M/s Indo Soviet Friendship College of Pharmay Managing Committee, Moga V. CIT (Central), Gurgaon

ITA 207/CHANDI/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86110 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2016
• Assessment Year: misc
• Appeal Filed On: 21-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Document seized; Opportunity of being heard; Cancellation of registration; Documents seized
• Section: 80G; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 207/CHD/2012 M/S INDO SOVIET FRIENDSHIP COLLEGE VS. THE CIT (CE NTRAL), OF PHRMACY MANAGING COMMITTEE, GURGAON MOGA. PAN NO.AAATI4977L (APPELLANT) (RESPONDENT) APPELLANT BY : SH SUDHIR SEHGAL RESPONDENT BY : SH. SUSHIL KUMAR DATE OF HEARING : 05.01.2016 DATE OF PRONOUNCEMENT : 18.01.2016 . ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(CENTRAL), GURGAON PASSED U/S 12AA AND 80G OF TH E INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') DATED 19.12.2011. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SSESSEE IS A CHARITABLE SOCIETY, WAS CONSTITUTED IN THE YEAR 1985 AND IS AT PRESENT IMPARTING EDUCATION IN VARIOUS BRANCHES OF BDS / MDS DIPLOMA IN TECHNIC AL EDUCATION, PHARMACY AND EDUCATION. THIS SOCIETY IS RUNNING A 100 BED MU LTI SPECIALITY HOSPITAL. THE SOCIETY WAS REGISTERED UNDER THE SOCIETIES ACT ON 2 .12.1985 WITH REGISTRAR OF SOCIETIES, PUNJAB. THE SOCIETY WAS GRANTED REGISTRA TION U/S 12AA OF THE ACT BY THE CIT, AMRITSAR DATED 6.6.1997. FURTHER, REGISTR ATION U/S 80G WAS ALSO GRANTED VIDE ORDER DATED 9.8.2002 FOR THE PERIOD FR OM 1.4.2002 TO 31.3.2003. 2 THE PERIOD WAS EXTENDED FROM 1.4.2003 TO 31.3.2005 VIDE ORDER DATED 2.9.2003 OF COMMISSIONER OF INCOME TAX, PANCHKULA. IT WAS F URTHER EXTENDED TO 1.4.2005 TO 31.3.2008 VIDE ORDER DATED 20.3.2006. A SEARCH WAS CONDUCTED ON 15.7.2008 AT THE VARIOUS RESIDENTIAL PREMISES, OFFICES, INSTI TUTES OF BRS GROUP OF MEDICAL SCIENCES. DURING THE COURSE OF SEARCH OPERATION, S EVERAL INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSMENT FOR ASSESSMENT YEAR 2006-07 AND 2007-08 WERE COMPLETED ON 31.12.2010 WHEREIN CE RTAIN ADDITIONS / DISALLOWANCES WERE MADE ON ACCOUNT OF UNDISCLOSED I NCOME OF THE ASSESSEE AS EMERGING FROM SEIZED DOCUMENTS. THE LD. CIT HAD ISS UED A SHOW CAUSE NOTICE FOR CANCELLATION OF REGISTRATION U/S 12AA OF THE AC T. HOWEVER, THERE WAS NO RESPONSE FROM THE ASSESSEE. THE LD. CIT CAME TO THE CONCLUSION THAT ACTIVITIES OF THE TRUST ARE NOT GENUINE AND HAS NOT BEEN CARRI ED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. ACCORDINGLY, THE REGISTRATION GRANTED VIDE ORDER DATED 6.6.1997 WAS WITHDRAWN. AS A CONSEQUENCE, THE RECOG NITION GRANTED FOR THE PURPOSES OF SECTION 80G OF THE ACT WAS ALSO WITHDRA WN. IT APPEARS THAT THE LD. CIT(A) HAS PASSED AN EX-PARTE ORDER 3. BEFORE US, SHRI SUDHIR SEHGAL, LD. COUNSEL FOR T HE ASSESSEE FILED A CHART SHOWING THE COMPARISON OF THE ISSUES IN THE ORDER U /S 12AA AND 80G OF THE ACT AS PASSED BY THE LD. CIT, WHICH IS REPRODUCED HEREI N BELOW:- 1. BASIS OF CANCELLATION OF REGISTRATION U/S 12AA & 80G IS ON ACCOUNT OF ORDER PASSED IN THE CASE OF M/S IN DO SOVIET FRIENDSHIP COLLEGE FOR PHARMACY FOR ASSTT. YEARS 20 04-05, 2006-07, 2007-08 & 2008-09. 2. THE ASSESSING OFFICER HAD MADE CERTAIN ADDITIONS , WHICH WERE PARTLY DELETED BY THE CIT(A) GURGAON AND BOTH THE ASSESSEE AND DEPARTMENT HAD FILED APPEALS BEFOR E THE HON'BLE ITAT, CHANDIGARH BENCH, CHANDIGARH AND THE HON'BTE BENCH IN ITA NOS. 478 A 479/CHD/2013 IN ITA NOS. 444,445,446/CHD/2013 FOR ASSTT. YEAR 2004-05, 2006- 07, 2007-08 & 2008-09 VIDE ORDER, DATED 28.09.2015 HAS SINCE 3 DISMISSED THE APPEAL OF THE DEPARTMENT AND THE ASSE SSEE'S APPEAL HAS BEEN ALLOWED AND, THUS, THERE WAS NO JUSTIFICATION IN CANCELLING THE REGISTRATION U/S 12 AA & 80G. 3. NO DOUBT HAS BEEN RAISED ON ACCOUNT OF OBJECTS F OR WHICH THE SOCIETY HAS BEEN FORMED. 4. THE VARIOUS HEADS OF THE ADDITION AS PER THE OR DER U/S 12AA/80 G ARE AS UNDER:- S.NO. ISSUE REMARKS 1 ADDITION ON THE BASIS OF TWO DIARIES TO THE TUNE OF RS. 4 CRORES THIS ISSUE HAS BEEN DISCUSSED IN PARA 27 OF THE ORDER OF THE ITAT, WHERE THE ADDITION OF RS. 4 CRORES WAS MADE AND PART ADDITION WAS DELETED BY THE CIT (A) AND BOTH THE ASSESSEE AND DEPARTMENT HAD COME IN APPEAL. THE HON'BLE BENCH HAS GIVEN A FINDING IN PARA 36 AT PAGE 26 & 27 OF THE ORDER, WHEREIN, THE DEPARTMENTAL APPEAL STANDS DISMISSED. IN ASSESSEE'S APPEAL FINDING HAS BEEN GIVEN IN PARA 37 AT PAGE 27 OF THE ORDER AND THE ADDITION HAS FINALLY BEEN DELETED IN PARA 38 AT PAGE 33 OF THE ORDER. 2 UNEXPLAINED CASH CREDIT THIS ISSUE HAS BEEN DISCUSSED IN PARA 40 AND THE FINDINGS HAS BEEN GIVEN IN PARA 45 OF THE ORDER AND FINALLY IN PARA 46 OF THE ORDER 3 VIOLATION OF PROVISIONS OF SECTION 13(2)(B)(C) THIS ISSUE HAS BEEN DISCUSSED IN THE CONSOLIDATED ORDER IN PARA 13 OF THE ORDER AND FINDING IS IN PARA 17 & 18 OF THE ORDER AT PAGES 12 TO 14. 4 4 ADDITION ON ACCOUNT OF DISALLOWANCE OF PART OF THE CAR EXPENSES. THIS ISSUE HAS BEEN DISCUSSED IN PARA 4 AND THE FINDING HAS BEEN GIVEN IN PARA 7 OF THE CONSOLIDATED ORDER. 5 ADDITION OF UNDISCLOSED INCOME APPARENT FROM EXISTENCE OF FALSE LIABILITY IN THE FORM OF BOGUS CREDITOR EXISTING UNDER THE NOMENCLATURE 'IMPREST A/C (SH. ANUP GARG). THIS ISSUE HAS BEEN DISCUSSED BY THE HON'BLE BENCH IN PARA 37.3 AT PAGE 32 OF THE ORDER. SH. ANUP GARG HAD OFFERED THIS AMOUNT IN HIS OWN NAME DURING THE COURSE OF SEARCH U/S 132(4) AND NO LINK OR CONNECTION WITH THE TRUST. 4. SHRI SUDHIR SEGHAL LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN VIEW OF THE CONSOLIDATED ORDER OF THE TRIBUNAL DATED 28.9.2 015 PASSED IN ITA NOS. 478 & 479/CHD./2013 RELATING TO ASSESSMENT YEARS 2004-0 5 & 2008-09 AND IN ITA NO. 444, 445 & 446./CHD/2013 FOR THE ASSESSMENT YEA RS 2006-07, 2007-08, 2008-09, THERE WAS NO JUSTIFICATION IN CANCELLING T HE REGISTRATION U/S 12AA OF THE ACT AND WITHDRAWING THE APPROVAL U/S 80G OF THE ACT. SHRI SUDHIR SEGHAL VEHEMENTLY ARGUED THAT THE LD. CIT HAS NOT DISPUTE D THE OBJECTS FOR WHICH THE SOCIETY HAS BEEN FOUND. HE, THEREFORE, SUBMITTED TH AT IN THE CHANGED SCENARIO, THE MATTER MAY BE REMANDED TO THE LD. CIT FOR A FRE SH CONSIDERATION IN ACCORDANCE WITH LAW. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE OBSE RVE THAT LD. CIT HAS CANCELLED THE REGISTRATION AND ALSO WITHDRAWN THE A PPROVAL U/S 80G OF THE ACT MERELY ON THE BASIS OF SEVERAL INCRIMINATING DOCUME NTS FOUND AND SEIZED DURING THE COURSE OF SEARCH OPERATION. ON THE BASIS OF THE SAID DOCUMENTS, THE LD. CIT CAME TO THE CONCLUSION THAT THE ACTIVITIES OF THE T RUST ARE NOT GENUINE AND HAS NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IN OUR OPINION, THE FINDINGS GIVEN BY THE TRIBUNAL IN ASSESSEES CA SE IN ITA NOS. 444, 445 & 5 646/CHD/2013 AND IN ITA NOS. 478 & 479/CHD/2013 I.E . IN DEPARTMENTAL APPEALS, REFERRED TO ABOVE ARE RELEVANT FOR DECIDIN G THE ISSUE IN HAND. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE SET ASIDE THE ORDER OF LD. CIT IN TOTO AND REMAND THE MATTER TO THE CIT WITH THE DIRECTION TO DECIDE THE ISSUES AFRESH IN ACCORDANCE WITH LAW AND AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE CIT IS ALSO DIRECTED TO DECIDE THE MATTER PREFERABLY WITHIN FOUR MONTHS FROM THE DATE OF RECEIPT OF THE COPY OF THIS ORDER. 6. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.01.2016 SD/- SD/- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED 18 TH JANUARY, 2016 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR