Tejas Education Society, Pune V. CIT-IV, Pune

ITA 761/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9780 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-10-2012
• Assessment Year: misc
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Assessee Lawyers: DR PRAYAG JHA
• Keywords: Search and seizure; Charitable institution; Cancellation of registration
• Section: 133A; 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 761/PN/2011 (ASSTT. YEA R : -) TEJAS EDUCATION SOCIETY, APPELLANT 62 GIRISH SOCIETY, WARJE, PUNE 411052 PAN :AAATT1348N V. COMMISSIONER OF INCOME TAX - IV RESPONDENT 60/61, ERANDWANE PRAPTIKAR SADAN, KARVE ROAD, PUNE 411004 APPELLANT BY : DR. P RAYAG JHA RESPONDENT BY : SHRI. M UKESH VERMA DATE OF HEARING : 05/12/ 12 DATE OF PRONOUNCEMENT : 19-12-12 O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT - IV, PUNE PASSED U/S. 12AA (3) OF THE I.T. ACT DATED 30.3.2011 CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APP EAL : 1. AS PER THE FACTS OF THE CASE AND THE LEGAL POSI TION, THE HON. CIT IV PUNE HAS ERRED IN CANCELLING THE REGISTRATION U/S. 12A GRANTED ON 15/01/1989 WITHOUT PROVING CONCLUSIVELY THAT THE TR UST IS NOT GENUINE AND NOT CARRYING OUT THE ACTIVITIES IN ACCORDANCE OF TH E OBJECTS OF THE TRUST. THEREFORE IT IS EARNESTLY REQUESTED TO RESTORE THE REGISTRATION ALREADY GRANTED TO SAVE THE CAREER OF 2,500 RURAL STUDENTS OF THE TRUST. 2. THE HON. CIT IV PUNE HAS ERRED TOTALLY IN REJECT ING THE REGISTRATION BASED ON THE FACTS NARRATED BY SOMEBODY BUT NOT PRO VED CONCLUSIVELY, THUS IT IS A HALF HEARTED EFFORT TO CANCEL THE REGI STRATION AND PUTTING THE CAREER OF ABOUT 2,500 RURAL STUDENTS OF THE REPUTED SCHOOL AT STAKE. THEREFORE IT IS HUMBLY REQUESTED TO RESTORE THE REG ISTRATION. 3. IT IS IMPORTANT TO BRING TO YOUR HONOURS KIND NO TICE THAT AT ANY STAGE THE ALLEGATIONS MADE BY THE CIT IV PUNE ARE N OT PROVED WITH DOCUMENTARY EVIDENCES OR OTHERWISE, THEREFORE KINDL Y RESTORE THE REGISTRATION U/S. 12A TO YOUR APPELLANT TRUST. 2 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - 2. THE ASSESSEE IS A TRUST REGISTERED UNDER THE BOM BAY PUBLIC TRUST ACT. THE ASSESSEE WAS GRANTED THE REGISTRATION U/S . 12A OF THE ACT ON 15.1.1989. THE LD CIT HAS OBSERVED THAT THE ASSESS EE WAS ASKED TO FILE THE DETAILS OF THE FIXED ASSET FOR THE CURRENT YEAR AND RECONCILE ALL THE INVESTMENTS LIKE AUTO SWEEP INVESTMENT, INVESTMENT IN BUILDING AND F.D. ETC., IT IS OBSERVED THAT THOUGH THE DETAILS WERE FILED , THE SAME WERE NOT RECONCILED WITH CASH AND BANK BALANCES FOR THE F.Y . 