M/s. BHANDARI GROUP OF HOSPITALS & INSTITUTIONS, Indore V. THE CIT - I, Indore

ITA 657/IND/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6896 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-11-2018
• Assessment Year: misc
• Appeal Filed On: 28-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: GIRISH AGRAWAL ADV
• Keywords: Search and seizure; Charitable institution; Diversion of income; Competent authority; Cancellation of registration
• Section: 80G; 12A; 12AA; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS.656 & 657/IND/2014 ASSESSMENT YEAR: NA BHANDARI GROUP OF HOSPITALS & INSTITUTIONS, 181, CLERK COLONY, INDORE (M.P.) / VS. CIT - I , INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAFCB3908A APPELLANT BY SHRI GIRISH AGRAWAL , ADV. CA RESPONDENT BY SHRI ASHIMA GUPTA , CIT - DR DATE OF HEARING: 27.11.2018 DATE OF PRONOUNCEMENT: 03 .01.2019 / O R D E R PER KUL BHARAT, J.M: THESE TWO APPEALS BY THE ASSESSEE ARE AGAINST ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, INDORE DATE D 12.09.2014 AGAINST CANCELATION OF REGISTRATION GRANTED U/S 80G & 12AA RESPECTIVELY. FIRST, WE TAKE UP ASSESSEES APPEAL IN ITA NO.657/I ND/2014 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE, WAS NOT JUST IFIED IN CANCELLING THE REGISTRATION GRANTED U/S 12A OF THE INCOME TAX A CT, 1961 TO THE APPELLANT TRUST. BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX -I, INDORE, WAS NOT JUST IFIED IN CANCELLING THE REGISTRATION OF THE TRUST U/S 12M (3) OF THE IN COME TAX ACT, 1961 WHEN A TRUSTEE OF THE APPELLANT TRUST WAS SUSPECTED TO BE INVOLVED IN SOME UNLAWFUL ACTIVITY WHICH WAS NOT CONNECTED WITH THE PERFORMANCE OF THE ACTIVITIES OF THE TRUST. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX-I, INDORE, WAS NOT JUSTI FIED IN CANCELLING THE REGISTRATION U/S 12M (3) OF THE INCOME TAX ACT, 1961 BASED ON SUSPICION, REPORTS NOT CORRECTED WITH THE ACTIVITIES OF THE TRUST AND HOLDING WITHOUT ANY BASIS THAT THE ACTIVITIES BEING RUN BY SUCH INSTITUTION ARE FARCE ONLY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX- I, INDORE, WAS NOT JUST IFIED IN NOT CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE TRUS T BEFORE THE LEARNED COMMISSIONER OF INCOME TAX-I, INDORE BY OMI TTING TO MENTION REASONS AS TO WHY THE POINT WISE SUBMISSIONS WERE N OT FOUND TO BE SATISFACTORY . 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX- I, INDORE ERRED IN REACH ING TO A CONCLUSION THAT NO CHARITABLE ACTIVITY COULD BE CARR IED OUT BY THE TRUST. 2. BRIEF FACTS GIVING RISE TO PRESENT APPEAL ARE TH AT THE ASSESSEE HAD APPLIED FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) ON 25.04.2013. RE GISTRATION WAS GRANTED TO THE TRUST VIDE ORDER DATED 21.10.2013. S UBSEQUENTLY THIS ORDER OF GRANTING REGISTRATION WAS WITHDRAWN VIDE I MPUGNED ORDER DATED 12.09.2014. AGAINST THIS ORDER THE ASSESSEE I S IN THE PRESENT APPEAL. 3. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED A ND REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER: A) ASSESSEE IS A COMPANY INCORPORATED U/S 25 OF THE COM PANIES ACT, 1956 ON 23.02.2013 WHEREIN IT HAS BEEN GRANTED A LICENSE BY BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 3 THE CENTRAL GOVERNMENT AS PER PROVISIONS OF SECTION 25(1) [TEXT OF SECTION 25 ENCLOSED WITH THIS SYNOPSIS PAGE 7] B) SECTION 25(8)(B) PROVIDES THAT CENTRAL GOVERNMENT MA Y REVOKE THE LICENSE OF SUCH A BODY IF IT CONTRAVENES THE PRO VISIONS OF CLAUSE (A) OF SECTION 25(1). IN THE INSTANT CASE, NO SUCH REVOCATION HAS BEEN DONE BY THE CENTRAL GOVERNMENT C) LD. CIT NOTED IN HER IMPUGNED CANCELLATION ORDER REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 ( THE ACT) WAS GRANTED AS THERE WAS NO ADVERSE REPORT WITH REGARD TO THE ACTIVITIES OF THE TRUST [EMPHASIS SUPPLIED] D) LD. CIT HAS NOTED THE FOLLOWING FOR DR. VINOD BHANDARI , IN HER IMPUGNED CANCELLATION ORDER AGAINST WHICH ASSESSEE C OMPANYS SUBMISSIONS ARE ALSO MADE PARA NO. PER LD. CIT ORDER CANCELLING THE REGISTRATION GRANTED U/S 12A ASSESSEE COMPANYS SUBMISSION 2 TRANSPIRED THROUGH VARIOUS REPORTS OF INVESTIGATING AGENCY THAT SHRI VINOD BHANDARI WAS FOUND INVOLVED IN VARIOUS OBJECTIONABLE ACTIVITIES RELATED TO ADMISSION IN MEDICAL COLLEGES, ETC. NO SUCH REPORTS MADE AVAILABLE BY THE LD. CIT TO THE ASSESSEE COMPANY. WITHOUT PREJUDICE, SUCH REPORTS RELATE TO SHRI VINOD BHANDARI AS IN INDIVIDUAL AND NOT THE ASSESSEE COMPANY HE IS ALLEGED TO BE INVOLVED IN ACTIVITIES RELATING TO ADMISSION IN MEDICAL COLLEGES AND NOT FOR CHARITABLE ACTIVITIES OF THE ASSESSEE COMPANY 2 MANY DIRECT EVIDENCES WERE FOUND BY STF DURING RAIDS CONDUCTED AT THEIR RESIDENCES AND OFFICES (THEIR REFERRING TO MANY BIG PERSONALITIES INCLUDING LEADING DOCTORS OF INDORE) NO SUCH RAID CONDUCTED ON THE ASSESSEE COMPANY NO SUCH ALLEGED DIRECT EVIDENCES FOUND OF THE ASSESSEE COMPANY 2 IT WAS PROVED BY STF THAT NO SUCH PROOF MADE BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 4 THESE STUDENTS OBTAINED ADMISSIONS USING UNFAIR MEANS WHICH INCLUDE PAYING HEAVY AMOUNTS IN LACS TO SCAMSTORS. AVAILABLE BY THE LD. CIT AGAINST THE ASSESSEE COMPANY. NO POSITIVE MATERIAL BROUGHT ON RECORD BY THE LD. CIT FOR SUCH PAYMENTS MADE TO THE ASSESSEE COMPANY FOR OBTAINING ADMISSIONS. 4 THE REPLY OF TRUST IS PLACED ON RECORD, CONSIDERED AND NOT FOUND SATISFACTORY. THE ASSESSEE IS A COMPANY HAVING SEPARATE LEGAL ENTITY STRUCTURE, DULY INCORPORATED UNDER THE COMPANIES ACT, 1956. IT IS NOT A TRUST OR A SOCIETY. NO BASIS, JUSTIFICATION OR REASONING GIVEN BY THE LD. CIT FOR HER DISSATISFACTION ON THE SUBMISSIONS MADE BY THE ASSESSEE COMPANY. SUBMISSIONS MADE BY THE ASSESSEE COMPANY REMAINED UNCONTROVERTED. THE IMPUGNED CANCELLATION ORDER IS NOT A SPEAKING ORDER JUSTIFYING THE FULFILLMENT OF CONDITIONS ENUMERATED U/S 12AA(3) FOR THE SAID CANCELLATION. 5 DR. VINOD BHANDARI WAS FOUND TO BE PLAYING LEADING ROLE IN THIS SCAM. THE ASSESSEE COMPANY IS NOT A PARTY IN ANY MANNER TO THIS ALLEGED SCAM. 5 BECAUSE OF STRONG EVIDENCES FOUND AGAINST HIM HE WAS NOT GRANTED BAIL BY ANY COURT. THE ALLEGED EVIDENCES ARE NOT AGAINST THE ASSESSEE COMPANY BUT AGAINST HIM. 5 HE HAS SPOILED THE LIVES OF HUNDREDS OF BRIGHT AND DESERVING STUDENTS. NO SUCH DECISION BY ANY COMPETENT AUTHORITY. WITHOUT PREJUDICE, IT WOULD IN ANY CASE RELATE TO DR. BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 5 VINOD BHANDARI AS AN INDIVIDUAL AND NOT THE ASSESSEE COMPANY. 