SHRI SARDAR HARNAM SINGH KEER PUBLIC WELFARE TRUST, Bhopal V. The CIT, Bhopal

ITA 435/IND/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2765 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2018
• Assessment Year: misc
• Appeal Filed On: 03-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: S S DESHPANDE
• Keywords: Charitable institution; Benefit of exemption; Cancellation of registration
• Section: 12A; 12AA; 12; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.435/IND/2014 ASSESSMENT YEAR: NA SARDAR HARNAM SINGH KEER PUBLIC WELFARE TRUST, T-15, THIRD FLOOR, CITY CENTRE, PLOT NO.1, PRESS COMPLEX, M.P. NAGAR ZONE 1, BHOPAL / VS. CIT BHOPAL ( APPELLANT ) ( REVENUE ) P.A. NO. AAHTS6761P APPELLANT BY SHRI S.S. DESHPANDE, CA RESPONDENT BY SHRI LAL CHAND, CIT - DR DATE OF HEARING: 10.07.2018 DATE OF PRONOUNCEMENT: 29.08.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), BHOPAL, DATED SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 2 30.04.2014. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE OF THE ASSESSEE THE LD. COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN HOLDING THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE NOT GENUINE AND ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE SOCIETY. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE OF THE ASSESSEE THE LD. COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN CANCELLING THE REGISTRATION U/ S 12AA AND THAT TOO W.E.F. 01.04.2007. 2. BRIEFLY STATED THE FACTS ARE THAT THE LD. CIT(A) CAN CELLED THE REGISTRATION GRANTED U/S 12AA OF THE INCOME TAX A CT 1961(HEREIN AFTER REFERRED TO AS THE ACT) VIDE THE IMPUGNED ORDER DATED 30.04.2014. THE ASSESSEE SOCIETY WAS REGISTERED U/S 12A OF THE ACT W.E.F. 01.04.2007. TH E BASIS OF CANCELLATION OF REGISTRATION WAS THAT THE ASSESSEE SOC IETY VIOLATED THE PROVISIONS OF SECTION 11/13 OF THE ACT. AND ACTIVITIES OF THE TRUST WERE FOUND IN THE OPINION OF THE AO AS NOT GENUINE AS THE SAME WERE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THUS LD. CI T(A) ON THE BASIS OF AOS FINDING PROCEEDED TO CANCEL THE REGISTRATION OF SOCIETY GRANTED U/S 12AA OF THE ACT. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THI S TRIBUNAL. SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 3 3. THE ONLY EFFECTIVE GROUND IS AGAINST THE CANCELLATIO N OF REGISTRATION GRANTED U/S 12AA OF THE ACT. 4. THE LD. COUNSEL FOR THE ASSESSEE SHRI S. S. DESHP ANDE, VEHEMENTLY ARGUED THAT THE LD. CIT WAS NOT JUSTIFIED I N CANCELLING THE REGISTRATION U/S 12AA. HE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. THE WRITTEN SUBMISSION OF THE ASSESSEE ARE REPRODUCED AS UNDER: THE ASSESSEE SOCIETY IS A REGISTERED SOCIETY OF 19 99, CARRYING OUT PUBLIC WELFARE ACTIVITY. THE SOCIETY IS REGISTE RED U/S 12AA OF THE INCOME TAX ACT, VIDE ORDER DATED 28/03/2008 (PA GE 15 OF PB). THERE HAS BEEN NO CHANGE IN THE OBJECTS OF THE SOCIETY SINCE THEN. THE REGISTRATION WAS GRANTED TO THE TRUST BY THE L D. CIT AFTER VERIFYING ALL THE ACCOUNTS UP TILL THAT DATE AND AFTER SATISFYING HERSELF REGARDING THE OBJECTS OF THE TRU ST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST AS REQUI RED BY THE PROVISIONS OF SECTION 12AA(1) OF THE ACT. THEREAFTE R FROM THE DATE OF REGISTRATION U/S 12AA I.E. FROM 29.03.2008 THERE IS NO CHANGE IN THE OBJECTS OR THE ACTIVITIES OF THE TRUS T. THUS IT CANNOT BE SAID THAT THE ASSESSEE HAS CARRIED ON ACTIVITIES WHICH ARE NOT IN ACCORDANCE WITH ITS OBJECT. THE MAIN OBJECT OF T HE TRUST (PAGE 7 OF PB) IS TO ESTABLISH, OPEN, SET UP, MAINTAIN, R UN, SUPPORT , FINANCE , ASSIST ANY OTHER INSTITUTION SUCH AS MEDICAL COLLEGES, DENTAL COLLEGES_ _ _ OTHER COLLEGES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAS ALSO VERIFIED ALL THE BOOKS OF ACCOUNTS AND OTHER S UPPORTING DOCUMENTS REGARDING THE ACTIVITIES OF THE SOCIETY A ND HAS NOT FOUND ANY DEFECT WHICH WOULD HAVE WARRANTED AN ADVE RSE COMMENT OR FINDING ON THE ACTIVITIES OR THE OBJECTS OF THE SOCIETY. THREE GROUPS OF PERSONS ESTABLISHED VARIOUS TRUST/ SOCIETIES FOR THE PURPOSE OF ADVANCING EDUCATION. T HESE SOCIETIES WERE MOSTLY RUNNING THE ENGINEERING/ B. SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 4 ED/MBA/PHARMACY/MCA COLLEGES. ONLY IN ONE TRUST THE RE WAS A DENTAL COLLEGE. THE GROUPS WERE- CHOUKSEY GROUP, DHAKRE GROUP AND KEER GROUP. THE FOLLOWING SOCIETIES WERE ESTABLISHED. 1. H.K KALCHURI EDUCATION TRUST, BHOPAL. 2. HAI HAY KHESTRIYA EDUCATION SOCIETY, BHOPAL 3. JAI NARAIN SHIKSHA SAMITI, BHOPAL 4. RISHIRAJ MEMORIAL EDUCATION WELFARE SOCIETY, BHOPAL 5. RISHIRAJ SINGH MEMORIAL EDUCATION WELFARE SOCIETY, BHOPAL 6. SARDAR HARNAM SINGH KEER PUBLIC WELFARE TRUST, BHOP AL 7. RISHIRAJ KMB EDUCATION INSTITUTION, BHOPAL IN THE FIRST THREE TRUSTS THE CHOUKSEY GROUP WAS RUNNING THE COLLEGES. IN OTHER TRUSTS THE THREE GRO UPS WERE RUNNING THE ENGINEERING/B.ED/ PHARMACY COLLEGES. AL L THESE TRUSTS/SOCIETIES WERE GRANTED THE REGISTRATION U/S 12A/12AA. SOME DISPUTE ABOUT THE ADMINISTRATION AROSE BETWEEN THESE GROUPS AND IT WAS DECIDED TO SEPARATE THE ADMINISTR ATION OF VARIOUS COLLEGES TO BE CONDUCTED BY EACH GROUP. ACC ORDINGLY THE MANAGEMENT OF THE TRUST/SOCIETIES WERE MODIFIED AND INDIVIDUAL TRUST/SOCIETIES WERE MADE PART OF THE RESPECTIVE GR OUPS. KEER GROUP RESIGNED FROM THE OTHER TRUSTS/ SOCIETIES AND THE OTHER GROUP PERSONS RESIGNED FROM THE MANAGEMENT OF ASSES SEE TRUST. THE AGREEMENT WAS ENTERED ON 13/07/2008. IT WAS AGR EED BETWEEN THE VARIOUS GROUPS THAT, FOR RUNNING THE CO LLEGES SMOOTHLY THE FINANCIAL ASSISTANCE WOULD BE GIVEN. A HAND WRITTEN UNDERSTANDING WAS FOUND DURING THE COURSE O F SEARCH WHICH STATED THAT THE CHOUKSEY GROUP WOULD PAY THE NECESSARY AMOUNT TO THE INSTITUTIONS OF KEER GROUP. ACCORDIN GLY THE ASSESSEE TRUST AND RISHIRAJ KMB INSTITUTION RECEIVE D DONATIONS FROM THE OTHER GROUP PERSONS AND INSTITUTIONS. THE ASSESSEE TRUST RECEIVED A DONATION OF RS. 5 CRORES AS A CORP US DONATION TO BE UTILISED FOR THE OBJECT OF THE TRUST. A SEARCH WAS CONDUCTED U/S 132(1) IN THE CASES OF CHOUKSEY GROUP ON 23/07/2009. DURING THE COURSE OF SEARCH CERTAIN DOCUMENTS WERE FOUND IN RESPECT OF THESE CH ARITABLE INSTITUTIONS. ON THE BASIS OF THIS THE NOTICES U/S 153C WERE ISSUED IN THE CASE OF THE ASSESSEE. DURING THE COUR SE OF THE SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 5 ASSESSMENT THE LD. A.O OBSERVED THAT THE ASSESSEE S OCIETY HAS GIVEN ADVANCES TO CERTAIN PERSONS WHO WERE CONNECTE D WITH THE OFFICE BEARERS AND AS SUCH THE TRANSACTION ARE COVE RED U/S 13(2)/13(3). IT WAS ACCORDINGLY HELD BY HIM (PARA 9 .2 PAGE 4 OF THE ASSESSMENT ORDER) .........IN ADVANCING SUCH A MOUNTS THE TRUST HAS COMPLETELY ACTED AS A PRIVATE DISCRETIONA RY TRUST AND SUCH ACTIVITY CANNOT BE SAID TO BE CARRIED OUT IN A CCORDANCE WITH THE OBJECTS OF THE TRUST AND CANNOT BE SAID TO BE G ENUINE AS WELL. THUS THE TRUST CANNOT BE SAID TO EXIST FOR TH E CHARITABLE PURPOSE AND THEREFORE, IS NOT ENTITLED FOR DEDUCTIO N U/S 11. ACCORDINGLY EXEMPTION TO THE ASSESSEE U/S 11/12 WAS DENIED BY THE AO. ON THE BASIS OF THE OBSERVATIONS OF THE LD. AO IN THE ASSESSMENT, THE LD. CIT, BHOPAL ISSUED NOTICES TO T HE ASSESSEE TRUST FOR CANCELLING THE REGISTRATION GRANTED U/S 1 2AA(3). VIDE ORDER DATED 29/04/2014 THE LD. CIT CANCELLED THE RE GISTRATION GRANTED TO THE ABOVE TRUST. IN THE SAID ORDER THE L D. CIT HAS TOTALLY RELIED ON THE ASSESSMENT ORDER PASSED BY TH E LD. AO U/S 153C. FROM PAGE 2 ONWARDS TO LAST PAGE THE CONCLUSI ONS OF THE LD. AO HAVE BEEN REPRODUCED INCLUDING THE HAND WRIT TEN MEMORANDUM OF UNDERSTANDING SEIZED DURING THE COURS E OF THE SEARCH. AFTER REPRODUCING THE OBSERVATION IN PARA 1 3 THE LD. CIT CANCELLED THE REGISTRATION BY CONCLUDING IN FOUR LI NES AS UNDER:- IN VIEW OF THE FACTS DISCUSSED ABOVE, I AM SATISFIE D THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE NOT GENUIN E AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST, HENCE THE REGISTRATION OF THE TRUST IS CANCELLED WI TH EFFECT FROM 01/04/2007. WHILE PASSING THE ORDER U/S 153C THE LD. A.O HAS GI VEN THE FOLLOWING REASONING. I (PARA.8): ADVANCES ARE GIVEN TO THE VARIOUS PAR TIES WHICH ARE RELATED. A.Y. 2009-10 S. NO. NAME OF THE SOCIETY AMOUNT OUTSTANDING AS ON 31.03.2009 SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 6 1 SHRI GURU GOBIND SINGH EDU. & WELFARE SOCIETY 1,79,00,000/ - 2 DADAJI DHUNIWALA PROFESSIONAL EDU. & DEV. LTD. 18,00,000/ - 3 RISHIRAJ KMB EDUCATION SOCIETY 68,30,000/ - A.Y. 2010-11 S. NO. NAME OF THE SOCIETY AMOUNT OUTSTANDING AS ON 31.03.2010 1 SHRI GURU GOBIND SINGH EDU. & WELFARE SOCIETY 1,93,77,125/ - 2 DADAJI DHUNIWALA PROFESSIONAL EDU. & DEV. LTD. 18,00,000/ - TOTAL 2,11,77,125/ - BESIDES THE ABOVE PAYMENT THE ASSESSEE HAS ADVANCED RS. 5,00,000/- TO SHRI DILIP MAHAJAN FOR PURCHASE O F THE LAND. HOWEVER THE DEAL COULD NOT BE COMPLETED AND THE AMO UNT WAS RECEIVED BACK FROM HIM. HE IS IN NO WAY RELATED TO ANY OF THE TRUSTEES OR THE OFFICE BEARERS. IT WAS SUBMITTED BEFORE THE LD. A.O AND ALSO BEFORE THE LD. CIT THAT THE ADVANCES WERE GIVEN OUT OF INTERES T FREE UNSECURED LOANS AND DONATIONS RECEIVED TO THE CORPU S FUNDS. IT WAS FURTHER SUBMITTED THAT THE LOANS GIVEN TO THE A BOVE INSTITUTIONS WHICH ARE FULLY CHARITABLE TRUSTS AND THEY ARE ALL REGISTERED U/S 12A/12AA OF THE IT ACT. THE ABOVE TR USTS ARE RUNNING THE EDUCATIONAL INSTITUTIONS AND FOR SMOOTH WORKING OF THE CHARITABLE INSTITUTIONS THE LOANS ARE GIVEN. ON E OF THE OBJECT OF THE SOCIETY AMONGST OTHER OBJECTS IS TO ESTABLI SH .... SUPPORT . FINANCE. ANY INSTITUTION SUCH AS MEDICAL COLLEG ES, DENTAL COLLEGES, PHARMACY COLLEGES, ENGINEERING COLLEGES, GRADUATE AND POST GRADUATE COLLEGES, NURSING COLLEGES, ETC.(PG 3 1 OF PB-2). WHILE PASSING THE ORDER THE LD. AO GAVE THE FOLLOWI NG REASONS FOR REJECTING THE CLAIM OF SEC. 11 TO 13. 1. FIRSTLY THE LD. AO STATES THAT THE ASSESSEE HAS ADV ANCED THE LOANS TO THE SOCIETIES WHICH ARE UNDER THE SAME MAN AGEMENT SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 7 AND AS SUCH IT IS HIT BY SECTION 13(3). HE FURTHER OBSERVED THAT IN THOSE SOCIETIES CONTROL AND MANAGEMENT IS UNDER THE SAME PERSONS WHO ARE MANAGING THE ASSESSEE SOCIETY AND A S SUCH THE INTERESTED PERSONS ARE HAVING SUBSTANTIAL INTER EST AS TRUSTEES. HE AT PARA 9.2 OBSERVES IT IS VERY CLEAR THAT IN ADVANCING SUCH AMOUNTS THE TRUST HAS COMPLETELY ACT ED AS A PRIVATE DISCRETIONARY TRUST AND SUCH ACTIVITY CANNO T BE SAID TO BE CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TH E TRUST AND CANNOT BE SAID TO BE GENUINE AS WELL. THUS THE TRUS T CANNOT BE SAID TO EXIST FOR THE CHARITABLE PURPOSE AND THEREF ORE, IS NOT ENTITLED FOR DEDUCTION U/S 11. 2. THE SECOND OBJECTION OF THE LD. A.O WAS THAT A SUM OF RS.1,00,00,000/- RECEIVED AS A CORPUS DONATION HAS BEEN CREDITED TO THE CORPUS FUND IN THE BALANCE SHEET AN D HAS NOT BEEN ROUTED THROUGH INCOME & EXPENDITURE A/C. IT WA S SUBMITTED BEFORE THE LD. A.O THAT THE RECEIPT OF DO NATION IS TO THE CORPUS FUND AND UNDER THE LAW IS NOT INCLUDABLE AS AN INCOME OF THE TRUST. THE LD. A.O FURTHER REMARKED T HAT THE DONATIONS RECEIVED ARE FOR THE CONSIDERATION FOR LE AVING THE MANAGEMENT IN THE OTHER TRUST OF CHOUKSEY GROUP. TH E LD. A.O HAS DRAWN ATTENTION TO PAGE NO.52 OF LPS 29 WHICH I S A HAND WRITTEN MEMORANDUM STATING THAT CHOUKSEY GROUP WILL PAY TO THE VARIOUS INSTITUTIONS A SUM OF RS.17 CRORES. THE LD. A.O FURTHER STATED THAT THE RS.1 CRORE HAS BEEN MADE BY CHOUKSEY GROUP TO THE SOCIETY WITHOUT MENTIONING THE SPECIFI C PURPOSE. FURTHER THE OTHER PAYMENTS HAVE BEEN MADE TO THE SO CIETIES CONTROLLED BY THE KEER GROUP. THE LD. A.O OBSERVED THAT MR. T.S KEER DID NOT ATTEND IN POST SEARCH INQUIRES SINCE H E WAS UNDER THE MEDICAL TREATMENT FOR CANCER, HOWEVER SHRI. G.S KEER ATTENDED BEFORE THE DEPARTMENT AND CLEARLY STATED T HAT THESE PAYMENTS WERE MADE TO THE SOCIETIES AS CORPUS DONAT IONS. THE LD. A.O FURTHER REMARKED THAT THE EXPLANATIONS GIVE N BY THE ASSESSEE IS VAGUE AND GENERAL AND NO DOCUMENTARY EV IDENCE WAS PRODUCED. HE ULTIMATELY CONCLUDED THAT ALL THES E PAYMENTS TO THE ASSESSEE TRUST ARE A PART OF THE DE AL EXECUTED FOR THE SALE BETWEEN CHOUKSEY GROUP AND KEER GROUP. SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 8 IT WAS SUBMITTED BEFORE THE LD. A.O THAT ALL THESE PAYMENTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL AND MAJO RITY OF THE PAYMENTS HAVE BEEN RECEIVED BY THE TRUST. THE A SSESSEE TRUST HAS RECEIVED THE CORPUS DONATIONS AND HAS NOT GIVEN ANY PAYMENT TO THE CONNECTED PERSONS MENTIONED U/S 13. ALL THE RECEIPTS HAVE BEEN UTILIZED FOR THE OBJECT OF THE T RUST AND THERE IS NO INFRINGEMENT OF ANY OF THE PROVISIONS OF SECTION 11 TO 13. A TRUST CAN ALWAYS RECEIVED DONATION FOR THE OBJECTS OF THE TRUST AND IT WOULD BE SEEN THAT ALL AMOUNTS RECEIVED HAVE BEEN UTILIZED FOR THE OBJECTS OF THE TRUST. THE LD. FURTHER IN PARA 14 MENTIONED THAT THE ASSES SEE HAS RECEIVED LOANS FROM VARIOUS PERSONS. ALL THE CREDIT ORS ARE INCOME TAX ASSESSEES AND HAVE SUBSTANTIAL CAPITAL AND SUBSTANTIAL INCOME. THE REMARK THAT UNEXPLAINED CRE DITS ARE NOT PROVED IS TOTALLY CONTRARY TO THE EVIDENCE ON RECOR D. IN ANY CASE THE LOANS HAVE BEEN UTILIZED FOR THE OBJECTS OF THE TRUST AND THERE IS NO INFRINGEMENT OF ANY OF THE PROVISIONS O F THE INCOME TAX LAW. SUBMISSIONS OF THE ASSESSEE:- THE ASSESSEE IS A CHARITABLE SOCIETY AND DOING THE ACTIVITY OF EDUCATION. THE OBJECTS OF THE ASSESSEE SOCIETY ARE PURELY CHARITABLE AND THERE IS NO DISTRIBUTION OF ANY PROF IT TO ANYONE. THE SOCIETY HAS BEEN GRANTED REGISTRATION U/S 12A/1 2AA BY THE LD. CIT AFTER SCRUTINIZING THE ACCOUNTS AND VERIFYI NG THE OBJECTS OF THE SOCIETY. THERE IS NO CHANGE IN THE OBJECT CL AUSE SINCE THE INCEPTION. THE ACTIVITY OF THE EDUCATION IS BEING U NDERTAKEN SINCE INCEPTION AND IS CONTINUING TILL TO DATE. THE SOCIETY HAS NOT INFRINGED ANY OF THE PROVISIONS OF SECTION 11 TO 13 . THE FUNDS INCLUDING THE BORROWED FUNDS HAVE BEEN UTILIZED FOR THE OBJECTS OF THE TRUST. THE TRUST HAS NOT GIVEN ANY ADVANCE I N CONTRAVENTION TO PROVISION OF SECTION 13. THE ADVAN CES HAVE BEEN GIVEN TO THE CHARITABLE TRUSTS WHICH ARE REGIS TERED U/S 12AA. GIVING THE FINANCIAL ASSISTANCE TO CHARITABLE COLLEGES IS ONE OF THE OBJECTS OF THE TRUST. THE ARRANGEMENT BETWEEN THE TRUSTEES FOR MANAGEMENT IS NOT ADVERSE TO THE CHARITABLE OBJECT AND IT IS BETWEEN THE TRUSTEES AND NOT BETWEEN THE ASSESSEE SOCIETIES. THE ASSESSE E SOCIETY HAS RECEIVED DONATIONS TO THE CORPUS FUND AND HAS N OT DISTRIBUTED ANY FUND TO ANYBODY; IT HAS UTILIZED AL L THE FUNDS FOR SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 9 THE CHARITABLE OBJECTS OF THE SOCIETY. THUS THE CON CLUSION DRAWN BY THE LD. A.O AND THE LD. CIT ABOUT THE GENUINENES S OF THE ACTIVITY ARE PERVERSE AND CONTRARY TO THE FACT ON R ECORD. THE REJECTION OF THE REGISTRATION IS THUS BAD IN LAW AND WITHOUT JURISDICTION. IT IS FURTHER SUBMITTED THAT SUB SECTION 4 TO SECTI ON 12AA WAS INTRODUCED W.E.F 01/10/2014 FOR CANCELLATION OF THE REGISTRATION IF IT IS NOTICED THAT THE ACTIVITY OF TRUST ARE NOT BEING CARRIED OUT IN THE MANNER THAT THE PROVISION OF SECTION 11 AND 12 DO NOT APPLY TO EXCLUDE THE INCOME OF THE INSTITUTION DUE TO OPERATION OF SUB SECTION 1 OF SECTION 13. THIS IS NOT RETROSPECT IVE PROVISION. SUBSECTION 3 OF SECTION 12AA AS IT STOOD ON 01/10/2 004 PROVIDED THE POWER OF CANCELLATION OF REGISTRATION ON TWO CONDITIONS I.E. THE ACTIVITY OF THE TRUST IS NOT GE NUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. IT IS SUBMITTED THAT NONE OF THESE TWO CONDITIONS ARE SAT ISFIED, THE SOCIETY IS GENUINELY CARRYING OUT THE EDUCATIONAL A CTIVITIES AS PER THE OBJECTS OF THE SOCIETY. THUS THE LD. CIT HAS NO POWER TO CANCEL THE REGISTRATION UNDER SUB SECTION 3 OF SECT ION 12AA. THE LD. CIT ON THE BASIS OF THE PAPERS AND IDENTICA L FACTS HAD CANCELLED THE REGISTRATION OF 5 CONNECTED TRUSTS WH ICH ARE LISTED ABOVE. THE REJECTION WAS CHALLENGE BEFORE THE HONB LE TRIBUNAL. THE HONBLE TRIBUNAL WIDE ITS ORDER DATED 17/05/201 6 IN ITA NO. 386 TO 390 HAS CANCELLED THE ORDER OF THE LD. C IT AND ALLOWED THE REGISTRATION. IN PARA 15 TO 19 THE HON BLE TRIBUNAL DISCUSSED THE PROVISION OF SECTION 12AA AND THE POW ERS OF THE LD. CIT ABOUT THE CANCELLATION OF REGISTRATION AND IN PARA 20 THE HONBLE TRIBUNAL OBSERVED AS UNDER. WE, RESPECTFULLY, FOLLOWING THE ABOVE DECISIONS, AN D ON THE BASIS OF CBDT CIRCULAR ARE OF THE VIEW THAT IN THE PRESENT CASE, CIT HAD NO POWERS TO CANCEL THE REGISTRATION, HENCE WE ALLOW THE APPEAL OF THE ASSESSEE AND HOLD THAT CIT HAD UN LAWFULLY CANCEL THE REGISTRATION. HENCE, WE ALLOW THE APPEAL ON THIS GROUND. IN PARA 21 THE HONBLE TRIBUNAL DISCUSSED ABOUT THE TRANSAC TION OF 17 CRORE AND HELD THAT THE PAYMENT HAVE BEEN MAD E THROUGH CHEQUE DUE TO DISPUTE AMONG THE OFFICE BEARERS TO C ONTINUE TO RUN THE CHARITABLE ENTITIES WERE 100 OF STUDENTS AR E BEING IMPARTED EDUCATION. IT IS IMPORTANT TO NOTE THAT TH E PAYMENTS SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 10 WERE NOT MADE TO ANY INDIVIDUAL OFFICE BEARER. AT P AGE 67 THE HONBLE TRIBUNAL CONCLUDED IN VIEW OF THE ABOVE, I N OUR OPINION IT CANNOT BE SAID THAT THE ACTIVITIES OF THE ASSESS EE ARE NOT CHARITABLE OR NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE ASSESSEE SOCIETY. IF THERE IS ANY CONTRAVENTION OF SECTION 11 AND 13 IT IS TO BE CONSIDERED BY THE A.O AT THE STAGE OF THE ASSESSMENT. THE REGISTR ATION OF THE INSTITUTION U/S 12A CANNOT BE CANCELLED. THE HONB LE TRIBUNAL DISCUSSED MANY CASES ON THIS POINT FROM PAGE 68 TO PAGE 76 AND HELD THAT THE CANCELLATION OF REGISTRATION IS N OT JUSTIFIED. WE RELY ON ALL THE CASE LAWS MENTIONED IN THE SAID ORD ER. IT IS HUMBLY SUBMITTED THAT ALL THE REGISTRATIONS O F VARIOUS SOCIETIES WERE CANCELLED ON THE SAME FACTS AND AT T HE SAME TIME. THE REGISTRATION OF THE OTHER SOCIETIES MANAG ED BY THE OTHER GROUP WHO HAVE PAID THE MONIES HAS BEEN RESTO RED BY THE HONBLE TRIBUNAL. THUS IT IS HUMBLY PRAYED THAT THE CANCELLATION OF THE REGISTRATION IN THE PRESENT CASE BE SET ASID E AND THE TRUST BE GRANTED THE REGISTRATION. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT UN DER THE IDENTICAL FACTS AND IN THE CASE OF THE CONNECTED TR UST, THE MATTER HAD REACHED UP TO THE STAGE OF THE TRIBUNAL. HE SUBMITTED THAT IN ITANO.386 TO 390 VIDE ORDER DATED 17.05.2016, ALLOWED THE REGISTRATION. THE LD. COUNSEL ALSO PLACED RELIANCE ON THE JUDGMENT OF HON'BLE MADRAS HIGH COURT RENDERED IN THE CASE OF CIT VS. WORKING WOMEN FORUM 365 ITR 353 (MAD.), JUDGMENT OF HON'BLE SUPREM E COURT IN THE CASE OF DIRECTOR OF INCOME TAX CHENNAI V S. WORKING WOMEN FORUM 235 TAXMAN 516(SC). CIT VS. ORPAT CHARITABLE TRUST 230 TAXMAN 66 GUJARAT, KESHAV SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 11 MADHAV DHAM TRUST VS. CIT HISAR 41 ITR 77 (DEL. T), MOHD. YONUS KHAN VS. UOI (SC), INCOME TAX VS. VIREND RA SINGH MEMORIAL 35 SOT (LUC.), PRAKASH CHAND NAHTA VS. CIT JABALPUR 170 TAXMAN 520 (MP). HE SUBMITTED THAT IN THE LIGHT OF THE ABOVE DECISIONS THE LD. CIT(A) OUGH T NOT TO HAVE CANCELLED THE REGISTRATION. 6. PER CONTRA LD. DR OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE LAW IS CLEAR, REGISTRATION GRANTED U/S 12AA CAN BE CANCELLED IF IT IS FOUND THAT THE ASSESSEE SOCIETY HAD VIOLATED THE TERMS FOR REGISTRATION AND THE PROVISIONS OF LAW. HE SUBMITTED IN THE PRESENT CASE, THERE IS A FINDING OF THE LD. CIT(A) THAT THE ASSESSEE TRUST HAD VIOLATED THE PROVISIONS OF SECTIONS 11 & 12 OF THE ACT. HE SUBMI TTED THAT THE PAYMENTS HAVE BEEN MADE TO THE INTERESTED PARTIES. UNDER THESE FACTS HE SUBMITTED THAT THE CASE L AWS AS RELIED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW. WE FIND THAT THE REGISTRATION AS GRANTED U/S 12AA OF THE ACT WAS WITHDRAWN ON THE BASIS THAT THE ASSESSEE FAILED TO CARRY OUT ACTIVITIES AS PER THE SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 12 OBJECTS OF THE TRUST, THE ASSESSEE VIOLATED THE SECTI ON 11 AND 13 OF THE ACT. ANOTHER OBJECTION OF THE AUTHORITI ES BELOW WAS THAT MONEY RECEIVED UNDER THE TERM OF CONTR ACT AND CATEGORIZED AS THE CORPUS DONATION IS NOT AS PER THE MANDATE OF SECTIONS 11 & 12 OF THE ACT. 8. IT IS A FACT THAT THE REGISTRATION U/S 12AA OF THE A CT IS PRECONDITION FOR AVAILING THE BENEFIT OF EXEMPTION U/ S 11 AND 12 OF THE ACT. HOWEVER, THE REGISTRATION SO GRANTE D IS SUBJECT TO CANCELLATION U/S 12AA(3) AND 12AA(4) OF THE ACT. IT IS PERTINENT TO NOTE THAT SECTION 12AA(4) OF THE ACT WAS INSERTED INTO THE ACT W.E.F 01.04.2007. THE IMPUGNE D ORDER IS DATED 30.04.2014, HENCE ON THE DATE OF PASSING ORDE R, LD. CIT(A) HAD POWER U/S 12(4) OF THE ACT AS WELL. IN THE PRESENT CASE THE ASSESSEE SOCIETY FAILED TO CARRY OUT I TS ACTIVITIES AS PER ITS OBJECTS. HENCE, WE DO NOT SEE AN Y INFIRMITY INTO THE ORDER OF LD. CIT SAME IS HEREBY AF FIRMED. HOWEVER, IT IS CLARIFIED THAT THE ASSESSEE MAY MAKE AN APPLICATION FOR REGISTRATION U/S 12A OF THE ACT IN RES PECT OF ASSESSMENT YEAR WHERE THE ACTIVITIES CARRIED OUT AS PER THE OBJECTS. GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. SARDAR HARMAN SINGH KEE R PUBLIC WELFARE TRUST 13 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 .08. 2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 29/ 08/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE