Shree Parishram Education & Medical Charitable Trust, Vadodara V. The Pr. CIT(Central), Surat

ITA 610/AHD/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2076 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 09-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRASENJIT SINGH
• Keywords: Income from undisclosed sources; Search and seizure; Charitable institution
• Section: 132; 12; 10; 11; 12A

Judgement Text

PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 1 OF 15 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A NO. 610/AHD/2016/SRT / ASSESSMENT YEAR : SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST, AT BAKROL, NEAR MADHAV NAGAR, AJWA-NIMETA ROAD, TAL. WAGHODIA, DIST. VADODARA-390010 PAN: AAATP9715H V S . PR. COMMISSIONER OF INCOME-TAX (CENTRAL), SURAT. APPELLANT /RESPONDENT /ASSESSEE BY SHRI M UKUND BAKSHI, C.A. /REVENUE BY SHRI PRASENJIT SINGH, CIT - DR / DATE OF HEARING: 08.06.2018 /PRONOUNCEMENT ON 19 .06.2018 /O R D E R PER O. P. MEENA, ACCOUTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED PR. COMMISSIONER OF INCOME TAX (CENTRAL), SURAT (IN SHORT THE PR.CIT ) DATED 19.02.2016 PERTAINING TO SECTION U/S. 12AA(3) OF THE I.T.ACT, 1961. 2. GROUNDS OF APPEAL ARE AS UNDER : PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 2 OF 15 1) THE LD. PR.CIT (CENTRAL), SURAT HAS ERRED IN LAW AND IN FACTS IN HOLDING THAT THE OPERATION OF THE PROVISIONS OF SECTION. 13 OF THE INCOME TAX ACT WOULD RESULTANTLY LEAD TO THE CANCELLATION OF THE REGISTRATION GRANTED U/S. 12A BY INVOCATION OF THE PROVISIONS CONTAINED IN SECTION.12AA(3) FROM THE DATE WHEN SUCH REGISTRATION IS GRANTED. 2) THE LD.PR. CIT(CENTRAL), SURAT HAS ERRED IN LAW AND IN FACTS IN CONSIDERING THAT THE OPERATION OF THE PROVISIONS OF SECTION.13 FOR AUTHORIZING THE CANCELLATION OF THE REGISTRATION OF TRUST 12AA(3) IS BROUGHT ON STATUTE EFFECTIVE FROM 01.10.2014 AND AS SUCH THE SAME COULD NOT HAVE BEEN APPLIED FOR A PRIOR PERIOD. 3) THE ACTION OF THE LD. PR. CIT (CENTRAL) , SURAT IN CANCELLING THE REGISTRATION OF THE TRUST U/S. 12A VIDE HIS ORDER DATED 19.02.2016 SINCE THE DATE WHEN IT WAS GRANTED I.E. 21.06.2010 BEING BAD IN LAW AND IN FACTS DESERVES TO QUASHED. 4) THE APPELLANT CRAVES LIBERTY TO ADD, ALTER, AMEND , REVISE OR SUBSTITUTE ANY OF THE GROUNDS OF APPEAL CONTAINED HEREINABOVE. PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 3 OF 15 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A PUBLIC TRUST WHICH HAS GOT APPROVAL UNDER SECTION 10 (23C)(6A) OF THE ACT FROM CHIEF COMMISSIONER OF INCOME-TAX, BARODA DTD. 29.09.2011. THE TRUST IS ALSO REGISTERED U/S. 12A(A) VIDE ORDER DTD.21.06.2010 BY CCIT, BARODA. A SEARCH U/S. 132 