2007-08 AND F.Y. 2008-09. THE ADDITIONS TO THE ASSETS WERE ALSO NOT SUPPORTED BY THE RECEIPTS OR ANY OTHER BILLS PARTICULARLY IN RESPECT OF SCHOOL BUS LIBRARY, FURNITURE, REPAIRS, COMPUTERS, EDUCATIONAL EQUIPMEN TS, COMPOUND WALL, ELECTRICAL EQUIPMENTS AND FITTINGS ETC. IT IS FUR THER OBSERVED THAT THE ASSESSEE HAS NOT FILED DETAILS OF RESERVES AND SURP LUSES CARRIED FORWARD FROM THE LAST YEAR AND THERE ARE NO PROOFS OF FILIN G FORM NO. 10 FOR CLAIMING CARRY FORWARD OF THE RESERVES. THE LD CIT HAS OBSERVED THAT THE ASSESSEE WAS CHARGING THE FEES MORE THAN THE AVERAG E STANDARD SCHOOL OR GOVT. SCHOOL AND THAT INDICATES THAT THERE IS NO EDUCATION IMPARTED ON CHARITY OR NO CONCESSION OF FEES IS ALSO OFFERED BUT RATHER MORE FEES ARE COLLECTED. IT IS FURTHER OBSERVED THAT IT IS RELIA BLY LEARNT THAT THE ASSESSEE WAS COLLECTING THE DONATIONS BEFORE OFFERING THE AD MISSION TO VARIOUS CLASSES OF BOTH THE ENGLISH & MARATHI CLASSES. 2.1. IT IS FURTHER OBSERVED THAT IN RESPECT OF THE SALARY PAYMENT TO THE TEACHER AND THE STAFF, SAME IS ALSO NOT CORRECTLY M ENTIONED AS THERE IS AN ALLEGATION THAT THE TRUSTEE IS TAKING THE SIGNATURE ON THE SALARY PAYMENT AS PER THE SALARY REGISTER, BUT IS NOT ACTUALLY MAK ING EXACT PAYMENT BUT DEDUCTING SOME PERCENTAGE AS A MANAGING TRUSTEE WH ICH IS VIOLATION OF THE PROVISIONS OF SEC. 13(1)(C ) OF THE ACT. HE HA S FURTHER NOTED THAT THE TEACHERS ARE AFRAID OF CARRYING TRUTH IN RESPECT O F THE SALARY RECEIVED BY THEM. IT ALLEGED IN THE ORDER THAT ASSESSEE IS ENG AGED IN THE COERCION ON THE TEACHERS AND STAFF FOR MIS UTILIZING THE TRUST FUNDS FOR PERSONAL BENEFIT. 2.2. THE LD CIT HAS ALSO MADE THE OBSERVATION ON THE ACCOUNTS. HE HAS OBSERVED THAT GROSS RECEIPTS FROM THE SCHOOL AR E NOT FULLY ACCOUNTED AND THE A.O IS DIRECTED TO VERIFY THE CORRECTNESS A FTER INVESTIGATING THE CASE FROM ALL ANGLE. IT IS OBSERVED THAT THERE IS NEED OF INVESTIGATION OF FALSE EXPENSES CLAIMED BY THE TRUST LIKE LESSER PA YMENT TO THE STAFF AND SHOWING THE OTHER PAYMENTS ON THE PAPER. THE A.O I S DIRECTED TO VERIFY THE SAID FACT. IT IS OBSERVED THAT THE ASSESSEE H AD MADE IT COMPULSORY 3 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - TO PURCHASE THE UNIFORMS AND OTHER MATERIAL FROM ON LY ONE SHOPKEEPER HAVING SOME FINANCIAL ARRANGEMENT WHICH IS NOT EXP RESSLY DEMONSTRATED IN THE PAPER BUT AMOUNTS TO VIOLATION OF PROVISIONS OF SEC. 13(1)(C ) OF THE ACT. THE LD CIT HAS ALSO NOTED THAT ASSESSEE I S CHARGING MORE FEES THOUGH IT IS A RURAL AREA. THE LD CIT HAS FURTHER NOTED THAT THE ASSESSEE TRUST IS BEING USED AS INSTRUMENT BY THE MANAGING TRUSTEE SHRI SHANU PATEL WHERE HE HAS GIVEN HIS OWN BUILDING FOR CHEAP ER RENT, SO THAT THE INDIVIDUAL TAX INCIDENCE IS REDUCED. IN SUM AND S UBSTANCE, THERE IS A CHARGE AGAINST MANAGING TRUSTEE FOR EVADING THE LE GITIMATE PAYMENT OF HIS INDIVIDUAL INCOME-TAX. HE FURTHER OBSERVED THA T SO FAR AS THE A.YS. 2009-10 AND 2010-11 ARE CONCERNED, IT IS REPORTED T HAT THE ASSESSEE HAS SPENT LESS THAN 85% ON THE OBJECT OF THE TRUST AND HE OTHERWISE ALSO NOT ELIGIBLE FOR EXEMPTION U/S. 11 TO SEC.13. 