5 SUCH PERSON CANNOT HAVE THE MINDSET WHICH CAN THINK OF DOING ANY TYPE OF CHARITABLE WORK. NOR IS IT CLEAR AS TO HOW, UNDER THE CIRCUMSTANCES AS DISCUSSED ABOVE, ANY CHARITABLE ACTIVITY CAN GO ON. REGISTRATION U/S 12A HAS BEEN GRANTED TO THE ASSESSEE COMPANY AND NOT TO THE INDIVIDUAL DR. VINOD BHANDARI BY FOLLOWING DUE PROCESS OF LAW. LD. CIT GOT CARRIED AWAY BY AN APPREHENSION BASED ON HER OWN SUSPICION, IN ABSENCE OF ANY DECISION / ORDER BY ANY COMPETENT AUTHORITY, WHICH IN ANY CASE WOULD NOT HAVE ANY BEARING ON THE ASSESSEE COMPANY AS IT WOULD RELATE TO INDIVIDUAL DR. VINOD BHANDARI. ASSESSEE COMPANY AS A SEPARATE LEGAL ENTITY CONTINUES TO PURSUE ITS CHARITABLE OBJECTIVES. 6 IT WAS REPORTED IN THE PRESS THAT MONEY OBTAINED THROUGH MONEY LAUNDERING HAS BEEN INVESTED IN BHANDARI GROUP OF HOSPITALS. BHANDARI GROUP OF HOSPITALS REFERRED BY LD. CIT RELATES TO VARIOUS BUSINESS CONCERNS OF THE BHANDARI GROUP AND NOT THE ASSESSEE COMPANY IN SPECIFIC THOUGH THE NAME BEARS A SIMILARITY. LD. CIT HAS RELIED ON PRESS AND MEDIA REPORTS, WITHOUT ANY BASIS. HER ACTION OF CANCELLATION OF REGISTRATION IS BASED PURELY ON SUSPICION, SURMISES AND CONJECTURES WHICH ARE BASELESS AND DEVOID OF ANY BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 6 MERITS SO FAR AS THE ASSESSEE COMPANY IS CONCERNED. 6 IN VIEW OF ALL THE ABOVE FACTS I AM SATISFIED THAT. THE ALLEGED FACTS ARE MERE ALLEGATIONS IN ABSENCE OF ANY DECISION BY COMPETENT AUTHORITY WHICH IN ANY CASE DO NOT RELATE TO ASSESSEE COMPANY. 6 ANY CLAIM REGARDING CHARITABLE ACTIVITIES BEING RUN BY SUCH INSTITUTION ARE FARCE ONLY. NO POSITIVE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE LD. CIT AGAINST THE ASSESSEE COMPANY WHICH SATISFIES THE TWIN CONDITIONS U/S 12AA(3) FOR CANCELLING THE REGISTRATION EARLIER GRANTED. IT IS NOT A CASE THAT ASSESSEE COMPANY OBTAINED THE REGISTRATION U/S 12A FRAUDULENTLY. 6 IN THIS CASE ALL THE EVIDENCES GATHERED ARE AGAINST DR. VINOD BHANDARI THIS STATEMENT BY THE LD. CIT IN HER ORDER SQUARELY JUSTIFIES THE SUBMISSIONS OF THE ASSESSEE COMPANY GIVING IT A CLEAN HAND. FURTHER, WITHOUT PREJUDICE, NONE OF THESE ALLEGED EVIDENCES OF DR. VINOD BHANDARI ON WHICH LD. CIT HAS PLACED STRONG RELIANCE, HAVE BEEN MADE AVAILABLE TO THE ASSESSEE COMPANY. 6 I HAVE REASONS TO BELIEVE THAT ASSESSEE COMPANY IS DOING NO CHARITABLE ACTIVITY AND IS GATHERING MONEY THROUGH VYAPAM SCAM. NO POSITIVE MATERIAL BROUGHT ON RECORD BY THE LD. CIT TO ESTABLISH THAT ASSESSEE COMPANY IS NOT DOING CHARITABLE ACTIVITY AS SHE NEVER ENQUIRED ABOUT BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 7 THE SAID ACTIVITIES FOR CANCELLING THE REGISTRATION. NO POSITIVE MATERIAL BROUGHT ON RECORD ALSO TO ESTABLISH THAT THE ASSESSEE COMPANY IS GATHERING MONEY. ASSESSEE COMPANY CANNOT BE MADE TO PROVE THE NEGATIVE. NO SUCH ALLEGED MONEY FLOWED INTO THE ASSESSEE COMPANY. E) CHAPTER XV AND SECTION 160 OF THE ACT RELATING TO REPRESENTATIVE ASSESSEE IS NOT APPLICABLE TO THE ASSESSEE COMPANY OWING TO ITS SEPARATE LEGAL ENTITY STRUCTURE AND BEI NG AN ASSESSEE IN ITS OWN RIGHT AND FILING ITS OWN RETURN. F) GRANTING OF REGISTRATION PROCEDURE IS DIFFERENT FROM ASSESSMENT PROCEDURES. THE POWER VESTED WITH THE CIT AT THE TIME OF GRANTING THE REGISTRATION IS TWOFOLD: 1) WHETHER THE TRUST OR INSTITUTION HAS CHARITABLE OR RELIGIOUS OBJECTS; AND 2) WHETHER THE ACTIVITIES CARRIED OUT