M/s., Appejay Education Society, Jalandhar V. The Commissioner of Income tax, Jalandhar

ITA 228/ASR/2013

• Counselvise Citation: 22820914 RSA 2013
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2014
• Assessment Year: misc
• Appeal Filed On: 15-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Charitable institution; Opportunity of being heard; Principle of natural justice; Accommodation entries; Competent authority; Cancellation of registration
• Section: 143(3); 133A; 12AA; 132; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL11 AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 228(ASR)/2013 ASSESSMENT YEAR: NIL PAN: AAATA3534F M/S APEEJAY EDUCATION SOCIETY, VS. COMMISSIONER OF INCOME BHAGWAN MAHAVIR MARG, JALANDHAR-II, JALANDHAR NEW JAWAHAR NAGAR, JALANDHAR (APPELLANT) (RESPONDENT) WITH I.T.A. NO. 227(ASR)/2013 ASSESSMENT YEAR: NIL PAN: AAATR2403F M/S RAJESHWARI SANGEET ACADEMY VS. COMMISSIONER OF INCOME TRUST, BHAGWAN MAHAVIR MARG, JALANDHAR-II, JALAN DHAR NEW JAWAHAR NAGAR, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH SALIL KAPOOR, VIKAS JAIN, ADVOC ATES, NIRMAL MAHAJAN, CA RESPONDENT BY: SH. MAHAVIR SINGH, SR.DR DATE OF HEARING: 29.04.2014 DATE OF PRONOUNCEMENT: 08.05.2014 ORDER 1) THESE TWO APPEALS OF TWO ASSESSEES ARISE FROM TWO DIFFERENT ORDERS OF LEARNED COMMISSIONER OF INCOME TAX, JALA NDHAR-II, JALANDHAR, 2 I.T.A. NO. 228 & 227(ASR)/2013 PASSED UNDER SECTION 12AA(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) DATED 25.03.2013 IN THE C ASE OF M/S APEEJAY EDUCATION SOCIETY AND 13.03.2013 IN THE CASE OF M/S RAJESHWARI SANGEET ACADEMY TRUST. THE ASSESSEE M/S APEEJAY EDUCATION S OCIETY IN ITA NO. 228(ASR)/2013 HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL: I. THAT ON FACTS AND IN LAW THE ORDER WITHDRAWING REGI STRATION U/S 12AA(3) OF THE INCOME TAX ACT, 1961 IS PREMATURE, B AD IN LAW AND VOID AB-INITIO. II. THAT ON FACTS AND IN LAW THE CIT ERRED IN HOLDING T HAT EFFECTIVE OPPORTUNITY TO CROSS EXAMINE WAS AFFORDED AND NOT A VAILED BY THE ASSESSEE. III. WITHOUT PREJUDICE AND IN THE ALTERNATE, THE CIT ERR ED ON FACTS AND IN LAW IN WITHDRAWING REGISTRATION RETROSPECTIVELY W.E.F. ASSESSMENT YEAR 2004-05. IV. THAT ASSESSEE RESERVES ITS RIGHT TO ADD ALTER, AMEN D, MODIFY AND/OR TO WITHDRAW ANY GROUNDS OF APPEAL OR DURING THE COU RSE OF HEARING. 2) THE ASSESSEE M/S RAJESHWARI SANGEET ACADEMY TRUS T IN ITA NO. 227(ASR)/2013 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I. THAT ON FACTS AND IN LAW THE ORDER WITHDRAWING REGI STRATION U/S 12AA(3) OF THE INCOME TAX ACT, 1961 IS PREMATURE, B AD IN LAW AND VOID AB-INITIO. II. THAT ON FACTS AND IN LAW THE ASSUMPTION OF JURISDIC TION IS BAD INASMUCH AS IT IS BASED ON DELEGATION OF POWER IMPE RMISSIBLE BY LAW. III. THAT ON FACTS AND IN LAW THE CIT ERRED IN HOLDING T HAT EFFECTIVE OPPORTUNITY TO CROSS EXAMINE WAS AFFORDED AND NOT A VAILED BY THE ASSESSEE. IV. WITHOUT PREJUDICE AND IN THE ALTERNATE, THE CIT ERR ED ON FACTS AND IN LAW IN WITHDRAWING REGISTRATION RETROSPECTIVELY W.E.F. ASSESSMENT YEAR 2004-05. 3 I.T.A. NO. 228 & 227(ASR)/2013 V. THAT ASSESSEE RESERVES ITS RIGHT TO ADD ALTER, AMEN D, MODIFY AND/OR TO WITHDRAW ANY GROUNDS OF APPEAL OR DURING THE COU RSE OF HEARING. 3) SINCE THE ISSUES INVOLVED IN BOTH THE APPEALS AR E IDENTICAL, THEREFORE, WE PROCEED TO DECIDE BOTH THE APPEALS BY A CONSOLIDATED ORDER. 4) FIRST OF ALL, WE PROCEED TO TAKE UP THE APPEAL I N THE CASE OF M/S APEEJAY EDUCATION SOCIETY IN ITA NO. 228(ASR)/2013 AND SINCE THE ISSUES AS MENTIONED HEREINABOVE ARE IDENTICAL WITH THAT OF M/S RAJESHWARI SANGEET ACADEMY TRUST IN ITA NO. 227(ASR )/2013, OUR DECISION HEREINBELOW IN THE CASE OF M/S APEEJAY EDU CATION SOCIETY IN ITA NO. 228(ASR)/2013 SHALL IDENTICALLY BE APPLICAB LE IN THE CASE OF M/S RAJESHWARI SANGEET ACADEMY TRUST IN ITA NO. 227(ASR )/2013. 5) THE BRIEF FACTS IN THE CASE OF M/S APEEJAY EDUCA TION SOCIETY IN ITA NO. 228(ASR)/2013 ARE THAT THE SOCIETY HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT W.E.F. 01.04.1998 VID E ORDER DATED 13.05.1999 PASSED BY THE THEN COMMISSIONER OF INCOM E TAX, JALANDHAR. ON PERUSAL OF RECORD, LEARNED CIT, JALANDHAR-II, JA LANDHAR, OBSERVED THAT THE ASSESSEE SOCIETY IS RUNNING VARIOUS INSTITUTION S REFERRED TO AT PAGE NOS. 1 & 2 OF ITS ORDER. LEARNED CIT, JALANDHAR-II, JALA NDHAR, FURTHER OBSERVED THAT THE SAID INSTITUTIONS ARE STATED TO BE ENGAGED IN THE ACTIVITY OF IMPARTING EDUCATION TO STUDENTS UNDER VARIOUS FIELD S. AN INFORMATION WAS 4 I.T.A. NO. 228 & 227(ASR)/2013 RECEIVED THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132(1) OF THE ACT WAS CONDUCTED BY THE DIRECTOR OF INCOME-TAX (IN VESTIGATION)-II, MUMBAI, AT THE PREMISES OF ONE SH. PARAG V. MEHTA L OCATED AT 114/114A, JOLLY BHAWAN NO. 1, 10 MARINE LINES, MUMBAI ON 22.0 3.2011. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION, IT WAS FOUND THAT SHRI PARAG V MEHTA HAD GIVEN TABLE SPACE TO VARIOUS BOGUS COMPAN IES IN HIS PREMISES WHICH DO NOT ACTUALLY TRANSACT ANY BUSINESS BUT ARE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES TO THE NEEDY PERSONS/CONCERNS . SUCH COMPANIES INCLUDED M/S WASHINGTON SOFTWARE LTD. (WSL), WHICH WAS BEING RUN BY ONE SH. SANJAY D SONAWANI. THE FACT THAT M/S WASHIN GTON SOFTWARE LTD. WAS A COMPANY ENGAGED IN PROVIDING ACCOMMODATION EN TRIES WAS ADMITTED BY SH. PARAG V MEHTA IN HIS STATEMENT RECO RDED DURING THE COURSE OF SEARCH & SEIZURE OPERATIONS ON 22.03.2011 . IT WAS FURTHER ADMITTED BY SHRI PARAG V MEHTA THAT THE SAID COMPAN Y WAS PROVIDING ACCOMMODATION BILLS TO INTERESTED PARTIES AND SH. S ANJAY D. SONAWANI WAS MANAGING ALL THE AFFAIRS OF THAT COMPANY. SH. S ANJAY D. SONAWANI IN HIS STATEMENT RECORDED ON 12.05.2011 ALSO ADMITTED THAT HIS COMPANY M/S WASHINGTON SOFTWARES LTD. WAS INVOLVED IN PROVIDING ACCOMMODATION ENTRIES AND ALSO ACCEPTED THE FACT THAT HE HAS PROV IDED ACCOMMODATION 5 I.T.A. NO. 228 & 227(ASR)/2013 ENTRIES TO THE APEEJAY GROUP THROUGH HIS COMPANY M/ S WASHINGTON SOFTWARE LTD. DURING THE COURSE OF POST SEARCH INVE STIGATIONS, THE BENEFICIARY PARTIES WERE IDENTIFIED AND INFORMATION WAS PASSED ONTO VARIOUS FIELD FORMATIONS BY THE INVESTIGATION WING, MUMBAI FOR TAKING FURTHER ACTION. AS A RESULT OF THIS INFORMATION, SU RVEY OPERATIONS WERE CONDUCTED UNDER SECTION 133A OF THE ACT BY THE DEPA RTMENT AS THE PREMISES OF VARIOUS BUSINESS ENTITIES OF THE APEEJA Y EDUCATION GROUP ON 29.03.2011. DURING THE COURSE OF THE SURVEY OPERATI ONS, GENUINENESS OF PURCHASE OF SOFTWARE BY APEEJAY EDUCATION GROUP OF CASES FROM M/S WASHINGTON SOFTWARE LTD. WAS EXAMINED FROM DIFFEREN T ASPECTS. AT THE TIME OF SURVEY OPERATIONS AT DIFFERENT PREMISES OF THE GROUP, STATEMENTS OF DIFFERENT PERSONS ACTIVELY INVOLVED IN THE MANAG EMENT AND RUNNING OF APEEJAY GROUP OF INSTITUTIONS WERE RECORDED. IN THE IR STATEMENTS, THEY HAVE ADMITTED THAT NO SOFTWARES WERE EVER PURCHASED FROM M/S WASHINGTON SOFTWARE LTD. MOREOVER, ON PHYSICAL VERI FICATION, SOFTWARES ALLEGED TO HAVE BEEN PURCHASED FROM M/S WASHINGTON SOFTWARE LTD. WERE NOT FOUND. HOWEVER, ENTRIES OF BOGUS BILLS FROM M/S WASHINGTON SOFTWARE LTD. WERE FOUND ENTERED IN THE BOOKS OF AC COUNT OF DIFFERENT ENTITIES OF THE GROUP DURING THE COURSE OF SURVEY O PERATIONS. IT WAS ALSO 6 I.T.A. NO. 228 & 227(ASR)/2013 ADMITTED THAT VARIOUS ENTITIES OF THE GROUP HAVE RE CEIVED ONLY BILLS FOR ENTERING IN THE BOOKS OF ACCOUNT AND NO SOFTWARE WE RE EVER INSTALLED OR RECEIVED BY THEM. AL THESE ENQUIRES INDICATE AND PR OVE BEYOND DOUBT THAT THE ASSESSEE SOCIETY HAS TAKEN ACCOMMODATION ENTRIE S FROM M/S WASHINGTON SOFTWARE LTD. IN THE FORM OF BOGUS BILLS OF PURCHASE OF COMPUTE SOFTWARES. ON FURTHER VERIFICATION, IT WAS FOUND DURING THE COURSE OF SURVEY OPERATIONS AND OTHER ENQUIRIES THA T M/S WASHINGTON SOFTWARE LTD. HAS PROVIDED THE ACCOMMODATION ENTRIE S TO THE ASSESSEE SOCIETY IN VARIOUS YEARS, THE DETAILS OF WHICH AS CONTAINED IN SURVEY REPORT AND OTHER REPORTS RECEIVED FROM VARIOUS DEPA RTMENTAL AUTHORITIES ARE AS UNDER: FINANCIAL YEAR: AMOUNT OF ACCOMMODATION ENTRIES(RS. APROX) 2003-04 RS. 2,00,00,000/- APPROX. 2005-06 RS. 2,50,00,000/- APPROX. 2006-07 RS. 3,40,00,000/- APPROX. 2007-08 RS. 80,00,000/- APPROX 2008-09 RS. 1,20,00,000/- APPROX 2009-10 RS. 2,68,60,900/- APPROX 2010-11 RS. 2,60,00,000/- APPROX 7 I.T.A. NO. 228 & 227(ASR)/2013 NOTE : THE ABOVE FIGURES MAY VARY ON ACTUAL VERIFICATION 6) DURING THE COURSE OF INVESTIGATION, THE STATEMEN T OF SH. SANJAY D. SONAWANI, CHAIRMAN AND THE MANAGING DIRECTOR OF M/S WASHINGTON SOFTWARE LTD. WAS ALSO RECORDED, WHEREIN HE ADMITTE D THAT HE HAD PROVIDED THE ABOVE NOTED ACCOMMODATION ENTRIES TO T HE ASSESSEE SOCIETY AND THAT HE HAD CHARGED COMMISSIONER @ 1% ON THE TO TAL AMOUNT OF THE ENTRIES AND THE BALANCE AMOUNT WAS GIVEN BACK IN CA SH TO THE TRUSTEES/MANAGEMENT OF THE ASSESSEE SOCIETY. 7) THE RELEVANT PORTION OF THE STATEMENT OF SH. SAN JAY D. SONAWANI DATED 16.03.2013 HAS BEEN REPRODUCED BY CI T, JALANDHAR-II, JALANDHAR, AT PAGE 4 AND 5 OF HIS ORDER. IT WAS OBS ERVED BY CIT, JALANDHAR-II, JALANDHAR, THAT FURTHER STATEMENTS GI VEN BY SH. SANJAY SONAWANI TO THE DEPARTMENTAL AUTHORITIES, WHEREIN H E RETRACTED FROM HIS VERSION THAT SH. PARAG MEHTA, CA WAS INSTRUMENTAL I N HELPING IN UNDERGOING ALL THE BOGUS ACTIVITIES OF M/S WASHINGT ON SOFTWARE LTD. BUT CONFIRMED HIS VERSION OF GIVING ACCOMMODATION ENTRI ES TO THE ASSESSEE SOCIETY. ACCORDINGLY, CIT, JALANDHAR-II, JALANDHAR, VIDE PARA 4 OF HIS ORDER OBSERVED THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT FOUND TO BE GENUINE IN VIEW OF THE PROVISIONS OF SECTION 13(1)(C) READ WITH 8 I.T.A. NO. 228 & 227(ASR)/2013 SECTION 13(3) OF THE ACT AND THE REGISTRATION GRANT ED TO THE ASSESSEE SOCIETY WAS LIABLE TO BE CANCELLED, INVOKING THE PR OVISIONS OF SECTION 12AA(3) OF THE ACT. ACCORDINGLY, A NOTICE DATED 07. 12.2011 WAS ISSUED TO THE ASSESSEE-SOCIETY TO SHOW CAUSE AS TO WHY THE REGISTRATION GRANTED TO IT UNDER SECTION 12AA OF THE ACT MAY NOT BE CANCELL ED. THE ASSESSEE SUBMITTED VARIOUS REPLIES DATED 17.08.2012, 14.09.2 012, 18.03.2013 AND 25.03.2013 WHICH ARE REPRODUCED IN THE ORDER OF CIT , JALANDHAR-II, JALANDHAR, AT PAGE NOS. 6 TO 28. LEARNED CIT, JALAN DHAR-II, JALANDHAR, LISTED OUT THE ISSUES THAT HAVE BEEN RAISED BY THE ASSESSEE IN THE VARIOUS REPLIES MENTIONED HEREINABOVE AT PAGE 29, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: (A) THAT THE REGISTRATION GRANTED TO A TRUST CAN BE CANCELLED ONLY WHEN THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTIVE OF THE TRUST. (B) THAT THE STATEMENT OF SH. SANJAY D. SONAWANI O F M/S WASHINGTON SOFTWARE LTD. PUNE HAS GOT NO STANDING A S IT HAS BEEN RECORDED BEHIND THE ASSESSEES BACK AND THE ASSESSE E HAS NOT BEEN PROVIDED OPPORTUNITY TO CROSS EXAMINE HIM. (C) THAT SH. SANJAY D. SONAWANI IS HIMSELF A DOUBT FUL CHARACTER AND MAN WITHOUT INTEGRITY AS HE HAS REMAINED IN PRI SON AS ADMITTED BY HIM IN HIS STATEMENT IN SOME OTHER CASE AND THAT HE HAS BEEN CHANGING HIS STANCE IN VARIOUS STATEMENTS RECORDED. (D) HE HAS REFERRED TO VARIOUS STATEMENTS OF SH. S ANJAY D. SONAWANI CONTENDING THAT HE HAS GIVEN FOUR STATEMEN TS BEFORE THE 9 I.T.A. NO. 228 & 227(ASR)/2013 DEPARTMENTAL AUTHORITIES ON VARIOUS DATES AND IN TH ESE STATEMENTS HE HAS BACK TRACKED FROM HIS FROM HIS EARLIER STATEMENT AN D IN THE LAST STATEMENT HE HAS AGAIN TAKEN A U TURN. IT IS THUS PLEADED BY HIM THAT THE PROCEEDINGS INITIATED ON THE BASIS OF HIS STATEMENT ARE NOT JUS TIFIED. (E) THAT THE ASSESSMENTS FOR VARIOUS YEARS IN THE CASE OF THE ASSESSEE ARE PENDING BEFORE THE A.O. AND THE RESULT OF THOSE ASSESSMENTS SHOULD BE WATCHED BEFORE RESORTING TO THE PROVISION S OF SECTION 12AA(3) OF THE ACT. (F) THAT THE ASSESSEE SOCIETY HAS RELIED UPON VARI OUS JUDICIAL PRONOUNCEMENTS WHICH ENVISAGE THAT EVEN IF THE FUND S OF A TRUST ARE MIS- UTILIZED OR MISAPPROPRIATED AND THE ACTIVITIES OF T HE TRUST ARE AS PER AIMS AND OBJECTS OF THE SOCIETY, REGISTRATION ALREADY GR ANTED TO IT CANNOT BE WITHDRAWN, RATHER THE AMOUNT OF FUNDS MISAPPROPRIAT ED COULD BE TAXED IN THE RELEVANT YEARS WITHOUT TOUCHING THE REGISTRATIO N GRANTED U/S 12AA OF THE INCOME TAX ACT, 1961. 8) FINDINGS OF LEARNED CIT, JALANDHAR-II, JALANDHAR , WITH REGARD TO THE VARIOUS REPLIES OF THE ASSESSEE MENTIONED HEREI NABOVE WERE DISCUSSED AND RELEVANT FINDINGS WERE GIVEN AT PAGE 29 TO 35, IN PARTICULAR OBSERVING THAT LEARNED CIT, JALANDHAR-II, JALANDHAR, IS NOT S ATISFIED THAT THE CASES RELIED UPON BY THE ASSESSEE ARE APPLICABLE TO THE F ACTS OF THE PRESENT CASE. THE OPPORTUNITY TO CROSS EXAMINE SH. SANJAY D. SONA WANI WAS PROVIDED TO THE ASSESSEE AND FINALLY LEARNED CIT, JALANDHAR- II, JALANDHAR, WAS NOT SATISFIED THAT THE ACTIVITIES OF THE SOCIETY WERE G ENUINE AS THE FUNDS ARE BEING MIS-UTILIZED CONTINUOUSLY FOR MANY YEARS AND REGISTRATION GRANTED UNDER SECTION 12AA(1) OF THE ACT IS LIABLE TO BE WI THDRAWN AND 10 I.T.A. NO. 228 & 227(ASR)/2013 CANCELLED. THE LEARNED CIT, JALANDHAR-II, JALANDHAR , WAS ALSO SATISFIED THAT THE FUNDS OF THE ASSESSEE SOCIETY WERE NOT BEI NG UTILIZED FOR ACHIEVING THE OBJECTS OF THE SOCIETY FOR THE PAST M ANY YEARS. THEREFORE, TAKING RECOURSE TO THE PROVISIONS OF SECTION 12AA(3 ) OF THE ACT, LEARNED CIT, JALANDHAR-II, JALANDHAR, CANCELLED THE REGISTR ATION GRANTED TO THE ASSESSEE SOCIETY ON 13.05.1999 W.E.F. ASSESSMENT YE AR 2004-05. THE RELEVANT FINDINGS AT PAGE 29 TO 35 OF THE ORDER OF LEARNED CIT, JALANDHAR- II, JALANDHAR, MENTIONED HEREINABOVE, ARE REPRODUCE D AS UNDER:- MY ISSUE-WISE FINDINGS IN RESPECT OF ARGUMENTS DAT ED 18.03.2013 ARE ENUMERATED HEREUNDER: (A) THE PROVISIONS OF SECTION 12AA(3) OF THE INCOM E TAX ACT, 1961 HAS TWO LIMBS VIZ. (I) GENUINENESS OF THE ACTI VITIES OF THE SOCIETY AND (II) THE ACTIVITIES OF THE SOCIETY ARE NOT IN A CCORDANCE WITH THE AIMS AND OBJECTS OF THE SOCIETY. IN THE INSTANT CASE, TH E ACTIVITIES OF THE ASSESSEE SOCIETY ARE CERTAINLY NOT GENUINE BECAUSE THE FUNDS OF THE ASSESSEE SOCIETY ARE BEING MISAPPROPRIATED RIGHT FR OM THE F.Y. 2003-04 TO F.Y. 09-10 AS MENTIONED ABOVE. SH. SANJAY D. SONAWA NI, THE MANAGING DIRECTOR OF M/S WASHINGTON SOFTWARE LTD., HAS CATEG ORICALLY ADMITTED IN HIS VARIOUS STATEMENTS THAT HE HAS NOT ACTUALLY SUP PLIED THE SOFTWARES TO THE ASSESSEE SOCIETY ANY ONLY THE BILLS HAVE BEEN RAISED IN THE NAME OF ASSESSEE SOCIETY. IT WAS ALSO ADMITTED BY HIM THAT THE PAYMENT RECEIVED FROM THE ASSESSEE SOCIETY THROUGH CHEQUES HAVE BEEN GOT DISCOUNTED FROM THE FINANCIERS OF MUMBAI, PAYMENT HAS BEEN RECEIVED IN CASH IN LIEU OF THOSE CHEQUES AND AFTER RETAINING A COMMISSIONER OF 1% OF THE TOTAL BILLS, THE BALANCE AMOUNT HAS BEEN PAID BACK IN CASH TO TH E MANAGEMENT OF THE ASSESSEE SOCIETY. THUS, THE ACTIVITIES OF THE TRUST ARE PROVED TO BE NON- GENUINE. AS FAR AS THE SECOND LIMB OF THE SECTION 1 2AA(3) OF THE INCOME TAX ACT, 1961 IS CONCERNED THERE IS NO DISPUTE THAT THE ACTIVITIES OF THE SOCIETY ARE TOWARDS ATTAINING THE OBJECTS OF THE AS SESSEE SOCIETY BUT IT ALSO 11 I.T.A. NO. 228 & 227(ASR)/2013 CANNOT BE SAID IN TOTALITY AS WHOLE OF THE FUNDS A RE NOT BEING UTILIZED FOR THE PURPOSES OF SOCIETY. THUS ON THE STRENGTH OF TH E FIRST LIMB OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 AS WELL AS SECO ND LIMB, REGISTRATION GRANTED TO THE ASSESSEE SOCIETY CAN BE CANCELLED/WITHDRAWN. (B) SH. SANJAY D. SONAWANI HAS GIVEN HIS STATEMENT S TO THE DEPARTMENT ON VARIOUS OCCASIONS. IN THE FIRST STATE MENT HE HAS DEPOSED THAT HE HAD BEEN UNDERTAKING ALL THE BOGUS ACTIVITI ES OF M/S WASHINGTON SOFTWARE LTD. AT THE INSTANCE OF ONE SH. PARAG V. M EHTA, CA WHO HAS GOT ALL THE BLANK CHEQUES SIGNED FROM HIM AND HE (MR. M EHTA) HAD BEEN UTILIZING IT ON HIS BEHALF AND THAT HE HAD RECEIVED TOTAL COMMISSION OF RS. 32 LACS AND BALANCE COMMISSION OF RS. 20 LACS IS DU E FROM SH. PARAG V. MEHTA. IN HIS FIRST STATEMENT, HE HAS ALSO SURRENDE RED THE COMMISSION OF RS. 32 LACS AS HIS UNDISCLOSED INCOME FOR TAXATION OVER AND ABOVE HIS REGULAR INCOME. IN THE LATER STATEMENTS, HE HAS RET RACTED FROM HIS VERSION THAT MR. PARAG V MEHTA, CA WAS INSTRUMENTAL IN ALL THE BOGUS ACTIVITIES OF THE SAID COMPANY, BUT HAS MAINTAINED THAT HE HAS GIVEN ACCOMMODATION ENTRIES TO THE ASSESSEE SOCIETY AS HE HAD EARLIER STATED IN HIS FIRST STATEMENT. THUS, THE VERSION WITH REGARD TO THE ACCOMMODATION ENTRIES GIVEN BY HIM TO THE ASSESSEE SOCIETY OF MR. SANJAY D. SONAWANI IS CORROBORATED IN HIS VARIOUS STATEMENTS AND HENCE IN MY CONSIDERED OPINION HIS CROSS-EXAMINATION IS NOT REQUIRED IN TH IS CASE. IN THIS REGARD A REFERENCE IS MADE BY THE ASSESSEES LETTERS DATED 2 8.02.2013 AND 15.03.2013 FURNISHED BEFORE THE ACIT, CIRCLE III, J ALANDHAR, WHEREIN THE CROSS-EXAMINATION OF SH. SONAWANI ALLOWED TO HIM BY THE ASSESSING OFFICER HAS BEEN DENIED BY THE ASSESSEE SOCIETY ON ONE PRETEXT OF ANOTHER FOR THE REASONS BEST KNOWN TO IT. (C) THAT MR. SANJAY D. SONAWANI COULD HAVE BEEN IN VOLVED IN SOME OTHER CRIMINAL CASES AND MIGHT HAVE UNDERGONE IMPRISONMENT BUT IT DOES NOT CONTROVERT THE FACT THAT HE HAS ACTUALLY G IVEN ACCOMMODATION ENTRIES TO THE ASSESSEE SOCIETY. (D) I FIND THAT THE ARGUMENT OF THE COUNSEL THAT T HE PROCEEDINGS INITIATED ON THE BASIS OF THE STATEMENTS OF SH. SON AWANI ARE NOT JUSTIFIED BECAUSE HE HAS CHANGED HIS STAND IN HIS VARIOUS STA TEMENTS HAS NO FORCE. SH. SONAWANI HAS NOWHERE BACK TRACKED FROM HIS MAIN DEPOSITION THAT HIS COMPANY, NAMELY, M/S WASHINGTON SOFTWARE LIMITED, P UNE HAS NOT 12 I.T.A. NO. 228 & 227(ASR)/2013 SUPPLIED THE ACTUAL SOFTWARE TO THE ASSESSEE SOCIET Y AND THAT HIS COMPANY HAS ISSUED THE BOGUS BILLS TO THE ASSESSEE COMPANY IN LIEU OF THAT. THUS, THE CRUX OF HIS STATEMENT JUSTIFIES THE PROCEEDINGS INITIATED BY THE UNDERSIGNED U/S 12AA(3) OF THE INCOME TAX ACT, 1961 . (E) IN THIS REGARD, IT IS HELD THAT THE ACTION OF THE ASSESSING OFFICER IN THE ASSESSMENTS IS AN INDEPENDENT ACTION WHICH H AS NO BEARING ON THE PROCEEDINGS INITIATED U/S 12AA(3) OF THE INCOME TAX ACT, 1961. (F) AS REGARDS THE VARIOUS JUDICIAL PRONOUNCEMENT S RELIED UPON BY THE COUNSEL OF THE ASSESSEE SOCIETY, THESE ARE DISC USSED HEREUNDER:- JUDGMENTS RELIED UPON IN ARGUMENTS DATED 18.03.2013 1. CIT VS. RED ROSE SCHOOL 212 CTR (ALL) 394: IN PARA NO. 20, ITSELF, IT IS HELD IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WH OSE OBJECTS DO NOT RUN CONTRARY TO PUBLIC POLICY AND ARE, IN FACT RELATED TO CHARITABLE PURPOSES, THE CIT IS AGAIN EMPOWERED TO MAKE ENQUIRES AS HE T HINKS FIT. IN CASE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TRUST/SOCIETY OR THE INSTITUTION, OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. THIS IS A CASE WHERE THE REFUSAL OF THE REGISTRATIO N TO THAT TRUST IS BEING ADJUDICATED BY HON'BLE ALLAHABAD HIGH COURT A ND NOT FOR WITHDRAWAL/CANCELLATION OF THE REGISTRATION ALREADY GRANTED. EVEN THOUGH THE FINDINGS AND OBSERVATIONS OF THE HON'BLE COURT EMBOLDENED IN THE ABOVE PARAGRAPH GO TO ESTABLISH THAT THE COMMISSION ER OF INCOME IS EMPOWERED TO REFUSE THE REGISTRATION TO A TRUST IF ITS ACTIVITIES ARE NOT FOUND TO BE GENUINE. IF THIS PARAMETER IS APPLIED W HEN THE REGISTRATION OF A TRUST IS BEING REVIEWED, WHICH HAS ALREADY BEEN G RANTED, THIS IS A GOOD CASE FOR WITHDRAWAL/CANCELLATION OF THE REGISTRATIO N ALREADY GRANTED. OTHER FACTS RELATED AND FINDINGS UNDERLINED IN PA RAS 21 TO 29 OF THIS JUDGMENT ARE DISTINGUISHABLE ON FACTS AND HENCE NOT APPLICABLE HERE. 2. CIT VS. KARIMA TRUST 302 ITR 57 (JHARKHAND) 13 I.T.A. NO. 228 & 227(ASR)/2013 THIS IS AGAIN A CASE WHERE THE GRANT OF REGISTRA TION TO A TRUST IS BEING CONSIDERED BY THE HON'BLE JHARKHAND HIGH COU RT AND NOT FOR WITHDRAWAL OR CANCELLATION OF THE REGISTRATION ALRE ADY GRANTED. IN THIS CASE ALSO IT IS OBSERVED BY THE COURT THAT EVEN IF THERE BEING BREACH OF TRUSTS WHICH ARE IN FACT EXTRANEOUS SO FAR AS INCOME TAX I S CONCERNED DOES NOT RENDER THE TRUST FROM QUALIFYING IT TO OBTAIN EXEMP TION UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 HENCE, THE FACTS OF THIS CASE ALSO DISTINGUISHABLE WITH THOSE OF THE PRESENT CASE AND HENCE THESE ARE NOT APPLICABLE HERE. 3. GURU GOBIND SINGH EDUCATIONAL SOCIETY VS. CIT 11 8 ITD 207 (ASR) IN THIS CASE, THE FACTS WERE THAT THE TRUSTEES O F THE SOCIETY HAD SIPHONED OFF THE FUNDS OF THE SOCIETY BY CREDITING VARIOUS PAYMENT OF THE SOCIETY INTO THEIR OWN BANK ACCOUNTS. IT WAS ONLY A ONE TIME HAPPENING AND DID NOT CONTINUE FOR MANY YEARS AS IN THE PRESE NT CASE. WHEN CAUGHT, THEY GOT SHELTER OF INCOME TAX SETTLEMENT C OMMISSION, NEW DELHI AND THE TRUSTEES OWNED AND SURRENDERED THOSE CREDIT ENTRIES INTO THEIR PERSONAL BANK ACCOUNTS FOR TAXATION. THE LEAR NED INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH, AMRITSAR HAS HE LD THAT THE IRREGULARITIES COMMITTED BY MEMBERS IN THEIR INDIVI DUAL CAPACITY CANNOT BE HELD AGAINST THE SOCIETY FOR THE PURPOSE OF CANC ELLATION OF REGISTRATION. THUS, THE FACTS OF THE CASE RELIED UPON BY THE ASSE SSEE ARE DISTINGUISHABLE WITH THOSE OF THE FACTS OF THE PRESENT CASE AND HEN CE ARE NOT APPLICABLE HERE. 4. MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RESEARCH (MAEER) VS. CIT 36 DTR 321 (PUNE) IN THIS CASE, ONE OF THE TRUSTEES WAS A DOCTOR WHO WAS INVOLVED IN AN IMMORAL AND ILLEGAL ACT OF MANUFACTURING AND SELLING OF HEROIN AND THE HON'BLE COURTS HELD THAT THE CASE HAS TO BE DEC IDED ON LEGAL PRINCIPLES AND NO ON ONES OWN MORAL VIEWS. THIS WAS A CASE OF CHARGING OF CAPITATION FEE IN THE FORM OF DONATION FROM THE KIT H AND KIN OF A STUDENT. BUT IN THE PRESENT CASE THERE IS NO CASE FOR DONATI ON OR IMMORAL ACTIVITIES 14 I.T.A. NO. 228 & 227(ASR)/2013 OF THE TRUSTEES. HENCE THE FACTS OF THE CASE RELIED UPON BY THE ASSESSEE ARE DIFFERENT AND NOT APPLICABLE. 5. INSTITUTE OF SCIENCE AND MANAGEMENT VS. CIT(CEN TRAL), PATNA PASSED ON 12.03.2012 BY I.T.A.T., COCHIN BENCH. IN THIS CASE ALSO, THE HON'BLE BENCH HAS OBSERVED T HAT ..THE CONDITION PRECEDENT TO CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT ARE NOT SATISFIED BECAUSE ONCE REGISTRATION IS GRAN TED, LEARNED CIT CAN CANCEL REGISTRATION ONLY IF SATISFIED THAT THE ACTI VITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTIVES OF THE TRUST OR INSTITUTION. IN TH IS CASE AGAIN, THE I.T.A.T., RANCHI BENCH HAS DISCUSSED THE TWO LIMBS OF THE PRO VISIONS OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 VIZ. GENUINENES S OF THE ACTIVITIES AND THE ACTIVITIES IN ACCORDANCE WITH THE OBJECTS O F THE SOCIETY. IN THE FOREGOING PARAS, IT HAS CLEARLY BEEN DISCUSSED THA T THE FIRST LIMB OF SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 IS MAIN LY INVOLVED IN THIS CASE AND THE REQUIREMENTS OF PROVING THE NON-GENUIN ENESS OF THE ACTIVITIES OF THE ASSESSEE SOCIETY HAVE BEEN FULFIL LED ELABORATELY. THERE IS ALSO VIOLATION OF THE PROVISION OF SECOND LIMB AS T HE FUNDS OF THE TRUST ARE NOT BEEN PROPERLY USED TO ATTAIN THE OBJECTS O F THE TRUST. THUS THIS JUDGMENT IS RATHER APPLICABLE IN THIS CASE BUT NOT FOR THE ASSESSEE RATHER CONTRARY TO THE ARGUMENTS OF THE ASSESSEE AND AGAIN ST THE ASSESSEE. 6. KRUPANIDHI EDUCATIONAL TRUST VS. DIT (2013) 152 TTJ (BANG.) 673: IN THIS CASE IT IS OBSERVED BY THE HON'BLE I.T.A .T., BANGALORE BENCH THAT POWER TO CANCEL REGISTRATION CAN BE DONE IN TWO SITUATIONS (A) SATISFACTION OF THE CIT THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND (B) SATISFACTION OF THE CIT THAT THE ACTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTIVES OF TH E TRUST. IN THE ORDER OF THE CIT IN THAT CASE THERE WAS NO FINDING ON THE SATISFACTION OF ANY OF THE TWO CONDITIONS. BUT IN THE PRESENT CASE, I AM F ULLY SATISFIED THAT BOTH THE CONDITIONS FOR CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE INCOME TAX ACT, 1961 ARE UNDOUBTEDLY FULFILLED. HENCE, THI S CASE LAW IS NOT APPLICABLE IN THE PRESENT CASE BEFORE ME. 7. DCIT VS. COSMOPOLITAN EDUCATION SOCIETY (2000) 2 44 ITR 494 (RAJ.) 15 I.T.A. NO. 228 & 227(ASR)/2013 IT WAS A CASE OF GRANT OF REGISTRATION AND NOT FOR CANCELLATION OF THE REGISTRATION ALREADY GRANTED. MOREOVER, IN THIS CAS E THE CIT(A) AND THE I.T.A.T. RECORDED A FINDING OF THE FACT IT WAS NOT KNOWN THAT ANY PART OF THE INCOME OF THE SOCIETY WAS MISUTILIZED, IF A REF ERENCE TO THE BALANCE SHEET OF THE ASSESSEE IS MADE. BUT IN THE INSTANT C ASE BEFORE ME, THERE IS CLEAR CUT MISAPPROPRIATION OF TRUSTS FUNDS CONSEQU ENTLY FOR VARIOUS YEARS. HENCE THE FACTS OF THE CASE RELIED UPON BY THE ASSE SSEE ARE DISTINGUISHABLE. (8) KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY VS. CIT (2008) 23 SOT 74 (CUTTACK BENCH OF I.T.A.T.): IN THIS CASE THE ISSUE DECIDED BY THE HON'BLE I. T.A.T. WAS THAT WHETHER THE CIT CAN UTILIZE HIS POWER UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 AFTER A SEARCH AND SEIZURE PRO CEEDINGS U/S 132(1) OF THE INCOME TAX ACT, 1961 BEFORE COMPLETION OF TH E SEARCH AND SEIZURE ASSESSMENT FOR WHICH THE ASSESSMENT WAS PENDING BEF ORE THE CONCERNED ASSESSING OFFICER. THE ASSESSMENT PENDING BEFORE TH E ASSESSING OFFICER WAS MERELY WITH REGARD TO THE DOCUMENTS AND VALUABL ES ETC., FOUND DURING THE COURSE OF THE SEARCH AND SEIZURE AND THE RE WAS ONLY ONE YEAR WHICH INVOLVED SOME MISAPPROPRIATION OF TRUSTS FUN DS. BUT IN THE PRESENT CASE, ALTHOUGH A SURVEY OPERATION U/S 133A OF THE I NCOME TAX ACT, 1961 WAS CONDUCTED ON 29.03.2011 AT THE PREMISES OF THE ASSESSEE TRUST BUT THAT SURVEY WAS AS A CONSEQUENCE OF A STATEMENT OF A PERSON WHOSE COMPANY HAD ISSUED BILLS FOR SUPPLY OF SOFTWARE AND THESE BILLS WERE ESTABLISHED TO BE THE BOGUS BILLS AND THERE WAS HUG E MISAPPROPRIATION OF TRUSTS FUNDS CONTINUOUSLY FOR VARIOUS YEARS. IN TH E CASE BEFORE THE HON'BLE I.T.A.T. CUTTACK BENCH THERE WAS NOT A CON TINUOUS MISAPPROPRIATION. HENCE THE FACTS OF THE CASE RELIE D UPON BY THE ASSESSEE ARE DIFFERENT FROM THOSE OF THE FACTS OF THE CASE B EFORE ME. (9) PAUL MATHEWS & SONS VS. CIT 263 ITR 101 (KER) & (10) CIT VS. S. KHADER KHAN SON. 300 ITR 157 (MAD.) IN THESE TWO CASES, IT HAS BEEN OBSERVED THAT TH E POWER TO ADMINISTER OATH IS BESTOWED ON THE AUTHORITIES ONLY U/S 132(4) OF THE INCOME TAX ACT, 1961 AND NOT U/S 133A OF THE INCOME TAX ACT, 1961. 16 I.T.A. NO. 228 & 227(ASR)/2013 HENCE, IT IS HELD THAT THE OATH ADMINISTERED TO THO SE ASSESSEE WAS NOT AS PER PROVISIONS OF SECTION 132(4) OF THE INCOME TAX ACT, 1961 AND THE STATEMENTS RECORDED WERE NOT ADMISSIBLE AS EVIDENCE . BUT IN THE INSTANT CASE, THE STATEMENT OF SH. SANJAY D. SONAWANI, HAS BEEN RECORDED AS PER PROVISIONS OF SECTION 133A(3)(III) OF THE INCOME TA X ACT, 1961 AND HENCE THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY TH E ASSESSEE IN THE ABOVE NOTED TWO CASES ARE NOT APPLICABLE. (11) AIR 1992 SC 711 & (12) 154 ITR 172 AS REGARDS HIS RELIANCE ON THE SAID TWO JUDGMENT S OF HON'BLE SUPREME COURT, AFTER GOING THROUGH THESE JUDGMENTS, IT IS NOTED THAT THESE ARE RELATING TO THE PRINCIPLES OF DISCIPLINED WHICH REQUIRE THAT THE ORDER OF THE HIGHER AUTHORITIES AND HIGHER COURTS ARE TO BE FOLLOWED BY THE LOWER AUTHORITIES/LOWER COURTS. THE JUDGMENTS RELIED UPON BY THE COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE ON FACTS, AS PER M Y FINDINGS IN THE RELEVANT PARAS ABOVE WHICH ESTABLISH THAT NO INDISC IPLINE WILL BE THERE IF THE VARIOUS JUDGMENTS RELIED UPON BY THE COUNSEL AN D DISTINGUISHED BY ME ARE NOT FOLLOWED IN THE PRESENT PROCEEDINGS. HEN CE, THE QUESTION OF NOT FOLLOWING THOSE JUDGMENTS IN THE CASE OF THE AS SESSEE TRUST IS NOT INVOLVED IN THE PRESENT CASE. WRITTEN ARGUMENTS DATED 14.09.2012 FILED BEFORE MY PREDECESSOR. IN THESE ARGUMENTS, IT IS STATED THAT THE SOFTWA RE PURCHASED FROM WASHINGTON SOFTWARE LTD., THOUGH DEBITED TO VARIOUS INSTITUTIONS, IS INSTALLED IN THE CENTRAL SERVER AT THE HEAD OFFICE FROM WHERE VARIOUS MODULES AND REPORTS ARE GENERATED. IN SUPPORT OF TH IS CONTENTION, HE HAS FILED A COPY OF THE REPORT DATED 11.09.2012 OF M/S TRIDENT INFORMATION SYSTEMS PVT. LTD., HO, NEW DELHI AND AN AFFIDAVIT O F SH. VIJAY KUMAR BERLIA, GENERAL SECRETARY OF THE ASSESSEE SOCIETY A S ALSO THE DETAILS OF CHEQUES ISSUED TOWARDS THE PAYMENT TO M/S WASHINGTO N SOFTWARE LTD. IT IS INCORRECT TO SAY THAT THE SOFTWARES HAVE B EEN PURCHASED AND INSTALLED IN THE CENTRAL OFFICE. THE INVESTIGATION CARRIED OUT BY THE DEPARTMENT CLEARLY ESTABLISHED THAT THE SOFTWARES W ERE NEVER PURCHASED. SO THE ARGUMENT THAT THE SOFTWARES WERE PURCHASED A ND INSTALLED IN THE 17 I.T.A. NO. 228 & 227(ASR)/2013 CENTRAL OFFICE HAS NO FORCE IN VIEW OF THE FINDINGS AS MENTIONED IN THE PRECEDING PARAGRAPHS. AS REGARDS THE REPORT DATED 11.09.2012 OF M/S TR IDENT INFORMATION SYSTEMS PVT. LTD. IT IS NOTED THAT THIS REPORT IS PREPARED AT MUCH LATER STAGE AND THE MATTER OF MISAPPROPRIATION OF SOCIETYS FUNDS, WHICH HAS COME TO NOTICE IN YEAR 2010-11 RELATES TO A PERIOD WAY BACK TO THE YEAR 2003-04 AND THIS REPORT IS PREPARED IN THE YEAR 2012. THE VERACITY OF THIS REPORT IS ALSO NOT RELIABLE IN VIE W OF THE FOLLOWING REASONS: (I) IT IS NOT ESTABLISHED THAT M/S TRIDENT INFORM ATION SYSTEMS PVT LTD. IS A DULY AUTHORIZED AGENCY BY SOME COMPETENT AUTHORITY TO CERTIFY THE AUTHENTICITY OF THE SOFTWARES UPLOADED ON ASSES SEE SOCIETYS COMPUTERS. (II) BY NOW, THE ASSESSEE SOCIETY COULD HAVE INSTA LLED SOME SIMILAR SOFTWARES IN THE COMPUTERS OF THE HEAD OFFICE, SINC E IT IS NOT CERTIFIED THAT AS TO WHEN THESE SOFTWARES WERE UPLOADED ON TH E CONCERNED COMPUTERS. (III) IN PARA 4 OF THE REPORT (SUPRA) IT IS MENTIO NED THAT HOWEVER THERE WAS NO DATA IN THE FINANCIAL ACCOUNTING MODUL E, WHICH MEANS THAT EITHER THE DATE HAS BEEN DELETED OR THE SOFTWARE HA S NOT BEEN USED. MOREOVER, THERE IS NO MENTION ABOUT THE COST PRICE, DATE OF INSTALLATION, TIME OF INSTALLATION, IT UPGRADATION ETC. IN THE REPORT. HENCE THE REPORT TAKEN NOW HAS NO AUTHENTICITY (IV) THE SEARCH & SEIZURE OPERATIONS AND SURVEY OP ERATIONS CARRIED ON BY THE DEPARTMENT AT VARIOUS PLACED INCLUDING BU SINESS PREMISES OF THE ASSESSEE SOCIETY CLEARLY ESTABLISHED THAT THE P URCHASE OF SOFTWARES BY THE ASSESSEE IS BOGUS. (V) THE STATEMENT OF SHRI SANJAY D. SONAWANI HAS N OT BEEN REVERTED BY PRODUCING ANY COGENT MATERIAL OR REASON S. MOREOVER, ASSESSEE SOCIETY HAS NOT AVAILED THE OPPORTUNITY PR OVIDED TO IT FOR CROSS- EXAMINATION OF SHRI SANJAY D. SONAWANI FOR THE REAS ONS BEST KNOW TO IT. 18 I.T.A. NO. 228 & 227(ASR)/2013 THE AFFIDAVIT OF SH. VIJAY KUMAR BERLIA IS A SEL F SERVING DOCUMENT, SINCE HE IS THE OFFICE BEARER OF THE ASSE SSEE SOCIETY, WHO HAS PERSONALLY APPROVED ALL THE PAYMENTS MADE TO WSL AN D THUS HE IS SUPPOSED TO DEPOSE IN THIS MANNER TO JUSTIFY HIS EA RLIER ACTION OF MAKING HUGE PAYMENTS TO WSL WITHOUT GETTING ANY PRODUCT/S OFTWARE IN RETURN. THE DETAILS OF VARIOUS CHEQUES IN LIEU OF PAYMENTS MADE ARE NOT IN DISPUTE, AS THE VARIOUS PAYMENTS MADE BY THE ASSESS EE THROUGH CHEQUES TO THE COMPANY OF SH. SANJAY D. SONAWANI HAVE BEEN ADM ITTED TO HAVE BEEN GOT DISCOUNTED FORM THE FINANCIERS OF BOMBAY AND PU NE AND THAT THE CASH HAS BEEN ADMITTED TO BE RETURNED BACK TO THE PERSON S MANAGING THE AFFAIRS OF THE ASSESSEE SOCIETY AND THEREFORE MISUTILIZED, AS DISCUSSED ABOVE. WRITTEN ARGUMENTS DATED 17.08.2012 FURNISHED BEFORE MY PREDECESSOR : IN THESE ARGUMENTS, THE ASSESSEE HAS GIVEN HIS P RELIMINARY INFORMATION WITH REGARD TO THE REGISTRATION GRANTED TO THE ASSESSEE SOCIETY IN THE YEAR 1999, THE NUMBER OF INSTITUTIONS BEING RUN BY THE ASSESSEE SOCIETY AND THAT WHAT WERE THE MAIN AIMS AND THE OB JECTS OF THE ASSESSEE SOCIETY, BESIDES AGITATING THE STATEMENT OF SH. SAN JAY D. SONAWANI. WITH REGARD TO THE STATEMENTS OF SH. SANJAY D. SONAWANI, REFERENCE IS MADE TO MY FINDINGS GIVEN EXHAUSTIVELY IN THE FOREGOING PAR AS WHICH NEED NOT TO BE REPEATED HERE. HENCE, THESE ARGUMENTS/SUBMISSION S WILL NOT HELP THE ASSESSEE IN VIEW OF THE DISCUSSION MADE IN THE PREC EDING PARAGRAPHS. THE COUNSEL FOR THE ASSESSEE SOCIETY HAS ALSO P UT FORTH ANOTHER ARGUMENT BEFORE ME THAT EVEN IF THE PURCHASE OF THE SOFTWARES BY THE ASSESSEE FROM THE SAID COMPANY WAS SHAM AND NOT REA L, IT IS NOT AN ACT OF THE SOCIETY BUT SOME OFFICIAL OF THE SOCIETY FOR WH ICH THE SOCIETY CANNOT BE PUNISHED. IN ALL THE ABOVE NOTED WRITTEN ARGUMEN TS, THE ASSESSEE SOCIETY HAS NEVER ADDUCED ANY EVIDENCE TO ESTABLISH THAT THE MANAGEMENT OF THE SOCIETY WAS NEVER INVOLVED IN THE SHAM TRANS ACTIONS OF THE SOCIETY WITH THE COMPANY OF SH. SANJAY D. SONAWANI. EVEN IF SOME OFFICIAL OF THE SOCIETY IS PIN POINTED IN ALL THESE UNREAL TRAN SACTIONS, THE MISAPPROPRIATION WHICH RUNS INTO CRORES OF RUPEES C ONTINUED FOR VARIOUS YEARS CANNOT BE WITHOUT THE KNOWLEDGE OF MANAGEMENT . IT IS PERTINENT TO MENTION HERE THAT ALL THE PAYMENTS MADE TO WSL HAVE BEEN APPROVED BY SH. VIJAY BERLIA GENERAL SECRETARY OF SOCIETY AND D URING SURVEY OPERATION, HE COULDNT GIVE ANY SATISFACTORY REPLY OR COULD NOT FURNISH 19 I.T.A. NO. 228 & 227(ASR)/2013 ANY EVIDENCE THAT SOFTWARE WAS ACTUALLY PURCHASED T HAT INSTALLED AT SOCIETY PREMISES. WRITTEN ARGUMENTS FURNISHED BEFORE ME ON 25.03.2013 IN THESE ARGUMENTS, THE COUNSEL FOR THE ASSESSEE SO CIETY HAS ALMOST REPEATED HIS EARLIER ARGUMENTS BESIDES RAISING THE FOLLOWING ISSUES AGAIN IN A DIFFERENT WAY, WHICH ARE DEALT WITH HEREUNDER: - (A) THAT MR. SONAWANI HAS GIVEN VARIOUS STATEMENTS BEFORE THE DEPARTMENT AUTHORITIES WHEREBY HE HAS CHANGED HIS STANCE EVERY TIME AND THAT THESE ARE CONTRARY TO EACH OTHER. IN THIS REGARD, I HAVE ALREADY OBSERVED THAT ALTHO UGH HE HAS GIVEN VARIOUS STATEMENTS, WHICH ARE ON FEW ISSUES ARE CONTRARY TO EACH OTHER, BUT HE HAS NOWHERE RETRACTED FROM HIS STAND THAT HE HAS ACTUAL LY NOT SUPPLIED THE REQUISITE SOFTWARE TO THE ASSESSEE SOCIETY AND THAT HE HAS RETURNED THE PAYMENT BACK IN CASH TO THE ASSESSEE RECEIVED BY HI M FROM THE ASSESSEE SOCIETY AFTER RETAINING 1% COMMISSION ON IT. THEREF ORE, THE CRUX OF HIS STATEMENT REMAINED THE SAME IN ALL THE STATEMENTS G IVEN BY HIM TO THE DEPARTMENT. (B) HE HAS FURTHER DEMANDED THAT ANOTHER EXPERT S HOULD BE APPOINTED BY THE DEPARTMENT IN ORDER TO ESTABLISH W HETHER THE SOFTWARE IN QUESTION HAS ACTUALLY BEEN INSTALLED ON THE COMPUTE RS OF HEAD OFFICE OF THE ASSESSEE SOCIETY OR NOT AT THE EXPENSE OF THE A SSESSEE SOCIETY. IN THIS REGARD, IT IS SIGNIFICANT TO MENTION HERE T HAT THE MISAPPROPRIATION OF SOCIETYS FUNDS HAS BEEN GOING ON SINCE THE FINA NCIAL YEAR 2003-04 AND WHAT IS THE PURPOSE TO GET IT VERIFIED NOW THROUGH AN EXPERT. WHAT IS THE AUTHENTICITY THAT ANY SOFTWARE IF AT ALL AVAILABLE IN ASSESSEES COMPUTERS IS NOT INSTALLED NOW AFTER THE MISAPPROPRIATION HAS CO ME TO LIGHT. THEREFORE, THE DEMAND OF THE ASSESSEE MADE AT THIS STAGE IS NO T JUSTIFIED. (C) THAT WITHOUT ALLOWING CROSS EXAMINATION OF SH. SANJAY D. SONAWANI, ANY ADVERSE DECISION TAKEN BY THE DEPARTM ENT AGAINST THE 20 I.T.A. NO. 228 & 227(ASR)/2013 ASSESSEE SOCIETY WILL TANTAMOUNT OF DENIAL OF SUFFI CIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE SOCIETY. IN THIS REGARD, I HAVE ALREADY GIVEN MY FINDING THA T THE ASSESSEES COUNSEL HAS FAILED TO AVAIL THE OPPORTUNITY PROVIDED TO CRO SS EXAMINE SH. SANJAY D. SONAWANI AS PER HIS LETTERS DATED 28.02.2013 AND 15.03.2013 FURNISHED BEFORE THE ACIT, CIRCLE-III, JALANDHAR. HENCE HIS C LAIM THAT HIS CROSS EXAMINATION HAS BEEN DENIED TO HIM IN A PLOY JUST T O DELAY THE PRESENT PROCEEDINGS. (D) THE ASSESSEE HAS ALSO RELIED UPON A CASE LAW P RONOUNCED BY HON'BLE ORISSA HIGH COURT IN CIT VS. BILLU PATNAIK, 190 ITR 396. THE CASE LAW RELIED UPON BY THE ASSESSEES COUNSEL IN THESE WRITTEN ARGUMENTS IS ALSO NO APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IN THAT CASE NO OPPORTUNITY WAS ALLOWED TO THE ASSESSEE TO CROSS EXAMINE THE WITNESS IN THAT CASE. BUT IN THE PRESENT CASE OPPOR TUNITY TO CROSS EXAMINE HAS ALREADY BEEN ALLOWED BY THE ASSESSING OFFICER T O THE ASSESSEE SOCIETY BEFORE WHOM ASSESSMENTS FOR VARIOUS YEARS WERE PEND ING, BUT THE COUNSEL FOR THE ASSESSEE HAS NOT AVAILED THE OPPORT UNITY PROVIDED TO HIM. 7. IN VIEW OF THE ABOVE MENTIONED LEGAL AND FACT UAL POSITION OF THIS CASE, I AM SATISFIED THAT THE ACTIVITIES OF TH E ASSESSEE SOCIETY ARE NOT GENUINE, AS ITS FUNDS ARE BEING MISUTILIZED CONTINU OUSLY FOR MANY YEARS AS MENTIONED ABOVE AND HENCE THE REGISTRATION GRANTED TO IT U/S 12AA(1) OF THE INCOME TAX ACT, 1961 IS LIABLE TO BE WITHDRAWN AND CANCELLED. I AM ALSO SATISFIED THAT THE FUNDS OF THE ASSESSEE SOCIE TY ARE ALSO BEING UTILIZED FOR THE OBJECTS OF THE SOCIETY FROM THE PAST MANY Y EARS. ACCORDINGLY, TAKING RECOURSE OF THE PROVISIONS OF SECTION 12AA(3 ) OF THE INCOME TAX ACT, 1961, THE REGISTRATION GRANTED TO THE ASSESSEE SOCIETY ON 13.05.1999 IS HEREBY CANCELLED WITH EFFECT FROM ASSESSMENT YEA R 2004-05. 9) LEARNED COUNSEL FOR THE ASSESSEE MR. SALIL KAPOO R, ADVOCATE ARGUED AND INVITED OUR ATTENTION AT PAGES 1 & 2 OF THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, THAT THE CIT HIMSELF RECORDED THE FINDINGS 21 I.T.A. NO. 228 & 227(ASR)/2013 AFTER EXAMINING THE RECORDS THAT THE SOCIETY IS RUN NING VARIOUS INSTITUTIONS LISTED OUT AT PAGES 1 AND 2 OF THE ORDER OF LEARNE D CIT, JALANDHAR-II, JALANDHAR. LEARNED CIT, JALANDHAR-II, JALANDHAR, HA S FURTHER MENTIONED THAT THE INSTITUTIONS ARE ENGAGED IN THE ACTIVITY O F IMPARTING EDUCATION TO THE STUDENTS UNDER VARIOUS FIELDS. 10) MR. SALIL KAPOOR, ADVOCATE, ALSO INVITED OUR ATTE NTION TOWARDS THE ASSESSMENT MADE UNDER SECTION 143(3)/147 OF THE ACT DATED 30.12.2011 FOR THE ASSESSMENT YEAR 2004-05 AVAILABL E AT PAGE 530 551 OF PB (VOL. -2), IN PARTICULAR AT PAGE 534, WHERE THE ASSESSING OFFICER, HAS GIVEN HIS FINDING IN PARA 3 THAT THE MAIN AIM O F THE ASSESSEE SOCIETY IS TO RUN EDUCATIONAL INSTITUTE AND DURING THE YEAR TH E ASSESSEE WAS RUNNING SEVERAL SCHOOLS AND COLLEGES. SIMILARLY FOR THE AS SESSMENT YEAR 2009-10, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORD ER DATED 30.12.2011 UNDER SECTION 143(3) OF THE ACT, AVAILABLE AT PAGE 553-563 OF PB (VOL. 2), WHERE ALSO THE ASSESSING OFFICER HAS GIVEN HIS FINDING THAT THE MAIN AIM OF THE SOCIETY IS TO RUN EDUCATIONAL INSTITUTIO NS AND DURING THE YEAR, THE ASSESSEE WAS RUNNING SEVERAL SCHOOLS AND COLLEG ES. NOWHERE, LEARNED CIT, JALANDHAR-II, JALANDHAR, IN ITS ORDER DATED 25 .03.2013, HAS EVEN MADE ANY ALLEGATION THAT THE ASSESSEE SOCIETY IS NO T ENGAGED IN THE 22 I.T.A. NO. 228 & 227(ASR)/2013 ACTIVITY OF IMPARTING EDUCATION OR IS NOT RUNNING S CHOOLS OR COLLEGES IN VARIOUS FIELDS. THERE IS NO FINDING OF LEARNED CIT, JALANDHAR-II, JALANDHAR, IN ITS ORDER THAT THE ASSESSEE SOCIETY HAS CONTRAVENED OR HAS GONE AGAINST ANY OF THE SPECIFIC OBJECTS OF THE ASS ESSEE SOCIETY. RATHER THE ASSESSING OFFICER, KEEPING INTO CONSIDERATION T HE SEARCH & SEIZURE CONDUCTED ON 22.03.2011 AT THE PREMISES OF ONE PARA G V MEHTA UNDER SECTION 132(1) OF THE ACT AND VARIOUS STATEMENTS, H AS OBSERVED THAT THE MAIN OBJECTS OF ASSESSEE SOCIETY IS TO RUN EDUCATIO NAL INSTITUTIONS AND DURING THE YEAR, THE ASSESSEE HAS BEEN RUNNING SEVE RAL SCHOOLS AND COLLEGES, AS MENTIONED HEREINABOVE. 11) LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTE NTION TO THE PROVISIONS CONTAINED IN SECTION 12AA(3) OF THE ACT, THE SAME IS REPRODUCED AS UNDER FOR THE SAKE OF CONVENIENCE: 12AA (3) : WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUC H TRUST OR INSTITUTION: PROVIDED : THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PAS SED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONAB LE OPPORTUNITY OF BEING HEARD. 23 I.T.A. NO. 228 & 227(ASR)/2013 12) LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT T HE ACTIVITIES OF THE SOCIETY IS TO IMPART EDUCATION AND NOTHING HAS BEEN BROUGHT ON RECORD BY LEARNED CIT, JALANDHAR-II, JALANDHAR, TO SHOW THAT THE ACTIVITIES OF THE INSTITUTION I.E. IMPARTING EDUCATION, WHICH ARE THE MAIN OBJECT OF THE INSTITUTION, ARE NOT GENUINE AND THEREFORE, LEARNED CIT, JALANDHAR-II, JALANDHAR, IS NOT JUSTIFIED IN CANCELLING THE REGIS TRATION OF THE ASSESSEE SOCIETY. LEARNED COUNSEL FOR THE ASSESSEE REFERRED AT PAGE 5 OF THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, WHERE THE CIT OBSERVED THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT FOUND T O BE GENUINE IN VIEW OF THE PROVISIONS OF SECTION 13(1)(C) READ WITH SECTI ON 13(3) OF THE ACT AND ON THIS BASIS, THE REGISTRATION GRANTED TO THE ASSE SSEE WAS LIABLE TO BE CANCELLED. IN THIS REGARD, IT WAS ARGUED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE ACTIVITIES OF THE SOCIETY ARE NOT TO PURCHASE AND SALE OF SOFTWARE AND NOTHING HAS BEEN BROUGHT ON RECORD BY LEARNED CIT, JALANDHAR-II, JALANDHAR, TO SHOW THAT ANY INCOME OF THE ASSESSEE SOCIETY HAS BEEN APPLIED DIRECTLY OR INDIRECTLY FOR THE BEN EFIT OF THE PERSONS REFERRED TO IN SECTION 13(3) OF THE ACT. 13) LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISIONS IN THE CASE OF CIT VS. RED ROSE SCHOOL, DATED 07.02.20 07 DECIDED BY 24 I.T.A. NO. 228 & 227(ASR)/2013 HON'BLE ALLAHABAD HIGH COURT REPORTED IN (2007) 212 CTR (ALL) 394; CIT VS. KARIMIA TRUST REPORTED IN 302 ITR 57 (JHARK HAND) IN SUPPORT OF HIS ARGUMENT. HE FURTHER RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW, WHICH ARE AS UNDER: I. CHATURVEDI HAR PRASAD EDUCATION SOCIETY VS. COMMISS IONER OF INCOME TAX (I.T.A.T. LUCKNOW A BENCH) REPORTED IN (2010) 46 DTR 121 AT PB 450 TO 454 II. MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RE SEARCH (MAEER) VS. COMMISSIONER OF INCOME TAX REPORTED IN (2010) 36 DTR 321 (I.T.A.T., PUNE A BENCH) AT PB 454 TO 484. III. INSTITUTE OF SCIENCE AND MANAGEMENT VS. CIT (CENTRA L), PATNA, PASSED IN ITA NO. 13(RANCHI) OF 2011, DATED 12.03.2 012 AT PAGE 60 OF PB 60 TO 70. IV. AJIT EDUCATION TRUST, BHARUCH VS. CIT IN ITA NO. 2666/AHD/2008, DATED 07.09.2010 REPORTED IN [2010] 42 SOT 415 (AHD.) 14) RELYING UPON THE AFORESAID DECISIONS AND THE ARGU MENTS MADE HEREINABOVE, LEARNED COUNSEL FOR THE ASSESSEE FURTH ER ARGUED THAT LEARNED CIT, JALANDHAR-II, JALANDHAR, IS NOT JUSTIFIED IN W ITHDRAWING AND CANCELLING THE REGISTRATION GRANTED UNDER SECTION 1 2AA(1) OF THE ACT W.E.F. 01.04.1998 VIDE ORDER DATED 13.05.1999. THE ORDER UNDER SECTION 12AA(3) OF THE ACT CANCELLING THE REGISTRATION W.E. F. ASSESSMENT YEAR 2004-05 IS LIABLE TO BE SET ASIDE AND PRAYED TO RES TORE THE REGISTRATION SO 25 I.T.A. NO. 228 & 227(ASR)/2013 GRANTED UNDER SECTION 12AA(1) OF THE ACT VIDE ORDER DATED 13.05.1999 W.E.F. 01.04.1998 W.E.F THE ASSESSMENT YEAR 2004-05 . 15) HE FURTHER ARGUED THAT THE ASSESSEE HAD ACTUALLY PURCHASED THE SOFTWARE AND HAD MADE THE PAYMENT THROUGH ACCOUNT P AYEE CHEQUES TO M/S WASHINGTON SOFTWARE LTD. (WSL). IN THIS REGARD, AFFIDAVIT OF SH. VIJAY KUMAR BERLIA IS AVAILABLE AT PAGE 103 & 104 O F PB, AND THE STATEMENT OF SMT. ANITA PAUL AVAILABLE AT PAGE 365 TO 373 OF PB. HE ALSO INVITED OUR ATTENTION TOWARDS THE REPORT OF M/S TRI DENT INFORMATION SYSTEMS PVT. LTD. AT PAGE 101 & 102 OF PB WHO AFTER INSPECTION AND EXAMINATION REPORTED THAT THE SAID SOFTWARE MODULES WERE PURCHASED BY THE ASSESSEE AND WERE INSTALLED BETWEEN 2004 TO 201 1 AND THE ASSESSEE ARGUED THAT THE LEARNED CIT, JALANDHAR-II, JALANDHA R, HAS NOT FOUND ANY DEFECT IN THE SAME. HE FURTHER FILED REPORTS, GENER ATED FROM TIME TO TIME BY THE SAID SOFTWARES, WHICH WERE INSTALLED IN THE HEAD OFFICE, AVAILABLE AT PAGE 106 TO 223 OF PB. IT IS ARGUED THAT THE SOF TWARE PURCHASED FROM M/S WASHINGTON SOFTWARE PVT. LTD, THOUGH DEBITED TO VARIOUS INSTITUTIONS, IS INSTALLED IN THE CENTRAL SERVER AT THE HEAD OFFICE OF UTMOST IMPORTANCE AND REQUIRING SECRECY. THE SOFTWARE INCL UDES VARIOUS MODULES AND VARIOUS TYPES OF REPORTS ARE GENERATED. THESE R EPORTS HAVE BEEN 26 I.T.A. NO. 228 & 227(ASR)/2013 MENTIONED HEREINABOVE AND WERE PLACED ON RECORD AT PAGE 106 TO 223 OF PB. 16) IT WAS ARGUED THAT IT WAS A CONCOCTED STORY BY THE VENDOR ONLY TO SAVE HIS SKIN AND PUTTING ONUS ON OTHERS TO PROV E. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF M/S WASHINGTON SOFT WARE LIMITED WERE PLACED ON RECORD WHICH SHOW NOWHERE THAT FINANCIAL POSITION OF THE COMPANY HAS GONE DOWN DUE TO CLOSURE OF BUSINESS. W HEREAS M/S WASHINGTON SOFTWARE LTD. IS AN US BASED COMPANY AND WORKING IN INDIA IN COLLABORATION WITH IT AND WITH A FEAR OF PROSECU TION, IT HAS DENIED OF HAVING SUPPLIED ANY SOFTWARE. THE ACCOUNTS CANNOT B E TAKEN AS FALSE AND FABRICATED AS CLAIMED BY MR. SONAWANI. LEARNED CIT, JALANDHAR-II, JALANDHAR, HAS ACCEPTED THAT MR. SONAWANI HAS CHAN GED HIS STANCE FROM TIME TO TIME. IT WAS ARGUED BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE CHEQUES GIVEN TO M/S WASHINGTON SOFTWARE LTD WERE I N TURN GIVEN TO VARIOUS PARTIES BY M/S WASHINGTON SOFTWARE LTD ON D IFFERENT DATES AS REFERRED BY THE ASSESSING OFFICER IN HIS ORDER FOR THE ASSESSMENT YEAR 2010-11 DATED 28.03.2013 AVAILABLE AT PAGE 570 TO 6 12 OF PB (VOL-2) IN PARTICULAR AT PAGE NO. 606 & 607. HOWEVER, NO CHEQU ES HAVE BEEN FOUND TO BE ENCASHED AND THERE IS NO EVIDENCE TO SHOW THA T M/S WASHINGTON 27 I.T.A. NO. 228 & 227(ASR)/2013 SOFTWARE LTD. HAS WITHDRAWN CASH AND HAS PAID TO AN Y PERSONS REFERRED TO IN SECTION 13(3) OF THE ACT. LEARNED COUNSEL FOR TH E ASSESSEE INVITED OUR ATTENTION AT PAGE 28 OF THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, WHERE IT WAS SPECIFICALLY GIVEN IN WRITING TO LEARN ED CIT, JALANDHAR-II, JALANDHAR, THAT ANY ORDER PASSED AGAINST THE ASSESS EE WITHOUT GIVING PROPER OPPORTUNITY WILL BE AGAINST THE LAW WHEREAS LEARNED CIT, JALANDHAR-II, JALANDHAR, AT PAGE 30 MENTIONED THAT CROSS-EXAMINATION OF MR. SANJAY D SONAWANI WAS ALLOWED TO THE ASSESSEE B Y THE ASSESSING OFFICER AND IT HAS BEEN DENIED BY THE ASSESSEE SOCI ETY ON ONE PRETEXT OR ANOTHER. THIS FINDING OF THE LEARNED CIT, JALANDHAR -II, JALANDHAR, IS PERVERSE TO THE FACTS FOR THE REASONS THAT ON 27.02 .2013 THE LEARNED COUNSEL FOR THE ASSESSEE DEPOSITED RS 15,000/-. LEA RNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION AT PAGE 615 OF PB (V OL. -2) WHICH IS A LETTER TO THE ACIT, CIRCLE-3, JALANDHAR, DATED 28.02.2013, THE SAME IS REPRODUCED AS UNDER FOR THE SAKE OF CONVENIENCE: 28.02.2013 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3, JALANDHAR RE: APEEJAY EDUCATION SOCIETY, JALANDHAR, A.Y. 2010 -11 28 I.T.A. NO. 228 & 227(ASR)/2013 DEAR MADAM, WE ACKNOWLEDGE THE RECEIPT OF YOUR LETTER NUMBER AC IT/C- III/JAL/2012-13/6757 DATED 18.02.2013, ADDRESSED TO DDIT (INV.), PUNE AND COPY TO US. IN THE SAME YOU HAVE DIRECTED US TO VISIT PUNE ON 04.03.2013 AND CROSS EXAMINE MR. SANJAY D. SONAWANI IN THE OFFICE OF DDIT(INV.), PUNE. IN REGARD TO SAME IT IS SUBMIT TED AS UNDER: THAT ASSESSMENT PROCEEDING IN OUR CASE IS GOING ON BEFORE AND YOU ARE OUR ASSESSING OFFICER. WE WANT TO CROSS EXAMINE THE WITNESS IN YOUR PRESENCE AS YOU HAVE TO DECIDE OUR CASE ON THE BASIS OF HIS CROSS EXAMINATION. NO DOUBT HE IS WITNESS OF THE DEPARTMENT AND WE HAV E RIGHT TO CROSS EXAMINE HIM AT JALANDHAR. HOWEVER KEEPING IN VIEW Y OUR LIMITATIONS AND WE BEING LAW ABIDING CITIZENS ARE READY TO BEAR ALL THE EXPENDITURE OF MR. SANJAY D. SONAWANI FOR TRAVELLIN G TO JALANDHAR AS WITNESS. FOR THIS PURPOSE WE ARE ENCLOSING HEREWITH DEMAND DRAFT NO. 652344 DATED 27.03.2013 FOR DRAWN ON OBC PUNE FOR R S. 15,000/- IN THE NAME OF MR. SANJAY D. SONAWANI. YOU ARE REQUESTED TO CALL ME TO DEPOSE HERE IN JALA NDHAR BEFORE YOU. IN CASE HIS EXPENDITURE IS MORE THAN THIS, WE WILL REIMBURSE THE SAME ON HIS ARRIVAL OR IF YOU WANT WE CAN PAY IN ADVANCE . HENCE IT IS PRAYED THAT HE MAY PLEASE BE CALLED TO JALANDHAR. THANKING YOU. YOURS FAITHFULLY FOR APPEJAY EDUCATION SOCIETY SD/./- (CA NIRMAL MAHAJAN) COUNSEL ENCL: DEMAND DRAFT 17) LEARNED COUNSEL FOR THE ASSESSEE ALSO INVITED OUR ATTENTION TOWARDS THE PROVISIONS CONTAINED IN THE CODE OF CIV IL PROCEDURE, 1908 IN 29 I.T.A. NO. 228 & 227(ASR)/2013 THE RELEVANT ORDER XVI, RULE 19. BUT MR. SONAWANI P ERSON WAS NOT CALLED TO JALANDHAR AND NO CROSS-EXAMINATION WAS AL LOWED. MOREOVER, LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENT ION TO THE LETTER REPRODUCED AT PAGE 24 TO 28 IN THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, WHERE THE DEPARTMENT HAD RECORDED FOUR S TATEMENTS OF MR. SANJAY D. SONAWANI AND THERE ARE CONTRADICTIONS IN THESE STATEMENTS AND STILL THE DEPARTMENT IS TRYING TO USE THESE STATEME NTS OF THE PERSON WHO HAD RETRACTED FROM HIS EARLIER STATEMENT FROM TIME TO TIME. CONTRADICTORY REPLIES DATED 16.03.2011, 12.04.2011, 12.05.2011 & 30.12.2011 ARE REPRODUCED AT PAGE 25 TO 26 OF THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR. LEARNED COUNSEL FOR THE ASSESSEE AGAIN INVITED OUR ATTENTION AT PAGE 26 AND 27 OF THE ORDER OF LEARNED CIT, JALANDH AR-II, JALANDHAR, WHERE MR. SONAWANI HAS STATED IN HIS STATEMENT, WHI CH WAS TAKEN UNDER THREAT AND DURESS, THAT HE WAS TOLD THAT HE WOULD H AVE A HEAVY LIABILITY OF ROUGHLY 100 CRORES AND ACCORDINGLY HE FRIGHTENED AN D TOOK THE NAME OF PARAG MEHTA. LEARNED COUNSEL FOR THE ASSESSEE ARGUE D THAT THE CONTRADICTORY STATEMENTS MADE BY MR. SONAWANI CANNO T BE RELIED UPON AND CANNOT BE THE BASIS FOR ARRIVING AT A CONCLUSIO N THAT THE ASSESSEE SOCIETY IS NOT CARRYING ON ANY CHARITABLE ACTIVITIE S. THE LEARNED COUNSEL 30 I.T.A. NO. 228 & 227(ASR)/2013 FOR THE ASSESSEE RELIED UPON THE DECISIONS OF CIT V S. EASTERN COMMERCIAL ENTERPRISES (1995) 123 CTR (CAL) 217 AVAILABLE AT P AGE 427- 432 OF PB (VOL. -2). THE RELEVANT PARA NO 4 OF THE SAID ORDER , AT PAGE 432, IS REPRODUCED AS UNDER:- WE HAVE CONSIDERED THE CONTESTING CONTENTIONS OF T HE PARTIES. IT IS TRUE THAT SHRI SUKLA HAS PROVED TO BE A SHIFTY PERS ON AS A WITNESS. AT THE EARLIER STAGES, HE CLAIMED ALL HIS SALES TO BE GENUINE BUT BEFORE THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE, HE D ISOWNED THE SALES SPECIFICALLY MADE TO THE ASSESSEE. THIS STATEMENT C AN AT THE WORST SHOW THAT SHRI SUKLA IS NOT A TRUSTWORTHY WITNESS A ND LITTLE VALUE CAN BE ATTACHED TO WHAT HE STATED EITHER IN HIS AFFIDAV ITS OR IN HIS EXAMINATION BY THE ASSESSING OFFICER. HIS CONDUCT N EUTRALISES HIS VALUE AS A WITNESS. A MAN INDULGING IN DOUBLE-SPEAK ING CANNOT BE SAID BY ANY MEANS A TRUTHFUL MAN AT ANY STAGE AND N O COURT CAN DECIDE ON WHICH OCCASION HE WAS TRUTHFUL. IF SHRI S UKLA IS NEUTRALISED AS A WITNESS WHAT REMAINS IS THE ACCOUNTS, VOUCHERS , CHALLANS, BANK ACCOUNTS, ETC. BUT, WE WOULD OBSERVE HERE THAT WHIC H WAY LIES THE TRUTH IN SHRI SUKLA'S DEPOSITIONS, COULD HAVE BEEN REVEALED ONLY IF HE WAS SUBJECTED TO A CROSS-EXAMINATION BY THE ASSESSE E. AS A MATTER OF FACT, THE RIGHT TO CROSS-EXAMINE A WITNESS ADVERSE TO THE ASSESSEE IS AN INDISPENSABLE RIGHT AND THE OPPORTUNITY OF SUCH CRO SS-EXAMINATION IS ONE OF THE CORNERSTONES OF NATURAL JUSTICE. HERE SH RI SUKLA IS THE WITNESS OF THE DEPARTMENT. THEREFORE, THE DEPARTMEN T CANNOT CUT SHORT THE PROCESS OF TAKING ORAL EVIDENCE BY MERELY HAVING THE EXAMINATION-IN-CHIEF. IT IS THE NECESSARY REQUIREME NT OF THE PROCESS OF TAKING EVIDENCE THAT THE EXAMINATION-IN-CHIEF IS FO LLOWED BY CROSS- EXAMINATION AND RE-EXAMINATION, IF NECESSARY 18) LEARNED DR, ON THE OTHER HAND, STRONGLY RELIED UP ON THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, AS WELL ON THE WRITTEN SUBMISSION FILED BY HIM, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: 31 I.T.A. NO. 228 & 227(ASR)/2013 REGARDING:- APJ EDUCATION SOCIETY, ITA NO. 228/ASR/2013 WRITTEN SUBMISSIONS:- THE MAIN ISSUED INVOLVED IN THE CANCELLATION OF R EGISTRATION U/S 12AA(3) OF THE I.T. ACT BY CIT-II, JALANDHAR VIDE H IS ORDER DATED 25.03.2012. THE BRIEF FACTS ARE THAT DURING SEARCH PROCEEDING ON 22.03.2011 U/S 132 OF I.T. ACT, 1962, ON SH. PARAG V. MEHTA, R /O 144/114A, JOLLY BHAWAN NO. 110, MAXINE LINES MUMBAI, IT WAS FOND TH AT A TABLE SPACE HAS BEEN PROVIDED TO M/S WASHINGTON SOFTWARE LTD, A (WSL) COMPANY OF SH. SANJAY D. SONAWANI ALONG WITH MANY O THER COMPANIES. IT WAS ADMITTED BY SH. MEHTA THAT HIS CO MPANY (WSL) IS PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PERSONS AND SH. SONAWANI WAS MANAGING THE AFFAIRS OF THE COMPANY. L ATER ON, STATEMENT OF SH. SONAWANI WAS RECORDED ON VARIOUS D ATES AND HE STATED, IN ADDITION TO OTHER FACTS, THAT ACCOMMODA TION ENTRIES HAVE BEEN PROVIDED TO M/S APJ GROUPD AND VARIOUS INSTITU TES MANAGED BY IT. THE DETAILS OF THESE ACCOMMODATIONS ENTRIES WE RE ALSO PROVIDED BY HIM YEAR-WISE. THOUGH THERE HAS BEEN VERY MINOR VAR IATION IN THE STATEMENTS RECORDED FROM TIME TO TIME RELATING TO M ANAGEMENT AND INVOLVEMENT OF SH. MEHTA, THERE IS ONE THREAD-WHICH HAS BEEN CONSISTENTLY STATED THAT THE WSL HAS PROVIDED ACCOM MODATION ENTRIES TO THE ASSESSEE GROUP AFTER CHARGING COMMISSION OF 1% ON TOTAL ENTRIES. THESE SHAM/BOGUS ACCOMMODATION ENTRIES WER E CLAIMED AS EXPENSES BY THE ASSESSEE GROUP. THE ENTITIES OF THE ASSESSEE GROUP, WHEREVER SUCH EXPENSES WERE CLAIMED, WERE SURVEYED U/S 133A OF THE I.T. ACT, 1962. DURING SURVEY PROCEEDING, STATEMENT OF VARIOUS PERSONS MANAGING THE INSTITUTES INCLUDING PRINCIPAL , DEAN, MANAGER ETC. WERE RECORDED AND ARE ON RECORD. IN ALL THESE STATEMENTS, THEY DENIED ANY KNOWLEDGE OF SUCH SOFTWARE OF PURCHASE O F SUCH SOFTWARE. BASED ON ABOVE BARE FACTS, THE LEARNED CIT-II ISS UED NOTICE U/S 12AA(3) OF THE IT ACT, 1962 FOR CANCELLATION OF REG ISTRATION GRANTED EARLIER. PROPER OPPORTUNITY WAS GRANTED TO THE ASSE SSEE AND DETAILED REPLIES WERE FILED BY THE ASSESSEE. A REQUEST FOR C ROSS-EXAMINATION OF 32 I.T.A. NO. 228 & 227(ASR)/2013 SH. SONAWANI WAS MADE BEFORE CIT-II AS WELL AS BEFO RE HIS ASSESSING OFFICER. THE ASSESSING OFFICER ALLOWED THEM OPPORTU NITY TO CROSS- EXAMINE SH. SONAWANI ON 28.02.2013 AND 15.03.2013 A ND ON BOTH TIMES, THE OPPORTUNITY WAS NOT AVAILED OF. SO, NOW THE ASSESSEE CANNOT CLAIM THAT NO OPPORTUNITY TO CROSS-EXAMINE WAS GRAN TED. AFTER TAKING ALL THE FACTS INTO CONSIDERATION AND ANALYZING THE TOTALITY OF CIRCUMSTANCES, THE LEARNED CIT-II CANCELLED THE REG ISTRATION U/S 12AA(3) BY GIVING DETAILED REASONING IN THE BODY OF THE ORDER AND CONCLUSION IN PARA 7 OF THE ORDER DATED 25.03.2013. THIS DECISION OF THE CIT-II IS ABSOLUTELY CORRECT AND AS PER LAW. AT THE ONSET, IT IS REQUESTED THAT READING OF THE ORDER U/S 12AA(3) DAT ED 28.03.2013 OF IT ACT, 1962 AD OF THE ASSESSMENT ORDER U/S 143(3) FOR ASSESSMENT YEAR 2010-11 PASSED ON 28.03.2013 (PAGE NO. 592 TO 612 OF THE PAPER BOOK VOLUME-2 FILED BY THE ASSESSEE) WILL CLEAR ALL THE DOUBTS AND WILL ESTABLISH THAT IT WAS A CRYSTAL CLEAR CASE OF CLAIM OF BOGUS/SHAM EXPENSES ON THE BASIS OF FORGED DOCUMENTS (ACCOMMOD ATION ENTRIES) BACK GROUND OF THE ASSESSEE/SOCIETY 1. THE SOCIETY/ASSESSEE IS MANAGED BY ONE FAMILY 5 MEMBERS OUT OF 7 MEMBERS ARE AND BELONG TO SH. SATYAPAL, TH E PRESIDENTOF THE SOCIETY. (SOURCE PAGE 14 OF THE PAPER BOOK FILED BY THE ASSE SSEE) SR. NO. NAME OCCUPATION ADDRESS RELATIONSHIP 1. STYA PAUL BUSINESS S-361, PANCH SHILLA PARK, NEW DELHI FATHER 2. SUSHMA BERILA BUSINESS 14, COMMERCIAL COMPLEX, MAJID MOTH, GREATER KAILASH- II, NEW DELHI-48 DAUGHTER 3. YASH RAJ AGGARWAL BUSINESS GDPA HOUSE NEAR RAILWAY GODOWN, JALANDHAR -4 4. VIJAY KUMAR BERILA BUSINESS 14, COMMERCIAL COMPLEX, MAJID MOTH, GREATER KAILASH- II, NEW DELHI-48 SON-IN- SH. STYA PAUL. 5. RAJESHWARI PAUL BUSINESS S-361, PANCH SHILLA PARK, NEW DELHI WIFE 6. KAMNA RAJ AGGARWAL BUSINESS 240-L, MODEL TOWN, JALANDHAR 33 I.T.A. NO. 228 & 227(ASR)/2013 7. NISHANT BERILA PROFESSIONAL NO. 1 TUGLAK LANE, NEW DELHI GRAND SON OF SH. STYA PAUL (2). THE PRSIDENTSHIP HAS BEEN BESTOWED UPON SH. S ATYAPAL FOR LIFE AND AFTER HIM, ON HIS LINEAL DESCENDENT AND HAVE TO REMAIN PERPETUALLY IN THE FAMILY. (SOURCE PAGE 8 OF THE PAPER BOOK FILED BY THE ASSES SEE) I) THE PRESENT PRESIDENT OF THE SOCIETY IS DR. ST YA PAUL, ELDER SON OF LATE SHRI PIYARE LAL. DR. SATYA PAUL WILL CONTINUE TO BE THE LIFE PRESIDENT OF THE SOCIETY. II) IN CASE OF HIS RETIREMENT OR IN CASE OF THE PO ST FALLING VACANT OTHERWISE THE NEXT PRESIDENT OF THE SOCIETY WILL BE SMT. SUSHMA B ERLIA, DAUGHTER OF DR. STYA PAUL. SMT. SUSHMA BERILA WILL THEN CONTINUE TO BE THE LIFE PRESIDENT OF THE SOCIETY UNLESS SHE HERSELF RETIRES . III) IN CASE AT NAY TIME VACANCY OCCURS, SUBSEQUEN T TO 2 C(II) ABOVE IN THE OFFICE OF THE PRESIDENT DUE TO RETIREMENT, RESIGNAT ION OR OTHERWISE THE VACANCY WILL BE FILED IN AMONGST BY ONE OF THE LIFE MEMBERS OF THE SOCIETY TO BE ELECTED BY THE LIFE MEMBERS ONLY WHO ARE EITH ER THEMSELVES FAMILY MEMBERS, DESCENDANTS AND/OR THEIR SPOUSES OF DR. SA TYA PAUL SONE OF LATE SHRI. PAYARE LAL. 3. IT S CLEARLY A BUSINESS VENTURE WHICH HAS BEEN GIVEN THE HUE OF A CHARITABLE SOCIETY THE FACTS OF CHARITABLE SOCIET Y PEEL OFF AS SOON THE FACT OF CLAIM BOGUS/INCURRED EXPENSES IS ESTABLISHE D WITH EVIDENCE. SO, IN REALITY, THE SOCIETY IS A FAMILY AFFAIR MANAGED BY THE FAMILY OF SH. SATYAPAL. BARE FACTS 1. THE CO (WSL) DID NOT HAVE ANY OFFICE OR INFRAST RUCTURE FOR CONDUCTING SUCH BUSINESS AS IT WAS WORKING FROM TAB LE SPACE IN THE PREMISES OF SH. PARAG MEHTA. 2. THE CLOSE CONNECTION BETWEEN SH. VIJAY BERLIA SEC. OF THE SOCIETY AND SH. MEHTA IS ON RECORD. IN HIS STATEMEN T DATED 34 I.T.A. NO. 228 & 227(ASR)/2013 29.03.2011. SH. BERILA HAS ADMITTED THAT SH. PARAG MEHTA -, IS SON OF HIS OLD CHARTERED ACCOUNTANT. (SOURCE PAGE NO. 357-364 OF THE PAPER BOOK FILED BY THE ASSESSEE) 3. SH. SONAWANI DIRECTOR OF WSL HAS CATEGORICAL LY STATED IS ALL HIS STATEMENTS THAT HE PROVIDED ACCOMMODATION ENTRI ES TO THE ASSESSEE IN VARIOUS YEARS. (SOURCE PAGE NO. 322 TO 356 OF THE PAPER BOOK FILED BY THE ASSESSEE) 4. THE ACCOMMODATION ENTRIES OBTAINED FROM SH. SO NAWANI HAS BEEN DEBITED AS EXPENSES OF VARIOUS INSTITUTES WHOS E KEY PERSONNELS WERE NOT EVEN AWARE OF THE PAYMENT OR S OFTWARE OR PURCHASE OF ANY SOFTWARE. (SOURCE PAGE NO. 365 TO 412 OF THE PAPER BOOK FILED BY THE ASSESSEE) 5. THE ASSESSEE IS AN OLD SOCIETY AND HAVE BEEN MA NAGING ITS AFFAIRS INCLUDING BOOKS OF ACCOUNT ON COMPUTER. THE EVIDENCE PRODUCED DURING THE PROCEEDINGS IN RESPECT OF SOFTW ARE ONLY RELATE TO REGULAR SOFTWARE WHICH WAS USED IN MAINTE NANCE OF DETAILS. THERE IS NO SPECIFIC EVIDENCE IN RESPECT O F EVIDENCE REGARDING SOFTWARE FROM THE WSL. HENCE:- 1. THE ASSESSEE COULD NOT EXPLAIN AS TO WHY THE SO-CAL LED SOFTWARE HAS BEEN INSTALLED IN THE HEAD OFFICE WHEREAS EXPEN SES HAVE BEEN DEBITED TO VARIOUS INSTITUTES OF THE ASSESSEE. 2. THE ASSESSEE HAS EMPLOYED UNFAIR MEANS TO SIPHON OF F THE FUNDS FOR ULTERIOR MOTIVE AND HENCE THE ACTIVITIES OF THE SOCIETY DOES NOT REMAIN GENUINE. 3. THE VERY SOUL OF CHARITABLE ACTIVITIES HAS BEEN VIO LATED WHICH GOES TO THE CORE OF PURPOSE AND OBJECTS. IT IS NOT A CASE OF DISPUTED EXPENSES BUT A CASE OF PURE SIPHONING OFF MONEY FOR NON-GENUINE ACTIVITIES OF THE SOCIETY. 4. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE REASO NS FOR OBTAINING SHOW/BOGUS BILLS IN THE HANDS OF VARIOUS INSTITUTES. 35 I.T.A. NO. 228 & 227(ASR)/2013 CLAIM OF BOGUS EXPENSES FROM FICTIONS COMPANY RAISE A VALID QUESTION MADE ON THE GENUINENESS OF THE ACTIVITIES OF THE SOCIETY. 5. THE STATEMENT OF THE DIRECTOR OF WSL (SH. SONAWANI) RECORDED FROM TIME TO TIME DURING SEARCH PROCEEDING AND THER EAFTER LEAD TO ONLY ON CONCLUSION THAT THE EXPENSES CLAIMED ARE NOT GENUINE AND HENCE NOT FOR GENUINE ACTIVITIES OF THE SOCIETY . 6. CLAIM OF BOGUS/SHAM BILL OF EXPENSES IS NOT ONLY UN ALLOWABLE EXPENSES BUT GOES TO THE CORE OF THE MATTER AS IT A FFECTS THE WHOLE BODY OF THE SOCIETY. A SOCIETY MEANT FOR NOBL E CAUSE OF EDUCATION GOES ASTRAY-CLAIMS BOGUS/SHAM EXPENSES, S IPHONS OFF THE FUNDS MEANT FOR EDUCATION-STILL HAS THE FACT OF CLAIMING REGISTRATION U/S 12AA I.E. AN EXEMPTION FROM PAYMEN T OF INCOME TAX. 7. ONCE IT IS ESTABLISHED THAT THE EXPENSES ARE NOT GE NUINE, IT IS NOT NECESSARY TO PROVE WHERE THE FUNDS GAVE GONE ULTIMA TELY FACTS OF WHICH ARE IN KNOWLEDGE OF THE ASSESSEE ONLY. 8. THE REGISTRATION HAS BEEN CANCELLED RIGHTLY FROM TH E YEAR WHEN THE CLAIM OF THE BOGUS EXPENSES WAS FIRST MADE. THE ISSUE NEEDS A VIEW BASED ON TOTALITY OF THE C IRCUMSTANCES AND FACTS OF THE CASE AND NO ON ONE OR TWO LINES PI CKED UP FROM HERE AND THERE. THE OVERALL FACTS LEAD TO ONLY ONE CONCL USION THAT IT IS CLEAR CASE OF NON-GENUINE ACTIVITIES OF THE SOCIETY. SO, THE LEARNED CIT HAS RIGHTLY CANCELLED THE REG ISTRATION THE SOCIETY U/S 12AA(3) OF THE I.T. ACT. SUBMITTED SIR, SD/./- (MAHAVIR SINGH) JOI NT COMMISSIONER OF INCOME TAX, SR. D.R., I.T.A.T., AMRITSAR. 36 I.T.A. NO. 228 & 227(ASR)/2013 19) WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED TH E FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT LEARNED CIT, JALANDHAR-II, JALANDHAR, WHO HAS PASSED THE ORDER UNDER SECTION 1 2AA(3) OF THE ACT, HAS HIMSELF OBSERVED THAT THE ASSESSEE SOCIETY IS R UNNING VARIOUS EDUCATION INSTITUTIONS UNDER ITS MANAGEMENT AND CON TROL WHICH ARE LISTED OUT AT PAGE NOS. 1 AND 2 OF HIS ORDER. THE SAID INS TITUTIONS ARE STATED TO BE ENGAGED IN THE ACTIVITIES OF IMPARTING EDUCATION TO STUDENTS UNDER VARIOUS FIELDS. IT IS ALSO NOT DISPUTED THAT THE ASSESSING OFFICER IN THE CASE OF ASSESSEE, VIDE HIS ORDER DATED 30.12.2011 PASSED FO R THE ASSESSMENT YEAR 2004-05 UNDER SECTION 143(3)/147 OF THE ACT, WHICH HAS BEEN PASSED AFTER THE ORDER UNDER SECTION 12AA(3) OF THE ACT, H AS OBSERVED IN PARA 3, PAGE 534 OF PB (VOL. -2), THAT THE MAIN OBJECT OF THE SOCIETY IS TO RUN EDUCATIONAL INSTITUTE AND DURING THE YEAR, THE ASSE SSEE WAS RUNNING SEVERAL SCHOOLS AND COLLEGES. NOWHERE, THERE HAS BE EN FINDING IN THE ASSESSMENT ORDER THAT THE ASSESSEE INSTITUTE IS NOT IMPARTING EDUCATION OR NOT CARRYING OUT ANY ACTIVITY OF IMPARTING EDUCATIO N WHICH IS THE MAIN OBJECT OF THE SOCIETY. IT HAS BEEN HELD BY THE ASSE SSING OFFICER IN THE SAID ORDER THAT THE ASSESSEE HAS INCURRED 91.71% OF THE RECEIPTS WHICH ARE MORE THAN 85%, AS REQUIRED UNDER SECTION 11(1) OF T HE ACT. SIMILARLY, IN 37 I.T.A. NO. 228 & 227(ASR)/2013 THE ORDER DATED 30.12.2011 PASSED FOR THE ASSESSMEN T YEAR 2009-10, WHICH HAS BEEN PASSED AFTER THE ORDER UNDER SECTION 12AA(3) OF THE ACT, AVAILABLE AT PAGE 553-563 OF PB (VOL. -2), IT HAS B EEN OBSERVED BY THE ASSESSING OFFICER IN PARA 2 (PAGE 554) THAT THE MAI N AIM OF THE ASSESSEE SOCIETY IS TO RUN EDUCATIONAL INSTITUTE AND DURING THE YEAR THE ASSESSEE WAS RUNNING SEVERAL SCHOOLS AND COLLEGES AND THEREFORE THERE IS NO FINDING WITH REGARD TO NOT IMPARTING EDUCATION TO THE STUDE NTS OR NOT ACHIEVING THE OBJECTS OF THE ASSESSEE SOCIETY. IN THE AFORESA ID ORDER, AT PAGE 562 OF PB (VOL. -2), IT HAS BEEN HELD BY THE ASSESSING OFF ICER THAT THE ASSESSEE HAS INCURRED EXPENSES AT 95.66% OF THE RECEIPTS WHI CH IS MORE THAN 85%, AS REQUIRED UNDER SECTION 11(1) OF THE ACT. LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISION IN THE CASE O F RED ROSE SCHOOL (SUPRA) AND THE RELEVANT PARA NO. 21 OF THE ORDER, AVAILABLE AT PAGE 317 OF PB (VOL. -2) IS REPRODUCED AS UNDER: 21. SECTION 12AA, WHICH LAYS DOWN THE PROCEDURE FO R REGISTRATION, DOES NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDE RING THE APPLICATION FOR REGISTRATION, SHALL ALSO SEE THAT T HE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SP ENT FOR CHARITABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT. THE LANGUAGE USED IN THE SECTION ONLY REQUIRES THAT ACTIVITIES OF THE TRUST OR THE INSTITUTION MUST BE GENUINE, WHICH ACCORDINGLY WOULD MEAN, THEY ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST/ INSTITUTION, AND ARE NOT MERE CAMOUFLAGE BUT ARE REAL, PURE AND SINCERE, NOR AGAINST THE PRO POSED OBJECTS. THE PROFIT EARNING OR MISUSE OF THE INCOME DERIVED BY C HARITABLE 38 I.T.A. NO. 228 & 227(ASR)/2013 INSTITUTION FROM ITS CHARITABLE ACTIVITIES, MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INC OME BUT CANNOT BE TAKEN TO BE A SYNONYM TO THE GENUINENESS OF THE ACT IVITIES OF THE TRUST OR THE INSTITUTION. 20) IN THE PRESENT CASE, THE ACTIVITIES OF THE ASSESS EE-TRUST WHICH ARE MAINLY OF IMPARTING EDUCATION TO THE STUDENTS UNDER VARIOUS INSTITUTIONS REFERRED IN THE ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, HAVE BEEN FOUND TO BE GENUINE AND NO ALLEGATION REGARDING NOT IMPARTING OF EDUCATION HAS BEEN FRAMED BY LEARNED CIT, JALANDHAR -II, JALANDHAR, IN ITS ORDER PASSED UNDER SECTION 12AA(3) OF THE ACT OR BY THE ASSESSING OFFICER IN HIS ORDER PASSED FOR THE ASSESSMENT YEAR S 2004-05 & 2009-10, REFERRED HEREINABOVE. THE ACTIVITIES OF THE TRUST A RE FOUND TO BE GENUINE AND ACCORDING TO US THE ACTIVITIES OF THE TRUST ARE GENUINE AND CANNOT BE SAID TO BE FOR NON-CHARITABLE PURPOSES, ESPECIALLY THAT THERE IS NOT EVEN A WHISPER FROM LEARNED CIT, JALANDHAR-II, JALANDHAR, WITH REGARD TO THE NON-GENUINENESS OF THE ACTIVITIES OF THE TRUST WHIC H ARE FOUND TO BE IN CONSONANCE WITH THE OBJECTS OF THE TRUST AND THEREF ORE, THE LEARNED CIT, JALANDHAR-II, JALANDHAR, IS NOT JUSTIFIED IN CANCEL LING AND WITHDRAWING THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT I.E. W.E.F. THE ASSESSMENT YEAR 2004-05. IN THE PRESENT CASE, LEAR NED CIT, JALANDHAR-II, JALANDHAR, HAS NOT BROUGHT ON RECORD ANY MATERIALS THAT THE ACTIVITIES OF 39 I.T.A. NO. 228 & 227(ASR)/2013 THE TRUST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS, THE ORDER OF LEARNE D CIT, JALANDHAR-II, JALANDHAR, CANCELLING THE REGISTRATION IS BAD IN LA W AND, THEREFORE, IS SET ASIDE. 21) RELIANCE HAS BEEN PLACED BY LEARNED COUNSEL FOR T HE ASSESSEE IN THE CASES OF CHATURVEDI HAR PRASAD EDUCATION SOCIET Y (SUPRA), MAHARASHTRA ACADEMY OF ENGINEERING & EDUCATIONAL RE SEARCH (MAEER) (SUPRA), INSTITUTE OF SCIENCE AND MANAGEMENT (SUPRA ) AND AJIT EDUCATION TRUST, BHARUCH (SUPRA) AND THESE CASE-LAWS SUPPORT OUR VIEWS AND ALL THE DECISIONS ARE PLACED ON RECORD. 22) AS REGARDS THE PURCHASE OF SOFTWARE, MUCH HAS BEE N RELIED UPON THE STATEMENT OF ONE MR. SANJAY D. SONAWANI MANAGER OF M/S WASHINGTON SOFTWARE LTD. WHO STATED THAT HE HAS PRO VIDED ACCOMMODATION ENTRIES TO THE ASSESSEE SOCIETY. FROM THE STATEMENTS GIVEN TO THE DEPARTMENT FROM TIME TO TIME DATED 16.03.201 1, 12.04.2011, 12.05.2011 AND 30.12.2011, IT WAS ARGUED THAT MR. S ANJAY D SONAWANI HAS CONTRADICTED HIS STATEMENTS EVERY TIME AND AS R EGARDS THE ARGUMENTS MADE BY LEARNED SR. DR MR. MAHAVIR SINGH THAT HIS S TAND HAS ALREADY BEEN CONSTANT WITH REGARD TO PROVIDING ACCOMMODATIO N ENTRIES TO THE 40 I.T.A. NO. 228 & 227(ASR)/2013 ASSESSEE WHEREAS WHILE READING PAGE 26 OF ORDER OF LEARNED CIT, JALANDHAR-II, JALANDHAR, IN WHICH IT HAS BEEN CLEAR LY MENTIONED BY HIM THAT MR. SONAWANI WAS THREATENED BY THE DEPARTMENT FOR THE STATEMENT DATED 16.03.2011 WHICH IS REPRODUCED AS UNDER: I HAVE NOT MADE ANY FALSE STATEMENT IN PUNE ON 16 .03.2011. IN FACT AT THAT TIME I WAS TOLD THAT I WOULD HAVE A HEAVY L IABILITY OF ROUGHLY 100 CRORES, SO I GOT FRIGHTENED AND TOOK THE NAME O F PARAG MEHTA. 23) THE AFORESAID STATEMENT RECORDED BY THE DEPARTMEN T WAS WHETHER UNDER THREAT OF TAX LIABILITY OF 100 CRORES IS NOT EVIDENCED BY ANY DOCUMENTARY EVIDENCE BY LEARNED A.R. IN THE PRE SENT ISSUE, THE ASSESSEE HAS SUBMITTED THE EXPLANATION VIDE LETTER DATED 14.09.2012 AVAILABLE AT PAGE 8 TO 10 OF THE ORDER OF LEARNED C IT, JALANDHAR-II, JALANDHAR, IN WHICH IT WAS STATED THAT THE SOFTWARE PURCHASED FROM WASHINGTON SOFTWARE LIMITED THOUGH DEBITED TO VARIO US INSTITUTIONS, IS INSTALLED IN THE CENTRAL SERVER AT THE HEAD OFFICE OF UTMOST IMPORTANCE AND REQUIRED SECRECY. THE SOFTWARE INCLUDES VARIOUS MOD ULES AND VARIOUS TYPES OF REPORTS WHICH INCLUDE DATA OF STUDENTS AND ALSO ABOUT THE INSTITUTIONS. IT GENERATES REPORTS WHICH ARE VERY B IG AND CONTAIN LARGE NUMBER OF PAGES. SOME OF THE REPORTS WERE PRODUCED BEFORE THE LEARNED CIT, JALANDHAR-II, JALANDHAR, AND ARE AVAILABLE ON RECORD. SUCH REPORTS 41 I.T.A. NO. 228 & 227(ASR)/2013 HAVE BEEN STATED TO BE WRONG BY LEARNED CIT, JALAND HAR-II, JALANDHAR. THE ASSESSEE, FOR SUPPLEMENTING HIS CONTENTION, HA S ENCLOSED THE REPORT OF TRIDENT INFORMATION SYSTEM PVT. LTD. CERTIFYING THAT THE SOFTWARE WERE DULY INSTALLED IN THE CENTRAL SERVER AT THE HEAD OF FICE AND THE SAID REPORT IS AVAILABLE ON RECORD AS MENTIONED HEREINABOVE. IT WA S ARGUED THAT THE SAID SOFTWARE SYSTEM HAS GENERATED THE REPORTS RIGHT FRO M 2004 TO 2011. 24) IN THIS REGARD AND KEEPING IN VIEW THE FACTS AND C IRCUMSTANCES AS ABOVE, IT CANNOT BE A CASE FOR WITHDRAWAL/CANCEL LATION OF REGISTRATION GRANTED UNDER SECTION 12AA(1) OF THE ACT AND THEREF ORE, IN THESE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, OUR FINDING S AS HEREINABOVE. LEARNED CIT, JALANDHAR-II, JALANDHAR, IS NOT JUSTIF IED IN WITHDRAWING OR CANCELLING THE REGISTRATION UNDER SECTION 12AA(3) O F THE ACT. ACCORDINGLY, ALL THE GROUNDS OF THE ASSESSEE ARE AL LOWED. 25) IN THE RESULT, THE APPEAL OF THE ASSESSEE APEEJAY EDUCATION SOCIETY I.E. ITA NO. 228(ASR)/2013 IS ALLOWED. 26) NOW, WE TAKE UP THE APPEAL OF M/S RAJESHWARI SANG EET ACADEMY TRUST IN ITA NO. 227(ASR)/2013. THE FACTS I N THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS IN THE APPEAL OF APEEJAY EDUCATION SOCIETY IN ITA NO. 228(ASR)/2013 AS MENTIONED HEREI NABOVE. 42 I.T.A. NO. 228 & 227(ASR)/2013 ACCORDINGLY, OUR ORDER PASSED IN APEEJAY EDUCATION SOCIETY IN ITA NO. 228(ASR)/2013, MENTIONED HEREINABOVE, IS IDENTICALL Y APPLICABLE IN THE PRESENT APPEAL OF M/S RAJESHWARI SANGEET ACADEMY TR UST IN ITA NO. 227(ASR)/2013. RESULTANTLY, ALL THE GROUNDS OF APPE AL RAISED BY THE ASSESSEE IN ITA NO. 227(ASR)/2013 ARE ALLOWED. 27) IN THE RESULT, BOTH THE APPEALS I.E. ITA NOS. 228 (ASR)/2013 & 227(ASR)/2013 FILED BY THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAY, 2014 SD/./- SD/./- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 8 TH MAY, 2014 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES: M/S APEEJAY EDUCATION SOCIETY & M/S RAJESHWARI SANGEET ACADEMY , BHAGWAN MAHAVIR MARG, NEW JAWAHA R NAGAR, JALANDHAR 2. COMMISSIONER OF INCOME JALANDHAR-II, JALANDHAR 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.