2.3. THE LD CIT HAS NOTED THAT THE ASSESSEE TRUST IS RUNNING A SCHOOL IN RESIDENTIAL PREMISES BELONGING TO THE GIRISH SOCIET Y AND THE RESIDENTS ARE COMPLAINING ABOUT BUSINESS ACTIVITY OF THE SCHOOL R UN BY THE TRUST. THE LD CIT ASKED THE ASSESSEE TO PRODUCE THE PERMISSION FR OM THE CONCERNED REGISTRAR OF THE CO-OPERATIVE SOCIETY FOR RUNNING T HE SAID SCHOOL IN THE PRIVATE SOCIETY. HE, THEREFORE, CAME TO THE CONCLU SION THAT THE ASSESSEE IS RUNNING THE SCHOOL IN THE ILLEGAL PREMISES (?) HE HAS FURTHER NOTED THAT THERE IS NO BANK A/C IS IN THE NAME OF THE TRUST BU T BANK A/C. IS IN THE JOINT NAMES OF THE CHAIRMAN AND HEAD MISTRESS. FIN ALLY HE CONCLUDED THAT HE IS SATISFIED THAT THERE IS NO GENUINE TRUS T AND ACTIVITIES ARE NOT CARRIED IN ACCORDANCE WITH THE OBJECTS OF THE TRUST . LD CIT HAS, THEREFORE, CANCELLED THE REGISTRATION GRANTED TO TH E ASSESSEE TRUST U/S. 12A OF THE I.T. ACT DATED 15.1.1989 USING HIS POWE RS U/S. 12AA(3) OF THE ACT. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD COUNSEL TOOK US THROUGH THE PROVIS IONS OF SEC.12AA(3) OF THE ACT AND SUBMITS THAT THE LD CIT HAS MISDIRECTED HIMSELF AND HAS TRAVELLED BEYOND THE SCOPE OF THE SAID PROVISO. NOT HING IS THERE ON RECORD TO SHOW THAT THE ACTIVITIES OF THE TRUST ARE NOT IN ACCORDANCE WITH THE OBJECTIVE. NOTHING IS ALSO THERE ON RECORD TO SHOW THAT THE ACTIVITEES OF THE ASSESSEE TRUST ARE NOT GENUINE. HE ARGUES THAT LD CIT HAS NO JURISDICTION TO LOOK INTO THE UTILIZATION OF THE F UNDS/INCOME OF THE TRUST AND THE SAID POWER IS WITHIN THE EXCLUSIVE JURISDIC TION OF THE A.O. U/S. 13. HE SUBMITS THAT NOWHERE IT IS DISPUTED THAT THE ONL Y ACTIVITY OF THE 4 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - ASSESSEE-TRUST IS RUNNING THE SCHOOL WHICH IS IMPAR TING EDUCATION AND THE SAID CONSTITUTE CHARITABLE PURPOSE AS PER THE PROVI SION OF SE. 2(15) OF THE ACT. THE LD COUNSEL RELIED ON THE FOLLOWING DECISI ONS : 1. OXFORD ACADEMY FOR CAREER DEV. V. CHIEF CIT, 315 ITR 382 (ALL.) 2. AGGARWAL MITRA MANDAL TRUST V. DIT (EXEM.), NEW DELHI, 106 ITD 531 (DEL.) 3. AJIT EDUCATION TRUST V. CIT, BARODA (2010), 42 S OT 415 (AHD.) 4. TISHIR SHIKSHA PRASAR SAMITI V. CIT, GWALIOR, 2 1 TAXMAN.COM 525 (AGRA) 4. BEFORE PROCEEDING TO DECIDE THE APPEAL, WE MAY R EFER HERE RELEVANT PROVISION OF SEC. 12AA(3) OF THE ACT WHICH READS AS UNDER : [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) [OR HAS OBTAINED REGI STRATION AT