St. Peters Educational Society, Chandigarh V. The Pr. CIT, Gurgaon

ITA 370/CHANDI/2021

AI Insights

The case revolves around the St. Peters Educational Society, which appealed against the decision of the Principal Commissioner of Income Tax (Central), Gurgaon, who had withdrawn the society's approval under section 10(23C)(vi) of the Income Tax Act, 1961. The withdrawal was based on allegations of misappropriation of funds and non-compliance with the conditions of the approval, following a survey and subsequent investigations. The Tribunal examined the legality of the retrospective withdrawal of the approval and the substantive evidence provided by both parties. The Tribunal concluded that the withdrawal was not justified, leading to the restoration of the society's approval.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127528 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-11-2022
• Assessment Year: 2021-2022
• Appeal Filed On: 17-11-2021
• Other Referred Cases: Agra Development Authority [2018] 407 ITR 562 (All), Indian Medical Trust Vs. Pr. CIT, Jaipur (2019) 108 taxman.com 93 (Raj), Auro Lab vs ITO (2019) 102 taxmann.com 225, Shri Jairam Education Society Bhopal (in ITA Nos. 90 & 548/lnd/2019 dated 13/10/2021), Aurora Educational Society Vs. Pr. CIT(Central) (in ITA Nos. 318 to 321 (Hyd) of 2020 dt. 20/04/2021), Commissioner of Customs (Import), Mumbai vs M/s Dilip Kumar and Company (Civil Appeal No. 3327 of 2007 dated 30/07/2018), Paramjit Singh vs ITO [2010] 323 ITR 588, Cancer Aid & Research Foundation (ITA No. 1782/Mum/2014 dated 16/07/2014), Krupanidhi Educational Trust (supra), DCIT vs. Cosmopolitan education Society 244 ITR 0494 (Raj.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Charitable institution; Opportunity of being heard; Retrospective amendment; Benefit of exemption; Cancellation of registration; TDS
• Section: 131; 12; 10; 56(2)(vii)(b); 11; 11A; 133A; 12A; 12AA; 192; 13

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ बी ” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B ”, CHANDIGARH ी स ु धांश ु ीवा तव, या यक सद य, एवं ी #व$म &संह यादव, लेखा सद य BEFORE: SHRI. SUDHANSHU SRIVASTAVA, JM & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 370 /Chd/ 2021 Assessment Year : 2021-22 St. Peters Educational Society, Sector-37B, Chandigarh The Pr. CIT (Central) Gurgaon PAN NO: AADTS0770J Appellant Respondent ! " Assessee by : Shri Tejmohan Singh, Advocate # ! " Revenue by : Shri Akashdeep, JCIT, Sr. DR $ % ! & Date of Hearing : 01/12/2022 '()* ! & Date of Pronouncement : 27/02/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee Society against the order of the Ld. PCIT(Central), Gurgaon dt. 21/10/2021 passed under section 10(23C)(vi) of the Income Tax Act, 1961(in short ‘the Act’) wherein the assessee has taken the following grounds of appeal: “1. That the Ld. PCIT(Central) has erred in law as well as on facts in withdrawing the approval granted u/s 10(23C)(vi) of the Act which is arbitrary & unjustified. 2. That the approval has been withdrawn based on suspicion, conjectures and surmises as is evident from the various unfounded findings as enumerated in the body of the order which is not permitted under the Law and as such the order withdrawing approval is illegal, arbitrary and unjustified. 3. That the Ld. PCIT (Central) has erred in withdrawing the approval only on the basis of some alleged rough jottings on a paper in respect of exchange of property, owning of cars and certain statements of teachers without any cross examination and as such withdrawal of approval in utter disregard of the explanations rendered is arbitrary, illegal and unjustified. 2 4. That the Ld. PCIT(Central) has further erred in holding that the activities of the assessee society are not being carried out in accordance with its aims and objects and also not in accordance with all or any of the conditions subject to which it is approved which is factually incorrect and as such order withdrawing the approval is arbitrary, illegal and unjustified. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 6. That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.” 2. Briefly the facts of the case are that the assessee society is engaged in the field of education and running a school in the name of St. Peter’s School, Chandigarh. It is registered under the Societies Registration Act and was approved for the purpose of Section 10(23C)(vi) of the Act by the ld. CCIT, Chandigarh vide his order dt. 14/02/2007 with effect from A.Y. 2003-04 and the assessee society has since been filing its return of income claiming exemption under section 10(23C)(vi) of the Act. 3. In the financial year 2008-09, the ld. CCIT, Chandigarh withdrawn the aforesaid approval granted under Section 10(23C)(vi) of the Act vide his order dt. 31/03/2009 against which the assessee society filed a writ petition before the Hon’ble Punjab and Haryana High Court. The matter was decided in favour of the assessee society and the order of the ld. CCIT, Chandigarh withdrawing the aforesaid approval granted under Section 10(23C)(vi) of the Act was quashed by the Hon’ble Punjab and Haryana High Court vide its order dated 29/01/2010. The Revenue thereafter moved a special leave petition which was dismissed by the Hon’ble Supreme Court vide its order dated 16/03/2015 and the decision of the Hon’ble Punjab and Haryana High Court was upheld. Pursuant thereto, the approval under exemption under section 10(23C)(vi) of the Act was reinstated by the ld CCIT, Chandigarh and accordingly, the assessee society has been filing its return of income claiming the said exemption and which has been allowed by the Revenue on year-to-year basis. 3 4. In the financial year 2020-21, the ld PCIT (Central) Gurgaon has again withdrawn the aforesaid approval granted to the assessee society under Section 10(23C)(vi) of the Act vide the impugned order dt. 21/10/2021. The background to the said action by the ld PCIT (Central) Gurgaon is a survey action under section 133A conducted at the school premises of the assessee society by the Revenue authorities on 23/01/2019 during the financial year 2018- 19 and a reference/report received from the Assessing officer, i.e, ITO (Exemption), Chandigarh. 5. As per ld PCIT, based on these preliminary findings of the survey team during the course of survey and post survey inquiries, it was found that the members of the governing body of the assessee society and its executive committee members have diverted the funds of the society and not applied the same wholly and exclusively to the objects for which the society was established. In particular, it was stated that the two immovable properties of the assessee Society at H.No. 533, Sector 18-B, Chandigarh and H.No. 163, Sector 11A, Chandigarh were being used by Mrs. Patricia Khanna, the Chairperson and her family members as their residence. It was further stated that an Exchange Deed dt. 15/12/2016 was found during the course of survey which was executed between the assessee society and Mr. Arun Kumar Dhir, wherein 100% of the property situated at Sector 18-B was exchanged for 80% share of another property situated at Sector 11A, Chandigarh and the assessee society has received Rs. 60 lakhs by way of cheques to equalize the value of the two properties. Further, a notepad was found in the bag of Mr. Shane John Khanna a member and Secretary of the society and on perusal of the noting therein, it was found that in addition to Rs. 60 lakhs, Rs. 2.50 crore was also paid in cash by Mr. Arun Kumar Dhir which was diverted and neither accounted for in the books of the assessee nor used for its objects. It was stated by the ld PCCIT that during the course of survey, it was found that the society owned a fleet of luxury cars 4 which were being used by the Chairperson and her family members alongwith Ms. Vardhini Verma, a member of the society. It was further found during the course of survey that the society was paying lower salary to its employees than what was reflected in the books of accounts and misappropriating the excess amount for use by its members. 6. Based on these preliminary findings of the survey team and a reference/report received from the Assessing officer, i.e, ITO (Exemption), Chandigarh in this regard, it is noted that two show cause notices dt. 25/01/2019 and 19/02/2021 were initially issued by the Ld. CIT(Exemptions), Chandigarh for withdrawal of approval under section 10(23C)(vi) of the Act. In response the assessee society filed its submissions vide letters dt. 14/02/2019 and 04/03/2021. Subsequently, consequent to implementation of the Faceless Assessment Scheme, 2019 vide order dt. 18/09/2020 issued by the CBDT, the case of the assessee society was transferred by the ld CIT(Exemption), Chandigarh vide order dt. 15/12/2020 passed under section 127(2) from ITO (Exemptions), Ward- Chandigarh to Central Circle-2, Chandigarh. Subsequent to transfer of jurisdiction over the assessee society, a fresh show cause notice dt. 15/06/2021 was issued by ld PCIT (Central), Gurgaon dt. 15/06/2021 referring to earlier show- cause notices dt. 25/01/2019 and 19/02/2021 issued by the Ld. CIT(Exemptions), the earlier replies filed by the assessee and requesting the assessee society to file complete replies alongwith documentation and calling for certain further information/documentation. 7. In response to the show-cause dated 15/06/2021 issued by the ld PCIT( Central), Gurgaon, the assessee society furnished its detailed submissions vide letter dt. 25/06/2021 and taking the same into consideration and other material available on record, the Ld. PCIT(Central), Gurgaon has recorded his findings that the assessee society has not applied its income wholly and exclusively for the objects for which it was established, but used it directly or indirectly for the 5 benefit of its Chairperson and other members of the society. It was also held by the Ld. PCIT(Central), Gurgaon that the activity of the assessee society are not being carried out in accordance with its aims and objectives and also not in accordance with the conditions subject to which it was initially approved. The Ld. PCIT(Central), Gurgaon has thereafter recorded his satisfaction that the assessee society has violated the provisions of Section 10(23C)(vi) specially the 3 rd & 14 th proviso of said section. Accordingly, the approval originally granted under section 10(23C)(vi) by the then ld CCIT, Chandigarh vide his order dt. 14/02/2007 with effect from A.Y. 2003-04 was withdrawn by the ld PCIT(Central), Gurgaon vide the impugned order dated 21/10/2021. 8. Against the said findings and direction of the Ld. PCIT, the assessee society is in appeal before us. 9. During the course of hearing, various contentions have been advanced by both the parties. Firstly, we refer to the ld AR’s contention regarding retrospective withdrawal of the exemption approval. The ld AR submitted that ld PCIT has withdrawn the exemption under Section 10(23C)(vi) with retrospective effective, i.e, with effect from A.Y 2003-04 which is clearly without requisite jurisdiction, arbitrary, unjust and without sanction of law. It was submitted that this is the second time when the exemption has been withdrawn unsettling the position in the earlier years. It was submitted that when the exemption was earlier withdrawn and thereafter, reinstated by the order of the Hon’ble Punjab and Haryana High Court which was affirmed by the Hon’ble Supreme Court, how the ld PCIT can invoke his jurisdiction to withdraw the exemption approval again right from inception and even covering the years for which the approval was withdrawn and reinstated and which was subject matter of orders of the Hon’ble Punjab and Haryana High Court and Hon’ble Supreme Court and has been duly settled and accepted by the authorities. 6 10. It was further submitted that survey at the school premises of the assessee society was conducted on 23/01/2019, thereafter, first show-cause was issued on 25/01/2019 and the second show-cause was issued on 19/02/2021 by the ld CIT(Exemption), Chandigarh and thereafter, the third show-cause was issued by the ld PCIT(Central), Gurgaon on 15/06/2021 and finally, the impugned order was passed on 21/10/2021. It was submitted that without going into the merits of the matter which the assessee society is contesting separately, even where the exemption has to be withdrawn, the withdrawal should be effective from the date of the impugned order i.e, 21/10/2021 relevant for assessment year 2022-23 and not prior to that. It was submitted that for the period prior to the impugned order, the exemption cannot be withdrawn and made effective retrospectively. 11. It was submitted that consequent to the withdrawal of exemption under section 10(23C)(vi), the assessment proceedings have been reopened by the Assessing officer right from A.Y 2013-14 and subsequent years and the AO has passed the reassessment/assessment orders wherein not just the surplus of receipts over expenditure has been brought to tax on account of withdrawal of exemption, which otherwise was eligible for exemption, the Assessing officer has made arbitrary, unjust and huge additions separately and individually in respect of various matters which are the subject matter of the impugned order passed by the ld PCIT. It was submitted that all these consequential and arbitrary assessment orders are fall-out of the action of the ld PCIT in withdrawing the approval from the retrospective effect and the same cannot be sustained in the eyes of law. 12. In this regard, our reference was drawn to the relevant provisions of section 10(23C)(vi) which empowers the ld PCIT to withdraw the approval which read as under: “Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) is notified by the Central 7 Government or is approved by the prescribed authority, as the case may be, or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via), is approved by the prescribed authority and subsequently that Government or the prescribed authority is satisfied that— (i) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not— (A) applied its income in accordance with the provisions contained in clause (a) of the third proviso; or (B) invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or (ii) the activities of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution— (A) are not genuine; or (B) are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or (iii) such fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not complied with the requirement of any other law for the time being in force, and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality, it may, at any time after giving a reasonable opportunity of showing cause against the proposed action to the concerned fund or institution or trust or any university or other educational institution or any hospital or other medical institution, rescind the notification or, by order, withdraw the approval, as the case may be, and forward a copy of the order rescinding the notification or withdrawing the approval to such fund or institution or trust or any university or other educational institution or any hospital or other medical institution and to the Assessing Officer.” 13. It was submitted that a reading of the aforesaid provisions makes it clear that ld PCIT has the power to withdraw the approval, however, such power of withdrawal cannot be read and understood as empowering the ld PCIT in withdrawing the approval with a retrospective effect and that too, from the date of grant of original approval. It was submitted that the power of withdrawal carries severe civic consequences and the same have to be exercised judiciously and where the situation so warrant, the same can be 8 exercised prospectively and as applicable from the date of passing of the order of withdrawal and not prior to that. 14. To buttress his submissions, the ld AR taken us through the amended provisions of section 10(23C)(vi) as amended by the Finance Act, 2022 w.e.f 01/04/2022 which reads as under: “Provided also that where the fund or institution referred to in sub clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) is approved or provisionally approved under the said clause and subsequently— (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall (i) call for such documents or information from the fund or institution or trust or any university or other educational institution or ay hospital or other medical institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence of any specified violation; (ii) pass an order in writing cancelling the approval of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution, on or before the specified date, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violation has taken place (iii) pass an order in writing refusing to cancel the approval of such fund or institution or trust or any university or other educational institution or any hospital or other medical institution, on or before the specified date, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such fund or institution or trust or any university or other educational institution or any hospital or other medical institution. Explanation 1.-For the purposes of this proviso, "specified date" shall mean the day on which the period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) expires. 9 Explanation 2-For the purposes of this proviso, the following shall mean "specified violation- (a) where any income of the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has been applied other than for the objects for which it is established; or (b) the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has income from profits and gains of business, which is not incidental to the attainment of its objectives or separate books of account are not maintained by it in respect of the business which is incidental to the attainment of its objectives; or (c) any activity of the fund or institution or trust or any university or other educational institution or any hospital or other medical institution- (A) is not genuine; or (B) is not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or (d) the fund or institution or trust or any university or other educational institution or any hospital or other medical institution has not complied with the requirement of any other law for the time being in force, and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality.” 15. It was submitted that a reading of the aforesaid amended provisions makes it clear that ld PCIT has the power to cancel the approval for such previous year and all subsequent previous years where he is satisfied that one or more specified violations have taken place in such previous year. It was submitted that the satisfaction can be recorded once the matter has been examined and specific finding has been recorded by way of a written order. It was submitted that the said power of withdrawal being prospective in nature has been brought out more clearly in the amended provisions, however, the same was always intended and should be read into the existing provisions as well as held by the various Courts and different Benches of the Tribunal. 16. In this regard, our reference was drawn on the decision of Hon’ble Allahabad High Court in case of Agra Development Authority [2018] 407 ITR 562 (All), Hon’ble Rajasthan High Court in case of Indian Medical Trust Vs. Pr. CIT, 10 Jaipur (2019) 108 taxman.com 93 (Raj), Hon’ble Madras High Court in case of Auro Lab vs ITO (2019) 102 taxmann.com 225, Indore Benches of the Tribunal in case of Shri Jairam Education Society Bhopal (in ITA Nos. 90 & 548/lnd/2019 dated 13/10/2021) and Hyderabad Benches of the Tribunal in case of Aurora Educational Society Vs. Pr. CIT(Central) (in ITA Nos. 318 to 321 (Hyd) of 2020 dt. 20/04/2021). 17. In his submissions, the ld Sr DR submitted that the exemption notification should be interpreted strictly as held by the Hon’ble Supreme Court in case of Commissioner of Customs (Import), Mumbai vs M/s Dilip Kumar and Company (Civil Appeal No. 3327 of 2007 dated 30/07/2018 and as per provisions at the relevant point in time, ld PCIT has the power to rescind the exemption notification and withdraw the approval and given that such notification/approval was granted from a prior period, the ld PCIT has no say in the same and the approval as stood has to be withdrawn on account of violation of specific conditions governing such exemption. It was submitted that effect of such rescind/withdrawal may appear to be from a retrospective effect/period but given the provisions as exist today, the provisions have to be read as provided in the statue and the necessary consequences thereof shall follow. 18. It was further submitted that the amended provisions are firstly not applicable in the instant case as the same have been amended by the Finance Act 2022 w.e.f 01/04/2022 and that too, subsequent to passing of the impugned order dated 21/10/2021. It was further submitted that without prejudice, even from the intent perspective as so contended by the ld AR that the same should be read in the existing provisions, if we look at the said provisions, it talks about specific violations which have taken place during any previous year and pursuant thereto, the ld PCIT by order in writing can withdraw the approval for such previous year and subsequent years. It was submitted that in the instant 11 case, the survey operations were conducted on 23/01/2019 and certain specific violations were noticed pertaining to transfer of property and misappropriation of funds of the assessee society which have happened during the financial year 2016-17 and therefore, even going by the amended provisions, the ld PCIT is well within his jurisdiction to withdraw the approval from the financial year 2016-17 relevant to assessment year 2017-18 and for all subsequent assessment years. He accordingly supported the order and findings of the ld PCIT and submitted that the contentions so advanced by the ld AR doesn’t hold any merit. 19. We have heard the rival contentions and purused the material available on record. There is no dispute that the statue empowers the appropriate authority, the ld PCIT(Central), Gurgaon in the instance case, to withdraw the exemption approval granted under section 10(23C)(vi) of the Act. On the issue of whether such powers can be exercised by the ld PCIT(Central) retrospectively or prospectively and in order to appreciate the rival contentions in this regard, we refer to the various decisions which have been relied upon during the course of hearing before us. 20. In case of Agra Development Authority (Supra), briefly the facts of the case before the Hon’ble Allahabad High Court were that the assessee had applied for registration under Section 12A of the Act which was granted to the assessee w.e.f. 1.4.2003 by an order in writing issued by the Commissioner of Income Tax-I Agra dated 24.9.2003. Thereafter, notice under Section 12AA(3) of the Act was issued to the assessee on 6.3.2012 whereby it was first proposed by the Commissioner to cancel the assessee's registration and in that background, the issue framed by the Hon’ble High Court was whether the Revenue having granted registration to the assessee way back, on 24.9.2003, could now cancel that registration with effect from a date prior to the date of issuance of the notice seeking to cancel the assessee's registration. It was held by the Hon’ble High Court that there is nothing in the language of Section 12AA(3) of the Act 12 that may suggest registration of the assessee may be cancelled with retrospective effect. It was held by the Hon’ble High Court that the act of cancellation of registration has serious civil consequences and in absence of any legislative intent expressed to suggest that the legislature had empowered the Commissioner to cancel the assessee's registration under Section 12-A of the Act with retrospective effect, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. It was accordingly held by the Hon’ble High Court that in such circumstances, the cancellation of the assessee's registration under Section 12-A of the Act, if at all, could be done only prospectively and not retrospectively and it would be the relevant to refer to the findings of the Hon’ble High Court which read as under: “39. In so far as the facts of the present case are concerned, it is not disputed that the assessee had applied for registration under Section 12A of the Act. The said registration was granted to the assessee w.e.f. 1.4.2003 by an order in writing issued by the Commissioner of Income Tax-I Agra dated 24.9.2003. In view of such registration having been granted to the assessee, it appears to have claimed and also been allowed exemption from tax on its receipt, in accordance with the scheme of the Act, year after year. Again, it is undisputed that the notice under Section 12AA(3) of the Act was issued to the assessee on 6.3.2012 whereby it was first proposed to cancel the assessee's registration. 40. The question, therefore, arises whether the revenue having granted registration to the assessee way back, on 24.9.2003, could now cancel that registration with effect from a date prior to the date of issuance of the notice seeking to cancel the assessee's registration. 41. In the first place the assessee could not have claimed exemption merely because it was engaged in an activity of charitable purpose. Engagement in such an activity was only a pre-condition to claim eligibility for registration under Section 12A of the Act. However, only upon the assessee making an application for registration and upon an order being passed thereon, the registration was granted to the assessee. Thereafter, it has to be said that the assessee's assessing authority has given effect to that registration in accordance with law for all assessment years inasmuch as the revenue has not set up a contrary case. 42. Then, it is also not the case of the revenue that the assessee had obtained registration by practicing fraud /or collusion or concealment of any material fact. In absence of such allegation, the registration granted to the assessee could never be alleged to be a nullity. 13 43. In the instant case, undisputedly the registration had been granted much prior to the introduction of the first proviso to Section 2(15) of the Act. Therefore, on the date of grant of registration to the assessee, it was fully eligible for the registration. The registration thus granted did not suffer from any inherent or fundamental defect. 44. Then, the assessee continued to avail the benefit of the registration for all the assessment years subsequent to the grant of its registration. Such a registration order cannot be allowed to be cancelled with retrospective effect so as to affect past transactions that too in absence of any express legislative intent and without any adverse inference being first drawn against the assessee, in terms of Section 13(8) of the Act, during the relevant assessment year. 49. In the context of the Income Tax Act, 1961 it is undisputed that the grant of registration is a one time affair. The assessee is required to apply for registration under Section 12-A of the Act. Once the assessee has been registered under Section 12-A of the Act, by a specific order passed by the Commissioner, it stands established for the purpose of the Act that the activity being pursued by that assessee is for a "charitable purpose", under Section 2(15) of the Act. 50. Then, there is nothing in the language of Section 12AA(3) of the Act that may suggest registration of the assessee may be cancelled with retrospective effect. The use of the words 'or have obtained registration at any time under Section 12-A of the Act' added by amendment w.e.f. 01.06.2010 only indicate that the Commissioner was vested with the power to cancel a registration that may have been granted to an assessee at any time prior to the aforesaid amendment itself. However, it does not indicate that thereby the Commissioner had been empowered to cancel the registration of the assessee with retrospective effect i.e. with effect from a date prior to the date of issuance of the order/notice to cancel the registration. 51. Clearly, the act of cancellation of registration has serious civil consequences. In absence of any legislative intent expressed to suggest that the legislature had empowered the Commissioner to cancel the assessee's registration under Section 12-A of the Act with retrospective effect, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. 52. Therefore, we are of the view that the cancellation of the assessee's registration under Section 12-A of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the Commissioner in this case. Thus, question no. 1 is answered in the negative that is in favour of the assessee and against the revenue.” 21. The Hon’ble Rajasthan High Court in case of Indian Medical Trust Vs. Pr. CIT, Jaipur (Supra) has taken a similar view and held that the provisions of section 12AA (3) empowers the Commissioner to initiate steps for cancellation of the 14 registration of a Trust, but the legislation had no intention of giving the said provision a retrospective effect and for in such a situation, the same would have been clearly specified in the said provision. It was held by the Hon’ble Rajasthan High Court that the interpretation of the said provision has to be harmonious rather than being prejudicial to the institutions as it would instigate and create a fear of the Income Tax Department and has referred to earlier decisions of the Hon’ble Allahabad High Court in case of Oxford Academy for Career Development and Agra Development Authority. It would be relevant to refer to the findings of the Hon’ble Rajasthan High Court which read as under: “28. Indisputably, the order dated 16th Jan, 2018, made by the Commissioner of Income Tax thereby canceling the registration granted under section 12A and withdrawing the approval given under section 10 (23C) (v) & 10 (23A) (via) of the Act of 1961, to the petitioner Trust with retrospective effect from the date of 01 st April, 2006, was arbitrary in the face of the provisions of the Act of 1961; and therefore, cannot be deemed to be in consonance with any possible interpretation to be valid or legal. This court is of the opinion that the provisions of section 12AA (3) of the Act of 1961, empowers the Commissioner of Income Tax to initiate steps for cancellation of the registration of a Trust, but, the legislation had no intention of giving the said provision, a retrospective effect. For in such a situation, the same would have been clearly specified in the said provision. Interpretation of the said provision has to be harmonious rather than being prejudicial to the institutions as it would instigate and create a fear of the Income Tax Department. I find support in my opinion from the following cases with reference to the issue of cancellation or withdrawal of registration with retrospective effect: A. In the case of Oxford Academy for Career Development Vs. Commissioner of Income Tax: (2009) 315 ITR 382, it was thus observed that: “16. In the instant case, the petitioner is a registered society, which was earlier granted registration under Section 12A on 1-4-1999. A survey was conducted at the business premises on 20-9-2002, from where documents were impounded. The registration was cancelled for the assessment years 2000-01 and 2001-02 for the reasons that the surplus was quite heavy. In the impugned order, it was mentioned by the CIT that there was an unusual huge margin and the petitioner was engaged in the commercial activities rather than charitable. As per the balance- sheet, huge amount from the student was charged. The profit margin embodied in the charges taken from the students are so huge and it proves the profit motive of the petitioner. The funds were misused by the president and his family members of the petitioner. 20. The expression "charitable purpose" is defined in Section 2(15) of the IT Act, 1961. It is of inclusive nature as revealed in the language. Earlier the words "the advancement of any other object of general public utility" in this definition were succeeded by the words "not involving the carrying on of any activity for profit". These words were omitted by the Finance Act, 1983, w.e.f. 1st April, 1984. 15 26. In the light of the above discussion and by considering the totality of the facts and circumstances of the case, we hold that the order dt. 9th March, 2004, passed by the CIT (Annex. No. 15 to the writ petition) as per the then law is without power and jurisdiction and therefore, it is liable to be set quashed. 27. Accordingly, the impugned order dt. 9th March, 2004, passed by opposite party No. 2 withdrawing/rescinding the order granting registration on 1st April, 1999, to the petitioner's society under Section 12A of the Act, is quashed. Consequently, the registration granted to the petitioner's society on 1st April, 1999, stands restored for the assessment years under consideration." B. In the case of Assistant Commissioner of Income Tax Vs. Agra Development Authority: (2018) 90 Taxman 288, it was observed thus: "50. In the context of the IT Act, 1961 it is undisputed that the grant of registration is a one time affair. The assessee is required to apply for registration under s. 12A of the Act. Once the assessee has been registered under s. 12A of the Act, by a specific order passed by the CIT, it stands established for the purpose of the Act that the activity being pursued by that assessee is for a "charitable purpose", under s. 2(15) of the Act. 51. Then, there is nothing in the language of s. 12AA(3) of the Act that may suggest registration of the assessee may be cancelled with retrospective effect. The use of the words 'or have obtained registration at any time under s. 12A of the Act' added by amendment w.e.f. 1st June, 2010, only indicate that the CIT was vested with the power to cancel a registration that may have been granted to an assessee at any time prior to the aforesaid amendment itself. However, it does not indicate that thereby the CIT had been empowered to cancel the registration of the assessee with retrospective effect i.e., w.e.f. a date prior to the date of issuance of the order/notice to cancel the registration. 52. Clearly, the act of cancellation of registration has serious civil consequences. In absence of any legislative intent expressed to suggest that the legislature had empowered the CIT to cancel the assessee's registration under s. 12A of the Act with retrospective effect, such power could not be deemed to exist or arise or be exercised to unsettle closed/part transactions especially because in this case the ground for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. 53. Therefore, we are of the view that the cancellation of the assessee's registration under s. 12A of the Act, if at all, could be done only prospectively and not retrospectively as had been done by the CIT in this case. Thus, question No. 1 is answered in the negative that is in favour of the assessee and against the Revenue." 29. Thus, it is more than clear that section 12 AA (3) of the Act of 1961, doesn't suggest or in any way contemplate that the registration of the assesse may be cancelled with retrospective effect. And therefore, this court is of the view that the cancellation of registration can only be prospective.” 22. We find that similar view has been taken by the Hon’ble Madras High Court in case of Auro Lab vs ITO (Supra) wherein it has held as under: “16.The questions raised in these writ petitions are broadly summarised as under:- 16 i. Whether the commissioner had the power to cancel the certificate of registration before he was specifically empowered to do so by the amendment dated 01.06.2010 to sec 12 AA (3)? ii.Whether the effect of the power of cancellation conferred to the comissioner vide amendment to Sec 12 AA (3) dated 01.06.2010 is prospective or retrospective? iii.What will be the effective date on which the petitioner will lose his registration and the entitlement to exemption on account of the cancellation order dated 30.12.2010? iv.Whether the completed assessment for the past years can be reopened on account of cancellation of the certificate of registration at a distant date? 17.On a cursory glance at the periodical amendments to the Income Tax Act regarding the exemptions granted to the charitable trusts, it is seen that until 2004, when the new Section 12AA was amended, there was no power under the Income Tax Act, 1961 to the Commisisoner of Income Tax or any other authotity to revoke/cancel the registration once granted for such Charitable Trusts. Later, on 01.06.2010 vide Finance Act, 2010, Section 12AA(3) was further amended to include specifically the registrations granted under erstwhile Section 12A of the Income Tax Act, 1961 also within the ambit of revocation/ cancellation as contemplated under the 2004 amendment. 18.On perusal of the case laws relied by the parties to these Writ Petitions, it is clear that the questions raised in these Writ petitions have become a matter res judicata and no more res integra owing to the various Judicial decisions. Following the amendments to Section 12AA(3) and the subsequent actions of the Department on Section 12AA Companies, numerous cases came to be filed before various judicial forums. The vires of the amended section also came to be challenged http://www.judis.nic.in and considered before the High Courts. The various questions raised in the litigations are settled by a series of pronouncements by various High Courts and later affirmed by the Hon'ble Supreme Court. The pronouncements that answers the questions raised in these writ petitions are summarised in the succeeding paragraphs. 19.On the question whether the Commissioner had inherent powers to cancel the certificate of registration flowing from his power to issue registration, it was held that without any express powers conferred under the statue, review or revocation is not permissible. On the question, the courts had further observed that the order passed by the Commissioner under Section 12AA is neither legislative and nor executive and essentially quasi judicial in nature and therefore went on to hold that Section 21 of the General Clauses Act is not applicable to the order passed by the commissioner under Sec 12 AA. 20.On the second question as to whether the cancellation will operate from a retrospective date, it was held that the amendment in Section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when the parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation can not operate from a past date. 21.On the third question of the effective date of operation of the cancellation order, it was held that the cancellation will take effect only from the date of the order/notice of cancellation of registration. Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in the event the pending Tax Appeal is decided in favour of the Revenue,will operate only from the date of the cancellation order, that is 30.12.2010. In other words, the exemption cannot be denied to the 17 petitioner for and up to the Assessment Year 2010-11 on the sole ground of cancellation of the certificate of registration. 22.On the fourth and last question as to whether the completed assessment can be reopened on the ground of cancellation of certificate of registration at a later/future date, what follows as a sequel to the decisions in the other three questions is an emphatic 'No'. Courts have categorically held that unless the assessee obtained registration by fraud, collusion or concealment of any material fact, the registration granted can never be alleged to be a nullity. In the case on hand, it is evident that fact of the cancellation of the registration triggered the proceedings and evidently forms the preamble of each of the impugned orders. And clearly, there is no allegation of fraud or misdeclaration on the part of the petitioners and the respondents were candid in confessing that the certificate was granted erroneously. Therefore, reopening the assessment for the past years on account of the cancellation order dated 30.12.2010 in the case of the petitioner by the assessing officer is not permissible under the law and the proceedings issued in AAATA1142P dated 12.08.2011 relating to the assessment year 2004-2005, 2005-2006, 2006-2007, 2007-2008 are liable to be quashed and accordingly quashed. Also, the the assessment order in AAATA1142P http://www.judis.nic.in dated 29.12.2011 relating to the assessment year 2010-11 disallowing exemptions on the basis of the cancellation order dated 30.10.2010 is liable to be quashed and accordingly quashed.” 23. We find that similar view has been taken by the Co-ordinate Indore Benches of the Tribunal in case of R Shri Jairam Education Society Bhopal (Supra) wherein the proceedings u/s 12AA(3) & 12AA(4) of the Act were initiated pursuant to search proceeding carried out on Ramani Group on 30th August 2016 wherein certain loose papers were found and it was alleged that the funds of the society have been used for the benefit of members of the society and bogus expenditure has been claimed and the registration u/s 12AA was thereafter cancelled retrospectively with effect from 1/04/2008. The Coordinate Bench, following the decision of Hon’ble Madras High Court in case of Auro Lab, has set-aside the retrospective cancellation of registration both on the legal ground and secondly on the ground that there was no material that raised any doubt about genuineness of the activities carried out by the assessee society with regard to imparting of education and carrying out charitable activities. It would be relevant to refer to the findings of the Co-ordinate Bench and the same read as under: 18 “15. Apropos to Ground no.1, 2 & 6 assessee has challenged the cancellation of registration u/s 12AA of the Act retrospectively w.e.f. 01.04.2008 by invoking provisions of section 12AA(3) & 12AA(4) of the Act. We observe that the assessee society is registered under M.P. Society Registration Act 1973 and enjoying the benefit of section 12AA of the Act vide order u/s 12AA of the Act dated 20th March 2008. The proceedings u/s 12AA(3) & 12AA(4) of the Act were initiated subsequent to search proceeding carried out on Ramani Group on 30th August 2016. Certain loose papers were found having some details of salary payments, calculation of higher salary, cash payment, hand written details of income and expenditure which have been claimed by the assessee to be dumb documents and the detailed discussion with regard to these documents will be dealt by us in the subsequent paras. Based on these documents Ld. Pr. CIT has alleged that the funds of the society have been used for the benefit of members of the society and bogus expenditure has been claimed. Apart from these allegation based on the alleged loose papers no doubt has been raised at any point of time by the revenue authorities about the genuineness of charitable activity carried out by the assessee and the activities of imparting education to the students. 15c. It is also a settled issue that the registration u/s 12AA cannot be cancelled from retrospective effect. For this view we place reliance on the judgment of Hon'ble Madras High Court in the case of Auro Lab v. ITO (2019) 102 taxmann.com 225 dated 23.01.2019 wherein Hon'ble Court held that “Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in the event the pending Tax Appeal is decided in favour of the Revenue, will operate only from the date of the cancellation order, that is 30.12.2010. In other words, the exemption cannot be denied to the petitioner for and up to the Assessment Year 2010-11 on the sole ground of cancellation of the certificate of registration.” [emphasis supplied] 15d. In view of the above discussion with regard to ground no.1 2 & 6 of the assessee’s appeal, in light of the judgments and decisions referred herein above settled and judicial principles, we are of the considered view that firstly, Ld. Pr. CIT erred in cancelling the registration with retrospective effect from 01.04.2008 and secondly, we are also of the view that Ld. Pr. CIT erred in cancelling the registration u/s 12AA(3) and 12AA(4) of the Act without placing any material evidences which could indicate that the assessee society was not running for the charitable objects for which it was established and nor any doubt has been raised about genuineness of the activities carried out by the assessee society with regard to imparting of education and carrying out charitable activities. So far as, the issue arising out of the loose papers is concerned in this case alleging that the fund of the assessee society have been misappropriated by the members of the society or there is any ambiguity in the claim of expenses, it can well be taken care of at the time of assessing the income and if needed the additions can be made to the income of the assessee and the same should be restricted only to the issue involved. However in no case the remaining income of the trust/society should be affected by way of denying the benefit of exemption u/s 11 & 12 of the Act. We accordingly allow ground no.1 2 & 6 of the assessee’s appeal.” 19 24. We find the aforesaid view of the Co-ordinate Bench find acceptance and resonance in the amended provisions by way of insertion of a proviso to section 10(23C)(vi) by the Finance Act, 2022 w.e.f 01/04/2022 wherein distinction has been brought between the cases where there is specified violations as so defined which can result in withdrawal of exemption approval altogether and cases where the income has been found as applied for the benefit of specified persons and in latter cases, the income to that extent shall be deemed to be the income of the previous year in which it is so applied and thus held not eligible for exemption rather than leading to withdrawal of exemption. The newly inserted proviso to section 10(23C)(vi) read as under: “Provided also that where the income or part of income or property of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub- clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via), has been applied directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13, such income or part of income or property shall, after taking into account the provisions of sub-sections (2), (4) and (6) of the said section, be deemed to be the income of such fund or institution or trust or university or other educational institution or hospital or other medical institution of the previous year in which it is so applied.” 25. In case of Aurora Education Society (Supra), we find that Co-ordinate Hyderabad Benches of the Tribunal has set-aside the cancellation of registration u/s 10(23C)(vi) firstly, on account of inherent lack of jurisdiction with the ld PCIT(Central) at the time of issue of first show-cause notice and secondly on account of fact that cancellation has been done retrospectively from the original date of grant of approval and has relied upon the decision of the Hon’ble Supreme Court in case of Commissioner of Customs (Import) v. Dilip Kumar (Supra) to hold that strict interpretation is applied in the given facts and 20 circumstances of the case in the light of Rule2CA of the Income-tax Rules, 1962 to conclude that the impugned order withdrawing the assessee's approval is not sustainable for want of the Pr.CIT(Central)'s patent lack of jurisdiction. It has been held by the Coordinate Bench that the withdrawal cannot be made effective from retrospective date especially when the search has been carried almost after a decade which has formed the basis for initiation of cancellation proceedings and well-beyond the period of show-cause notice and it would be useful to refer to the relevant findings of the Coordinate Bench which read as under: “7. We have given our thoughtful consideration to the foregoing legal issue of Pr.CIT(Central)'s jurisdiction in withdrawing the assessee's approval with effect from the date the same was granted i.e., 27-03-2008. Learned CIT-DR's written submissions (supra) has relied upon Pr. CIT's clarification dt.06-11-2020 explaining the assumption of jurisdiction to this effect as follows: "F.No. Pr.CIT(C)/Hyd/Aurora/2018-19 To The Sr.AR-II, ITAT-II, Bech, Hyderabad Sub:- Assessee's appeal in the case of Church Educational Society, Aurora Educational Society, Tarakarama Educational society and Karshak Vidya Parishad- furnishing of information called for - Reg Ref: Your letter in F.No. Sr.AR/ITAT/B-Bench/2020-21 dated 22-10-2020 ** ** ** The report called for is submitted hereunder: 2. The conditional approval U/s.lO(23)(C)(W) was originally granted in all the four cases by Chief Commissioner of Income Tax, Hyderabad-I who was the Prescribed Authority during that period. Consequent to search operation, the aforesaid group cases were centralized with ACIT, CC-2(4), Hyderabad under the administrative control of PCIT(Central), Hyderabad. The CIT(E) amongst others PCITs, on recommendation of PCIT(Central) passed 127 orders assigning the cases to ACIT, CC-2(4), Hyderabad. The proviso to section 10(23)(C)(vi) of the Income-tax Act, 1961 read with rule 2CA of the Income-tax Rules, 1962 empowers the Prescribed Authority under the Act to withdraw the approval granted under such-section as per the provisions of the section 10(23)(C)(v/) of the IT Act, 1961. 21 4. By an earlier CBDT notifications in S.O.3026(E) and 3027(E) both dated 1st December, 2014, the CBDT has authorised the Commissioners of Income-tax (Exemptions) to act as 'Prescribed authority' for the purposes of sub-clause (vz) and sub-clause (via) of clause (23C) of Section 10. Thus, the role of the Chief Commissioner for such purposes has been assigned to the Commissioner of Income Tax(Exemption). This was, however, omitted w.e.f. 05 November, 2019 vide CBDT Notification No. S03215(E)/No.60/2019 in F.No.370142/14/2018 -TPL. The CBDT vide such notification has amended Rules 2C and 2CA. 5. The amended Rule 2C is as under: '2C. (1) The prescribed authority under sub-clause(z'v),sub-clause(v), sub- clause(vz') and sub-clause(via) of clause (23C) of Section 10 shall be the Principal Commissioner of Commissioner whom the Central Board of Direct Taxes may authorise to act in this behalf. 6. Thus, as things stood as on the date of order, the CIT(Exemption), who no longer holds the jurisdiction over the case in view of the order u/s 127, cannot be taken as prescribed authority for the purpose Section 10(23)(C)(vz) In respect of aforesaid cases as the cases are centralised with PCIT(Central), Hyderabad and the person holding that charge will become the prescribed authority in view of the afore mentioned amendment. This is for your information and further necessary action". 8. After giving our thoughtful consideration to the foregoing facts on record, we find that the / Pr.CIT(Central)'s clarification extracted in preceding paragraphs seals the outcome of the assessee's grievance. This taxpayer's detailed paper book pgs. 1 to 47 contain the ACIT, Central Circle's proposal^) dt. 10-06-2019 and 12-06-2019 recommending cancellation of its approval at pgs.l to 77 sent to the Pr.CIT(Central Circle), latter authorities' show cause notice dt.16-09-2019 (pgs.82 to 98) issuing show cause thereby assuming jurisdiction u/s.10(23C)(vz), reply dt.03-10-2019 pg.99 and dt.04-11-2019 (pages 100 to 116) yet another fresh show cause notice in continuation to the earlier once coming from the Pr.CIT's office dt.20-12-2020 (pages No. 117 to 121), assessee's reply dt.24-12-2009, Pr.CIT's order sheet entries (pages 139 to 143) and his clarification dt.06-11-2020 {supra); stand perused. All this detailed evidence makes it clear that the Pr.CIT(Central)'s initial show cause notice dt.16-09-2019 itself forming basis of the impugned entire exercise to withdraw the assessee's approval suffers from inherent lack of jurisdiction as per his own clarification that the CBDT's notification {supra) was issued much later i.e., on 5-11-2019 only. We observe in this clinching backdrop that the PCIT(Central) has erred in law and on facts not only in assuming his section 10(23C)(vi) jurisdiction on 16-09-2019 (before having being confirmed the prescribed authority's jurisdiction to this effect on 5-11-2019) but also he has wrongly withdrawn the assessee's approval with effect from the date it had been 22 granted the same {supra). And that the latter action also involved illegality since this approval had come way back in the year 2009 as against the search carried out almost after a decade i.e., 23-03-2018. We thus adopt strict interpretation in the given facts and circumstances of the case in the light of Rule2CA of the Income-tax Rules, 1962 and going by hon'ble apex court's constitutional bench decision in Commissioner of Customs (Import) v. Dilip Kumar & Com. [2018] 95 taxmann.com 327/69 GST 239 (SC) and conclude that the impugned order withdrawing the assessee's approval is not sustainable for want of the Pr.CIT(Central)'s jurisdiction. We make it clear that we are dealing with an instance of patent lack of jurisdiction at the threshold itself which cannot be made good in latter stages. 9. There is yet another equally significant aspect of the matter before us. There is hardly any dispute that the / Pr.CIT's order; assuming but not accepting it as correct, has withdrawn the assessee's approval from the day which was granted the very relief i.e., from 27-03-2008 turning out to be well beyond the period of show cause notice itself. And that too, without even indicating as to how the assessee had violated the conditions of its approval granted earlier in all these intervening assessment years wherein it had also been assessed without any violation of the approval's conditions. 10. We therefore rely upon our foregoing detailed discussion and hold that Pr.CIT(Central) herein has erred in law and as on facts in withdrawing the assessee’s approval granted u/s 10(23C)(vi) of the Act. The assessee has also filed a detailed case law paper book as well as citing various judicial precedents but we do not deem it appropriate to deal with any of them since it is an instance of the Pr.CIT(Central)'s lack of jurisdiction. The impugned order dt.26-12-2019 forming subject matter of ITA No. 320/Hyd72020 stands reversed. The assessee's impugned approval is restored as a necessary corollary.” 26. In the instant case, survey at the premises of the assessee society was carried out on 23/01/2019, thereafter, first show-cause dated 25/01/2019 was issued by the ld CIT(Exemption), Chandigarh. Subsequently, consequent to implementation of the Faceless Assessment Scheme, 2019 vide order dt. 18/09/2020 issued by the CBDT, the case of the assessee society was transferred by the ld CIT(Exemption), Chandigarh vide order dt. 15/12/2020 passed under section 127(2) from ITO (Exemptions), Ward-Chandigarh to Central Circle-2, Chandigarh. Subsequent to transfer of jurisdiction over the assessee society, fresh show cause dt. 15/06/2021 was issued by ld PCIT (Central), Gurgaon dt. 15/06/2021 and approval u/s 10(23C)(vi) was withdrawn vide order dated 23 21/10/2021 wherein earlier approval granted vide order dt. 14/02/2007 with effect from A.Y. 2003-04 was withdrawn from retrospective effect. 27. In the instant case, we, therefore, find that as far as assumption of jurisdiction by the ld PCIT(Central) is concerned, the same is clearly in the capacity of prescribed authority as per amended Rule 2C vide CBDT Notification dated 05/11/2019 and pursuant to transfer of jurisdiction and order passed u/s 127 dated 15/12/2020 and there is no dispute in this regard. At the same time, it is noted that on assumption of jurisdiction, the show-cause notice has been issued by the ld PCIT(Central) on 15/06/21 and thereafter, he has passed the impugned order dated 21/10/21 withdrawing the approval retrospectively that too with effect from A.Y 2003-04. In light of aforesaid rulings as discussed supra where the Courts and various Benches of the Tribunal have consistently held that the exercise of power of withdrawal cannot be done retrospectively and in absence of any contrary authority brought to our notice, we are of the considered view that the ld PCIT(Central) was not legally correct in withdrawing the approval u/s 10(23C)(vi) retrospectively and such approval can only be withdrawn from the date of issuance of the show cause notice dated 15/06/21 that is, with effect from A.Y 2022-23 and subsequent years. 28. Moving further, in order to determine whether the withdrawal of approval under section 10(23C)(vi) can be directed even prospectively in the instant case, what is relevant to examine is whether the assessee society has not applied its income in accordance with the provisions contained in clause (a) of the third proviso; or has not invested or deposited its funds in accordance with the provisions contained in clause (b) of the third proviso; or the activities of assessee society are not genuine; or the activities of the assessee society are not being carried out in accordance with all or any of the conditions subject to which it was notified or approved; or the assessee society has not complied with the requirement of any other law for the time being in force. 24 29. In the following paragraphs, we shall now be discussing each of the matters raised by the Ld. PCIT, Gurgaon, the relevant facts and the submissions made by the assessee society before the Ld. PCIT, his findings, the rival contentions advanced by both the parties before us and our understanding and analysis thereof in order to determine whether the same satisfies the conditions so specified for withdrawal of approval u/s 10(23C)(vi) of the Act. 30. The first issue relates to utilization of the two immovable property of the assessee society situated at Sector 18-B and Sector 11A, Chandigarh by the Chairperson of the assessee society and her family members for their personal residence and in that context, whether such facility has been provided to the Chairperson in lieu of the services rendered by them to the society and whether the same has been offered as perquisite under section 17(2) for taxation or any rent for the use of the premises has been recovered from her. 31. The Ld. PCIT has stated that it is not disputed that the property situated at Sector 18-B, Chandigarh as well as Sector 11A, Chandigarh are owned and registered in the name of the assessee society. At the same time, the Ld. PCIT has stated that both these properties were being used by the Chairperson and her family members for personal residence purposes. Regarding claim of the assessee society that premises were used as hostel facility for the children, it was stated by the Ld. PCIT that the assessee society has not been able to furnish any evidence/supporting documents whatsoever such as hostel/mess fees charged, list of students staying in the hostel etc. It was further stated that there is no evidence to prove that the house was used as residential facility by other members / staff of the assessee society as stop gap arrangement, as so claimed by the assessee society. It was further stated that the domestic gas connection at the house is in the personal name of Mr. S.S. Khanna, the erstwhile chairman and municipal tax in respect of the property is paid as a residential building. It was further held by the Ld. PCIT that the assessee society could not provide any 25 evidence in the form of salary slips etc. to prove that the house whose value is more than Rs. 8 Crore was provided to the Chairperson in lieu of the services rendered by them to the society and same was offered by them as perquisite under section 17(2) for taxation or any rent for the use of the premises as their residence was recovered from them. It was accordingly held by the ld PCIT that although there is no dispute that the investment in the properties was made as per the objects of the society, however the same was used as personal residential accommodation by the Chairperson in violation of its objects. 32. In this regard, the Ld. AR has contended that a part of property situated at Sector 18-B, Chandigarh was being used as an accommodation by Sh. S.S. Khanna, the erstwhile Chairman and Mrs. Patricia Khanna for their residence and as stop gap residence for faculty members and school children. It was submitted that Mrs. Patricia Khanna had since taken over as Chairperson of the assessee society and she has been allowed to retain the accommodation. It was submitted that the said property was subsequently exchanged for another property situated at Sector 11, Chandigarh and it is not a case where both the properties were used as an accommodation at the same time. It was submitted that both these properties were registered in name of the assessee society. It was submitted that the perquisite value of accommodation has been duly reflected in income tax returns of Mrs. Patricia Khanna. It was submitted that both Shri S.S. Khanna and Mrs. Patricia Khanna have devoted their whole time for the promotion of education and have rendered tireless services to the assessee society which is a full time job requiring continuous involvement and as part of the same, where the society is providing them accommodation, the same cannot be held against the society or against any of the objects being pursued by it as the same are clearly in furtherance of the said objects and nothing else. It was further submitted that the properties are registered in the name of assessee society and therefore the question of succession of the 26 properties of the assessee society in favour of Mrs. Patricia Khanna or any of her family members does not arise. 33. It was further submitted that at the time of grant of initial approval u/s 10(23C)(vi) by the then ld CCIT, Chandigarh, the fact of the property at Sector 18-B Chandigarh being used by the Shri S.S. Khanna and Mrs Patricia Khanna was duly examined and taken into consideration and thereafter the approval was granted. It was submitted that once the matter has been duly examined at the time of original grant of approval, the same matter cannot be again agitated by the Revenue stating that there is violation of any of the terms of the approval so granted initially when there is no such violation. 34. Further our reference was drawn to the submissions filed by the assessee society dt. 04/03/2021 in response to the final show cause notice dt. 19/02/2021 issued by the ld PCIT(Central) and the contents thereof read as under: “6. Para 2-3 of the Show Cause Notice deals with the ownership and occupation of H. No. 533, Sector 18-B, Chandigarh. 6.1 It has not been disputed, but rather accepted, that H. No. 583, Sector 18- B, Chandigarh is Registered and Owned by the Society. Similarly the exchanged property i.e. H. No. 163, Sector 11-A, Chandigarh was Registered & Owned by the Society itself. 6.2 The Society in para 4 its reply dated 14-02-2019 had highlighted the fact that it was competent to make investment in the purchase of land and own properties of all kinds and also to do all such other acts and things whether incidental to the Power aforesaid or not, as may be required to further its objectives. 6.3 That the investment in H. No. 533, Sector 18-B, Chandigarh and later the exchanged property i.e. H. No. 163, Sector 11-A, Chandigarh, are strictly in consonance with the objective of the Society and which fact, has not been faulted with by the Show Cause Notice. Moreover, the said investment adhere to the norms laid down in Section 11(5) (x) of the Income Tax Act, 1961. 6.4 The only, so called violation if any, as per para 2.1 of the Show Clause Notice is that the properties of the assessee Society were being used by the Chairperson/ Members for personal purposes. 27 6.5 The Society has to draw your kind attention that at the time of grant of approval by the worthy Chief Commissioner, the owning of the property i.e. H. No. 533, Sector 18-B, Chandigarh and its occupation by the then Chairperson, Mr. S.S. Khanna, was a matter of considerable debate and investigation. This will be evident from the official correspondence resting with the following letters; (i) CIT/CHD-II/2005-06/5200 dated 09-03-2006 Annexure-I (ii) Reply dated 21 -03-2006 Annexure-II (iii) CC/CHD/Judl/2006-07/3040 dated 26/27-12-2006. Annexure-III (iv) Reply dated 06-01 -2007. Annexure-IV 6.6 It was after deliberate consideration of facts, circumstances that the Society was granted approval. Facts and circumstances remaining the same as they existed at the time of grant of approval, the withdrawal of approval is not warranted at this stage.” 35. Per contra, the Ld. Sr. DR submitted that both these properties admittedly are used by the Chairperson and her family members and therefore there is clearly a benefit/perquisite by way of accommodation which has been provided by the assessee society to them. It was further submitted that the fact that the chairperson is rendering services to the assessee society is not doubted by the ld PCIT(Central), at the same time, it is essential to determine whether the benefit so provided by the assessee society is in lieu of such services and whether the same has been offered to tax in the hands of the Chairperson and as per the order of the ld PCIT(Central), there is no evidence on record to this effect. He accordingly supported the order and findings of the ld PCIT(Central) in this regard. 36. We have heard the rival contentions and purused the material available on record. Firstly, we refer to the aims and objectives of the assessee society which read as under: “1. To recognize and to encourage talent of all kinds and of all degrees and to endeavor to stretch the intellectual and creative capacity of individuals. 2. To seek, to measure the extent of an individual's success in making maximum use of its endowments and opportunities. 28 3. Since it is impossible for a school to cover the whole realm of knowledge, to be vigorously selective in material presented to children, but always to pay particular attention to : * stimulating intellectual curiosity; * directing and exercising the emotions; * encouraging clear thinking and discrimination * developing an interest in the process and resources of learning * fostering a capacity to tackle a problem and to follow and sustain an argument, and * Emphasizing the difference between truth and falsehood, and between fact and feeling. 4. To develop in the school a caring community, exercising concern and respect for the welfare of others and emphasizing the overriding importance of good human relations, based upon sensitivity, tolerance and goodwill. 5. To encourage an attitude of positive response to the persistent demands of a changing society, yet firmly upholding a belief in basic values and standards. 6. To Project the school as the servant of the community, and accept its proper share of responsibility for equipping each child to find his own niche in his occupation and in society 7. To make extensive use of 'Project Work' to encourage the investigative approach. 8. To train the mind and shape the character of the younger generation. 9. To provide, facilities for learning social sciences, music, dance, drams, art, poetry, oration, games and physical training. 10. To teach moral science including ethical values in accordance with the basic human principles. 11. To inspire the younger generation to discover their talents in different arts and sciences for their own benefits and to be good citizens of India and good individuals for the betterment of the world at large. 12. To render free education to deserving pupils and to provide financial assistance to promote their education and other talents. 13. To provide educational, social and financial assistance to the handicapped or under-developed youth irrespective of caste, creed and colour. 14. To provide board and lodge to the orphans and aged persons in order to preserve their individual dignity. 15. To provide literary atmosphere to the retired educationists and other persons of distinction and also felicitate them for their achievements for the benefits of humanity. 29 16. To establish and administer and control the institutions and their branches at different stations; states for the proliferation of education, brotherhood, secularism and democratization. 17. To control as well as to develop the resources and funds to a sound financial position of the said society as of its institution at different stations/states through suitable means by accounting as well as to maintain genuine accounts of the donations collected through private individuals, semi-Govt. Organization, Govt agencies, missions in India or abroad or any other resources. 18. To arrange sponsor or hold discussions, seminars, lecturers and exhibitions for better appreciation and understanding of Education, Sports and Cultural matters. 19. To award prizes and distinction. 20. To promote mutual cooperation between the society and other similar societies in other cities of India and abroad. 21. To charge fees for membership of the society and to collect and receive donations and grants for purposes of furthering its activities. 22. To purchase land and own properties of all kinds and to maintain, sell, mortgage or otherwise dispose off it in furtherance of its work. 23. To do all such other acts and things whether incidental to the powers aforesaid or not, as may be required in order to further its objectives. 24. To promote the objectives of St Peter's Educational Society and Charitable Trust. 25. The Society shall do everything possible to run its affairs in consonance with the laws of the land and in particular with the Income Tax laws and if any such clauses of its objectives, rules or bye laws is found to be repugnant, the said objective rule or bye law and activity shall be treated to be non-est and never to have been carried out .” 37. On perusal of the above, one of the objectives (stated at point no. 22) states that the assessee’s society can purchase land and own properties of all kinds and to maintain, sell, mortgage, or otherwise dispose off it in furtherance of its work. It has been further provided that the affairs of the assessee society shall be managed by an executive committee consisting of five persons namely, Chairperson, Mrs Patrica Khanna, Secretary, Mr Shane John Khanna, Finance Secretary Mr Anil Kumar Batra, Member, Col, Igbal Singh and Member, Ms 30 Vardhini Verma. It has been further provided that the executive committee shall have powers and authority to do all acts, matters, things and deeds which may be necessary or expedient for the purposes of the society. In particular, it has also been provided that the executive committee is authorized to purchase, take-over or give on lease acquire or sell and let all properties, tangible or intangible properties, construct, alter, maintain keep in repair and develop all lands, houses, housing complexes, building, playgrounds necessary or convenient as desirable for the purposes of the society. 38. As per the findings of the ld PCIT, though the investment in the house properties were made as per the aforesaid objects of the assessee society but the fact that the same were used as personal residential accommodation by the Chairperson is in violation of the asssessee’s objects. Therefore, the limited issue under consideration is whether the usage of the assessee’s society property by the Chairperson is in violation of its aforesaid objectives or not. In this regard, it has been contended that the said matter had already been examined at the time of grant of initial approval by the ld CCIT and after due examination, the approval under section 10(23C)(vi) has been granted and given that facts and circumstances remaining the same as they existed at the time of grant of approval, the withdrawal of approval is not warranted. 39. In order to appreciate the same, we refer to letter dated 9/03/2006 issued by the then ld CCIT, Chandigarh which was issued in context of examining the assessee society’s application under section 10(23C)(vi) and one of the matter relates to use of residential house by then chairman Mr S.S Khanna and Mrs Patricia Khanna, Principal. It has been stated by the ld CCIT that as per audit report for the year ending 31/03/2002, residential house was purchased for Rs 54,69,000/- which is being used for residential purpose of chairman Mr S.S Khanna and Mrs Patricia Khanna, Principal and a sum of Rs 8,000/- was charged 31 as rent from them. It was further stated in the said letter that from perusal of records, it was not clear for which period the rent was charged and whether rent so charged was at market rate and if not, they were availing personal benefit and it cannot be said that the income of the society is being used for purposes of education entitling it to exemption u/s 10(23C)(vi) of the Act. In response, the assessee society vide its letter dated 21/03/2006 has stated that “The Society originally was allotted a larger area for school building which, interalia, included the provision for residential premises. Due to agitation by the residents of the locality, in which area the school site is located, the allotted land area was reduced to provide access to various residential streets. For this reason, the Society had to purchase residential premises to accommodate staff and hostel facilities. The chairman is not drawing any salary from the society, though he devotes all his time to it. Mrs. Khanna pays rent @ 2000/- P.M. for the portion occupied.” Thereafter, in response to another communication from the ld CCIT dated 27/12/2006, the assessee society has further submitted that “With respect to the occupation of residential house, the clarification is that this property is not being used for the residence of the principal alone, that the 1 st Floor is used for accommodating temporary staff, hostel for school children and as guest house accommodation for various visiting officials.” Taking the same into consideration and due examination thereof, the approval u/s 10(23C)(vi) was granted by the ld CCIT on 14/02/2007. We therefore find that the matter relating to residential accommodation provided by the assessee society to its then chairman Mr S.S Khanna and Mrs Patricia Khanna, Principal was duly examined while grant of initial approval and the same was clearly as per the objects of the assessee society and it is also manifest from the records that rent was recovered from them. 40. It is also a matter of record that Mrs Patricia Khanna has since taken over from Mr S.S Khanna and is rendering services as the chairperson of the assessee 32 society and as part of her services, she has been allowed by the assessee society to retain and occupy the said residential accommodation and there is thus no dispute in this regard that a facility by way of residential accommodation has been provided by the assessee society to the Chairperson in lieu of her services. The question which remains is whether the same has been considered as perquisite in her hands by the assessee society for tax purposes and/or any rent has been recovered from her. 41. As per ld PCIT(Central), there is no evidence on record that the same has been offered to tax in her hands as perquisite under section 17(2) or any rent has been recovered from her. In his submissions, the ld AR has stated at the Bar that perquisite in form of residential accommodation has been computed and duly considered in the hands of the Chairperson for the purposes of tax deduction u/s 192 by the assessee society and the same has thereafter been duly offered to tax in individual tax returns filed by her. In support, copies of Form 16 issued by the assessee society for the financial years 2017-18 to 2020-21 as well as personal tax returns of the Chairperson have been placed on record. It thus appears that Form 16s and personal tax returns were available but for some reasons, the same couldn’t be brought on record resulting in aforesaid findings of the ld PCIT(Central). The same can be verified and examined by the Assessing officer during the course of assessment proceedings to determine whether the perquisite towards residential accommodation has been rightly determined by the assessee society in the hands of the Chairperson or not and take appropriate steps and decide as per law while framing the assessment. At the same time, in light of aforesaid discussions, we are of the considered view that the same cannot be a reason for withdrawal of exemption u/s 10(23C)(vi) as the residential accommodation has been provided to the Chairperson in furtherance of the society’s educational objectives and in pursuance of her services to the assessee’s society. 33 42. Now coming to the matter relating to fleet of luxury cars which were owned by the assessee society and used by the Chairperson and other members of the society for personal purposes. 43. During the course of survey carried out on 23/01/2019, it was found by the survey team that the assessee society owns a fleet of luxury cars which were being used by the Chairperson and her family members alongwith another member of the assessee society. The statement of Chairperson and other members of the society were recorded wherein they have stated that they did not own personal vehicle and the vehicles purchased and registered in the name of the assessee society are used by them. Basis the same, the Ld. PCIT was of the view that since Khanna family did not own any personal vehicle, it proves that the vehicle of the assessee society are being used by Chairperson, her family members and other members of the society for their personal purposes and the assessee’s explanation was called for which was examined but not found acceptable by the Ld. Pr. CIT. 44. As per the Ld. PCIT, the funds of the assessee society were meant for application towards the educational objects of the society. However these were diverted for buying luxury cars for personal use of Khanna family. It was further stated by the Ld. PCIT that the assessee society could not provide any evidence in the form of salary slips etc. to prove that the cars were provided to the Chairperson and other members in lieu of the services rendered by them to the society and same were offered by them in respective hands for taxation or they have reimbursed any money to the assessee society. It was finally held by the Ld. PCIT that although the investment in the luxury vehicles per se may not be in contravention of the objects of the assessee society but considering the surrounding circumstances and utilization of the vehicles by the Chairperson and her family members, it can be concluded that the funds of the society were 34 diverted for buying luxury cars for personal use of Chairperson and her family members. 45. In this regard, the Ld. AR has submitted that these vehicles are owned and registered in the name of assessee’s society and duly recorded in the books of assessee society. It was submitted that these vehicles are at the disposal of the society’s executive committee members and other staff members. The vehicles are used exclusively for the official conduct and activities of the assessee society for interacting with various Government departments. Further, Mrs. Patricia Khanna , Mr. Shane John Khanna and Ms Verdhini Verma are wholly devoted towards the school activities of the assessee’s society and they have been authorized by the assessee society to use these vehicles and are thus entitled to the use of the vehicles. It was further submitted that even in respect of matter relating to investment and usage of vehicles, the approval was initially granted to the assessee society by the then ld CCIT, Chandigarh and after due verification, the approval was granted. It was submitted that the said fact was also brought to notice of ld CIT (Exemptions), Chandigarh vide submissions dated 14/02/2019 and thereafter, in response to final show-cause dated 19/02/21 by ld CIT (Exemptions), Chandigarh, by another submissions dated 04/03/21. It was submitted that subsequent to transfer of jurisdiction to ld PCIT(Central), the assessee society again drawn reference to the aforesaid submissions before the ld PCIT(Central) vide submissions dated 25/06/21, however, the same has not been considered and the matter has been summarily decided against the assessee society. It was submitted that where there are no changes in the facts and circumstances of the case and the matter has been examined at the time of grant of approval, how the same matter can form the basis of withdrawal of exemption. It was submitted that it is not a case of fresh purchase of these vehicles during the year, these vehicles have been purchased long back in the name of the assessee society, have 35 been duly recorded in the books of accounts and have been in use by the staff and other members of the assessee society and there has been no adverse findings recorded by the Assessing officer during all these past years regarding personal usage of any of these vehicles. It was accordingly submitted that the findings of the ld PCIT(Central) are not borne out of the records and in absence thereof, the same deserve to be set-aside. 46. In support, reliance was placed on Coordinate Mumbai Benches decision in case of ITO vs Cancer Aid & Research Foundation (ITA No. 1782/Mum/2014 dated 16/07/2014) wherein on account of purchase of BMW car in name of the trustee, the registration u/s 12AA was initially cancelled and subsequently restored by the Tribunal and the relevant findings therein read as under: "18. The second objection of the learned DIT(E) is that the assessee had purchased BMW 325i car in personal name of the trustee Mr. A.A. Kazi, vide bill dated 20th March 2009. The car was purchased out of the funds of the trust. The learned DIT(E) held that nothing has been brought on record to show the need of buying such a luxury car. As brought on record, this issue was subject matter of scrutiny in the assessment year 2009-10, wherein the Assessing Officer has invoked the provisions of section 13 to deny the exemption to the assessee trust. The matter had travelled up to the stage of first appellate proceedings, wherein the learned Commissioner (Appeals) has reversed the findings and the conclusion of the Assessing Officer by holding that the car was used for the purpose of the trust only and after recording detail reasons, he decided the issue in favour of the assessee trust by holding that there is no violation of section 13. It has also been brought on record that the said car was sold in the next year. Such an objection of the learned DIT(E) in the present case, cannot be the subject matter of cancellation of registration under section 12AA(3), firstly, it is still a dabatable matter which is subjudice, whether there is any violation of section 13 or any misuse of trust fund; secondly, even if the car has been purchased in the name of the trustee, then at the most, it needs to be examined within the scope of section 13, and if at all there is any violation, then the income of the previous year in which such a violation took place, gets excluded from the exemption provided under section 11 i.e., surplus income becomes taxable for that year. If there is any kind of misuse of trust funds by the trustee or a related person of the trustee, then the statute provides enough power to the Assessing Officer to forfeit the exemption and tax the surplus. However, in such a situation, it cannot be held that the entire activities of the trust have been rendered non- genuine or its activities are not carried out in accordance with the objects of the trust. Similar issue had also come up for consideration before the Bangalore Bench of the Tribunal in Krupanidhi Educational Trust (supra), (as relied upon by the learned Counsel for the assessee), wherein on similar purchase of the BMW car purchased in the name of the trustee, the Tribunal held that it cannot be the basis for cancellation of registration under section 12AA(3), at the most, it can be a violation of provisions of section 13. Thus, this objection of the learned DIT(E) cannot be held to be sufficient ground for cancellation of the registration. 36 20. In view of the aforesaid discussion, we find that none of the objections and the grounds which have been taken by the learned DIT(E) in the impugned order for cancelling the registration can be held to be sustainable either on facts or in law, so as to hold that the activities of the trust are either not genuine or they are not being carried out in accordance with the objects within the scope of section 12AA(3). Moreover, nothing has been brought on record to show that the application of the income of the trust from year-to-year has not been made towards attainment of the objects i.e., for the Cancer Aid & Research Foundation charitable purposes. If no discrepancy has been found in the income and expenditure account and there is a proper application of income towards the objects in accordance with the provisions of section 11, then neither the charitable nature of the trust should be doubted nor it can be held that its activities are not genuine or are not in accordance with the objects for which registration was granted. Accordingly, we reverse the findings of the learned DIT(E) and hold that the registration granted to the assessee cannot be cancelled under section 12AA(3) on the ground stated by the learned DIT(E) in the impugned order. The grounds thus raised by the assessee are allowed.” 47. The Ld. Sr DR submitted that the vehicles have been used by the Chairperson and her family members for their personal use and therefore there is clearly benefit by way of availability of these vehicles at the disposal of the members of the assessee society. It was further submitted that the fact that the chairperson and other members are rendering services to the assessee society is not doubted by the ld PCIT(Central), at the same time, it is essential to determine whether the benefit so provided by the assessee society is in lieu of such services and whether the same has been offered to tax in the hands of the Chairperson and other members and as per the order of the ld PCIT(Central), there is no evidence on record to this effect. He accordingly supported the order and findings of the ld PCIT(Central) in this regard. 48. We have heard the rival contentions and purused the material available on record. It is a fact that the matter relating to vehicles and its usage by then Chairperson Mr S.S Khanna and Mrs Patrica Khanna was subject matter of examination by the ld CCIT at the time of initial grant of approval. It is also a fact that all these years, there has been no adverse findings recorded by the Assessing officer regarding personal usage of these vehicles. The factum of these vehicles been purchased in the name of the assessee society and duly recorded in the books of accounts of the assessee society are not in dispute 37 and infact, the ld PCIT(Central) has himself stated that the investments in these vehicles are not in contravention of the objects of the assessee society. 49. The limited issue which therefore arises for consideration is whether these vehicles have been provided by the assessee society to the chairperson and other members of the society for the purposes of rendering services to the assessee society or exclusively for their personal use. As per ld AR, the fact that the chairperson and other members are rendering services to the assessee society is not doubted by the ld PCIT(Central) and coupled with the same, where these vehicles are provided to these members for efficient discharge of their work responsibilities and dealings with Government authorities, it is clear that these vehicles are used for official and not personal purposes. The ld PCIT(Central) has however recorded a finding that in the statement so recorded of the members of the assessee society, they have acknowledged the fact that these are using these vehicles, and since the chairperson and other members of the society donot own any personal vehicle, he has arrived at a finding that the subject vehicles have been provided to them exclusive for personal usage. 50. In our understanding, these vehicles have been provided to the respective members of the assessee society for discharge of their services to the assessee society as it evident from the record when the matter was initially enquired by the ld CCIT(Chandigarh) and at the same time, given that these vehicles are at the exclusive disposal of the individual members, possibly, some personal usage cannot be ruled out and it thus gives an impression that these vehicles have been provided to them exclusively for personal usage. The exclusive disposal of vehicle vis-à-vis exclusive personal usage thus seems to be have created the present situation which has led to the impugned findings of the ld PCIT(Central). 38 51. It is not unusual to provide dedicated vehicle facility to the members of the assessee society for commuting from home to office and back and for other official purposes, however, to hold that the vehicles have been provided exclusive for personal purposes won’t be correct. Basis the material available on record, we believe that not enough evidence has been brought on record by the Revenue to hold that these vehicles have been provided exclusively for personal purposes of members of the assessee society and funds to that extent have been diverted for personal benefit. At the same time, we believe that the Assessing officer is not precluded from examining the said matter during the course of regular assessment proceedings as to whether the vehicles have been used for official purposes alone or besides the official purposes, whether there is any personal usage as well and take appropriate action as per law. At the same time, in light of aforesaid discussions and in the entirety of facts and circumstances of the case and taking into consideration the decision of the Coordinate Mumbai Benches referred supra which support the case of the assessee, we are of the considered view that the provision of vehicles per se to the members of the assessee society cannot be a reason for withdrawal of exemption u/s 10(23C)(vi) of the Act. 52. Now coming to the issue of payment of lower salary to the employees and misappropriating the excess amount for use of the members of the assessee society. 53. Briefly the facts of the case are that during the course of survey, it has been stated by the survey team that several blank signed cheque books of various employees of the assessee society were found from the drawer of the office of the Chairperson at the school premises. The statement of the Chairperson was recorded wherein she identified the employees who had signed blank cheques which included teachers and other employees of the assessee society. However, when she was asked the purpose of keeping the 39 blank signed cheques, she pretended to be ignorant about it. Mr. Shane John Khanna, another member of the assessee society was also enquired regarding the purpose of keeping the blank cheques and he too could not explain the same. Thereafter, the Ld. PCIT has listed down the name of the employees and the corresponding bank account numbers of the persons whose signed cheque books were found and also referred to the statement of three teachers, namely, Smt. Harmeet Kaur, Smt. Swati Srivastava and Smt. Raveena Verma. Further, he has referred to the information sought and obtained from the ICICI Bank as to name of the person who encashed the cheques and also to provide copy o the signed cheques which were encashed. Basis the said information and inquiry, the assessee was asked to provide its explanation which was considered but not found acceptable by the Ld. PCIT. 54. As per ld PCIT, the assessee society may be disbursing the salary to the teachers as prescribed by the rules in this regard but the evidences collected clearly indicated that part of the salary was taken back by the management of the school every month and the actual salary paid to them was less than the amount which was entered in the books of account kept by the school and the only conclusion which can be drawn is that the funds of the society were misappropriated by the chairperson and the members for their personal purposes by inflating the salary expenses of the teachers and other staff members. 55. During the course of hearing, the ld AR has assailed the aforesaid findings of the ld PCIT. It was submitted that the Revenue had alleged that signed cheque books were found from the drawer of the Chairman office. It was submitted that a description of the Chairman office is that it has a cabinet which has several drawers and most of the time, the Chairperson office is open and accessible to teaches and other staff members. It was submitted that Chairperson Mrs Patrica Khanna and Mr Shane John Khanna were totally 40 unaware of existence of these cheque books. It has been alleged that some of the teachers have given signed blank cheque to the Chairperson, however, on perusal of the statements so recorded of the teachers, it doesn’t indicate any such charge against chairperson or school management. It was further submitted that the statement of thirty teachers were recorded, out of which only two teachers have said that they have parted with part of their salary, without specifying the person to whom it is given. It was submitted that the teachers working with the Society are an educated lot and no one these days would be influenced by the management to part with their salary. The assessee society gave replies to the queries raised by the ld PCIT which though reproduced in the impugned order has not been appreciated and wrong inference has been drawn by the ld PCIT based on presumptions, surmises and conjectures and our reference was drawn to the submissions so made and the contents thereof read as under: “ 9.2 The assessee vide its reply dated 14.02.2019, in respect of this issue submitted as under: - To verify the correctness, statements of 30 teachers were recorded Out of the total numbers of statements 1. 17 teachers have denied that they ever gave cheque books, 2. 3 teachers have said that they did give the cheque books but have not said anything about the purpose of giving the cheque books to the school. 3. 2 teachers have said that they have parted with a part of salary in favour of the Management. 4. One form, though signed, is blank. The Society enjoys affiliation both with the CBSE & Distt Education Officer (D.E.O) U.T. Chandigarh. Salary paid to both the teaching/non-teaching staffs are governed by the salary structure laid put by the D.E.O. Chandigarh, who is monitoring the same. In addition, the society is also paying PF/EPF. wherever applicable. Further, the salary is being disbursed according to the 6 th pay commission norms. As per the order dated 25.01.2018 issued by the Chandigarh Administration the salary paid to staff is to be at par with the teachers working in Government schools. The society also has to provide copy of service contract between Management and staff." 41 In another reply dated 04.03.2021, the assessee submitted as under: "12.1 Para 2.6 of the present Show Cause Notice deals with the discovering of certain cheque books of the employees of the Society form the drawer of chairperson's office at Saint Peter's School. 12.2 Respectfully submitted that the survey part had conducted a thorough investigation with regards to the cheques. 12.3 The Society had filed a detailed explanation in its reply dated 14.02.2019 duly incorporated in the Show Cause Notice. The Department/ Survey Teams had recorded the statement of 30 teachers independently without allowing the participation of any member of the Society. So, it can be safely said that the said statements were recorded free of influence, coercion or pressure from the part of the Society. The statements of teachers are sacrosanct and cannot be disagreed on basis of presumption that one Mr. Mohan, who is an account assistant, acted as an agent/ representative of the Society/ management for collecting the cheques. The Society never used the services or deployed Mr. Mohan to collect the cheques on its behalf. The allegation is categorically denied. The explanation of the Society has not been faulted with or falsified.” 56. It was further submitted that the department had collected various evidence from the banks from where it learnt that the cheques issued by various teachers were encashed by one Mr. Mohan. This material was collected at the back of the society and which was never allowed to be examined by the society. It was further submitted that the society has not asked or authorized Mr Mohan to withdraw or deal in any manner with the teacher’s salary and it is the teachers who have availed the services of Mr. Mohan to withdraw money from the bank required for daily needs. It was submitted that there is no statement of Mr Mohan which has been recorded by the Revenue and it is merely basis conjectures that allegation of misappropriation and inflation of salary expenditure has been levied and which has formed the basis and reason for withdrawal of the approval. Further, reliance was placed on the Indore Benches decision in case of R Shri Jairam Education Society Bhopal (Supra) wherein similar allegation of misappropriation and inflation of expenses has been levied and which has been decided in favour of the assessee. It was 42 accordingly submitted that there is no basis to hold that the salary expenditure has been inflated and the funds have been misappropriated by the members of the assessee society. 57. The ld Sr DR supported the order and the findings of the ld PCIT(Central) and taken us through his findings which read as under: “9.3 I have considered the reply of the assessee society. As per the information gathered during the survey there were about 26 full time teachers and 3 part time teachers in the school. The blank signed cheque books of 24 teachers and staff members were found in the drawer of the office of the chairperson Mrs. Patricia Khanna at St. Peter School, Sector-37B, Chandigarh. Admittedly, two of the teachers stated that they parted with a portion of their salary every month in favour of the management. The denial by the teachers that they gave the signed cheque books to the management is incorrect on the face of it as during the survey a large number of such signed blank cheque books of teachers and staff members were found from the drawer of the office of the chairperson Mrs. Patricia Khanna. It is a fact that the livelihood of these teachers was dependent on the school and its management and they cannot be expected to give a statement which might implicate the management and jeopardize their jobs. Hence, the modus operandi adopted by the school management is required to be analyzed and unearthed in light of the human probabilities and surrounding circumstances. The withdrawals of fixed amount in cash by bearer cheques in the first week of every month by Mr. Mohan who is Account Assistant of school corroborates the modus operandi adopted by the school to inflate the salary expenses. The above facts are supported by the evidences in form of the bank statements and copies of encashed cheques of the bank accounts maintained by the teachers in the ICICI Bank which were obtained from the bank. It is also noted that the numbers of cheques used for such withdrawals from the account of one teacher are consecutive which indicated that one signed cheque book was given by each teacher to the management which was exclusively used to make such withdrawals from their accounts through Mr. Mohan. Otherwise, there is no reason as to why the numbers of all such cheques which were used during the different months in a year would be consecutive. There is no denial of the fact that the assessee society may be disbursing the salary to the teachers as prescribed by the rules in this regard but the evidences collected clearly indicated that part of the salary was taken back by the management of the school every month and the actual salary paid to them was less than the amount which was entered in the books of account kept by the school. The only conclusion which can be drawn is that the funds of the society by inflating the salary of the teachers and staff was misappropriated by the chairperson and the members for their personal purposes.” 43 58. We have heard the rival contentions and purused the material available on record. We have carefully gone through the statements of thirty teachers recorded during the course of survey carried out at school premises on 23/01/2019 as available in assessee’s paperbook pages 91-152 and we find that various questions have been raised by the survey team in a typewritten questionnaire in terms of their educational qualifications, experience, mode of selection, designation, payment of salary, TDS, working hrs, etc. and the teachers have individually and manually filled up the questionnaire and have put their respective signatures. What is relevant to note is that other than typewritten questionnaire, they have apparently been asked a specific question as to whether they have given any signed cheque to the school/school management/authority and the said question has been handwritten by the respective teachers along with their responses in their own handwriting. This shows that a specific question has been verbally asked to each of the teachers as to whether they have handed over any signed cheque to school or not and thereafter, they have been asked to confirm the same in writing. 59. Admittedly and undisputedly, out of thirty teachers whose statements were recorded, only two teachers have stated that they have parted with a portion of their salary. We refer to statement of these two teachers. One of the teachers namely Miss Harmeet Kaur has stated that she is working with the school for last 7 months and has also stated that she has given signed cheque book to school and she receives Rs 24,500/- in her account as salary and Rs 9000/- was given back to school through cheque every month. The other teacher namely Miss Swati Srivastava has stated that she was working with the school since 01/02/2018 and she has received Rs 24,000/- in her bank account though exact salary is Rs 15,500/- and she returns the balance to school by blank cheque. It is equally relevant to note that out of other teachers whose 44 statements have been recorded, seventeen teachers have categorically stated “No” to the question whether they have handed over the signed cheque book. 60. The question that arises for consideration is what is the relative strength of negative statements vis-à-vis positive statements and whether negative statements can be discarded altogether and only positive statements have to be considered. Further, whether the implications arising out of the positive statements can be extrapolated to cover all of the earlier years even prior to appointment of these two teachers in the assessee school and that too, in respect of whole of the school faculty and staff members. To our mind, the answer to both of these questions is clearly in negative. Where one look at the human probability, how can two persons statement of expression represent statement of expression of thirty persons. It is not a case where thirty persons have appointed two persons as their representative and whatever they say will represent the collective conscience of thirty persons. Each of the thirty persons represent their individual standing and carry creditability and where their’s other part of the statement is not disputed in terms of their education, experience, how can one dispute the part of the statement where they categorically stated that they have not parted with part of their salary. As we have noted earlier, each of the teachers have been asked a specific question verbally as to whether they have parted with their cheque book and thereafter, they have been asked to confirm it in writing in their own handwriting. There is thus a conscious affirmation on part of these teachers that they have not parted with their salary. These negative statements therefore cannot be discarded and carries equally strength. Given that these negative statements outweigh the positive statements, the hypothesis which the Revenue has tried to establish that the whole of the salary figure has been inflated by the assessee society and funds of the assessee society have been misappropriated is not established in the instant case. 45 61. Further, the ld PCIT has stated that the withdrawals of fixed amount in cash from the individual bank accounts by bearer cheques in the first week of every month by Mr. Mohan who is Account Assistant of school corroborates the modus operandi adopted by the school to inflate the salary expenses. In this regard, we find that the information obtained from the bank has not been confronted to the assessee society. Further, the statement of Mr Mohan has not been recorded who as per Revenue is crucial link but for reasons best known to the Revenue, his statement has not been recorded and is thus not on record which could have thrown some light on the nexus as so alleged by the Revenue. and therefore, once the teachers have denied parting with their salary to the school in their respective statements, the necessary corollary to the same is that the withdrawals so made by Mr Mohan is authorized by the individual signatory to the cheques and the money so withdrawn is handed over to the respective individual teachers and not to the school or its management as so alleged by the Revenue. 62. In light of aforesaid discussions, we are of the considered view that basis material available on record and carefully analysis thereof, it cannot be held that there is misappropriation of society’s funds all these years by way of inflating salary expenditure and withdrawing money from the respective teachers bank accounts and that too, for benefit of Chairperson and members of the assessee’s society. This is however subject to part of salary withdrawn in respect of aforesaid two teachers and who have confirmed that they have parted with their salary. In respect of part of salary so withdrawn in respect of these two teachers, the Assessing officer is directed to verify the same and take appropriate action as per law in regular assessment proceedings in the hands of the assessee society for the years involved. 63. In case of Shri Jairam Education (Supra), we find that similar fact pattern was under consideration before the Indore Benches. In the said case, basis 46 certain loose papers found during search, it was alleged by the Revenue that the fund of the assessee society have been misappropriated by the members of the society and the funds have been used for the benefit of members and bogus expenditure has been claimed. It was held by the Coordinate Bench that the loose papers don’t establish that the activities of assessee society are not genuine and are not carried out in accordance with the objects and thus the same cannot form the basis for withdrawal of exemption. At the same time, it was further held by the Coordinate Bench that where there are allegations that funds of the assessee society have been misappropriated or there is any ambiguity in the claim of expenses, the same can be taken up during the assessment proceedings. We find that the facts in the instant case are similar where there are allegation of misappropriation of assessee society’s fund by inflating the salary expenditure and withdrawal from teachers’s bank account and the registration has been cancelled with retrospective effect though there is nothing on record wherein the genuineness of the activities of the assessee society has been challenged in terms of imparting education to school children. In light of aforesaid discussions and in the entirety of facts and circumstances of the case, we are of the considered view that the same cannot form the basis for withdrawal of exemption u/s 10(23C)(vi) of the Act. 64. The next issue relates to the exchange deed dt. 15/12/2016 executed between the assessee society and Mr. Arun Kumar Dhir whereby properties were exchanged and it has been alleged that a part of sale consideration has been misappropriated and not accounted in the books of the assessee society and the funds have been diverted for the benefit of the Chairperson and members of the assessee society. 65. Briefly the facts of the case are that an exchange deed dt. 15/12/2016 was executed between the assessee society and Mr. Arun Kumar Dhir wherein 100% of the property situated at Sector 18-B Chandigarh owned by the assessee 47 society was exchanged for 80% share of the another property situated at Sector 11A, Chandigarh. As per the exchange deed, the value of the property situated at Sector 18-B was determined at Rs. 8,12,00,000/- as against collector rate of 8,10,73,475/- and the value of the property situated at Sector 11A was determined at Rs. 7,52,00,000/- as against collector rate of Rs. 4,32,20,150/-. The exchange deed was duly registered with Stamp Duty Authority on 15/12/2016 and appropriate stamp duty was also paid. 66. The ld PCIT firstly observed that the difference in value of the two properties as per the collector rate is Rs. 3,78,53,325/- whereas as per the exchange deed, the difference worked out to Rs. 60 lacs only which is basically to equalize the value of the properties and the said amount of Rs. 60 lacs was paid by Shri Arun Kumar Dhir by four cheques to the assessee society and details thereof have been given in para 7 of the impugned order. 67. The Ld. PCIT, on perusal of the Fixed Assets Schedule for F.Y 2016-17, further observed that the assessee society has not properly accounted for the transaction of exchange of properties in its books of account. In this regard, the ld PCIT referred to submission dt. 14/02/2019 wherein the assessee society submitted that the said transaction was not accounted for in the books of account as physical possession of the properties were to be taken on a future date and in support thereof, a copy of memorandum of understanding dated 20/03/2018 signed between the assessee society and Shri Anil Kumar Dhir was submitted. 68. Referring to the MoU dated 20/03/2018, the ld PCIT further observed that the MOU has been signed more than a year after execution of the Exchange Deed wherein it was stated that the property at Sector 11A was not in a habitable condition and therefore till the time, house at Sector 11A is not in a 48 habitable condition, the society shall retain the house at Sector 18-B and chairperson shall continue to stay at the said house at Sector 18-B. 69. The ld. PCIT further referred to a notepad found from the bag of Mr. Shane John Khanna and his statement recorded under section 131 of the Act on 24/01/2019. Referring to the statement of Mr. Shane John Khanna, the Ld. PCIT stated that he has identified most of the hand writing in the notepad as his own. He has also admitted that notings at page no. 7 is in his handwriting. However he refused to identify the handwriting on page nos. 13 and 14. However from perusal of the contents of these pages, he noted that these are in the same handwriting as that of Mr Shane John Khanna. It was further observed by the ld. PCIT that from the perusal of the pages of the notepad, it is clear that these are notings about cheques of Rs. 60 lacs and cash components of Rs. 2.50 crores with respect to the same property transaction as per exchange deed. 70. In light of aforesaid facts and findings, and taking into consideration the submissions to the show cause submitted by the assessee society, the Ld. PCIT has held that the value of the property at Sector 18 has been artificially enhanced without any basis over and above the collector rate and the differential consideration received in cash was misappropriated and not accounted for in the books of account of the assessee society and the funds so received were diverted for the benefit of the Chairperson and members of the assessee society. 71. During the course of hearing, the Ld. AR has contested the aforesaid findings of the ld PCIT. It was submitted by the ld AR that the assessee society owned a residential house situated at Sector 18-B, Chandigarh and the same was exchanged by the assessee society vide registered exchange deed dated 15.12.2016 with another residential house at Sec11-A, Chandigarh. Our reference was drawn to the copy of the exchange deed placed at pages 70-79 49 of the assessee’s paperbook and it was submitted that the value for H.No. 533, Sector 18 Chandigarh was determined at Rs. 8,12,00,000/- and for H.No. 163 Sector 11 A Chandigarh, the value was determined at Rs. 7,52,00,000/- and the difference of Rs. 60,00,000/- was received by cheques by the assessee society which is clearly mentioned in the exchange deed and which was duly accounted for in the books of accounts during the financial year 2016-17. Our reference was drawn to the Fixed Asset Schedule forming part of the annual accounts for the financial year 2016-17 where a figure of Rs 46,88,000/- has been mentioned and it was submitted that the same represents the cheque payment of Rs 60 lacs net of commission of Rs 5 lacs paid to Shri Narender and TDS amounting to Rs 8.12 lacs. 72. It was further submitted that in response to show cause notices, the society has explained the difference between the collector rate of Rs. 4,32,20,150/- and exchanged/transaction value of Rs. 7,52,00,000/- vide replies dated 14.02.2019 and 04.03.2021 placed in the Paper Book at Pages 6-14 and Pages 281-288 respectively. However, the ld PCIT, negating the registered exchange deed, merely on the basis of certain rough jottings in Note pad came to the conclusion that the assessee society had received Rs. 2,50,00,000/- as unaccounted money as exchange value as against the submission of assessee society that the builder Mr. Arun kumar Dhir had expended the money on re- construction of H.No. 163, Sec. 11A Chandigarh and therefore the actual value of H.No. 163, Sec. 11 A was adopted at Rs. 7,52,00,000/- as against the collector rate of Rs. 4,32,20,150/- and the difference in the exchange value was received by way of cheque payment which was duly accounted for in the books of accounts. 73. It was further submitted that the assessee society has dissociated itself with the contents of the "Note Pad" as this was a rough note pad, used by many persons which is not signed or authenticated by any person except to the 50 extent of some figures appearing on the left hand side of page no. 7, which were in the handwriting of Mr. Shane John Khanna. This is a dumb note pad which has nothing to do with the working of the society. It is also an admitted fact that during the course of recording of statement of Mr. Shane John Khanna, he categorically stated that the handwriting on page 7 was in his handwriting and he did not know as to whose handwriting was there on Pages 13-14. It was submitted that ld PCIT has wrongly presumed that the amount of Rs 7,52,00,000/- was paid for a structure having a collector rate of Rs 4,32,20,150/- whereas the actual fact is that Rs 7,52,00,000/- is the reconstructed value of the house as on 15/12/2016. 74. It was submitted that the delay in occupation of the exchanged house no.163, Sector 11-A Chandigarh was due to the difference in quality of construction of the building and furnishings by the builder Mr Arun Kumar Dhir and the same has been documented by way of MOU which has again been discarded by the ld PCIT. 75. It was further submitted that the issue of cash payment and signing of MOU was never examined by way of recording of statement of the builder Mr Arun Kumar Dhir and allowing his cross examination and a one-sided presumption has been drawn against the Society. It was further submitted that even though the statement of the Chairperson who is the signatory to the Exchange Deed was recorded but no query in this regard was put to her regarding the rough noting in the note pad. 76. It was accordingly submitted that it is a settled law that written document has more evidentiary value than any rough notings and in the instant case, the exchange deed clearly documents the final understanding between the two parties and nothing more can be read and understood other than what has been stated therein and reliance was placed on the decision of the Hon’ble 51 Punjab and Haryana High Court in case of Paramjit Singh vs ITO [2010] 323 ITR 588 wherein it was held that the sale consideration as disclosed in the sale deed has to be accepted and it cannot be contradicted by adducing any oral evidence. It was submitted that following the said decision, it is clear that no evidence can be admitted to prove that any amount was paid or received relating to transfer of the property outside the written exchange deed. It was accordingly submitted that there is no basis in allegation made by the ld PCIT that certain consideration has been received in cash over and above the new house property and cheque payment in exchange for the old house property and which has not been accounted for in the books of account of the assessee society and the funds so received were diverted for the benefit of the Chairperson and members of the assessee society. 77. Per contra, the Ld. Sr. DR relied on the findings of the Ld. PCIT and submitted that the entries so found in the notepad are clearly matching as far as the cheque payments are concerned with the details mentioned in the exchange deed and given that, the corresponding cash figures along with dates were also mentioned therein, the same clearly established that there was payment of part consideration amounting to Rs. 2.5 crore by way of cash and since the same was not accounted for in the books of the account of the assessee society and the funds were diverted for the benefit of the Chairperson and members of the society. Further, our reference was drawn to the findings of the Ld. PCIT which are contained at para 7.4 of the impugned order which read as under: “7.4 I have considered the matter and perused the replies of the assessee society and page nos. 7. 13 and 14 of Annexure-A1. It is noted that the notepad marked as A1 was found in personal possession, in the bag of Mr. Shane J. Khanna. In the statement recorded and reply furnished by the assessee society it was admitted that the page no. 7 and jottings on the left-hand side of page no. 13 are in the handwriting - of Mr. Shane J. Khanna. Also, there is no doubt that the transaction mentioned therein is related to the Exchange Deed dated 15.12.2016 signed between Mrs. Patricia Khanna and Mr. Arun Kumar Dhir. The amount and 52 dates of cheques mentioned on page no. 7 and 13 exactly matches with those of mentioned in page no. 4 of the Exchange Deed. It is also strange to note that the collector value of 80% share of H.No. 163. Sector- 11A. Chandigarh was only Rs. 4,32,20,150/- which has been artificially, without any basis enhanced to Rs. 7.52 crore so that to equalize the value of the properties a lower amount of Rs. 60 lakh (Rs. 8.12 crore - Rs. 7.52 crore) was payable by Mr. Dhir to the society. If the Exchange Value of H.No. 163, Sector- 11A, Chandigarh is taken at collector value of Rs. 4,32,20,150/- then for the exchange of the properties an amount of Rs. 3.78 crore (Rs. 8.10 crore - Rs. 4.32 crore) was required to be paid by Mr. Dhir to the society. On the basis of jottings on page nos. 7, 13 and 14 of A-1 it is noted that an amount of Rs. 3.10 crore was paid by Mr. Dhir to the society out of which Rs. 60 lakh was paid by cheques and Rs. 2.50 crore was paid in cash etc. which was misappropriated by the chairperson and the member of the society. It was explained by the assessee society that the H.No. 163, Sector-11A, Chandigarh at the time of transaction was an old structure, which was to be demolished and reconstructed. The tentative cost of construction was about Rs. 2.50 crore which was taken care of, while determining the value of the property at Rs.7,52,00,000/- as against the circle rate of Rs.4,32,20,150/-. This paper reflected the tentative value of property to be exchanged and there was no cash dealing between the parties to the Exchange Deed. The assessee also questioned the fact as to why the society would determine the exchange value at a higher figure than the collector rate. lt was reiterated that the difference between the exchange value & collector rate is the cost of construction incurred by the builder, which would otherwise have been paid in cash. The explanation furnished by the assessee is baseless. If the property at H.No. 163. Sector-11A, Chandigarh was an old structure then as on the date of exchange 15.12.2016, its value should be lower than the collector value and not higher by the amount of Rs. 3.20 crore. Secondly, the question of the assessee as to why the society would determine the exchange value at a higher figure than the collector rate is again not tenable. It is apparent that the Exchange Value was fixed up at higher value so that to equalize the value of the properties, a lower amount of Rs. 60 lakh (Rs. 8.12 crore - Rs. 7.52 crore) was payable by Mr. Dhir to the society The balance amount of Rs. 2.50 crore was paid in cash by Mr. Dhir to the society which was misappropriated by the chairperson and the members of the society. It is noted that the dates and the details of amount received are clearly mentioned on the page and these are not estimated figures. In fact, the amount of Rs. 40 lakh was paid by Mr. Dhir to the chairperson and member at the time of agreement as advance (Biana). A number of payments in cash have been made before the date of signing of the Deed of Exchange on 15.12.2016. Hence, the explanation of the assessee society that the tentative cost of reconstruction was about Rs. 2.50 crore which was taken care of, while determining the value of the property at Rs.7,52,00.000/- as against the circle rate of Rs.4,32,20,150/- and the paper merely reflected the tentative value of property to be exchanged and there was no cash dealing between the parties to the Exchange Deed is baseless and not tenable in view of the clear notings as discussed supra. The Exchange 53 Deed dated 15.12.2016 also does not mention about any such cost of reconstruction to be incurred and the same is also not supported by any evidence. The only conclusion which can be drawn is that the H.No. 533, Sector- 18B, Chandigarh was exchanged by the chairperson of the society for a property i.e. H.No. 163. Sector-11A, Chandigarh which was of a much lower value and part of the consideration amounting to Rs. 2.50 crore in lieu of such exchange was transferred to the chairperson and member of the society in cash in violation of third and fourteenth proviso to section 10(23C)(vi) of the Act and such income was not applied wholly and exclusively to the objects for which the society was established. The fund so received was diverted for the benefit of the chairperson and member of the society. It may be reiterated that the consideration received in cash was not accounted for by the society in its books of account.” 78. We have heard the rival contentions and purused the material available on record. The undisputed facts which are emerging from the records are that an exchange deed dt. 15/12/2016 was executed between the assessee society and Mr. Arun Kumar Dhir wherein 100% of the property situated at Sector 18-B Chandigarh owned by the assessee society was exchanged for 80% share of the another property situated at Sector 11A, Chandigarh owned by Mr. Arun Kumar Dhir. As per the exchange deed, the value of the property situated at Sector 18-B was determined at Rs. 8,12,00,000/- as against collector rate of 8,10,73,475/- and the value of the property situated at Sector 11A was determined at Rs. 7,52,00,000/- as against collector rate of Rs. 4,32,20,150/-. It is also not in dispute that the exchange deed was duly registered with Stamp Duty Authority on 15/12/2016 and stamp duty amounting to Rs 24,36,000/- was also paid and the property is registered and owned by the assessee society. 79. The ld PCIT has contested the value of property situated at Sector 11A so determined between the two parties and the mode of discharge of consideration. The ld PCIT has held that where the collector value of 80% share of H.No. 163. Sector-11A. Chandigarh was only Rs. 4,32,20,150/-, the same has been artificially enhanced without any basis to Rs. 7,52,00,000/-. It has been held by the ld PCIT that where the exchange value of H.No. 163, Sector-11A, Chandigarh is taken at collector value of Rs. 4,32,20,150/-, then for the 54 exchange of the properties, an amount of Rs. 3.78 crore (Rs. 8.10 crore - Rs. 4.32 crore) was required to be paid by Mr. Dhir to the society. It has been further held by the ld PCIT that the same has been done basically to equalize the value of the two properties and to show a lower amount of Rs. 60 lakh (Rs. 8.12 crore - Rs. 7.52 crore) as payable by Mr. Dhir to the society in the exchange deed. It has been further held by the ld PCIT that in reality, the assessee society has received Rs 3.10 crores whereby Rs 60 lakhs has been received by way of cheque, the remaining amount of Rs 2.50 crores (Rs 3.10 crores – Rs 60 lakhs) has been received in cash and the cash amount has not been reflected in the books of accounts of the assessee society and the same has been misappropriated by the Chairperson and members of the society. 80. We therefore have a situation where transacted value which is higher than the collector value is disputed by the ld PCIT and the ld PCIT is of the opinion that collector value should be considered and not the transacted value. We find that the same is in contrast to situations where the transaction value is generally found lower than the collector value and the Revenue challenges the same and invokes provisions of Section 56(2)(vii)(b) questioning the transaction value and the matter is then referred to the valuation officer. In the instant case as well, basis certain notings in the note-pad so found during the course of survey where the ld PCIT had certain apprehensions in accepting the transaction value of the property and was of the belief that the value has been artificially inflated, in our view, he should have referred the matter to the Valuation officer and necessary guidance could be drawn from the provisions of Section 142A of the Act. The Valuation officer has been authorized under law to determine the fair market value of the properties and there are guidelines laid down by the CBDT as to how the valuation should be undertaken. The Courts have held time and again that in matter of valuation, the matter should be referred to the Valuation officer and his opinion should be considered by the 55 Revenue authorities and in absence, thereof, the Revenue Authorities couldn’t substitute the transacted value on their own. The assessee society has given an explanation with regard to the difference in transaction and collector value stating that at the time of transaction, it was an old structure and it was agreed that the builder shall demolish and reconstruct the structure and the difference therefore represents the tentative cost of construction incurred by the builder. We are not going into the merit of the said explanation as we equally find ourselves incapacitated in appreciating the same in absence of any guidance from the Valuation officer. Had the matter been referred to the valuation officer, the said explanation of the assessee society could have been easily examined and verified by the Valuation officer. The ld PCIT however decided to brush aside the same without referring the matter to the Valuation officer and further without bringing any contrary evidence on record in terms of any comparable third party transaction in the same area or in vicinity thereof. In the instant case, we therefore find that merely basis certain apprehension and howsoever strong such apprehension may be, the ld PCIT was not correct in disregarding the transacted value so arrived at between the two parties without referring the matter to the Valuation officer who is a specialist in the field of valuation and whose inputs as a specialist have been recognized under law as well as by the Courts. As the matter stands today, as far as valuation of the property is concerned, we are therefore of the considered view that the transacted value of property at Rs 7,52,00,000/- could not be disturbed and substituted with the collector value as has been done by the ld PCIT whatever may be the apprehension in his mind. 81. Further, looking at the matter from another perspective, we are also intrigued by the fact that where the exchange deed was presented before the registering authority and the registering authority after examination of the transacted value of the both properties and taking into consideration the 56 collector rate, has determined the quantum of stamp duty and which has been duly paid and deposited, how the ld PCIT can step-in and say that the transacted value is more than the collector rate and has been artificially inflated. In other words, where the higher transacted value has been accepted by the registering authority and stamp duty thereon has been determined by the registering authority and there is no dispute thereon raised by either of the parties or any higher appellate authority, can the ld PCIT still question the transacted value and substitute it with collector value and to our mind, the answer to the same is clearly not in the affirmative. 82. Now, coming to the basis of apprehension raised by the ld PCIT which is a note-pad and certain entries found therein and whether the same can act as a credible evidence to corroborate the theory of over-valuation, if at all, the same can be proved with help of the Valuation officer. We find that the ld PCIT has effectively stated that basis certain note pad entries found during the course of survey, he is of the belief that value of the property has been artificially inflated and a part of the consideration has been paid in cash and the consideration so paid in cash has thus not been reflected in the exchange deed. In other words, he is of the belief that what has been stated in the exchange deed between the two contracting parties cannot be believed and trusted and therefore, have to be disregarded. The question that arises for consideration is whether the exchange deed which is a written contract between two contracting parties for sale and exchange of immoveable property and which has been duly registered with the stamp duty authorities can be discarded or atleast a part of the contents thereof discarded in light of certain rough note pad entries. In our view, the exchange deed which evidence the transfer of the impugned immoveable property not just contain the description of the property being transacted but also the underlying terms and conditions subject to which the transfer has been effected including the quantum of consideration and mode 57 and manner of discharge of such consideration and nothing more can be read and understood other than what has been stated therein unless the same is rescinded and/or cancelled which is not a case before us. 83. As per ld Sr DR, the entries so found in the notepad are in handwriting of Mr Shane John Khanna and are clearly matching as far as the cheque payments are concerned with the details mentioned in the exchange deed and given that, the corresponding cash figures along with dates were also mentioned therein in the same handwriting, the same clearly establishes that it relates to the same transaction of exchange of two properties and there was payment of part consideration amounting to Rs. 2.5 crore by way of cash which has not been reflected in the exchange deed and has been misappropriated. However, as per ld AR, the assessee society has dissociated itself with the contents of the "Note Pad" as this was a rough note pad which is not signed or authenticated by any person and has nothing to do with the working of the assessee society. It has been further stated that in his statement, Mr. Shane John Khanna has categorically denied his handwriting as so claimed by the Revenue on certain pages. 84. We therefore have a situation where a note pad has been found in personal possession of Mr. Shane John Khanna and therein, there are certain entries reflecting cheque payments and cash payments. The presumption therefore is that such note pad belongs to Mr. Shane John Khanna and the contents thereof are in his handwriting and he has to explain the contents thereof. He has however disputed and has stated that the entries of cash payments are not in his handwriting. Once he has objected and the note-pad is in possession of the Revenue authorities, the right course of action would have been to refer the matter to the handwriting expert in some government authorized forensic laboratory who could have confirmed whether the entries are in the handwriting of Mr. Shane John Khanna or not. However, no such 58 reference has been made in the instant case and the ld PCIT has proceeded and held that basis his own analysis, the handwriting is that of Mr. Shane John Khanna and he accordingly reached the conclusion that cash has been paid as part of transaction coupled with inflating the transaction value. More so, such a conclusion has been reached without confronting the entries in the note- pad entries to the Chairperson who has signed the exchange deed on behalf of the assessee society as well as without taking any steps to reach out or summoning Mr Arun Kumar Dhir, the other signatory to the exchange deed and the person who is alleged to have paid part consideration in cash. In any case, where the Revenue chooses to take appropriate steps in this regard, it can be well be taken up at the time of assessing the income in the hands of the assessee society in the relevant assessment year as per law, and where needed, the addition can be made to the income of the assessee society and which should be restricted only to the issue involved. However, as the matter stand today, we are of the considered view that basis aforesaid discussion, the same cannot lead to a situation where the approval granted u/s 10(23C)(vi) can be withdrawn and that too, from a retrospective effect. We find that similar view has been taken by the Coordinate Indore Benches in case of Shri Jairam Education Society vs PCIT (Central) (Supra). Further, we draw support from the decisions of Hon’ble Rajasthan High Court in case of DCIT vs. Cosmopolitan education Society 244 ITR 0494 (Raj.) wherein the Hon’ble High Court affirming the finding of the Tribunal held that where there is allegation of misutilisation of the funds of the Society or mismanagement of the activities of the Society, the action could be taken against the members of the society as per the provision of governing the Society. However, even such misutilisation and mismanagement by the members could not be the basis of rejection of the claim of exemption to the assessee education Society and the SLP against the judgement stood dismissed by Hon’ble Supreme Court reported in 241 ITR 132 (St). 59 85. In light of aforesaid discussion and in the entirety of facts and circumstances of the case and respectfully following the decisions referred supra, the order passed by the ld PCIT(Central) withdrawing the approval u/s 10(23C)(vi) is set-aside and the original approval is revived from the date of withdrawal of such approval. 86. In the result, the appeal of the assessee society is allowed and disposed off in light of aforesaid directions. (Order pronounced in the open Court on 27/02/2023 ) Sd/- Sd/- स ु धांश ु ीवा तव #व$म &संह यादव (SUDHANSHU SRIVASTAVA) ( VIKRAM SINGH YADAV) या यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER AG Date: 27/02/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. $ / 0 1 The CIT(A) 5. - 2 ग 4 5 & 4 5 678 ग9 DR, ITAT, CHANDIGARH 6. ग 8 : % Guard File ( + $ By order, ; # Assistant Registrar