OF THE INCOME-TAX ACT WAS CONDUCTED IN THE SIGMA GROUP OF BARODA ON 13.11.2014 WHICH COVERED THE CASE OF THE ASSESSEE VIZ. PARISHRAM EDUCATION AND MEDICAL CHARITABLE TRUST. IT WAS REPORTED BY THE A.O. TO THE PR. COMMISSIONER OF INCOME-TAX THAT DURING THE COURSE OF SEARCH OPERATION, HUGE VOLUME OF INCRIMINATING MATERIAL IN THE FORM OF LOOSE PAPER, DIARIES, NOTEBOOKS, REGISTERS, HARD DISKS, PEN DRIVES, ETC. WERE SEIZED FROM VARIOUS PREMISES OF SIGMA GROUP. ON VERIFICATION OF THE SEIZED MATERIAL, IT WAS NOTICED THAT THE TRUST HAS GENERATED UNACCOUNTED MONEY THROUGH EDUCATIONAL INSTITUTIONS AND SAME IS INVESTED IN UNDISCLOSED ASSETS OF THE TRUSTEES FOR THEIR PERSONAL BENEFIT. THE ASSESSEE HAS ADMITTED UNACCOUNTED INCOME OF RS.40,70,92,172/- FOR A.Y. 2008-09 TO 2015-16. IT WAS FURTHER PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 4 OF 15 REVEALED FROM THE EVIDENCES FOUND THAT THE ASSESSEE HAS ADOPTED MODUS OPERANDI OF EVASION OF TAX BY GENERATION OF UNACCOUNTED CASH THROUGH INFLATING SALARY EXPENSES, NON RECORDING OF DONATION RECEIPTS FROM STUDENTS IN BOOKS , UNDISCLOSED BANK ACCOUNT OF THE TRUST AND VARIOUS INDIVIDUAL TRUSTEES AND RELATIVES. IN VIEW OF THE FACTS, THE PR.CIT (CENTRAL) OBSERVED THAT THE ASSESSEE TRUST CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY AS IT HAS STEPPED OUT OF THE OBJECT OF THE TRUST AND IS ENGAGED IN PROFIT MAKING AND UNLAWFUL ACTIVITIES. SECTION 11 OF THE INCOME-TAX ACT, 1961 PROVIDES FOR EXEMPTION OF INCOME OF THE TRUSTS INVOLVED IN CHARITABLE ACTIVITIES. HOWEVER, AS PER THE ABOVE STATED FACTS, IT IS CLEAR THAT THE MOTIVE OF THE TRUST IS MAKING PROFIT RATHER THAN THE OBJECT OF CHARITABLE ACTIVITY. THEREFORE, EXPLANATION WAS CALLED FOR FROM THE TRUST VIDE LETTER DTD. 04.01.2016 AS TO WHY APPROVAL OF REGISTRATION OF TRUST U/S. 12A OF THE ACT SHOULD NOT BE CANCELLED. THE ASSESSEE VIDE HIS LETTER DTD. 15.02.2016 SUBMITTED THAT THE ASSESSEE TRUST IS ENGAGED IN THE ACTIVITY OF PROVIDING SCHOLARSHIP, PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 5 OF 15 BOOKS TO RUN BOARDING HOMES AND TO ESTABLISH SCHOOLS AND COLLEGES FOR THE POOR AND MEDIUM CLASS AND NEEDY TO RUN HOSPITALS AND PROVIDE MEDICINES AND TO GIVE CASH RUPEES TO POOR AND MEDIUM AND NEEDY TO HELP THE NEEDY PERSONS AT THE TIME OF NATURAL CALAMITIES. IT WAS STATED THAT THE ASSESSEE TRUST HAS NOT ALTERED ITS DEED AND IT CONTINUES TO CARRY THE SAME ACTIVITY AND THAT THE ACTIVITIES BEING CARRIED OUT ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST. IT WAS ARGUED THAT AS PER PROVISION OF SEC. 12A(3) AND 12A(4) WHEN REGISTRATION GRANTED TO TRUST CAN BE CANCELLED IF THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST OR INSTITUTION. THE ASSESSEE TRUST HAS ARGUED THAT ITS ACTIVITIES ARE GENUINE AND CONTINUES TO BE ENGAGED IN IMPARTING EDUCATION IN THE FIELD OF ENGINEERING BY SYSTEMATIC TEACHING AND INSTRUCTIONS AND THUS, THERE IS NOTHING TO SHOW THAT THE TRUST HAS UNDERTAKEN ANY ILLEGAL ACTIVITY OR INFRINGED ANY LAW TO DOUBT THE GENUINENESS OF THE ACTIVITIES. THE ASSESSEE HAS ALSO CITED THE DECISION OF MUMBAI PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 6 OF 15 TRIBUNAL IN THE CASE OF MUMBAI CRICKET ASSOCIATION 24 TAXMANN.COM, 96 WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 12AA(3) HAVE BEEN BROUGHT ON STATUTE ONLY FROM 01.06.2010 AND IS NOT RETROSPECTIVE AND HENCE EVEN IF THE CANCELLATION IS SOUGHT TO BE JUSTIFIED BY INVOKING THESE PROVISIONS, THE SAME CAN ONLY BE FROM 01.06.2010 AND NOT FOR THE PERIOD PRIOR TO EARLIER. HOWEVER, PR. CIT OBSERVED THAT: 6. THE CONTENTION OF THE ASSESSEE ARE NOT ACCEPTABLE ON THE FOLLOWING REASONS : I) THE ASSESSEE HAS INDULGED IN GENERATION OF UNACCOUNTED CASH THROUGH INFLATING SALARY EXPENSES, DONATION RECEIPTS FROM STUDENTS NOT RECORDED IN BOOKS OF ACCOUNTS AND UNDISCLOSED BANK ACCOUNT OF THE TRUST AND VARIOUS INDIVIDUALS, II) THE UNACCOUNTED FUNDS GENERATED THROUGH THE TRUST HAVE BEEN CLEARLY DIVERTED FOR THE BENEFIT OF THE TRUSTEES AND RELATIVES, THEREBY ATTRACTING THE PROVISIONS OF SECTION 13(1)( C) OF THE INCOME-TAX ACT, 1961. THE INCOME OF THE TRUSTS HAVE BEEN APPLIED AND USED DIRECTLY AND INDIRECTLY FOR THE BENEFIT OF THE TRUSTEES. III) THE TRUST CANNOT BE SEPARATED FROM THE ACTS OF THE TRUSTEES, AS IT IS TRUSTEES WHO CONTROL THE ACTIVITY OF THE TRUSTS. THUS, THE PROVISIONS OF SECTION 13 ARE ATTRACTED IN THE CASE OF THIS TRUST. SECTION 12 (3) OF THE ACT BARS EXEMPTION , WHERE THE FOUNDER TRUSTEES OR THEIR RELATIVES PERSONALLY BENEFITED FROM THE TRUST BECAUSE THE TRUST IN THAT CASE LOSES ITS PUBLIC CHARACTER. IT WAS HELD BY HONBLE APEX COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. BHARAT DIAMOND BOURSE (2003) 259 ITR 280 THAT IN THE CASE OF A CHARITABLE INSTITUTION FORMED AS A COMPANY PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 7 OF 15 EVERY SIGNATORY TO THE MEMORANDUM OF ASSOCIATION HAS TO BE TREATED AS FOUNDER, SO THAT MONEY LENT TO SUCH A PERSON WITHOUT ADEQUATE SECURITY CONSTITUTES A BENEFIT, WHICH WOULD LOSE THE EXEMPTION FOR THE COMPANY . THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF ACTION FOR WELFARE AND AWAKENING IN RURAL ENVIRONMENT (AWARE) VS. DY.CIT (2003) 263 ITR 13 HAS OBSERVED THAT WHERE FIXED DEPOSITS IN NAME OF ASSESSEE TRUST WORTH RS.16 LACS WAS PLEDGED AS SECURITY WITH BANK FOR ENABLING ONE OF THE MEMBERS OF THE ASSESSEE TO AVAIL LOAN WITHOUT ADEQUATE SECURITY AND CONSIDERATION AND CERTAIN TRANSACTION OF PURCHASE OF LAND WAS ROUTED THROUGH AN AOP IN WHICH ALL MEMBERS WERE DIRECTORS AND EMPLOYEES OF THE ASSESSEE, THE MISUTILISATION WAS GLARING AND IT COULD NOT ESCAPE THE CLUTCHES OF LAW, NOR ANY SYMPATHY OR EQUITIES COULD BE EXTENDED. IN VIEW OF THE FACT THAT THE ENTIRE TRANSACTION WAS WITHIN THE PERSONAL KNOWLEDGE OF THE TRUSTEES, IT COULD BE SAID THAT THE FUNDS OF THE ASSESSE WERE DIVERTED AND MISUTILISED. ON FACTS, THE ASSESSE HAS VIOLATED THE PROVISIONS OF SECTION 13 (1) (C)(II) WITH SECTION 13(2)(G) AND THUS WAS NOT ENTITLED FOR EXEMPTION. 7.IT IS PERTINENT TO MENTION HERE THAT THE ASSESSE HAS CITED THE CASE LAW OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF MUMBAI CRICKET ASSOCIATION 24 TAXMANN.COM 96 WHEREIN IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 12AA(3) HAVE BEEN BROUGHT ON STATUTE ONLY FROM 01.06.2010 AND IS NOT RETROSPECTIVE AND HENCE EVEN IF THE CANCELLATION IS SOUGHT TO BE JUSTIFIED BY INVOKING THESE PROVISIONS, THE SAME CAN ONLY BE FROM 01.06.2010 AND NOT FOR THE PERIOD EARLIER., THIS CONTENTION OF THE ASSESSEE IS NOT FOUND ACCEPTABLE FOR THE REASON THAT THE ASSESSEE ITSELF INDICATES THAT THE FUND OF THE ASSESSEE IS DIVERTED AND MISUTILIZED. IT MEANS THAT THE ASSESSEE HAS NOT CARRIED OUT ITS ACTIVITY ACCORDING TO THE OBJECTS OF THE TRUST. THE FACTS AS CONFIRMED BY THE ASSESSEE IN ITS SUBMISSION BY STATING THAT IF THE CANCELLATION IS SOUGHT TO BE JUSTIFIED BY INVOKING THESE PROVISIONS, THE SAME CAN ONLY BE FROM 01.06.2010 AND NOT FOR THE PERIOD EARLIER. THE RATIO OF DECISION OF HONBLE MUMBAI TRIBUNAL IN THE CASE OF MUMBAI CRICKET ASSOCIATION IS NOT APPLICABLE TO THE ASSESSEE TRUSTS CASE AS THE ASSESSEE TRUST HAS OBTAINED THE CERTIFICATE U/S.12A PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 8 OF 15 OF THE I.T. ACT FROM 21.06.2010 I.E. AFTER 01.06.2010. HENCE, THE FACTS ARE CLEARLY DISTINGUISHABLE. 8. IN THE LIGHT OF THE FACTS AND DISCUSSION MADE, IT IS CRYSTAL CLEAR THAT THE ASSESSEE TRUST HAS DEVIATED FROM ITS OBJECT OF TRUST I.E. NOT IMPARTING EDUCATION FOR CHARITABLE PURPOSE BUT FOR PURPOSE OF MAKING PROFIT ONLY. THE ASSESSEE TRUST DOES NOT FULFILL THE CONDITIONS LAID DOWN IN SECTION 13 OF THE INCOME-TAX ACT, 1961. THE PROVISIONS OF SECTION 11 AND 12 ARE ALSO NOT APPLIED TO THE ASSESSEE. 9. IN VIEW OF THE ABOVE POSITION, I AM SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE TRUST OR INSTITUTION ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. HENCE, THE ASSESSEE TRUST IS NOT ELIGIBLE FOR GRANT OF REGISTRATION U/S. 12A OF THE I.T.ACT, 1961. I HEREBY CANCEL THE REGISTRATION U/S.12AA(3) GRANTED TO THE ASSESSEE TRUST U/S. 12A(A) SINCE INCEPTION I.E. FROM THE DATE 21.06.2010. 4. BEING AGGRIEVED WITH THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. THE LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED THAT THE TRUST IS CARRIED OUT ACTIVITIES IN THE FIELD OF EDUCATION BY RUNNING AND MAINTAINING THE INSTITUTIONS IN IMPARTING EDUCATION IN THE FIELD OF ENGINEERING BY PROVIDING COURSES LEADING TO DIPLOMA IN ENGINEERING. THE TRUST HAS NOT ALTERED ITS DEED AND IT CONTINUES TO CARRY THE SAME ACTIVITY AND THAT THE ACTIVITIES BEING CARRIED OUT ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST. THE PR. CIT (CENTRAL) HAS CANCELLED THE REGISTRATION OF THE TRUST ON THE GROUND THAT THERE WAS A SEARCH WHEREIN IT WAS FOUND THAT THE PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 9 OF 15 UNACCOUNTED INCOME UTILIZED FOR THE BENEFIT OF FEES. THE LEARNED COUNSEL FURTHER CONTENDED THAT AS PER PROVISION OF SEC.12AA(1), THE REGISTRATION GRANTED WOULD BE EXEMPT IF HE SATISFY ACTIVITY OF THE TRUST ARE NOT GENUINE OR / AND IS CARRIED OUT WITH THE OBJECT OF THE TRUST. SINCE, THE ACTIVITIES OF THE TRUST ARE GENUINE AND THE TRUST CONTINUES TO BE ENGAGED AND IMPARTING EDUCATION IN THE FIELD OF ENGINEERING BY SYSTEMATIC TEACHING AND INSTRUCTIONS AND THUS, THERE IS NOTHING TO SHOW THAT THE TRUST HAS UNDERTAKEN ANY ILLEGAL ACTIVITY OR INFRINGED ANY LAW TO DOUBT THE GENUINENESS OF THE ACTIVITIES. THE EARNING OF UNACCOUNTED INCOME AND /OR ITS APPLICATION FOR THE BENEFIT OF THE TRUSTEES IN VIOLATION OF SECTION 13, AT BEST CAN BE INVOKED TO DENY THE BENEFIT OF SEC.11 AND 12 OF THE I.T. ACT, THERE IS SIMPLE POWER PROVIDED TO THAT EXTENT. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE PROVISION OF SEC. 12AA(3) HAVE BEEN BROUGHT ON STATUTE ONLY FROM 01.06.2010 AND IT NOT RETROSPECTIVE AND HENCE EVEN IF THE CANCELLATION IS SOUGHT TO BE JUSTIFIED BY INVOKING THESE PROVISIONS THE SAME CAN ONLY FROM PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 10 OF 15 01.06.2010 AND NOT FOR THE PERIOD EARLIER. THE LEARNED COUNSEL HAS RELIED IN THE CASE OF MUMBAI CRICKET ASSOCIATION V. DIRECTOR OF INCOME TAX ( EXEMPTION), MUMBAI 24 TAXMANN.COM 96. MERELY BECAUSE A SEARCH HAS BEEN CONDUCTED WOULD NOT LEAD TO A SATISFACTION THAT THE PROVISIONS OF SEC. 13(1) ARE APPLICABLE AS THERE COULD BE VARIOUS REASONS LEADING THE ASSESSEE TRUST TO MAKE A DISCLOSURE. SUCH DISCLOSURE ITSELF CANNOT LEAD TO ANY SATISFACTION UNLESS THE ASSESSMENT IS COMPLETED. RELIANCE IS PLACED BY THE ASSESSE ON THE ORDER IN THE CASE OF KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY V CIT 23 SOT 74 (CUTTACK). THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE PROVISION OF SEC. 12AA(4) HAVE BEEN BROUGHT ON STATUTE ONLY FROM 01.10.2014 AND FOLLOWING THE JUDGEMENT OF MUMBAI TRIBUNAL IN THE CASE OF MUMBAI CRICKET ASSOCIATION AS REFERRED ABOVE IT IS SUBMITTED THAT THE PROVISIONS CAN BE APPLIED PROSPECTIVELY ONLY AND THAT REGISTRATION UNDER NO CIRCUMSTANCE BE CANCELLED FOR PERIOD PRIOR TO SUCH DATE. PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 11 OF 15 5. ON THE OTHER HAND, THE LEARNED SR. D.R. HAS PLACED RELIANCE ON THE ORDER OF PR.CIT (CENTRAL) AND SUBMITTED THAT THE SEARCH AND SEIZURE OPERATION CONDUCTED IN THE CASE OF ASSESSEE TRUST HAS REVEALED THAT THE ASSESSEE TRUST WAS INDULGING IN EARNING UNACCOUNTED INCOME THEREFORE, THE ASSESSEE TRUST HAS DIVERTED FROM THE OBJECTS AS PER ACTIVITY CARRYING, THEREFORE, THE PCIT (CENTRAL)WAS RIGHT IN CANCELLING REGISTRATION GRANTED TO THE TRUST. 6. WE HAVE CONSIDERED THE FACTS AND PERUSED MATERIAL AVAILABLE ON RECORD . THE PERUSAL OF THE ORDER U/S. 12AA(3) OF THE ACT PASSED BY THE PR.CIT ON 19.02.2016 SHOWS THAT THERE WAS SEARCH U/S. 132 OF THE ACT CONDUCTED IN THE SIGMA GROUP, BARODA ON 13.11.2014 WHICH COVERS THE CASE OF THE ASSESSE TRUST ALSO. DURING THE COURSE OF SEARCH, HUGE VOLUMES OF INCRIMINATING MATERIAL IN THE FORM OF LOOSE PAPER, DIARIES, NOTE BOOKS, REGISTERS, HARD DISKS, PEN DRIVES, ETC. WERE SEIZED FROM THE PREMISES OF SIGMA GROUP. ON VERIFICATION OF SEIZED MATERIAL, IT WAS NOTICED THAT THE ASSESSE TRUST GENERATING UNACCOUNTED MONEY THROUGH EDUCATIONAL PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 12 OF 15 INSTITUTIONS AND THE SAME IS INVESTED IN UNDISCLOSED ASSETS OF THE TRUSTEES FOR THEIR PERSONAL BENEFIT. IT IS ALSO RELEVANT TO MENTION THAT THE ASSESSE HAS ADMITTED UNACCOUNTED INCOME OF RS.40,70,92,172/- FOR A.Y. 2008-09 TO 2015.16. ON THE BASIS OF SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. IT IS ALSO NOTED THAT THE ASSESSE TRUST ADMITTED MODUS OPERADING FOR WILLFUL EVASION OF TAX BY INVOKING EXPENSES, NOT RECORDING DONATION RECEIPT IN THE BOOKS OF ACCOUNT AND MAKING INVESTMENT OF THE BANK AND VARIOUS INDIVIDUAL AND MAKING INVESTMENT TO TRUSTEES AND THEIR RELATIVES . THEREFORE, PR.CIT HAS CLEARLY FOUND AND HELD THAT THE ASSESSE TRUST CANNOT BE CONSIDERED AS CHARITABLE ACTIVITY AS IT HAS STEPPED OUT OF THE OBJECT OF THE TRUST AND IS ENGAGED IN PROFIT MAKING AND UNLAWFUL ACTIVITIES. WE HAVE ALSO GONE THROUGH THE FINDINGS OF LEARNED PR. CIT (CENTRAL) WHICH MAKE OUT THE CASE THAT THE ASSESSE TRUST HAS BEEN CLEARLY FOR THE BENEFIT OF THE TRUSTEE AND RELATIVES PROVISION OF SEC. 13(1)(C ) OF THE ACT. INCOME OF THE TRUST HAVE BEEN APPLIED AND USE AND ANY POOR BENEFIT FOR THE FEES. THEREFORE, PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 13 OF 15 PROVISION OF SEC. 13 OF THE ACT BARS EXEMPTION , WHERE THE FOUNDER TRUSTEES OR THEIR RELATIVES PERSONALLY BENEFITED FROM THE TRUST BECAUSE THE TRUST IN THAT CASE LOSES ITS PUBLIC CHARACTER. THE LEARNED PR.CIT PLACED RELIANCE IN THE CASE OF DIRECTOR OF INCOME TAX VS. BHARAT DIAMOND BOURSE (2003) 259 ITR 280 WHEREIN IT WAS HELD THAT IN THE CASE OF CHARITABLE INSTITUTION FORMED AS A COMPANY EVERY SIGNATORY TO THE MEMORANDUM OF ASSOCIATION HAS TO BE TREATED AS FOUNDER, SO THAT MONEY LENT TO SUCH PERSON WITHOUT ADEQUATE SECURITY CONSTITUTES A BENEFIT, WHICH WOULD LOOSE THE EXEMPTION FOR THE COMPANY. WE ALSO FIND THAT THE DECISION RELIED BY THE LEARNED COUNSEL MUMBAI CRICKET ASSOCIATION 24 TAXMANN.COM 96, WHEREIN IT WAS HELD THAT THE PROVISIONS OF SEC. 12AA(3) HAVE BEEN BROUGHT ON STATUTE ONLY FROM 01.06.2010 AND IS NOT APPLICABLE FOR THE REASONS THAT THE ASSESSE ITSELF INDICATES THAT THE FUND OF THE ASSESSEE DIVERTED AND MISUTILISED. IT MEANS THAT THE ASSESSEE HAS NOT CARRIED OUT ITS ACTIVITIES ACCORDING TO THE OBJECTS OF THE TRUST RATHER NOT APPLICABLE TO THE ASSESSEE TRUST PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 14 OF 15 BECAUSE TRUST HAS OBTAINED THE CERTIFICATE U/S.12A OF THE ACT FROM 21.06.2010 I.E. AFTER 01.06.2010. HENCE, THE FACTS ARE CLEARLY DISTINGUISHABLE. IN LIGHT OF THE FACTS AND CONTENTION OF THE ASSESSEE THAT PROVISION OF SEC. 12AA(3) ONLY FROM 01.06.2010 AND NOT RETROSPECTIVE AND HENCE CANCELLATION IS JUSTIFIED BY INVOKING PROVISION , THE SAME CAN ONLY BE 01.06.2010 AND NOT FOR THE PERIOD EARLIER. ON GOING THROUGH PARA-9 OF THE ORDER OF PR.CIT, WE FIND THAT REGISTRATION WAS CANCELLED BY THE PR. CIT (CENTRAL) U/S.12AA(3) GRANTED TO THE ASSESSEE U/S.12AA WITH EFFECT FROM THE DATE 21.06.2010 ONLY. THEREFORE, THE PCIT (CENTRAL) HAS PROVISION AFTER 01.06.2010 , HENCE, GROUNDS OF APPEAL TAKEN BY THE ASSESSEE MORE PARTICULARLY GROUND NO.2 IS DEVOID OF ANY MERIT, HENCE, DISMISSED ON ANY MERIT. 7. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE INCLINED TO AGREE WITH THE ORDER PASSED BY THE CIT (CENTRAL) AND DOES NOT CALL FOR ANY INTERFERENCE FROM OUR SIDE, THEREFORE, SAME IS UPHELD. PR.CIT (CENTRAL) V. SHREE PARISHRAM EDUCATION & MEDICAL CHARITABLE TRUST I.T.A. NO.610/AHD/2016 PAGE 15 OF 15 8. IN VIEW OF THIS MATTER, APPEAL OF THE ASSESSEE TRUST IS DISMISSED. 9. ORDER PRONOUNCED IN OPEN COURT ON 19.06.2018 SD/- SD/- ( . . /C.M. GARG) ( . . /O.P.MEENA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER SURAT, DATED : 19.06.2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ) ( / THE CIT(A), 4. PR. CIT 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT BVC