ARE GENUINE IN NA TURE. TO SATISFY THESE TWIN CONDITIONS, CIT MAY CALL FOR SUCH INFORMATION AS MAY BE REQUIRED. AT THE TIME OF GRANT OF REGISTRATIO N TO A TRUST OR INSTITUTION, THE POWER OF THE CIT IS LIMITED TO EXAM INATION WHETHER TRUST'S OBJECTS ARE CHARITABLE OR NOT AND TRUSTS AC TIVITIES ARE GENUINE OR NOT. WHEN CIT GRANTS REGISTRATION TO TRUST OR INSTITUTIO N IT MEANS THAT HE IS SATISFIED ABOUT OBJECTS AND GENUINENESS OF ACTIVITIES OF TRUST OR INSTITUTION. LD. CIT HAVING SATISFIED FOR THE ABOVE TWOFOLD CONDITI ONS, GRANTED THE REGISTRATION FACT OF WHICH IS CATEGORICALLY NOTED IN PARA 1 OF HER IMPUGNED ORDER - REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (THE ACT) WAS GRANTED AS THERE WAS NO ADVERSE REPORT WITH REGARD TO THE ACTIVITIES OF THE TRUST [EMPHASIS SUPPLIED] G) THE POWER OF CANCELLATION OR WITHDRAWAL OF REGISTRA TION ALLOWED TO A TRUST OR INSTITUTION CAN BE INVOKED BY THE GRAN TOR OF REGISTRATION, BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 8 VIZ., CIT ONLY, ON THE LIMITED GROUNDS MENTIONED IN SE CTION 12AA(3) OF THE ACT AND NOT ON ANY OTHER GROUNDS. ACCORDING TO SECTION 12AA(3), IF THE CIT IS SATISFI ED THAT THE ACTIVITIES OF ANY TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INST ITUTION, MAY CANCEL THE REGISTRATION. IN NO OTHER SITUATION, THE REGISTRATION GRANTED CAN BE CANCELLED / WITHDRAWN BY THE CIT. THUS, THE FINDING OF CIT CANCELLING REGISTRATION HA S NOT ONLY TO BE CONCEPTUAL OR CONTEXTUAL BUT SHOULD BE WITHIN THE FO UR CORNERS OF LAW SO THAT THEY ARE NOT SURPASSING THE POWER GRANTED U/ S 12AA(3). LD. CIT HAS CANCELLED THE REGISTRATION GRANTED BY AP PLYING SECTION 12AA(3). [COPY OF FULL TEXT OF SECTION 12AA ENCLOSED WITH THIS SYNOPSIS PAGE 8] THE ONUS OF THE FACTORS FOR CANCELING THE REGISTRAT ION GRANTED TO A TRUST OR INSTITUTION IS ON THE DEPARTMENT AND NOT ON THE INSTITUTION AS HELD IN PARA 30 IN CASE OF GURU GOBIND SINGH EDUCATION AL SOCIETY V. CIT (2009) 118 ITD 207 (AMRITSAR). IT WAS FURTHER H ELD IN THIS CASE IN PARA 29 THAT FOR ANY IRREGULARITY OR ILLEGALITY COMMITTED BY ITS MEMBERS, A SOCIETY, WHICH IS A JURIDICAL ENTITY HAVI NG INDEPENDENT EXISTENCE, CANNOT BE HELD LIABLE. FURTHER, WHEN THER E IS NO FINDING RECORDED THAT THE INCOME OF THE SOCIETY HAS FLOWED TO ITS MEMBERS, IRREGULARITIES COMMITTED BY MEMBERS IN THEIR INDIVID UAL CAPACITY CANNOT BE HELD AGAINST THE SOCIETY FOR THE PURPOSE OF CANCELLATION OF REGISTRATION. IN THE INSTANT CASE, LD. CIT HAS NEITHER ESTABLISHED BY BRINGING ANY COGENT AND POSITIVE MATERIAL ON RECORD THAT ACTIVITIE S OF THE INSTITUTION ARE NOT GENUINE NOR THAT THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION. SHE HAS MERELY RELIED ON ALLEGATIONS AGAINST AN INDIVIDUAL DR. VINOD BHANDAR I, MEDIA AND PRESS REPORTS, HER OWN APPREHENSIONS AND SUSPICIONS TO CANCEL THE REGISTRATION EARLIER GRANTED AFTER COMPLYING THE PRO CEDURE LAID DOWN U/S 12AA OF THE ACT. RELIANCE IS PLACED ON THE DECISION OF HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF RED ROSE SCHOOL [2007] 163 TAXMAN 19 - PA RA 33 STRONG RELIANCE IS PLACED FOR THE ABOVE SUBMISSION O N THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF TAMIL NADU CRICKET ASSOCIATION [2014] 221 TAXMAN 275 PARA 48 & 51 IN THE INSTANT APPEAL BY THE ASSESSEE COMPANY, IT H AS NOT BEEN DENIED THAT AT THE TIME OF GRANTING REGISTRATION, THE LD. CIT HAD SATISFIED HERSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 9 THE ACTIVITIES, AS IT STOOD WHEN THE REGISTRATION WA S GRANTED ON 21.10.2013. THE LD. CIT DID NOT DENY AS A MATTER OF FA CT THAT THE OBJECTS REMAINED AS THEY WERE WHEN REGISTRATION WAS GRANTED IN THE YEAR 2013 AND THERE WAS NO CHANGE IN CONTENT TO CAL L THE ASSESSEE COMPANY'S OBJECTS AS NOT GENUINE. THERE WAS NO MATE RIAL TO INDICATE THAT THE GRANT OF REGISTRATION WAS NOT BASED ON MATE RIALS INDICATING CHARITABLE PURPOSE. THE LD. CIT RESTED HER DECISION ON CONSIDERATIONS WHIC H WERE NOT RELEVANT FOR CONSIDERING THE TEST SPECIFIED UNDER SEC TION 12AA(3) TO IMPOSE CRIMINAL / NON-CHARITABLE CHARACTER TO THE A CTIVITIES OF THE ASSESSEE COMPANY. IN THE CIRCUMSTANCES, THE LD. CIT WAS WRONG IN CANCELLING REGISTRATION OF THE ASSESSEE. H) OTHER RELEVANT DECISION SQUARELY COVERING THE CASE O F THE ASSESSEE COMPANY ON WHICH RELIANCE IS PLACED 1) CHATURVEDI HARPRASAD EDUCATIONAL SOCIETY [2011] 45 SOT 108 (LUCK) HEAD NOTE 2) H.P. GOVERNMENT ENERGY DEVELOPMENT AGENCY [2010] 134 TTJ 33 (CHD) PARA 8 3) SARVODAYA ILAKKIYA PANNAI [2012] 343 ITR 300 (MAD) PARA 5 & 6 4) BHARAT JYOTI [2012] 23 TAXMANN.COM 366 (LUCK) PARA 8.2 J) FOLLOWING ARE THE CIRCUMSTANCES IN WHICH AN INST ITUTION CAN AVOID BREACH OF TRUST UNDER THE ACT- I. CARRYING ON OBJECTS DISCRETELY FOR CHARITABLE OR RELIGIOUS PURPOSES II. COMPLYING WITH THE TERMS AS ENUMERATED IN THE DEE D OF TRUST III. MAINTAINING PROPER BOOKS OF ACCOUNTS IV. INVESTING OF INCOME IN A MANNER THAT IS IN ACCO RDANCE WITH THE LAW V. NO DIVERSION OF INCOME OR THE ASSETS OF THE TRUS T VI. APPLYING INCOME ONLY FOR CHARITABLE OR RELIGIOU S PURPOSES IN TERMS OF THE DEED OF TRUST. VII. COMPLYING WITH ALL OTHER PROVISIONS AS REQUIRE D UNDER THE INCOME TAX OR ANY OTHER LAW. THE ASSESSEE COMPANY HAS COMPLIED WITH ALL THE ABOVE LISTED REQUIREMENTS AND HAS NOT BREACHED THE TRUST ENTRUSTE D BY THE ACT BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 10 AND THE CENTRAL GOVERNMENT WHILE GRANTING REGISTRAT ION U/S 12A AND 80G OF THE ACT. THUS, THE FACTUAL AND LEGAL POSITION AS EMERGES FRO M THE FOREGOING SUBMISSIONS AS WELL AS THOSE BEFORE THE LD. CIT, IS THAT ONCE THE REGISTRATION IS GRANTED TO A TRUST OR INSTITUTION IT CAN BE CANCELLED ONLY ON BREACH OF EITHER OF THE TWO CONDITIONS MENTIONED IN SECTION 12AA(3). ORDER OF LD. CIT U/S 12AA(3) DOES NOT GIVE ANY FINDING ABOUT SUCH A BREACH. ACCORDINGLY, THE REGISTRATION TO THE ASSESSEE COMPANY OUGHT TO BE RESTORED U/S 12A. REGISTRATION U/S 80G HAS BEEN CANCELLED AS A CONSEQU ENTIAL EFFECT OF CANCELLATION U/S 12AA(3). ALL THE SUBMISSIONS MADE ABOVE MAY ALSO BE CONSIDERED FOR RESTORING THE REGISTRATION U/S 80G WHICH WILL BE CONSEQUENTIAL TO RESTORATION OF REGISTRATION U/S 12 A. 4. LD. DEPARTMENTAL REPRESENTATIVE (DR) OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDER OF LD. CIT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. CIT WHILE CANCELLING THE R EGISTRATION HAS OBSERVED AS UNDER: 2. HOWEVER, AS IT TRANSPIRED THROUGH VARIOUS REPORTS OF INVESTIGATING AGENCY, SHRI VINOD BHANDARI, FOUNDER OF THE TRUST, WAS FOUND INVOLVED IN VARIOUS OBJECTIONABLE ACTIVITIES RELATED TO ADMISSIONS IN MEDICAL COLLEGES, ETC. RECENTLY VERY BIG SCANDAL HA S BEEN DETECTED BY STF REGARDING ADMISSIONS IN MEDICAL COLLEGES, DENT AL COLLEGES AND PROFESSIONAL COLLEGES OF M.P. IN MADHYA PRADESH VYAVSAYIK PARIKSHA MANDAL, BHOPAL. MODUS OPERANDI WAS TO PROVI DE SCORES TO STUDENTS WHO ARE WILLING TO PAY BIG AMOUNTS FOR ADMI SSIONS IN MEDICAL AND DENTAL COLLEGES. IN THIS SCAM MANY BIG PE RSONALITIES INCLUDING LEADING DOCTORS OF INDORE WERE FOUND INVOL VED WHO ARE IN CENTRAL JAIL AND NO COURT HAS GRANTED BAIL TO ANYBODY TILL TODAY BECAUSE MANY DIRECT EVIDENCES WERE FOUND BY STF DURIN G RAIDS CONDUCTED AT THEIR RESIDENCES AND OFFICES. ONE PERSON NAMELY BRAJBHOOSHAN RAGHUVANSHI HAS ALSO CONFESSED HIS INVO LVEMENT IN THIS SCAM AND IT IS ALSO MENTIONED HERE THAT THIS PE RSON IS A SENIOR EXECUTIVE IN THIS INSTITUTION. ABOUT 400 ADMISSION S IN MEDICAL COLLEGES HAVE BEEN CANCELLED INCLUDING IN POST-GRADU ATION COURSES ALSO BECAUSE IT WAS PROVED B STF THAT THESE STUDENTS OBTAINED BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 11 ADMISSIONS USING UNFAIR MEANS WHICH INCLUDE PAYING H EAVY AMOUNTS IN LACS TO THE SCAMSTORS . MOST OF SUCH STUDENTS ARE STILL IN JAIL. 3. UNDER SUCH CIRCUMSTANCES IN THE LIGHT OF POWER V ESTED IN COMMISSIONER OF INCOME TAX-I, INDORE FOR CANCELLING THE REGISTRATION U/S 12AA(3) OF THE I.T.ACT, 1961, THIS OFFICE SUO-M OTO ISSUED A SHOW CAUSE NOTICE ON 01.07.2014 TO EXPLAIN THE REASON, W HY THE REGISTRATION '9 OF THE TRUST U/S 12AA (3) OF THE I.T.ACT, 1961 SHOU LD NOT BE CANCELLED. 4. THE NOTICE WAS SERVED ON 01.07.2014. IN RESPONSE TO THE NOTICE REPLY WAS SUBMITTED ON 21.07.2014 AND MATTER WAS POST ED FOR HEARING ON 08.07.2014, 14.07.2014 & 21.07.2014 BY THE TRUST. THE REPLY OF TRUST IS PLACED ON RECORD, CONSIDERED AND NO T FOUND SATISFACTORY. 5. THE OTHER NOTORIOUS FACTS OF THE CASE ARE THAT D R. VINOD BHANDARI, PRINCIPAL OFFICER, WHO HEADS THE BHANDARI GROUP OF HOSPITALS AND INSTITUTIONS WAS FOUND TO BE PLAYING LEADING ROLE IN THIS SCAM WHO WAS ALSO ARRESTED AND PUT IN CENTRAL JAIL. MOST OF TH E ADMISSIONS IN THESE MEDICAL COLLEGES WERE FOUND TO BE MADE THROUGH THIS SCAM ONLY. HE TIED TO GET BAIL FROM ALL THE COURTS BUT BE CAUSE OF STRONG EVIDENCES FOUND AGAINST HIM HE WAS NOT GRANTED BAIL BY ANY COURT. BECAUSE OF THIS SCAM MANY BRIGHT AND DESERVING STUDENT S COULD NOT GET ADMISSIONS AS UNDESERVING STUDENTS WHOSE PARENTS WERE HAVING BLACK MONEY WERE GIVEN THEIR SEATS BECAUSE OF GREED FOR MONEY OF PERSONS INVOLVED IN THIS SCAM. THESE SCAMSTORS INCLU DING DR. VINOD BHANDARI HAVE PLAYED HAVOC IN THE LIFE OF MANY BRIGH T AND DESERVING STUDENTS. THIS IS BEING DISCUSSED HERE TO SHOW THAT T HE PERSON WHO IS RUNNING LEADING MEDICAL INSTITUTIONS AND WHO WAS CONSIDERED A WELL-RESPECTED PERSONALITY OF THE CITY WAS FOUND TO B E HAVING ENORMOUS GREED FOR MONEY AND TO FULFILL HIS GREED HE H AS SPOILED THE LIVES OF HUNDREDS OF BRIGHT AND DESERVING STUDENTS. S UCH PERSON CANNOT HAVE THE MINDSET WHICH CAN THINK OF DOING ANY TYPE OF CHARITABLE WORK. NOR IS IT CLEAR AS TO HOW, UNDER T HE CIRCUMSTANCES AS DISCUSSED ABOVE, ANY CHARITABLE ACTIVITY CAN GO ON. 6. RECENTLY ENFORCEMENT DIRECTORATE ALSO INTERROGAT ED DR. VINOD BHANDARI AND AGAIN SH. BHANDARI COULD NOT EXPLAIN THE HUGE AMOUNT OF MONEY INVESTED IN BHANDARI GROUP OF HOSPIT ALS RUNNING INTO ABOUT 40 CRORES. IT WAS REPORTED IN THE PRESS T HAT MONEY OBTAINED THROUGH MONEY LAUNDERING HAS BEEN INVESTED I N BHANDARI GROUP OF HOSPITALS. IN VIEW OF ALL THE ABOVE FACTS I AM SATISFIED THAT I NSTITUTIONS WHICH BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 12 ARE HEADED BY THE PERSONS LIKE DR. VINOD BHANDARI AR E CREATED AND RUN FOR MINTING MONEY ONLY USING UNFAIR MEANS. ANY CLAIM REGARDING CHARITABLE ACTIVITIES BEING RUN BY SUCH INSTITUTION ARE FORCE ONLY. IN THIS CASE ALL THE EVIDENCES GATHERED ARE AGAINST DR. VINOD BHANDARI AND EVEN HON'BLE M.P. HIGH COURT IS ALSO SATISFIED O N THE BASIS OF FACTS GATHERED BY THE STF INVESTIGATING THE SCAM. THE REFORE, I HAVE REASONS TO BELIEVE THAT BHANDARI GROUP OF HOSPITALS AND INSTITUTIONS, 181, CLERK COLONY, INDORE (M.P.) IS DOING NO CHARITA BLE ACTIVITY AND IS GENERATING MONEY THROUGH VYAPAM SCAM I DISCUSSED AB OVE AND THEREFORE, THE REGISTRATION GRANTED TO IT THE PROVIS IONS OF SECTION 12AA(3) IS HEREBY, CANCELLED. 6. DURING THE COURSE OF HEARING THE ASSESSEE WAS AS KED TO SUBMIT MEMORANDUM AND ARTICLES OF ASSOCIATION (MOA) AND TH E CLAUSES DISTRIBUTION OF PROPERTY UPON WINDING UP OR DISSOLU TION. THE ASSESSEE HAS MADE FOLLOWING SUBMISSIONS: 1. DIRECTION WAS GIVEN IN THE LAST HEARING HELD ON 14.11.2018 TO FURNISH COPY OF ' MEMORANDUM AND ARTICLES OF ASSOCIA TION (MOA) OF THE APPELLANT COMPANY TO PERUSE ITS OBJECT CLAUSE. THE SAME ARE ENCLOSED WITH THIS SUBMISSION FOR READY REFERENCE. IT IS ALSO HUMBLY SUBMITTED TO REFER TO CLAUSE V(2) WHICH PROHIBITS DISTRIBUTION OF PROFITS DIRECTLY OR INDIRECTLY BY T HE APPELLANT COMPANY. CLAUSE VI WHICH RESTRICTS ALTERATION TO THE MOA SUBJECT TO CE RTAIN APPROVALS. CLAUSE X WHICH PROHIBITS DISTRIBUTION OF PROPERTY UPON WINDING UP OR DISSOLUTION. [PAGE 4 OF MOA]. 2. YOUR HONOURS ALSO ENQUIRED IF A CERTIFICATE CAN B E GIVEN BY THE MANAGEMENT OF THE APPELLANT COMPANY FOR THE VOCATIO NAL SKILLS DEVELOPMENT AND TRAINING PROGRAMS CONDUCTED BY THE APPE LLANT FOR ITS STUDENTS DURING THE RELEVANT TIME CONFIRMING THA T SUCH PROGRAMS DID NOT RELATE TO ISSUES COVERED IN ALLEGED 'VYAPAM SCAM'. A MANAGEMENT CERTIFICATE TO THIS EFFECT IS ACCORDINGL Y ANNEXED WITH THIS SUBMISSION. DETAILS OF PROGRAM CONDUCTED, STUDENTS ATTENDED AND AFFIL IATED BODY WITH RESULTS OF THE STUDENTS ARE ALREADY ON RECORD IN PAPER BOOK VOLUME - 2 FROM PAGE 36 TO 64. 7. FROM THE AFORESAID OBSERVATION OF THE LD. CIT, I T IS EVIDENT FROM THE OBSERVATION OF LD. CIT(A) THAT THE BASIS OF CAN CELLATION OF BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 13 REGISTRATION HAS NOT ON THE BASIS THAT THE ASSESSEE HAS VIOLATED PROVISIONS OF INCOME TAX ACT HOWEVER PURELY ON THE BASIS THAT DR. VINOD BHANDARI WAS INVOLVED IN SOME SCAM RELATED TO ADMISSION OF STUDENTS WHICH WAS BEING INVESTIGATED BY THE INVEST IGATION AGENCIES. IN OUR VIEW THE LD. CIT OUGHT TO HAVE BAS ED HER FINDING ON MATERIAL RELATED TO THE APPELLANT ASSESSEE. THERE I S NO WHISPER OF ANY MATERIAL RELATED TO THE APPELLANT ASSESSEE. UND ER THESE FACTS WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE LD. CIT TO RECONSIDER THE ISSUE OF REJECTION OF REGISTRATION U/S 12AA OF THE ACT. THUS, GROUNDS RAISED IN THIS APPEAL ARE ALLOWED FOR STATI STICAL PURPOSES. NOW WE TAKE ASSESSEE APPEAL IN ITANO.656/IND/2014 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE, WAS NOT JUS TIFIED IN CANCELLING THE REGISTRATION GRANTED U/S 80G OF THE INCOME TAX A CT, 1961 TO THE APPELLANT TRUST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE, WAS NOT JUS TIFIED IN CANCELLING THE REGISTRATION OF THE TRUST U/S 80G OF THE INCOME TAX ACT, 1961 WHEN A TRUSTEE OF THE APPELLANT TRUST WAS SUSPECTED TO BE INVOLVED IN SOME UNLAWFUL ACTIVITY WHICH WAS NOT CONNECTED WITH THE PERFORMANCE OF THE ACTIVITIES OF THE TRUST. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE, WAS NOT JUS TIFIED IN CANCELLING THE REGISTRATION U/S 80G OF THE INCOME TAX ACT, 196 1 BASED ON SUSPICION, REPORTS NOT CORRECTED WITH THE ACTIVITIES OF THE TRUST AND HOLDING WITHOUT ANY BASIS THAT THE ACTIVITIES BEING RUN BY SUCH INSTITUTION ARE FARCE ONLY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE, WAS NOT JUST IFIED IN NOT CONSIDERING THE VARIOUS SUBMISSIONS MADE BY THE TRUS T BEFORE THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE BY OMI TTING TO MENTION REASONS AS TO WHY THE POINT WISE SUBMISSION S WERE NOT FOUND TO BE SATISFACTORY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX - I, INDORE ERRED IN REAC HING TO A BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 14 CONCLUSION THAT NO CHARITABLE ACTIVITY COULD BE CARR IED OUT BY THE TRUST. 8. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE POIN TED OUT THAT THE REGISTRATION GRANTED U/S 80G OF THE ACT WAS REJECTE D IN CONSEQUENCE OF THE REGISTRATION U/S 12AA OF THE ACT. 9. LD. DEPARTMENT REPRESENTATIVE (DR) CONCEDED THIS FACT. 10. WE HAVE HEARD BOTH REPRESENTATIVES OF THE PARTI ES IN APPEAL, WE FIND THAT THE LD. CIT HAD CANCELLED REGISTRATION U/ S 80G OF THE ACT WHILE OBSERVING AS UNDER: BHANDARI GROUP OF HOSPITALS & INSTITUTIONS 181, CL ERK COLONY, INDORE HAD APPLIED FOR REGISTRATION/APPROVAL U/S 80G OF THE IT ACT, 1961 ON 25.04.2013. REGISTRATION/APPROVAL U/S 80G W AS GRANTED TO THE TRUST AS THERE WAS NO ADVERSE REPORT WITH REGAR D TO THE ACTIVITIES OF THE TRUST REFERENCE ORDER F.NO. CIT-I/IND/TECH/8 0G/2/2013-14 DT.23.10.2013. IN CONSEQUENCE TO THE CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE I.T. ACT, 1961 VIDE THIS OFFICE ORDER F.NO.CIT/IND/TEC H/12A/2014- 15, INDORE DATED 12.09.2014, REGISTRATION/APPROVAL U /S 80G OF THE I.T. ACT 1961 IS HEREBY CANCELLED DUE TO DETAILED REAS ONS MENTIONED IN THE CANCELLATION ORDER OF 12AA(3) DATED 12.09.201 4. 11. AS IN ITANO.657/IND/2014 WE HAVE RESTORED THE I SSUE OF CANCELLATION FOR REGISTRATION U/S 12AA OF THE ACT F OR RECONSIDERATION BY THE LD. CIT, THEREFORE, THE IMPUGNED ORDER IN TH IS APPEAL IS ALSO SET ASIDE AND THE ISSUE OF CANCELLATION FOR REGISTR ATION U/S 80G OF THE ACT WOULD ALSO BE RECONSIDERED BY THE LD. CIT. GROUNDS RAISED IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES . BHANDARI GROUP O F HOSPITAL & INSTITUTIONS 15 12 . IN THE RESULT, BOTH THE APPEAL OF ASSESSEE IN ITANO.656/IND/2014 & ITANO.657/IND/2014 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 03 .01.2 019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 03/01/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE