX (EXEMPTION) -2(1), MUMBAI) OF THAKUR EDUCATIONAL TRUST FOR CONFIRMATION OF DONAT ION GIVEN TO THE ASSESSEE. THIS LETTER WAS ISSUED BY THE A.O. OF THE THAKUR EDUCATIONAL TRUST IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS PENDING FOR A.Y. 2014-15 OF THE SAID TRUST. COPY OF REPLY OF THE ASSESSEE IN COMPLIANCE TO NOTI CE U/S. 133(6) TO DCIT (EXEMPTION)-2 (1), MUMBAI. (B) WITH RESPECT TO DONATION FROM ZAGDU SINGH CHARI TABLE TRUST (AAATZ0141P) RS.10000000 + RS.1000000 CONFIRMATION LETTER (SEIZED DOCUMENT) APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DON ATION. (SEIZED DOCUMENT) COPY OF THE NOTICE U/S. 133(6) DATED 18.07.2016 ISS UED BY ASSESSING OFFICER (DY. COMMISSIONER OF INCOME TAX (EXEMPTION) -2(1), MUMBAI) OF ZAGDU SINGH CHARITABLE TRUST FOR CONFIRMATION OF DO NATION GIVEN TO THE ASSESSEE. THIS LETTER WAS ISSUED BY THE A.O. OF THE ZAGDU SINGH CHARITABLE TRUST IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS PENDING FOR A.Y. 2014-15 OF THE SAID TRUST. COPY OF REPLY OF THE ASSESSEE IN COMPLIANCE TO NOT ICE U/S. 133(6) TO DCIT (EXEMPTION)-2 (1), MUMBAI. (C) WITH RESPECT TO DONATION FROM UDHODAS MUNDHRA SEVA SANTHAN (AAATU0983C) RS. 5000000 CONFIRMATION LETTER (SEIZED DOCUMENT) CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 25 APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DONA TION. (SEIZED DOCUMENT) 13.3. IT IS SUBMITTED THAT WITH RESPECT TO DONAT ION RECEIVED OF RS. 16000000 FROM THAKUR EDUCATIONAL TRUST, THE CIT/AO DOUBTED THE GENUINENESS OF DONATION ON THE GROUND THAT THE SAID TRUST HAS SHOWN INCOME OF RS. 300 ONLY. IN THE CASE OF ZAGDU SINGH CHARITABLE TRUST, THE DONATION OF RS. 20000000 HAS BEEN DOUBTED ON THE SA ME REASON THAT THE SAID TRUST HAS SHOWN NIL INCOME. ASSESSEE SUBMITS T HAT THESE TWO INSTITUTIONS ARE ASSESSED TO INCOME TAX AT MUMBAI. THE ASSESSING OFFICER OF THE SAID TWO INSTITUTIONS OF MUMBAI ISSUED NOTIC E TO THE ASSESSEE TO CONFIRM THAT THE ASSESSEE HAS RECEIVED DONATION FRO M THEM. THE NOTICES ISSUED U/S 133(6) BY THE AO OF THE INSTITUTIONS VER Y MUCH SHOW THAT THE PAYMENT OF DONATION WAS MADE FROM THE EXPLAINED RES OURCES BY THE SAID INSTITUTIONS. IT IS SUBMITTED THAT THE PROFIT / INC OME IS NOT THE SOLE CONSIDERATION BECAUSE THE AVAILABILITY OF FUNDS CAN BE FROM OTHER SOURCES ALSO I.E. REALIZATION OF DEBTS ETC. IT IS SUBMITTED THAT IN ALL FAIRNESS OF THE MATTER, THE ASSESSING OFFICER COULD HAVE MADE THE E NQUIRY FROM THE ASSESSING OFFICER OF THE DONOR INSTITUTIONS AT MUMB AI WHO ISSUED THE NOTICES U/S 133(6) FOR THE PURPOSE OF ASSESSMENT OF AY 2014-15 OF THE SAID TWO INSTITUTIONS. IN THE COURSE OF ASSESSMENTS THE ASSESSEE ALSO REQUESTED REPEATEDLY VIDE LETTERS DT. 26.11.2018 AN D 28.12.2018 TO ISSUE SUMMONS TO THE SAID TWO INSTITUTIONS U/S 131 / 133( 6) OF THE ACT, BUT, WITHOUT THE KNOWLEDGE OF THE ASSESSEE, IT APPEARS F ROM PAGE NO. 12 OF THE ORDER, SHE HAD ISSUED A NOTICE U/S 133(6) TO THE DO NOR. SHE HAS NOT MENTIONED IN THE ASSESSMENT ORDER WHAT WAS THE STAT EMENT / REPLY OF THE DONOR INSTITUTIONS RECEIVED BY HER FROM THE DONORS AND NO SUCH MATERIAL HAS BEEN CONFRONTED TO THE ASSESSEE. FROM THE READI NG OF THE ORDER IT IS APPARENT THAT THE DONORS HAVE CONFIRMED GIVING THE DONATION TO THE ASSESSEE, THUS, THERE IS NO DENIAL FROM THE DONORS REGARDING GIVING THE DONATION. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 26 13.4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE SUBMITTED THE PROFILE OF THE THAKUR EDUCATIONAL TRUST AND ZAG DU SINGH CHARITABLE TRUST. THIS PROFILE IS AVAILABLE ON THE WEB SITE OF THE THAKUR GROUP OF INSTITUTIONS. IT IS SUBMITTED THAT THIS GROUP IS RU NNING 16 EDUCATIONAL INSTITUTIONS AT KANDIVALI, WESTERN SUBURB OF MUMBAI WHEREIN OVER 40000 STUDENTS ARE STUDYING, WHICH ITSELF PROVES THE WORT H OF THE DONOR INSTITUTIONS. THE COPY OF INSTITUTIONS PROFILE AS AVAILABLE ON THE WEB SITE WAS ALSO FILED. THE ASSESSEE SUBMITS THAT THE RETUR NED INCOME WHICH HAS BEEN SEEN BY THE LEARNED CIT/AO IS ONLY AFTER EXEMP TIONS AVAILABLE U/S 11 / 12 OF THE ACT. IT MAY BE APPRECIATED THAT THE ASSESSEE HAD ALSO SUBMITTED THE NOTICES ISSUED BY THE ASSESSING OFFIC ER OF THE SAID TWO INSTITUTIONS. THESE NOTICES FULLY ESTABLISH THE FAC T THAT THE INSTITUTIONS ARE GENUINE INSTITUTIONS AND ARE REGULARLY ASSESSED TO TAX. 13.5. THE ASSESSEE SUBMITS THAT THE FURTHER FINDI NGS OF THE CIT ARE WHOLLY WRONG AND FALSE AND WITHOUT ANY CONCRETE MAT ERIALS/POSITIVE EVIDENCE. NO SUCH EVIDENCE LEGALLY ADMISSIBLE IN LA W HAS BEEN REFERRED TO IN THE ORDER. THE BOOKS OF ACCOUNTS SHOWS THE DONAT ION RECEIPTS HAVE BEEN DULY RECORDED IN THE BOOKS AND USED WHOLLY AND SOLELY FOR THE PURPOSES OF THE INSTITUTION. ALL THE FINDINGS OF T HE CIT ARE BASED ON SUSPICION AND SUSPICION ALONE AND WITHOUT ANY COGEN T MATERIAL TO SUPPORT HIS FINDINGS, HENCE THE FALSE AND BASELESS FINDINGS BE QUASHED. THE APEX COURT IN THE CASE OF STATE OF KERALA VS. M .M. MATHEW REPORTED IN (1978) 42 STC 348 (SC) HELD STRONG SUSPICION, S TRANGE COINCIDENCE AND GRAVE DOUBTS CANNOT TAKE THE PLACE OF LEGAL PRO OF. THIS DECISION HAS BEEN REFERRED TO AND RELIED UPON BY THE JURISDICTIO NAL APPELLATE TRIBUNAL, INDORE IN THE CASE OF ASHA DEVI GOYAL & OTHERS VS. ACIT REPORTED IN 32 ITC 386/394 (IND). 13.6. IN CONNECTION WITH THE DONATION OF RS. 500 0000 RECEIVED FROM UDHODAS MUNDRA SEVA SANSTHAN, IT IS SUBMITTED THAT THE ASSESSEE HAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 27 ALREADY SUBMITTED A CONFIRMATION LETTER FROM THE SA ID DONOR CONFIRMING THE SAID DONATION AND IN THE SAID CONFIRMATION LETT ER THE DONOR HAS GIVEN HIS PERMANENT ACCOUNT NO. THIS CONFIRMATION LETTER FORMS PART OF THE SEIZED MATERIAL ALONG WITH THE APPEAL OF THE ASSESS EE TO THE SAID DONOR TO MAKE GENEROUS DONATION. IT IS ALSO APPARENT FROM TH E ASSESSMENT ORDER THAT NOTICES U/S 133(6) OF THE ACT WERE ISSUED TO A LL THE DONORS MENTIONED IN THE SHOW CAUSE NOTICE INCLUDING UDHODA S MUNDRA SEVA SANSTHAN. FROM THE READING OF THE ASSESSMENT ORDER IT IS APPARENT THAT ALL THE DONORS HAVE CONFIRMED GIVING THE DONATION T O THE ASSESSEE. THUS, THERE IS NO STATEMENT OF ANY DONOR STATING THAT THE Y HAVE NOT GIVEN THE DONATION INCLUDING UDHODAS MUNDRA SEVA SANSTHAN. TH E LEARNED AO HAS ALSO NOTED THAT THE THIRD PARTY ENQUIRY CONDUCT ED BY ADIT (INV.)-2(4), KOLKATA REVEALED THAT THE REGISTERED OFFICE OF THE SAID DONOR WAS A COMMON ADDRESS OF MANY COMPANIES / FIRMS WHICH IS I DENTICAL TO TYPICAL JAMA-KHARCHI ENTITY. IN THIS RESPECT IT IS SUBMITTE D, FIRSTLY, THAT THE ENQUIRY WAS CONDUCTED AT THE BRANCH OFFICE OF THE S AID DONOR AT KOLKATA AND NOT AT THE HEAD OFFICE AT NEW DELHI. NO MATERIA L HAS BEEN BROUGHT ON RECORD TO JUSTIFY WHY ENQUIRY WAS NOT MADE AT HEAD OFFICE. SECONDLY, SIMPLY OBSERVING THAT THE BRANCH OFFICE OF THE DONO R IS TYPICAL OF JAMA- KHARCHI ENTITY WITHOUT HAVING ANY COGENT EVIDENCE I S SUSPICION AND PRESUMPTION ONLY WHICH CANNOT BE A PART OF JUDICIAL ANALYSIS. IN BIG CITIES LIKE DELHI, MUMBAI ETC., COMMON ADDRESSES IS NORMAL PHENOMENON. IN THOSE CITIES, EVEN A TABLE IS SHARED BY MORE THAN O NE PERSON. THUS, THIS COULD NOT BE A GROUND FOR RAISING A SUSPICION. IT I S FURTHER SUBMITTED THAT IN THE COURSE OF ASSESSMENT, THE INSPECTORS REPORT WAS NEITHER SHOWN NOR CONFRONTED, AND, THEREFORE, THE ORDER IS NULLIT Y. THE APEX COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE CIVIL APPEAL NO. 4228 OF 2006 [2015] 127 DTR (SC) 2 41, HELD THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WIT NESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERI OUS FLAW WHICH CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 28 MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. 13.7. THE FINDINGS IN THE ORDER U/S 12A ARE NOT J USTIFIED BECAUSE THE ASSESSEE HAS PLACED EVERY POSSIBLE EVIDENCE BEFORE THE LEARNED CIT AND THE A.O. IN SUPPORT OF ITS CONTENTION THAT THE RECE IPT OF CORPUS DONATION IS GENUINE. THE DOCUMENTS FOUND IN THE SEARCH, AS M ENTIONED IN THE FOREGOING PARAGRAPHS IN RESPECT OF THE DONATION OF RS. 81590000 (IN AY 2012-13) AND RS. 41000000 (IN AY 2014-15) ALSO SUPP ORT THE GENUINENESS AND CORRECTNESS OF THE ASSESSEES SUBMI SSION IN VIEW OF SECTION 292C OF THE ACT WHICH SECTION READS AS UNDE R: 292C. PRESUMPTION AS TO ASSETS, BOOKS OF ACCOUNT, E TC.WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE PO SSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132, IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED (I ) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELON G OR BELONGS TO SUCH PERSON; (II ) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT A ND OTHER DOCUMENTS ARE TRUE; AND (III ) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HAND WRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUME D TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PART ICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A DOC UMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 29 BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO E XECUTED OR ATTESTED.'. 13.8. THE ASSESSEE SUBMITS THAT WITH REGARD TO THE DOCUMENTS FURNISHED IN RESPECT OF THE GENUINENESS OF DONATION OF RS. 81 590000 (IN A.Y. 2012- 13) & RS. 41000000 (IN A.Y. 2014-15), IT HAS DISCHA RGED ITS BURDEN U/S. 68 OF THE ACT AND IN VIEW OF THE FOLLOWING DECISION S, THE AFORESAID ALLEGATIONS THAT DONATIONS ARE NOT GENUINE ARE NEIT HER JUSTIFIED NOR LAWFUL AND, THEREFORE, BE DELETED. IN SUPPORT OF THIS RELIANCE WAS PLACED ON THE FOLLO WING DECISIONS; 1. HON'BLE MADHYA PRADESH HIGH COURT IN THE CAS E OF ASHOK PAL DAGA(HUF) V/S. CIT REPORTED IN 220-ITR-452(MP). 2. HON'BLE M.P. HIGH COURT IN THIS CASE HAS RELIE D ON DECISION OF BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING C O. LTD. V/S. CIT REPORTED IN 49-ITR-723. 3. HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT V/S. METACHEM INDUSTRIES REPORTED IN 245-ITR-160 (MP). 4. HON'BLE SUPREME COURT IN THE CASE OF SREELEK HA BANERJEE & OTHERS V/S. CIT REPORTED IN 49-ITR-112 (SC). 5. HON'BLE SUPREME COURT IN THE CASE OF CIT V/ S. ORISSA CORPORATION PVT. LTD. REPORTED IN 159-ITR-78(SC). 6. THE GUAHATI HIGH COURT IN THE CASE OF RAICHAN D KOTHARI (HUF) V/S. CIT REPORTED IN 223-ITR-250 7. HON'BLE PATNA HIGH COURT IN THE CASE OF ADDL . CIT V/S. HANUMAN AGARWAL REPORTED IN 151-ITR-150/151 8. HON'BLE PATNA HIGH COURT IN THE CASE OF SARAO GI CREDIT CORPORATION V/S. CIT REPORTED IN 103-ITR-344 9. HON'BLE ITAT COCHIN BENCH IN THE CASE OF G.G. FILMS V/S. ITO REPORTED IN 45-TTJ-644. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 30 10. HON'BLE ITAT DELHI BENCH IN THE CASE OF KAMA L ENGINEERING WORKS V/S. ITO REPORTED IN 52-TTJ (DEL) 75. 11. HON'BLE ITAT RAJKOT BENCH IN THE CASE OF ACIT V/S. RADHEY SHYAM BANSAL REPORTED IN (2000) 68 TTJ (RAJKOT) 136 12. HON'BLE ITAT AHMEDABAD BENCH IN THE CASE OF ITO V/S. MEGHJIBHAI VIRJIBHAI PATEL REPORTED IN 11-TTJ-367 13. HON'BLE ITAT INDORE BENCH IN THE CASE OF ITO V/S. PRADEEP KUMAR BADJATYA & CO. REPORTED IN 25-ITC-147 11. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARG UED REFERRING TO THE FOLLOWING FINDING OF LD. PCIT MENTIONED IN T HE IMPUGNED ORDER:- 5. ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE VIDE THIS OFFICE LETTER F.NO.PCIT(CENTRAL)/BPLL12A/2018-19/4303 DATED 06112/2018 AND THE AFORESAID FACTS WERE CONFRONTED TO THE ASSESSEE . IN RESPONSE, THE ASSESSEE FILED ITS WRITTEN SUBMISSIONS WHICH HAVE B EEN PERUSED AND ARE PLACED ON RECORD. THE ASSESSEE MAINLY RELIED ON THE CONFIRMATIONS OF THE DONORS SUBSTANTIATING SUCH DONATIONS AND FILED THE SAME DURING THE PROCEEDINGS U/S 12AA OF THE INCOME TAX ACT, 1961. 6. THE SUBMISSIONS OF THE ASSESSEE ARE DULY CONSIDE RED BUT NOT FOUND ACCEPTABLE. THE CONFIRMATIONS FILED BY THE ASSESSEE ARE NOTHING BUT SELF SERVING. THE DONORS ARE ENTITIES OF NO MEANS AS ALR EADY OBSERVED ABOVE AND ARE MERELY PAPER CONCERNS. 7. IT IS ALSO WORTHWHILE TO MENTION THAT THE ASSESS EE ALSO FILED FINAL REPORT OF CBI, ACIV, BHOPAL BEARING FIR NO. RC2172015A0025 DATED 31.07.2015 ARISING OUT OF CRIME NO.12/2013 OF P.S.STF,BHOPAL WHEREIN CHARGES WERE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 31 FRAMED AGAINST THE CHIRAYU MEDICAL COLLEGE, BHOPAL AT PAGE NO. 78, 79 & 80 WHICH IS REPRODUCED AS UNDER: I. 'DOCUMENTS COLLECTED FROM DME AND THE SAID MEDI CAL COLLEGE AS WELL AS STATEMENTS OF WITNESSES HAS ESTABLISHED THAT T HE MANAGEMENT OF THE SAID MEDICAL COLLEGE DISHONESTY FURNISHED FAL SE INFORMATION TO DME ABOUT ADMISSION OF 12 ACCUSED CANDIDATES ('ENGINES') IN THE SAID MEDICAL COLLEGE WHEREAS THEY HAD ACTUALLY NO T TAKEN ADMISSION. II. INVESTIGATION REVEALED THAT EVEN ON 25.09.2012 WHEN VACANCY CHART WAS PREPARED BY DME COUNSELLING COMMITTEE IN THE PR ESENCE OF REPRESENTATIVES OF EACH MEDICAL COLLEGE, THE SAID M EDICAL COLLEGE ONLY REPORTED 9 VACANT SEATS WHEREAS MORE THAN 50 SEATS WERE VACANT. DURING INVESTIGATION. THE SAID MEDICAL COLLEGE HAS MADE AVAILABLE TO CBI A LETTER DATED 28.09.2012 ADDRESSED TO DME UNDE R THE SIGNATURE OF DEAN OF THE COLLEGE IN WHICH IT IS MENTIONED THAT M AJORITY OF THE STUDENTS WHO WERE ALLOTTED BY DME FOR ADMISSION IN THIS COLLEGE IN THE 1 ST COUNSELLING HAD NOT REPORTED AFTER MAKING ENQUIRIE S FROM THE COLLEGE ABOUT THE FEE, ETC. THIS LETTER IS NOT AVAILABLE IN THE RECORDS OF DME AND THE MEDICAL COLLEGE HAS FAILED TO MAKE AVAILABLE TH E DISPATCH REGISTER FOR THE RELEVANT PERIOD. THE EARLIER LETTER OF THE COLLEGE DATED 21.09.2012 TO THE DME, VIDE WHICH IT HAD REPORTED VACANCY OF O NLY 9 SEATS OUT OF 63, WAS A FALSE DOCUMENTS AND IT WAS SENT TO DME TO ENSURE THAT ELIGIBLE AND DESERVING STUDENTS WERE NOT ALLOTTED T O THE COLLEGE IN 2 ND ROUND OF COUNSELLING. ILL. IT IS REVEALED THAT DESPITE THE (ACT THAT ALLOTTED STUDENTS OF 2 ND ROUND OF COUNSELLING WERE GIVEN 4 DAYS TIME TILL 29 TLL SEPTEMBER TO GET ADMISSION, THE COLLEGE LEVEL ADMIS SION COMMITTEE ON 28 TLL SEPTEMBER ADMITTED 19 NEW STUDENTS WHO WERE NOT FROM THE ALLOTMENT LIST AT ALL. 32 NEW STUDENTS WERE ADMITTE D ON 29 TH SEPTEMBER CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 32 AND 4 STUDENTS ON 30 SEPTEMBER WITHOUT ANY MERIT AN D WITHOUT FOLLOWING ANY CRITERIA. ALL THESE ADMISSIONS WERE MADE WITHOU T FOLLOWING THE DUE PROCESS. IV. INVESTIGATION REVEALED THAT AS IN THE CASE OF INDEX MEDICAL COLLEGE, THE COLLEGE FORWARDED LIST OF ADMITTED STUDENTS TO DME, WHICH WAS VERY MUCH DIFFERENT FROM THE ALLOTMENT LIST OF DME WHICH WAS DISHONESTLY COUNTERSIGNED AND FORWARDED BY NM SRIVASTAVA. THE T HEN JOINT DIRECTOR 0/0 DME TO THE CONCERNED UNIVERSITY TO WHICH THIS PVT. MEDICAL COLLEGE WAS AFFILIATED AND TO MCI AND THEREBY ABETTED REGUL ARIZATION OF THESE ILLEGAL ADMISSION. V INVESTIGATION FURTHER REVEALED THAT AS IN THE CA SE OF INDEX MEDICAL COLLEGE, THIS MEDICAL COLLEGE ALSO DID NOT ADHERE T O THE RULES/REGULATIONS OF RESERVATIONS (SC/ST, ETC.). VI. DURING INVESTIGATION. IT WAS REVEALED THAT MO ST OF THE STUDENTS ALLOTTED TO THE MEDICAL COLLEGE IN THE 1 ST ROUND OF DME COUNSELLING HAD NEVER REPORTED IN THE COLLEGE YET THE COLLEGE AUTHORI TIES WERE DIRECTED BY AJAY GOENKA, THE CHAIRMAN OF THE MEDICAL COLLEGE T O SEND A REPORT TO DME GIVING FALSE INFORMATION THAT ONLY 9 SEATS ARE VACANT IN THE COLLEGE WHEREAS ABOUT 50 SEATS WERE VACANT. THEREAFT ER, VIDE A LETTER DATED 21.09.2012, THE THEN DEAN OF THE MEDICAL COLLEG E SUBMITTED THIS INFORMATION TO THE DME. THE COLLEGE LEVEL ADMISSION CO MMITTEE COMPRISING OF VIRENDRA MOHAN. THE THEN DEAN, RAVI SAX ENA, V.H. BHAVGAR, A.K. JAIN, S.N.SAXENA, VINOD NARKHEDE AND H ARSH SALANKAR, ALL MEMBERS O(THE COLLEGE LEVEL ADMISSION COMM ITTEE HAD MADE THESE ADMISSION WITHOUT ANY DUE PROCESS FROM 2 8.09.2012 TO 30.09.2012. VII. ONE OF THE ACCUSED WHO IS AMONG THE 12 ACCUSED CANDIDATES WHOSE ADMISSION, WAS FALSELY REPORTED BY THE MEDICAL COLL EGE OF DME, HAS STATED CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 33 THAT HE WAS TAKEN BY RACKETEER SANJIV SHILPKAR TOTH E MEDICAL COLLEGE HE WAS MADE TO SIGN ON BLANK PAPER AND WAS GIVEN 1.50 LAKH FOR LEAVING HIS SEAT. HE NEVER TOOK ADMISSION IN THE MEDICAL COLLEG E AS HE WAS AFRAID AN MBBS STUDENT IN ANOTHER MEDICAL COLLEGE AND HIS ORI GINAL DOCUMENTS WERE IN THE POSSESSION O(THIS MEDICAL COLLEGE WHERE HE W AS STUDYING. VIII. ACCUSED ENGINE AKSHA KUMAR WHO IS ONE 0F THE AFORESAID 12 CANDIDATES WHOSE ADMISSION WAS FALSELY REPORTED BY THE SAID MEDICAL COLLEGE TO DME HAS STATED IN HIS DISCLOSURE STATEME NT U/S 27 IEA RECORDED BY STF ON 11.02.2014 THAT HE WAS PAID RS.50,000/-BY MIDDLEMAN VIVEK YADAV FOR SEAT CANCELLATION IN CHIRAYU MEDICAL COLL EGE, BHOPAL, 8. FROM THE CHARGES LEVELLED AS ABOVE AND IN THE L IGHT OF THE DOCUMENTARY EVIDENCE STATED AS ABOVE, SEEN THAT TH E ASSESSEE TRUST IS GENERATING CASH BY MANIPULATION OF ADMISSION PROCES S BY ADMITTING NON DESERVING CANDIDATES IN LACE OF MERITORIOUS & DESERVING CANDIDATES. THE CASH SO GENERATED IS CHANNELIZED IN THE BOOKS OF TH E ASSESSEE TRUST IN THE FORM OF DONATIONS FROM PAPER ENTITIES WHO HAVE NO C REDITWORTHINESS WHATSOSEVER AS EVIDENT FROM THEIR RETURNS OF INCOME IN ADVANCE IN THOSE DONATIONS. 9. FROM ALL THESE FACTS & DISCUSSION MADE AS ABOVE, IT IS CATEGORICALLY ESTABLISHED THAT NEITHER THE ACTIVITIES OF THE TRUS T ARE GENUINE NOR IN ACCORDANCE WITH THE OBJECTS OF THE TRUST AS REPRODU CED ABOVE. THEREFORE PROVISIONS OF SECTION 12AA 3 OF THE INCOME TAX ACT 1961 ARE CLEAR} ATTRACTED IN THE ASSESSEE TRUST'S CASE RELEVANT ART OF WHICH IS REPRODUCED AS UNDER FOR READY REFERENCE: PROCEDURE FOR REGISTRATION 12AA (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATI ON UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A {IS IT STOOD BEFORE ITS AMENDMENT BY THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 34 FINANCE (NO. 2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE PRINCIPAL COMMISSIONER OR COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF . SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NO T BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION , AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITI NG CANCELLING THE REGISTRATION O/SUCH TRUST OR INSTITUTION PROVIDED T HAT NO ORDER UNDER THIS SUB-SECTION SHALL HE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY Q/BEING HEARD. V. W. 10. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CASE IT IS SEEN THAT THE ASSESSEE TRUST IS GENERATING CASH BY MANIPULATION O F ADMISSION PROCESS BY ADMITTING NON DESERVING CANDIDATES IN PLACE OF M ERITORIOUS & DESERVING CANDIDATES. THE CASH SO GENERATED IS CHAN NELIZED IN THE BOOKS OF THE ASSESSEE TRUST IN THE FORM OF DONATIONS FROM A ER ENTITIES WHO HAVE NO CREDITWORTHINESS. THAKUR EDUCATION TRUST, FROM W HOM THE ASSESSEE TRUST HAS SHOWN A DONATION OF RS. 1,60,00,000/-, IN ITS RETURN OF INCOME FOR A.Y. 2014-15 HAS SHOWN GROSS TOTAL INCOME OF RS . 300/-. ZAGDU SINGH CHARITABLE TRUST FROM WHOM THE ASSESSEE TRUST HAS S HOWN A DONATION OF RS. 2,00,00,000/-, IN ITS RETURN FOR A.Y. 2013-14 H AS FILED NIL GROSS TOTAL INCOME. M/S RIVIERA INFOWAY LTD FROM WHOM THE ASSES SEE TRUST HAS SHOWN A CORPUS DONATION OF RS. 8,15,90,000/- ON 01. 07.2011, HAS FILED RETURN OF A.Y. 2012-13 DECLARING GROSS TOTAL INCOME OF RS. 2,022/-.THIRD PARTY ENQUIRY CONDUCTED BY ADIT(INV.)-2(4) KOLKATA REVEALED THAT THE REGISTERED OFFICE OF UDODAS MUNDHRA SEVA SANSTHAN A T 1 ST FLOOR, YAMUNA BHAWAN, 55 EZRA STREET, KOLKATA-01 IS A COMMON ADDR ESS OF MANY COMPANIES/FIRMS WHICH AS PER THE REPORTOF ADIT(INV) -2(4) KOLKATA IS IDENTICAL TO TYPICAL JAMA-KHARCHI ENTITY. 11. IN VIEW OF DETAILED DISCUSSION MADE AS ABOVE, I T IS CLEAR THAT THE AFFAIRS OF THE TRUST ARE NOT GENUINE AND ARE NOT BE ING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS AND AIMS OF THE TRUST. THE REGISTRATION OF THE TRUST (CHIRAYU CHARITABLE FOUNDATION BEARING PAN: A AAAC3656P) GRANTED U/S 12AA IS HEREBY CANCELLED BY INVOKING SECTIONS 1 2AA(3) OF THE INCOME CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 35 TAX ACT, 1961 WITH EFFECT FROM 1.04.2011 THAT IS TH E PERIOD FROM WHICH VIOLATION OF THE TRUST PROVISIONS ARE NOTICED AS DI SCUSSED ABOVE. 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORDS PLACED BEFORE US AND GONE THROUGH THE JUDGMENTS/DEC ISIONS REFERRED BY SENIOR LD. COUNSEL FOR THE ASSESSEE. T HOUGH THE ASSESSEE HAS RAISED 8 GROUNDS OF APPEAL BUT THE SOU L ISSUE IS THAT WHETHER THE LD. PCIT WAS JUSTIFIED IN INVOKING SEC TION 12AA(3) OF THE ACT THEREBY CANCELLING THE REGISTRATION OF THE SOC IETY GRANTED U/S 12AA OF THE ACT W.E.F. 1.4.2011. 13. WE OBSERVE THAT THE ASSESSEE SOCIETY REGISTERE D AS CHARITABLE SOCIETY ON 26.5.2001 UNDER M.P. SOCIETIES REGISTRAT ION ACT AND GRANTED REGISTRATION U/S 12AA OF THE ACT W.E.F. 1.4 .2002 IS ESTABLISHED TO CARRY OUT CHARITABLE ACTIVITIES IN T HE FIELD OF HEALTH AND EDUCATION. THE MAIN AIMS AND OBJECTS OF THE TR UST ARE AS UNDER :- I. TO ESTABLISH, RUN, MANAGE, DEVELOP, OWN, ACQUIRE , OPEN, PURCHASE, UNDERTAKE, IMPROVE, EQUIP, PROMOTE, INITIATE, ENCOU RAGE, SUBSIDE, SPONSOR, MAINTAIN, AND ORGANIZE HOSPITAL, NURSING H OMES, DISPENSARIES, CLINICS, POLYBANKS, EYE-BANKS, KIDNEY-BANKS, PHYSIO THERAPY CENTRES, INVESTIGATION CENTRES, HEALTH CARE CENTRES AND OTHE R CLINICAL EXPERIMENTAL DIAGNOSTIC CENTRES AND OTHER SIMILAR I NSTITUTIONS, CENTRES CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 36 AND ESTABLISHMENTS FOR PROVIDING SERVICES, TREATMEN T, CARE AND MEDICAL RELIEF AND ALSO TO CO-OPERATE AND COORDINATE WITH E XISTING ONES. II. TO ESTABLISH, RUN, MANAGE, DEVELOP, OWN ACQUIRE , OPEN, PURCHASE, UNDERTAKE, IMPROVE, EQUIP, PROMOTE, INITIATE, ENCOU RAGE, SUBSIDIES, SPONSOR, MAINTAIN AND ORGANIZE SCHOOLS, COLLEGE, DI PLOMA COURSES, COMPUTER CENTRES, ACADEMICS ETC. TO EDUCATE AND TRA IN THE PEOPLE IN VOCATIONAL, ART, CULTURE, RELIGION AND TECHNICAL FI ELD AS ALSO TO IMPART TRAINING, INSTRUCTIONS AND EXERCISE, GIVE PRACTICAL EXPOSURE AND ORGANIZE SEMINARS, CLASSES, WORKSHOPS ETC. ILL. TO EDUCATE AND PROMOTE GENERAL AND SPECIALIZE D AWARENESS IN THE PUBLIC REGARDING MEDICAL SCIENCE, HYGIENE AND SANIT ATION FOR BRINGING ABOUT IMPROVEMENT IN THE OVERALL HEALTH SCENARIO OF THE COUNTRY. IV. TO ESTABLISH AND PROMOTE RESEARCH AND TECHNOLOG ICAL INSTITUTES FOR THE ADVANCEMENT OF SCIENCE AND TECHNOLOGY SPECIALLY IN THE FIELD OF MEDICAL SCIENCE AND ENGINEERING. V. THE PROMOTION OF MEDICAL SCIENCE, EDUCATION, LIT ERATE AND ADVANCEMENT OF THE VARIOUS TECHNOLOGIES IN THIS FIE LD AND TO USE VARIOUS ADVANCED METHODS, EQUIPMENT, MACHINES FOR THE PURPO SE OF THE SOCIETY. VI. TO RUN, ORGANIZE AND MANAGE CAMPS OF VARIOUS NA TURE INCLUDING EYE CENTRES, DONATION CAMP, DENTAL CAMP, CANCER DET ECTION CAMP ETC. AND OPERATION MEDICAL CHECK-UP CENTRES, TRAINI NG CENTRES RELATING TO VARIOUS DISEASE DISPENSE DRUGS, MEDICINES AND OTHER RELATED MATERIAL. VII. TO UNDERTAKE RUN AND MANAGE PROJECTS OF ALLEVI ATING DISEASE, AILMENTS, HUNGER, UNDEMOURISHMENT AND SUCH HEALTH R ELATED PROBLEMS. VIII. TO UNDERTAKE, RUN AND MANAGE SUCH OTHER PROJE CTS OF REMOVING SOCIAL ILL LIKE ILLITERACY, UNEMPLOYMENT, POVERTY, INJUSTICE ETC. AND TO CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 37 PROMOTE WELFARE OF THE PEOPLE THROUGH RELIGIOUS, SP IRITUAL AND SOCIAL SERVICE ACTIVITIES. IX. THE SOCIETY SHALL WORK IN ALL FIELDS AND RUN AL L TYPE OF INSTITUTION IN THE FIELD OF CULTURE, RELIGION, SCIENCE AND TECHNOL OGY WHICH ARE NECESSARY TO PROMOTE RESEARCH, EDUCATION AND WELFAR E FOR THE BENEFIT OF THE CITIZENS OF THE COUNTRY. X. TO ACHIEVE THE OBJECTS, THE SOCIETY SHALL CONSTR UCT BUILDINGS, HOSPITALS, CLINICS DIAGNOSTIC CENTRES, RESEARCH CEN TRES, COLLEGES ETC. AND SHALL RAISE ALL OTHER NECESSARY INFRASTRUCTURE, EQU IPMENT, MACHINES, TOOLS AND RAISE FITTING AND TO DO ALL NECESSARY AND INCIDENTAL THERE FOR THE BENEFICIARIES. THE OBJECT OF THE SOCIETY SHALL NOT INCLUDE OBJECTS INVOLVING THE CARRYING ON OF ACTIVITY FOR PROFIT WITHIN THE MEANING OF INC OME TAX, 1961. 14. THE ABOVE STATED AIMS AND OBJECTS ARE WITHIN TH E FRAME WORK OF CHARITABLE PURPOSE AS PROVIDED IN SECTION 2(15 ) OF THE INCOME TAX ACT WHICH READS THAT :- (15) ' CHARITABLE PURPOSE' INCLUDES RELIEF OF THE P OOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INC LUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMEN TS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST)AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY ; 15. TO ACHIEVE THE ABOVE AIMS AND OBJECTS OF THE AS SESSEE SOCIETY HAS ESTABLISHED AND CONSISTENTLY RUNNING COLLEGES A ND HOSPITALS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 38 NAMELY CHIRAYU MEICAL COLLEGE AND HOSPITAL, BHOPA L, CHIRAYU COLLEGE OF NURSING, CHIRAYU COLLEGE OF PARA MEDIC AL AND CHIRAYU CANCER HOSPITAL. THESE COLLEGES HAVE COURSES OF MB BS, MD, B.SC NURSING. POST B.SC. NURSING. GNM, MSC. NURSING, AND VARIOUS COURSES UNDER PARAMEDICAL COLLEGE LIKE DMIT, BMLT A ND PHYSIOTHERAPY ETC. ALL THESE COLLEGES AND HOSPITAL S ARE EDUCATING STUDENTS AND HOSPITALS ARE PROVIDING MEDICAL SERVIC ES TO PUBLIC AT LARGE. 16. WE OBSERVE THAT ON 4.11.2016 SEARCH WARRANT WAS EXECUTED BY THE CENTRAL BUREAU OF INVESTIGATION (IN SHORT CBI ) AT THE PREMISES OF THE DIRECTOR AND PROMOTER OF CHIRAYU GROUP AT 11 , PROFESSOR COLONY, BHOPAL. CASH AND JEWELLERY WERE FOUND. IN COME TAX DEPARTMENT WAS INFORMED. SEARCH AND SEIZURE OPERATI ON U/S 132 OF THE ACT WAS CARRIED OUT ON THE VERY SAME DAY I.E. 4.11.2016 AT VARIOUS PREMISES OF CHIRAYU HEALTH GROUP AND CERTAI N DOCUMENTS AND OTHER MATERIALS WERE SEIZED. BASED ON THESE E VIDENCE AND MATERIAL ADDL. CIT (CENTRAL), BHOPAL MADE A PROPOSA L FOR CANCELLATION OF REGISTRATION GRANTED U/S 12AA OF TH E ACT AND IN THIS PROPOSAL REFERENCE WAS MADE ONLY WITH REGARD TO DON ATIONS RECEIVED CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 39 BY CHIRAYU CHARITABLE FOUNDATION QUESTIONING THE GE NUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE DONORS. LD. PCIT ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESEE ASKING THE ASSESSEE TO EXPLAIN THE GENUINENESS OF DONATIONS FR OM VARIOUS ENTITIES RECEIVED DURING FINANCIAL YEAR 2011-12 AND 2013-14. THE MAIN OBSERVATION OF LD. PCIT IN THE SHOW CAUSE NOTI CE WAS THAT THE DONORS GIVING HUGE DONATIONS ARE HAVING VERY NOMINA L INCOME WHICH RAISES DOUBT ON THE CREDITWORTHINESS OF THE D ONORS. APART FROM QUESTIONING THE GENUINENESS OF DONORS THERE IS NO ALLEGATION ON THE ASSESSEE SOCIETY OF NOT CARRYING OUT THE CHA RITABLE ACTIVITIES AS PER THE AIMS AND OBJECTS OF THE SOCIETY. 17. THE SHOW CAUSE NOTICE ISSUED BY LD. PCIT WAS DU LY REPLIED BY THE ASSESSEE BY SUBMITTING THAT THE IDENTITY OF THE DONORS, GENUINENESS OF THE DONATION RECEIVED AND CREDITWORT HINESS OF THE DONORS HAS BEEN PROVED TIME AND AGAIN BEFORE THE LD . A.O DURING THE COURSE OF ASSESSMENT PROCEEDINGS GIVING RELEVA NT DOCUMENTS INCLUDING CONFIRMATION LETTERS AND OTHER RELATED DO CUMENTS WITH REGARD TO THE DONATIONS RECEIVED THROUGH BANKING CH ANNEL. ALL THESE DOCUMENTS WERE AGAIN FILED WITH THE REPLY BEF ORE LD. PCIT. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 40 18. HOWEVER LD. PCIT WAS NOT CONVINCED AND HE WAS O F THE OPINION THAT THE CONFIRMATION FILED BY THE ASSESSEE ARE NOTHING BUT SELF SERVING AND THE DONORS ARE ENTITIES HAVING NO MEANS AND ARE MERELY PAPER CONCERNS. ALONG WITH THIS OBSERVATION ALSO LD. PCIT GAVE A REFERENCE TO THE CHARGES FRAMED BY CBI AGAIN ST CHIRAYU MEDICAL COLLEGE & HOSPITALS WITH REGARD TO ALLEGED IRREGULARITY IN THE ADMISSION PROCESS BY WAY OF ADMITTING NON DESERVING CANDIDATES. BASED ON THESE TWO OBSERVATION LD. PCIT INVOKED PRO VISIONS OF SECTION 12AA(3) OF THE ACT CANCELLING THE REGISTRAT ION U/S 12AA OF THE ACT. 19. NOW BEFORE MOVING FURTHER WE WOULD LIKE TO GO T HROUGH THE PROVISIONS OF SECTION 12AA OF THE ACT WHICH READS A S FOLLOWS:- 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OR CLAUSE (AB) OF SUB-SECTION (1) OF SECTION 12A , SHALL 48 [(A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABO UT, (I) THE GENUINENESS OF ACTIVITIES OF THE TRUST O R INSTITUTION; AND (II) THE COMPLIANCE OF SUCH REQUIREMENTS OF ANY O THER LAW FOR THE TIME BEING IN FORCE BY THE TRUST OR INSTITUTION AS ARE M ATERIAL FOR THE PURPOSE OF ACHIEVING ITS OBJECTS, AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF; AND] CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 41 (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES 49 [AS REQUIRED UNDER SUB-CLAUSE (I) OF CLAUSE (A) AND COMPLIANCE OF THE REQUIREMENTS UNDER SUB-CLAUSE (II) OF THE SAID CLAUSE], HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING T HE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN OR DER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER ON WHICH NO ORDER HAS BEEN PASSE D UNDER CLAUSE (B) OF SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999 , SHALL STAND TRANSFERRED ON THAT DAY TO THE PRINCIPAL COMMISSIONER OR COMMIS SIONER AND THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB- SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY OF SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED UND ER CLAUSE (A) OR CLAUSE (AA) OR CLAUSE (AB) OF SUB-SECTION (1) OF SECTION 12A . (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGIS TRATION AT ANY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (N O. 2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE PRINCIP AL COMMISSIONER OR COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDA NCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SH ALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST O R INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSE D UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. (4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (3), WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 19 96 (33 OF 1996)] AND SUBSEQUENTLY IT IS NOTICED THAT CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 42 50 [(A) THE ACTIVITIES OF THE TRUST OR THE INSTITUTION ARE BEING CARRIED OUT IN A MANNER THAT THE PROVISIONS OF SECTIONS 11 AND 12 DO NOT APPLY TO EXCLUDE EITHER WHOLE OR ANY PART OF THE INCOME OF SUCH TRUS T OR INSTITUTION DUE TO OPERATION OF SUB-SECTION (1) OF SECTION 13 ; OR (B) THE TRUST OR INSTITUTION HAS NOT COMPLIED WITH THE REQUIREMENT OF ANY OTHER LAW, AS REFERRED TO IN SUB-CLAUSE (II) OF CLA USE (A) OF SUB-SECTION (1), AND THE ORDER, DIRECTION OR DECREE, BY WHATEVER NAM E CALLED, HOLDING THAT SUCH NON-COMPLIANCE HAS OCCURRED, HAS EITHER NOT BE EN DISPUTED OR HAS ATTAINED FINALITY, THEN, THE PRINCIPAL COMMISSIONER OR THE COMMISSIONE R MAY, BY AN ORDER IN WRITING, CANCEL THE REGISTRATION OF SUCH TRUST OR I NSTITUTION:] PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELLED UNDER THIS SUB- SECTION, IF THE TRUST OR INSTITUTION PROVES THAT TH ERE WAS A REASONABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED OUT IN THE SAID MA NNER. 20. THE POWER OF THE PCIT OR CIT TO CANCEL THE REGI STRATION IS PROVIDED IN SUB SECTION (3) OF 12AA OF THE ACT, AS PER WHICH IF THE PCIT/CIT IS SATISFIED THAT (A) THE ACTIVITIES OF SU CH TRUST IN QUESTION ARE NOT GENUINE (B) OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, THEN IN TH IS SITUATION PCIT/CIT MAY PASS AN ORDER IN WRITING CANCELLING TH E REGISTRATION OF SUCH TRUST OR INSTITUTION AFTER PROVIDING REASONABL E OPPORTUNITY OF BEING HEARD. 21. SO FOR CANCELLATION OF REGISTRATION OF TRUST OR INSTITUTION PCIT/CIT NEEDS TO BE SATISFIED THAT THE ACTIVITIES OF SUCH TRUST INSTITUTION OR ARE NOT BEING CARRYING OUT IN ACCORD ANCE WITH THE OBJECTS. GOING THROUGH THE SHOW CAUSE NOTICE WE FI ND THAT THE ONLY CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 43 ALLEGATION MENTIONED IS WITH REGARD TO GENUINENESS OF DONATION RECEIVED BY THE TRUST. THERE IS NO MENTION ABOUT A NY CHARGE AGAINST THE TRUST/INSTITUTION SHOWING THAT ITS ACTI VITIES ARE NOT BEING CARRIED OUT FOR CHARITABLE PURPOSE OR ITS ACT IVITIES ARE BEYOND THE SCOPE PROVIDED IN THE AIMS AND OBJECTS PROVIDED IN THE TRUST. IT IS NOTEWORTHY THAT THE ASSESSEE SOCIETY IS RUNNING VARIOUS HOSPITALS AND COLLEGES NAMELY CHIRAYU MEICAL COLLEGE AND HOS PITAL, BHOPAL, CHIRAYU COLLEGE OF NURSING, CHIRAYU COLLEGE OF P ARA MEDICAL AND CHIRAYU CANCER HOSPITAL WHICH APART FROM RUNNING 750 BEDDED MULTI SPECIALTY HOSPITAL IS ALSO IMPARTING EDUCATIO N TO AROUND 2000 STUDENTS IN VARIOUS COLLEGES HAVING COURSES OF MBBS , MD, B.SC NURSING. POST B.SC. NURSING. GNM, MSC. NURSING, AND VARIOUS COURSES UNDER PARAMEDICAL COLLEGE LIKE DMIT, BMLT A ND PHYSIOTHERAPY ETC. LD. PCIT HAS NOT MADE ANY OBSERVATION NOR ANY CONCRETE FINDING WITH NECESSARY INVESTIGATION A ND INFORMATION ABOUT ANY OF THESE COLLEGES AND HOSPITALS RUN BY TH E ASSESSEE TRUST OF NOT CARRYING OUT FOR CHARITABLE ACTIVITIES OF IM PARTING EDUCATION AND MEDICAL RELIEF. THE SOLE ISSUE RAISED IN THE SH OW CAUSE NOTICE IS ABOUT THE GENUINENESS OF DONORS. RECEIVING OF DONA TION THROUGH BANKING CHANNEL FROM VARIOUS ENTITIES IS THE SOURCE OF INCOME OR CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 44 FUND WHICH IS SUBSEQUENTLY USED FOR APPLICATION OF THE SAME FOR ACHIEVING THE OBJECTS OF THE TRUST. ONCE THE FUNDS ARE RECEIVED THEN THEY ARE UTILISED FOR CARRYING OUT CHARITABLE ACTIV ITIES. UNLESS AND UNTIL THERE IS ANY EVIDENCE TO SHOW THAT THE ASSESS EE TRUST IS NOT CARRYING OUT THE ACTIVITIES AS PER ITS OBJECTS WHIC H ARE NOT CHARITABLE IN NATURE THEN THERE REMAINS NO SCOPE/REASON WITH L D. PCIT TO CANCEL THE REGISTRATION U/S 12AA OF THE ACT. CERTA INLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ADDITIONS CAN BE MADE BY THE LD. A.O IF HE IS OF THE OPINION THAT THE FUNDS RECE IVED ARE NOT GENUINE OR THE FUNDS HAVE BEEN DIVERTED AS PROVIDED IN SECTION 13 OF THE ACT WHICH CAN THUS GIVE RISE TO ADDITIONS TO BE MADE IN THE HANDS OF THE ASSESSEE. 22. NOW ON GOING THROUGH THE IMPUGNED ORDER THE ORD ER OF CANCELLATION OF REGISTRATION U/S 12AA OF THE ACT IS BASED ON FOLLOWING TWO OBSERVATIONS:- (I) THE ALLEGED IRREGULARITY IN ADMISSION PROCESS AT CHIRAYU MEDICAL COLLEGE OBSERVED BY CBI (II) GENUINENESS OF DONATION RECEIVED FROM VARIOUS CONCERNS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 45 AND DOUBTING THEIR CREDITWORTHINESS AS THEY HAVE N OMINAL OR MEAGRE SOURCE OF INCOME. 23. AS REGARDS THE FIRST ISSUE REFERRED ABOVE WE FIND THAT LD. PCIT HAS NOT MENTIONED THE SAME IN THE SHOW CAUSE NOTICE THUS GIVING NO OPPORTUNITY TO THE ASSESSEE TO FILE ITS SUBMISSI ON THEREBY VIOLATING THE PROVISIONS OF PROVISO TO SECTION 12AA (3) OF THE ACT WHICH PROVIDES THAT REASONABLE OPPORTUNITY OF BEING HEARD SHOULD HAVE BEEN PROVIDED TO THE ASSESSEE. LD. PCIT WITHO UT MENTIONING THIS ISSUE IN THE SHOW CAUSE NOTICE HAS MERELY REPR ODUCED PART OF FINAL REPORT OF CBI DATED 31.7.2015 RELATING TO THE ASSESSEE TRUST. THIS ACTION OF LD. PCIT IN OUR CONSIDERED VIEW IS U NJUSTIFIABLE SINCE THE ISSUE IS ALREADY SUBJUDICE BEFORE THE COURT AND IT IS MERELY AN ALLEGATION WHICH HAS NOT REACHED TO ITS FINALITY AN D SEEMS NO SOUND BASIS FOR CANCELLING THE REGISTRATION OF THE ASSESS EE TRUST GRANTED U/S 12AA OF THE ACT. LD. PCIT OUGHT TO HAVE APPREC IATED THE FACT THAT THE ASSESSEE SOCIETY IS RUNNING NUMBER OF COLL EGES AND HOSPITALS AND JUST BECAUSE ONE OF ITS COLLEGE THAT TOO FOR PARTICULAR COURSE THERE IS AN ALLEGATION BY FEW STUDENTS ABOUT THE IRREGULARITY IN THE ADMISSION PROCESS, THE OVERALL WORKING OF TH E SOCIETY RUNNING CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 46 FOR CARRYING OUT CHARITABLE ACTIVITIES IMPARTING ED UCATION AND MEDICAL RELIED CANNOT BE DOUBTED. 24. IN OUR VIEW CBI CHARGE SHEET CANNOT BE RELIED U PON BY THE LD. PCIT AS IT DOES NOT FORM PART OF SHOW CAUSE NOTICE. SINCE THE ALLEGED CHARGE WAS BEYOND THE SCOPE OF SHOW CAUSE N OTICE AND IS ALSO VAGUE AND WITHOUT ANY DETAIL IT CANNOT FORM BA SIS TO CANCEL THE REGISTRATION U/S 12AA OF THE ACT. WE OBSERVE THAT LD. PCIT HAS NOT ADHERED TO THE PRINCIPLES OF NATURAL JUSTICE SINCE THE ASSESSEE WAS NOT PROVIDED WITH REASONABLE OPPORTUNITY TO DEFEND ITS CASE. THE REPLY GIVEN BY THE ASSESSEE DURING THE COURSE OF I MPUGNED PROCEEDINGS WAS ONLY WITH REFERENCE TO THE ISSUE OF GENUINENESS OF DONATIONS RECEIVED MENTIONED IN THE SHOW CAUSE NOTI CE ISSUE. IF ANY NEW ISSUE WAS ADOPTED AS A BASIS TO CANCEL THE REGISTRATION U/S 12AA OF THE ACT LD. PCIT WAS DUTY BOUND TO ISSUE A SECOND SHOW CAUSE NOTICE TO PROVIDE OPPORTUNITY TO THE ASSESSEE TO DEFEND ITSELF AS HELD IN THE CASE OF UMC TECHNOLOGIES LTD. V. FOOD CORPORATION OF INDIA , 2020 SCC ONLINE SC 934, DECIDED ON 16.11.2020 WHEREIN HON'BLE APEX COURT HELD THAT AN ORDER TRAVELLING B EYOND THE BOUNDS OF NOTICE IS IMPRESSIBLE AND WITHOUT JURISDI CTION TO THAT EXTENT. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 47 25. IT IS JUDICIAL SETTLED PRINCIPLE THAT THE SHOW CAUSE NOTICE SHOULD CLEARLY INDICATE THE NATURE OF VIOLATIONS IF ANY AND SHOULD SPECIFICALLY STATE THE SPECIFIC PROVISIONS VIOLATED AND SHOULD ALSO RELEASE THE MATERIAL RELIED ON AGAINST THE ASSESSEE . IT IS ALSO WELL SETTLED PRINCIPLE THAT AN ENQUIRY CANNOT GO BEYOND THE SCOPE OF THE SHOW CAUSE NOTICE AND IT IS ALSO NOT PERMISSIBLE TO RELY ON SUPPLEMENTARY MATERIAL IN THE ORDER AND IF IT IS DO NE SO THEN THE OFFICER PASSING THE ORDER IS HELD TO HAVE ACTED BEY OND THE JURISDICTION. IN THE INSTANT CASE ALSO WE FIND THA T LD. PCIT HAS GONE FAR BEYOND THE CHARGES AND MATERIAL STATED IN THE S HOW CASE NOTICE AND THE FINAL OUTCOME OF THE PROCEEDINGS SEEMS TO B E PARTLY RELIED ON THE FACTS AND ISSUES NOT MENTIONED IN THE SHOW C AUSE NOTICE. IN THESE GIVEN FACTS AND CIRCUMSTANCES SUCH ORDERS MAD E AGAINST A PERSON WITHOUT FOLLOWING THE RULES OF NATURAL JUSTI CE ARE HELD TO BE BAD IN LAW. OUR VIEW IS SUPPORTED BY THE FOLLOWING DECISIONS; (I) D.A. GADGIL V. SECURITIES & EXCHANGE BOARD OF INDIA [(2000) CLC 1873], (II) MOHINDER SINGH GILL V. THE CHIEF ELECTION COMMISSIONER [AIR 1978 SC 851], CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 48 (III) S.L.KAPOOR V JAGMOHAN [AIR 1981 SC 136] (IV) ANAND RATHI V. SECURITIES AND EXCHANGE BOARD OF INDIA [(2001) 32 SCL 227], (V) HINDUSTAN LEVER LTD V. DIRECTOR GENERAL (INVESTIGAT ION, REGISTRATION) [2001(1) SCALE 219] (VI) WIMCO VS. UNION OF INDIA 1980 ELT 235, (BOM) (VII) RAPHEAL PHARMACEUTICALS VS SUPERINTENDENT OF DISTILLERIES (1998 (38) ELT 11(AP) (VIII) LUBRICHEM INDUSTRIES LTD. VS. COLLECTOR OF CUSTOMS (1994 (73) ELT 257 (SC)). 26. EVEN ON MERITS AS SUBMITTED BY LD. SENIOR COUNS EL FOR THE ASSESSEE THAT CBI CHARGE SHEET CANNOT FORM THE BASI S FOR CANCELLATION OF REGISTRATION U/S 12AA OF THE ACT. HE SUBMITTED THAT THE ADMISSION AND FEE REGULATORY COMMITTEE (IN SHOR T AFRC) IS A STATUTORY BODY CONSTITUTED ON THE DIRECTIONS OF HON 'BLE SUPREME COURT AND IT IS AN APPELLATE AUTHORITY HEADED BY RE TIRED HIGH COURT JUDGE. AFRC IS A BODY WHICH REGULATES MATTERS RELA TING TO FEES AND ADMISSION AND IN IRREGULARITY/ILLEGALITY. IN THE C ASE OF ASSESSEE WITH REGARD TO THE ALLEGED IRREGULARITY IN ADMISSION PRO CESS AFRC DID NOT CANCELLED THE ADMISSION AND HAS ONLY OBSERVED THAT THERE IS AN IRREGULARITY IN GRANTING ADMISSION AND IMPOSED FINE FOR THE SIMILAR KIND OF ADMISSION MADE IN THE YEAR 2013. THIS ORDE R OF AFRC HAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 49 ALSO BEEN CHALLENGED BY THE COLLEGE MANAGEMENT BEFO RE THE HON'BLE HIGH COURT OF M.P AT JABALPUR BY FILING WRIT PETITI ON NO.10857/2015 AND HON'BLE COURT HAD GRANTED STAY ON 23.7.2015 WHI CH IS STILL CONTINUING. THE SAID STAY ORDER IS EXTRACTED BELOW: - WP-10857-2015 (CHIRAYU CHARITABLE FOUNDATION FOR CH IRAYU MEDICAL COLLEGE AND HOSPITAL BHOPAL VS THE STATE OF MADHYA PRADESH) ORDER DATED 23.7.2015 SHRI AJAY V. GUPTA, LEARNED COUNSEL FOR THE PETITI ONER. ADMIT. ISSUE NOTICE TO THE RESPONDENT ON PAYMENT OF PROCESS FEE WITHIN ONE WEEK RETURNABLE IN FOUR WEEKS. HAVING HEARD SHRI GUPTA ON THE QUESTION OF INTERIM RELIEF, WE FIND THAT IMPOSITION OF FINE IN QUESTION IS CONTRAR Y TO PROVISIONS OF SECTION 4(9)(C) AND (D) OF THE M.P. NIJI VYASAYIK SHIKSHAN SANSTHAN (PRAVESH KA VINIYAMAN AVAM SHULK KA NIRDHARAN) SANSODHAN ADHINI YAM, 2013. KEEPING IN VIEW THE AFORESAID, THE RECOVERY OF THE IMPUGNED ORDER OF FINE FROM THE PETITIONER INSTITUTE SHALL REMAIN STAYED T ILL THE NEXT DATE OF LISTING. 27. WE THUS OBSERVED THAT THE HON'BLE JURISDICTIONA L HIGH COURT ON PRIME FACIE HAS STAYED THE IMPOSITION OF FINE QUA THE ADMISSION ALLEGED BEING CONTRARY TO RULES. THEN IN SUCH SITUA TION IT IS TOO EARLY TO ANTICIPATE THAT THERE IS ANY ILLEGALITY OR IRREG ULARITY DONE BY THE ASSESSEE SOCIETY IN THE ADMISSION PROCESS. THERE W AS NO EVIDENCE ON RECORD TO SHOW THAT ANY MONEY WAS TAKEN BY THE C OLLEGE MANAGEMENT OVER AND ABOVE THE APPROVED LEGAL FEES S INCE THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 50 ALLEGED IRREGULARITY IS SUBJUDICE AND FINAL OUTCOME IS AWAITED, LD. PCIT WAS NOT JUSTIFIED IN TAKING SUPPORT OF THIS IS SUE. 28. WE ALSO OBSERVE THAT LD. PCIT HAS NOT MADE ANY INDEPENDENT ENQUIRY, INVESTIGATION OR COLLECTED ANY EVIDENCE TH ROUGH ITS OFFICE TO FIND THAT THE ASSESSEE SOCIETY IS NOT RUNNING FOR C ARRYING OUT CHARITABLE ACTIVITIES. IN THESE GIVEN FACTS IT IS E VIDENT THAT LD. PCIT WAS NOT JUSTIFIED TO OBSERVE THAT ANY IRREGULARITY HAS BEEN DONE BY THE ASSESSEE SOCIETY IN THE ADMISSION PROCESS. LD. PCIT HAS ALSO FAILED TO BRING ANY INFORMATION WITH REGARD TO ANY EVIDENCE UNEARTHED DURING SEARCH OR SUBSEQUENT PROCEEDINGS S HOWING THAT ANY MONEY WAS TAKEN BY COLLEGE MANAGEMENT OVER AND ABOVE THE APPROVED LEGAL FEE WITH REGARD TO THE ALLEGATION TH AT ANY EXTRA AMOUNT TOWARDS FEES OR OTHERWISE WAS TAKEN BY THE COLLEGE MANAGEMENT FROM STUDENTS ADMITTED IN THE YEAR 2011- 12. IN OUR VIEW THE ALLEGED IRREGULARITY IN THE ADMISSION PROC ESS IN ONE OF THE COLLEGES NOTED BY THE CBI SHOULD NOT HAVE BEEN TAKE N AS A BASIS FOR CANCELLING THE REGISTRATION U/S 12AA OF THE ACT GRA NTED TO THE ASSESSEE SOCIETY. 29. AS REGARDS THE SECOND ISSUE REGARDING THE ALLEG ED GENUINENESS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 51 OF DONORS AND THE CREDITWORTHINESS IN DOUBT, WE OBS ERVE THAT PRIME FACIE THIS ISSUE HAS NO STRENGTH TO FORM A BASIS FOR CANC ELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT, SINCE SUCH TYP E OF ISSUES IN THE CASE OF CHARITABLE SOCIETIES ARE TO BE DEALT AT THE TIME OF REGULAR ASSESSMENT PROCEEDINGS WHEREIN THE ASSESSING OFFICE R CAN MAKE NECESSARY INVESTIGATION TO EXAMINE THE GENUINENESS OF DONATIONS AS WELL AS THE CREDITWORTHINESS OF THE DONORS, BUT STI LL WE WOULD LIKE TO DEAL WITH THE ISSUE SINCE THE MAJOR THRUST OF LD. PCIT IS ON THIS ISSUE FOR CANCELLING THE REGISTRATION U/S 12AA OF T HE ACT. ON GOING THROUGH THE VARIOUS DOCUMENTS PLACED BY THE ASSESSE E IN THE PAPER BOOK RUNNING FROM PAGE 320 TO 728 WE FIND THAT TO T HE BEST POSSIBLE EXTENT THE ASSESSEE TRUST HAS FILED ALL RELEVANT IN FORMATION AND DOCUMENTS TO SHOW THAT THE IDENTITY AND GENUINENESS OF THE DONORS AS WELL AS THE CREDITWORTHINESS OF THEM TO GIVE DON ATION TO THE SOCIETY ARE PROVED. IT IS ALSO BROUGHT TO OUR NOTI CE THAT REGULAR BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED BY THE SOCIE TY WHICH ARE DULY AUDITED. THE ASSESSMENT YEARS DURING WHICH SO ME DONATIONS WERE RECEIVED ARE MENTIONED IN THE IMPUGNED ORDER H AVE ALREADY BEEN EXAMINED BY THE ASSESSING AUTHORITIES DURING THE REGULAR ASSESSMENT PROCEEDINGS PRIOR TO THE SEARCH AND ASSE SSEE WAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 52 SUCCESSFUL IN SATISFYING THE ASSESSING OFFICER ABOU T THE IDENTITY AND GENUINENESS OF THE DONORS AND THEIR CREDITWORTHINES S. EVEN IN THE SEIZED MATERIAL MARKED AS LPS 10 FOUND DURING THE C OURSE OF SEARCH, CONTAINED CONFIRMATIONS IN ORIGINAL AND OTH ER DOCUMENTS INCLUDING INCOME TAX RETURNS, BANK STATEMENTS, BOAR D RESOLUTIONS, FINANCIAL STATEMENTS OF THE ALLEGED DO NORS ETC. AGAIN THIS INFORMATION WERE FILED ON 26.11.2018 & 4.12.20 18. IT IS ALSO INTERESTING TO NOTE THAT DURING THE COURSE OF SEARC H CONDUCTED AT THE PREMISES OF THE ASSESSEE SOCIETY VARIOUS DOCUME NTS WERE FOUND REGARDING TO THE DONATION OF RS.8,15,90,000/- AND RS.4,10,00,000/- RECEIVED DURING ASSESSMENT YEAR 20 12-13 AND 2014-15 AND ALL THESE DOCUMENTS ARE TAKEN AS A BASI S BY THE ASSESSEE TO PROVE THE GENUINENESS AND CREDITWORTHIN ESS OF THE DONORS. 30. WE FIND FORCE IN THE CONTENTION OF SR. COUNSEL FOR THE ASSESSEE WHO HAS REFERRED TO SECTION 292C(2) OF THE ACT CONT ENDING THAT WHERE ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS, MON EY, BILLION, JEWELLERY OR OTHER VALUABLE ARTICLES ARE FOUND IN T HE POSSESSION OR CONTROL OF ANY PERSONS IN THE COURSE OF SEARCH U/S 132 OF THE ACT THAT CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 53 IT MAY BE PRESUMED THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNTS AND THE DOCUMENTS ARE TRUE. ON THE STRENGTH OF THE SUBMISSION LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAS DISCHARGED ITS BURDEN U/S 68 OF THE ACT SINCE ALL T HE RELEVANT MATERIAL TO PROVE THE IDENTITY OF DONOR, GENUINENES S OF THE TRANSACTION OF RECEIVING DONATION AND CREDITWORTHIN ESS OF THE DONORS TO GIVE DONATIONS TO THE ASSESSEE SOCIETY BE CAUSE ALL THE RELEVANT EVIDENCE WERE FOUND BY THE SEARCH PARTY IT SELF DURING THE COURSE OF SEARCH U/S 132 OF THE ACT. THE ONLY REASO N FOR WHICH LD. PCIT WAS NOT SATISFIED WITH THE GENUINENESS OF THE DONATION WAS MAINLY THE INCOME SHOWN BY THESE DONORS WHICH WAS N OT COMMENSURATE WITH THE HUGE DONATION GIVEN BY THEM. THOUGH THE ASSESSEE HAD GIVEN DETAILED SUBMISSION WITH REGARD TO DONATION HAVE ALSO SUBMITTED THAT THE DEPARTMENT WAS HAVING ALL INFORMATION INCLUDING THE ADDRESS AND PAN AND THEY COULD HAVE C ONDUCTED NECESSARY ENQUIRY WHICH THEY HAVE FAILED TO DO AND RELIANCE WAS ALSO PLACED ON VARIOUS JUDGMENTS WHEREIN IT WAS HEL D THAT IF THE ASSESSEE SUBMITS ALL RELEVANT INFORMATION AND DOCUM ENTS TO PROVE THE IDENTITY OF CASH CREDITOR, GENUINENESS OF THE T RANSACTION AND CREDITWORTHINESS OF THE CASH CREDITOR TO GIVE THE A MOUNT WHICH IN CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 54 THIS CASE IS THE DONATION THEN THE BURDEN TO DISCHA RGE THE ONUS SHIFTS ON TO THE REVENUE WHO HAS TO CARRY OUT NECES SARY INVESTIGATION TO DISPROVE THE EVIDENCE PLACED BY TH E ASSESSEE BEFORE TAKING ANY ACTION FOR MAKING ANY ADDITION IN THE HA NDS OF THE ASSESSEE. 31. AS REGARDS THE DONATION OF RS.8,15,90,000/- REC EIVED BY THE ASSESSEE FROM M/S RIVIERA INFOWAY LTD DURING FINANC IAL YEAR 2010- 11 SUM OF RS.7,28,90,000/- WAS RECEIVED THROUGH BAN KING CHANNEL AND THIS SUM WAS SHOWN AS UNSECURED LOAN IN THE BAL ANCE SHEET AS ON 31.3.2011. FURTHER SUM OF RS. 87,00,000/- WAS R ECEIVED DURING FINANCIAL YEAR 2011-12 THROUGH BANKING CHANNEL. TH US TOTAL SUM OF RS. 8,15,90,000/- SHOWN AS UNSECURED LOAN WAS TR ANSFERRED TO THE GROUPS DONATION ACCOUNT THROUGH A JOURNAL ENTRY PASSED ON 29.8.2011. THE ASSESSMENT OF THE ASSESSEE WAS COMP LETED U/S 143(3) OF THE ACT FOR ASSESSMENT YEAR 2011-12 ON 18 .3.2014 IN NORMAL COURSE AND DURING THE COURSE OF PROCEEDINGS CONFIRMATION OF LOAN CREDITORS WERE FILED, COPY OF BANK ACCOUNT OF M/S RIVIERA INFOWAY LTD ALONG WITH ITS INCOME TAX RETURN FOR AS SESSMENT YEAR 2009-10 WAS FURNISHED. ON THE STRENGTH OF THESE DO CUMENTS LD. A.O WAS SATISFIED WITH THE IDENTITY AND CREDITWORTH INESS OF THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 55 DONOR COMPANY AND GENUINENESS OF THE TRANSACTION OF LOAN. SIMILARLY ASSESSMENT FOR ASSESSMENT YEAR 2012-13 WA S COMPLETED U/S 143(3) OF THE ACT ON 24.3.2014 AND NO ADDITION WAS MADE ON THE AMOUNT RECEIVED FROM THE ALLEGED DONOR I.E. M/S RIVIERA INFOWAY LTD . SUBSEQUENTLY ALL THE DOCUMENTS FILED BEFORE THE LD. A.O WHICH FORM PART OF THE ASSESSMENT WERE ALSO FOUND BY THE SEARCH TEAM. HOWEVER DURING THE ASSESSMENT PROCEEDINGS CARRIED O UT AFTER ISSUE OF NOTICE U/S 153A OF THE ACT AMOUNT OF DONATION WA S ADDED BY THE LD. A.O TO THE INCOME OF THE ASSESSEE BY GIVING REF ERENCE TO THE DETAILED INVESTIGATION DONE BY INVESTIGATION WING O F WHICH NO REPORT OR ANY OTHER DOCUMENT HAS NEITHER BEEN PROVIDED TO THE ASSESSEE NOR PLACED BEFORE US. BUT THERE IS NO DISPUTE TO T HE FACT THAT AT NO LEVEL ANY OF THE LOWER AUTHORITIES HAS CONTROVERTED OR BROUGHT ANY EVIDENCE TO DISAPPROVE THE DOCUMENTARY EVIDENCE FIL ED BY THE ASSESSEE TIME AND AGAIN TO PROVE THE GENUINENESS OF THE DONATION AND CREDITWORTHINESS OF THE DONORS. 32. AS REGARDS THE DONATION RECEIVED FROM THAKUR ED UCATION TRUST, ZAGDU SINGH CHARITABLE TRUST AND UDODAS MUND RA SEVA SANSTHAN, WE FIND THAT DURING THE COURSE OF ASSESSM ENT CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 56 PROCEEDINGS FOLLOWING DOCUMENTS WERE FILED WHICH CO INCIDENTLY WERE FOUND DURING THE COURSE OF SEARCH AT THE ASSESSEES PREMISES. (A) WITH RESPECT TO DONATION FROM THAKUR EDUCATIONAL T RUST (AACTT4004F) RS. 10000000 + RS. 6000000 (I) CONFIRMATION LETTER (SEIZED DOCUMENT) (II) CERTIFIED COPY OF RESOLUTION OF THE DONOR GIVING DO NATION (SEIZED DOCUMENT) (III)APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DONATION. (SEIZED DOCUMENT) (IV) COPY OF THE NOTICE U/S.133(6) DATED 18.07.2016 ISSU ED BY ASSESSING OFFICER (DY. COMMISSIONER OF INCOME TAX ( EXEMPTION)- 2(1), MUMBAI) OF THAKUR EDUCATIONAL TRUST FOR CONF IRMATION OF DONATION GIVEN TO THE ASSESSEE. THIS LETTER WAS ISS UED BY THE A.O. OF THE THAKUR EDUCATIONAL TRUST IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS PENDING FOR A.Y. 2014-15 OF THE SAID TRUST. (V) COPY OF REPLY OF THE ASSESSEE IN COMPLIANCE TO NOTI CE U/S. 133(6) TO DCIT (EXEMPTION)-2 (1), MUMBAI. (B) WITH RESPECT TO DONATION FROM ZAGDU SINGH CHARITAB LE TRUST (AAATZ0141P ) RS. 10000000 + RS. 10000000 (I) CONFIRMATION LETTER (SEIZED DOCUMENT) (II) APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DON ATION. (SEIZED DOCUMENT) (III) COPY OF THE NOTICE U/S. 133(6) DATED 18.07.2016 I SSUED BY ASSESSING OFFICER (DY. COMMISSIONER OF INCOME TAX ( EXEMPTION)- 2(1), MUMBAI) OF ZAGDU SINGH CHARITABLE TRUST FOR C ONFIRMATION OF DONATION GIVEN TO THE ASSESSEE. THIS LETTER WAS ISSUED BY THE A.O. OF THE ZAGDU SINGH CHARITABLE TRUST IN CONNECT ION WITH THE ASSESSMENT PROCEEDINGS PENDING FOR A.Y. 2014-15 OF THE SAID TRUST. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 57 (IV) COPY OF REPLY OF THE ASSESSEE IN COMPLIANCE TO N OTICE U/S. 133(6) TO DCIT (EXEMPTION)-2 (1), MUMBAI. (C) WITH RESPECT TO DONATION FROM UDHODAS MUNDHRA SEVA SANTHAN (AAATU0983C) RS. 5000000 (I) CONFIRMATION LETTER (SEIZED DOCUMENT) (II) APPEAL BY THE ASSESSEE TO THE DONOR FOR GIVING DONA TION. (SEIZED DOCUMENT) 33. WE OBSERVE THAT TWO TRUSTS NAMELY THAKUR EDUCAT IONAL TRUST AND ZAGDU SINGH CHARITABLE TRUST WHICH HAVE GIVEN D ONATION OF RS.1.60 CRORES AND RS.2.00 CRORES DURING FINANCIAL YEAR 2013-14 AS SUBMITTED BY LD. SENIOR COUNSEL FOR THE ASSESSEE AN D NOW BOTH THESE TRUSTS RELATES TO THAKUR GROUP OF INSTITUTION S RUNNING 16 EDUCATIONAL INSTITUTIONS AT KANDIVILI, MUMBAI WHERE IN OVER 40000 STUDENTS ARE STUDYING AND THE INSTITUTION PROFILE I S AVAILABLE AT PUBLIC PLATFORM I.E. ON THE WEB SITE. WE FAIL TO U NDERSTAND THAT HOW CAN LD. PCIT COULD REMAIN UNSATISFIED WITH THE IDEN TITY AND GENUINENESS OF SUCH DONATION AS WELL AS CREDITWORTH INESS OF SUCH TWO WELL ESTABLISHED TRUSTS. 34. IT IS ALSO OBSERVED THAT IN CASE OF DONOR NAMEL Y UDODAS MUNDHRA SEVA SANSTHAN WHICH HAVE GIVEN DONATION OF RS.50 LAKHS ON 10.5.2013 WAS ISSUED NOTICE U/S 133(6) OF THE AC T WHICH WAS CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 58 DULY COMPLIED THAT THE DONOR HAVE CONFIRMED TO HAVE GIVEN DONATION TO THE ASSESSEE. 35. OUR FINDING WITH REGARD TO THE ALLEGED DONATION S RECEIVED BY THE TRUST IS THAT THE ASSESSEE HAS SUPPLIED ALL NEC ESSARY INFORMATION TO PROVE THE IDENTITY AND GENUINENESS O F THE DONORS AND THEIR CREDITWORTHINESS TO GIVE THE DONATION TO THE ASSESSEE TRUST WHICH PRIMA FACIE SHOWS THAT THE DONORS ARE NOT FICTITIOUS, SECONDLY DONORS ARE TRUST OR INSTITUTIONS HAVING SUFFICIENT FUNDS TO GIVE DONATIONS AND IN SOME CASES THE DONORS HAVE CONFIRM ED TO HAVE GIVEN DONATION IN REPLY TO THE NOTICES U/S 136(6) O F THE ACT AND IN SUCH A SITUATION, WE IN THE GIVEN FACTS ARE OF THE VIEW THAT LD. CIT WAS NOT JUSTIFIED IN DOUBTING THE GENUINENESS AND C REDITWORTHINESS OF THE DONATIONS RECEIVED BY THE ASSESSEE DURING VA RIOUS YEARS AS MENTIONED IN THE IMPUGNED ORDER AND WAS FURTHER NOT JUSTIFIED IN ADOPTING A BASIS FOR DENYING THE REGISTRATION U/S 1 2AA OF THE ACT. IN THE GIVEN STATED FACTS AND CIRCUMSTANCES AND DOC UMENTARY EVIDENCE FILED BY THE ASSESSEE BEFORE THE LOWER AUT HORITIES, WE ARE SATISFIED WITH THE IDENTITY AND CREDITWORTHINESS OF THE ALLEGED DONORS AND GENUINENESS OF THE TRANSACTION. OUR VIE W IS FURTHER CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 59 SUPPORTED BY FOLLOWING JUDGMENTS WHICH ARE SQUARELY APPLICABLE:- (I) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE O F ASHOK PAL DAGA(HUF) V/S. CIT REPORTED IN 220-ITR-452(MP), WHE REIN HON'BLE COURT REFERRED TO THE JUDGMENT OF HON'BLE B OMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD. V/S. CIT REPORTED IN 49-ITR-723. THAT AS THE ASSESSEE SATISFIED THE AUTHORITY AS TO THE IDENTITY OF THE THIRD PARTIES AND ALSO SUPPLIED RELEVANT EVIDENCE S HOWING PRIMA- FACIE THAT THE ENTRIES WERE NOT FICTITIOUS, THE INI TIAL BURDEN IS STOOD DISCHARGED BY THE ASSESSEE. (II) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CI T V/S. METACHEM INDUSTRIES REPORTED IN 245-ITR-160 (MP). ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN IN VESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL , THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WHETHER TH AT PERSON IS AN INCOME-TAX PAYER, OR NOT, AND WHERE HE HAD BROUGHT THIS MONEY FROM, IS NOT THE RESPONSIBILITY OF THE FIRM. THE M OMENT THE FIRM GIVES A SATISFACTORY EXPLANATION AND PRODUCES THE PERSON WHO HAS DEPOSITED THE AMOUNT, THEN THE BURDEN OF THE FIRM I S DISCHARGED, AND IN THAT CASE THAT CREDIT ENTRY CAN NOT BE TREAT ED TO THE INCOME OF THE FIRM FOR THE PURPOSE OF INCOME-TAX. (III) HON'BLE SUPREME COURT IN THE CASE OF CIT V/S. ORISS A CORPORATION PVT. LTD. REPORTED IN 159-ITR-78(SC) IN THIS CASE THE RESPONDENT HAD GIVEN THE NAMES AN D ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF T HE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APAR T FROM ISSUING CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 60 NOTICES UNDER S. 131 AT THE INSTANCE OF THE RESPOND ENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAM INE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE TH E SO-CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE RESP ONDENT COULD NOT DO ANYTHING FURTHER. IN THE PREMISES, IF THE TRIBUN AL CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED THE B URDEN THAT LAY ON IT, THEN IT COULD NOT BE SAID THAT SUCH A CONCLU SION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION CO ULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH AROSE. THE HIGH COUR T WAS RIGHT IN REFUSING TO STATE A CASE. (IV) THE CO-ORDINATE BENCH OF RAJKOT IN THE CASE OF ACIT V/S. RADHEY SHYAM BANSAL REPORTED IN (2000) 68 TTJ (RAJK OT) 136. THE CIT (A) HAS CLEARLY STATED IN HIS ORDER THAT T HE CONFIRMATORY LETTERS WERE FILED BY ALL THE THREE DEPOSITORS. THE AO DID NOT MAKE ANY FURTHER INVESTIGATION WITH THE DEPOSITORS TO FI ND OUT THE GENUINENESS OF THE DEPOSITS. WHEN CONFIRMATION LETT ERS ARE FILED AND THE IDENTITY OF THE CREDITORS ARE KNOWN, IT IS THE DUTY OF THE AO TO SUMMON THE CREDITORS AND TO RECORD THEIR STATEMENTS . THE ONUS IS ON THE DEPARTMENT TO PROVE THAT THE DEPOSITS WERE NOT GENUINE. THIS ONUS HAS NOT BEEN DISCHARGED BY THE AO. IN VIEW OF THE DISCUSSIONS ABOVE, THE ADDITION HAS BEEN MADE BY THE AO WITHOUT MAKING ANY PROPER ENQUIRIES. THEREFORE, THE CIT (A) HAS RIGHTL Y DELETED THE ADDITION. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 61 36. WE FURTHER OBSERVE THAT IT HAS BEEN CONSISTENTL Y HELD BY THE HON'BLE COURTS AND CO-ORDINATE BENCHES THAT REGISTR ATION GRANTED TO CHARITABLE SOCIETIES U/S 12AA OF THE ACT CANNOT BE CANCELLED BY INVOKING PROVISIONS OF SECTION 12AA(3) OF THE ACT U NLESS AND UNTIL IT IS ESTABLISHED BY MATERIAL EVIDENCE THAT THE ACTIV ITIES OF SUCH TRUSTS/INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUSTS OR THE RE ASONABLE OPPORTUNITY OF BEING HEARD IS NOT GRANTED BEFORE CA NCELLING THE REGISTRATION. 37. THE CO-ORDINATE BENCH OF LUCKNOW IN THE CASE OF FATEH CHAND CHARITABLE TRUST V. CIT (EXEMPTIONS) V. CIT (EXEMPT IONS) [2017] 83 TAXMANN.COM 33 (LUCKNOW - TRIB.) HONBLE TRIBUNAL WHILE DEALING WITH THE ISSUE OF CANCELLATION OF REGISTRATION UND ER SECTION 12AA (III) OF THE I.T ACT HELD THAT: PARA 13. 'HAVING CAREFULLY EXAMINED THE ORDER OF THE ID. COM MISSIONER OF INCOME TAX (EXEMPTIONS) IN THE LIGHT OF THE RIVAL SUBMISSI ONS, WE FIND T HAT ON RECEIPT OF CERTAIN INFORMATION FROM THE ID. COMMISS IONER OF INCOME TAX (EXEMPTIONS), KOLKATA; ID. COMMISSIONER OF INCOME T AX (EXEMPTIONS) HAS ISSUED NOTICE UNDER SECTION I2AA(3) OF THE ACT TO THE ASSESSEE ON 13.11.2015 FOR COMPLIANCE ON 24.11.2015. ON 24.11.2015 THE ASSESSEE SOUGHT ADJOURNMENT AND HEARING WAS ADJOURNED TO 27. 11.2015. ON 27.11.2015 THE ASSESSEE HAS FILED A DETAILED REPLY TO THE CHARGES CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 62 LEVELED AGAINST IT IN SHOW CAUSE NOTICE. THE ASSESS EE EMPHATICALLY DENIED THE ALLEGATIONS LEVELED AG AINST THE ASSESSEE THAT IT HAS RECEIVED A DONATION OF RS.L CRORE THROUGH CHEQUE AFTER MAKING PAYMENT O F THE SAME IN CASH TO M/S HERBICURE HEALTH CARE BIO HERBA L RESEARCH FOUNDATION. THE REPLY FILED BY THE ASSESSEE IS AVAI LABLE AT PAGES 19 TO 25 OF THE COMP ILATION OF THE ASSESSEE RUNNING INTO 7 PAGES AND IN PARA 8 OF IT, THE ASSESSEE HAS SPECIFICALLY ASKED THE ID. COMMISSIONER OF INCOME TAX THAT IN CASE THERE IS ANY AUTHENTIC MATE RIAL AVAILABLE WITH HIM WHICH COULD THROW SOME LIGHT ON THIS ISSUE, THE SAME MA Y BE GIVEN TO THE ASSESSEE SO THAT SPECIFIC' REPLY ON THE SAME COULD BE SUBMITTED ON IT, BESIDES DENYING THE ALLEGATIONS LEVELED AGAINST HIM. FOR THE SAKE OF REFERENCE, WE EXTRACT PARA 8 AS UNDER:- 8. THAT YOUR GOODSELF HAS, IN YOUR NOTICE DATED 13/11/2015, ALLEGED THAT THE ASSESSEE HAS RECEIVED A DONATION OF RSL,00 ,00,000/- FROM M/S HERBICURE HEALTH CARE BIO HERBAL RESEARCH FOUNDATIO N IN THE A/Y 2011-12 BY PAYING AN AMOUNT OF RS.1,00,00,000/- IN CASH TO M/S HERBICURE HEALTH CARE BIO HERBAL RESEARCH FOUNDATION ITSELF. THIS ALLEGATION IS TOTALLY UNTRUE AS NOTHING OF THIS SOR T HAS BEEN WRITTEN OR MENTIONED IN THE CONFIRMATION, GIVEN BY M/S HERBICU RE HEALTH CARE BIO HERBAL RESEARCH FOUNDATION. TILL DATE NO EVIDENCE TO THE CONTRARY HAS BEEN M ADE AVAILABLE TO THE ASSESSEE WHICH COULD SUBSTANTIATE YOUR HONOUR'S ALL EGATION THAT THE AMOUNT OFRS.1,00,00,000/- WAS PAID BY THE ASSESSEE IN CASH TO THE DONOR IN EXCHANGE OF DONATION RECEIVED BY CHEQUE. HOWEVER, IN CASE, THERE IS ANY AUTHENTIC MATERIAL A VAILABLE WITH YOUR HONOUR WHICH COULD THROW SOME LIGHT ON THIS ISSUE, THE SAME MAY BE GIV EN TO THE ASSESSEE SO THAT A SPECIFIC REPLY ON THE SAME COULD BE SUBMI TTED ON IT' CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 63 (II) THE CO - ORDINATE BENCH OF MUMBAI I N THE CASE OF LILAVATI KIRTILAL MEHTA MEDICAL TRUST, BANDRA V. CIT (CENTRA L) I, MUMBAI [2019] 108 TAXMANN.COM 272 (MUMBAI - TRIB.) THE HONBLE ITAT, MUMBAI HELD THAT :- NOW, WE MAY GO BACK TO SECTION 12AA(3) OF THE ACT, WHICH PRESCRIBES ONLY TWO CONDITIONS UNDER WHICH THE COMMISSIONER IS EMPOWERED T O CANCEL THE REGISTRATION EARLIER GRANTED U/S. 12A OF THE ACT. IN OUR VIEW, THE POINTS BROUGHT OUT BY THE COMMISSIONER IN THE I MPUGNED ORDER ARE NOT IN THE CONTEXT OF THE CONDITIONS PRESCRIBED U/S . 12AA(3) OF THE ACT, BUT ARE RELEVANT FOR THE PURPOSES OF MAKING AN ASSE SSMENT OF INCOME. 11. IN THE PRESENT CASE, THE CASE SOUGHT TO BE MADE OUT BY THE COMMISSIONER IS THAT THE VIOLATION CARRIED OUT BY T HE ASSESSEE WOULD LEAD TO DENIAL OF EXEMPTION U/S. 11 & 13 OF THE ACT AND, THEREFORE, THE PRE- REQUISITE OF SECTION 12AA(3) OF THE ACT IS SATISFIE D. IN PARA 9 OF THE IMPUGNED ORDER, THE COMMISSIONER RECORDS THAT THE V IOLATION OF SECTION 11 & 13 OF THE ACT WOULD RESULT IN FORFEITURE OF EX EMPTION NOT ONLY FOR THE YEAR IN WHICH SUCH TRANSACTIONS OCCUR BUT ALSO FOR THE YEARS WHEN SUCH ARRANGEMENT CONTINUES TO BE IN FORCE. IN OUR CONSID ERED OPINION, SUCH AN APPROACH OF THE COMMISSIONER IS QUIET MISDIRECTED A ND IS INCONSISTENT WITH THE LEGAL POSITION ON THE SUBJECT CO NTEMPLATED U/S. 12AA(3) OF THE ACT SO AS TO CANCEL REGISTRATION ALREADY GRANTED. W E MAY ADD HERE THAT WE ARE NOT SHUTTING OUT THE CASE OF THE REVENUE TO EXAMINE WHETHER OR NOT THERE HAS BEEN A VIOLATION OF SECTION 13 OF THE ACT, BUT WE ARE ONLY TRYING TO S AY THAT THE SAME IS NOT RELEVANT FOR THE PURPOSE OF CANCELLATION OF REGISTRATION U/S. 12AA(3) OF THE ACT. OF COURSE, SUCH MATTERS CAN BE DEALT WITH IN THE COURSE OF ASSESSMENT PROCEEDINGS AND, IN OUR VIEW, THE SAME OUGHT TO BE DEALT WITH, IF THE SITUATION SO WARRANTS. PRESENTLY, WE ARE CONFINING OURSELVES WITH EXAMINING THE EFFICACY OR OTHERWISE OF THE ACTION OF THE COMMISSIONER IN INVOKING SECTION 12AA (3) OF THE ACT AND CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 64 WE FIND THAT THE REASONS ADVANCED BY THE COMMISSION ER ARE NOT GERMANE. ON THIS POINT, T HE LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS RELIED ON THE FOLLOWING DECISIONS TO SAY THAT SECTI ON 12AA(3) CANNOT BE INVOKED BY COMMISSIONER FOR CANCELLATION OF REGISTR ATION MERELY FOR VIOLATION OF PROVISIONS OF SECTION 11 AND 13 OF THE ACT BY THE ASSESS EE : CIT V. APEEJAY EDUCATION SOCIETY [2015] 59 TAXMANN.COM 102 (PUNJ. & HAR.) CANCER AID & RESEARCH FOUNDATION V. DIT (EXEMPTION) [2014] 66 SOT 86/49 TAXMANN.COM 537 (MUM. - TRIB.) CIT (EXEMPTIONS) V. CANCER AID & RESEARCH FOUNDATION INCOME TAX APPEAL NO.505 OF 2015 PRABODHAN SHIKSHAN PRASARAK SANSTHA V. DY. CIT [ 2014] 44 TAXMANN.COM 33/[2015] 152 ITD 473 (PUNE - TRIB.) TAMIL NADU CRICKET ASSOCIATION V. DIT (EXEMPTION) [2014] 360 ITR 633/221 TAXMAN 275/[2013] 40 TAXMANN.COM 250 (MAD.) 12. THEREFORE, IN VIEW OF OUR AFORESAID DISCUSSION, ON THE PRELIMINARY POINT ITSELF, WE FIND THAT THE IMPUGNED ORDER OF TH E COMMISS IONER CANCELLING THE REGISTRATION U/S. 12AA(3) OF THE ACT IS BEREFT OF A VALID JURISDICTION. (III) THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ISLAMIC ACADEMIC OF EDUCATION REPORTED IN 229 TAXM AN 274 (KARN) HELD AS UNDER :- IN THE INSTANT CASE, THE MATERIAL ON RECORD SHOWS T HAT THE TRUST HAS ESTABLISHED EDUCATIONAL INSTITUTION AND IMPARTING M EDICAL EDUCATION. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 65 EVERY YEAR, STUDENTS ARE ADMITTED. HUGE INVESTMENT IS MADE FOR CONSTRUCTION OF BUILDINGS FOR HOUSING THE COLLEGE, HOST EL AND TO PROVIDE OTHER FACILITIES TO THE STUDENTS WHO ARE ST UDYING IN THE COLLEGE. THE COLLEGE IS RECOGNIZED BY THE MEDICAL C OUNCIL OF INDIA, STATE OF KARNATAKA AND ALL OTHER STATUTORY AUTHORIT IES. THEREFORE, IT CANNOT BE SAID THAT THE TRUST IS NOT GENUIN E. ADMITTEDLY, THE STUDENTS ARE BEING ADMITTED EVERY YEAR. STUDENTS AR E STUDYING IN ALL COURSES. THUS THE OBJECT OF THE CONSTITUTION OF THE TRUST NAMELY IMPARTING OF EDUCATION IS GOING ON UNINTERRUPTEDLY. THEREFORE, IT CANNOT BE SAID THAT THE ACTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. WH EN THE AFORESAID TWO CONDITIONS ARE FULLY SATISFIED, ON THE GROUND T HAT THE TRUSTEES ARE MISAPPROPRIATING THE FUNDS OF THE TRUST THE REGISTR ATION OF THE TRUST CANNOT BE CAN CELLED. IF THE TRUSTEES ARE MISAPPROPRIATING THE FU NDS, IF THEY ARE MAINTAINING FALSE ACCOUNTS, IT IS OPEN TO THE AUTHORITIES TO DENY THE BENEFIT UNDER SECTION 11 OF THE INCOME TAX ACT, BUT THAT IS NOT A GROUND FOR CANCELATION OF REGISTRATION ITSELF . THAT IS PRECISELY WHAT THE TRIBUNAL HAS HELD. THEREFORE, THE SUBSTANT IAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAIN ST THE REVENUE. THERE IS NO MERIT IN THIS APPEAL. (IV) THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF RED ROSE SCHOOL REPORT ED IN (2007) 163 TAXMAN 19 (ALL.), WHEREIN IT IS OBSERVED THAT:- 'CIT IS ENTITLED TO SEE ONLY THE GENUINENESS OF OBJ ECTS AND ACTIVITIES : IT HAS BEEN HELD THAT WHILE REFUSING APPLICATION UN DER SECTION 12A THE COMMISSIONER HAS TO EXAMINE ONLY TWO ASPECTS, I .E., GENUINENESS OF THE ACTIVITIES OF THE TRUST / INSTIT UTION AND OBJECT OF THE TRUST / INSTITUTION. ONCE THERE IS NO DISPUTE A BOUT THE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 66 GENUINENESS OF THE ACTIVITIES; THE COMMISSIONER CAN NOT TAKE SHELTER OF ANY OTHER OUTER SOURCE FOR REFUSING REGISTRATION UNDER SECTION 12A. THE ISSUE OF REGISTRATION UNDER SECTION 12A AND THE SCOPE OF ENQUIRY AT THE STAGE OF SECTION 12AA WAS DISCUSSED, IT WAS CATEGORICALLY HELD IN THE SAID DECISION THAT SECTION 12AA DOES NO T SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE THAT THE INCOME DERIVE D BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SPENT FOR CHARI TABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT. PROFIT EARNING OR MI SUSE OF THE INCOME DERIVED BY CHARITABLE INSTI TUTION FROM ITS CHARITABLE ACTIVITIES MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT T O THAT PART OF THE INCOME BUT CANNOT BE TAKEN TO BE A SYNONYM TO THE G ENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION. WHI LE CONSIDERING THE REGIST RATION UNDER SECTION 12AA, THE SCOPE OF ENQUIRY OF THE COMMISSIONER WOULD BE LIMITED TO THE AFORESAID EXTE NT ONLY.' (V)THE DECISION OF KRUPANIDHI EDUCATIONAL TRUST VS. DIT ( E) 152 TTJ 673, WHEREIN IT IS HELD AS UNDER :- THE DIT(E) IN THE ORDER U/S 12AA (3) OF THE ACT, DO NOT MAKE OUT ANY CASE, WHICH CAN SHOW THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE OR THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT BEIN G CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION. THE FACT THAT THE ASSESSEE WAS PAYING COMMISSION TO PERSONS WHO SOLICIT STUDENTS FOR STUDYING IN THE ASSESSEES INSTITUTION CANNOT LEAD TO THE CONCLUSION THAT THE ASSESSEE IS NOT IMPARTING EDUCA TION. SIMILARLY PURCHASE OF A BMW CAR, BORROWING OF LOANS FROM SIND HI FINANCIERS, NON MAI NTENANCE OF REGULAR BOOKS OF ACCOUNTS, VIOLATIONS O F PROVISIONS OF SEC.13(1)( C) OF THE ACT IN AS MUCH A S THE TRUSTEES WERE PAID ENORMOUS SALARY ARE ALL BY WAY OF PASSING REFE RENCE HAVING CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 67 NORELEVANCE TO WHETHER OR NOT THE ASSESSEE WAS PURS UING EDUCATION AS ITS MAIN OBJECT. THERE ARE NO FACTS BROUGHT OUT IN THE IMPUGNED ORDER REGARDING THE GENUINENESS OF THE ACTIVITIES O F THE TRUST OR AS TO WHETHER THE OBJECT OF EDUCATION WAS NOT PURSUED BY THE ASSESSEE AS ITS MAIN AND PREDOMINANT ACTIVITY. IN FACT, THE ORD E R OF THE DIT(E) DOES NOT ANYWHERE SHOW THAT THE ASSESSEE IS NOT IMP ARTING EDUCATION. THE COMPLAINT OF THE REVENUE SEEMS TO BE THAT EDUCATION IS BEING IMPARTED BUT ON COMMERCIAL LINES. THE DEFI NITION OF CHARITABLE PURPOSE IS GIVEN IN SEC.2(15) OF THE ACT . T HE SAME REFERS TO 'RELIEF TO POOR, MEDICAL RELIEF, EDUCATION AND T HE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. THE PR OVISO TO SEC.2(15) OF THE ACT INTRODUCED BY THE FINANCE ACT, 2008 W.E.F. 1.4.2008 REGARDING EXCLUDING ORGANIZATIONS WHERE THERE IS PROFIT MOTIVE FROM THE DEFINITION OF CHARITABLE PURPOSE APPLIES ONLY T O THE CATEGORY OF TRUSTS WHICH HAS AS ITS OBJECT, THE OBJECT OF 'ADVA NCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. IT DOES NO T APPLY TO THE OTHER CATEGORIES OF CHARIT ABLE PURPOSE VIZ., 'RELIEF TO POOR, EDUCATION AND MEDICAL RELIEF'. AS RIGHTLY POINTED OUT BY THE LEAR NED COUNSEL FOR THE ASSESSEE, ELEEMOSYNARY ELEMENT IS NOT ESSENTIAL ELE MENT OF CHARITY. IT IS ALSO NOT A NECESSARY ELEMENT IN A CHARITABLE PURPOSE THAT IT SHOULD PROVIDE SOMETHING FOR NOTHING OR FOR LESS TH AN IT COSTS OR FOR LESS THAN THE ORDINARY PRICE. THE SURPLUS GENERATED , IF IT IS HELD FOR CHARITABLE PURPOSE AND APPLIED FOR CHARITABLE PURPO SE OF THE ASSESSE, AND THEN THE ASSESSEE HAS TO BE CONSIDERED AS EXISTING FOR A CHARITABLE PURPOSE. THERE ARE ENOUGH SAFEGUARDS P ROVIDED IN SEC.12 AND 13 OF THE ACT TO ENSURE THAT PERSONAL BE NEFITS OF THEPERSONS IN CONTROL OF THE TRUSTS ARE NOT TREATED AS HAVING APPLIED FOR CHARITABLE PURPOSE AND FOR BEING BROUGHT TO T AX LIKE PROVISIONS OF SEC.13(1) (C ) OF THE ACT WHICH RESTRICTS UNREASONA BLE AND EXCESSIVE PAYMENTS TO CERTAIN CATEGORY OF PERSONS CONNECTED W ITH A TRUST OR CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 68 OTHER INSTITUTION. IN SUCH CIRCUMSTANCES, THE ORDER U/S 12AA(3) OF THE ACT, CANNOT BE SUSTAINED. (VI) THE DECISION OF PRABODHAN PRASARAK SHIKSHAN SANTHAN VS. DCIT152 ITD 473 (PUNE), WHEREIN IT IS HELD AS UNDER :- THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SINHAG AD TECHNICAL EDUCATION SOCIETY V. CIT (CENTRAL) 2012) 343 ITR 23 (BOM) HAS HELD THAT 'EVERY STATUTORY PROVISION WHICH OPERATES IN R ESPECT OF A TRUST, WHICH HAS ALREADY BEEN REGISTERED IN THE PAST IS NO T NE CESSARILY RETROSPECTIVE. A PROVISION IS RETROSPECTIVE WHEN IT TAKES AWAY A RIGHT WHICH HAS VESTED OR ACCRUED IN THE PAST. THE EFFECT OF THE PROVISION IS TO EMPOWER THE COMMISSIONER TO CANCEL THE REGIST RATION OF THE TRUST WHERE HE IS SATISFIED THAT THE ACTI VITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THIS COULD NOT BY ANY STRETCH OF IMAGINATION BE REGARDED AS RETROSPECTIVE ALTERNATION OF THE LAW. I N THE CASE BEFORE US, AS PER THE AMENDMENT BY THE FINANCE ACT, 2010, THE COMMISSIONER HAS CLAIMED TO BE EMPOWERED TO INITIAT E STEPS FOR THE CANCELLATION OF THE REGISTRATION OF A TRUST OR INST ITUTION WHERE THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENU INE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS THEREOF EVEN IN RELATION TO A TRUST WHICH WAS REGISTERED UNDER S. 12A AS IT THE N STOOD.' SO BASIC REQUIREMENT FOR INVOKING S. 12AA(3) IS THAT T HE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN A CCORDANCE WITH THE OBJECTS OF THE TRUST. THE CIT HAS RECORDED HER FINDINGS IN THE ORDER U/S 12AA(3) THAT THE TRUST IS IMPARTING KNOWL EDGE AT COST AND THEREFORE, NOT A CHARITABLE TRUST WITHIN THE PURVIE W OF S. 2(15) OF THE ACT, SECONDLY, THE APPELLANT TRUST HAS CONTRAVENED THE PROVISIONS OF SS. 11(5) AND 13(1) (C) OF THE ACT. THIRDLY, THE TR UST IS TREATED BY THE CHAIRMAN AND FAMILY MEMBERS /RELATIVES AS THEIR PRI VATE PROPERTY CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 69 AND ENJOYED BY THEM FOR THEIR BENEFITS ONLY. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE TRUST IS NOT 'GENUINE'. IN FACT, THE TRUST IS CARRYING ON EDUCATIONAL ACTIVITIES THEY ARE CHARITA BLE IN NATURE. THE ACTIVITIES ARE CARRIED OUT AS PER ITS OBJECTS. THER E IS NO INFRINGEMENT OF ANY OF THE PROVISIONS CONTAINED IN SS.1 1(5) AND 13 OF T HE ACT. THE PROVISIONS OF S.12AA(3) FOR CANCELLATION/WITHDRAWAL OF REGISTRATION GRANTED TO IT W.E.F. 11-2- 1998 U/S 12A OF THE ACT ARE NOT RETROSPECTIVE AND THEREFORE, THE IMPUGNED ORDER OF THE CIT PASSED U/S 12AA(3) IS NOTHING BUT A REVIEW OF ITS EARLIER O RDER WHICH IS IMPERMISSIBLE IN LAW. (VII)THE DECISION OF RAJASTHAN VIKAS SANSTHAN VS. CIT REPORTED IN 78 DTR 411 (RAJ), WHEREIN IT IS HELD A S UNDER :- THE REGISTRATION CAN BE CANCELLED ON THE GROUND THA T THE ACTIVITY OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST. IN CASE THERE ARE VIO LATIONS AS MENTIONED IN S. 11 AND 13 OF THE ACT. THUS THE AO WHILE MAKIN G ASSESSMENT CAN DENY THE EXEMPTION TO THE TRUST. FOR GETTING TH E EXEMPTION U/S 11, REGISTRATION IS PRE- REQUISITE. HOWEVER, REGISTRATION IS NOT A GUARANTEE FOR EXEMPTION. IN CASE THE TRUST FAILS TO COMPLY WITH THE REQUIREMENTS AS MENTIONED IN S. 11 AND 13 OF THE AC T THEN EXEMPTION CAN BE DENIED. IN RESPECT OF FAILURE MENT IONED IN S. 11 AND 13 IN A PARTICULAR YEAR, IT CANNOT BE SAID THAT REGISTRATIO N IS TO BE CANCELLED. SURPLUS IN EDUCATIONAL 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 C HARITA BLE ACTIVITIES THEN IT CANNOT BE SAID THAT REGISTRATION IS TO BE D ISALLOWED. THE GROUND ON WHICH THE REGISTRATION CANNOT BE REFUSED, CANNOT BE CONSIDERED AS A GROUND FOR CANCELLING THE REGISTRAT ION . CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 70 (VIII) THE CO-ORDINATE BENCH OF COCHIN IN THE CASE OF M/S KUNHITHARUVAI MEMORIAL CHARITABLE TRUST, KMCT CORPO RATE OFFICE, MALABUR CHRISTIAN COLLEGE CROSS ROAD, CALIC UT V CIT (CENTRAL), KOCHI (ORDER DATED 16/01/2017 IN APPEAL NO. 246/COCH/14) IT WAS HELD THAT :- PARA 16. HAVING SAID SO, LET US EXAMINE THE POWERS OF THE COMMISSIONER TO GRANT REGISTRATION U/S 12AA AND CANCELLATION OF REGISTRATION U/S 12AA (3) OF THE ACT. THE POWER TO CANCEL REGISTRATION AL READY GRANTED U/S.12AA OF THE ACT IS CONTAINED IN SEC. 12AA(3) OF THE ACT AND IT READS AS FOLLOWS: '(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANT ED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION 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 O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONAB LE OPPORTUNITY OF BEING HEARD.' THE PROVISIONS OF SECTION 12AA OF THE ACT, DEALS WI TH PROCEDURE FOR REGISTRATION OF TRUST/INSTITUTIONS. AS PER SAID S ECTION, THE COMMISSIONER SHALL LOOK INTO THE OBJECTS OF THE TRUST AND ITS AC TIVITIES AND SATISFY HIMSELF ABOUT THAT THE OBJECTS OF THE TRUST ARE CHA RITABLE IN NATURE AND ITS ACTIVITIES ARE GENUINE AND SUCH ACTIVITIES ARE CARR IED OUT IN ACCORDANCE WITH ITS OBJECTS. SUB-SECTION (3) INSERTED WITH EFF ECT FROM 1ST OCT., 2004 EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATIO N OF A TRUST OR INSTITUTION GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1) WHEN SUBSEQUENT TO GRANT OF REGISTRATION THE COMMISSIONER IS SATISFIED THAT ACTIVITIES OF TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 71 WITH OBJECTS OF THE TRUST OR INSTITUTION.BASIC PURP OSE OF S. 12AA(3) IS TO CHECK MISUSE OF EXEMPTION UNDER PRETEXT OF CARRYING OUT CHARITABLE ACTIVITIES WHEN THE SAME ARE NOT SO. THE CIT HAS TO MAKE OUT CLEAR CASE FOR EXERCISING POWERS U/S. 12AA(3). IN THIS CASE, S O FAR AS OBJECT OF TRUST IS CONCERNED, IT IS NOWHERE DISPUTED THAT ASSESSEE IS ENGAGED IN IMPARTING EDUCATION. ONCE AN INSTITUTION CAME WITHI N THE PHRASE 'EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PROFIT' NO OTHER CONDITION LIKE APPLICATION OF INCOME WAS REQUIRED TO BE COMPLIED W ITH. THE MERE EXISTENCE OF PROFIT/SURPLUS DID NOT DISQUALIFY THE INSTITUTION. BREACH OF THE CONDITIONS OF THE TRUST DEED WOULD NOT DISENTITLE T HE INSTITUTION FROM GETTING THE BENEFIT WHICH THE INSTITUTION HAD BEEN GRANTED EARLIER BEING A CHARITABLE TRUST. NOWHERE IN HER ORDER, THE CIT HAS TAKEN ANY OBJECTION TO THE CHARITABLE AND EDUCATIONAL NATURE OF THE INSTIT UTION. IN FACT, THE OBJECTS OF THE INSTITUTION AS DECLARED IN THE TRUST DEED DO REFLECT THAT ALL ARE PHILANTHROPIC OR BENEVOLENT IN NATURE, PRECISEL Y, FOR THE PURPOSE OF IMPARTING EDUCATION. STRANGE ENOUGH, THERE IS NO FI NDING RECORDED BY THE CIT CONTRARY TO THIS FACT.RATHER, THIS IS ALSO NOT THE CASE OF THE CIT THAT THE INSTITUTION IS DOING SOME OTHER ACTIVITY OF EAR NING PROFIT OTHER THAN THE ACTIVITY OF RUNNING EDUCATIONAL INSTITUTIONS. THE E STABLISHED FACTUAL POSITION IS THAT THE INSTITUTION IS NOT DOING ANY O THER ACTIVITY EXCEPT RUNNING EDUCATIONAL INSTITUTIONS. IN SUCH CIRCUMSTA NCES, THE ACTION OF CANCELLATION OF REGISTRATION CANNOT BE UPHELD. AS F AR AS THE OBJECT OF THE ASSESSEE IS CONCERNED, THIS IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE WAS NOT IMPARTING EDUCATION. SINCE THE QUE STION ABOUT THE IMPARTING OF EDUCATION HAS NOT BEEN DOUBTED OR CHAL LENGED BY THE REVENUE, THE IMPUGNED ORDER PASSED BY THE CIT IS UN SUSTAINABLE IN LAW. STRANGE ENOUGH AGAIN, THERE IS NOTHING ON RECORD TO PROVE EVEN SIGHTLESSLY THAT THE PURPOSE OF IMPARTING EDUCATION WAS NOT FULFILLED BY THIS INSTITUTE, THUS THE REVENUE DEPARTMENT HAS FAI LED TO ESTABLISH THAT THERE WAS ANY ILLEGAL ACTIVITY OR INFRINGEMENT OF L AW SO AS TO DOUBT THE GENUINENESS OF THE ACTIVITIES. CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 72 38. ON PERUSAL OF THE JUDGMENTS AND DECISIONS REFER RED HEREIN ABOVE, WE FIND THAT THEY ARE SQUARELY APPLICABLE ON THE FACTS OF THE INSTANT APPEAL AND THE ISSUE RAISED BEFORE US AND T HUS FAVOURS THE ASSESSEE. BEFORE CONCLUDING WE WOULD LIKE TO SUMMA RISE OUR FINDINGS AND OBSERVATIONS IN FOLLOWING MANNER:- (I) AS REGARDS THE ALLEGED DONATIONS RECEIVED FROM VARIOUS CONCERNS MENTIONED IN THE IMPUGNED ORDER, WE ARE SATISFIED WITH THE IDENTITY OF THE ALLEGED DONORS, GENUINENESS OF THE TRANSACTION OF GIVING DONATIIO N TO THE ASSESSEE TRUST SINCE MOST OF THE ALLEGED DONORS A RE EITHER CHARITABLE TRUSTS OR KNOWN TO THE DIRECTORS / PROMOTERS AND THE TRANSACTIONS BEING CARRIED OUT THROUGH BANKING CHANNEL AND WE ARE ALSO SATISFIED WITH THE CREDITWORTHINESS OF THE ALLEGED DONORS AS THE Y HAVE SUFFICIENT FINANCIAL STRENGTH TO PROVIDE THE DONAT ION TO THE ASSESSEE TRUST, (II) AS REGARDS THE ALLEGED IRREGULARITY IN EDUCAT ION PROCESS NOTED BY CBI THE MATTER IS STILL SUBJUDICE WITH THE COURT AND THE ORDER OF REGULATORY AUTHORITY NA MELY ADMISSION FEE REGULATORY COMMITTEE STAND STAYED B Y CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 73 THE HON'BLE JURISDICTIONAL HIGH COURT VIDE STAY OR DER DATED 23.7.2015 WHICH IS EFFECTIVE TILL DATE. THE ALLEGED IRREGULARITY IS FOR ONE OF THE YEAR IN ONLY ONE OF THE COLLEGE RUN BY THE TRUST AMONGST OTHER HOSPITALS AND COLLE GES WHICH ARE UNDISPUTEDLY PROVIDING CHARITABLE SERVI CES IN THE FIELD OF MEDICAL AND EDUCATION. (III) THE ISSUE OF IRREGULARITY IN ADMISSION PROCES S IS NOT PART OF THE SHOW CAUSE NOTICE DATED 6.12.2018 ISSUE D TO THE ASSESSEE IN CONNECTION WITH THE CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT WHICH SHOWS THA T ASSESSEE WAS NOT GRANTED REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE WHICH IN ITSELF MAKES THE PROCE EDINGS BAD IN LAW. (IV) THE ISSUES RAISED IN THE SHOW CAUSE NOTICE DA TED 6.12.2018 ISSUED BY LD. PCIT ARE NOT RELEVANT FOR CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE AC T. SUCH TYPES OF ISSUES CAN BE EXAMINED BY THE ASSESSING O FFICER DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDING S WHEREIN ON THE BASIS OF HIS EXAMINATION/ INVESTIG ATION NECESSARY VIEW AS PERMISSIBLE IN LAW CAN BE TAKEN IF CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 74 VIOLATION OF SECTION 11 AND SECTION 13 OF THE ACT BY THE ASSESSEE ARE OBSERVED. LD. PCIT CAN ONLY CANCEL T HE REGISTRATION U/S 12AA(3) OF THE ACT IF IT IS FOUND THAT THE ACTIVITIES OF THE SOCIETY/TRUST ARE EITHER NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH IT S OBJECT PROVIDED IN BYE LAWS. (V) WE ALSO FIND THAT NOTHING ON RECORD HAS BEEN BR OUGHT BEFORE US BY WAY OF AN INDEPENDENT ENQUIRY BY LD. P CIT THEREBY COLLECTING NECESSARY EVIDENCE WHICH CAN SHO W THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE EIT HER NOT GENUINE OR ARE NOT BEING CARRIED OUT AS PER THE OBJ ECTS OF THE SOCIETY WHICH WERE FILED BEFORE THE REGISTERING AUTHORITY AT THE TIME OF GRANTING REGISTRATION U/S 12AA OF THE ACT. IT IS THEREFORE ESTABLISHED THAT THE ACTIV ITIES CARRIED OUT BY THE APPELLANT ASSESSEE SOCIETY BY WA Y OF RUNNING HOSPITALS AND MEDICAL COLLEGES FOR THE BENE FIT OF PUBLIC AT LARGE AND FOR THE STUDENTS ARE FOR CHARIT ABLE PURPOSES ONLY AS PROVIDED IN SECTION 2(15) OF THE ACT. 39. WE THEREFORE IN VIEW OF OUR ABOVE FINDING ARRIV ED AT AFTER EXAMINING THE FACTS OF THE INSTANT CASE AND IN THE LIGHT OF CHIRAYU CHARITABLE FOUNDATION ITA NO.179/IND/2019 75 JUDGMENTS REFERRED HEREIN ABOVE WHICH ARE SQUARELY APPLICABLE ON THE FACTS AND ISSUE RAISED BEFORE US ARE OF THE CON SIDERED VIEW THAT THE IMPUGNED ORDER OF LD. PCIT CANCELLING THE ASSES SEES REGISTRATION GRANTED U/S 12AA(1) OF THE ACT DESERVE S TO BE QUASHED. WE ACCORDINGLY ORDER SO AND DIRECT THE REVENUE AUTH ORITIES TO RESTORE THE REGISTRATION U/S 12AA(1) OF THE ACT GRA NTED TO ASSESSEE SOCIETY W.E.F. 1.4.2011. ACCORDINGLY ALL THE GROUND S RAISED BY THE ASSESSEE ARE ALLOWED. 40. IN THE RESULT APPEAL OF THE ASSESSEE STANDS ALL OWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09 .0 2.2021. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 09 FEBRUARY, 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT. REGISTRAR, I.T.A.T., INDORE