ANY TIME UNDER SECTION 12A[AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 1996 (33 OF 1996]] AND SUBSEQUENTLY THE COMMIS SIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION AR E NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITI NG CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: AS PER SUB-SECTION 12AA(3), THE COMMISSIONER IS VES TED WITH THE POWER TO CANCEL THE REGISTRATION WHICH IS GRANTED UNDER 12A/ 12AA OF THE ACT, IF HE IS SATISFIED WITH (A) THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NON- GENUINE OR (B) ARE NOT BEING CARRIED OUT IN ACCORDA NCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. 5. THE PROVISIONS OF SEC. 12AA(3) HAD COME FOR THE JUDICIAL SCRUTINY IN THE CASE OF OXFORD ACADEMY FOR CAREER DEV. (SUPRA) AND IT IS HELD AS UNDER : THE EXPRESSION CHARITABLE PURPOSE IS DEFINED IN SECTION 2(15) OF THE INCOME-TAX ACT, 1961. IT IS OF INCLUSIVE NATUR E AS REVEALED IN THE LANGUAGE. EARLIER THE WORDS THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY IN THE DEFINITION WERE SUCC EEDED BY THE WORDS NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFI T. THESE WORDS WERE OMITTED BY THE FINANCE ACT, 1983, WITH EFFECT FROM APRIL 1, 1984. 5 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - THE ORDER CANCELLING THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION UNDER SECTION 12AA BEING A QUASI-JUDICIAL ORDER DO ES NOT FALL WITHIN THE CATEGORY OF ORDERS MENTIONED UNDER SECTION 21 OF TH E GENERAL CLAUSE ACT, 1897, WHICH PROVIDES THAT THE POWER CONFERRED ON AN AUTHORITY TO ISSUE ORDERS INCLUDES THE POWER TO RESCIND SUCH ORDERS, A ND THE COMMISSIONER WOULD NOT HAVE POWER TO RESCIND THE ORDER PASSED B Y THE COMMISSIONER EARLIER GRANTING THE REGISTRATION TO A TRUST OR INS TITUTION. SECTION 12AA(3) WAS INCORPORATED WITH EFFECT FROM OCTOBER 1, 2004, TO EMPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION. THE OBJECT OF THIS PROVISION IS NOT CLARIFICATORY O R EXPLANATORY. SO PRIOR TO THAT DATE, THE AUTHORITIES GRANTING REGISTRATION HA D NO INHERENT POWER TO WITHDRAW OR REVOKE THE REGISTRATION ALREADY GRANTED . ONCE AN INSTITUTION CAME WITHIN THE PHRASE EXISTS SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PROFIT NO OTHER C ONDITION LIKE APPLICATION OF INCOME WAS REQUIRED TO BE COMPLIED WITH. THE ME RE EXISTENCE OF PROFIT/SURPLUS DID NOT DISQUALIFY THE INSTITUTION. BREACH OF THE CONDITIONS OF THE TRUST DEED WOULD NOT DISENTITLE THE INSTITUT ION FROM GETTING THE BENEFIT WHICH THE INSTITUTION HAD BEEN GRANTED EARL IER BEING A CHARITABLE TRUST. AFTER REGISTRATION, FURTHER PROBE INTO THE OBJECTS IS NOT PERMISSIBLE. THE PETITIONERS, A REGISTERED SOCIETY, WAS GRANTED REGISTRATION UNDER SECTION 12A ON APRIL 1, 1999. A SURVEY UNDER SECTION 133A WAS CONDUCTED AT THE BUSINESS PREMISES ON SEPTEMBER 20, 2002, FROM WHERE DOCUMENTS WERE IMPOUNDED. THE REGISTRATION WAS CAN CELLED FOR THE ASSESSMENT YEARS 2000-01 AND 2001-02 ON THE GROUND THAT THE SURPLUS WAS QUITE HEAVY. IN THE ORDER, THE COMMISSIONER M ENTIONED THAT THE PETITIONER WAS ENGAGED IN COMMERCIAL ACTIVITIES RAT HER THAN CHARITABLE. AS PER THE BALANCE-SHEET, HUGE AMOUNT WERE CHARGED FRO M THE STUDENTS. THE PROFIT MARGIN EMBODIED IN THE CHARGES TAKEN FRO M THE STUDENTS WAS HUGE AND IT PROVED THE PROFIT MOTIVE OF THE PETITIO NER. ON A WRIT PETITION : HELD, ALLOWING THE PETITION, (I) THAT EVEN ASSUMING THAT THE COMMISSIONER HAS POWER TO RESCIND THE ORDER OF REGI STRATION ON THE GROUND THAT THE REGISTRATION HAD BEEN OBTAINED BY P RACTICING FRAUD OR FORGERY, THERE WAS NOTHING IN THE SHOW-CAUSE NOTICE OR IN THE ORDER CANCELLING REGISTRATION ALLEGING THAT THE PETITIONE R HAD OBTAINED THE REGISTRATION BY PRACTICING FRAUD OR FORGERY. (II) THAT THE PETITIONER WAS PREPARING STUDENTS BY PROVIDING COACHING/GUIDELINES TO GET ADMISSIONS IN PROFESSION AL INSTITUTIONS TO PURSUE THEIR STUDIES. THE SENSE IN WHICH THE WORD EDUCATION HAS BEEN USED IN SECTION 2(15) IS THE SYSTEMATIC INSTRUCTION , SCHOOLING OR TRAINING GIVEN TO THE YOUNG IN PREPARATION FOR THE WORK OF L IFE. SIMILARLY, EXTENDING FINANCIAL ASSISTANCE/SCHOLARSHIP, ETC., T O STUDENTS FOR THEIR EDUCATIONAL PURPOSE WOULD FALL WITHIN THE CONNOTATI ON OF EDUCATION. THEREFORE, THE PETITIONER WAS ENGAGED IN EDUCATION AL ACTIVITIES WHICH FALLS UNDER CHARITABLE PURPOSE. THUS, THE ORDER CA NCELLING THE REGISTRATION BY THE COMMISSIONER AS PER THEN LAW WAS WITHOUT POW ER AND JURISDICTION AND, THEREFORE, IT WAS LIABLE TO BE SET ASIDE. 6. IN THE CASE OF AGGARWAL MITRA MANDAL TRUST (SUPR A), IN WHICH THE TRIBUNAL HAS EXPLAINED THE SCOPE OF POWERS OF THE C IT FOR REFUSING TO GRANT THE REGISTRATION U/S. 12AA OF THE ACT AND THU S HELD AS UNDER : 6 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - 7. AS ALREADY NOTED, THE PROCEDURE FOR REGISTRATIO N LAID DOWN IN SECTION 12AA REQUIRES THE CIT TO SATISFY HIMSELF AB OUT THE GENUINENESS OF ACTIVITIES AND OBJECT OF THE TRUST OR INSTITUTION A ND AS SUCH, THE SCOPE OF HIS POWERS IS LIMITED IN THIS REGARD TO MAKE SUCH E NQUIRIES, AS HE MAY DEEM FIT, TO SATISFY HIMSELF IN RESPECT OF THESE TW O ASPECTS. AS HELD BY HONBLE SUPREME COURT IN THE CASE OF AHMEDABAD RANA CASTE ASSOCIATION (SUPRA), AN OBJECT BENEFICIAL TO THE SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY AND TO SERVE A CHARITABLE PU RPOSE, IT IS SUFFICIENT IF THE INTENTION IS TO BENEFIT A SECTION OF THE PUBLIC AS DISTINGUISHED FROM A SPECIFIED INDIVIDUAL. THIS DECISION OF HONBLE APE X COURT FOLLOWED SUBSEQUENTLY BY HONBLE ALLAHABAD HIGH COURT IN TH E CASE OF SURJI DEVI KUNJI LAL JAIPURIA CHARITABLE TRUST (SUP RA) AND IN THE CASE OF PT. RAM SHANKAR MISRA TRUST (SUPRA) TO HOLD THAT THE EX PENDITURE INCURRED ON A PUBLIC CHARITABLE OBJECT STILL HOLDS THE FIELD NO TWITHSTANDING THE PROVISIONS CONTAINED IN SECTION 13(1)(B) SINCE THE DEFINITION OF THE TERM CHARITABLE PURPOSE GIVEN IN SECTION 2(15) CONTINU ES TO REMAIN THE SAME. THE PROVISIONS OF SECTION 13(1) ARE THUS NOT DIREC TLY RELEVANT IN THIS REGARD. NOTHING CONTAINED IN SECTION 11 OR SECTION 12 SHALL OPERATE SO AS TO EXCLUDE, FROM THE TOTAL INCOME OF THE PREVIOUS Y EAR, OF THE PERSON.. WHICH CLEARLY ENVISAGES OPERATION OF SECTION 11 OR SECTION 12 BEFORE THE PROVISIONS OF SECTION 13 CAN BE APPLIED OR INVOKED IN A GIVEN CASE. IT ALSO SHOWS THAT THE SAID PROVISIONS CAN BE APPLIED OR INVOKED ONLY AT THE TIME OF COMPUTATION OF TOTAL INCOME OF THE PREVIOU S YEAR OF THE PERSON WHO IS CLAIMING EXEMPTION UNDER SECTION 11 OR SECTI ON 12. BOTH THESE SITUATIONS CONTEMPLATED IN SECTION 13 CAN ARISE ONL Y AND ONLY IF REGISTRATION UNDER SECTION 12A IS GRANTED TO THE SA ID PERSON. IF THE SAME IS NOT GRANTED AND THE PERSON IS REFUSED THE REGIST RATION UNDER SECTION 12A, HE WOULD NOT BE ENTITLED TO CLAIM ANY BENEFIT AVAILABLE UNDER SECTION 11 OR 12 AND THERE WILL BE NO OCCASION TO THE ASSES SING OFFICER TO INVOKE OR APPLY SECTION 13 IN HIS CASE. THIS POSITION WOU LD NOT ONLY BE CONTRARY TO THE SCHEME OF THE ACT AS LAID DOWN IN SECTIONS 1 1, 12, 12A, 12AA AND 13 BUT THE SAME MAY ALSO CAUSE PREJUDICE/HARDSHIP T O THE PERSONS IN CERTAIN CASES. FOR INSTANCE, THE OBJECTS; FOR WHIC H THE ASSESSEE TRUST IN THE PRESENT CASE IS ESTABLISHED, AS INDICATED IN OB JECT CLAUSES 3(1) AND 3(2), NO DOUBT ARE FOR THE BENEFITS OF A PARTICULAR COMMUNITY, VIZ. VAISH. NEVERTHELESS, AS PER OBJECT CLAUSE 3(4), IT WAS ALS O ESTABLISHED TO RUN SCHOOLS, COLLEGES, HOSPITALS ETC. FOR THE BENEFIT O F PUBLIC AT LARGE. IN THIS SITUATION, IF THE REGISTRATION APPLIED FOR UNDER S ECTION 12A IS NOT GRANTED TO IT FOR VIOLATION OF PROVISIONS OF SECTION 13(1)( B) AND IT IS ULTIMATELY FOUND THAT THE ASSESSEE-TRUST ACTUALLY ACCOMPLISHED THE OBJECTS AS INDICATED IN CLAUSE 3(4) ONLY FOR THE BENEFIT OF PU BLIC AT LARGE WITHOUT THERE BEING ANY ACTIVITY UNDERTAKEN AS PER OBJECT CLAUSES 3(1) AND 3(2), IT WOULD BE DEPRIVED OF ANY BENEFITS WHICH OTHERWI SE WERE AVAILABLE TO IT UNDER SECTION 11 OR SECTION 12. THIS CERTAINLY IS NOT THE LEGISLATIVE INTENTION AS REFLECTED IN THE SCHEME LAID DOWN IN S ECTIONS 11, 12, 12A, 12AA DISCUSSED, MAKES IT EXPLICITLY CLEAR THAT THE SAID PROVISIONS BECOME OPERATIVE OR RELEVANT ONLY AT THE STAGE OF ASSESSME NT WHEN ASSESSEE FOR BENEFITS UNDER SECTION 11 OR SECTION 12 WHILE COMPU TING THE TOTAL INCOME OF THE ASSESSEE OF THE RELEVANT PREVIOUS YEAR. THE APPLICATION OF SECTION 13 THUS FALLS WITHIN THE EXCLUSIVE DOMAIN OF THE AS SESSING OFFICER AND THE PROVISIONS CONTAINED THEREIN CAN BE INVOKED BY HIM WHILE FRAMING THE ASSESSMENT AND NOT BY THE CIT WHILE CONSIDERING TH E APPLICATION FOR REGISTRATION UNDER SECTION 12AA. 7 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - 7. IN THE CASE OF AJIT EDUCATION TRUST (SUPRA), THE TRIBUNAL HAS AGAIN EXAMINED THE SCOPE OF POWERS OF THE CIT FOR REFUSI NG THE REGISTRATION U/S. 12AA AND IT IS HELD AS UNDER : 17. THE PROPOSITION LAID DOWN THEREIN HAS TO BE APP LIED IN THE PRESENT APPEAL. THAT THE LD. COMMISSIONER HAS TO COMPREHEND THE OBJECTS OF THE TRUST WHETHER THEY ARE MEANT FOR PUBLIC UTILITY [RE QUIREMENT OF SECTION 12AA(1)(B)] AND SECONDLY THAT THE ACTIVITIES HAVE A CTUALLY AS ALSO GENUINELY BEEN CARRIED OUT TO FULFIL THE AIMS OF TH E TRUST [REQUIREMENT OF SECTION 12AA(1)(A). IN THE PRESENT CASE, THE TRUST BEING AN EDUCATIONAL INSTITUTION AND UNDISPUTEDLY IMPARTING EDUCATION, T HEREFORE, IT WAS NOT JUSTIFIABLE ON THE PART OF THE LD. COMMISSIONER TO DENY THE REGISTRATION. NEVERTHELESS, THE APPLICATION OF INCOME AND THE UTI LIZATION OF FUNDS IS ALWAYS SUBJECT TO SCRUTINY BY THE ASSESSING OFFICER WHILE ASSESSING THE INCOME OF THE TRUST, FOR THIS LEGAL PROPOSITION WE CAN RELY ON SANJEEVAMMA HANUMATHE GOWDA CHARITABLE TRUST V. DIT (EXEMPTIONS)[2006] 285 ITR 327 (KAR.), CIT V. RED ROSE SCHOOL [2007] 163 TAXMAN 19 (ALL.), AND ACHARYA SEWA NIYAS UTTARANCHAL V. CIT [2007] 13 SOT 54 (DELHI). WE MAY, THEREFORE, CLARIFY THAT MERELY B Y GRANTING A REGISTRATION UNDER SECTION 12A/12AA OF THE INCOME-T AX ACT, 1961, A TRUST IPSO FACTO IS NOT ENTITLED FOR THE EXEMPTIONS PRESC RIBED UNDER SECTIONS 11 AND 12 OF THE INCOME-TAX ACT, 1961. NEITHER DE JUR E NOR DE FACTO, I.E., IN PRINCIPLE NOR IN PRACTICE, A TRUST CAN GET EXEMPTIO N UNDER SECTIONS 11 AND 12 MERELY ON GETTING A REGISTRATION UNDER SECTION 1 2AA(IN THE PAST 12A) OF THE INCOME-TAX ACT, 1961. 18. IN THE LIGHT OF ABOVE DISCUSSION, WE HEREBY HOL D THAT THE CANCELLATION OF REGISTRATION, ON BOTH THE COUNTS, I .E. ON MERITS AS ALSO ON THE LEGALITY OF JURISDICTION, WAS NOT IN ACCORDANCE OF LAW. AS A RESULT, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 8. WE HAVE ANXIOUSLY EXAMINED THE IMPUGNED ORDER WH ICH IS SUBJECT MATTER OF APPEAL BEFORE US. THE OBJECTION RAISED B Y THE LD CIT IS THAT THE ASSESSEE TRUST IS CHARGING THE HIGHER FEES AS COMPA RED TO THE GOVT. SCHOOL IN THE RURAL AREA. THERE ARE CERTAIN ALLEGA TIONS AGAINST THE TRUSTEE IN RESPECT OF THE ALLEGED LESS PAYMENT OF THE SALAR Y TO THE STAFF. THERE IS FURTHER ALLEGATION AGAINST THE TRUSTEE, I.E. COERS ION IS USED FOR PAYMENT OF LESSER SALARY TO THE STAFF. IT IS ALLEGED THAT THE ASSESSEE TRUST IS RUNNING THE SCHOOL WITHOUT PERMISSION OF THE REGISTRAR OF T HE SOCIETY IN THE RESIDENTIAL AREA. APART FROM THIS, THE LD CIT IS T OTALLY SILENT IN RESPECT OF THE OBJECT OF THE TRUST, THE EXPRESSION ACTIVITIES IN SUB-SECTION (3) TO SEC.12AA IS TO BE EXAMINED IN THE CONTEXT OF THE OB JECTS OF THE TRUST. MOREOVER, SEC. 12AA(3) IS TO BE READ WITH SEC. 12AA (1)(B) AS THAT IS ONE OF THE REQUIREMENT FOR GRANTING THE REGISTRATION TO THE TRUST OR INSTITUTION. ADMITTEDLY IN THE PRESENT CASE, THE ASSESSEE HAD BE EN GRANTED REGISTRATION W.E.F. 15 TH JANUARY 1989 (U/S. 12A OF THE ACT AS IT WAS 8 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - APPLICABLE). THE ASSESSEE HAS FILED THE COPIES OF THE ASSESSMENT ORDER FOR THE A.YS. 2005-06 & 2008-09 AND IT IS SEEN THAT THOUGH THE ASSESSMENT PROCEEDINGS WERE COMPLETED U/S. 143(3), NOT A SINGLE WHISPER IS THERE IN THOSE ORDERS IN RESPECT OF THE ALLEGED VIOLATION OF SEC.13(1)(C). THE ENTIRE IMPUGNED ORDER IS ONLY ME RELY BASED ON UNSUPPORTED ALLEGATION AND SHOWS THE EXCESS USE OF POWER. THERE IS NOT A WHISPER REGARDING THE OBJECT OF THE TRUST AND AC TIVITIES WHICH ARE TO BE SEEN IN THE CONTEXT OF THE OBJECTS OF THE TRUST WHI CH ARE NOT ALLEGED TO BE GENUINE. THE BASIC PURPOSE OF SUB-SECTION (3) OF S EC. 12AA IS TO CHECK THE MIS-USE OF THE EXEMPTION UNDER THE PRETEXT OF C ARRYING OUT THE CHARITABLE ACTIVITIES WHEN THE SAME ARE NOT SO. TH E CIT(A) HAS TO MAKE OUT CLEAR CASE FOR EXERCISING THE POWERS U/S. 12AA( 3) OF THE ACT. UNFOUNDED AND BASELESS ALLEGATION WITHOUT ANY EVIDE NCE ARE OF NO USE. THE CIT COULD HAVE HIMSELF CARRIED OUT THE INVESTIG ATION TO PROVE THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE OR NOT I N ACCORDANCE WITH THE OBJECT. SO FAR AS THE OBJECT OF THE TRUST IS CONCE RNED, NOWHERE IT IS DISPUTED THAT THE ASSESSEE IS ENGAGED IN IMPARTING THE EDUCATION. IN OUR OPINION, THE ORDER PASSED BY THE CIT- IV, PUNE, DOE S NOT STAND TO THE TEST CONTEMPLATED IN SUB-SECTION (3) TO SEC. 12AA OF THE ACT. WE, ACCORDINGLY, CANCEL THE SAME. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH DECEMBER 2012. SD/- SD/- (R.K. PANDA) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 19TH DECEMBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. ADDL. CIT, R-7, PUNE 4. THE D.R. A BENCH, PUNE 5. GUARD FILE 9 ITA NO.761/PN/2011 TEJAS EDUCATION SOCIETY A.Y. - /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE