Young Indian, New Delhi V. CIT(E), New Delhi

ITA 7751/DEL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3242 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 26-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G C SRIVASTAVA SP E CL
• Keywords: Reopening of assessment; Gift; Business income; Depreciation; Charitable institution; Retrospective amendment; Additional evidence; Wholly owned subsidiary; Competent authority; Benefit of exemption; Cancellation of registration; Reason to believe; Borrowed satisfaction; TDS; Set aside; Capital Gains
• Section: 133(6); 80G; 12A; 12AA; 80IA; 201; 64; 131; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 7751/DEL/2017 YOUNG INDIAN, 5A, HERALD HOUSE, BAHADURSHAH ZAFAR MARG, NEW DELHI PAN- AAACY4625Q (APPELLANT) VS. CIT (EXEMPTION) NEW DELHI. (RESPONDENT) APPELLANT BY SH. YOGESH A. THAR , CA SH. ANKIT AGARWAL, CA SH. NIKHIL BHALLA, ADVOCATE SH. SUVINAY KUMAR DASH, ADVOCATE RESPONDENT BY SH. G.C. SRIVASTAVA, SP E CL. COUNSEL ORDER PER AMIT SHUKLA, J.M.: 01 THE AFORESAID APPEAL HAS BEEN FILED BY YOUNG INDI AN [ IN SHORT YI] , APPELLANT-ASSESSEE AGAINST IMPUGNED O RDER DATED 26.10.2017, PASSED BY THE LD. CIT(EXEMPTION), NEW DELHI, CANCELLING THE REGISTRATION U/S. 12AA(3) OF THE INCOME-TAX ACT, 1961[ IN SHORT THE ACT] , GRANTE D EARLIER DATE OF HEARING 24 .09.2019 DATE OF PRONOUNCEMENT 15 .11.2019 ITA NO. 7751/DEL/2017 2 TO THE ASSESSEE U/S. 12A R.W.S. 12AA, VIDE CERTIFICA TE DATED 09.05.2011 W.E.F. ASSESSMENT YEAR 2011-12. 02 IN THE GROUNDS OF APPEAL, THE APPELLANT ASSESSEE HA S RAISED FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (E) ERRED IN WITHDRAWING THE REGISTRATION GRANTED U/S. 12A RETROSPECTIVELY FROM A.Y. 2011-12 ON THE ALLEGED GROUNDS THAT THE ACTIVITIES CARRIED ON BY THE APPELLANT ARE NOT GENUINE AND ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (E) ERRED IN NOT APPRECIATING THAT THE ASSESSEE HAD SUO MOTO SURRENDERED ITS REGISTRATION U/S. 12A IN MARCH 2016 AND THAT ONCE THE REGISTRATION U/S. 12A IS SURRENDERED IN MARCH 2016, NOTHING SURVIVES TO BE CANCELLED SUBSEQUENTLY. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, TO ALTER AND/OR TO DELETE ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 03 BEFORE US, DURING THE COURSE OF MARATHON HEAR ING, FOUR VOLUMES OF PAPER BOOKS ON BEHALF OF THE APPELLANT-A SSESSEE HAVE BEEN FILED, ALONG WITH TWO SEPARATE SETS OF PAPE R ITA NO. 7751/DEL/2017 3 BOOKS OF ADDITIONAL EVIDENCES, ONE FILED DURING THE COURSE OF ARGUMENTS AND OTHER DURING THE COURSE OF REJOIND ER SUBMISSIONS. ON BEHALF OF THE DEPARTMENT, TWO SETS O F PAPER BOOKS HAVE BEEN FILED ALONG WITH A STATEMENT G IVING DATES AND EVIDENT OF VARIOUS STAGES. BESIDES THIS, VARIOUS DOCUMENTS AND JUDGMENTS WERE ALSO FILED FROM BOTH T HE SIDES. ALL THE SUBMISSIONS AND RELEVANT DOCUMENTS T HAT ARE GERMANE TO THE ISSUE INVOLVED SHALL BE DISCUSSED HEREINAFTER. BRIEF FACTS AND BACKGROUND OF THE CASE: 04 THE APPELLANT, YOUNG INDIAN WAS INCORPORATED AS A COMPANY ON 23.11.2010 U/S. 25 OF THE COMPANIES ACT, 1956. IT APPLIED FOR REGISTRATION U/S. 12A R/W SECTI ON 12AA ON 31.03.2010. IT WAS GRANTED REGISTRATION BY THEN D IT (EXEMPTION), NEW DELHI VIDE ORDER/CERTIFICATE DATED 09.05.2011 W.E.F. ASSESSMENT YEAR 2011-12. AS A PREL UDE, CERTAIN VITAL EVENTS PRECURSOR TO GRANT OF REGISTRA TION U/S. 12AA AND ANTECEDENT TO APPLICATION FOR REGISTRATION US 12AA NEED TO BE ELABORATED WHICH ARE GERMANE TO THE ISSUE INVOLVED. 05 ASSESSEE HAD FILED AN APPLICATION FOR INCORPORATION OF A COMPANY U/S. 25 OF THE COMPANIES ACT, 1956 ON 14.10.2010. MEMORANDUM OF ASSOCIATION WAS SUBSCRIBE D BY TWO DIRECTORS, NAMELY, MR. SUMAN DUBEY, HAVING 55 0 EQUITY SHARES, AND MR. SATYAN GANGARAM PITRODA (SAM ITA NO. 7751/DEL/2017 4 PITRODA) WITH 550 EQUITY SHARES. LICENSE U/S. 25 OF THE COMPANIES ACT, 1956 WAS GRANTED TO YI ON 23.11.2010. LATER ON, BOTH THE DIRECTORS TRANSFERRED THEIR SHAR ES TO MR. OSCAR FERNANDES AND MRS. SONIA GANDHI; AND MR. SAM PITRODA AND SUMAN DUBEY WERE APPOINTED AS DIRECTORS OF A COMPANY, M/S ASSOCIATED JOURNALS LIMITED (HEREIN RE FERRED TO AS AJL) ON 21.12.2010. ON 13.12.2010, MR. RAHU L GANDHI WAS APPOINTED AS DIRECTOR OF YI, WHO ACQUIRED 1900 SHARES RESULTING IN 36% STAKE IN YI; AND LATER ON, MRS. SONIA GANDHI BECAME THE DIRECTOR ON 22.01.2011 HAVI NG 36% OF STAKES WITH 1900 SHARES. ANOTHER RELEVANT FAC T TO THIS CHAIN OF EVENTS IS THAT VARIOUS LOANS WERE ADV ANCED BY ALL INDIA CONGRESS COMMITTEE [ IN SHORT THE AICC] TO AJL FROM TIME TO TIME AND AS ON 31.03.2010, THERE WAS OUTSTANDING OF RS. 88,86,68,976/- . FURTHER LOAN OF RS. 1,35,000/- WAS RECEIVED DURING THE PERIOD 01.04.2010 TO 16.12.2010. ON 16.12.2010, AICC, WHO HAD GIVEN LOAN TO AJL OVER THE PERIOD OF AROUND RS. 90 CRORES, TRAN SFERRED THE ENTIRE LOAN OF RS. 90 CRORES DUE FROM AJL IN FA VOUR OF YI FOR A CONSIDERATION OF RS. 50 LAKHS. THUS, AICC ASS IGNED LOAN OF RS. 90 CRORES OUTSTANDING AS PAYABLE IN B OOKS OF AJL TO YI AT RS. 50 LAKHS. SINCE YI DID NOT HAD F UNDS TO PAY CONSIDERATION OF RS. 50 LAKHS, IT TOOK LOAN O F RS. 1,00,00,000/- (ONE CRORE) FROM M/S. DOTEX MERCHANDI SE PVT. LTD., KOLKATA. OUT OF SAID LOAN, RS. 50 LAKH S WERE ITA NO. 7751/DEL/2017 5 PAID TO AICC ON 01.03.2011. HOWEVER, BEFORE THE PAY MENT OF RS. 50 LAKHS TO AICC, AJL HAD ALLOTTED 9,02,16, 898 SHARES (ALMOST 99.99% OF THE HOLDING) TO YI IN LIEU OF LOAN OF RS. 90 CRORES BY INCREASING THE SHARE CAPITAL FR OM RS. 1 CRORE TO RS. 10 CRORES. THUS, ALMOST ENTIRE SHARE HOLDING OF AJL WENT TO YI. CERTAIN ADDITIONAL SHARES OF AJL WE RE ALSO PURCHASED BY MRS. SONIA GANDHI, MR. RAHUL GANDHI AN D MRS. PRIYANKA GANDHI TO GAIN FULL CONTROL OF AJL. A T THE TIME OF MAKING AN APPLICATION FOR REGISTRATION U/S. 12AA, THE ASSESSEE COMPANY DISCLOSED THE LIST OF SHAREHOL DERS AND DIRECTORS OF YOUNG INDIAN DURING THE ASSESSMENT YEAR 2011-12 AS UNDER: NAME POSITION IN YI & NO. OF SHARES HELD MRS. SONIA GANDHI DIRECTOR SINCE 22.01.2011 - 1900 SHARES (36%) SHRI RAHUL GANDHI DIRECTOR SINCE 22.01.2011 - 1900 SHARES (36%) SHRI MOTI LAL VORA DIRECTOR SINCE 22.01.2011 - 600 SHARES SHRI OSCAR FERNANDES DIRECTOR SINCE 22.01.2011 - 600 SHARES SHRI SATYAN GANGARAM PITRODA (SAM PITRODA) DIRECTOR SINCE 23.11.2010 - HELD 550 SHARES BUT TRANSFERRED IT TO SHRI OSCAR FERNANDES SHRI SUMAN DUBEY DIRECTOR SINCE 23.01.2010 - HELD 550 SHARES BUT TRANSFERRED IT TO MRS. SONIA GANDHI. ITA NO. 7751/DEL/2017 6 06 THE CHRONOLOGY OF EVENTS RIGHT FROM THE DATE OF INC EPTION OF YOUNG INDIAN U/S. 25 OF THE COMPANIES ACT TILL THE DATE OF APPLICATION OF REGISTRATION U/S. 12AA AS AVAILABLE FROM RECORD CAN BE SUMMARIZED IN THE FOLLOWING MANNER: - DATES DOCUMENTS PARTICULARS 13.08.2010 APPLICATION MADE FOR INCORPORATION OF YI AS SECTION 25 COMPANY 01.09.2010 RESOLUTION PASSED BY BOARD OF DIRECTORS OF AJL FOR CHANGE OF ADDRESS OF OFFICE. R EGISTERED OFFICE OF AJL SHIFTED FROM LUCKNOW TO DELHI AT 5A HERALD HOUSE, BAHADUR SHAH ZAFAR MARG, NEW DELHI TO PROVIDE EASY AND EFFICIENT CONTROL AND MANAGEMENT TO THE DIRECTORS. 14.10.2010 OBJECTS OF YOUNG INDIAN WERE INCORPORATED M AIN OBJECT WAS TO INCULCATE IN THE MIND OF INDIA'S YOUTH ..... ......... 18.11.2010 GRANT OF LICENSE U/S. 25 OF THE COMPANIES ACT, 1956 TO PROMOTE OBJECT IN T ERMS OF SECTION 25(1)(A) 23.11.2010 INCORPORATION OF AUTHORISED CAPITAL OF RS. 5,00,000 ITA NO. 7751/DEL/2017 7 YOUNG INDIAN BEING 500 SHARES OF RS 100/ - EACH AS ON 31.03.2011 ADDRESS OF REGISTERED OFFICE WAS AT THE SAME PROPERTY OF AJL, I.E., 5A HERALD HOUSE, SINCE INCEPTION. 23.11.2010 COMMENCEMENT OF DIRECTORSHIP OF MR. SAM PITRODA HE HELD 550 SHARES IN YI, WHICH WERE LATER ON, WERE TRANSFERRED TO MR . OSCAR FERNANDES. HE WAS DIRECTOR OF AJL SINCE 21.12.2010 23.11.2010 COMMENCEMENT OF DIRECTORSHIP OF MR. SUMAN DUBEY HE HELD 550 SHARES IN YI WHICH WERE LATER ON TRANSFERRED TO MRS . SONIA GANDHI HE WAS DIRECTOR OF AJL SINCE 21.12.2010 13.12.2010 FIRST MANAGING COMMITTEE MEETING OF YI MR. RAHUL GANDHI APPOINTED AS DIRECTOR 13.12.2010 COMMENCEMENT OF DIRECTORSHIP OF MR. RAHUL GANDHI 1900 SHARES HELD FOR 36% STAKE IN YI 16.12.2010 TRANSFER OF LOAN BY OF RS 90 CRORES BY AICC TO AJL ASSIGNED TO YI BY JOURNAL ENTRY WITHIN 25 DAYS OF INCORPORATION OF YOUNG INDIAN 21.12.2010 MR. SUMAN DUBEY AND MR. SAM PITRODA INITIALLY DIRECTOR S OF YI , WERE APPOINTED AS DIRECTOR OF AJL BEFORE ALLOTMENT OF SHARES; ITA NO. 7751/DEL/2017 8 APPOINTED DIRECTORS OF AJL IN EXTRA ORDINARY GENERAL MEETING 28.12.2010 ASSIGNMENT OF LOAN THROUGH LETTER TO YOUNG INDIAN AT THE TIME, YI HAD NO FUNDS TO PAY RS. 50 LAKHS TO AICC , THEREFORE IT OBTAINED A LOAN OF RS. 1 CRORE FROM M/S. DOTEX MERCHANDISE PVT. LTD., KOLKATA ASSIGNMENT DEED WAS EXECUTED 28.12.2010 LETTER BY MR. MOTILAL VORA, AS TREASURER OF AICC TO AJL THAT THE LOAN HAS BEEN ASSIGNED BY AICC TO YI MR. MOTILAL VORA WAS DIRECTOR OF AJL SINCE 2002 A.Y. 2011 - 12 LOANS ADVANCE D BY AICC TO AJL RS. 88,86,68,976 TILL 31.03.2010 (AS CLAIMED) RS. 1,35,000 DURING 01.04.2010 TO 16.12.2010 TOTAL LOAN BY AICC TO AJL IS RS 90 CRORES. AY 2011 - 12 LIST OF SHAREHOLDERS AND DIRECTORS MR. SUMAN DUBEY AND MR. SAM PITRODA - FOUNDER MEMBERS WITH 550 SHARES EACH RS. 53,21,290 SPENT TOWARDS OBJECTS INCLUDING RS 50 LAKHS PAID TO AICC TOWARDS ACQUISITION OF LOAN OF RS 90 ITA NO. 7751/DEL/2017 9 CRORES AND ONLY RS. 200 AS INCOME FROM SUBSCRIPTION 21.01.2011 E GM OF AJL APPROVING FRESH ISSUE OF 9.021 CRORE SHARES 22.01.2011 COMMENCEMENT OF DIRECTORSHIP OF MRS. SONIA GANDHI HOLDS 1900 SHARES 36% STAKE IN YI 22.01.2011 COMMENCEMENT OF DIRECTORSHIP OF MR. MOTI LAL VORA HELD 600 SHARES IN YI CHAIRMAN AND MD OF AJL SINCE 22.03.2001 22.01.2011 COMMENCEMENT OF DIRECTORSHIP OF MR. OSCAR FERNANDES HELD 600 SHARES HELD IN YI DIRECTOR IN AJL SINCE 17.06.2010 14.02.2011 BANK ACCOUNT OF YI OPENED AFTER ISSUE OF PAN BY IT AUTHORITIES 15.02.2011 LOAN FROM DOTEX MERCHANDISE (P) LTD., KOLKATA LOAN OF RS 1 CRORE WAS TAKEN FROM THIS COMPANY TO PAY AICC RS. 50 LAKHS FOR ASSIGNMENT OF LOAN IN AJL CONFIRMATION LETTER DATED 24.12.2010 26.02.2011 ALLOTMENTS OF SHARES IN AJL TO YI 9,02,16,898 SHARES ISSUED IN LIEU OF ASSIGNMENT OF LOAN OF RS. 90 CRORE BY INCREASING ITS AUTHORIZED SHARE CAPITAL TO 10 CRORES FROM 1 CRORE. ITA NO. 7751/DEL/2017 10 MRS SONIA GANDHI , MR . RAHUL GANDHI AND MS. PRIYANKA GANDHI PURCHASED ADDITIONAL SHARES TO GAIN FULL CONTROL OF AJL 01.03.2011 PAYMENT OF RS. 50 LAKHS TO AICC FOR LOAN ASSIGNMENT PAYMENT OF RS 50 LAKHS WAS DISCLOSED AS AN EXPENDITURE FOR THE OBJECT ENSHRINED IN MOA OF YI 07 ONE OF THE MAIN OBJECTS OF YOUNG INDIAN AS ENSHRINE D IN THE MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLE OF ASSOCIATION (AOA)FOR WHICH IS CLAIMED TO BE OF CHA RITABLE IN NATURE, WAS AS UNDER: 1. TO INCULCATE IN THE MIND OF INDIA'S YOUTH COMMITMENT TO THE IDEAL OF A DEMOCRATIC AND SECULAR SOCIETY FOR ITS ENTIRE POPULACE WITHOUT ANY DISTINC TION AS TO RELIGION, CASTE OR CREED AND TO AWAKEN INDIA' S YOUTH TO PARTICIPATE IN ACTIVITIES THAT MAY PROMOTE THE FOREGOING OBJECTIVE IN ANY MANNER WHATSOEVER INCLUDING, WITHOUT LIMITATION, PARTICIPATING IN ALL DEMOCRATIC ACTIVITIES THROUGH OPEN AND TRANSPARENT ELECTORAL PROCESS, SO AS TO CONFORM TO THE IDEALS O F THE FOUNDING FATHERS OF INDIA, MAHATMA GANDHI AND PANDIT JAWAHARLAL NEHRU. 08 SINCE THE MAIN OBJECT WAS TO INCULCATE IN THE MINDS OF INDIAN YOUTHS COMMITMENT TO THE IDEAL OF A DEMOCRAT IC AND SECULAR SOCIETY IN CONFORMITY WITH THE IDEALS OF MAH ATMA ITA NO. 7751/DEL/2017 11 GANDHIJI AND PT. JAWAHAR LAL NEHRU, STATED TO BE O F CHARITABLE IN NATURE IN TERMS OF SECTION 2(15) OF T HE ACT, ASSESSEE COMPANY APPLIED FOR REGISTRATION U/S. 12AA BEFORE THE LD. DIT (E), NEW DELHI. ALONG WITH THE APPLICATIO N, THE ASSESSEE HAD FILED LIST AND NAMES OF FOUNDER MEMBER S, MEMORANDUM OF ASSOCIATION AND ARTICLE OF ASSOCIATIO N, LICENSE GRANTED U/S. 25 OF THE COMPANIES ACT, FUTUR E ANNUAL INCOME & EXPENDITURE ESTIMATES AND ASSETS AN D LIABILITIES STATEMENTS. 09 ON 18.04.2011, A SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE FROM DIT(E) ASKING FOLLOWING DOCUMENTS/CLARIFICATIONS: 1.ORIGINAL MOA & REGISTRATION CERTIFICATE FROM REGISTRAR/TRUST DEED FOR VERIFICATION. 2. NO OBJECTION CERTIFICATE FROM THE LANDLORD ALONG W ITH THE PROOF OF OWNERSHIP/OCCUPANCY. 3. A NOTE CLARIFYING WHAT IS THE FOCUS AREA OF YOUR CHARITABLE ACTIVITIES AND GIVING A PROJECTION/PLAN O F ACTION FOR THE MAIN CHARITABLE ACTIVITIES TO BE UNDE RTAKEN BY YOU DURING THE NEXT TWO YEARS. 4. COPY OF ACCOUNTS FOR THE PERIOD SINCE THE INCEPTION OF THE TRUST / SOCIETY OR LAST YEARS DURING WHICH THE TRUST HAS BEEN IN EXISTENCE. 5. PLEASE INSERT A CLAUSE IN THE DEED /MOA PROVIDING THAT THE FUNDS /PROPERTY OF THE TRUST WILL BE USED ONLY FOR THE OBJECTIVES OF THE TRUST/SOCIETY. 6. PLEASE INSERT A PROVISION RELATING TO THE DISSOLUTION OF THE TRUST/SOCIETY PROVIDING INTER AL IA THAT IN THE EVENT OF DISSOLUTION OF FUNDS/ ASSETS WILL BE ITA NO. 7751/DEL/2017 12 TRANSFERRED ONLY TO SOME OTHER TRUST HAVING SIMILAR OBJECTIVES. 7. A NOTE ON ACTIVITIES CARRIED OUT SINCE INCEPTION/LAST 1/2/3/4 YEARS WITH SUPPORTING DOCUMENTARY EVIDENCE. 8. PLEASE JUSTIFY YOUR CLAIM FOR REGISTRATION U/S. 12AA & 80G. 9. PLEASE EXPLAIN THE CHANGE IN FACT & CIRCUMSTANCES OF THE CASE SINCE THE LAST REJECTION ORDER. 10. PLEASE FURNISH THE DETAILS OF DONATION INCLUDING CORPUS DONATIONS RECEIVED & MADE GIVING NAME, ADDRESS, PAN OF DONORS. 11. PLEASE FURNISH CONTACT NO & E-MAIL ADDRESS OF TH E APPLICANT & ITS MEMBERS. 12. JUSTIFY WITH THE BILL/VOUCHERS OF THE INCOME APPLIED FOR CHARITABLE ACTIVITIES ALONG WITH PROOF O F BENEFICIARIES. 13. PLEASE FILE THE UNDERTAKING THAT THERE SHALL BE NO INFRINGEMENT TO THE PROVISO TO THE SECTION 2(15) OF THE IT ACT. 10 IN RESPONSE, THE ASSESSEE HAD FILED CERTAIN DOCUMEN TS INCLUDING NOTE ON ACTIVITIES WHICH WERE AS UNDER: YOUNG INDIAN (YI) IS A COMPANY REGISTERED U/S. 25 OF THE COMPANIES ACT, 1956 (THE COMPANIES ACT) WITH THE MAIN OBJECT OF INCULCATING IN THE MIND OF INDIAS YOUTH COMMITMENT TO THE IDEAL OF A DEMOCRATIC AND SECULAR SOCIETY FO R ITS ENTIRE POPULACE WITHOUT ANY DISTINCTION AS TO RELIGION, CA STE OR CREED AND TO AWAKEN INDIAS YOUTH TO PARTICIPATE IN ACTIV ITIES THAT MAY PROMOTE THE FOREGOING OBJECTIVE IN ANY MANNER WHATSOEVER INCLUDING, WITHOUT LIMITATION, PARTICIPA TING IN ALL ITA NO. 7751/DEL/2017 13 DEMOCRATIC ACTIVITIES THROUGH OPEN AND TRANSPARENT ELECTORAL PROCESS, SO AS TO CONFORM TO THE IDEALS OF THE FOUN DING FATHERS OF INDIA, MAHATMA GANDHI AND PANDIT JAWAHARLAL NEHR U. THE COMPANY IS INCORPORATED WITH A SMALL CAPITAL AN D FUNDS BY WAY OF CONTRIBUTION FROM PATRON MEMBERS MAY PROVIDE SUPPORT TO EARN RECURRING INCOME, WHICH WOULD BE DEPLOYED FOR THE MAIN OBJECT FOR WHICH THE COMPANY IS INCORPORATED. NEVER THELESS, WITHIN THE FRAMEWORK OF THIS MAIN OBJECT THE ACTIVI TIES, THEIR MAGNITUDE AND PACE WILL NECESSARILY DEPEND ON THE F UNDS AVAILABLE WITH YI WHICH IN TURN, DEPENDS ON THE ABI LITY TO ATTRACT DONATION (FROM PATRON MEMBERS OR OTHERWISE) WHICH, IN ITS OWN TURN IS LINKED TO THE ABILITY OF THE DONORS TO CLAI M DEDUCTION U/S. 80G OF THE INCOME TAX ACT. THE APPLICATION FOR -REG ISTRATION U/S 12AA IS THE FIRST STEP IN THAT DIRECTION. 11 ANOTHER FACT, WHICH MAY BE MENTIONED HERE, IS THAT I N APPLICATION FOR REGISTRATION FILED, THE ADDRESS MEN TIONED WAS HERALD HOUSE, 5A BAHADUR SHAH ZAFAR MARG, NEW DELHI, WHICH WAS THE PREMISES BELONGING TO AJL AND I N THIS REGARD, NOC WAS GIVEN FROM THE CHAIRMAN OF AJL TO T HE LD. DIT(E). 12 THEREAFTER, REGISTRATION CERTIFICATE U/S. 12A R/W SE CTION 12AA WAS GRANTED BY THE DIT (E) TO THE ASSESSEE COMP ANY VIDE ORDER DATED 09.05.2011 W.E.F. ASSESSMENT YEAR 2 011- 12. SUCH A REGISTRATION WAS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS:- ORDER U/S.12A(A) READ WITH SECTION 12AA (1)(B) DOES N OT CONFORM ANY RIGHT OF EXEMPTION UPON THE APPLICATION U/S.11, ITA NO. 7751/DEL/2017 14 12 AND 13 OF THE INCOME TAX ACT, 1961. SUCH EXEMPTION FROM TAXATION WILL BE AVAILABLE ONLY AFTER THE ASSESSING OFFICER IS SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES PR OMISED OR CLAIMED TO BE CARRIED ON IN EACH FINANCIAL YEAR RELEV ANT TO THE ASSESSMENT YEAR AND ALL THE PROVISIONS OF LAW ACTED U PON. THE TRUST/ SOCIETY/ NON PROFIT COMPANY SHALL COMPLY WITH THE PROVISION OF SECTION 139A(A)(II) AND (HI) O F THE ACT WITHIN ONE MONTH OF THE DATE OF THIS ORDER TO OB TAIN A PERMANENT ACCOUNT NUMBER AND SHALL COMMUNICATE THE PAN TO THIS OFFICE. THE TRUST/ SOCIETY/ NON PROFIT COMPANY SHALL MAINTAI N ACCOUNTS REGULARLY AND SHALL GET THESE AUDITED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12A(B) OF THE INCOME TAX ACT, 1961. SEPARATE ACCOUNTS IN RESPECT OF EACH ACTIVITY AND SPECIFIED IN MEMORANDUM SHALL BE MAINTAINED. A COPY OF SUCH ACCOUNT SHALL BE SUBMITT ED TO THE ASSESSING OFFICER. A PUBLIC NOTICE OF THE ACTIV ITIES CARRIED ON/ TO BE SUBMITTED TO THE ASSESSING OFFICER. A PUBLIC NOTICE OF THE ACTIVITIES CARRIED ON/ TO BE CA RRIED ON AND THE TARGET GROUP(S) (INTENDED BENEFICIARIES) SHAL L BE DULY DISPLAYED AT THE REGISTERED/ DESIGNATED OFFICE TO THE ORGANIZATION. SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF PROFITS AND GAINS OF BUSINESS INCIDENTAL TO, ATTAINMENT OF OBJEC TS SHALL BE MAINTAINED IN COMPLIANCE TO SECTION 11(44) OF THE INCOME TAX ACT 1964. ITA NO. 7751/DEL/2017 15 ALL THE PUBLIC MONEY SO RECEIVED INCLUDING FOR CORP US OR ANY CONTRIBUTION SHALL BE COMMUNICATED TO THIS OFFIC E. NO CHANGE IN THE TRUST DEED/ MEMORANDUM OF ASSOCIATION/ INSTRUMENT SHALL BE EFFECTED WITHOUT TH E APPROVAL OF THE JURISDICTIONAL HIGH COURT/ APPROPRI ATE AUTHORITY AND IT SHALL CONTINUE TO SERVE THE MAIN OB JECT OF THE TRUST IN FURTHER WITHOUT ANY CHANGE. NO ASSET SHALL BE TRANSFERRED WITHOUT THE KNOWLEDGE OF THE UNDERSIGNED TO ANYONE, INCLUDING TO ANY TRUST/ SOCIETY/ NON PROFIT COMPANY, ETC. THE REGISTERED OFFICE OF THE PRINCIPLE PLACE OF ACTI VITY OF THE APPLICANT SHOULD NOT BE TRANSFERRED OUTSIDE THE NATIONAL CAPITAL TERRITORY, DELHI EXCEPT WITH THE P RIOR APPROVAL OF THE DIT (E), DELHI. IF LATER ON, IT IS FOUND THAT THE REGISTRATION HAS BEEN OBTAINED FRAUDULENTLY BY MISREPRESENTATION OR SUPPRESSION OF ANY FACT, THE REGISTRATION SO GRANTED IS LIABLE TO BE CANCELLED AS PER PROVISIONS U/S 12AA(3) OF THE ACT. NO FEE OR ANY OTHER CONSIDERATION SHALL BE RECEIVE D WHICH COMES UNDER THE PROVISO TO SECTION 2(15) OF TH E INCOME TAX ACT. [EMPHASIS IN BOLD IS OURS] 13 AFTER THE GRANT OF REGISTRATION U/S 12AA IN THE AFO RESAID MANNER, ASSESSEE COMPANY IN THE 5 TH YEAR OF REGISTRATION, I.E., ON 21.03.2016, WROTE A LETTER TO CIT(E), THAT IT IS SUO ITA NO. 7751/DEL/2017 16 MOTO SURRENDERING THE REGISTRATION U/S. 12AA GRANTED VI DE ORDER DATED 09.05.2011. THUS, THE BENEFIT OF BEING A CHARITABLE INSTITUTION AND REGISTRATION WAS GIVEN UP . THE LETTER FOR SURRENDER OF REGISTRATION READS AS UNDER : MARCH 21, 2016 DIRECTOR OF INCOME TAX (EXEMPTION) PRATYAKSH KAR BHAWAN ROOM NO. 2602, E-2 BLOCK 26TH FLOOR, DR. S.P. MUKHERJEE CIVIC CENTRE, J.L.N. MARG NEW DELHI 110002 SUB: REGISTRATION U/S 12A READ WITH SECTION 12AA OF THE INCOME TAX ACT, 1961 OF YOUNG INDIAN DEAR SIR, WE ARE CURRENTLY HOLDING SHARES OF THE ASSOCIATED JO URNALS LIMITED (AJL). IT WAS NEVER INTENDED TO MAKE ANY GA IN. THIS IS, INDEED, FULLY BORNE OUT OF THE FACT THAT THE SH AREHOLDERS OF AJL HAD PASSED A UNANIMOUS RESOLUTION ON JANUARY 21, 2016 TO GET THE COMPANY REGISTERED UNDER SECTION 8 OF TH E COMPANIES ACT, 2013. WE MAY AMPLIFY THE EFFECT OF THE FOREGOI NG BY BRINGING OUT THAT A SECTION 8 COMPANY IS PROHIBITED FROM DECLARING DIVIDEND OR DISTRIBUTING OR PAYING ANY AMO UNT TO ITS MEMBERS. INVESTMENT PRESUPPOSES RETURN. HOWEVER, HOLDING T HESE SHARES DOES NOT ENVISAGE ANY DIVIDEND, EITHER PRESENT OR EXPECTED. THEREFORE, IN OUR VIEW, OUR CONTINUING TO HOLD SHARES OF THE ASSOCIATED JOURNALS LIMITED DOES NOT MILITATE AGAINST SECTION 11(5) OF THE INCOME TAX ACT, 1961. HOWEVER, CURRENTLY AND IN THE FORESEEABLE FUTURE WE DO NOT HAVE SIGNIFI CANT SURPLUSES, WHICH PRESENTLY MAKES OUR REGISTRATION U NDER SECTION 12AA VIRTUALLY ACADEMIC IN NATURE. ITA NO. 7751/DEL/2017 17 AFTER CONSIDERING ALL ASPECTS WE HAVE DECIDED TO SURRENDER OUR REGISTRATION U/S 12A READ WITH SECTION 12AA WIT H IMMEDIATE EFFECT. THE ORIGINAL REGISTRATION CERTIFI CATE ISSUED U/S 12AA BEARING NO. 2011-12/100 DEL-YR21296 DATED 9/5/2011 IS SURRENDERED HEREWITH. THIS IS TO CALL UPON YOU TO NOTE THAT THE REGISTRATION STANDS CANCE LLED WITH IMMEDIATE EFFECT. THANK YOU. YOURS FAITHFULLY, MOTILAL VORA DIRECTOR DIN: 00628348 ENCL: ORIGINAL REGISTRATION CERTIFICATE BEARING NO. 2011- 12/100 DEL-YR21296 DATED 9/5/2011 FINDING GIVEN IN THE IMPUGNED ORDER OF CIT (E) 14 IN THE IMPUGNED ORDER, THE LD. CIT(E) IN PARA 3 HAS NOTED THAT AN INTIMATION WAS RECEIVED FROM ACIT(E), CIR 1( 1) VIDE LETTER DATED 16.08.2017 REGARDING CONTRAVENTION OF CONDITIONS SUBJECT TO WHICH THE ASSESSEE WAS GRANTED REGISTRATION U/S. 12A R/W SECTION 12AA. IN THE SAID COMMUNICATION, FOLLOWING FACTS WERE STATED: IN THIS CASE, THIS OFFICE HAS BEEN CONDUCTING CERT AIN INQUIRIES WITH REGARD TO TAKE OVER OF M/S. ASSOCIAT ED JOURNALS LTD. (AJL) BY THE YI SINCE JULY 2015 AND SUBSEQUENT TO THESE INQUIRIES THE FOLLOWING IMPORTA NT FINDINGS ARE OBSERVED:- ITA NO. 7751/DEL/2017 18 YI HAS BEEN ENGAGED IN ACTIVITIES, WHICH WERE NOT I N ACCORDANCE WITH OBJECTS OF YI. YI HAS CARRIED OUT ACTIVITIES IN A MANNER THAT THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT DO NOT A PPLY. YI HAS BEEN ENGAGED IN COMMERCIAL ACTIVITIES OF CONSTRUCTION OF COMMERCIAL COMPLEXES AND EARNING COMMERCIAL INTEREST INCOME THROUGH AJL BY ACQUIRING 99.99% SHARES OF AJL, SINCE ASSESSMENT YEAR 2011-12 TO TILL DATE. 15 THEREAFTER, IN PARA 4, THE LD. CIT (E) OBSERVES THA T HE HAS EXAMINED THE ANNUAL REPORTS OF THE ASSESSEE AS WELL AS OF AJL FOR THE RELEVANT PERIOD AND FROM SCRUTINY OF SU CH RECORDS AND ON GOING THROUGH THE FINDINGS OF THE AS SESSING OFFICER AND THE INFORMATION GIVEN BY HIM, THE AFORE SAID ALLEGATIONS GETS CORROBORATED WITH THE FACTS ON RECO RD OF THE ASSESSEE AS WELL AS OF AJL. HE FURTHER TOOK NOTE OF THE FACT THAT THE ASSESSEE VIDE LETTER DATED 21.03.2016 HAD INFORMED FOR SURRENDERING OF REGISTRATION WITHOUT EX PLAINING THE ACTUAL REASON FOR SUCH SURRENDER. FURTHER, DIT (INV.) AND THE ASSESSING OFFICER WAS CONDUCTING VARIOUS ENQ UIRIES WITH REGARD TO THE TAKE-OVER OF AJL BY THE ASSESSEE SINCE THE YEAR 2014 AND THE MAIN REASON FOR SURRENDERING THE REGISTRATION U/S. 12AA WAS THE FINDING ARRIVED BY TH E INVESTIGATION WING AND THE ASSESSING OFFICER THAT T HE ASSESSEE HAS NOT CARRIED OUT THE ACTIVITIES IN ACCO RDANCE WITH ITS OBJECTS AND THESE ACTIVITIES WERE NOT IN CO NFORMITY WITH THE TERMS AND CONDITIONS SUBJECT TO WHICH REGIST RATION ITA NO. 7751/DEL/2017 19 U/S. 12AA WAS GRANTED TO THE ASSESSEE. AFTER TAKING NOTE OF THESE FACTS AND RECORDS AVAILABLE BEFORE HIM, HE RE ACHED TO A PRIMA FACIE CONCLUSION THAT THE ASSESSEE HAD NOT BEEN CARRYING OUT ITS ACTIVITIES IN ACCORDANCE WITH ITS O BJECTS. IN A SHOW CAUSE NOTICE ISSUED ON 21.08.2017 TO THE ASSE SSEE, HE CALLED FOR THE FOLLOWING INFORMATION: M/S. YOUNG INDIAN WAS INCORPORATED WITH MAIN OBJECT OF INCULCATING IN THE MIND OF INDIAS YOUTH, COMMITMEN T TO IDEAL OF DEMOCRATIC AND SECULAR SOCIETY FOR ITS ENTIRE PO PULATION WITHOUT ANY DISTINCTION AS TO RELIGION, CASTE OR CRE ED AND TO AWAKEN INDIA'S YOUTH TO PARTICIPATE IN ACTIVITIES TH AT PROMOTE FOREGOING OBJECTIVES. IN THIS CONTEXT, YOU ARE REQU ESTED TO FURNISH DETAILS ALONG WITH EVIDENCE OF CHARITABLE A CTIVITIES UNDERTAKEN BY M/S. YOUNG INDIAN TO FULFILL ABOVE OBJ ECT DURING A.Y. 2011-12 TO 2016-17. PLEASE CLARIFY IF TH ERE IS ANY CHANGE IN AIM AND OBJECTS OF M/S. YOUNG INDIAN DURIN G AY 2011- 12 AY 2016-17. IT IS EVIDENT FROM THE RECORDS THAT THE ONLY SUBST ANTIAL ACTIVITY UNDERTAKEN BY M/S. YOUNG INDIAN DURING P.Y. 2010- 11 WAS TO ACQUIRE M/S ASSOCIATED JOURNALS LTD. BY AC QUIRING ITS 99.99% SHARES. IT IS IMPORTANT TO MENTION HERE T HAT M/S AJL HAS BEEN ENGAGED IN THE BUSINESS OF REAL ESTATE AND THE SOURCE OF ITS INCOME WAS RENTAL INCOME AS WELL AS OT HER BUSINESS INCOME FROM CONSTRUCTION AND DEVELOPMENT O F COMMERCIAL COMPLEXES SINCE FY 2008-09. PLEASE EXPLAIN WHETHER EARNING OF INCOME FROM REAL ESTATE BUSINESS THROUGH M/S AJL IS COVERED WITHIN THE AIMS AND OBJECTS OF M/ S ITA NO. 7751/DEL/2017 20 YOUNG INDIAN AND WHETHER THESE ACTIVITIES ARE IN CONF ORMITY WITH THE TERMS AND CONDITIONS SUBJECT TO WHICH REGIS TRATION U/S 12A OF THE WAS GRANTED TO M/S YOUNG INDIAN. YOU ARE REQUESTED TO FURNISH COMPLETE DETAILS OF SOU RCE OF FUND/INCOME, OF M/S YOUNG INDIAN AND ITS APPLICATION DURING ASSESSMENT YEAR 2011-12 TO 2016-17. 16 IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE H AD SUBMITTED A REPLY, THE EXTRACT OF WHICH HAS BEEN INCORPORATED IN PARA 5 OF THE IMPUGNED ORDER. IN SU M AND SUBSTANCE, THE ASSESSEES SUBMISSIONS WERE: - THAT THE FINDINGS OF THE ASSESSING OFFICER ARE MERE LY BASED ON THE FACTS THAT THE ASSESSEE HAD SURRENDERE D THE REGISTRATION U/S. 12A OF THE ACT AND HAS FAILED TO SUBSTANTIATE HIS FINDINGS THAT HOW THE ASSESSEE IS ENGAGED IN ACTIVITIES NOT IN ACCORDANCE WITH ITS OBJECTS, THE ASSESSING OFFICER FAILED TO PROVIDE AN Y REASONS WHY HE BELIEVED THAT THE ACTIVITIES OF THE ASSESSEE WERE NOT IN COMPLIANCE TO THE PROVISIONS O F SECTION 11 & 12. THE ASSESSEE WAS NOT ENGAGED IN ANY COMMERCIAL ACTIVITIES OF CONSTRUCTION OF COMMERCIAL COMPLEXES AND THE ASSESSEE WAS ONLY AN INVESTOR AND IT DOES NOT MEAN EARNING OF THE SAME NATURE WHAT AN INDUSTRY EARNS AND IN SUPPORT, RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MRS. BACHA F. GUZDAR VS. CIT REPORTED IN (1955) 27 ITA NO. 7751/DEL/2017 21 ITR-1. A SHAREHOLDER OF A COMPANY IS NOT THE OWNER OF THE PROPERTY OF THE COMPANY. IT DOES NOT HAVE ANY OWNERSHIP INTEREST, WHATSOEVER, IN THE PROPERTIES OWNED BY THE COMPANY BECAUSE THE COMPANY OWNING THE PROPERTY IS SUPPOSED TO BE A SEPARATE AND DISTINCT LEGAL ENTITY RESPONSIBLE IN LAW TO MAKE RE CORDS OF ASSETS AND LIABILITIES OWNED BY IT. A SHAREHOLDER IS NOT EXPECTED IN LAW TO MAINTAIN THE RECORDS OF THE PROPERTIES AND LIABILITIES OF THE COMPANY WHOSE SHAR ES ARE OWNED BY HIM. THE PERCENTAGE OF SHARE HOLDING HAS NO RELEVANCE. THUS, IT WAS STATED THAT IT WOULD BE INCORRECT TO HOLD THAT THE ASSESSEE WAS ENGAGED IN SOME KIND OF COMMERCIAL ACTIVITIES IN CONSTRUCTION OF COMMERCIAL COMPLEXES THROUGH AJL. IN SO FAR AS THE ALLEGATION THAT THE ASSESSEE WAS ENGAGED IN THE CONSTRUCTION OF COMMERCIAL COMPLEXES AND EARNING COMMERCIAL INTEREST INCOME THROUGH AJL BY ACQUIRING 99.99% OF THE SHARE HOLDING OF AJL, IT WAS SUBMITTED THAT NEITHER ANY COMMERCIAL ACTIVITIES NOR ANY COMMERCIAL INTEREST INCOME WAS EARNED BY THE ASSESSEE AND EVEN IN THE AUDITED ACCOUNTS FILED WIT H THE RETURN OF INCOME FROM YEAR TO YEAR, IT CAN BE S EEN THAT NO INCOME HAS BEEN CREDITED TO THE INCOME & EXPENDITURE ACCOUNT OF THE COMPANY. THUS, SUCH AN ALLEGATION IS BASELESS. ITA NO. 7751/DEL/2017 22 REGARDING SURRENDERING OF REGISTRATION CERTIFICATE ISSUED U/S. 12A, IT WAS SUBMITTED THAT THE ASSESSEE NEVER ADMITTED THAT ITS ACTIVITIES ARE NOT IN CONFO RMITY WITH THE TERMS OF REGISTRATION, RATHER IT WAS CLEARLY STATED THAT CURRENTLY AND IN THE FORESEEABLE FUTURE , THE ASSESSEE DO NOT EXPECT SIGNIFICANT SURPLUS AND THEREFORE, REGISTRATION U/S. 12AA VIRTUALLY BECAME ACADEMIC IN NATURE. IT IS PURELY A PREROGATIVE OF A N ASSESSEE WHETHER IT WOULD LIKE TO AVAIL ANY BENEFIT O F EXEMPTION PROVIDED UNDER LAW AND IT IS WELL-SETTLED LAW THAT IF THE ASSESSEE DOES NOT DESIRE TO AVAIL BENEF IT PROVIDED IN LAW, THEN HE MAY CHOSE NOT TO AVAIL THE SAME. RELIANCE IS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. MAHINDRA MILLS (2000) 243 ITR 56 (SC). THUS, AFTER HAVING SURRENDERED ITS REGISTRATION CERTIFICATE W.E.F. 21.03.2016, IT CEASES TO ENJOY THE BENEFIT OF THE PROVISIONS OF EXEMPTION OF INCOME, IF ANY, ACCRUING TO IT FROM AND AFTER THE SAID DATE. ACCORDINGLY, THE QUESTION OF CANCELLING THE REGISTRATION DOES NOT AR ISE. REGARDING PROPOSAL TO CANCEL THE REGISTRATION W.E.F. ASSESSMENT YEAR 2011-12, IT WAS STATED THAT, FIRSTLY , THE PAYMENTS TOWARDS ACQUISITION OF SHARES OF AJL DOES NOT AMOUNT TO INVESTMENT BECAUSE THE TERM INVESTMENT PRE-SUPPOSES A RETURN AND HOLDING THESE ITA NO. 7751/DEL/2017 23 SHARES DOES NOT ENVISAGE ANY DIVIDEND WHETHER AT PRESENT OR EXPECTED. IN FACT, PAYMENT TOWARDS SHARES OF AJL AMOUNTS TO UTILIZATION OF FUNDS TOWARDS OBJE CTS OF YOUNG INDIAN; AND SECONDLY , SUCH SURRENDER CANNOT BE CONSTRUED AS ADMISSION THAT ANY OF ITS ACTIVITIE S WERE NOT IN CONFORMITY WITH THE TERMS OF REGISTRATION . 17 THE LD. CIT (E) AFTER DISCUSSING THE PROVISIONS OF SUB-SEC. (3) OF SECTION 12AA OF THE ACT AND CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, OBSERVED THAT TH E ASSESSEE HAS NOT FURNISHED ANY DETAILS OR EVIDENCES IN SUPPORT OF THE CLAIM THAT IT HAS CARRIED OUT ANY AC TIVITIES IN ACCORDANCE WITH ITS OBJECTS, IN RESPONSE TO SPECIFIC QUERY RAISED TO THE ASSESSEE IN THIS REGARD IN THE SHOW CA USE NOTICE GIVEN U/S. 12AA (3). HE ALSO EXAMINED THE IN COME- TAX RETURNS AND ANNUAL REPORTS OF THE ASSESSEE FOR THE RELEVANT PERIOD AND FOUND THAT THE ASSESSEE HAD SHO WN INCOME OF RS. 200 IN FORM OF ANNUAL FEE AND HAS CLA IMED EXPENDITURE OF RS. 53,21,290/-, OUT OF WHICH EXPENDI TURE OF RS. 50 LAKHS WERE CLAIMED TO BE INCURRED ON THE OBJ ECTS OF YOUTH COMMITMENT OF DEMOCRATIC AND SECULAR SOCIETY. THE INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD 23.11 .2010 TO 31.03.2011, AS EXTRACTED IN THE IMPUGNED ORDER, IS REPRODUCED AS UNDER: (IN RS.) INCOME ANNUAL FEES 200 TOTAL -- ----------------------- ITA NO. 7751/DEL/2017 24 EXPENDITURE EXPENDITURE ON THE OBJECTS (I) YOUTH COMMITMENT TO THE IDEAL OF 50,00,000 DEMOCRATIC AND SECULAR SOCIETY (II) INTEREST ON LOAN 1 ,72,603 51,72,603 PROFESSIONAL FEES 15,000 LEGAL EXPENSES 3600 AUDIT FEE 8273 PRELIMINARY EXPENSES WRITTEN OFF 1,21,814 TOTAL 53,21,290 18 IN THE NOTES TO ACCOUNTS, THE ASSESSEE EXPLAINED TH E NATURE OF RS.50 LAKHS SPENT IN THE FOLLOWING MANNER: 1. IN PURSUIT OF ITS OBJECTS, THE COMPANY ACQUIRED LOAN OWED OF RS. 90,21,68,980 BY THE ASSOCIATED JOURNALS LTD. ('THE SAID COMPANY'), PRESENTLY ENGAGED IN ACHIEVIN G A RECAST OF ITS ACTIVITIES SO AS TO HAVE ITS MAIN OBJ ECT CONGRUENT TO THE MAIN OBJECT OF THE COMPANY, FOR A CONSIDERATION OF RS. 50 LACS. AS A PART OF RESTRUCT URING EXERCISE OF THE SAID COMPANY, THE SAID LOAN WAS CONVERTED INTO 9,02,16,898 ORDINARY SHARES OF RS. 1 0 EACH FULLY PAID. SINCE SAID ACQUISITION IS TREATED AS AP PLICATION ON THE OBJECTS OF THE COMPANY (AND ACCORDINGLY, TRE ATED IN THE FINANCIAL STATEMENTS OF THE COMPANY), THE SAME HAS NOT BEEN REFLECTED AS AN INVESTMENT IN SHARES. BESI DES, EVEN IF THE SHARES WERE TO BE TREATED AS AN ASSET (INVESTMENT), HAVING REGARD TO THE FACT THAT THE NET WORTH OF THE SAID COMPANY IS NEGATIVE, RECOGNIZING THE EN TIRE COST AS DIMINUTION IN VALUE WOULD RESULT IN AN EQ UIVALENT CHARGE TO THE INCOME & EXPENDITURE ACCOUNT. 19 AFTER INCORPORATING AFORESAID DETAILS, THE LD. CIT (E) PROCEEDED TO ANALYZE THE INCOME & EXPENDITURE ACCOU NTS FOR THE ASSESSMENT YEARS 2012-13 TO 2014-15 AND FRO M THE ITA NO. 7751/DEL/2017 25 PERUSAL OF THE SAME, HE OBSERVED THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE ON ITS OBJECTS EXCEPT FOR CREATING PROVISION FOR INTEREST PAYMENT FOR LOANS OF RS. 1.0 0 CRORE TAKEN TO ACQUIRE AJL, WHICH, ACCORDING TO HIM, WAS A REAL ESTATE COMPANY. HE ALSO INCORPORATED THE EXPENDITUR E INCURRED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 20 12-13 TO 2014-15 WHICH WERE AS UNDER: ( IN RUPEES) FROM THE ABOVE DETAILS, HE CONCLUDED THAT THE ASSES SEE HAD NOT INCURRED ANY EXPENDITURE ON ACTIVITIES IN ACCOR DANCE WITH ITS OBJECTS EXCEPT FOR ACQUIRING THE REAL ESTAT E COMPANY, WHICH WAS NOT IN CONFORMITY WITH THE MAIN OBJECTS OF THE ASSESSEE COMPANY. HENCE, THE ASSESSE E HAD NOT CARRIED OUT ANY GENUINE ACTIVITIES IN ACCORDANC E WITH ITS OBJECTS AND THEREFORE, THE CONTENTION OF THE AS SESSEE THAT IT HAD CARRIED OUT ACTIVITIES IN ACCORDANCE WIT H ITS OBJECTS IS INCORRECT AND NON-GENUINE. AY 2012-13 AY 2013- 14 AY 2014-15 EXPENDITURE ON OBJECT - - - INTEREST ON LOAN 14,00,000 14,00,000 14,00,000 OTHER EXPENSES 2,57,000 2,50,000 2,57,468 TOTAL 16,57,000 16,50,000 16,57,468 ITA NO. 7751/DEL/2017 26 20 THEREAFTER, THE LD. CIT(E) DEALT WITH THE ACTIVITIE S CARRIED OUT BY AJL AND NOTED THAT AJL WAS A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956 AND IN E ARLIER YEARS ENGAGED IN PUBLISHING NEWSPAPER LIKE NATIONAL HERALD, NAVJEEVAN AND QAUMI AWAZ NEWSPAPERS. HOWEVER, THE BUSINESS OF PUBLICATION OF NEWSPAPERS CEASED TO EXIST, W.E.F. 02.04.2008 AND ALL THE EMPLOYEES OF THE COMPANY TOOK VRS W.E.F. 02.04.2008. AFTER THE PUBLIC ATION OF NEWSPAPERS CEASED TO EXIST, THE INCOME OF AJL WAS MAINLY FROM REAL ESTATE BUSINESS AND THIS COMPANY WA S ENGAGED IN PURCHASE, CONSTRUCTION AND SALE AND RENT ING OUT OF ITS PROPERTIES. HE ALSO TOOK NOTE OF IMPORTA NT PROPERTIES HELD BY THE AJL IN VARIOUS PARTS OF THE COUNTRY, THE DETAILS OF WHICH ARE AS UNDER: A LEASE HOLD LAND ADDRESS DELHI 5-A, BAHADUR SHAH ZAFAR MARG, NEW DELHI-02 PATNA VILLAGE PHULWARI, PATNA B FREE HOLD LAND LUCKNOW 1, BISHWESHWAR NATH ROAD, LUCKNOW PANCHKULA C-17 SEC-6, PANCHKULA MUMBAI S.NO. 340, PART ALIYAVAR MARG, BANDRA, EAST MUMBAI. C BUILDING DELHI 5-A, BAHADUR SHAH ZAFAR MARG NEW DELHI-02 LUCKNOW 1, BISHWESHWARNATH ROAD, ITA NO. 7751/DEL/2017 27 LUCKNOW. D CAPITAL WORK IN PROGRESS MUMBAI S.NO.340, PART ALIYAVAR MARG, BANDRA, EAST MUMBAI. PANCHKULA C-17 SEC-6, PANCHKULA PATNA VILLAGE PHULWARI, PATNA LUCKNOW (NM) 1, BISHWESHWARNATH ROAD, LUCKNOW. HE ALSO NOTED THAT THESE PROPERTIES WERE ACQUIRED B Y AJL EITHER AS FREE HOLD OR ON LEASE FROM CENTRAL/STATE GOVERNMENT SOLELY FOR THE PURPOSE OF PUBLICATION OF NEWSPAPER BY PAYING TOKEN PRICE AND AFTER CLOSURE O F NEWSPAPER BUSINESS IN THE YEAR 2008, AJL STARTED TH E BUSINESS OF CONSTRUCTION OF BUILDINGS FOR COMMERCIA L PURPOSE AND HAD LET OUT OR SOLD ITS EXISTING BUILDI NG ON RENT OR SALE CONSIDERATION. TO CORROBORATE THIS FACT, HE ALSO TOOK NOTE OF DISCLOSURE OF AJL IN THE ANNUAL REPORT, WHIC H FOR THE SAKE OF READY REFERENCE IS ALSO INCORPORATE HER EUNDER: 3. IN RESPECT OF CONSTRUCTION ACTIVITY AT LUCKNOW FOR SALE OF SHOPS AND FLOORS, ADVANCES MADE TO CONTRACTORS AND BOOKING MONEY RECEIVED FROM INTENDING PURCHASER IN EARLIER YEARS, ARE INCLUDED UNDER SCHEDULE IV CURRENT ASSETS LOANS A ND ADVANCES' AND SCHEDULE V CURRENT LIABILITIES & PRO VISIONS RESPECTIVELY. DURING THE YEAR COMPANY PAID RS. 2,22 ,17,743/- FOR BUY-BACK OF SHOPS AT LUCKNOW THE AMOUNT PAID HA S BEEN SHOWN AS DEVELOPMENT EXPENDITURE. 4. (A) FREEHOLD LAND INCLUDES 2 PLOTS OF LAND ALLOT TED TO THE COMPANY IN 1983 BY GOVERNMENT OF MAHARASHTRA AT BAN DRA, MUMBAI FOR RS. 31,23,054/- ON DEFERRED PAYMENT BASI S. HOWEVER, IN 1991 THE GOVT. OF MAHARASHTRA ON REPRES ENTATION BY THE COMPANY HAD AGREED TO CONVERT THE SAID LAND FROM FREE ITA NO. 7751/DEL/2017 28 HOLD TO LEASE HOLD. FRESH REPRESENTATION HAS BEEN M ADE TO GOVT. OF MAHARASHTRA FOR REVERSING THIS DECISION, CONVERT ING THIS LAND TO FREEHOLD, WHICH IS PENDING. (B) THE PAYMENT MADE UP TO 31.03.2009 TO GOVT. OF MAHARASHTRA ON ACCOUNT OF ANNUAL LEASE RENT ETC. HA S BEEN SHOWN UNDER THE HEAD CAPITAL WORK IN PROGRESS. (C) THE TITLE DEED IN RESPECT OF LAND ALLOTTED IN MUMBAI, PATNA AND PANCHKULA IS YET TO BE REGISTERED/ EXECUT ED. 5. (A) ADVANCES/ SECURITY DEPOSITS RECEIVED FROM TH E PARTIES IN EARLIER YEARS RELATING TO CONSTRUCTION ACTIVITY ON COMPANYS LAND AT LUCKNOW AND MUMBAI HAS BEEN GROUPED UNDER OTHER LIABILITIES AND UNSECURED LOANS AND NO PROVISION OF INTEREST HAS BEEN MADE THEREON. (B) NO PROVISION HAS BEEN MADE OF INTEREST ON AMOUN T OF RS. 165 LAKHS RECEIVED FROM PARTIES AS ADVANCE TOWARDS CONS TRUCTION ACTIVITY AT MUMBAI, DUE TO NON-EXECUTION OF FINAL A GREEMENT. [EXTRACTED FROM SCHEDULE X - NOTES FORMING PART OF THE ACCOUNT FOR THE YEAR ENDED 31.03.2009 AND EMPHASIS SUPPLIED ] 4. THE COMPANY HAS NO EMPLOYEES AS ON 31.03.2010 O N ITS RECORDS. 5. IN RESPECT OF CONSTRUCTION ACTIVITY AT LUCKNOW FOR SALE OF SHOPS AND FLOORS, ADVANCES MADE TO CONTRACTORS A MOUNT PAID FOR BUY-BACK OF SHOPS AND BOOKING MONEY RECEIVED FR OM INTENDING PURCHASER IN EARLIER YEARS, ARE INCLUDED UNDER SCHEDULE IV CURRENT ASSETS LOANS AND ADVANCES AND SCHEDULE V CURRENT LIABILITIES & PROVISIONS RESPE CTIVELY. DURING THE YEAR COMPANY PAID RS. 9,28,45,160/- (PRE V. YEAR RS. 2,22,17,743/-) FOR BUY-BACK OF SHOPS AT LUCKNOW THE AMOUNT PAID HAS BEEN SHOWN AS DEVELOPMENT EXPENDITU RE. 6. (A) FREE HOLD LAND INCLUDES 2 PLOTS OF LAND ALL OTTED TO THE COMPANY IN 1983 BY GOVERNMENT OF MAHARASHTRA AT BANDRA, MUMBAI FOR RS. 31,23,054/- ON DEFERRED PAYM ENT BASIS. HOWEVER, IN 1991 THE GOVT. OF MAHARASHTRA ON REPRESENTATION BY THE COMPANY HAD AGREED TO COVERT THE SAID LAND FROM FREE HOLD TO LEASE HOLD. FRESH REPRESENTA TION HAS BEEN MADE TO GOVT. OF MAHARASHTRA FOR REVERSING THI S DECISION, CONVERTING THIS LAND TO FREEHOLD, WHICH IS PENDING. ITA NO. 7751/DEL/2017 29 (B) THE PAYMENT MADE TO 31.03.2010 TO GOVT, OF MAHARASHTRA, ON ACCOUNT OF ANNUAL LEASE RENT ETC. H AS BEEN SHOWN UNDER THE HEAD CAPITAL WORK IN PROGRESS. (C) THE TITLE DEED IN RESPECT OF LAND ALLOTTED IN MUMBAI, PATNA AND PANCHKULA IS YET TO REGISTERED/ EXECUTED. 7. ADVANCES/ SECURITY DEPOSITS RECEIVED FROM THE P ARTIES IN EARLIER YEARS RELATING TO CONSTRUCTION ACTIVITY ON COMPANYS LAND AT LUCKNOW AND MUMBAI HAS BEEN GROUPED UNDER OTHER LIABILITIES AND UNSECURED LOANS AND NO PROVISION OF INTEREST HAS BEEN MADE THEREON. 21 THUS, ACCORDING TO LD. CIT (E), AJL HAD EARNED SUBS TANTIAL INCOME FROM REAL ESTATE BUSINESS FROM AY 2012-13 TO 2014-15. HE ALSO INCORPORATED THE DETAILS OF SUCH I NCOME AS DISCLOSED IN THE RETURN OF INCOME OF AJL. 22 FURTHER, ON PERUSAL OF FINANCIAL DETAILS OF AJL WITH REFERENCE TO THE CLAIM OF THE ASSESSEE THAT THE EXP ENDITURE OF RS. 50 LAKHS INCURRED ON ACQUISITION OF AJL WAS I N ACCORDANCE WITH THE OBJECTS, THE LD. CIT(E) HELD THA T THE CLAIM OF THE ASSESSEE WAS FACTUALLY INCORRECT AND WAS NOT TENABLE FOR THE FOLLOWING REASON: IT IS EVIDENT FROM THE FINANCIAL RECORDS OF THE ASS ESSEE COMPANY, AS SUMMARIZED ABOVE THAT DURING ASSESSMENT YEAR 2011-12 TO 2014-15, THE ASSESSEE HAD NOT CARRI ED OUT ANY ACTIVITIES IN ACCORDANCE WITH ITS OBJECT EXC EPT FOR ACQUISITION OF AJL, A COMPANY SOLELY ENGAGED IN PRO FIT MAKING BUSINESS FROM REAL ESTATE. SINCE, THE ASSESSEE HAD FULL CONTROL OVER AJL BY ACQUIRING ITS 99% OF TOTAL SHAREHOLDING, SOME OF TH E ITA NO. 7751/DEL/2017 30 DIRECTORS/ SHARE HOLDERS OF THE ASSESSEE COMPANY NAMELY SHRI MOTI LAL VORA, SH. OSCAR FERNANDES, SH. SAM PITRODA AND SH. SUMAN DUBEY WERE CHAIRMAN AND MANAGING DIRECTOR OF AJL SINCE 22.03.2002, DIRECTOR SINCE 17.06.2010, DIRECTOR SINCE 21.12.2010 AND DIRECTOR SINCE 21.12.2010 OF THE AJL RESPECTIVELY D URING AY 2011-12 TO 2014-15 AND THE ONLY ACTIVITIES CARRI ED ON BY THE ASSESSEE WAS TO MANAGE AND RUN BUSINESS OF TH E AJL BY ENGAGING IN THE REAL ESTATE BUSINESS WITH THE HELP OF ITS DIRECTORS AND SHAREHOLDERS. IN THESE CIRCUMSTANCES, IT WOULD BE REASONABLE AND LOGICAL TO INFER THAT THE ONLY ACTIVITIES CARRIED ON BY THE AS SESSEE DURING AY 2011-12 TO 2014-15 WAS TO CONTROL, MANAGE AND RUN THE REAL ESTATE BUSINESS OF AJL. THESE FACT S CLEARLY PROVE THAT THE ASSESSEE HAD IN FACT WAS ENGA GED IN THE REAL ESTATE BUSINESS THROUGH ITS SUBSIDIARY, AJL AND NO OTHER ACTIVITIES WERE CARRIED ON BY THE ASSE SSEE IN ACCORDANCE WITH ITS OBJECTS. ACTIVE INVOLVEMENT OF THE ASSESSEE COMPANY IN MANAGING, CONTROLLING AND CONDUCTING REAL ESTATE BUSINESS THROUGH ITS DIRECTOR AND SHAREHOLDER DURIN G AY 2011- 12 TO 2014-15 WAS THE ACTIVITY NOT IN ACCORDAN CE WITH THE OBJECT OF THE ASSESSEE. WHILE EXPLAINING THE INVESTMENT TO TAKE OVER AJL THE ASSESSEE HAD CLAIMED IN NOTES TO ACCOUNT FOR FY 201 0-11 ITA NO. 7751/DEL/2017 31 THAT THE INVESTMENT WAS FOR THE PURPOSE OF THE STAT ED OBJECT OF THE ASSESSEE COMPANY NAMELY YOUTH COMMITMENT TO THE IDEAL OF DEMOCRATIC AND SECULAR SOCIETY AND THE AJL WAS IN PROCESS OF REALIGNING ITS BUSINESS TO THE STATED OBJECT OF THE ASSESSEE COMPA NY. HOWEVER, FINDINGS AS DISCUSSED ABOVE HAD PROVED BEYOND DOUBTS THAT AJL HAD NEVER CHANGED ITS BUSINE SS ACTIVITIES OF REAL ESTATE DURING AY 2011-12 TO 2014 -15 TO REALIGN ITSELF WITH THE STATED OBJECT OF THE ASSESSE E COMPANY. 23 THUS, IN VIEW OF THE AFORESAID REASONS, LD. CIT (E) HELD THAT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE WERE TO MANAGE, CONTROL AND ENGAGE IN BUSINESS OF THE AJL AND THUS, THE ACTIVITIES WERE NOT IN ACCORDANCE WITH THE STATED OB JECTS OF THE ASSESSEE COMPANY. 24 THE LD. CIT (E) FURTHER HELD THAT THE ACQUISITION O F SHARES OF AJL WAS NEVER MEANT FOR OBJECTS OF THE ASSESSEE, I.E ., FOR YOUTH COMMITMENT FOR IDEALS OF DEMOCRATIC AND SECUL AR SOCIETY FOR THE REASON THAT AJL WAS ENGAGED SOLELY F OR EARNING INCOME FROM REAL ESTATE BUSINESS AND NEVER CARRIED OUT ACTIVITIES AND THE OBJECTS FOR WHICH IT WAS GRANT ED REGISTRATION. EVEN THE ASSESSEE IN THE NOTES TO ACC OUNT FOR THE YEAR ENDING 31.03.2011, STATED THAT AJL WAS IN T HE PROCESS OF REAL ESTATE BUSINESS TO MANAGE THE ASSES SEE COMPANY, WHICH WAS ALSO FOUND TO BE FACTUALLY CORRECT . AJL ITA NO. 7751/DEL/2017 32 HAD NEVER CHANGED OR RE-ALIGNED ITS BUSINESS WITH TH E OBJECTS OF THE ASSESSEE COMPANY AND FOR THIS REASON , THE EXPENDITURE OF RS. 50 LAKHS CANNOT BE HELD TO HAVE BEEN INCURRED FOR THE ACTIVITIES AS PER OBJECTS OF THE A SSESSEE COMPANY. 25 HE FURTHER HELD THAT SUO MOTO SURRENDER OF REGISTRATION U/S. 12A IN MARCH, 2016, WAS IN THE WAKE OF THE FACT THAT THE INVESTIGATION WAS MOUNTED AGAINST THE ASSESSEE BY T HE INVESTIGATION WING IN THE YEAR 2014 AND AFTER HAVIN G RECEIVED THE ENQUIRY REPORT FROM THE INVESTIGATION WING, THE ASSESSING OFFICER HAD STARTED INVESTIGATION AGAINST THE ASSESSEE BY WAY OF ISSUE OF SUMMONS U/S. 131 AND PROCEEDINGS U/S. 133(6) IN THE YEAR 2015. BECAUSE O F THIS ENQUIRY, THE ASSESSING OFFICER HAD ISSUED NOTICE U/ S. 148 IN JANUARY 2017 FOR REOPENING THE ASSESSMENT FOR A. Y. 2011-12. THUS, THE SURRENDER WAS MADE BY THE ASSESSE E AS A SEQUEL TO THE INVESTIGATION AGAINST THE ASSESSEE AND IT WAS NOT SUO MOTO ACTION BY THE ASSESSEE. HE FURTHER HELD THAT THERE WAS NO PROVISION FOR SURRENDERING OF CERT IFICATION OF REGISTRATION U/S. 12A BY THE ASSESSEE UNDER THE ACT AND THE ASSESSEE HAD MADE THE SURRENDER AFTER HAVING CL AIMED THE BENEFIT OF EXEMPTION ON THE INCOME OF RS. 2 CRO RES RECEIVED BY IT AS CONTRIBUTION DURING THE A.Y. 2016 -17 IN ITS RETURN OF INCOME AND SUO MOTO SURRENDERING REGISTRATION WILL NOT LEAD TO AUTOMATIC CANCELLATION OF REGISTRAT ION. HE ITA NO. 7751/DEL/2017 33 ALSO DISTINGUISHED THE JUDGMENT OF HONBLE SUPREME COURT IN CIT VS. MAHINDRA MILLS (SUPRA) AS RELIED UPON BY THE ASSESSEE. 26 ANOTHER IMPORTANT FACT NOTED BY THE LD. CIT (E) WAS THAT THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS AND EVIDENC ES TO SHOW THAT IT HAS ACTUALLY CARRIED OUT ANY ACTIVITIES DURING THE ASSESSMENT YEARS 2011-12 TO 2016-17 IN ACCORDAN CE WITH THE STATED OBJECTS. IN ALL THE WRITTEN REPLIES F ILED, HE OBSERVED, THAT NO EVIDENCE, WHATSOEVER, WERE FURNISH ED TO PROVE THAT THE ASSESSEE COMPANY HAD ACTUALLY CARRIE D OUT ANY GENUINE ACTIVITIES IN ACCORDANCE WITH THE STATED OBJECTS. IN FACT, AUDITED INCOME & EXPENDITURE ACCO UNTS AND DISCLOSURE IN THE ANNUAL REPORT PROVE BEYOND DO UBT THAT THE ASSESSEE HAD NOT CARRIED OUT ANY ACTIVITIE S IN ACCORDANCE WITH ITS STATED OBJECTS AND CLAIM OF ASSE SSEE THAT THE ACTIVITIES WERE CARRIED OUT HAS NOT BEEN F OUND TO BE GENUINE. THE ONLY ACTIVITY STATED TO BE CARRIED OUT WAS OF ACQUIRING AJL, WHICH TOO WAS NOT IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE, FOR WHICH IT WAS GRANTED REGISTRATION. 27 THEREAFTER, HE OBSERVED THAT THE JUDGMENT OF HONBL E SUPREME COURT IN THE CASE OF MRS. BACHA F. GUZDAR V S. CIT (SUPRA) IS NOT APPLICABLE IN THE FACTS OF THE CASE BECAUSE HERE THE ISSUE IS THAT THE NATURE OF ACTIVITIES CAR RIED OUT BY THE ASSESSEE THROUGH SOME OF ITS DIRECTORS WHO WERE A LSO ITA NO. 7751/DEL/2017 34 DIRECTORS OF AJL BY MANAGING, CONTROLLING AND PARTI CIPATING IN REAL ESTATE BUSINESS OF AJL ON BEHALF OF THE ASS ESSEE. 28 AFTER MAKING ALL THESE OBSERVATIONS AND ANALYSIS, L D. CIT(E) REACHED TO THE FOLLOWING CONCLUSIONS: ON THE BASIS OF ABOVE REFERRED TO FACTUAL ANALYSIS OF THE RETURN OF INCOME, ANNUAL REPORTS AND AUDITED INCOME AND EXPENDITURE OF THE ASSESSEE, INQUIRIES CONDUCTED BY THE AO AND ITS SUBSIDIARY M/S AJL WITH REFERENCE TO CONTENTION OF THE ASSESSEE AND PROVISI ONS OF SECTION 12AA(3), I HAVE REACHED FOLLOWING CONCLUSIONS: EVEN THOUGH ASSESSEE WAS SPECIFICALLY ASKED TO FURNISH DETAILS AND EVIDENCE OF THE ACTIVITIES CARR IED OUT BY IT DURING AY 2011-12 TO 2016-17 IN ACCORDANCE WITH ITS OBJECTS, THE ASSESSEE DID NOT FURNISH ANY DETAILS OR EVIDENCE THAT IT HAD ACTUALL Y CARRIED OUT ANY GENUINE ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS I.E. THE ASSESSEE HAS NOT EVEN DISCHARGED ITS INITIAL ONUS. HOWEVER, SCRUTINY OF T HE RETURNS OF INCOME AND ANNUAL REPORTS HAS REVEALED THAT THE ASSESSEE HAD NOT CARRIED OUT ANY ACTIVITIE S IN ACCORDANCE WITH THE OBJECTS. THE CLAIM OF THE ASSESSEE THAT INFORMATION AS CONTAINED IN THE REPORT OF THE AO WAS WITHOUT BASIS HAS BEEN EXAMINED IN DETAIL WITH REFERENCE TO ITA NO. 7751/DEL/2017 35 DISCLOSURE MADE BY THE ASSESSEE AND ITS SUBSIDIARY M/S. AJL IN THE RETURN OF INCOME AND ANNUAL REPORTS AND IT HAS BEEN NOTICED THAT THE FINDINGS O F THE AO IN REPORT WERE VERIFIABLE WERE BASED ON CREDIBLE BASIS AS EVIDENT FROM THE DISCUSSION AND FINDINGS AS RECORDED IN PRECEDING PARAGRAPHS 8 TO 11 OF THIS ORDER, ACCORDINGLY, THE CONTENTION OF TH E ASSESSEE WAS FOUND FACTUALLY INCORRECT. THE CLAIM OF THE ASSESSEE THAT ACTIVITY OF AJL COUL D NOT BE HELD AS ACTIVITY OF ASSESSEE HAS BEEN EXAMINED IN DETAIL IN PARAGRAPH 9 TO 12 OF THIS ORDER AND THE CLAIM WAS FOUND BOTH FACTUALLY AND LEGALLY UNTENABLE FOR THE REASON THAT ONLY ACTIVITY CARRIED ON BY THE ASSESSEE WAS TO MANAGE, CONTROL AND ENGAGE IN THE REAL ESTATE BUSINESS OR THE AJL AFTER ACQUIRING ALL THE PROPERTIES OF THE AJL THROU GH DIRECTORS AND SHAREHOLDERS OF THE ASSESSEE COMPANY AS DISCUSSED EARLIER. IN THIS CONTEXT, THE DISCLOSURE MADE BY THE ASSESSEE IN THE ANNUAL REPORT ENDING 31.03.2011 AS EXAMINED IN DETAIL ABOVE MAY ALSO BE REFERRED TO. THE CASE LAW AS CITED BY THE ASSESSEE IS NOT APPLICABLE TO THE PECULIAR FACTS OF THE CASE OF THE ASSESSEE WHERE DIRECT EVIDENCES ARE AVAILABLE TO PROVE THAT THE ASSESSEE WAS ENGAGED IN CARRYING OUT COMMERCIAL BUSINESS ITA NO. 7751/DEL/2017 36 OF REAL ESTATE IN CONTRAVENTION TO STATED OBJECT OF THE COMPANY THROUGH ITS DIRECTORS/ SHAREHOLDERS. THE CONTENTION OF THE ASSESSEE THAT IT HAD SUO MOTO SURRENDERED THE REGISTRATION U/S 12A IN THE MONTH OF MARCH 2016 HAS ALSO BEEN FOUND FACTUALLY INCORRECT AS THE SURRENDER OF 12A BY THE ASSESSEE WAS AS SEQUEL TO INVESTIGATION BY THE DIRECTORATE OF INVESTIGATION AND THE AO SINCE 2014. THE ARGUMENT OF THE ASSESSEE THAT SURRENDER OF CERTIFICATE GRANTED TO IT U/S 12A R.W.S. 12AA IN THE MONTH OF MARCH 2016 HAS AUTOMATICALLY CANCELLED THE REGISTRATION GRANTED BY THE COMPETENT AUTHORITY IS LEGALLY UNTENABLE CLAIM AS THE PROVISIONS OF SECTION 12AA DO NOT STIPULATE CANCELLATION OF REGISTRATION BY WAY OF SURRENDER BY THE ASSESSEE. I T IS A DIFFERENT ISSUE THAT IN THIS CASE THE ASSESSEE HAS CHOSEN TO SURRENDER THE CERTIFICATE OF REGISTRATION AFTER HAVING CLAIMED EXEMPTION OF INCOME OF RS. 2 CRORES IN THE RETURN OF INCOME FOR AY 2016-17. 29 ACCORDINGLY, LD. CIT(E) HELD THAT IN VIEW OF THE AFO RESAID UNCONTROVERTED FINDINGS, HE IS SATISFIED THAT FIRSTLY , THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE; AND SECONDLY , ARE NOT CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. ITA NO. 7751/DEL/2017 37 CONSEQUENTLY, HE WITHDREW THE REGISTRATION GRANTED U/ S. 12A R/W SEC. 12AA W.E.F. THE ASSESSMENT YEAR 2011-12 ONWARDS. IN OTHER WORDS, HE CANCELLED THE REGISTRATIO N FROM THE DATE OF GRANT OF GRANTING REGISTRATION ITSELF. ARGUMENTS PLACED BY THE APPELLANT/ASSESSEE: 30 BEFORE US, THE LD. COUNSEL MS. KAVITA JHA, WHO HAD I NITIALLY APPEARED BEFORE US ON BEHALF OF THE ASSESSEE, VIDE LETTER DATED 05.08.2019 HAD SUBMITTED A PETITION FOR ADMIS SION OF ADDITIONAL EVIDENCES STATING THAT THE LD. CIT(E) HA D GIVEN VARIOUS INCORRECT AND FACTUALLY MISLEADING STATEMEN TS AND HAS REACHED TO THE CONCLUSION WITHOUT GIVING ANY OPPORTUNITY OR MAKING SUFFICIENT ENQUIRY. THE ADDIT IONAL EVIDENCES PAPER BOOK FILED SEPARATELY IS RUNNING IN TO 386 PAGES, CONTAINING LIST OF 20 DOCUMENTS WHICH ARE MOS TLY IN THE NATURE OF LAUNCH OF COMMEMORATIVE EDITION OF NA TIONAL HERALD PUBLICATION IN THE YEAR 2017 AND 2018, LAUNC H OF VARIOUS WEBSITES BY NATIONAL HERALD AND NAVJIVAN NEWSPAPERS, ERSTWHILE NEWSPAPERS PUBLISHED BY AJL, REGISTRATION CERTIFICATES OF NATIONAL HERALD NEWSPA PER AND SUNDAY NAVJIVAN WITH REGISTRAR OF NEWSPAPERS FOR INDI AN AND VARIOUS KIND OF REPORTS OF GOOGLE SHOWING THE O UTREACH OF THE ONLINE NEWS PORTALS OPERATED BY AJL. FURTHER , RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF AJL TO ITA NO. 7751/DEL/2017 38 RESUME THE PUBLICATION OF NEWSPAPERS ON 26.09.2016 A ND LETTER OF AJL TO THE REGISTRAR OF NEWSPAPERS OF INDI A TO RESUME NEWSPAPER BUSINESS, COPY OF FORM NO. 23 SUBMITTED BEFORE THE ROC WITH AMENDED MOA TO SHOW THA T THE AMENDED OBJECTS OF THE AJL WERE IN CONSONANCE WIT H THE OBJECTS OF YOUNG INDIAN ARE PLACED IN THE ADDIT IONAL EVIDENCE PAPER BOOK. BESIDES THIS, VARIOUS PRESENTA TIONS, PHOTOGRAPHS SHOWING OPERATION OF YOUNG INDIAN WERE AL SO FILED. 31 THE REASON STATED FOR FILING ALL THESE ADDITIONAL E VIDENCES WAS THAT THESE ARE FILED TO COUNTER VARIOUS STATEMEN TS MADE BY THE CIT(E) WHICH ARE MAINLY BASED ON CONJECT URES AND SURMISES AND THE LD. CIT(E) WITHOUT GIVING ANY P ROPER OPPORTUNITY HAVE STATED SEVERAL INCORRECT FACTS. IT WAS POINTED OUT THAT THE LD. CIT (E) OBSERVED THAT THE OBJECT OF AJL WAS NEVER RE-CASTED TO MATCH WITH THE OBJECTS OF THE APPELLANT-ASSESSEE. HOWEVER, THERE WAS AN AMENDED MO A OF AJL FILED BEFORE THE REGISTRAR OF COMPANIES [ROC ] THAT THESE OBJECTS WERE RE-CASTED IN THE YEAR 2011 TO AL IGN WITH THE OBJECTS OF THE ASSESSEE. SECONDLY, RELEVANT OBS ERVATION OF THE LD. CIT (E) THAT BUSINESS OF PUBLICATION OF NEWSPAPER OF AJL CEASED TO EXIST W.E.F. 02.04.2008 IS ALSO INC ORRECT. IN FACT, THERE WAS NO SUCH CLOSURE OF BUSINESS, RATHER IT WAS A SUSPENSION OF PUBLICATION OF NEWSPAPERS FOR TEMPORAR Y PERIOD AND SAME HAD BEEN REVIVED IN THE YEAR 2017-1 8, FOR ITA NO. 7751/DEL/2017 39 WHICH THESE ADDITIONAL EVIDENCES HAVE BEEN FILED. LA STLY, ON ISSUE THAT THE LD. CIT (E) HAS CONCLUDED THAT AJL S TARTED THE BUSINESS OF CONSTRUCTION OF BUILDINGS FOR THE COMMERCIAL PURPOSE IN THE YEAR 2008 AND LET OUT AND SOLD THE BUILDING ON RENT AND FOR SALE CONSIDERATION, WHE REAS THE MATTER OF FACT IS THAT ACTIVITY OF RENTING WAS P ART AND PARCEL OF THE BUSINESS OF AJL SINCE INCEPTION AND N O INCOME HAS BEEN EARNED FROM SALE OF ANY PROPERTY. A LL THESE FINDINGS ARE BASED ON UNILATERAL READING OF C ERTAIN NOTES ON FINANCIAL STATEMENTS OF AJL WITHOUT CONDUCT ING ANY KIND OF ENQUIRY FROM AJL. 32 FURTHER, THE LD. CIT (E) HAS MENTIONED THE REASONS FOR SURRENDER OF REGISTRATION ON ACCOUNT OF FINDINGS OF THE INVESTIGATION WING, BUT SUCH OBSERVATION HAS BEEN M ADE WITHOUT PROVIDING ANY ORDER OR REPORT FROM THE INVESTIGATION WING TO THE ASSESSEE. EVEN, REOPENING U/S. 148 WAS MUCH LATER IN THE YEAR 2017, WHEREAS THE ASSE SSEE HAS SURRENDERED THE REGISTRATION IN MARCH 2016. IN SUPPORT OF ADMISSION OF ADDITIONAL EVIDENCES U/R. 29 OF ITA T RULES, 1963, STRONG RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF TEXT HUNDRED INDIA (P) LTD. (2011) 197 TAXMAN 128. 33 THEREAFTER, THE LD. COUNSEL FOR THE ASSESSEE, SRI Y OGESH THAR GAVE PARA-WISE SUBMISSIONS OF THE FINDINGS GIVE N IN THE IMPUGNED ORDER. ONE OF THE CONTENTIONS RAISED W AS THAT ITA NO. 7751/DEL/2017 40 THE ORDER PASSED BY THE LD. CIT (E) U/S. 12AA (3) I S MOSTLY BASED ON THE BORROWED SATISFACTION WITHOUT APPLICATI ON OF MIND. THIS WAS POINTED OUT FROM PARA 2 OF THE IMPUG NED ORDER WHEREIN AN ALLEGATION MADE BY THE ACIT VIDE COMMUNICATION DATED 16.08.2017 HAS BEEN MADE THE BA SIS BY THE LD. CIT (E) AND BASED ON THAT HE HAS REACHED TO THE CONCLUSION THAT PRIMA FACIE FINDING OF THE ASSESSING OFFICER WAS CORROBORATED FROM THE FACTS ON RECORD OF THE ASS ESSEE AS WELL AS AJL. THUS, THE LD. CIT (E) HAS MERELY RE LIED UPON THE INFORMATION RECEIVED FROM THE ACIT AND JCIT AND HAD NOT INDEPENDENTLY AND OBJECTIVELY APPLIED HIS OWN MI ND. FOR INSTANCE, RELEVANT OBSERVATION MADE BY THE LD. CIT (E) AT PAGE 13 TO 15 WAS HIGHLIGHTED BEFORE US. THE LD. COUNSEL FURTHER SUBMITTED THAT THE REQUIREMENT U/S. 12AA(3) BEFORE CANCELING THE REGISTRATION IS THAT THE LD. CIT(E) S HOULD BE SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE ARE N OT GENUINE OR ARE NOT IN ACCORDANCE WITH THE OBJECTS. SUCH SAT ISFACTION CANNOT BE A BORROWED SATISFACTION BASED ON THE FIND ING OF ANOTHER OFFICER WITHOUT APPLICATION OF MIND INDEPEND ENTLY. IN SUPPORT, RELIANCE WAS PLACED ON THE FOLLOWING TWO DECISIONS: (I) PCIT V. MEENAKSHI OVERSEAS (P) LTD., 395 ITR 677 (II) CIT V. SPLS SIDDHARTHA LTD., 345 ITR 223 . 34 WITH REGARD TO VARIOUS OBSERVATIONS AND ALLEGATIONS OF THE LD. CIT (E), THE LD. COUNSEL TRIED TO GIVE HIS POIN T-WISE ITA NO. 7751/DEL/2017 41 REBUTTAL ON VARIOUS ISSUES RAISED IN THE IMPUGNED O RDER. FIRST OF ALL, WITH REGARD TO THE ALLEGATION THAT THE MOA OF AJL WAS NEVER RE-CASTED TO ALIGN WITH THE OBJECTS OF THE ASSESSEE COMPANY DURING THE PERIOD RELEVANT TO ASSESSMENT YEARS 2011-12 TO 2014-15, HE SUBMITTED T HAT THE SAME IS NOT CORRECT BECAUSE THE MOA OF AJL WAS R E- CASTED ON 13.09.2011 WHEREBY NEW CLAUSE (U) WAS INSERTED TO ALIGN WITH THE OBJECTS OF THE ASSESSEE C OMPANY. IN SUPPORT, AMENDED MOA AS PASSED BY THE SHAREHOLDE RS OF THE COMPANY ON 13.09.2011, PLACED ON THE ADDITIO NAL PAPER BOOK PAGE 68 TO 80, WAS REFERRED TO AND RELIED UPON. THE NEW AMENDED OBJECTS, CLAUSE (U) PLACED AT PAPE R BOOK PAGE 224 IN ADDITIONAL EVIDENCE, READ AS UNDER : ( U) TO INCULCATE IN THE MIND OF INDIA'S YOUTH COMMITMENT TO THE IDEAL OF A DEMOCRATIC AND SECULAR SOCIETY FOR ITS ENTIRE POPULACE WITHOUT ANY DISTINC TION AS TO RELIGION, CASTE OR CREED AND TO AWAKEN INDIA'S YOUTH TO PARTICIPATE IN ACTIVITIES THAT MAY PROMOTE THE FOREGOING OBJECTIVE IN ANY MANNER WHATSOEVER INCLUDING WITHOUT LIMITATION, PARTICIPATING IN ALL DEMOCRATIC ACTIVITIES THROUGH OPEN AND TRANSPARENT ELECTORAL PROCESS, SO AS TO CONFORM TO THE IDEALS O F THE FOUNDING FATHERS OF INDIA, MAHATMA GANDHI AND PANDIT JAWAHARLAL NEHRU. 35 FURTHER, IN THE YEAR 2016, AJL FURTHER AMENDED ITS OBJECTS THAT IT IS THE NON-PROFIT MAKING COMPANY AND IT HAD APPLIED ITA NO. 7751/DEL/2017 42 U/S. 8 OF THE COMPANIES ACT 2013, FOR WHICH REFERENC E WAS MADE TO PAGES 281 TO 295 OF THE ADDITIONAL EVIDENCE PAPER BOOK. OUR ATTENTION WAS DRAWN TO FORM MGT 14 FILED WIT H THE ROC AND THE MAIN OBJECT OF AJL AT CLAUSE (I) WAS INSERTED, WHICH READS AS UNDER: TO INCULCATE IN THE MIND OF INDIAS YOUTH COMMITME NT TO THE IDEAL OF A DEMOCRATIC AND / SECULAR SOCIETY FOR ITS ENTIRE POPULACE WITHOUT ANY DISTINCTION AS TO RELIGION, CA STE OR / CREED AND TO AWAKEN INDIAS YOUTH TO PARTICIPATE IN ACTIVITIES THAT MAY PROMOTE THE FOREGOING OBJECTIVE IN ANY MAN NER WHATSOEVER INCLUDING WITHOUT LIMITATION, PARTICIPAT ING IN ALL DEMOCRATIC ACTIVITIES THROUGH OPEN AND TRANSPARENT ELECTORAL PROCESS, SO AS TO CONFORM TO THE IDEALS OF THE FOUN DING FATHERS OF INDIA, MAHATMA GANDHI AND PANDIT JAWAHAR LAL NEHRU AND TO ACHIEVE THIS THROUGH PUBLICATION AND DISTRIBUTION OF NEWSPAPER, PERIODICALS, MAGAZINE OR JOURNAL, THROUGH PHYSICAL, ELECTRONIC, DIGITAL OR ANY OTHER MEDIA, AS ISSUED BY THE COMPANY IN ACCORDANCE WITH THE POLICY AND PRINCIPLES OF THE INDIAN NATIONAL CONGRESS. FURTHER, CLAUSE (V) OF THE MOA MENTIONED THAT (I) THE PROFIT, IF ANY, OR OTHER INCOME AND PROPERTY OF THE COMPANY WHENEVER DERIVED SHALL BE APPLIED SOLELY FOR THE PROMOTION OF ITS OBJECTS AS SET FORTH IN THIS MEMOR ANDUM. (II) NO PORTION OF THE PROFITS, OTHER INCOME OR PRO PERTY AFORESAID SHALL BE PAID OR TRANSFERRED, DIRECTLY OR INDIRECTLY, BY WAY OF DIVIDEND, BONUS OR OTHERWISE BY WAY OF PROFIT TO PERS ONS WHO, AT ANY TIME, ARE OR HAVE BEEN MEMBERS OF THE COMPAN Y OR TO ANYONE OR MORE OF THEM OR TO ANY PERSONS CLAIMING T HROUGH ANYONE OR MORE OF THEM. ITA NO. 7751/DEL/2017 43 (III) NO REMUNERATION OR OTHER BENEFIT IN MONEY OR MONEYS WORTH SHALL BE GIVEN BY THE COMPANY TO ANY OF ITS MEMBERS , WHETHER OFFICERS OR MEMBERS OF THE COMPANY OR NOT, EXCEPT P AYMENT OF OUT-OF-POCKET EXPENSES, REASONABLE AND PROPER INTER EST ON MONEY LENT, OR REASONABLE AND PROPER RENT ON PREMISE S LET TO THE COMPANY. 36 FURTHER CLAUSE (X) OF THE MOA PROVIDED THAT ON WINDI NG UP OR DISSOLUTION OF AJL, THE SURPLUS, IF ANY, SHALL N OT BE DISTRIBUTED AMONG THE MEMBERS OF THE COMPANY BUT SH ALL BE GIVEN OR TRANSFERRED TO SUCH OTHER SECTION 8 COM PANY HAVING OBJECTS SIMILAR TO THE OBJECTS OF AJL. THUS, IT WAS SUBMITTED THAT THE OBSERVATIONS OF THE LD. CIT (E) THAT THE OBJECTS OF THE AJL WERE NOT RE-CASTED DURING THE YE ARS 2011-12 TO 2014-15 IS COMPLETELY BASELESS AND INCOR RECT. 37 ANOTHER CONTENTION RAISED TO REBUT THE FINDING OF T HE LD. CIT (E) WAS THAT, THE PUBLICATION BUSINESS WAS ONLY TEMPO RARILY SUSPENDED IN THE YEAR 2008 AND THERE WAS NO CLOSURE OF THE BUSINESS. IT WAS SUBMITTED THAT PUBLICATION BUS INESS OF THE AJL HAD NEVER CEASED TO EXIST AND REFERENCE TO NOTES TO ACCOUNTS OF AJL IS NOT PROPERLY APPRECIATED, BECAUS E IT NOWHERE STATES THAT THE BUSINESS OF PUBLICATION HAD BEEN SUSPENDED. NOWHERE, THE NOTE SPEAKS ABOUT THE INTEN TION TO CLOSE THE PUBLICATION BUSINESS. THE LD. COUNSEL SUBMITTED THAT THE AJL IS A VERY OLD COMPANY INCORP ORATED IN THE YEAR 1937 AS A PUBLIC COMPANY IN LUCKNOW UND ER ITA NO. 7751/DEL/2017 44 THE INDIAN COMPANIES ACT, 1913, WHEREIN VARIOUS STAL WARTS OF FREEDOM MOVEMENT, SUCH AS, PT. JAWAHAR LAL NEHRU, PD TANDON, ACHARYA NARENDRA DEV, KAILASH NATH KATJU, R AFI AHMAD KIDWAI WERE THE FIRST SUBSCRIBERS AND SIGNATOR IES TO MOA OF AJL. THE MAIN OBJECT OF THE AJL WAS TO ESTABL ISH A PUBLICATION BUSINESS AND TO PUBLISH NEWSPAPERS, MAGAZINES IN ACCORDANCE WITH THE POLICY AND PRINCIPL ES OF THE INDIAN NATIONAL CONGRESS. THE AJL STARTED PUBLI SHING NEWSPAPERS, I.E., NATIONAL HERALD IN ENGLISH, NAVJI VAN IN HINDI AND QAUMI AWAZ IN URDU, WHICH SERVED AS THE VOI CE OF THE FREEDOM MOVEMENT. IT WAS ALSO ARGUED THAT FRO M TIME TO TIME, PUBLICATION BUSINESS OF AJL WAS SUSPEN DED AND AGAIN IT WAS REVIVED. IN THE YEAR 2008, SINCE A JL STARTED FACING FINANCIAL, OPERATIONAL AND LABOUR TR OUBLES, THE COMPANY HAD TO AGAIN TEMPORARILY SUSPEND ITS PUBLICATION BUSINESS. IN SUPPORT, EVENTS LEADING TO TEMPORARY SUSPENSION OF PUBLICATION BUSINESS IN 200 8 WERE ALSO SUBMITTED. THESE WERE STATED TO ON ACCOUNT OF LABOUR UNREST AND STRIKES, PRINTING MACHINERY HAD B ECOME OBSOLETE AND THERE WAS DIP IN THE CIRCULATION OF IT S NEWSPAPERS AND MOST OF ITS BUILDINGS WERE SEALED DUE TO NON-PAYMENT OF LABOUR DUES. NOT ONLY THAT, A FIRE H AD BROKEN OUT IN ITS LUCKNOW PREMISES, WHICH DESTROYED T HE PRINTING PRESS. OWING TO THE SAID TROUBLE AND CONTIN UOUS LOSSES, THE PUBLICATION WAS TEMPORARILY SUSPENDED. T HE ITA NO. 7751/DEL/2017 45 PUBLICATION BUSINESS WAS TEMPORARILY SUSPENDED, IS C LEAR FROM THE FACT THAT ON 31.03.2008, AJL INFORMED UNIT ED NEWS OF INDIA (UNI) ABOUT THE TEMPORARY SUSPENSION O F PUBLICATION BUSINESS. EVEN THIRD PARTY NEWSPAPERS HA D PUBLISHED THAT THERE WAS TEMPORARY SUSPENSION OF PUBLICATION BUSINESS BY AJL. THUS, THERE WAS NO CLOS URE OF BUSINESS OR BUSINESS ITSELF HAD CEASED TO EXIST, RA THER IT WAS ONLY A TEMPORARY SUSPENSION. HE SUBMITTED THAT, IN FACT, THE PUBLICATION HAD LATER ON RE-COMMENCED, WHI CH IS EVIDENT FROM THE FOLLOWING FACTS, PLACED IN THE PAPE R BOOK OF ADDITIONAL EVIDENCES: - ON 23/01/2014, AJL WROTE TO THE REGISTRAR OF NEWSPA PERS FOR INDIA (RNI) INFORMING IT OF ITS INTENT TO RESTART P UBLICATION OF THE NEWSPAPERS. PLEASE SEE PAGE 267 OF THE AB - PB I; - ON 26/09/2016, A RESOLUTION WAS PASSED BY THE BOA RD OF DIRECTORS OF AJL TO RESUME THE PUBLICATIONS OF NEWS PAPERS. PLEASE SEE PAGE 266 OF THE AB - PB I; - ON 14/11/2016, AJL LAUNCHED NATIONAL HERALD WEBSITE . PLEASE SEE PAGES 204 TO 213 OF THE AB - PB I; - ON 15/11/2016, AN AGREEMENT WAS ENTERED BETWEEN AJ L AND PRESS TRUST OF INDIA FOR WIRE NEWS SERVICES. PLEA SE SEE PAGES 245-249 OF THE AB - PB I; - ON 12/06/2017, AJL LAUNCHED THE COMMEMORATIVE EDIT ION OF NATIONAL HERALD (PUBLICATION) IN PRINT IN BANGAL ORE. PLEASE SEE PAGES 133-153 OF THE AB - PB I FOR THE COPIES O F VARIOUS REPORTS AND PHOTOGRAPHS OF SAID LAUNCH; - ON 23/06/2017, AJL OBTAINED REGISTRATION CERTIFIC ATE FOR NATIONAL HERALD NEWSPAPER FROM THE REGISTRAR OFFICE OF ITA NO. 7751/DEL/2017 46 NEWSPAPERS FOR INDIA, MINISTRY OF INFORMATION AND BROADCASTING. PLEASE SEE PAGES 239-240 OF THE AB - P B I; - ON 01/07/2017, AJL LAUNCHED COMMEMORATIVE EDITION OF NATIONAL HERALD (PUBLICATION) IN PRINT IN NEW DELHI . PLEASE SEE PAGES 154-185 OF THE AB - PB I FOR THE COPIES O F VARIOUS REPORTS AND PHOTOGRAPHS OF SAID LAUNCH; - ON 12/08/2017, AJL LAUNCHED QAUMI AWAZ WEBSITE IN URDU. PLEASE SEE PAGES 215- 229 OF THE AB - PB I; - ON 29/08/2017, AJL LAUNCHED NAVJIVAN WEBSITE IN HI NDI. PLEASE SEE PAGES 230-238 OF THE AB - PB I; - ON 24/11/2017, AJL OBTAINED REVISED REGISTRATION CERTIFICATE FOR NATIONAL HERALD NEWSPAPER FROM REGIS TRAR OFFICE OF NEWSPAPERS FOR INDIA, MINISTRY OF INFORMA TION AND BROADCASTING. PLEASE SEE PAGE 241 OF THE AB - PB I; - ON 20/2/2018 AND 11/01/2019, AJL OBTAINED REGISTRATION CERTIFICATE OF SUNDAY NAVJIVAN WITH REG ISTRAR OFFICE OF NEWSPAPERS FOR INDIA, MINISTRY OF INFORMA TION AND BROADCASTING. PLEASE SEE PAGES 242-244 OF THE AB - P B I; - ON 10/12/2018, AJL LAUNCHED COMMEMORATIVE EDITION OF NAVJIVAN NEWSPAPERS (PUBLICATION) IN PRINT IN CHAND IGARH. PLEASE SEE PAGES 186-203 OF THE AB - PB I FOR THE C OPIES OF VARIOUS REPORTS AND PHOTOGRAPHS OF SAID LAUNCH. 38 FURTHER, IT WAS SUBMITTED THAT THERE WERE SEVERAL SUBSCRIBERS AND READERS OF AJL PUBLICATIONS, FOR WHI CH CERTIFICATE ISSUED BY AUDIT BUREAU OF CIRCULATIONS AND THE REPORT OF GOOGLE SHOWING OUTREACH OF THE ONLINE PORT ALS OPERATED BY AJL SINCE NOVEMBER 2016 TILL DATE. IT C LEARLY SHOWS THAT THE PUBLICATION BUSINESS OF THE ASSESSEE COMPANY HAD REVIVED AND IS RUNNING. THE LD. COUNSEL ALSO ITA NO. 7751/DEL/2017 47 RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. VIKRAM COTTON MILLS LTD. (1988) 169 ITR 597 (SC), WHEREIN HONBLE SUPREME COURT HAS HELD THAT TO DETERMINE WHETHER BUSINESS WAS TEMPORARILY SUSPENDED, EVIDENCE OF THE ASSESSEE IS IMPORTANT. 39 THE LD. COUNSEL FURTHER SUBMITTED THAT THE ALLEGATI ON OF THE LD. CIT (E) THAT AJL IS REAL ESTATE COMPANY IS ABSO LUTELY INCORRECT. IT WAS POINTED OUT THAT IN PUBLIC INTERES T, STATE GOVERNMENTS, AS A POLICY, HAD ALLOTTED LANDS/BUILDI NGS TO VARIOUS ENTITIES ENGAGED IN THE NEWSPAPER BUSINESS TO PARTLY USE IT FOR RUNNING NEWSPAPER BUSINESS AND PAR TLY TO RENT IT OUT. THE SAME IS DONE BY THE GOVERNMENT TO ENSURE INDEPENDENCE OF THE PRESS. THE NEWSPAPER PUBLISHING BUSINESS, BEING CAPITAL INTENSIVE IN NATURE, IS PRI MARILY A LOSS MAKING BUSINESS. IN FACT, THE PRICE AT WHICH NEWSPAPERS ARE SOLD IS VERY NOMINAL SO THAT IT CAN REACH TO MASSES AND GENERALLY, THE COST OF PUBLISHING A NEWS PAPER IS HIGHER THAN THE PRICE AT WHICH THE SAME IS SOLD. THEREFORE, IN ORDER TO PROMOTE PRESS AND ENSURE ITS FREEDOM, THE GOVERNMENT ALLOTS LANDS/BUILDINGS TO V ARIOUS ENTITIES ENGAGED IN THE NEWSPAPER BUSINESS SO THAT THEY CAN RECOUP THEIR LOSSES FROM PUBLICATION BUSINESS A ND SURVIVE BY COMMERCIALLY EXPLOITING THE SAID ALLOTTE D LANDS/BUILDINGS BY RENTING OUT THE SAME. THE LEASE DEED ALLOTTING THE SAID LANDS/BUILDINGS SPECIFICALLY PER MITS THE ITA NO. 7751/DEL/2017 48 LESSEES TO USE THE PROPERTY FOR RENTING OUT. INDEED , SAID PRACTICE OF RENTING OUT THE PROPERTIES BY NEWSPAPER BUSINESS IS PERMISSIBLE IN STANDARD NEWSPAPER LEASES AND ALLOTMENTS OF IMMOVABLE PROPERTY FOR NEWSPAPER USER . THE AFORESAID FACTS ARE MATTER OF PUBLIC KNOWLEDGE AND P OLICY. IN SUPPORT, RELIANCE WAS PLACED ON THE JUDGMENT OF H ONBLE SUPREME COURT IN THE CASE OF GOVT. OF AP V. MAHARSH I PUBLISHERS PVT. LTD.(CIVIL APPEAL 7152-7157 OF 2002 ), WHEREIN HONBLE SUPREME COURT HAS OBSERVED AS UNDER: ANOTHER CONTENTION URGED BEFORE THE DIVISION BENCH OF THE HIGH COURT AND REITERATED BEFORE US, IS THAT THERE WERE NO CONTRACTS SIGNED BY COMPLYING WITH THE FORMALITIES UNDER ARTI CLE 299 OF THE CONSTITUTION AND THEREFORE, THE GOVERNMENT WAS NOT OBLIGED TO HONOUR ITS COMMITMENTS. THIS CONTENTION HAS RIGHTLY BEEN REPELLED BY THE DIVISION BENCH OF THE HIGH COURT BY POINTING OU T THAT THE SALE OF THE LAND WAS NOT A RESULT OF ANY COMMERCIAL TRANSAC TION BY THE STATE GOVERNMENT, BUT PURSUANT TO ITS DECLARED SOCIO-ECON OMIC POLICY REFLECTED IN THE SCHEME OF ALLOTMENT OF LAND TO GIV E INCENTIVES TO NEWSPAPER CONCERNS AND EDUCATIONAL INSTITUTIONS. TH E HIGH COURT RIGHTLY HELD THAT THIS WAS AN EXECUTIVE ACT FALLING WITHIN THE PROVINCE OF ARTICLE 162 AND NOT WITHIN THE AMBIT OF ARTICLE 299 OF THE CONSTITUTION.' (UNDERLINED FOR EMPHASIS). 40 THE LD. COUNSEL ALSO FURNISHED THE LIST OF PROPERTI ES OF MAJOR NEWSPAPER COMPANIES IN INDIA AND LIST OF PROPERTIES ALLOTTED TO AJL. ALL THE NEWSPAPERS COMPANIES HAVE BEEN PARTLY RENTING OUT THEIR PROPERTIES TO SUPPORT THEI R NEWSPAPER BUSINESS. IN SUPPORT, LIST OF TENANTS OF VARIOUS SUCH COMPANIES IN DELHI WAS ALSO HANDED OVER TO US A T THE TIME OF HEARING. THUS, IT WAS SUBMITTED THAT PRACTIC E OF ITA NO. 7751/DEL/2017 49 ALLOTMENT OF LAND TO NEWSPAPER COMPANIES AND SUCH NEWSPAPER COMPANIES USING THE SAME FOR RENTING PURP OSE IS PART AND PARCEL OF THEIR PUBLICATION BUSINESS IS NOT SO UNCOMMON. THEREFORE, IF AJL HAS RECEIVED RENTAL INC OME, IT CANNOT BE HELD THAT IT IS FROM REAL ESTATE BUSINESS AND IF SAID LOGIC IS APPLIED TO ALL THE NEWSPAPER COMPANIE S, ALL OF THEM SHALL BE TREATED AS REAL ESTATE COMPANIES. HIGHLIGHTING THE ROLE OF NEWSPAPER IN THE DEMOCRACY , THE LD. COUNSEL SUBMITTED THAT PRESS IS ONE OF THE IMPO RTANT PILLARS OF DEMOCRACY AND ITS FREEDOM IS OF PARAMOUN T IMPORTANCE. RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF INDIAN EXPRESS NEWSPAPER V. UOI (1986 AIR 515) WHEREIN HONBLE SUPREME COURT HAS HELD THAT PRESS IS THE 4 TH ESTATE OF THE COUNTRY AND FREEDOM OF SPEECH AND EXPRESSION SHOULD , THEREFORE, BE GIVEN PARAMOUNT IMPORTANCE AND GENERO US SUPPORT AND THE GOVERNMENT SHOULD BE MORE CAUTIOUS WHILE LEVYING TAXES ON OTHER MATTERS CONCERNING NEWS PAPER INDUSTRY. RELIANCE WAS ALSO PLACED ON ANOTHER DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF BENNETT COLEMAN & CO. &ORS. VS. UOI (1973 AIR 106) . RELYING ON THESE JUDGMENTS, IT WAS SUBMITTED BY THE LD. COUNSEL THAT FOR THE SAID FREEDOM OF PRESS, LANDS WERE ALLOTTED TO T HE COMPANIES AND PERMISSION WAS GRANTED TO PARTLY RENT OUT THE SAME AND THEREFORE, AJL CANNOT BE REGARDED AS ITA NO. 7751/DEL/2017 50 ENGAGED IN THE REAL ESTATE BUSINESS AND IT IS PART AND PARCEL OF PUBLICATION BUSINESS OF AJL. 41 THE LD. COUNSEL FURTHER SUBMITTED THAT AJL HAD NEVE R PURCHASED OR SOLD ANY PROPERTY AFTER YEAR 2008 AS A LLEGED BY THE LD. CIT (E). IT WAS SUBMITTED THAT CERTAIN L AND PARCELS WERE ALLOTTED TO AJL BY THE GOVERNMENT FROM TIME TO TIME BETWEEN THE PERIODS 1962 TO 2005. IN THE YE AR 1962, THE GOVERNMENT OF INDIA ALLOTTED LAND TO AJL SITUATED AT 5A, BAHADUR SHAH ZAFAR MARG, NEW DELHI FOR THE PURPOSE OF CARRYING OUT NEWSPAPER PUBLICATION. AS P ER TERMS OF ALLOTMENT, AJL WAS ALLOWED TO LET OUT PART O F THE BUILDING TO BE CONSTRUCTED ON THE SAME. IN THE YEAR 1983, GOVERNMENT OF MAHARASHTRA ALLOTTED A PROPERTY TO AJ L IN MUMBAI FOR THE PURPOSE OF CARRYING OUT PUBLICATION OF DAILY NEWSPAPERS AND ESTABLISHING A NEHRU LIBRARY CUM RESEARCH INSTITUTE. SIMILARLY, ALLOTMENT WAS MADE BY THE GOVERNMENT OF BIHAR IN PATNA AND GOVERNMENT OF HARY ANA IN PANCHKULA. APART FROM THAT, AJL ALSO OWNS FREEHOL D LAND IN LUCKNOW PURCHASED IN THE YEAR 1975. THUS, ALLOTME NT OF LAND BY THE GOVERNMENT FOR PUBLICATION BUSINESS CAN NOT BE HELD THAT AJL HAD ACQUIRED THE PROPERTIES FOR ANY K IND OF REAL ESTATE BUSINESS. CERTAIN ANNEXURE WERE FILED BY THE ASSESSEE TO SHOW THAT THE CONSTRUCTION OF THE DELHI PROPERTY WAS COMPLETED IN THE YEAR 1967 AND THE SAME HAS BEEN GIVEN ON RENT SINCE YEAR 1990. IT WAS POINTED O UT THE ITA NO. 7751/DEL/2017 51 PATNA PROPERTY IS AN ENCROACHED LAND ON WHICH NO CONSTRUCTION ACTIVITY HAS BEEN UNDERTAKEN EVER. PRO PERTY IN LUCKNOW IS A FREEHOLD LAND COMPRISING OF TWO PARTS, N EHRU BHAWAN AND NEHRU MANZIL. CONSTRUCTION OF NEHRU BHAWAN WAS COMPLETED IN THE YEAR 1984 AND NEWSPAPER ACTIVITY WAS CONDUCTED THERE FROM. HOWEVER, A FIRE BROKE OUT IN THE YEAR 2002 DESTROYING THE PRINTING PRESS, AFTER WHICH THE BUILDING WAS REPAIRED IN THE FY 2007-08 AND GIVEN ON RENT TO A CHARITABLE ORGANIZATION. IN CASE OF NEHRU MANZ IL, CONSTRUCTION HAD STARTED IN THE YEAR 1988, BUT WAS NEVER COMPLETED DUE TO FINANCIAL CONSTRAINTS. IN CASE OF PANCHKULA PROPERTY, THE CONSTRUCTION HAS BEEN COMPL ETED IN 2013, FROM WHERE NEWSPAPER ACTIVITY IS BEING CONDU CTED. IN CASE OF MUMBAI PROPERTY, THE CONSTRUCTION IS STI LL IN PROCESS, WHICH AFTER COMPLETION WOULD BE USED FOR NEWSPAPER ACTIVITY, FOR ESTABLISHING A NEHRU LIBRAR Y CUM RESEARCH INSTITUTE AND BE PARTLY LET OUT AS PER THE PERMISSIBLE TERMS OF ALLOTMENT. HENCE, IT WAS SUBMIT TED THAT CIT (E)'S OBSERVATIONS THAT AJL STARTED CONSTR UCTIONS AFTER YEAR 2008 IS ALSO UNTRUE. IT WAS SUBMITTED THA T THERE WAS TEMPORARY SUSPENSION OF PUBLICATION BUSINESS IN THE YEAR 2008, AND TO FURTHER STRENGTHEN AND IMPROVE LI QUIDITY AND TO IMPROVE THE FINANCIAL POSITION OF THE COMPAN Y, AJL SUBSTANTIALLY RENOVATED TWO PROPERTIES, NAMELY DELHI AND LUCKNOW, IN ORDER TO EARN HIGHER RENTS FROM THESE ITA NO. 7751/DEL/2017 52 IMMOVABLE PROPERTIES SO AS TO BE ABLE TO USE THE PR OCEEDS TO RESUME NEWSPAPER AND DIGITAL PUBLICATION. IT STAR TED RENOVATION AND CONSTRUCTION OF ITS PROPERTIES SO AS TO LET THEM OUT AND IMPROVE ITS FINANCIAL POSITION WITH THE LONG- TERM VIEW TO FIRST STABILIZE ITS FINANCIAL POSITION AND THEN REVIVE ITS PUBLICATION BUSINESS. LD. COUNSEL POINTE D OUT THAT, IN THE YEARS 2016-17 AND 2017-18, THE DIGITAL AND PRINT PUBLICATION ACTIVITIES OF AJL RESPECTIVELY HA VE RECOMMENCED AND THE COMPANY IS FULLY COMMITTED TO CONTINUE TO CONDUCT ITS PUBLICATION ACTIVITIES TO T HEIR FULLEST POTENTIAL. IN FY 2016-17, THE COMPANY HAD RESTARTED ITS DIGITAL PUBLICATION BUSINESS AND IN THE FOLLOWING FI NANCIAL YEAR REVIVED ITS TRADITIONAL PRINT NEWSPAPER BUSINES S, THUS ENDING THE BRIEF 'TEMPORARY SUSPENSION'. THUS, RENT ING OF THE PROPERTIES HAS REVIVED THE FINANCIALLY DISTRESS ED POSITION OF AJL AND TODAY IT IS A HEALTHY GOING CON CERN NEWSPAPER AND DIGITAL PUBLISHING BUSINESS RUN IN TH E PUBLIC INTEREST. THUS, SAID ACTIVITY CANNOT BE SAID TO BE REAL ESTATE BUSINESS. 42 REGARDING ALLEGATION OF LD. CIT (E) THAT AJL HAD SO ME PROPERTIES WHICH GOES TO SHOW THAT IT IS A REAL ESTAT E COMPANY, FOR WHICH REFERENCE WAS MADE BY HIM TO THE NOTES ON ACCOUNT OF AJL AS ON 31.03.2009, WHEREIN IT WAS STATED THAT THE COMPANY HAS TAKEN BOOKING AMOUNT FO R SALE OF SHOPS AND FLOORS FROM INTENDED PURCHASERS I N ITA NO. 7751/DEL/2017 53 LUCKNOW AND HAS PAID AMOUNT FOR BUY-BACK OF SHOPS. L D. COUNSEL SUBMITTED THAT THE WORD BUY-BACK HAS BEEN LOOSELY USED IN THE SAID NOTE BECAUSE IT REPRESENTS REPAYMENT OF THE BOOKING AMOUNT TAKEN FROM THE INTE NDED PURCHASERS. IN ORDER TO CONSTRUCT NEHRU MANZIL PROP ERTY AT LUCKNOW, IN THE YEAR 1988, AJL HAD RAISED FUND BY TA KING AMOUNTS IN THE FORM OF BOOKING AMOUNT TOWARDS SHOPS THAT WOULD HAVE BEEN SOLD IN THE CONSTRUCTED PROPERT Y. HOWEVER, SINCE AJL WAS UNABLE TO COMPLETE THE CONSTRUCTION DUE TO FINANCIAL CONSTRAINTS, IT SUSPE NDED THE CONSTRUCTION AND GRADUALLY REFUNDED THE BOOKING AMO UNT TO THE PARTIES. NOT A SINGLE PROPERTY HAS BEEN SOLD AND ALL THE PROPERTIES REMAIN IN DILAPIDATED CONDITIONS EVE N TODAY. IN ANY CASE, THE TRANSACTION, WHICH HAS TAKEN PLACE IN THE YEAR 1988, FOR WHICH THE BOOKING AMOUNT WAS RECEIVED, HAS NO RELEVANCE FOR THE PERIOD WHEN THE PUBLICATION BUS INESS WAS TEMPORARILY SUSPENDED. THE FACT THAT LUCKNOW PROPERTY WAS NEVER SOLD IS ALSO EVIDENT FROM THE ACC OUNTS OF AJL FOR VARIOUS YEARS. THUS, WHEN THE ASSESSEE H AS NOT EARNED INCOME FROM ANY SALE OF PROPERTY THEN IT CAN NEVER BE TREATED AS REAL ESTATE COMPANY SINCE 2011-12. AJ L NEVER STATED IN ITS ACCOUNT OR ITS ITR THAT ITS INC OME IS FROM REAL ESTATE BUSINESS. 43 COMING ON TO THE POINT RAISED BY THE LD. CIT (E) TH AT, SINCE THE ASSESSEE COMPANY (YI) HAD FULL CONTROL OVER AJL BY ITA NO. 7751/DEL/2017 54 ACQUIRING 99% OF THE SHARE HOLDING AND THE DIRECTOR S BEING THE SAME OF THE TWO COMPANIES, THEREFORE, THE ASSESS EE WAS INDULGED IN THE BUSINESS OF REAL ESTATE, WHICH IS NO T IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE. THE LD. COUNSEL SUBMITTED THAT THE LD. CIT (E) HAS GIVEN NO BASIS TO SAY SO MERELY BECAUSE THE ASSESSEE HOLDS THE SHARES IN AJL AND HAS COMMON DIRECTORS, THE ASSESSEE WAS CONDUCTI NG THE BUSINESS OF AJL. IT IS TRITE LAW THAT BY ACQUIRI NG THE SHARES OF A COMPANY, THE SHAREHOLDER DOES NOT BECOM E THE OWNER OF THE ASSETS OF THE COMPANY. RELIANCE IS PLAC ED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F RUSTOM CAWASJEE COOPER AND UNION OF INDIA (40 COMPANY CASES 325), WHEREIN THE HONBLE SUPREME COURT HELD THAT THE COMPANY REGISTERED UNDER THE COMPANIE S ACT IS A LEGAL PERSON SEPARATE AND DISTINCT FROM ITS IN DIVIDUAL MEMBERS AND THE PROPERTY OF THE COMPANY IS NOT THE PROPERTY OF SHAREHOLDERS. SIMILAR VIEW HAS BEEN TAKE N BY HONBLE SUPREME COURT IN MRS. BACHA F. GUZDAR (SUPR A) AND CATENA OF OTHER JUDGMENTS. THUS, IT CANNOT BE H ELD THAT THE ASSESSEE COMPANY WAS CONDUCTING THE DUTIES OF AJL. IN ANY CASE, THE AJL IS NOT INTO THE REAL ESTA TE BUSINESS BUT IN PUBLICATION ACTIVITIES. THEREFORE, THE QUESTION OF ASSESSEE COMPANY HAVING BEEN ENGAGED IN COMMERCIAL ACTIVITIES DOES NOT ARISE. IN FACT, BY A CQUIRING THE SHARES OF AJL, IT WAS NEVER INTENDED TO MAKE ANY GAIN. ITA NO. 7751/DEL/2017 55 THE ASSESSEE BEING A SECTION 25 COMPANY AND EVEN IF ANY ALLEGED GAIN WOULD HAVE BEEN DERIVED THEN IT WOULD NO T HAVE BEEN DISTRIBUTED AS DIVIDEND. THEREFORE, THERE COULD NOT BE ANY MOTIVE TO UNDERTAKE ANY COMMERCIAL TRANS ACTION TO DERIVE ANY BENEFIT OR GAIN. FURTHER, AJL HAD PAS SED RESOLUTION ON 21.01.2016 TO GET THE COMPANY REGISTE RED UNDER SECTION 8 OF THE COMPANIES ACT, 2013, THE EFF ECT OF WHICH IS THAT EVEN AJL IS PROHIBITED FROM DECLARING DIVIDEND OR DISTRIBUTING ANY PROFIT AMOUNT TO THE SHAREHOLDERS. 44 AS FAR AS ALLEGATION OF THE LD. CIT (E) THAT THE AS SESSEE COMPANY DID NOT CARRY OUT ANY GENUINE ACTIVITIES IN ACCORDANCE WITH ITS OBJECTS, LD. COUNSEL SUBMITTED T HAT THE ASSESSEE COMPANY ACQUIRED 99% SHAREHOLDING IN AJL, WHICH IS A NEWSPAPER PUBLISHING COMPANY WITH OBJECTS SIMILAR TO THAT OF THE ASSESSEE. THE OBJECTS OF BOT H THE COMPANIES WAS TO REACH OUT TO THE YOUTH OF INDIA IN PURSUANCE TO ITS CHARITABLE OBJECTS AND ACCORDINGLY IN ORDER TO PROMOTE ITS OBJECTS THROUGH THE PLATFORM OF AJL, THE ASSESSEE COMPANY APPROACHED AJL, WHOSE OBJECTS WERE GERMANE TO THOSE OF THE ASSESSEE AND WITH INFRASTRUC TURE TO PUBLISH NEWSPAPERS. THUS, THROUGH AJL AND ITS PLATFO RM, THE ASSESSEE WANTED TO REACH YOUTH OF INDIA AND SPRE AD MESSAGE OF MORALS AS LAID DOWN IN ITS OBJECTS. SINCE AJL WAS FACING FINANCIAL AND OPERATIONAL TROUBLES DUE TO WHICH ITA NO. 7751/DEL/2017 56 IT HAD TO TEMPORARILY SUSPEND ITS OPERATION IN 2008 , THEREFORE, AS A PART OF ITS EFFORT TO REVIVE AJL WIT H AN OBJECT TO CREATING PLATFORM TO ACHIEVE ITS OBJECTS, THE AS SESSEE COMPANY TOOK OVER LOAN WHICH AJL WAS NOT IN A POSITIO N TO REPAY FROM AICC FOR A SUM OF RS. 50 LAKHS. ACCORDIN GLY, THE LOAN WAS ASSIGNED BY AICC TO THE ASSESSEE FOR CONSIDERATION OF RS. 50 LAKHS. AFTER ASSIGNING OF S AID LOAN, AJL STEP INTO THE SHOES OF AICC AND AJL CONVERTED T HE SAID LOAN INTO THE EQUITY SHARES BY ISSUING 9.021 CRORE EQUITY SHARES TO THE ASSESSEE COMPANY TO DISCHARGE ITS LIA BILITY. AS A RESULT, THE ASSESSEE BECAME 99% SHAREHOLDER IN AJ L. THIS TRANSACTION WAS DULY DISCLOSED IN THE AUDITED ACCOUNTS OF THE ASSESSEE COMPANY IN THE BALANCE SHE ET IN THE YEAR ENDING 31.03.2011. IT WAS EMPHATICALLY REI TERATED THAT THE AJL HAD RE-ALIGNED ITS OBJECTS WITH THAT OF THE ASSESSEE COMPANY IN THE YEAR 2011 AND FURTHER IN TH E YEAR 2016, IT HAD AMENDED ITS MOA AGAIN TO ACHIEVE ITS O BJECTS AND DECLARED ITSELF AS A NON-PROFIT COMPANY. THUS, AJL BEING NEWSPAPER PUBLICATION WAS AN IDEAL PLATFORM TO ACHIEVE THE OBJECTS OF THE ASSESSEE, I.E., TO SPREA D THE IDEOLOGY OF DEMOCRATIC AND SECULAR SOCIETY. IT WAS T HROUGH AJL THAT THE ASSESSEE WAS SPREADING ITS IDEOLOGY TO THE YOUTHS. AS A SAMPLE, THE LD. COUNSEL DREW OUR ATTEN TION THROUGH THE WEB OF NATIONAL HERALD, WHERE THERE IS A SEPARATE TAB FOR DEMOCRACY AND YOUNG INDIA. THE SAID ITA NO. 7751/DEL/2017 57 WEB WAS LAUNCHED IN NOVEMBER 2016 WHEREAS THE SHOW- CAUSE NOTICE WAS ISSUED BY THE CIT (E) IN NOVEMBER 2016. THE ASSESSEE COMPANY HAS BEEN SPREADING THE IDEOLOG Y OF DEMOCRATIC AND SECULAR SOCIETY THROUGH VARIOUS ARTI CLES. IN SUPPORT, THE LD. COUNSEL ALSO HANDED OVER A LIST OF ARTICLES PUBLISHED UNDER THE TAB YOUNG INDIA ON NATIONAL H ERALD WEB. THE LD. COUNSEL HAS ALSO PLACED SEVERAL PRESEN TATIONS AND PHOTOGRAPHS SHOWING OPERATIONS OF THE ASSESSEE A T PAGE 301 TO 386 OF THE ADDITIONAL EVIDENCE PAPER BO OK. THUS, HE SUBMITTED THAT E-MEDIUM WAS THE IDEAL PLATF ORM TO REACH TODAYS YOUTHS AS IT WAS AVAILABLE ON ALL ELECTRONIC PLATFORMS IN THE FORM OF MOBILES, LAPTOPS, TABS ETC . APART FROM THAT, THE IDEOLOGY OF DEMOCRACY AND SECULARISM WAS ALSO BEING SPREAD THROUGH THE NEWSPAPERS OF AJL. IN SUPPORT, HE SHOWED US THE COMMEMORATIVE EDITION OF NATIONAL HERALD. THUS, IT WAS SUBMITTED THAT ON THE PLATFORM OF AJL, YOUNG INDIAN HAD ACHIEVED ITS OBJE CTS FOR SPREADING THE IDEOLOGY OF DEMOCRATIC AND SECULAR SO CIETY. ACCORDINGLY, IT CANNOT BE HELD THAT NO GENUINE ACTI VITIES WERE CARRIED OUT BY THE ASSESSEE TOWARDS ITS OBJECTS. 45 WITHOUT PREJUDICE TO THE SUBMISSIONS MADE ABOVE, TH E LD. COUNSEL SUBMITTED THAT THE CANCELLATION ORDER OF TH E LD. CIT(E) IS BAD IN LAW BECAUSE BEFORE ISSUANCE OF SHOW CAUSE NOTICE, THE ASSESSEE HAD SUO MOTO SURRENDERED ITS REGISTRATION. HE SUBMITTED THAT THE ASSESSEE HAD AL READY ITA NO. 7751/DEL/2017 58 FILED A LETTER BEFORE THE DIT (E) SURRENDERING ITS REGISTRATION U/S. 12A R.W.S. 12AA AND ALSO COMMUNICATED THAT UNANIMOUS RESOLUTION WAS PASSED ON 21.02.2016 TO GE T THE AJL COMPANY REGISTERED U/S. 8 OF THE COMPANIES ACT, 2013 AND THEREFORE, THE ASSESSEE WOULD NOT HAVE ANY EARN ED INCOME DUE TO THE SAID FACT. IT WAS FOR THIS REASON, THE REGISTRATION U/S. 12AA HAD VIRTUALLY BECOME ACADEMI C AND ACCORDINGLY, THE SAME WAS SURRENDERED WITH IMMEDIATE EFFECT. ONCE, ON THE DATE OF ISSUANCE OF SHOW CAUSE NOTICE, THE ASSESSEE HAD ALSO SURRENDERED THE REGISTRATION U/S. 12AA, AND THEN NOTICE ITSELF IS BAD IN LAW AND WITHOU T JURISDICTION. 46 AS FAR AS THE ALLEGATION OF THE LD. CIT (E) THAT TH E ASSESSEE HAD SURRENDERED ITS REGISTRATION AS A SEQUEL OF INV ESTIGATION AGAINST THE ASSESSEE, LD. COUNSEL SUBMITTED THAT FIRSTLY , THE ENTIRE PREMISE WAS BASED ON THE GROUND THAT AJL WAS IN REAL ESTATE BUSINESS, WHICH IT WAS INCORRECT AS PE R THE DETAILED SUBMISSIONS MADE BY HIM. HE POINTED OUT TH AT THE INVESTIGATION HAD STARTED IN JULY 2014 AND THE ASSE SSEE HAD REPLIED IN AUGUST 2015 AND THEREAFTER, THE ASSE SSEE WAS NEVER PROVIDED ANY REPORT OR ORDER IN RESPECT OF ALL THESE INVESTIGATIONS AND THEREFORE, NO ADVERSE ALLE GATION COULD HAVE BEEN ENVISAGED AGAINST THE ASSESSEE. EVE N AFTER SURRENDERING OF REGISTRATION ON 21.03.2016, NO COMMUNICATION WAS RECEIVED BY THE ASSESSEE FROM THE ITA NO. 7751/DEL/2017 59 DEPARTMENT AND IT WAS ONLY IN JANUARY 2017, THE ASSE SSEE WAS VISITED WITH NOTICE U/S. 148 FOR REOPENING THE CA SE FOR THE ASSESSMENT YEAR 2011-12. THUS, SURRENDER OF REGISTRATION HAD NO LINK WITH THE INVESTIGATION AS A LLEGED BY THE LD. CIT (E). WHEN THE ASSESSEE WAS NOT PROVIDED ANY ADVERSE ORDER OR REPORT, THE QUESTION OF SURRENDERI NG ITS REGISTRATION BECAUSE OF INVESTIGATION, CANNOT BE AR ISE. THE SOLE REASON FOR SURRENDER OF REGISTRATION WAS BECAUS E OF THE FACT THAT AJL WAS IN THE PROCESS OF CONVERTING INTO SECTION 8 COMPANY, THERE WOULD HAVE BEEN NO INCOME IN FUTUR E, AND REGISTRATION HELD BY IT WOULD NOT HAVE SERVED AN Y PURPOSE. BESIDES THIS, EVEN MUCH BEFORE THE INVESTI GATION BEGAN, FULL DISCLOSURE WAS MADE IN THE ANNUAL ACCOU NT OF THE ASSESSEE COMPANY FOR F.Y. 2010-11, WHEREIN IT WAS CATEGORICALLY STATED THAT THE ASSESSEE IN PURSUIT O F ITS OBJECTS REQUIRED THE LOAN OWNED BY AJL WHICH WAS CONVERTED INTO SHARES OF AJL AND SINCE SAID CONVERS ION WAS TOWARDS OBJECTS OF THE ASSESSEE, THE SAME WAS NOT REF LECTED AS INVESTMENT IN THE BOOKS. THUS, IF CANCELLATION O F REGISTRATION IS NOT BY ANY INVESTIGATION REPORT THE N HOW CAN INVESTIGATION BE THE REASON FOR SURRENDER OF REGIST RATION BY THE ASSESSEE. 47 LASTLY, LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS ENTITLED TO SURRENDER THE REGISTRATION U/S. 12AA EVEN THOUGH ACT DOES NOT PROVIDE ANY SPECIFIC PROVISION PROHIBITING SUCH ITA NO. 7751/DEL/2017 60 SURRENDER. IN SUPPORT, HE HAS RELIED UPON THE JUDGM ENT OF HONBLE SUPREME COURT IN THE CASE OF MAHINDRA MILLS (SUPRA) AND ALSO FOLLOWING JUDGMENTS: (I) CYANAMID INDIA LTD. V. COLLECTOR OF CENTRAL EXC ISE, BARODA (1997) 1997 TAXMANN.COM 1518(CEGAT NEW DELHI) (II) GOTHI PLASTIC INDUSTRIES VS. COLLECTOR OF CENT RAL EXCISE, TRICHY (1996) 1996 TAXMANN.COM 486 (CEGAT CHENNAI) 48 FURTHER, WHEN THE ASSESSEE HAD SURRENDERED REGISTRAT ION IN MARCH, 2016 AND FOR A LONG PERIOD OF 17 MONTHS, NO ACTION WAS TAKEN, THEN IN ABSENCE OF ANY ACTION TAKEN BY TH E DEPARTMENT, IT SHOULD BE DEEMED TO HAVE BEEN ACCEPT ED BY THE DEPARTMENT. THE LD. COUNSEL REFERRED TO SUB-SEC . (2) OF SECTION 12AA WHEREIN, IT HAS BEEN STATED THAT EVERY ORDER GRANTING OR REJECTING REGISTRATION, HAS TO BE PASSE D WITHIN SIX MONTHS FROM THE END OF THE MONTHS IN WHICH THE APPLICATION IS FILED. IN SUPPORT, HE ALSO REFERRED TO THE FOLLOWING DECISIONS: (I) CIT V. SOCIETY FOR THE PROMOTION OF EDUCATION, ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT (2016) 67 TAXMANN.COM 264(SC) (II) CIT VS. TBI EDUCATION TRUST (2018) 96 TAXMANN.COM 356 (KERALA) (III) STATE OF PUNJAB V. BHATINDA DISTRICT COOP. MILL (11 SCC 363)(SC) (IV) CIT VS. NHK JAPAN BROADCASTING CORP (305 ITR 137 (DEL) ITA NO. 7751/DEL/2017 61 (V) AMALNER COOPERATIVE BANK LTD. V. COMMISSIONER OF CENTRAL EXCISE (2012) 21 TAXMANN.COM 433 (MUM. CESTAT) 49 WITHOUT PREJUDICE, THE LD. COUNSEL SUBMITTED THAT REGISTRATION CANNOT BE CANCELLED RETROSPECTIVELY WIT HOUT GIVING SPECIFIC OPPORTUNITY TO THE ASSESSEE AND FUR THER, REGISTRATION CANNOT BE CANCELLED WITH RETROSPECTIVE DATE. RELIANCE IN THIS REGARD WAS PLACED ON THE JUDGMENT OF ALLAHABAD HIGH COURT IN THE CASE OF AGRA DEVELOPMENT AUTHORITY (2018) 90 TAXMANN.COM 282 AND OF MADRAS HIGH COURT IN THE CASE OF AURO LAB V. ITO (2019) 102 TAXMANN.COM 225 (MADRAS). 50 AGAIN, WITHOUT PREJUDICE, LD. COUNSEL SUBMITTED THAT EVEN IF IT IS HELD THAT THE ASSESSEE HAD ACQUIRED SHARES OF A COMMERCIAL ENTITY, IT COULD NOT BE A BASIS FOR DENI AL OF REGISTRATION. HE SUBMITTED THAT TILL INSERTION OF S UB-SEC. (4) IN SECTION 12AA W.E.F. 01.10.2014, THE REGISTRATION COULD BE CANCELLED ONLY IF CIT FINDS THAT THE ACTIVITIES OF THE TRUST IS NOT GENUINE OR IS NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. ANY OTHER BASIS THAT THE ASSESSEE IS HOLDING ASSET NOT PERMISSIBLE U/S. 11(5) OR ANY OTHER REASON DOES NOT PERMIT CANCELLATION OF SHARES. IN SUPPORT, HE HAS R ELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN TH E CASE OF DIT(E) V. ABDUL KALAM AZAD ISLAMIC AWAKENING (2013) 33 TAXMANN.COM 364 AND THE JUDGMENT OF ITAT, PUNE ITA NO. 7751/DEL/2017 62 BENCH IN THE CASE OF PRABODHAN SHIKSHAN PRASARAK SANSTHA VS. DCIT(2014) 44 TAXMANN.COM 33. FURTHER, THE REASON FOR CANCELLATION ON THE GROUND THAT HOLDING OF SHARES OF AJL WHICH WAS ENGAGED IN COMMERCIAL ACTIVIT IES, CANNOT BE A GROUND FOR CANCELLATION OF REGISTRATION BECAUSE SUCH GROUND, IF AT ALL, WOULD HAVE BEEN UNDER SUB-SE CTION (4) OF SECTION 12AA INSERTED W.E.F. 01.10.2014 BY WHI CH HOLDING IMPERMISSIBLE INVESTMENT U/S. 11(5) CAN BE A GROUND FOR CANCELLATION OF REGISTRATION W.E.F. 01.10 .2014 AND THEREFORE, ANY CANCELLATION ON THIS GROUND PRIO R TO THE SAID DATE, IS NOT PERMISSIBLE. SUBMISSIONS ON BEHALF OF THE REVENUE 51 ON BEHALF OF THE REVENUE, LD. SPECIAL COUNSEL, SHRI G. C. SRIVASTAVA, ADVOCATE, FIRST OF ALL OBJECTED FOR ADM ISSION OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THE GR OUND THAT, FIRSTLY , THEY ARE NOT RELEVANT FOR DECIDING THE ISSUE IN HAND; SECONDLY , MOST OF THE DOCUMENTS AND MATERIALS, WHICH HAVE BEEN PLACED IN THE ADDITIONAL EVIDENCE PA PER BOOK-1, ARE POST CANCELLATION ORDER OF LD. CIT (E) DATED 26.10.2017, WHICH ARE PLACED IN THE ADDITIONAL EVIDE NCES. FOR INSTANCE, DOCUMENTS PLACED AT ITEM NO. 2, 5, 10 AND 12; THEREFORE, THESE DOCUMENTS SHOULD NOT BE ADMITT ED; AND LASTLY , HE QUESTIONED THE GENUINENESS OF THE EVIDENCES. 52 THEREAFTER, MR. SRIVASTAVA SUBMITTED THAT IN ORDER TO APPRECIATE ENTIRE GAMUT OF FACTS AND BACKGROUND OF THE ITA NO. 7751/DEL/2017 63 CASE AND TO HAVE AN OVER VIEW OF ENTIRE FACTUAL MAT RIX AND THE MATERIAL AVAILABLE WITH THE COMMISSIONER AND THE RECORDS CALLED BY HIM FOR ITS PERUSAL AS CONCLUDED BY THE LD. CIT(E) IN PARA 17 OF HIS IMPUGNED ORDER, THE FA CTS OF THE CASE CAN BE DIVIDE INTO FOUR PART, NAMELY I. FACTS AS EXISTED PRIOR TO THE INCORPORATION OF THE ASSESSEE COMPANY. II. FACTS EVIDENCED BY EVENTS HAPPENING FROM THE D ATE OF INCORPORATION TILL THE DATE OF FILING THE APPLICATI ON FOR REGISTRATION; III. FACTS STATED IN THE APPLICATION FOR REGISTRAT ION OR IN THE COURSE OF PROCEEDINGS RELATING THERETO; IV. EVENTS HAPPENING AFTER THE GRANT OF REGISTRATI ON TILL THE DATE OF CANCELLATION OF REGISTRATION. 53 HE ALSO SUBMITTED A CHART OF DATES AND EVENTS WHICH GIVES DETAILS OF: I) EVENTS PRIOR TO THE YEAR 2008; II) E VENTS FROM 2008 TILL INCORPORATION OF YOUNG INDIAN; III) DATES AND EVIDENT FROM INCORPORATION OF YOUNG INDIAN TILL FIL ING OF APPLICATION FOR REGISTRATION; III) EVENTS AND FACTS DISCLOSED DURING THE REGISTRATION PROCESS; AND V) LASTLY, THE DATES AND EVENTS POST REGISTRATION AND BEFORE CANCELLATION. F ROM THESE CHARTS, HE TRIED TO HIGHLIGHT THE FACTS AND B ACKGROUND OF THE ENTIRE CASE, WHICH HAS BEEN SUMMARIZED BY HIM IN THE FOLLOWING MANNER: A. THE COMPANY IN THE NAME OF M/S. ASSOCIATED JOURNALS LIMITED (AJL) WAS INCORPORATED ON ITA NO. 7751/DEL/2017 64 20.11.1937 WITH THE OBJECT OF PUBLISHING NEWSPAPERS HAVING A POLICY, WHICH WOULD BE IN TUNE WITH THE PRINCIPLES OF INDIAN NATIONAL CONGRESS. THE BUSINES S OF AJL WAS SUSPENDED ON VARIOUS OCCASIONS DUE TO FINANCIAL DIFFICULTIES OR ACTIONS OF THE THEN GOVERNMENT, LABOUR PROBLEMS, ETC. AJL IS IN POSSESSION OF LAND AT VARIOUS PLACES IN THE COUNTRY AND DERIVING INCOME FROM LETTING OUT OF SUCH PROPERTIES. IT WAS IN THE YEAR 2008 THAT THE AJL STOPPED THE PUBLICATION OF NEWSPAPERS AND ACCORDINGLY ALL THE EMPLOYEES WERE GIVEN VRS W.E.F. 02.04. 2008. B. THE REGISTERED OFFICE OF AJL WAS MOVED FROM LUCKNOW TO DELHI ON 01.09.2010. PRIOR TO THAT, ON 17.06.201 0, MR. OSCAR FERNANDES WAS APPOINTED DIRECTOR OF AJL. C. YOUNG INDIAN WAS INCORPORATED ON 23.11.2010. IT WAS GRANTED LICENSE U/S 25 OF THE COMPANIES ACT, 1956. THE INCORPORATION WAS DONE WITH MR. SAM PITRODA AND MR. SUMAN DUBEY BEING DIRECTORS, EACH HAVING 550 SHARES IN THE COMPANY (WHICH WERE LATER TRANSFERRED TO MR. OSCAR FERNANDES AND SMT. SONIA GANDHI). MR. SAM PITRODA AND MR. SUMAN DUBEY WERE ALSO APPOINTED AS DIRECTORS OF AJL ON 21.12.2010. ITA NO. 7751/DEL/2017 65 D. WITHIN 25 DAYS OF THE INCORPORATION OF THE ASSESSEE COMPANY, THE AICC TRANSFERRED LOAN OF RS. 90.21 CRORES WHICH WAS DUE TO THEM FROM AJL IN FAVOUR OF THE ASSESSEE COMPANY FOR A CONSIDERATION OF RS. 50,00,000/-. HE POINTED OUT THAT THE PAID-UP CAPITA L OF THE ASSESSEE COMPANY WAS ONLY RS. 5,00,000/- AND DID NOT EVEN HAVE THE FUNDS TO PAY THE MEAGER CONSIDERATION OF RS. 50 LAKHS. E. THE ASSESSEE COMPANY TOOK A LOAN OF RS. 1 CRORE FROM M/S DOTEX MERCHANDISE PVT. LTD. (DOTEX) THE ASSESSEE COMPANY PAID THE SAID RS. 50 LAKHS OUT OF THE LOAN FROM M/S DOTEX TO ALL INDIA CONGRESS COMMITTEE (AICC) ON 01.03.2011. HOWEVER, MUCH BEFORE THE PAYMENT OF RS. 50 LAKHS TO AICC, AJL HAD ALREADY ALLOTTED 9,02,16,898 SHARES IN LIEU OF THE LOAN OF RS. 90 CRORES (APPROX.) TO THE ASSESSEE COMPANY BY INCREASING ITS SHARE CAPITAL FROM RS. 1 CRORE TO RS. 10 CRORES. CERTAIN ADDITIONAL SHARES OF AJL WERE AL SO PURCHASED BY SMT. SONIA GANDHI, SH. RAHUL GANDHI AND SMT. PRIYANKA GANDHI TO GAIN FULL CONTROL OF AJ L. THESE TRANSACTIONS AS APPEARING IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY WERE NOTED AS SUSPICIOUS TRANSACTIONS AND THE FINANCIAL INTELLIGENCE UNIT (FIU) RECEIVED A NOTE FROM THE CONCERNED AGENCY T O THE EFFECT THAT THE LOAN TRANSACTION AS ALSO THE ITA NO. 7751/DEL/2017 66 ACQUISITION OF SHARES WERE SUSPICIOUS IN NATURE AS THESE WERE NOT IN ACCORDANCE WITH THE STATED OBJECTS OF THE ASSESSEE COMPANY. THIS INFORMATION WAS RECEIVED AND PASSED ON TO THE INVESTIGATION WING OF THE DEPARTMENT. THUS, THE TRIGGER OF INQUIRY INTO T HE AFFAIRS OF THE COMPANY WAS THE NATURE OF TRANSACTION AS REPORTED TO FIU. F. THE ASSESSEE COMPANY APPLIED FOR REGISTRATION OF U/S. 12A R.W.S 12AA BY ITS APPLICATION DATED 31.03.2010. THE APPLICATION WAS ACCOMPANIED BY SETS OF ANNEXURE CONTAINING NAMES OF FOUNDER MEMBERS, NAMES OF MEMBERS OF THE MANAGING COMMITTEE, MEMORANDUM OF ASSOCIATION, ARTICLES OF ASSOCIATION, CERTIFICATE OF INCORPORATION, LICENSE U/S. 25 OF THE COMPANIES ACT, 1956. ALL THESE DOCUMENTS FORM PART OF THE PAPER BOOK-1 FILED BY THE REVENUE AND APPEAR ON PAGES 9 TO 58. THEREFORE, IT NEEDS TO BE HIGHLIGHTED THAT THOUGH THE ASSESSEE COMPANY HAD BORROWED RS. 1 CRORE FROM DOTEX AND HAD ALSO INVESTED IN THE ACQUISITION OF AJL THROUGH ALLOTMEN T OF 99.999% SHARES, THE STATEMENT IN ANNEXURE - 5B STATED THAT THERE ARE NO ASSETS AND LIABILITIES 7 D AYS PRIOR TO THE DATE OF FILING OF APPLICATION. THIS STATEMENT IS CLAIMED TO HAVE BEEN SIGNED ON 14.10.2010 AND THE EXPLANATION OFFERED BY THE ITA NO. 7751/DEL/2017 67 ASSESSEE WAS THAT THESE DOCUMENTS WERE FILED BEFORE MINISTRY OF CORPORATE AFFAIRS (MCA) FOR OBTAINING LICENSE UNDER SECTION 25 AND THESE DOCUMENTS, THOUGH NOT REQUIRED TO BE FILED UNDER THE RULES, SLIPPED INTO THE APPLICATION. HE POINTED OUT THAT THESE ANNEXURES (5(A) AND 5(B)) WERE FILED IN RESPO NSE TO POINT NO. 2, WHICH CALLED FOR COPIES OF ACCOUNTS FOR THE LATEST ONE YEAR. IF THE DOCUMENT IS FILED ON 31 S ' MARCH 2011, IT FOLLOWS THAT THE FACTS HAVE NOT UNDERGONE ANY CHANGE ON THE DATE OF FILING OF THE DOCUMENT. REVENUES CASE IS THAT THERE WAS A DELIBERATE ATTEMPT ON THE PART OF THE ASSESSEE COMPANY TO PLACE INCORRECT FACTS IN ORDER TO ENSURE THAT FACTUM OF SO-CALLED BORROWING BY THE ASSESSEE COMPANY AND ACQUISITIONS OF SHARES OF AJL DO NOT COME TO THE NOTICE OF THE COMPETENT AUTHORITY. G. IN THE COURSE OF PROCEEDINGS BEFORE THE COMMISSIONER, THE ASSESSEE COMPANY DID SUBMIT A NOTE ON 09.05.2011 GIVING A BRIEF ACCOUNT OF THE ACTIVITIES OF THE ASSESSEE COMPANY TILL THAT DATE A ND THE SAID RECORDS AS UNDER: - THE COMPANY IS INCORPORATED WITH A SMALL CAPITAL MID FUNDS BY WAY OF CONTRIBUTION FROM PATRON MEMBERS MAY PROVIDE SUPPORT TO EMU RECURRING INCOME, WHICH WOULD BE DEPLOYED FOR THE MAIN ITA NO. 7751/DEL/2017 68 OBJECT FOR WHICH THE COMPANY IS INCORPORATED. NEVERTHELESS, WITHIN THE FRAMEWORK OF THIS MAIN OBJECT THE ACTIVITIES, THEIR MAGNITUDE MID PACE WIL L NECESSARILY DEPEND ON THE FUNDS AVAILABLE WITH YI WHICH IN TURN, DEPENDS ON THE ABILITY' TO ATTRACT DONATION (FROM PATRON MEMBERS OR OTHERWISE) WHICH, IN ITS OWN TURN IS LINKED TO THE ABILITY OF THE DON ORS TO CLAIM DEDUCTION U/S. 80G OF THE INCOME TAX ACT. THE APPLICATION FOR REGISTRATION U/S 12AA IS THE FI RST STEP IN THAT DIRECTION. H. IT HAS BEEN POINTED OUT BY HIM THAT THE ASSESSEE COMPANY NEVER APPLIED FOR REGISTRATION U/S 80G AND NOT A PENNY OF DONATION WAS RAISED FROM ANY AGENCY. I. FURTHER, IN THE NOTE DATED 09.05.2011, THE ASSESSEE COMPANY DID NOT EVEN WHISPER ABOUT THE ACTIVITY OF ACQUISITION OF SHARES OF AJL NOR MADE ANY ATTEMPT T O PLACE ON RECORD A FULL AND TRUE ACCOUNT OF THE ACTIVITIES OF THE ASSESSEE COMPANY FROM THE DATE OF ITS INCORPORATION TILL THE REQUEST FOR GRANT OF REGISTRATION. THUS, HE SUBMITTED THAT THIS FACT FUR THER REINFORCES THE CONTENTION THAT THERE WAS DELIBERATE ATTEMPT TO SUPPRESS AND WITHHOLD INFORMATION ABOUT THE REAL MOTIVE OF THE ACTIVITIES OF THE ASSESSEE COMPANY DURING THE COURSE OF PROCEEDINGS FOR GRANT OF REGISTRATION. ITA NO. 7751/DEL/2017 69 J. THE APPLICATION FOR REGISTRATION WAS FILED WITH THE ADDRESS OF THE ASSESSEE COMPANY AS HERALD HOUSE, NEW DELHI AND WHEN ASKED BY THE REVENUE, THE ASSESSEE COMPANY FILED NO OBJECTION CERTIFICATE FRO M THE CHAIRMAN OF AJL GRANTING THE USE OF HERALD HOUSE TO THE ASSESSEE COMPANY. THE REGISTRATION WAS GRANTED TO THE ASSESSEE COMPANY ON 09.05.2011 SUBJECT TO CERTAIN CONDITIONS. REVENUE STARTED MAKING INQUIRIES INTO THE ACTIVITIES OF THE ASSESSE E COMPANY ALTER RECEIVING THE INFORMATION THROUGH FIU AND THE TAX EVASION PETITION. AFTER THE INQUIRIES B Y THE INVESTIGATION WING, THE AO SOUGHT VARIOUS INFORMATION FROM YI AND ALSO FROM AICC TO REACH TO THE CORRECT STATE OF AFFAIRS. HE HAD ALSO PLACED TH E ENTIRE CORRESPONDENCE THAT THE AO HAD WITH YI AND AICC AND ALSO THE MANNER IN WHICH SUBMISSION OF INFORMATION TO THE AO WAS RESISTED ON VARIOUS GROUNDS LIKE LACK OF AUTHORITY TO CONDUCT THE INQUIRIES, MAKING AVAILABLE THE COPY OF THE APPROVA L OF COMMISSIONER FOR CALLING INFORMATION U/S 133(6), SEEKING INSPECTION OF THE TILE, ETC. NO WORTHWHILE INFORMATION WAS GIVEN TO THE AO. THE LETTERS IN CORRESPONDENCE FORM PART OF THE PAPER HOOK TILED BY THE REVENUE. THE VITAL PIECES OF INFORMATION CALLED FOR BY THE AO WERE NOT SUBMITTED AND A GENERAL ITA NO. 7751/DEL/2017 70 STATEMENT WAS MADE THAT IT IS AVAILABLE IN ACCOUNTS OR IN PUBLIC DOMAIN. K. THE ASSESSEE COMPANY, FACED WITH THE QUESTIONNAIRE OF THE AO AND THE REOPENING OF ASSESSMENT FOR A.Y. 2011-12, CHOSE TO SURRENDER THE REGISTRATION U/S 12 A ON 21.03.2016. THE AO REPORTED TO THE CIT (E) HOW THE ACTIVITIES OF THE ASSESSEE COMPANY WERE NEITHER GENUINE NOR CARRIED OUT IN FURTHERANCE OF THE STATE D OBJECTS. BASED ON THE REPORT OF THE AO AND ON PERUS AL OF THE RELEVANT RECORDS, THE CIT (E) ISSUED NOTICE AND AFTER GIVING FULL OPPORTUNITY TO THE ASSESSEE COMPA NY PASSED ORDER ON 26.10.2017, WITHDRAWING THE REGISTRATION W.E.F. A.Y. 2011-12 ONWARDS. THE PRIMARY BASIS ON WHICH REGISTRATION HAS BEEN WITHDRAWN IS CONTAINED IN PARA 17 OF THE ORDER OF THE CIT (E). I N SUBSTANCE, THE FOUNDATION OF THE CIT(E)S ACTION IS BASED ON THE FACT THAT THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO POINT OUT A SINGLE ACTIVITY IN FURTHER ANCE OF ITS STATED OBJECTS FOR WHICH IT WAS CREATED DURING THE SAID PERIOD, AND THE ONLY ACTIVITY CARRIED OUT BY THE ASSESSEE COMPANY WAS OF BORROWING THE AMOUNT OF RS. 1CRORE, MAKING PAYMENT OF RS. 50 LAKHS TO AICC, APPLYING FOR ALLOTMENT OF SHARES AGAINST CANCELLATION OF LOAN OF RS. 90 CRORES ASSIGNED BY A ICC TO THEM, HAS ABSOLUTELY NOTHING TO DO WITH THE ITA NO. 7751/DEL/2017 71 FURTHERANCE OF OBJECTS OF YI. THE ONLY MOVE THAT WAS TAKEN WAS TO ACQUIRE AJL THAT HAD STOPPED ITS PUBLICATION ACTIVITIES BUT WAS ONLY HOLDING ON TO CERTAIN PROPERTIES AND EXPLOITING THESE FOR RENTAL INCOME OR CONSTRUCTION OF SHOPS, ETC. THE CIT (E) A LSO POINTED OUT THAT THE SURRENDER OF REGISTRATION AFTE R THE INVESTIGATION BY THE DEPARTMENT CANNOT BE USED AS A TOOL TO PREVENT THE RIGORS OF CANCELLATION OF REGISTRATION. 54 MR. SRIVASTAVA THEN DREW OUR ATTENTION TO ANOTHER FA CT THAT WHILE THE INCOME TAX AND INVESTIGATION PROCEEDINGS WE RE GOING ON AND PARALLEL PROCEEDINGS WERE ALSO UNDERTAK EN BY LAND DEVELOPMENT OFFICE FOR TAKING BACK THE POSSESS ION OF LAND ALLOTTED IN NEW DELHI TO AJL POST CESSATION OF THE PUBLICATION ACTIVITY. INSPECTIONS WERE CARRIED OUT O N 13.09.2016 AND 26.09.2016 THAT CLEARLY DEMONSTRATED THAT THERE WAS NO PRESS ACTIVITY AT THE GIVEN PREMISES. O NCE IT WAS REALIZED THAT AJL WAS IN CONTRAVENTION OF THE TER MS OF LEASE, IT PASSED A RESOLUTION ON 26.09.2016 TO RESU ME THE ACTIVITY OF THE PUBLICATION OF NEWSPAPERS. HE FURTH ER BROUGHT ON RECORD THAT A WRIT PETITION WAS FILED BY A JL BEFORE THE HONBLE DELHI HIGH COURT AGAINST THE ACT IONS OF THE LAND & DEVELOPMENT OFFICER (LDO). THE PETITIO N WAS DISMISSED BY THE WRIT COURT AND AGAINST THAT AN APP EAL WAS FILED BEFORE THE HONBLE DIVISION BENCH. A DETAI LED ITA NO. 7751/DEL/2017 72 ORDER HAS BEEN PASSED BY THE HONBLE DIVISION BENCH UPHOLDING THE ACTIONS OF THE LDO, BRINGING TO PUBLI C DOMAIN CERTAIN FACTS THAT HAVE A DIRECT BEARING ON THIS CASE ALSO, WHICH SHOULD BE FOLLOWED. THE COPIES OF THE OR DERS OF THE HONBLE HIGH COURT WERE PLACED BEFORE US. 55 FURTHER, BY WAY OF COUNTER SUBMISSIONS IN RESPONSE T O THE ARGUMENTS AND SUBMISSIONS MADE BY THE LD. COUNSEL F OR THE ASSESSEE, MR. SRIVASTAVA SUBMITTED THAT ONE OF THE CORE ISSUES, ON WHICH THE REGISTRATION HAS BEEN CANCELLED BY THE LD. CIT (A), IS THAT THE ACTIVITIES OF THE ASSESSEE COMPANY WERE NOT IN ACCORDANCE WITH ITS OBJECTS. THE MAIN TH RUST BY THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE LD. C IT (E) WAS NOT JUSTIFIED IN HOLDING THAT AJL IS REAL ESTATE CO MPANY AND SINCE THIS IS THE CORE REASON FOR CANCELLATION OF REGISTRATION, THEREFORE, THE ORDER OF THE LD. CIT ( E) CANNOT BE SUSTAINED. THE CASE OF THE REVENUE FOR CANCELLATION OF REGISTRATION IS NOT ONLY CONFINED TO THE FACT THAT THE AJL IS A REAL ESTATE COMPANY, ALBEIT THE ASSESSEE COMPANY HA S NOT CARRIED OUT ANY ACTIVITY, WHATSOEVER, IN FURTHERANCE OF THE STATED OBJECTS AND THE ONLY ACTIVITY CARRIED OUT IN THIS REGARD WAS ACQUISITION OF AJL WHICH WAS NOT IN CONFORM ITY WITH THE OBJECTS, ON THE BASIS OF WHICH THE REGISTRA TION WAS GRANTED TO THE ASSESSEE. HE DREW OUR ATTENTION TO TH E FINDING GIVEN BY THE LD. CIT (E) IN PARA 15 AND HIS OBSERVATIONS SUMMARIZED IN PARA 17 OF THE IMPUGNED ITA NO. 7751/DEL/2017 73 ORDER. HE FURTHER SUBMITTED THAT, FROM THE DOCUMENT S PLACED BEFORE THIS TRIBUNAL, WHICH ARE FORMING PART OF THE RECORD, IT IS CLEARLY SHOWN THAT I. EVEN BEFORE THE INCORPORATION OF THE ASSESSEE COMPANY, THE REGISTERED OFFICE OF AJL WAS SHIFTED TO DELHI. II. DIRECTORS MANAGING THE AFFAIRS OF THE ASSESSEE COMPANY WERE TAKEN ON BOARD OF AJL. III. THE APPELLANT COMPANY WAS PERMITTED TO USE THE PROPERTY OF AJL AS ITS HEAD OFFICE/REGISTERED OFFIC E. IV. THE MANNER IN WHICH A LOAN OF RS. 90 CRORES (APP ROX.) WAS ASSIGNED BY AICC IN FAVOUR OF THE ASSESSEE COMPANY FOR A PALTRY CONSIDERATION OF RS. 50 LACS SPEAKS VOLUMES OF THE REAL INTENT AND MOTIVE OF THE TRANSACTION. V. THE ASSESSEE COMPANY WAS NOT HAVING THE FINANCIA L CAPABILITY BY WAY OF CORPUS OR THE REVENUE RECEIPTS TO PAY EVEN THIS CONSIDERATION AND HAD TO ALLEGEDLY BORROW A SUM OF RS. 1 CRORE FROM A COMPANY NAMED M/S DOTEX MERCHANDISE PVT. LTD., BASED OUT OF KOLKATA. VI. AJL PROMPTLY INCREASED ITS SHARE CAPITAL AND A LLOTTED 99.99% SHARES TO THE APPELLANT COMPANY, SOME OF THE ITA NO. 7751/DEL/2017 74 DIRECTORS SEPARATELY ACQUIRED A SMALL NUMBER OF SHARES TO HAVE FULL CONTROL OVER AJL. VII. THESE TRANSACTIONS WERE QUESTIONABLE AND S PEAK VOLUMES AS OBSERVED BY THE HONBLE HIGH COURT OF DELHI. (PARA 20 OF THE HONBLE HIGH COURT ORDER IN W.P. (C.) 12133/2018). 56 THE SECOND CORE ARGUMENT TAKEN ON BEHALF OF THE REV ENUE WAS THAT, MOST OF THESE VITAL FACTS WERE SUPPRESSED B Y THE ASSESSEE COMPANY FROM DIT (EXEMPTION) WHILE MAKING T HE APPLICATION FOR REGISTRATION AND DURING THE PROCESS OF SAID REGISTRATION. FOR INSTANCE, VIDE POINT NO. 7 OF THE INFORMATION/CLARIFICATION DATED 18.04.2011 (DURING THE PROCESS OF REGISTRATION) SEEKING NOTE ON THE ACTIVI TIES CARRIED OUT SINCE INCEPTION WITH SUPPORTING DOCUMENT ARY EVIDENCES WAS ADMITTEDLY NEVER SUPPLIED TO BY THE AS SESSEE COMPANY. THE COPY OF THE SAID QUERY/CLARIFICATION S OUGHT FROM THE ASSESSEE VIDE LETTER DATED 18.04.2011 HAS BEEN PLACED IN THE PAPER BOOK-1 FILED BY THE REVENUE. TH US, IT WAS SUBMITTED THAT THERE WAS CLEAR CUT SUPPRESSION OF INFORMATION BY THE ASSESSEE COMPANY DURING THE PROC ESS OF SEEKING REGISTRATION U/S. 12AA, WHICH ITSELF VITIATE S THE REGISTRATION AS THE CONDITION MENTIONED IN THE ORDE R GRANTING REGISTRATION HAS BEEN VIOLATED. ITA NO. 7751/DEL/2017 75 57 FURTHER, THE ASSESSEE COMPANY COULD NOT DEMONSTRATE THAT IT HAS PERFORMED ANY SINGLE ACTIVITY IN FURTHERANCE OF ITS OBJECTS EITHER BEFORE THE LOWER AUTHORITIES OR DURI NG THE COURSE OF MARATHON ARGUMENTS PLACED BEFORE THIS TRI BUNAL. THE CONTENTION RAISED BY THE ASSESSEE THAT ACQUISIT ION OF AJL WAS IN FURTHERANCE OF THE OBJECTS OF THE ASSESSE E COMPANY IS PATENTLY FALSE AS SUBMITTED IN EARLIER P ART. EVEN FROM THE INCOME-TAX RETURNS, LD. SPL. COUNSEL POINT ED OUT THAT, IT CAN BE SEEN THAT NO EXPENDITURE HAS BEEN M ADE IN ANY OF THE ASSESSMENT YEARS IN FURTHERANCE OF ANY O F THE OBJECTS TILL THE CANCELLATION OF REGISTRATION. IT I S AN ADMITTED FACT THAT AJL WAS NOT PUBLISHING ANY NEWSPAPER EITHER IN PRINT OR DIGITAL FORM DURING THE ENTIRE PERIOD. HEN CE, IT CAN BE EASILY DEDUCED THAT THE ONLY REASON TO TAKE OVER AJL WAS TO COMMERCIALLY EXPLOIT ITS IMMOVABLE ASSET. IT CANNOT BE HELD THAT BY TAKING OVER THE SAID COMPANY, THE A SSESSEE WOULD HAVE BEEN FULFILLING ITS OBJECTS. EVEN AFTER T AKE OVER, NO ACTIVITY WAS DONE BY THE AJL TO REVIVE THE NEWSPA PER BUSINESS FOR A PERIOD OF FIVE YEARS, IT WAS ONLY AFT ER THE ENQUIRY BY THE REVENUE, AND THE PROCEEDINGS FOR EVI CTION INITIATED FROM THE LAND AND DEVELOPMENT OFFICERS TH AT THE STEPS WERE TAKEN FOR REVIVAL OF BUSINESS. THE COMMENCEMENT OF RESUMING THE NEWSPAPER BUSINESS IN SEPTEMBER 2016 WAS DONE MUCH AFTER THE ASSESSEE HAS WRITTEN TO THE REVENUE SURRENDERING ITS REGISTRATION . THUS, ITA NO. 7751/DEL/2017 76 THE CONTENTION OF THE ASSESSEE THAT LATER ON THE NE WSPAPER BUSINESS WAS STARTED IS OF NO CONSEQUENCE. THE ENTIR E THEORY OF REVIVAL OF PUBLISHING NEWSPAPER BUSINESS WAS AFTER THE AJL REALIZED THAT IT WAS IN VIOLATION OF CLAUSE OF PERPETUAL LEASE DEED OF THE PROPERTY, HOUSED IN 5A, BAHADUR SHAH ZAFAR MARG, NEW DELHI. 58 ANOTHER CONTENTION RAISED BY THE LD. COUNSEL OF THE ASSESSEE THAT AJL HAD CONVERTED ITSELF INTO SECTION 8 COMPANY IN JANUARY, 2016 AS PER COMPANIES ACT, 2013 , I.E., NON-PROFITABLE COMPANY, ENABLING YOUNG INDIAN , WHICH WAS SECTION 25 COMPANY AS PER COMPANIES ACT, 1956, T O CARRY OUT ITS OBJECTIVES. THE CONTENTION RAISED WAS THAT BOTH THE COMPANIES WERE NOT FOR PROFIT AND THEREFOR E, ANY PROFIT DERIVED FROM ITS ACTIVITIES WOULD HAVE BEEN S OLELY APPLIED FOR THE PROMOTION OF THE OBJECTS. IN SUPPOR T, EVIDENCES HAVE BEEN FILED IN FORM MGT-14 ALONG WITH AMENDED MOA FILED WITH THE ADDITIONAL EVIDENCE. HE POINTED OUT THAT NO SUCH APPLICATION IS AVAILABLE O N THE MCA WEBSITE, AS HAVING BEEN FILED BY AJL AND MOST IMPORTANTLY, NO LICENSE HAS BEEN GRANTED BY THE REG ISTRAR OF COMPANIES TILL DATE SO AS TO ESTABLISH THAT AJL HAD BECOME A SECTION 8 COMPANY. THUS, IT CANNOT BE SAID THAT AJL WAS CONVERTED INTO SECTION 8 COMPANY. MERE AMENDING THE MOA OF AJL DOES NOT LEAD TO ANY INFERE NCE THAT IT IS A NON-PROFITABLE COMPANY. TILL LICENSE I S GRANTED ITA NO. 7751/DEL/2017 77 BY ROC U/S. 8 OF THE COMPANIES ACT, 2013, IT CANNOT CLAIM THAT IT IS A NON-PROFITABLE COMPANY. MOA CAN BE AME NDED AT THE SWEET WILL AND AT ANY POINT OF TIME AND THERE FORE, MERE AMENDMENT IN MOA WILL NOT SERVE THE PURPOSE. EV EN OTHERWISE ALSO, FROM THE YEAR 2011 WHEN SO CALLED MOA WAS AMENDED, NOTHING HAS BEEN DONE TILL 2016 TO ALIGN T HE FUNCTIONING OF THE TWO COMPANIES. IT CANNOT BE THE CONTENTION OF THE LD. COUNSEL THAT SINCE THE COMPAN Y HAS ADOPTED THE CHANGES IN MOA, IT HAS PRACTICALLY ALL THE ATTRIBUTES A SECTION 8 COMPANY, IS FALLACIOUS BECAU SE IT IS ALWAYS OPEN TO A COMPANY TO AMEND ITS MOA AND BECOME A NON-SEC. 8 COMPANY ANYTIME AT ITS CHOICE. THUS, TO SAY THAT ACQUISITION OF AJL WAS TO FURTHER THE OBJECTS O F THE ASSESSEE COMPANY ARE NOT SUPPORTED BY SUCH UNTENABL E PROPOSITIONS. 59 REGARDING THE CONTENTION THAT THE CANCELLATION OF REGISTRATION CANNOT BE DONE RETROSPECTIVELY, MR. SR IVASTAVA SUBMITTED THAT THE COMMISSIONER HAD THE STATUTORY P OWER TO CANCEL THE REGISTRATION U/S. 12A FROM THE YEAR 2 004 AND THE SAME CAN BE CANCELLED U/S. 12AA (3) WHERE THE COMMISSIONER FINDS REASON TO BELIEVE THAT EITHER TH E ACTIVITIES OF THE ASSESSEE ARE NOT IN LINE WITH ITS OBJECTS OR ACTIVITIES CARRIED OUT BY THE ASSESSEE ARE NOT GENU INE. KNOWLEDGE OF BREACH OF CONDITIONS LAID DOWN IN SECTIO N 12AA (3) WOULD ONLY COME TO THE NOTICE OF CIT AFTER THE ITA NO. 7751/DEL/2017 78 BREACH HAD BEEN COMMITTED AND IF SUCH A BREACH IS EXISTING FROM DAY ONE THEN CANCELLATION WOULD ALWAYS FOLLOW FROM THE DATE OF BREACH. THE PROVISION OF SECTION 1 2AA(3) CANNOT BE READ TO MEAN THAT CIT HAS TO DISREGARD TH E PERIOD DURING WHICH THE BREACH OCCURS AND HE HAS TH E POWER TO CANCEL THE REGISTRATION ONLY FROM THE FUTU RE YEARS. SUCH AN ARGUMENT IS UNTENABLE AND IN SUPPORT, STRON G RELIANCE WAS PLACED BY HIM ON THE PRINCIPLE ELUCIDA TED BY HONBLE MADRAS HIGH COURT IN THE CASE OF PRATHYUSHA EDUCATIONAL TRUST VS. PR. CIT (TAX CASE APPEAL NO. 366 TO 368 OF 2019 AND CMP NOS. 12438, 12446, 12447, 12450 AND 12452 OF 2019 VIDE JUDGMENT DATED 27.06.2019, WH ERE THEIR LORDSHIPS IN PARA 22 OF THE JUDGMENT HAS MADE THE FOLLOWING OBSERVATIONS: AT THE FIRST BLUSH, THE COURT ASSUMED THAT THE ARG UMENT OF MR. ANIRUDH KRISHNAN IS TO THE EFFECT THAT THE CANCELLATION/WITHDRAWAL WAS WITH EFFECT FROM THE DA TE OF GRANT OF EXEMPTION/REGISTRATION. HOWEVER, ON A PERU SAL OF THE ORDER DATED 18.11.2014 WITHDRAWING THE APPROVAL GRANTED UNDER SECTION 10(23C)(VI) OF THE ACT, IT IS SEEN THAT IT HAS BEEN GIVEN EFFECT TO FROM THE ASSESSMENT YEAR 2 010- 2011. LIKEWISE THE ORDER CANCELLING THE ASSESSEE'S REGISTRATION UNDER SECTION 12AA OF THE ACT IS FROM THE ASSESSMENT YEAR 2010-2011. CAN IT BE SAID THAT THES E ORDERS OF CANCELLATION ARE WITH RETROSPECTIVE EFFEC T. THE DEFINITE ANSWER FOR THIS QUESTION IS AN EMPHATIC 'N O'. ADMITTEDLY, THE BUSINESS PREMISES OF THE ASSESSEE W AS SUBJECTED TO SEARCH DURING THE ASSESSMENT YEAR 2010 -2011. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT FOUND LARGE SCALE DIVERSION OF FUNDS AND SEVERAL IM PROPER ITA NO. 7751/DEL/2017 79 ACTIONS ON THE PART OF THE ASSESSEE IN DIRECT CONFL ICT TO THE TERMS OF THE DEED OF TRUST AND CONDITIONS OF REGISTRATION/EXEMPTION. THEREFORE, IT WAS RECOMMEND ED TO THE COMPETENT AUTHORITY TO INITIATE PROCEEDINGS FOR CANCELLATION OF THE EXEMPTION/REGISTRATION. THE MAT TER WAS DECIDED AFTER DUE OPPORTUNITY TO THE ASSESSEE AND S PEAKING ORDERS HAVE BEEN PASSED AND OBVIOUSLY THESE ORDERS WILL TAKE EFFECT FROM THE ASSESSMENT YEAR 2010-2011 AND IT IS A MISNOMER TO STATE THAT THE ORDERS ARE RETROSPECTIVE OR RETROACTIVE. THE LIS WHICH WAS THE SUBJECT MATTER I S FOR THE ASSESSMENT YEAR 2010-2011 AND THOUGH THE ORDERS OF CANCELLATION OF THE EXEMPTION/REGISTRATION WAS PASS ED ON 18.11.2014 AND 07.12.2016 THEY WOULD TAKE EFFECT FR OM THE ASSESSMENT YEAR 2010-2011 DURING WHICH YEAR THE CAU SE OF ACTION AROSE. THIS BEING THE FACTUAL POSITION, T HE DECISION IN THE CASE OF AURA DEVELOPMENT AUTHORITY IS NOT AP PLICABLE TO THE FACTS OF THE PRESENT CASE. 60 IN SO FAR AS THE CONTENTION OF THE ASSESSEE THAT AJ L IS IN THE BUSINESS OF PUBLICATION OF NEWSPAPERS AND IS NO T A REAL ESTATE COMPANY, IS COMPLETELY IRRELEVANT IN THE MAT TER AT HAND, BECAUSE AJL IS PERFORMING NO ACTIVITIES IN CONSONANCE WITH THE OBJECTS OF THE ASSESSEE COMPANY. THIS IS EVIDENT FROM THE MATERIAL PLACED ON RECORD EVEN BY THE ASSESSEE THAT NO ACTIVITY OF PUBLICATION OF NEWSPAPE R WAS CONDUCTED BY THE AJL FROM 2008 TO 2016 AND IN FACT, IT WAS ENJOYING RENTAL INCOME FROM PROPERTIES. WHETHER THE RE WAS TEMPORARY SUSPENSION OR SHUT DOWN OF THE PUBLICATION BUSINESS IS NOT IMPORTANT AND WHAT IS IMPORTANT IS THAT WHETHER AJL WAS STILL IN THE BUSINESS OF PRINT MEDIA DURING THE RELEVANT TIME AND WAS NOT MAINLY REAPING THE REN TAL INCOME FROM ITS PROPERTIES. FURTHERMORE, IT IS NOT THE OBJECT ITA NO. 7751/DEL/2017 80 OR GOAL OF THE ASSESSEE COMPANY TO RUN A NEWSPAPER COMPANY OR A REAL ESTATE COMPANY ENJOYING RENTAL IN COME. EVEN IN THE TAX AUDIT REPORT FOR THE ASSESSMENT YEA R 2012- 13 ONWARDS, THE AJL HAS SHOWN BUSINESS OF NEWSPAPER PUBLICATION AND BUSINESS OF RENTING AND LEASING OF PROPERTIES. ACCORDINGLY, THE ENTIRE THRUST OF THE L D. COUNSEL THAT IT IS NOT REAL ESTATE COMPANY WILL NOT MAKE ANY DIFFERENCE BECAUSE NO PUBLICATION OF NEWSPAPER WAS D ONE DURING THE PERIOD NOR IT CAN BE SAID THAT THE PUBLI CATION OF NEWSPAPER WAS IN FURTHERANCE OF THE OBJECTS OF THE A SSESSEE COMPANY. 61 ANOTHER KEY CONTENTION RAISED BY THE LD. COUNSEL WAS THAT YOUNG INDIAN AND AJL ARE TWO SEPARATE AND INDEPENDEN T COMPANIES HAVING A SEPARATE LEGAL CHARACTER FROM TH AT THE SHAREHOLDERS. IT WAS CONTENDED THAT THE SHARE HOLDER S HAVE NO RIGHT IN THE PROPERTY VESTED WITH THE COMPANY AND CAN ONLY SEEK DIVIDEND AND BONUS ON THE SHARES AND THER EFORE, CHANGE IN THE OWNERSHIP OF THE AJL WOULD NOT MAKE TH EM OWNERS OF THE SAID PROPERTY . IN SUPPORT, STRONG RELIANCE WAS PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MRS. BACHA F. GUZDAR (SUPRA). TO REBUT SUCH A PLEADING, MR. SRIVASTAVA, PLACED BEFORE US TWO JUDGM ENTS OF HONBLE JURISDICTIONAL HIGH COURT (DELHI) IN THE CA SE OF ASSOCIATE JOURNALS LTD. VS. LAND & DEVELOPMENT OFFI CE. DRAWING OUR ATTENTION TO THE DIVISION BENCH ORDER AN D ITA NO. 7751/DEL/2017 81 JUDGMENT DATED 28.02.2019 (LPA 10 OF 2019 AND CM NO . 566/2019 AND 649/2019), HE SUBMITTED THAT IDENTICAL SUBMISSIONS HAVE BEEN CONSIDERED BY THE HONBLE HIG H COURT AND THE MATTER REGARDING LIFTING OF CORPORATE VEIL WAS SUBJECT MATTER OF DETAILED CONSIDERATION BY THE HON BLE COURT. AFTER READING VARIOUS ARGUMENTS PLACED BY BO TH THE PARTIES BEFORE THE HONBLE COURT, HE DREW OUR ATTENT ION TO PARA 65 AND 66 OF THE JUDGMENT WHEREIN THIS ISSUE HA S BEEN DISCUSSED THREADBARE. HE SUBMITTED THAT IF THE COMPANY HAS BEEN FOUND TO EVADE THE OBLIGATION UNDE R LAW OR INDULGED IN ANY FRAUDULENT ACTIVITY UNDER LAW OR FOR THE PURPOSE OF TAKING UNDUE ADVANTAGE OR INDULGE IN ANY FRAUDULENT ACTIVITY AGAINST THE PUBLIC INTEREST, TH E DOCTRINE OF LIFTING OF CORPORATE VEIL CAN BE INVOKED. THE HO NBLE COURT AFTER EXAMINING THIS ISSUE AT LENGTH FOUND TH AT FOR ASSESSING THE ACTUAL NATURE OF TRANSACTION OR THE M ODUS OPERANDI EMPLOYED IN CARRYING OUT A PARTICULAR TRAN SACTION, THE THEORY OF LIFTING OF THE CORPORATE VEIL IS PERM ISSIBLE. HERE ALSO, IN THE GIVEN FACTS, THIS DOCTRINE IS SQU ARELY APPLICABLE AND IT IS OPEN FOR THE TRIBUNAL TO SEE WH AT IS THE ACTUAL NATURE OF TRANSACTION IN THE BACKDROP OF PUB LIC INTEREST OR INTEREST OF THE REVENUE. THUS, THE CONT ENTION OF THE LD. COUNSEL ON THIS POINT CANNOT BE SUSTAINED. 62 COMING TO THE ISSUE OF SURRENDER OF REGISTRATION CE RTIFICATE, MR. SRIVASTAVA SUBMITTED THAT THE SURRENDER OF REGI STRATION ITA NO. 7751/DEL/2017 82 WAS NEITHER GENUINE NOR BONA FIDE. FIRST OF ALL, SUCH AN ACT OF SURRENDER OF REGISTRATION IS NOT PERMISSIBLE UND ER THE LAW FOR THE REASON THAT THE REGISTRATION GRANTED WAS NOT ANY KIND OF AWARD OR SOME GRATUITOUS ACTION ON THE PART OF THE GOVERNMENT WHICH COULD BE REJECTED BY THE RECIPIENT OR SURRENDER THE SAME AFTER THE RECEIPT. THE ORDER OF CANCELLATION OF REGISTRATION IS A STATUTORY ORDER P ASSED ON THE BASIS OF CERTAIN FACTS LEADING TO THE BREACH OF THE CONDITIONS OF REGISTRATION AND SUCH BREACH CANNOT B E UNDONE BY VOLUNTARY SURRENDER OF REGISTRATION. THE CANCELLATION OF REGISTRATION HAS TO BE FOLLOWED IN ACCORDANCE WITH THE STATUTE. IN SO FAR AS RELIANCE PLACED BY TH E LD. COUNSEL ON THE DECISION IN THE CASE OF CIT VS. MAHI NDRA MILLS (SUPRA), HE SUBMITTED THAT IS COMPLETELY ILL FOUNDED FOR THE REASON THAT THE DECISION WAS RENDERED IN THE CONTEXT OF SECTION 32. LATER ON, HONBLE SUPREME COURT IN T HE CASE OF PLASTIBLENDS INDIA LTD. VS. ACIT, 398 ITR 568 , HAVE CLEARLY HELD THAT THE DECISION IN THE CASE OF MAHIN DRA MILLS (SUPRA) WOULD NOT APPLY IN THE CASE OF SECTION 80IA, WHICH WAS A PROVISION IN CHAPTER VIA AND CONSTITUTED A COD E BY ITSELF. THE DECISION OF MAHINDRA MILLS (SUPRA) WOULD NOT HAVE ANY APPLICABILITY IN THESE CIRCUMSTANCES. THE PROVISIONS CONTAINED IN SECTION 11 TO 13, GOVERNING CHARITY ARE EQUALLY A CODE ITSELF AND THEREFORE, THE DECISI ON RENDERED U/S. 32 WOULD NOT HAVE ANY APPLICABILITY UN DER ITA NO. 7751/DEL/2017 83 SUCH CIRCUMSTANCES. EVEN OTHERWISE ALSO, THE CASE O F THE REVENUE IS THAT THE ACT OF SURRENDER WAS NOT BONA FIDE AS IT WAS POST ENQUIRIES CONDUCTED BY THE REVENUE AND THE MATERIALS FOUND WHICH CLEARLY SHOWED THAT THE ASSESS EE WAS NOT ENTITLED FOR REGISTRATION AT ALL. FURTHER, T HERE WAS CLEAR-CUT BREACH OF CONDITIONS OF INVESTMENT AS PRO VIDED U/S. 13(1) (D). AFTER HAVING REALIZED THAT THE REGI STRATION COULD BE WITHDRAWN BOTH FOR THE BREACH OF THE CONDITI ONS AS MENTIONED IN SUB-SECTION (3) AND SUB-SEC. (4) OF SECTION 12AA, THE ASSESSEE COMPANY HAS WRITTEN A LETTER OF S O CALLED SURRENDER OF REGISTRATION. THUS, SAID SURREN DER WAS NOT BONA FIDE AND ITS ACTIVITIES WERE NOT IN ACCORDANCE WITH THE OBJECTS AND THE REAL INTENT AND MOTIVE AND HAD FAILED TO ACHIEVE THE OBJECTIVES FOR WHICH IT WAS CREATED. THE ASSESSEE COMPANY DID NOT OFFER TO SURRENDER THE REGISTRATION FROM A.Y. 2011-12 WHEN THEY ACQUIRE AJL , BUT ONLY POST YEAR 2016. THUS, AFTER ENJOYING BENEFIT O F REGISTRATION, IT WAS NOT OPEN TO THE ASSESSEE TO MAK E VOLUNTARY SURRENDER OF REGISTRATION FOR FUTURE YEAR S. ACCORDINGLY, THE CLAIM THAT SURRENDER WAS BONA FIDE CANNOT BE ACCEPTED. REJOINDER BY THE APPELLANT 63 IN THE REJOINDER PROCEEDINGS, THE LD. COUNSEL FOR T HE ASSESSEE FIRST OF ALL VEHEMENTLY OBJECTED ON THE RE LIANCE ITA NO. 7751/DEL/2017 84 PLACED ON THE JUDGMENTS OF DELHI HIGH COURT IN THE CASE OF ASSOCIATE JOURNALS LTD. (SUPRA) ON THE GROUND THAT THE SAME ARE SUBJUDICE. THE LD. DR HAS RELIED UPON VARI OUS ADDITIONAL DOCUMENTS/ORDERS, WHICH WERE NEITHER CONFRONTED TO THE ASSESSEE BY THE LD. CIT (E) NOR W ERE AVAILABLE AT THE TIME OF PASSING THE IMPUGNED CANCE LLATION ORDER AND, THEREFORE, ARE WHOLLY IRRELEVANT IN THE P RESENT APPEAL. THE LD. DR IS TRYING TO MAKE OUT NEW CASE B ASED ON SOME ADDITIONAL EVIDENCES AND THE SAME OUGHT NOT TO BE CONSIDERED. 64 NOW AGAIN IN THE REJOINDER STAGE ASSESSEE COMPANY H AS FILED ANOTHER SET OF ADDITIONAL EVIDENCES PAPER BOO K (MARKED AS AE P B-2). THESE ADDITIONAL EVIDENCES CO NTAIN LIST OF 34 DOCUMENTS. IT HAS BEEN STATED TO BE BECA USE OF THE FACT THAT, DEPARTMENT HAS PLACED ADDITIONAL PAP ERS AND SUBMISSIONS, WHICH WERE NOT DISCUSSED IN THE ORDER O F LD. CIT (E) AND CERTAIN ALLEGATIONS, HAVE BEEN MADE WHIC H ARE NOT PART OF CANCELLATION PROCEEDINGS. 65 AS FAR AS PLACING OF HEAVY RELIANCE ON (I) ORDER OF THE HONBLE DELHI HIGH COURT DATED DEC. 21, 2018 IN THE CASE OF, I) ASSOCIATED JOURNAL LTD. & ANR VS. LAND & DEVELOPMENT OFFICE IN WP. (C) 12133/2018 AND CM 47131/2018; AND (II) ORDER OF DELHI HIGH COURT DATE D 28.02.2019 IN THE CASE OF THE ASSOCIATED JOURNAL LT . & ANR. VS. LAND & DEVELOPMENT OFFICE IN LPA 10/2019 A ND ITA NO. 7751/DEL/2017 85 CM NOS. 566/2019 &649/2019, HE POINTED OUT THAT THE PROCEEDINGS, PURSUANT TO THE SAID JUDGMENT OF HIGH COURT HAVE BEEN STAYED BY HONBLE SUPREME COURT VIDE ORDE R DATED 05.04.2019 IN SLP TO APPEAL (C) NO. 7345/2019 AND THE MATTER IS PRESENTLY PENDING FOR DISPOSAL BEFORE THE HONBLE SUPREME COURT. THUS, THE SAID ORDER CANNOT BE CONSIDERED FOR THE PURPOSE OF DECIDING THE PRESENT APPEAL. ONCE THE APEX COURT HAS STAYED THE OPERATION OF DEL HI HIGH COURT ORDER, THE SAME BECAME INOPERATIVE AND THEREFORE, INADMISSIBLE AS ON DATE. IN VIEW OF SUCH SUBMISSIONS, THE LD. COUNSEL PRAYED THAT THIS TRIBU NAL FIRSTLY SHOULD NOT ALLOW THE REVENUE TO PLACE RELIA NCE ON THE AFORESAID ORDERS AND SHOULD NOT TAKE INTO COGNI ZANCE THE POINTS OF LAW APPLIED/ PROPOUNDED ON THE SAID O RDER; AND SECONDLY, WITHOUT PREJUDICE IN CASE THE JUDGMENT S ARE TO BE CONSIDERED, THEN IT AMOUNTS TO PRE-JUDGE THE ISSUE WHICH IS PRESENTLY SUBJUDICE AND THEREFORE, THE MATT ER SHOULD BE ADJOURNED TILL THE MATTER IS DECIDED BY H ONBLE APEX COURT. 66 REACTING STRONGLY TO THE SAID REQUEST MADE BY THE L D. COUNSEL FOR THE ASSESSEE, MR. G.C. SRIVASTAVA SUBMI TTED THAT IT IS COMPLETELY ERRONEOUS TO SAY THAT THE OPE RATION OF ORDER HAS BEEN STAYED, ALBEIT WHAT HAS BEEN STAYED IS, THE FURTHER PROCEEDINGS PURSUANT TO THE HIGH COURT ORDE R, I.E., DIRECTION FOR EVICTION PROCEEDINGS OF THE BUILDING AND NOT ITA NO. 7751/DEL/2017 86 THE ENTIRE ORDER. EVEN OTHERWISE ALSO, IF ANY FURTHE R PROCEEDINGS HAVE BEEN STAYED THAT DOES NOT MEAN THE ORDER OF HONBLE JURISDICTIONAL HIGH COURT BECOMES INOPER ATIVE AND IN SO FAR AS THE FINDINGS AND PRINCIPLES PROPOU NDED THEREIN IS A BINDING JUDICIAL PRECEDENCE TO THE COURTS/TRIBUNALS UNDER THE SAME JURISDICTION. 67 AS A REJOINDER TO VARIOUS SUBMISSIONS MADE BY THE L D. SPECIAL COUNSEL FOR THE REVENUE, HE SUBMITTED THAT FIRST OF ALL IT HAS BEEN ACCEPTED BY THE DEPARTMENT BEFORE T HIS TRIBUNAL THAT PUBLICATION BUSINESS OF AJL WAS SUSPEN DED SEVERAL TIMES IN PAST AND GOT REVIVED TIME AND AGAI N. THIS IS EVIDENT FROM THE CHART OF DATES AND EVENTS SUBMI TTED BY THE REVENUE PRIOR TO 2008. IN SO FAR AS THE EFFECT OF SAID ORDER OF HONBLE SUPREME COURT ON THE JUDGMENT OF D ELHI HIGH COURT ORDER, HE SUBMITTED THAT THE SAID ORDER HAS TO BE TREATED TO BE NON-OPERATIONAL BECAUSE IT INDICAT ES THAT EITHER THE ORDER IS PASSED ON WRONG FACTS OR LAW HAS NOT BEEN APPLIED CORRECTLY. IN SUPPORT, HE RELIED UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF CIT VS. BHUSHAN STEELS PVT. LTD., 398 ITR 216 WHEREIN THE SLP FILED AGAINST THE SAID JUDGMENT WAS ADMITTED BY THE SUPREME COURT AND THE ORDER WAS STAYED AND ON THIS BACKGROUND, THE HONBLE HIGH COURT IN THE CASE OF SUNBEAM AUTO PVT. LTD. (WP(C) 8941/2015 DECIDED NOT TO FOLLOW THE EARLIER DECISION OF BHUSHAN STEEL PVT. LTD. ITA NO. 7751/DEL/2017 87 (SUPRA) ON THE GROUND THAT THE SAME HAS BEEN STAYED BY HONBLE SUPREME COURT. SIMILARLY, IN THE JUDGMENT O F CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UOI(292 ITR 470)WHEREIN IT WAS HELD THAT THE PROVISIO NS OF SECTION WERE UNCONSTITUTIONAL. HOWEVER, THE SAID ORD ER HAS BEEN STAYED BY HONBLE SUPREME COURT AND IN BACKGRO UND OF SUCH STAY ORDER; VARIOUS COURTS HAVE HELD THAT T HE DECISION OF CALCUTTA HIGH COURT CANNOT BE FOLLOWED. IN SUPPORT, HE HAS REFERRED TO CATENA OF JUDGMENTS, FO R INSTANCE, DHANLAKSHMI BANK LTD. V. CIT (2019) 102 TAXMAN 442 (KERALA), SOUTH INDIAN BANK LIMITED V CI T 45 TAXMANN.COM 428. 68 IN SO FAR AS RELIANCE PLACED BY THE LD. SPECIAL COU NSEL FOR THE REVENUE ON THE JUDGMENT OF SINGLE JUDGE OF HON BLE HIGH COURT IN THE CASE OF ASSOCIATE JOURNAL LTD. WHI CH WAS UPHELD BY THE DIVISION BENCH IN LPA NO. 10/2019, WH EREIN THERE IS AN OBSERVATION THAT ONLY WHEN RELEVANT AUTH ORITIES INITIATED INSPECTION, THE AJL DECIDED TO RESUME HIS PRESS ACTIVITIES SO AS TO SAVE THE LEASE OF THE PROPERTIE S FROM BEING CANCELLED BY THE GOVERNMENT. IN THIS REGARD, HE SUBMITTED THAT WAY BACK ON 23.01.2014; AJL HAD FILE D A LETTER TO REGISTRAR FOR NEWS PAPERS OF INDIA, COPY O F WHICH HAS BEEN PLACED AT PAGE 267 OF THE PAPER BOOK-1 FIL ED BY THE ASSESSEE, WHICH CLEARLY INDICATED THE INTENTION TO RESUME THE NEWSPAPER ACTIVITIES. SUCH AN ALLEGATION MADE ITA NO. 7751/DEL/2017 88 BY THE LD. SPECIAL COUNSEL THAT THE DECISION OF PRI NTING WAS AN AFTERTHOUGHT GETS DEMOLISHED FOR THE REASON THAT THIS INSPECTION OF LDO HAD OCCURRED ONLY IN SEPTEMBER 20 16. HE ALSO POINTED OUT FOLLOWING DATES AND EVENTS OCCUR RED PRIOR TO FIRST NOTICE OF INSPECTION BY THE LDO: ON 15 . 10 . 2012 , AJL APPLIED FOR REGISTRATION OF ESTABLISHMENT EMPLOYING CONTRACTOR LABOUR FOR CONST RUCTION OF BUILDING FOR NEWSPAPER/PRESS IN PANCHKULA. SEE CO PY OF THE SAME AT PAGE 523 TO 525 OF AE-PB II. ON 31 . 10 . 2012 , REGISTRATION CERTIFICATE ISSUED BY DY. LABOUR COMMISSIONER, AMBALA IN RESPECT OF CONSTRUCT ION OF BUILDING FOR NEWSPAPER/PRESS IN PANCHKULA. SEE COPY OF THE SAME AT PAGE 526 TO 528 OF AE-PBII. AJL HAS SANCTIONED PLANS FOR CONSTRUCTION OF PRINTI NG PRESS AT PANCHKULA PROPERTY DATED 26.11.2012 IS AT PAGE 5 29 TO 532 OF AE - PB II. THE SAME CLEARLY SHOWS THE AREA PERTAINING TO PRESS IS DEMARCATED ON THOSE PLANS; AJL'S PLANS FOR CONSTRUCTION OF PRINTING PRESS AT M UMBAI PROPERTY WAS SANCTIONED BY THE RELEVANT AUTHORITIES IN 2013 AND 2016. A COPY OF THE SANCTIONED PLANS IS SE T OUT AT PAGE 533 TO 538 OF AE - PB II. THE SAME CLEARLY SHO WS THE AREA PERTAINING TO PRESS IS DEMARCATED ON THOSE PLA NS; ON FEBRUARY 22, 2013, THE BOARD OF DIRECTORS OF AJL NOTED IN ITS MEETING THAT THE PUBLICATION OF NATIONAL HER ALD WOULD BE CONSIDERED ON WEB-SITE. A COPY OF THE SAID MINUTE S IS ENCLOSED AT PAGE 539 OF AE PB II. ITA NO. 7751/DEL/2017 89 ON SEPTEMBER 12, 2014, THE INTERNET / WEB DOMAIN NAME WWW.NATIONALHERALD.COM WAS REGISTERED. THE NECESSARY REGISTRATION PROOF IS ENCLOSED AT PAGE 54 0 OF AE - PB II. (HOWEVER, SINCE THE ACTUAL COMMENCEMENT TOOK TIME, THE SAID APPROVAL EXPIRED AND A NEW APPROVAL OF DOMA IN NAME WAS TAKEN ON 03.11.2016). IN THE FEBRUARY 24, 2016 BOARD MEETING, THE ROUGH ESTIMATES OF MONTHLY EXPENDITURE FOR PUBLISHING THE NEWSPAPERS WAS DISCUSSED. THE EXTRACTS FROM THE MINUT ES OF THE SAID MEETING ARE ENCLOSED AT PG. 541 OF AE - PB II. ON JULY 10, 2016, ZEE NEWS WRITES A REPORT TITLED 'EIG HT YEARS AFTER IT WAS SHUT DOWN, CONGRESS RE-LAUNCH NAT IONAL HERALD NEWS PAPER'. PLEASE SEE AT PG. 542 OF AE-PB I I. IN AUGUST 2016, THE EDITOR-IN-CHIEF WAS APPOINTED. I N FACT, THE NEWS REPORT OF ZEE NEWS (CITED ABOVE) CLEARLY CITE S AJL AS INFORMING IN ITS JULY 10, 2016 NEWS REPORT, INTER ALIA, 'WE ARE NOW CLOSE TO FINALISING THE EDITOR'S NAME FOR OPERATIONS TO START... 69 LD. COUNSEL SUBMITTED THAT THE FIRST NOTICE OF INS PECTION WAS ONLY ON 06.09.2016 AND SECOND NOTICE ON 26.09.20 16, WHEREAS THE PREPARATION FOR STARTING THE PRESS ACTI VITIES HAPPENED SINCE THE YEAR 2010, THUS, IT CANNOT BE HE LD THAT IT WAS PURELY AN AFTERTHOUGHT AND SUCH AN ACTIVITY WA S DECIDED TO BE RESUMED ONLY AFTER LDO INSPECTION. HE ALSO ITA NO. 7751/DEL/2017 90 REFERRED TO FURTHER EVENTS FOLLOWING THE FIRST INSPE CTION BY THE LDO AS UNDER: (1) THE FIRST INSPECTION WAS CARRIED OUT ON 26.09.2 016. (2) ON THAT DAY, THE COMPANY HANDED OVER SANCTIONE D PLANS, OCCUPANCY CERTIFICATES AND ALSO A LETTER OF EVEN DA TE. (3) ON 10.10.2016, THE 'BREACH NOTICE' WAS RECEIVED . THE SAID 'BREACH NOTICE' DOES NOT MENTION ANYWHERE THAT AJL IS NOT CARRYING OUT PRESS ACTIVITY IN THE PREMISES. NO N CARRYING OUT OF THE PRESS ACTIVITY WAS NOT AN ALLEGATION AT A LL. PLEASE SEE THE COPY OF THE SAID 'BREACH NOTICE' DATED 10.10.20 16 AT PAGE 547 TO 548 OF AE - PB II (4) IN REPLY TO THE SAID BREACH NOTICE, A REPLY WAS SENT VIDE LETTER DATED 19.11.2016. (5) THE COMPANY RECEIVED ANOTHER INSPECTION NOTICE DATED 05.04.2018 FOR CONSTITUTING A COMMITTEE TO AGAIN VI SIT THE PREMISES. A LETTER DATED 07.04.2018 WAS ADDRESSED BY THE COMPANY TO INFORM THAT THE BREACHES MENTIONED IN 10 .10.2016 BREACH NOTICE WERE RECTIFIED. ALONG WITH THAT LETTER , THE COPIES OF NEWS PAPERS PUBLISHED BETWEEN SEPTEMBER 2017 TILL THAT DATE WERE HANDED OVER TO THE CONCERNED OFFICER. (SE E PAGE 549 TO 565 OF AE-PB II). (6) THE SECOND INSPECTION TOOK PLACE ON 09.04.2018 . (7) THE COMPANY RECEIVED 'SHOW CAUSE NOTICE' DATED JUNE 18, 2018 REFERRING TO THE 09.04.2018 INSPECTION AND ALLEGING FOR THE FIRST TIME THAT NO PRINTING ACTIVITY WAS BEI NG CARRYING OUT IN THAT PREMISES. (PLEASE NOTE THAT THE SAID SH OW CAUSE NOTICE ACKNOWLEDGES THAT THE COMPANY'S NEWS PAPER PRI NTING ACTIVITY IS BEING CARRIED OUT ELSEWHERE). A COPY IS ENCLOSED AT PAGE 566 TO 567 OF AE-PBII. (8) THERE WAS A SUBSEQUENT NOTICE FROM LDO DATED 24 SEPTEMBER 2018. IT RELIES ON THE ORDER PASSED BY TH E LD ASSESSING OFFICER UNDER THE INCOME TAX ACT, 1961 U/ S. 148 TO ITA NO. 7751/DEL/2017 91 ALLEGE THAT THERE IS A TRANSFER' OF PROPERTIES FRO M AJL TO YI ON ACCOUNT OF YI BECOMING ALMOST 100% SHAREHOLDER. IT IS THEN CONTENDED THAT SUCH TRANSFER' IS IN CONTRAVENTION OF THE LEASE DEED. HENCE, THE PROPERTY IS LIABLE TO BE RE-ENTERE D. FROM THE ABOVE DETAILS, HE SUBMITTED THAT: (A) THE ALLEGATION THAT THE NEWSPAPER PRINTING ACTIV ITY WAS AN AFTERTHOUGHT PURSUANT TO THE INSPECTION ON 26.09.20 16 GETS DEMOLISHED; (B) THE NON PRINTING OF NEWS PAPER AS ALLEGED IN TH E LDO PROCEEDINGS IS MERELY IN RESPECT OF DELHI PREMISES. LDO ITSELF ACKNOWLEDGES THAT THE NEWSPAPER IS BEING PRINTED BY THE COMPANY ELSEWHERE. WHAT IS RELEVANT FOR THIS APPEAL IS THE FACT THAT AJL IS ACTUALLY PUBLISHING THE NEWSPAPERS. LITIGATION QUA ONE OF ITS PROPERTIES CANNOT AFFECT THE ENTIRE COMPANY AS A WHOLE. THE CIT'S ALLEGATION THAT AJL IS A REAL ES TATE COMPANY IS DEMOLISHED BY THE LDOS OWNS ACCEPTANCE THAT THE NEWSPAPER IS BEING PRINTED SOMEWHERE ELSE. (C) THE LDO RELIES ON YI'S ORDER U/S. 148. THE HON' BLE HIGH COURT APPROVES THAT LDO'S ORDER BASED ON THE WRIT P ETITION IN CASE INDIVIDUAL SHAREHOLDERS OF YI. LD. DR IN THIS APPEAL IS RELYING ON THE SAID HIGH COURT ORDER. THEREFORE, BY IMPLICATION, THE ID. DR IS RELYING ON THE ORDER PAS SED U/S. 148. THAT ORDER IS SUBJECT MATTER OF APPEAL TO THE HON'BLE ITAT. THAT APPEAL IS PRESENTLY PENDING. ANY DECISIO N IN THIS APPEAL BASED ON RELIANCE ON THE HON'BLE HIGH COURT ORDER WOULD AMOUNT TO EVEN PRE-JUDGING THE OUTCOME OF THE APPEAL AGAINST THE ORDER U/S. 148! CAN THIS BE PERMITTED T O BE DONE? IN APPELLANT'S HUMBLE SUBMISSIONS - 'NO'. 70 LD. COUNSEL SUBMITTED THAT IN ANY CASE, HONBLE DEL HI HIGH COURT ORDER VINDICATES THE ASSESSEES SUBMISSIONS I N SO FAR AS ALLOTMENT OF PROPERTY TO AJL IS ON THE CONDITION THAT ITA NO. 7751/DEL/2017 92 SOME SPECIFIED PART OF IT MUST BE USED FOR NEWS PAPE R BUSINESS; IF IT IS NOT SO USED, THE PROPERTY IS LIABLE TO BE RESUMED BY THE CONCERNED AUTHORITIES; CONSEQUENTLY, AJL IS A 'NEWS PAPER' COMPANY AND NOT A 'REAL ESTATE COMPANY' AS ALLEGED BY THE ID. C IT. ON THIS GROUND ITSELF, THE FOUNDATION OF THE CIT'S CANCELLATION ORDER GETS DEMOLISHED. 71 AS REGARDS THE ALLEGATION MADE BY THE REVENUE THAT THE ASSESSEE HAD NOT DISCLOSED CORRECTLY THE ASSETS, LI ABILITIES, ESTIMATE OF INCOME & EXPENDITURE AND, THEREFORE, TH E REGISTRATION HAS BEEN OBTAINED BY SUPPRESSING THE M ATERIAL FACTS, THE LD. COUNSEL SUBMITTED THAT RULE 17A, AS IT THEN STOOD, REQUIRED SUBMISSION OF ACCOUNTS RELATING TO PRIOR YEARS IN CASES WHERE THE COMPANY HAS BEEN IN EXISTE NCE DURING ANY YEAR OR YEARS, PRIOR TO THE FINANCIAL YE AR IN WHICH THE APPLICATION FOR REGISTRATION IS MADE. SINC E THE APPELLANT WAS INCORPORATED ON NOVEMBER 23, 2010, AND THE APPLICATION WAS DATED MARCH 29, 2011, THIS REQUIREME NT WAS 'NOT APPLICABLE'. FORM 10A, BEING THE APPLICATIO N FOR REGISTRATION REQUIRES, AT ITEM NO. 2 TO PROVIDE COP IES OF ACCOUNTS FOR LATEST 1/2/3 YEARS. SINCE THE APPLICAT ION DATED 29.03.2011 WAS FILED ON 31.03.2011, THE ACCOUN TS FOR THE FIRST FINANCIAL YEAR WERE NOT PREPARED. THE APPELLANT COULD HAVE VERY WELL MENTIONED 'NOT APPLICABLE' AGAI NST ITA NO. 7751/DEL/2017 93 ITEM NO. 2. HOWEVER, OUT OF GOOD GOVERNANCE, THE AP PELLANT SUBMITTED THE SAME DOCUMENTS THAT WERE SUBMITTED TO THE ROC ON OCTOBER 15, 2010 FOR THE PURPOSES OF SECTION 25 LICENSE. REQUIREMENT OF FILING 'FUTURE ANNUAL INCOM E AND EXPENDITURE ESTIMATES' AND 'ASSETS AND LIABILITIES STATEMENT WITH THEIR ESTIMATED VALUES AS ON SEVEN DA YS BEFORE MAKING THE ESTIMATE' ARE THE REQUIREMENTS UN DER THE COMPANIES ACT, 1956 FOR OBTAINING LICENCE U/S. 25 AND NOT UNDER THE IT ACT FOR OBTAINING REGISTRATION U/S . 12AA R.W.R. 17A. HOWEVER, THE SAID DOCUMENTS, OUT OF GOO D GOVERNANCE, WERE ALSO SUBMITTED ALONG WITH THE APPLI CATION FOR REGISTRATION U/S. U/S 12AA. THIS ALSO EXPLAINS WHY THE DATE MENTIONED ON ANNEX 5A AND 5B IS 'OCTOBER 14, 2 010'. THEREFORE, THE ALLEGATION THAT REGISTRATION IS OBTA INED BY SUPPRESSION OF MATERIAL FACTS IS WITHOUT ANY BASIS. BESIDES THIS, THE ONLY OTHER REQUIREMENT IN RULE 17A IS TO PROVIDE THE INSTRUMENT OF FORMATION OF THE TRUST / INSTITUT ION, WHICH WAS ALSO DULY FURNISHED. THE LD. CIT THEN GRANT ED REGISTRATION BASED ON THE DOCUMENTS THAT ARE REQUIR ED TO BE SUBMITTED UNDER THE LAW. IN SUCH A CASE, THE ALLE GATION THAT THE REGISTRATION IS OBTAINED BY MISREPRESENTAT ION AND SUPPRESSION OF FACTS IS BASELESS. THE LD DR HAS ALS O LABOURED ON THE NOTE ON PAGE 7 OF THE REVENUE PAPER BOOK TO CONTEND THAT ON MAY 9, 2011, THE APPELLANT DID N OT DISCLOSE THE ACTIVITY OF ACQUIRING SHAREHOLDING IN AJL, ITA NO. 7751/DEL/2017 94 WHICH IT UNDERTOOK IN FEBRUARY 2011. THUS, AS PER TH E ID DR, THE APPELLANT SUPPLIED WRONG INFORMATION AND HEN CE THE REGISTRATION IS LIABLE TO BE CANCELLED. IN THIS BEHALF, HE SUBMITTED AS UNDER: THE NOTE ON PAGE 7 WAS SUBMITTED PURSUANT TO REQUIREMENT AT S. NO. 3 IN CIT'S LETTER DATED 18.04.2011); THIS REQUIREMENT IS FOR 'PLAN OF ACTION FOR THE MAIN CHARITABLE ACTIVITIES TO BE UNDERTAKEN BY YOU DURIN G THE NEXT TWO YEARS'; THUS, THE NOTE FOCUSED ON THE FUTURE ACTIVITIES AND NOT ON THE PAST ACTIVITIES. THE FACT THAT THE NOTE IS PURSUANT TO THE SAID REQUIREMENT OF ITEM 3 IS VERY EVIDENT FROM THE PLAIN READING OF REQUIREMENT AT IT EM 3 AND THE READING OF THE COVERING LETTER DATED MAY 9, 2011. THUS, THERE WAS NO REQUIREMENT OF DISCLOSING THE ASSETS ACQUISITION, VIZ. SHARES IN AJL AND THEREFORE, THERE WAS NO SUPPRESSION OF FACTS BY THE APPELLANT AS ALLEGED BY THE LD. DR. IN ANY CASE, ACQUISITIONS OF SHARES OF AJL WERE PREPARATORY ACTIVITY. PREPARING TO CREATE A PLATFOR M THROUGH WHICH YI CAN REACH OUT TO YOUTH. 72 BESIDES, THE CRUX OF THE ALLEGATION IS THAT THE CIT WOULD NOT HAVE GRANTED THE REGISTRATION HAD THE ACQUISITION B EEN ITA NO. 7751/DEL/2017 95 DISCLOSED. HE SUBMITTED THAT ACQUISITION OF SHARES OF AJL WAS A PREPARATORY EXERCISE TOWARDS ITS OBJECTS. EVEN IF THE DISCLOSURE WAS MADE, HOW IS BORROWING OF LOAN AND ACQUISITION OF SHARES OF AJL A 'NON-GENUINE' ACTIVI TY? IN SUPPORT HE RELIED UPON JUDGMENT OF RAJASTHAN HIGH COURT IN INDIAN MEDICAL TRUST V. PCIT (414 ITR 296) WHEREIN IT WAS HELD THAT WHERE THE ACQUISITION OF SHARES IS IN FURTHERANCE OF ITS OBJECTS THEN THE SAME COULD NOT BE REGARDED AS A NON- GENUINE ACTIVITY. IN SAID CASE, INVESTMENT MADE BY THE ASSESSEE IN A TV CHANNEL WAS HELD TO BE IN A GENUINE ACTIVITY AS IT WAS IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE SINCE IT FURTHERED IT OBJEC TS. THUS, IN VIEW OF THE ABOVE, THERE IS NO SUBSTANCE IN THE CONT ENTION OF THE ID. DR THAT THE NOTE DID NOT TALK ABOUT THE ACTIVITY OF ACQUIRING SHARES IN AJL IN FEBRUARY 2011. THE SAID ARGUMENT OF THE LD. DR IS NOT EVEN ALLEGED BY THE L D. CIT IN HIS CANCELLATION ORDER AND IT IS NOT THE BASIS O F CANCELLATION. HOW CAN THE ID DR BE PERMITTED TO SAY THIS AT THIS STAGE? IN SUPPORT OF SUCH A CONTENTION, RELIAN CE WAS PLACED ON THE DECISION IN THE CASE OF WELHAM BOYS' SCHOOL SOCIETY V. CBDT [2006] 285 ITR 74 (UTTARANCHAL), WHE REIN IT IS HELD THAT WHERE IN THE SHOW CAUSE NOTICE OR IN THE IMPUGNED ORDER, THE COMMISSIONER HAD NOT ALLEGED TH AT THE ASSESSEE HAD OBTAINED THE REGISTRATION BY PRACT ICING ITA NO. 7751/DEL/2017 96 FRAUD OR FORGERY, SAID GROUND CANNOT SURVIVE BEFORE THE COURT. 73 FURTHER, THE JURISDICTIONAL HIGH COURT HAS, IN CASE OF MAHESHWARI MANDAL (DELHI) VS THE STATE OF DELHI &ORS (W.P. (C) 2029/2016 AND CM NOS. 8748/2016, 21328/2016 AND CRL. M.A. NOS. 5911/2017 & 6253/2017) HELD THAT WHERE IN THE ORIGINAL PROCEEDIN GS IT WAS NOT ALLEGED THAT REGISTRATION WAS OBTAINED BY FRA UD THEN SAID GROUND CANNOT BE TAKEN DURING APPEAL. THE RELEVANT EXTRACT OF THE JUDGMENT IS AS UNDER: ' 15. THIS COURT IS NOT INCLINED TO EXAMINE THE QUESTION WHETHER THE CERTIFICATE FOR REGISTRATION O F THE AMENDMENTS IN THE RULES AND REGULATIONS WAS OBTAINED FROM THE REGISTRAR BY PLAYING A FRAUD AND THUS COULD BE REVOKED. THIS IS SO BECAUSE NO SUCH REASON HAS BEEN REFERRED TO BY THE REGISTRAR FOR PASSING THE IMPUGNED ORDER; THE IMPUGNED ORDER HAS NOT BEEN PASSED ON THE BASIS THAT ANY FRAUD HAD BEEN PERPETUATED ON THE REGISTRAR. MORE IMPORTANTLY, PARTICULARS OF FRAUD HAVE TO BE PLEADED AND ESTABLISHED FOR SECURING ANY ORDER ACCEPTING SUCH PLEAS. IT IS APPARENT THAT IN THIS CASE THE REGISTRAR HAS NOT PROCEEDED ON THE BASIS THAT IT HAD BEEN DEFRAUDED INTO GRANTING APPROVAL/CERTIFICATE. ON THE CONTRARY, THE REGISTRAR HAS PROCEEDED ON THE BASIS THAT 'THERE WERE CERTAIN IRREGULARITIES IN APPROVING/CERTIFYING THE AMENDMENTS'. UNDISPUTEDLY, THE SAME CANNOT BE CONSTRUED AS A FINDING OF FRAUD. ITA NO. 7751/DEL/2017 97 74 AS REGARDS THE REFERENCE MADE BY THE REVENUE TO THE DEED OF ASSIGNMENT OF LOAN OWNED BY AJL TO AICC AMOUNTING TO RS. 90.21 CRORES FOR A CONSIDERATION OF RS. 50 LAKH S, THE LD. COUNSEL SUBMITTED THAT THIS FACT WAS DULY DISCLOSED IN THE AUDITED ACCOUNTS OF THE ASSESSEE BY WAY OF NOTE AND THE SAID NOTE CLEARLY EXPLAINS THE SECOND LEG OF THE TR ANSACTION, NAMELY, ACQUISITION OF SHARES IN LIEU OF LOAN. BESI DES THIS, THERE IS NO REFERENCE TO THE ASSIGNMENT DEED IN THE IMPUGNED ORDER OF THE LD. CIT (E) AND NEITHER THE A SSESSEE WAS ASKED TO EXPLAIN IT BEFORE THE LD. CIT (E) BEFOR E PASSING THE CANCELLATION ORDER. EFFECTIVELY, THE APPELLANT HAS ACQUIRED SHARES IN MAJORITY SHARES IN AJL. SUCH ACQUISITION IS A PREPARATORY ACTIVITY IN PURSUANCE OF ITS OBJECTS AS HAS BEEN EXTENSIVELY ELUCIDATED IN THE C OURSE OF ARGUMENTS OF THE APPELLANT. AJL IS A NEWSPAPER COMPA NY, WHICH PROVIDES A READY PLATFORM FOR THE APPELLANT TO ACHIEVE ITS OBJECTIVES. THE ASSIGNMENT AGREEMENT HA S NO REFERENCE IN THE CIT'S CANCELLATION ORDER. INDEED, THE SAID ASSIGNMENT IS NOT THE BASIS OF CANCELLATION. THE BA SIS OF CANCELLATION IS THE SECOND LEG, NAMELY, THE APPELLA NT'S INVESTMENT IN SHARES OF AJL, WHICH, ACCORDING TO THE ID. CIT, IS A REAL ESTATE COMPANY. IT IS SUBMITTED THAT THE HON'BLE TRIBUNAL CANNOT DRAW ANY ADVERSE INFERENCE F ROM THE ASSIGNMENT AGREEMENT SINCE THE CIT HAS NOT DRAWN , NOR HAS THE ID. CIT REQUIRED THE APPELLANT, BEFORE PASSING ITA NO. 7751/DEL/2017 98 THE CANCELLATION ORDER, TO SHOW CAUSE WHY ADVERSE INFERENCE SHOULD NOT BE DRAWN FROM THE SAID AGREEMEN T. 75 REGARDING THE ALLEGATION OF LD. REPRESENTATIVE OF T HE DEPARTMENT THAT THE ASSIGNMENT OF LOAN CONVERTED IN TO SHARES OF AJL IS ONLY ACTIVITY AND BESIDES THIS, NO ACTIVITY WAS CARRIED OUT, HE CLARIFIED THAT ACQUISITION OF SH ARES IN AJL IS A PREPARATORY ACTIVITY IN PURSUANCE OF THE O BJECTIVE OF THE APPELLANT. THIS FACT HAS BEEN DISCLOSED IN T HE NOTES TO AUDITED ACCOUNTS OF MARCH 31, 2011 IN THE FOLLOWI NG MANNER:- THE REVIVAL OF AJL AND RESUMING ITS NEWSPAPER ACTIVI TY WAS A TALL TASK IN VIEW OF HUGE LOSSES AND INABILITY TO RAISE FUNDS DUE TO HUGE DEBT. ULTIMATELY, IT SUCCEE DED. THIS HELPED YI ACHIEVE ITS OBJECTIVE OF GETTING A R EADY PLATFORM FOR REACHING OUT TO THE YOUTH OF THE COUNT RY. IT WAS FURTHER STATED THAT YI DIRECTLY ALSO, IN A SMA LL WAY, REACHED OUT TO THE YOUTH IN PURSUANCE OF ITS OBJECT IVE TO INCULCATE IN THE MIND OF INDIA'S YOUTH THE IDEAL OF DEMOCRACY BY ORGANIZING AN INITIATIVE IN 2018 TO SPREAD THE AWARE NESS ABOUT THE IMPORTANCE OF VOTING DURING THE KARNATAKA ASSEM BLY ELECTIONS. YI FURTHER, ON ITS OWN HAVE BEEN REACHING TO YOUTH THROUGH ITS VARIOUS SOCIAL MEDIA HANDLERS OPERATED BY YI ON VARIOUS SOCIAL MEDIA PLATFORMS LIKE FACE BOOK, INST AGRAM, TWITTER, YOU TUBE ETC. ITA NO. 7751/DEL/2017 99 76 IN SO FAR AS THE REFERENCE MADE BY THE LD. SPECIAL COUNSEL THAT THE LOAN OF RS. 90 CRORES WAS TRANSFERRED BY A ICC TO YOUNG INDIAN ON 16.12.2010, HOWEVER, THE LOAN WAS ASSIGNED THROUGH LETTER ON 28.12.2010, HE CLARIFIED THAT ASSIGNMENT AGREEMENT DATED 28.12.2010 WAS THE FINAL DULY STAMPED ASSIGNMENT AGREEMENT. THE ORIGINAL ASSIGNME NT WAS ON LEDGER PAPER, THE DATE OF JOURNAL ENTRY WAS IN FACT 18.12.2010 AND WAS INADVERTENTLY TYPED AS 16.12.2010 , AND THE SAME WAS A CLERICAL ERROR. BESIDES, THE ASSI GNMENT OF LOAN AND CONVERSION THEREAFTER INTO EQUITY SHARE S OF AJL FOLLOWED BY CONVERSION OF AJL INTO A NON-PROFIT ORG ANIZATION ARE ALL DIFFERENT STEPS IN THE PROCESS OF ENABLING THE ASSESSEE TO ACHIEVE ITS OBJECTIVES OF REACHING OUT TO THE YOUTHS OF INDIA IN PURSUANCE OF ITS CHARITABLE OBJE CTIVES THROUGH THE PLATFORM OF AJL BY REVIVING AJLS PUBLI CATION ACTIVITIES. IN ANY CASE, THIS WAS NOT THE BASIS OF CANCELLATION BY THE LD. CIT (E) AND THEREFORE, NO A DVERSE INFERENCE CAN BE DRAWN FROM THE ALLEGED FACT. 77 ONE OF THE POINTS RAISED BY THE LD. DR WAS THAT LOAN FROM AICC TO AJL WAS NOT DISCLOSED IN AJLS ANNUAL REPORT AND IT WAS ARGUED THAT ANNUAL REPORT OF AJL FOR THE YEAR 2010 SHOWS UNSECURED LOAN OF RS. 89.67 CRORES AS ON 31.03.2010 AND THE NATURE OF WHICH WAS EXPLAINED IN SCHEDULE-X OF THE REPORT. IN REJOINDER, THE LD. COU NSEL SUBMITTED THAT SUCH AN ALLEGATION IS BASELESS BECAU SE IN ITA NO. 7751/DEL/2017 100 ORDER TO SUBSTANTIATE THAT LOAN GIVEN BY THE AICC T O AJL IS GENUINE, FOLLOWING MATERIAL FACTS ARE RELEVANT IN TH IS REGARD: AJL WAS GOING THROUGH FINANCIAL DISTRESS AND HENCE REQUIRED FUNDS FOR RUNNING THE PUBLICATIONS. NATION AL HERALD AND OTHER PUBLICATIONS OF AJL, IN ACCORDANCE WITH THE OBJECTS OF AJL; WERE BEING RUN IN ACCORDANCE WITH THE POLICY AND PRINCIPLES OF THE INDIAN NATIONAL CONGRE SS. AICC STARTED ADVANCING LOANS TO AJL TO HELP THEM IN THEI R FINANCIAL HARDSHIP. THE SAID AMOUNTS OVER A PERIOD FROM THE YEAR 2002 TO THE YEAR 2011 AGGREGATED TO RS. 90,21,68,980/-.IT IS FURTHER PERTINENT TO POINT OUT THAT RS. 90,20,22,785/- OF THE AMOUNT ADVANCED TO AJL WERE BY WAY OF CHEQUES. AJL UTILIZED THE AMOUNTS ADVANCED BY AI CC INTER OLIO FOR MEETING ITS EXPENSES OF RUNNING THE PUBLICATIONS INCLUDING PAYING EMPLOYEES' SALARIES, VRS, PF, ESI, STATUTORY DUES AND TAXES AND BUILDING AND MAINTAINING ITS NEWSPAPER OFFICES. IN THE YEAR 2012, IN RESPECT OF LOAN GIVEN BY AICC TO AJL, A PETITION WAS FILED BEFORE THE ELECTION COMMISSION OF INDIA BY A POLITICAL RIVAL OF AICC SEEKING DE-RECOGNITION OF AICC UNDER SECTION 16A OF ELECTION SYMBOLS (RESERVATION AND ALLOTMENT ORDER), 1968 ON THE GROUND THAT THE PARTY LOANED MORE THAN RS. 90 CRORES TO AJL IN VIOLATION OF THE GUIDELINES AND RULES FOR REGISTRATION AS WELL AS RECOGNITION OF POLITICAL PARTIES. THE ELECTION COMMISSION OF INDIA DISMISSED SAID PETITION HOLDING THAT THERE IS NO DIRECTION OR INST RUCTION OF THE ELECTION COMMISSION REGULATING THE MANNER IN WHI CH ITA NO. 7751/DEL/2017 101 THE PARTY MAY SPEND THE FUNDS RAISED BY THEM AND TH AT SECTION 29B/C OF THE REPRESENTATION OF PEOPLE ACT, 1951 PROVIDE FOR THE MANNER IN WHICH THE POLITICAL PARTI ES MAY RAISE FUNDS AND THAT THERE IS NO PROVISION WHATSOEVE R IN THE ACT PRESCRIBING THE MANNER IN WHICH THE POLITICAL PA RTIES MAY USE THOSE FUNDS. IT IS HUMBLY SUBMITTED THAT TH E SAID ORDER CLEARLY VALIDATES THE AUTHENTICITY OF THE LOA N PROVIDED BY AICC TO AJL. ALSO, IT MAY BE KINDLY NOTED THAT THE INCOME TAX DEPARTMENT ITSELF HAS IN THE ASSESSMENT OF AJL FOR AY 2011-12 EXAMINED THE DETAILS OF LOAN ADVANCED BY TH E AICC TO AJL AND IN THE ASSESSMENT ORDER MENTIONED THAT 'EXAMINATION OF DETAILS FILED BY THE ASSESSEE REVEA LS THAT IN EARLIER YEARS, AICC HAD GIVEN INTEREST FREE LOANS I N VARIOUS TRANSACTIONS FROM TIME TO TIME TO THE ASSESSEE COMP ANY AMOUNTING TO RS. 90,21,68,980/-/ FURTHER, IT WAS HELD THERE THAT SINCE THE LOAN WAS DISCHARGED BY CONVERSI ON INTO EQUITY SHARES AND NOT BY ACCOUNT PAYING CHEQUE, SEC TION 269T OF THE ACT WAS CONTRAVENED. 78 FURTHER, HE CLARIFIED THAT SUCH LOAN DOES APPEAR IN THE BALANCE SHEET OF AJL AND FOLLOWING DETAILS OF ACCOUN TS WERE SHOWN: PARTICULARS AICC OTHER ADVANCE/ SECURITY DEPOSITS TOTAL AS ON MARCH 31, 2010 88.86 0.81 89.67 RECEIVED DURING FY 2010-11 1.35 - 1.35 LESS: CONVERTED IN TO EQUITY (90.21) - (90.21) TOTAL - 0.81 0.81 ITA NO. 7751/DEL/2017 102 THE RELIANCE PLACED BY THE DEPARTMENT ON THE NOTE I N SCHEDULE-X OF THE ANNUAL ACCOUNT OF AJL SUGGESTS TH AT THE UNSECURED LOAN INCLUDES THE AMOUNT TAKEN EARLIER YE ARS FOR ITS CONSTRUCTION ACTIVITIES HAS BEEN CLEARLY MISREA D TO INFER THAT THE ENTIRE LOAN WAS FOR CONSTRUCTION WORK. THE SAID INFERENCE WAS NOT CORRECT. MOREOVER, NONE OF THE DEPARTMENTAL AUTHORITIES HAVE MADE ANY EFFORTS TO V ERIFY THE PRESUMPTION THAT THE AICC LOAN IS NOT DISCLOSED IN THE BOOKS OF AJL. APART FROM THAT, THIS FACT HAS NOWHERE BEEN STATED IN THE IMPUGNED CANCELLATION ORDER. 79 AS REGARDS THE REFERENCE MADE TO STR RECEIVED BY TH E DEPARTMENT FROM YOUNG INDIANS BANKERS, IN WHICH IT WAS REPORTED THAT THE TRANSACTION OF LOAN TAKEN BY YOUN G INDIAN FROM THE COMPANY NAMED DOTEX MERCHANDISE PVT . LTD. OF RS. 1 CRORE AT 14% INTEREST AND UTILIZATION THEREOF FOR PAYMENT TO AICC OF RS. 50 LAKHS, DO NOT APPEAR TO BE IN LINE WITH THE STATED OBJECTS OF THE ASSESSEE. FIRST OF ALL, THE LD. COUNSEL SUBMITTED THAT THIS REPORT WAS NEVER CON FRONTED TO THE ASSESSEE BY THE CIT (E) AND IT WAS FOR THE FI RST TIME, SUCH A REPORT HAS BEEN SHOWN IN THIS COURT. SECONDLY , THE SAID DOCUMENT ITSELF STATES THAT THE INFORMATION SH ARED THEREIN MAY BE USED FOR INTELLIGENCE PURPOSES ONLY AND SHOULD NOT BE USED OR DISSEMINATED FOR EVIDENTIAL O R JUDICIAL PURPOSES. FURTHER, THIS DOCUMENT CANNOT BE TAKEN ITA NO. 7751/DEL/2017 103 INTO ACCOUNT AS EVIDENCE IN ANY PROCEEDINGS. IN ANY CASE, THE LOAN TAKEN BY THE ASSESSEE IS PART OF THE OBJEC TS (CLAUSE 18 OF ITS MOA), HENCE, THERE IS NO MERIT THAT THE L OAN DOES NOT APPEAR TO BE IN LINE WITH THE STATED OBJECTS OF THE ENTITY. THE PAYMENT OF RS. 50 LAKHS FOR CONSIDERATI ON OF ASSIGNING OF LOAN WAS DULY DISCLOSED IN THE AUDITED ACCOUNTS FOR THE YEAR ENDING 31.03.2011 BY DISCLOSI NG THE CONVERSION OF SHARES OF AJL AND THIS EXERCISE IS IN PURSUANCE TO THE MAIN OBJECTS OF YOUNG INDIAN. THE STR REPORT IS DATED 07.02.2011 AND THE ASSESSEE HAS DIS CLOSED THE TRANSACTION IN ITS AUDITED ACCOUNT FOR THE FINA NCIAL YEAR 2010-11 FILED ALONG WITH THE INCOME TAX RETURN ON 11.10.2011 AND THE ASSESSING OFFICER HAD INITIATED ENQUIRY ONLY IN JULY, 2015, I.E., AFTER MORE THAN FOUR YEAR S. FURTHER, THIS ACTION WAS NOT THE BASIS FOR IMPUGNED CANCELLAT ION ORDER. 80 HE FURTHER SUBMITTED THAT THE LOAN WAS OBTAINED FROM R.P. GOENKA GROUP CO., WHICH HAS LISTED COMPANIES. FURTH ER, WHILE THE LOAN WOULD HAVE BEEN REPAID FROM YEAR TO Y EAR AND TDS HAS BEEN DEDUCTED ON YEAR-TO-YEAR BASIS, THEREFORE, NOTHING TURNS TO THE FACT THAT THE LOAN WAS REPAID IN A.Y. 2015-16. THE REPAYMENT WAS POSSIBLE ONLY AFT ER CERTAIN DONATIONS WERE RECEIVED DURING THE F.Y. 2015 -16. ITA NO. 7751/DEL/2017 104 81 IN SO FAR AS, THE ALLEGATION OF THE LD. DR THAT AJL HAS NOT FILED NECESSARY FORMS WITH THE ROC TO TAKE INTEREST IN CONVERTING INTO NON-PROFIT ENTITY, REFERENCE WAS MAD E TO FORM MGT-14 TO ALLEGE THAT THERE IS NO SRN NUMBER MENTIONED ON THE SAID FORM AND THEREFORE, THIS IS E VIDENCE CREATED BY THE ASSESSEE. IN THIS REGARD, HE SUBMITT ED THAT AN EXTRA ORDINARY MEETING OF SHAREHOLDERS OF AJL WA S HELD ON 21.01.2016 FOR WHICH THE NOTICE WAS SENT TO ALL TH E SHAREHOLDERS ON 19.12.2015. THE MEETING WAS, THEREAF TER, CONVENED AND RESOLUTION WAS PASSED TO CONVERT THE COMPANY INTO NON-PROFIT COMPANY. FORM MGT-14 WAS FIL ED WITH THE ROC ON 19.02.2016 UNDER SRN C79224572. POST FILING OF SAID FORM, ON 25.02.2016 AN EMAIL WAS RECEIVED FROM MCA ASKING FOR RE-SUBMISSION WITH CERT AIN REMARKS AND IN RESPONSE THERETO SAID FORM WAS RE- SUBMITTED ON 10.03.2016 AND ALONG WITH SAID RE-SUBMI TTED FORM, THE APPELLANT ENCLOSED THE LETTER DATED 10.03 .2016 EXPLAINING WHY THE REMARKS IN THE MCAS EMAIL HAVE FALLACIES. THEREAFTER, NOTHING HAS BEEN HEARD FROM ROC AND THERE IS STILL STALEMATE. IN ANY CASE, ONCE THE AME NDED MOA HAS BEEN APPROVED BY THE SHAREHOLDERS THEN THE SAME WAS BINDING ON ALL THE SHAREHOLDERS, WHICH IS BINDING AN D EFFECTIVE ON THE COMPANY WHETHER OR NOT LICENSE IS G RANTED. 82 FURTHER, THE LD. COUNSEL SUBMITTED THAT THE RELIANC E PLACED BY THE DEPARTMENT ON THE JUDGMENT OF DELHI HIGH COU RT ON ITA NO. 7751/DEL/2017 105 THE PROPOSITION THAT FIRSTLY ALL THE ARGUMENTS MADE BY THE ASSESSEE IN THE PRESENT APPEAL WERE ALSO MADE BEFOR E THE HONBLE HIGH COURT BUT THE SAME HAVE BEEN REJECTED; AND SECONDLY, THAT IN THIS CASE CORPORATE VEIL OUGHT TO BE LIFTED HAS BEEN UPHELD BY THE HONBLE HIGH COURT. HE SUBMI TTED THAT THE WHOLE ARGUMENT OF LIFTING THE CORPORATE VEI L IN THE CASE BEFORE THE HON'BLE HIGH COURT IS TO BUTTRESS T HE POINT THAT BY ACQUIRING THE SHARES OF AJL, THE APPELLANT HAS ACQUIRED THE PROPERTIES OF AJL AND SUCH ACQUISITION AMOUNTS TO 'TRANSFER' OF THE PROPERTY BY AJL, THOUG H NOT BY WAY OF SALE OR MORTGAGE OR GIFT, BUT 'OTHERWISE'. THI S IS INTERPRETATION OF CLAUSE 111(13) OF THE LEASE DEED. HOWEVER, FOR THE LANGUAGE IN THE SAID LEASE DEED, THE QUESTI ON OF INVOKING THE PRINCIPLES OF LIFTING OF CORPORATE VEI L WOULD NOT HAVE ARISEN EVEN BEFORE THE HON'BLE HIGH COURT. THE ISSUE IN THE PRESENT CASE IS UNDER THE PROVISIONS OF INCO ME TAX ACT, 1961 AND THERE IS NO SIMILAR LANGUAGE IN THE A CT AS IN THE LEASE DEED INTERPRETED BY THE HON'BLE HIGH COUR T. ACCORDINGLY, IN THE PRESENT APPEAL, RELIANCE ON THE DELHI HC ORDER FOR ARGUING LIFTING OF CORPORATE VEIL IS C OMPLETELY MISPLACED. 83 LD. COUNSEL SUBMITTED THAT WHAT IS TO BE CONSIDERED IS: AS TO WHO IS BEING TAXED UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961 ON THE RENTAL INCOME, AJL OR T HE APPELLANT; ITA NO. 7751/DEL/2017 106 AS TO WHO IS BEING GRANTED DEPRECIATION ON THE BUILD INGS IN COMPUTATION OF INCOME UNDER THE PROVISIONS OF INCOME TAX ACT, 1961, AJL OR THE APPELLANT; AS TO WHO COULD BE CHARGED TO TAX ON CAPITAL GAINS I F THE PROPERTY IS SOLD (THOUGH IT IS NOT PERMISSIBLE UNDE R THE PROVISIONS OF THE LEASE); AJL OR THE APPELLANT? THE ANSWER TO ALL THESE QUESTIONS HE SUBMITTED IS O BVIOUS, VIZ. 'AJL' AND NOT THE APPELLANT. UNDER SUCH CIRCUMSTANCES, THE PROPOSITION ARGUED BY THE LD DR THAT APPELLANT AND AJL ARE ONE AND THE SAME AND THAT BY ACQUIRING THE SHARES OF AJL, THE APPELLANT HAS ACQU IRED THE PROPERTIES OF AJL IS UNSTATEABLE FOR INCOME TAX PUR POSES. IF THE ARGUMENTS OF THE ID DR ARE RIGHT, THEN, EVERY C ASE OF 99% OR 100% SUBSIDIARY WILL HAVE TO BE A CASE OF LIF TING OF CORPORATE VEIL! WHEREVER THERE ARE COMMON, DIRECTOR S OR SHAREHOLDERS WOULD BE A CASE OF LIFTING OF CORPORATE VEIL! WHEREVER THE ACQUISITION OF SHARES BY THE HOLDING C OMPANY HAS HAPPENED AT A PRICE THAT IS CONSIDERED BELOW MAR KET PRICE BY THE TAX DEPARTMENT WOULD BE A CASE OF LIFTI NG OF CORPORATE VEIL. AJL BOARD AS ON 31.3.17 HAS FOLLOWIN G DIRECTORS WHO ARE NOT IN ANY WAY CONNECTED WITH YI: MR. DEEPENDER SINGH HOODA MR. DIPAKBHAI RATILAL BABARIA BESIDES, AJL HAS A 'LEADERSHIP TEAM' WITH FIVE MEMBE RS WHO ARE IN NO WAY CONNECTED TO YI: MR. NEELABH MISHR A; ITA NO. 7751/DEL/2017 107 MR. ZAFAR AGHA; MR. UTTAM SENGUPTA; MR. PIYUSH JAIN ; AND MS. ROSHNI TONDON. THUS, EVEN MANAGEMENT OF BUSINES S OF AJL IS NOT THE DOMAIN OF YI. EXCEPT FOR ENSURING TH E GOOD AMOUNT OF WORK IS DONE FOR REACHING THE YOUTH IN FURTHERANCE OF THE OBJECT, YI HAS NO WORK TO PLAY. WHERE IS THE QUESTION OF PIERCING THE CORPORATE VEIL IN SUCH A CASE ANY WAY? HE SUBMITTED THAT THE ARGUMENT AS REGARDS L IFTING OF CORPORATE VEIL BORROWED FROM THE HON'BLE DELHI H IGH COURT'S DECISION BY THE LD DR HAS NO RELEVANCE TO T HE FACTS OF THE PRESENT CASE AND IT DESERVES TO BE REJECTED. BESIDES, IT WAS SUBMITTED THAT THE BASIC TRANSACTION, WHICH HA S BEEN QUESTIONED HERE, IS THE ACQUISITION OF SHARES OF AJL, WHICH IS ALLEGEDLY WORTH RS. 90 CRORES, FOR MERE RS. 50 LAKHS. FIRSTLY, THE SAID SHARES, AT THE TIME OF ACQ UISITION HAD NO WORTH AS AJL WAS INTO LOSSES AND HAD ERODED NE T WORTH. BESIDES, IN VIEW OF THE CONDITIONS OF THE LEAS E DEED, THE SHARES OF AJL HAVE NO VALUE AS THE PROPERTIES H AVE TO BE USED FOR NEWSPAPER ACTIVITIES. FURTHER, THE COMPA NY HAS SUBSEQUENTLY AMENDED ITS MOA TO ALIGN ITS OBJECT WI TH THAT OF A NOT FOR PROFIT COMPANY AND THUS, CANNOT GIVEN ANY BENEFIT TO ITS SHAREHOLDER IN FORM OF DIVIDEND, BON US ETC. DUE TO WHICH TOO, ITS SHARES DO NOT CARRY ANY SIGNIF ICANT VALUE. BE THAT AS IT MAY, EVEN IF IT IS ASSUMED THA T THE SHARES OF AJL ARE WORTH RS. 90 CRORES WHICH WAS ACQUIR ED BY THE APPELLANT AT A DISCOUNTED PRICE OF RS. 50 LA KHS, THE ITA NO. 7751/DEL/2017 108 APPELLANT FAILS TO UNDERSTAND, HOW THIS CAN BE A REA SON TO LIFT THE CORPORATE VEIL OF THE COMPANIES AND CONSID ER THEM AS ONE. IT IS SUBMITTED THAT THE APPELLANT IS A CHA RITABLE ORGANIZATION. THE APPELLANT IS A SECTION 8 COMPANY. THIS IS NOT IN DISPUTE, WHETHER OR NOT IT HAS SECTION 12AA REGISTRATION. IT IS NOT UNCOMMON FOR SUCH ORGANIZAT IONS TO RECEIVE DONATIONS. WHEN RECEIPT OF DONATIONS BY CHA RITABLE ORGANIZATIONS ARE NOT CONSIDERED TO BE WRONG, HOW RE CEIVING SOMETHING AT AN ALLEGED DISCOUNTED VALUE BE CONSIDE RED TO BE SO WRONG SO AS TO LIFT THE CORPORATE VEIL OF THE COMPANY OR TO STATE THAT THE ACTIVITY OF APPELLANT IS NOT G ENUINE? HE THUS SUBMITTED THAT THERE IS NO LOGIC IN SUCH ALLEG ATION. 84 DURING THE COURSE OF HEARING, THE LD. DR HAS ALSO R ELIED ON VARIOUS PROCEEDINGS IN RESPECT OF NOTICE ISSUED U/S . 133(6) TO THE ASSESSEE TO ARGUE THAT THE ASSESSEE HAD NOT SUBMITTED INFORMATION CALLED FOR AND TRIED TO EVADE THE PROCEEDINGS. HE SUBMITTED THAT FIRST OF ALL SUCH AR GUMENT HAS NO RELEVANCE TO THE ISSUE IN HAND BECAUSE WHETHE R THE ASSESSEE HAD COMPLIED WITH THE NOTICE ISSUED U/S. 13 3(6) OR NOT IN PAST WAS NOT THE SUBJECT MATTER OF CONSID ERATION IN THE SHOW CAUSE NOTICE ISSUED BY THE LD. CIT (E) F OR CANCELLATION OF REGISTRATION AND HAS NO RELEVANCE F OR DETERMINING WHETHER THE REGISTRATION CAN BE CANCELLE D. THEY HAVE NO CONNECTIONS, WHATSOEVER. WHAT IS RELEVA NT IS ITA NO. 7751/DEL/2017 109 THAT THE CANCELLATION PROCEEDINGS OF REGISTRATION U /S. 12AA WILL START AFTER A VALID SHOW CAUSE NOTICE AND REGIST RATION CAN BE CANCELLED ONLY WHEN ACTIVITIES OF THE ASSESSE E ARE FOUND TO BE NON-GENUINE OR ARE NOT IN ACCORDANCE WIT H ITS OBJECTS. IT CANNOT BE CANCELLED MERELY ON THE GROUN D THAT IN SOME INDEPENDENT PROCEEDINGS, THE ASSESSEE ALLEGEDL Y DID NOT COOPERATE WITH THE TAX DEPARTMENT. THERE IS NO S UCH REFERENCE EVEN IN THE IMPUGNED ORDER. 85 WITHOUT PREJUDICE, IT WAS SUBMITTED THAT MOST OF THE INFORMATION CALLED FOR THROUGH VARIOUS NOTICES AND ENQUIRIES, WERE IN ANY WAY AVAILABLE WITH THE DEPARTME NT AS THEY WERE EITHER ALREADY SUBMITTED BY THE APPELL ANT IN OTHER PROCEEDINGS OR WERE PUBLICLY AVAILABLE IN PUB LIC DOMAIN. THUS, THERE WAS NO SUPPRESSION OF FACTS. ONE OF THE MAIN REASONS OF THE COMPLAINT AGAINST THE DEPAR TMENT RAISED BY THE ASSESSEE BEFORE THE HIGHER AUTHORITIE S WAS THAT THE DETAILS SUBMITTED IN RESPONSE TO NOTICES W ERE BEING LEAKED TO THE POLITICAL OPPONENTS, WHICH WAS IN VIOLA TION OF SECTION 138 OF THE ACT. ALL THESE ENQUIRIES WERE PU RELY PART OF POLITICAL WITCH-HUNT AND THEREFORE, THE ASSESSEE- APPELLANT OBJECTED TO THE SAID ENQUIRIES. 86 COMING TO THE ARGUMENTS REGARDING SURRENDER OF REGISTRATION BY THE ASSESSEE AND HEAVY RELIANCE PLA CED BY THE LD. DR ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF PLASTIBENDS INDIA LTD. (SUPRA) FOR THE ITA NO. 7751/DEL/2017 110 PROPOSITION THAT THE DECISION OF MAHINDRA MILLS LTD . (SUPRA) IS NOT APPLICABLE TO THE PROVISIONS OF REGISTRATION U/S. 12AA, THE LD. COUNSEL, REFERRING TO THE JUDGMENT IN THE CASE OF PLASTIBENDS (SUPRA) SUBMITTED THAT THE DECISION OF HONBLE SUPREME COURT WAS BASED ON THE FACT THAT IN THE CASE OF 80IA DEDUCTION, THE ASSESSEE WOULD CLAIM DO UBLE BENEFITS AND REVENUE WOULD BEAR DOUBLE LOSS. THEREF ORE, OPTION THEORY IS REFERRED TO AS ANATHEMA AND A D EVICE. HERE, ON SURRENDER OF REGISTRATION, THERE IS NO BEN EFIT TO THE ASSESSEE ALBEIT SURRENDER WOULD MEAN ADDITIONAL TAX REVENUES IN CASE OF PROFITS. THEREFORE, REJECTION O F OPTION THEORY IN THE CONTEXT OF NOT CLAIMING DEPRECIATION FOR 80IA UNITS CANNOT BE EXTENDED FOR REJECTING THE OPTION O F CLAIMING AN EXEMPTION U/S. 11. 87 IN SO FAR AS CONTENTION RAISED BY THE REVENUE THAT SURRENDER IS NOT PERMISSIBLE AND THERE IS NO PROCES S OF LAW, IT IS SUBMITTED THAT THERE IS NO PROVISIONS UNDER T HE ACT TO DENY THE POWER OF VOLUNTARY SURRENDER OF THE REGIST RATION UNDER THE ACT AND THEREFORE, THE ARGUMENT BASED ON 'PROCESS OF LAW' IS UNSUSTAINABLE AS THE LAW DOES NO T PROHIBIT THE VOLUNTARY SURRENDER. IN ANY CASE, THE DECISIONS ON SURRENDER OF EXCISE REGISTRATION CITED BY THE AP PELLANT IN ITS EARLIER ARGUMENTS LAY DOWN THE 'PROCESS OF LA W' THAT THE SURRENDER SHOULD BE ACTED UPON BY THE DEPARTMEN T IN A REASONABLE PERIOD OR ELSE SUCH SURRENDER IS DEEMED ITA NO. 7751/DEL/2017 111 EFFECTIVE AFTER SUCH REASONABLE PERIOD. AS SUBMITTE D EARLIER, IN THE PRESENT CASE THE REASONABLE PERIOD COULD ONL Y BE SIX MONTHS WHEREAS THE LD. CIT (E) INITIATED THE PROCESS AFTER ABOUT 17 MONTHS. 88 AS REGARDS RELIANCE PLACED ON THE JUDGMENT OF MADRA S HIGH COURT IN THE CASE OF PRATHYUSHA EDUCATIONAL TRUST ( SUPRA) ON RETROSPECTIVE CANCELLATION OF REGISTRATION U/S. 12A/12AA, THE LD. COUNSEL SUBMITTED HONBLE ALLAHAB AD HIGH COURT IN THE CASE OF AGRA DEVELOPMENT AUTHORIT Y (SUPRA) HAS CLEARLY HELD THAT CIT (EXEMPTION) IS NO T EMPOWERED TO CANCEL REGISTRATION WITH RETROSPECTIVE EFFECT, I.E., PRIOR TO THE DATE OF ISSUANCE OF ORDER/NOTICE . TO THE SAME EFFECT, THERE IS ANOTHER JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF INDIAN MEDICAL TRUST VS. PCIT, 414 ITR 296. THEREFORE, IF THERE ARE TO V IEWS, THEN THE VIEW FAVORABLE TO ASSESSEE SHOULD BE FOLLOWED IN LINE WITH THE PRINCIPLE OF LAW LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF VEGETABLE PRODUCTS 88 ITR 192. THE LD. DR HAS ALSO ARGUED THAT IT WAS FOR THE FIRST TIME TH AT YOUNG INDIAN IS CONTENDING THAT ACQUISITION OF SHARES OF AJL IS TOWARDS ITS OBJECTS. SUCH AN ARGUMENT IS DEVOID OF A NY BASIS BECAUSE THE SAME IS EVIDENT FROM THE FOLLOWING FACTS: - A. IN FY 2010-11, I.E. THE YEAR IN WHICH THE SHARES OF A JL WERE ACQUIRED, IN THE NOTES TO THE ANNUAL ACCOUNTS, IT H AS BEEN CATEGORICALLY MENTIONED THAT THE SHARES OF AJL WERE ACQUIRED ITA NO. 7751/DEL/2017 112 TOWARDS THE OBJECTS OF THE APPELLANT AND IN FACT, IT WAS FOR SAID REASON THAT THE EXPENDITURE INCURRED IN RESPEC T THEREOF WAS CLAIMED AS APPLICATION TOWARDS OBJECTS OF THE APP ELLANT AND NOT SHOWN AS AN INVESTMENT. B. FURTHER, EVEN IN THE INCOME TAX RETURN FOR SAID YEAR I.E. AY 2011-12, THE AMOUNT SPENT TOWARDS THE SAID ACQUISITI ON HAS BEEN CLAIMED AS APPLICATION OF INCOME TOWARDS THE OB JECTS THAT AGAIN SHOWS THAT THE APPELLANT ALWAYS CONSIDERE D SAID ACQUISITION AS A PART OF ITS OBJECTS. 89 AS REGARDS THE ISSUE, WHETHER AJL IS REAL ESTATE COM PANY OR NOT, THE LD. DR HAS SUBMITTED THAT THE FOUNDATIO N OF CIT(E)S ORDER IS NOT BASED ON THE AJL AS A REAL ES TATE COMPANY, WHICH IS NOT CORRECT BECAUSE IN ENTIRE ORDE R, THE LD. CIT(E) HAS REFERRED AT VARIOUS PLACES THAT AJL IS A REAL ESTATE COMPANY. NOW THE LD. DR WANTS TO MAKE OUT SOME NEW CASE AND DILUTING HIS ARGUMENTS, WHICH SHOULD NO T BE PERMITTED. 90 ONE OF THE ARGUMENTS RAISED BY THE LD. DR WAS THAT T HE RENTAL INCOME AMOUNTS TO REAL ESTATE BUSINESS, WHICH CANNOT BE APPRECIATED IN VIEW OF THE LAW UNDER THE IT ACT AND REFERENCE OF ANY DICTIONARY MEANING TAKEN BY TH E LD. DR SHOULD NOT BE TAKEN INTO COGNIZANCE. FOR EXAMPLE , MANY GOVERNMENT OWNED COMPANIES LIKE AIR INDIA AND ANOTHER SUCH COMPANIES WHO OWN HUNDREDS OF BUILDINGS IN THE COUNTRY HAVE LEASED OUT SOME OF THE PREMISES TH AT DOES ITA NO. 7751/DEL/2017 113 NOT MAKE THEM REAL ESTATE COMPANY. EVEN THE COMPANY IDENTIFICATION NUMBER ISSUED BY THE REGISTRAR OF COMPANIES TO AJL REFERS TO INDUSTRY CODE PERTAINING TO PUBLISHING OF PERIODICALS AND JOURNALS AND NOT THAT OF OPERATING OF REAL ESTATE BUSINESS. 91 ANOTHER ARGUMENT TAKEN BY THE DR WAS THAT AJL STOPPE D BUSINESS AND ALL EMPLOYEES WERE DISCHARGED AND WHAT WAS LEFT WAS PROPERTIES ONLY AND THEREFORE, BY ACQUIRING THE SHARES OF AJL THE ASSESSEE HAS ACQUIRED THE PROPERT IES WHICH IS NOT THE OBJECT OF THE ASSESSEE. SUCH PROPOS ITION IS NOT CORRECT ON THE FACTS AND MATERIAL ON RECORD BEC AUSE AJL DID NOT STOP THE BUSINESS, BUT THERE WAS A TEMPO RARY SUSPENSION. EVEN OTHERWISE, ALSO, ANY PERSON WHO ACQU IRES THE SHARE OF A COMPANY WHOSE PREDOMINANT ASSETS ARE IMMOVABLE PROPERTIES, THEN SUCH SHAREHOLDER DOES NO T ACQUIRE THE PROPERTY HIMSELF. THE ASSESSEES SUBMIS SION THROUGHOUT HAS BEEN THAT THE RENTAL INCOME WAS INCI DENTAL TO THE NEWSPAPER BUSINESS AND EVERY LICENSE ALLOWED FOR NEWSPAPER BUSINESS REQUIRE THAT CERTAIN PORTION OF THE PROPERTIES OUGHT TO BE USED FOR PRINTING PRESS AND BALANCE CAN RENTED OUT. EVERY NEWSPAPER COMPANY HAS SIGNIFIC ANT RENTAL INCOME. 92 COMING TO THE QUESTION RAISED BY THE LD. DR THAT HO W THE PUBLICATION FURTHERS THE OBJECTS OF YOUNG INDIAN, H E SUBMITTED THAT ASSESSEE HAS ALREADY ARGUED AT LENGT H THAT ITA NO. 7751/DEL/2017 114 THE NEWSPAPERS ACTIVITY OF AJL FURTHERS THE OBJECTS OF THE ASSESSEE AND IN SUPPORT HE ALSO SUBMITTED AT PAGE 1 8 TO 34 OF THE PAPER BOOK THE DATA COMPILED FROM GOOGLE ANA LYTICS TILL DATE TO SHOW THAT THERE ARE ALMOST 62% OF THE U SERS OF ONLINE NEWS PORTAL OF AJL. THEREFORE, BY THIS PLATF ORM, THE ASSESSEE HAS ACHIEVED SUCCESS TO APPROACH THE YOUTH S OF THE COUNTRY. THE LD. DR HAS ALSO ALLEGED THAT MOST OF THE ARTICLES PUBLISHED IN THE WEB UNDER THE TAB YOUNG INDIA ARE PICKED UP FROM PTI IS NOT ENTIRELY CORRECT BECA USE AJL HAS PUBLISHED CERTAIN COMMEMORATIVE EDITION OF NEWSPAPERS WRITTEN BY WELL-KNOWN PERSONALITIES HIGHLIGHTING VARIOUS ASPECTS OF OUR CONSTITUTIONAL VALUES LIKE DEMOCRACY, SECULARISM, FREEDOM OF SPEECH ETC. THIS IS HOW THE OBJECTS OF YOUNG INDIA WERE ACHIEVED THROUGH THE PLATFORM OF AJL. FURTHER THE ASSESSEE HAS ALSO FILE D CIRCULATION CERTIFICATE ISSUED BY AUDIT BUREAU OF CIRCULATIONS FOR THE PERIOD JANUARY TO JUNE 2018 AN D JULY TO DECEMBER 2018 OF NATIONAL HERALD ON SUNDAY. 93 ANOTHER CONTENTION HARPED UPON BY THE LD. DR WAS THA T WHETHER OR NOT AJL HAS REAL ESTATE BUSINESS; THE EFF ECT IS THE SAME, IN AS MUCH AS ACQUISITION OF SHARES OF BO TH THE COMPANIES IS CONTRARY TO THE OBJECTS OF THE ASSESSE E COMPANY. IN THIS REGARD, HE SUBMITTED THAT, WHERE T HE ACQUISITIONS OF SHARES ARE IN FURTHERANCE OF ITS OB JECTS THEN THE SAME COULD NOT BE REGARDED AS NOT IN ACCORDANCE TO ITS ITA NO. 7751/DEL/2017 115 OBJECTS. IN THIS REGARD, REFERENCE IS DRAWN TO THE D ECISION OF THE RAJASTHAN HIGH COURT IN INDIAN MEDICAL TRUST V. PCIT (414 ITR 296) WHEREIN INVESTMENT MADE BY THE ASSESSE E IN A TV CHANNEL WAS HELD TO BE IN ACCORDANCE WITH THE OB JECTS OF THE ASSESSEE SINCE IT FURTHERED IT OBJECTS. THE RELEVANT EXTRACT IS AS UNDER: 'ON A GLANCE OF THE FACTS AND MATERIALS AVAILABLE O N RECORD OF THE CASE AT HAND, IT IS EVIDENT THAT THE SAID TV CH ANNEL WAS ACQUIRED BY THE PETITIONER TRUST FOR EDUCATIONAL TR AINING IN 'JOURNALISM' AND 'MASS COMMUNICATION', AS IT WAS OFF ERING COURSES FOR GRADUATION AND POST-GRADUATION IN 'MASS COMMUNICATION' AND 'JOURNALISM'. ... APPLYING THE P RINCIPLE AFORESAID, IT IS EVIDENT THAT EDUCATION CANNOT BE C ONFINED TO THE MEANING OF ONE SUBJECT ONLY AND KEEPING THIS PR ECEDENT IN MIND, IT IS CONCLUDED THAT THE SAID INVESTMENT IN T V CHANNEL SHALL BE CONSIDERED TO BE IN CONSONANCE WITH THE OBJ ECTIVES AND IN THE PURVIEW OF THE OBJECTS OF THE TRUST. BESIDES, ACQUISITION OF SHARES OF A COMPANY CAN O NLY TRIGGER SECTION 12AA(4) AND CANNOT TRIGGER SECTION 12AA(3) AND SINCE SECTION 12AA(4) WAS NOT ON THE STATUTE BOOK IN AY 11- 12, THE YEAR WITH EFFECT FROM WHICH THE ID. CIT HAS PASSED TH E ORDER CANCELLING THE REGISTRATION, THE ORDER PASSED BY TH E CIT(E) IS BAD IN LAW. IN THIS REGARD, RELIANCE IS PLACED ON TH E DECISION OF THE MUMBAI TRIBUNAL IN LILAVATI KIRTILAL MEHTA MEDI CAL TRUST V. CIT [2019] 108 TAXMANN.COM 272 (MUMBAI - TRIB.) WHEREIN IT IS HELD THAT VIOLATION OF PROVISIONS OF SECTION 13 CAN BE A GROUND FOR CANCELLATION OF REGISTRATION ONLY UNDER SECTION 12AA ITA NO. 7751/DEL/2017 116 (4) AND NOT 12AA (3) AND THAT SECTION 12AA (4) WOUL D TAKE EFFECT ONLY FROM 1.10.2014. THERE CANNOT BE RETROSP ECTIVE CANCELLATION U/S. 12AA (4) PRIOR TO 1.10.2014. CASE LAW FOR THIS PROPOSITION HAVE BEEN CITED IN THE INITIAL SUB MISSIONS. NEWS PAPERS ARE CONSIDERED AS THE 'FOURTH ESTATE' OF THE COUNTRY, RANKING FOURTH AFTER THE FIRST THREE BEING : LEGISLATURE, EXECUTIVE AND THE JUDICIARY. THE ROLE OF PRESS IS, AS RECOGNIZED BY THE SUPREME COURT IN SEVERAL CASES TO WHICH REFER ENCES WERE MADE IN THE INITIAL PART OF APPELLANT'S SUBMISS IONS, IS TO FURTHER THE CONSTITUTIONAL VALUES OF DEMOCRACY, SEC ULARISM, FREEDOM OF SPEECH ETC. THIS INDEED IS THE OBJECTIVE OF THE APPELLANT. THEN HOW IS ACQUISITION OF SHARES OF AJL NOT IN ACCORDANCE WITH THE OBJECT OF THE APPELLANT? 94 LASTLY, THE LD. COUNSEL VERY STRONGLY CONTENDED LD. SPECIAL COUNSEL FOR THE REVENUE HAS TRIED TO MAKE OUT NEW CA SE OR IMPROVED UPON THE ORDER OF CIT (E), CANCELLING REGI STRATION U/S. 12AA, WHICH IS NOT PERMISSIBLE. IN SUPPORT, HE STRONGLY RELIED UPON ITAT SPECIAL BENCH DECISION IN THE CASE OF MAHINDRA & MAHINDRA LTD. V. DCIT(2009) 30 S OT 374, WHICH HAS BEEN AFFIRMED BY THE HONBLE BOMBAY H IGH COURT (365 ITR 560). 95 WITH THE PERMISSION OF THE COURT, MR. G.C. SRIVASTA VA, LD. SPECIAL COUNSEL FOR THE REVENUE SUBMITTED THAT NO N EW CASE HAS BEEN MADE OUT BY THE DEPARTMENT AND IT IS COMPLETELY MISCONCEIVED ASSERTION. THE ORDER OF LD. CIT(E) PROCEEDS ON PRIMARY SATISFACTION RECORDED BY HIM IN PARA ITA NO. 7751/DEL/2017 117 15 & 17 AND THE ENTIRE COURSE OF THE CANCELLATION O RDER IS THAT ACTIVITIES OF THE APPELLANT/ASSESSEE ARE NEITH ER GENUINE NOR THEY HAVE BEEN CARRIED OUT IN ACCORDANC E WITH ITS STATED OBJECTS. HE ALSO REFERRED TO THE JUDGMEN T IN THE CASE OF ACIT V. PRAKASH L. SHAH (2008) 115 ITD 167, WHEREIN THE TRIBUNAL HAS CLEARLY STATED THAT THE DR CAN STRENGTHEN THE VIEW TAKEN BY THE ASSESSING OFFICER F ROM ANY ANGLE, HE LIKES, BUT CANT BRING OUT AN ALTOGET HER DIFFERENT CASE DE HORS THE VIEW OF THE ASSESSING OFF ICER. THE AREA OF ARGUMENTS OF DR IS UNLIMITED BUT WITHIN THE BOUNDARY LIMIT MARKED BY THE ASSESSING OFFICER. HE ALSO DISTINGUISHED THE CASE OF MAHINDRA & MAHINDRA (SUPR A) BUT CONTENDED THAT IN THOSE CASES REVENUE WAS SEEKING TO NEGATE THE FINDINGS ALREADY RECORDED BY THE ASSESSI NG OFFICER AND DR ARGUED IN THAT CASE CONTRARY TO THE FINDING OF THE LD AO. THUS, THIS CASE DOES NOT SUPPORT THE ARGUMENT OF THE ASSESSEE. DECISION AND REASONS : 96 WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED ENTIRE GAMUT OF FACTS PLACED ON RECORD AND THE MATERIAL REFERRED TO BY THE PARTIES AT THE TIME OF HEARING. FROM THE DISCUSSION S MADE ABOVE, THE CORE ISSUE AS IT CULLS OUT IS, WHETHER TH E LD. CIT (E) WAS JUSTIFIED IN LAW AND ON FACTS IN CANCELLING T HE REGISTRATION GRANTED TO THE ASSESSEE U/S. 12A R.W.S. 12AA ITA NO. 7751/DEL/2017 118 VIDE CERTIFICATE DATED 09.05.2011 W.E.F. ASSESSMENT YEAR 2011-12, THAT IS, RETROACTIVELY. IT IS INDUBITABLE THAT THE ASSESSEE ITSELF HAD WRITTEN A LETTER TO THE LD. CIT (E) DATED 21.03.2016 FILED ON 22.03.2016, WHEREIN IT HAS OFFER ED TO SURRENDER THE REGISTRATION GRANTED U/S. 12A R.W.S. 1 2AA WITH IMMEDIATE EFFECT. ERGO, THE ASSESSEE COMPANY ON ITS OWN VOLITION HAS CEDED THE REGISTRATION AND ANY BENE FIT OF BEING A CHARITABLE ENTITY UNDER THE INCOME TAX ACT FROM MARCH 2016. HOWEVER, THE BONE OF CONTENTION AND THE ASSESSEES MAIN OBJECTION IS THAT, THE REGISTRATION COULD NOT HAVE BEEN CANCELLED PRIOR TO 21.03.2016 W.E.F. 2011- 12. SUCCINCTLY PUT, THE ENTIRE WRANGLING OF THE ASSESSEE COMPANY IS THAT RETROACTIVE CANCELLATION IS NOT JUS TIFIED, THAT IS, BETWEEN THE PERIODS 09.05.2011 TO 21.03.20 16. CANCELLATION POST FACTO IS NOT DISPUTED RATHER ASSE SSEE HAS ACQUIESCED TO SUCH CANCELLATION, ALBEIT FROM 21 MAR CH 2016. 97 THE STATUTE PROVIDES THAT IF A TRUST OR INSTITUTION HAS BEEN CONSTITUTED TO CARRY OUT THE ACTIVITIES WHICH ARE OF CHARITABLE NATURE AS DEFINED IN SECTION 2(15) OF TH E ACT, THEN IT CAN APPLY FOR REGISTRATION THROUGH AN APPLI CATION IN PRESCRIBED FORM BEFORE THE PR. CIT OR CIT U/S 12A/1 2AA ON OR BEFORE THE EXPIRY OF PERIOD OF ONE YEAR FROM THE DATE OF CREATION OF THE TRUST OR ESTABLISHMENT OF THE INSTI TUTION. UPON SUCH APPLICATION, THE PR. CIT OR CIT CALLS FOR SUCH ITA NO. 7751/DEL/2017 119 DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUT ION, AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABO UT THE GENUINENESS OF THE ACTIVITIES AND MAY MAKE SUCH ENQ UIRY, AS HE DEEMS NECESSARY IN THIS REGARD. ON HIS BEING SATISFIED ABOUT THE GENUINENESS OF THE TRUST OR INS TITUTION AND THE GENUINENESS OF THE ACTIVITIES, HE CAN PASS AN ORDER GRANTING REGISTRATION TO THE SAID TRUST; AND IF HE IS NOT SATISFIED, THEN HE CAN REFUSE TO GRANT REGISTRATION BY WAY OF SPEAKING ORDER. AFTER GRANT OF SUCH REGISTRATION, T HE ASSESSEE TRUST HAS TO NECESSARILY COMPLY WITH THE CONDITIONS PRESCRIBED IN SECTION 11 TO 13 AND SUBMI T ITS INCOME & EXPENDITURE ACCOUNT IN THE PRESCRIBED FORM AS PROVIDED IN THE STATUTE AND RELEVANT RULES. THE STA TUTE PROVIDES EXEMPTION OF INCOME OF SUCH TRUST OR INSTI TUTION SUBJECT TO CONDITIONS PRESCRIBED UNDER THE ACT AND RULES, PROVIDED, SUCH TRUST OR INSTITUTION IS CARRYING OUT ACTIVITIES FOR CHARITABLE PURPOSE AND NOT ONLY THAT, SUCH ACTI VITIES ARE CARRIED OUT STRICTLY IN ACCORDANCE WITH THE OBJECTS, FOR WHICH IT WAS CREATED AND ALSO THE ACTIVITIES SHOULD B E GENUINE. THE ONUS IS HEAVILY UPON THE APPLICANT TRUST/INSTITUTION TO DISCLOSE FULLY AND TRULY ALL M ATERIAL FACTS AND TO CLEARLY STATE THE PURPOSE AND THE NATU RE OF THE ACTIVITIES THAT IT IS SUPPOSED TO CARRY OUT IN TERM S OF THE REGISTRATION GRANTED AT THE TIME OF SEEKING REGISTR ATION U/S 12A/12AA. ITA NO. 7751/DEL/2017 120 98 WE HAVE ALREADY DISCUSSED IN DETAIL THE FACTS AND T HE CHAIN OF EVENTS STARTING FROM THE DATE OF INCORPORATION O F THE ASSESSEE COMPANY TILL THE GRANT OF REGISTRATION. FR OM THE FACTS AND MATERIAL AS DISCUSSED ABOVE, THE UNDISPUT ED FACTS ARE REITERATED IN A SUCCINCT MANNER: THE APPELLANT, YOUNG INDIAN WAS INCORPORATED AS A COMPANY ON 23.11.2010, FOR WHICH IT WAS GRANTED LICENSE U/S. 25 OF THE COMPANIES ACT, 1956 ON 18.11.2010 THE APPLICATION FOR REGISTRATION WAS MADE BY THE APPELLANT COMPANY ON 31.03.2011 IN FORM NO. 10A ALONG WITH FOLLOWING ANNEXURE: ANNEXURE 1 LIST OF NAMES OF FOUNDER MEMBERS ANNEXURE 2 LIST OF NAMES OF MANAGING COMMITTEE ANNEXURE 3(A)- MEMORANDUM OF ASSOCIATION ANNEXURE 3(B)- ARTICLES OF ASSOCIATION ANNEXURE 4(A)- CERTIFICATE OF INCORPORATION ANNEXURE 4(B)- LICENSE U/S. 25 OF THE COMPANIES ACT ANNEXURE 5(A) - FUTURE ANNUAL INCOME & EXPENDITURE ESTIMATES. ANNEXURE 5(B) - ASSETS & LIABILITIES STATEMENT BEFORE THE APPLICATION. ITA NO. 7751/DEL/2017 121 SAID ANNEXURES ALSO INCLUDED A NOTE WRITTEN TO DIT (EXEMPTION) VIDE LETTER DATED 09.05.2011. THE EXTRA CT OF THE NOTE HAS ALREADY BEEN INCORPORATED IN THE FOREGOING PARA 10 OF THIS ORDER. FURTHER, FROM A PERUSAL OF ANNEXURES AND DOCUMENTS FILED ALONG WITH APPLICATION, IT IS SEEN THAT NOWHERE, THE ASSESSEE HAD EVEN WHISPERED ABOUT ACQUISITION OF AJL OR ACTIVITIES CARRIED OUT BY AJL OR OBJECTS OF THE AJL OR THE PURPOSE FOR ACQUISITION OF AJL THAT IT WAS IN FURTHE RANCE OF THE OBJECTS OF THE ASSESSEE COMPANY, YOUNG INDIAN. SINCE THE LD. DIT(E), BASED ON THE MATERIAL FACTS PLACED BEFORE HIM, FOUND THAT THE ASSESSEES OBJECTS ARE CHARITAB LE IN NATURE, HE ACCORDINGLY GRANTED REGISTRATION U/S. 12 A R.W.S. 12AA(3) OF THE ACT VIDE CERTIFICATE DATED 09.05.201 1. AS POINTED OUT BY THE LD. SPECIAL COUNSEL, SHRI G.C. SRIVASTAVA, ON BEHALF OF THE REVENUE, SUCH A CERTIFICATE/ORDER GRANTING REGISTRATION WAS SUBJECT TO VARIOUS CONDITIONS AND ONE VERY IMPORTANT CONDITION WAS MENTIONED, WHICH PROVIDED THAT, IF LATER ON, IT IS FOUND THAT THE REGISTRATION HAS BEEN OBTAINED FRAUDULENTLY BY MISREPRESENTATION OR SUPPRESSION OF ANY FACT, THE REGISTRATION SO GRANTE D IS LIABLE TO BE CANCELLED AS PER PROVISIONS U/S 12AA ( 3) OF THE ACT. ITA NO. 7751/DEL/2017 122 99 FROM THE DETAILED DISCUSSION, MADE HERE IN THIS ORD ER AS WELL AS CHRONOLOGY OF EVENTS AS DISCUSSED IN THE FOR EGOING PARAS 5 & 6, IT IS FAIRLY EVIDENT THAT THE FOLLOWING MATERIAL FACT AND INFORMATION WERE NOT PLACED BEFORE THE DIT (E) AT THE TIME OF SEEKING REGISTRATION: FIRSTLY, THE FACTUM OF TRANSFER OF LOAN OF RS. 90 C RORES BY AICC, WHICH WAS GIVEN TO AJL FROM TIME TO TIME, TO YOUNG INDIA, I.E., APPELLANT COMPANY, FOR A MEAGER CONSIDERATION OF RS. 50 LAKHS BY WAY OF JOURNAL ENTR Y. SUCH AN ASSIGNMENT OF LOAN BY AICC OF RS. 90 CRORES TO YOUNG INDIA AT RS. 50 LAKHS HAD NOT BEEN DISCLOS ED AT ANY STAGE IN THE COURSE OF PROCESS OF REGISTRATI ON. THE ASSESSEE IN HIS STATEMENT FOR ASSETS AND LIABIL ITIES, FILED IN ANNEXURE 5B HAD SIMPLY STATED THAT CURRENT LY, THE COMPANY HAS NO ASSETS AND LIABILITY, WHEREAS THE FACT OF THE MATTER WAS THAT THE ASSESSEE HAS TAKEN L OAN OF RS. 1 CRORE FROM M/S. DOTEX MERCHANDISE PVT. LTD ., KOLKATA AND OUT OF THE SAID LOAN, THE AMOUNT OF RS. 50 LAKHS WAS PAID TO AICC. AJL HAD ALLOTTED 9,02,16,898 SHARES WHICH WAS MORE THAN 99.99% OF THE HOLDING TO YOUNG INDIAN IN LIEU OF LOAN OF RS. 90 CRORES BY INCREASING THE SHARE CAPIT AL. THIS FACT WAS ALSO NOT DISCLOSED TO THE LD. DIT (E) NOR WAS IT STATED OR MENTIONED THAT ENTIRE HOLDING OF AJ L WENT TO THE ASSESSEE COMPANY. ITA NO. 7751/DEL/2017 123 THE PURPOSE AND THE OBJECT FOR ACQUIRING ENTIRE SHA RE HOLDING OF AJL WAS NEITHER BROUGHT TO THE NOTICE OF LD. DIT (E) NOR EXPLAINED AT THE TIME OF REGISTRATION, WHICH IS NOW BEING CANVASSED. WHEN THE LD. DIT(E) SPECIFICALLY ASKED TO GIVE NOTE ON ACTIVITIES CARRIED OUT SINCE INCEPTION WITH SUPPORTI NG DOCUMENTS AND TO JUSTIFY THE CLAIM OF REGISTRATION, THE ASSESSEE SHOULD HAVE MENTIONED ALL THE EVENTS BEFOR E THE DIT(E), BECAUSE ACQUISITION OF ENTIRE HOLDING O F A COMPANY, ASSIGNING OF LOAN OF RS. 90 CRORES FOR A CONSIDERATION OF RS. 50 LAKHS ONLY AND TAKING OF LO AN OF RS. 1 CRORE FROM M/S. DOTEX MERCHANDISE PVT. LTD ., KOLKATA WERE NOT SOME INSIGNIFICANT EVENTS WHICH DO NOT REQUIRE DISCLOSURE BEFORE THE LD. DIT(E). 100 THUS, FROM THE AFORESAID FACTS, IT IS PALPABLE THAT ASSESSEE COMPANY, SEEKING REGISTRATION AS A CHARITABLE INSTI TUTION, HAD NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACT S WITH CLEAR CONSCIENCE AND PROBITY. SUCH FACTS, EVENTS AN D MATERIAL SHOULD HAVE BEEN PLACED; AND IF ON EXAMINA TION OF SUCH MATERIAL FACTS, THE LD. DIT (E) COULD HAVE EXA MINED AND TAKEN DECISION FOR GRANTING OF REGISTRATION. TH EN IT COULD HAVE BEEN HELD THAT THE ASSESSEE HAD DISCHARG ED ITS ONUS WITH CLEAN HANDS. HERE NOT ONLY THERE WAS MISREPRESENTATION BUT ALSO THE SUPPRESSION OF MATER IAL FACTS BEFORE THE LD. DIT (E) AT THE TIME OF REGISTR ATION. THUS, ITA NO. 7751/DEL/2017 124 THERE WAS A CLEAR-CUT BREACH ON PART OF THE ASSESSE E COMPANY. IF THERE WAS CONCEALMENT AND SUPPRESSION OF MATERIAL FACTS, THEN SUCH A REGISTRATION GRANTED IS ALWAYS OPEN FOR CANCELLATION OR REVOCATION AT ANY TIME BY THE LD. DIT (E)/CIT (E) WHEN IT COMES TO HIS NOTICE. IN FACT , THIS WAS ONE OF THE CONDITIONS MENTIONED WHILE GRANTING REGISTRATION AND SUCH CONDITION, IN OUR OPINION, HA S BEEN CLEARLY VIOLATED. 101 FROM THE PERUSAL OF THE IMPUGNED ORDER OF CANCELLAT ION OF REGISTRATION AND THE REPLIES SUBMITTED BY THE ASSES SEE BEFORE THE LD. CIT(E), IT IS SEEN THAT NOWHERE THE A SSESSEE HAS EVEN MENTIONED OR BROUGHT ON RECORD THAT THE PU RPOSE FOR ACQUIRING AJL WAS IN FURTHERANCE OF ANY OF ITS O BJECTS WHICH HAS BEEN VOCIFEROUSLY ARGUED BEFORE US THAT, S INCE AJL WAS INTO THE BUSINESS OF PUBLICATION OF NEWSPAPER S AND THE PURPOSE OF ACQUIRING THE AJL WAS TO USE THE PRINT MEDIA AND DIGITAL MEDIA TO PROMOTE THE OBJECTS OF Y OUNG INDIAN. WE HAVE GONE THROUGH THE REPLIES FILED BY T HE ASSESSEE COMPANY BEFORE THE LD. CIT (E) IN THE COUR SE OF CANCELLATION PROCEEDINGS AND WE FIND THAT THE ASSES SEE HAS NOWHERE STATED THAT EITHER THE OBJECTS OF THE AJL WER E ALIGNED WITH THAT OF THE ASSESSEE COMPANY AND BY ACQ UIRING THE ENTIRE STAKE IN AJL, THE ASSESSEE WAS CARRYING OUT ANY CHARITABLE ACTIVITIES, FOR THE PURPOSE OF WHICH IT WA S GRANTED REGISTRATION. WHEN THE LD. CIT(E) IN HIS SH OW CAUSE ITA NO. 7751/DEL/2017 125 NOTICE DATED 21.08.2017 IN PARA-5 CLEARLY CONFRONTE D THE ASSESSEE THAT; FIRSTLY , ONLY SUBSTANTIAL ACTIVITY UNDERTAKEN BY THE APPELLANT COMPANY WAS ACQUIRING 99.99% OF SHA RES OF AJL AND AJL HAS BEEN ENGAGED IN THE REAL ESTATE BUSINESS AND THEIR SOURCE OF INCOME WAS RENTAL INCOM E; SECONDLY , ASKED THE ASSESSEE TO EXPLAIN WHETHER SUCH ACTIVITIES OF AJL ARE COVERED WITHIN THE AIMS AND OB JECTS OF YOUNG INDIAN; AND LASTLY , WHETHER THESE ACTIVITIES WERE IN CONFORMITY WITH THE TERMS AND CONDITIONS OF THE REGISTRATION GRANTED U/S. 12AA TO YOUNG INDIAN, THE ASSESSEE NOWHERE HAD CLARIFIED OR SATED THAT THE PUR POSE OF ACQUIRING AJL AND ITS ACTIVITIES, EXCEPT FOR REITER ATING THAT AS A SHAREHOLDER, YOUNG INDIAN DOES NOT HAVE ANY OWNERSHIP INTEREST, WHATSOEVER, IN THE PROPERTIES OWNE D BY AJL AS IT IS A SEPARATE LEGAL ENTITY. 102 NOW, WHAT HAS BEEN CANVASSED BEFORE US IS ENTIRELY A NEW ARGUMENT THAT THE SOLE AIM AND OBJECTIVE OF ACQUIRI NG THE ENTIRE STAKE HOLDING IN AJL WAS TO CARRY OUT CHARITA BLE ACTIVITIES FOR ITS OBJECTS, I.E., TO SPREAD DEMOCRA TIC AND SECULAR VALUES TO THE YOUTHS OF INDIA THROUGH THE M EDIUM OF NEWSPAPERS PUBLISHED BY AJL. NOW, IN SUPPORT OF S UCH NEWLINE PLEA, VOLUMINOUS ADDITIONAL EVIDENCES HAVE BEEN FILED BEFORE US ON THE GROUND THAT THE LD. CIT (E) HAS WRONGLY HELD THAT AJL WAS INTO THE REAL ESTATE BUSINE SS AND WAS CARRYING OUT COMMERCIAL ACTIVITIES OF CONSTR UCTION ITA NO. 7751/DEL/2017 126 AND SALE OF PROPERTIES. IN ORDER TO CONTROVERT SUCH A FINDING, ASSESSEE HAS FILED HUNDREDS OF PAPERS TO S HOW THAT HOW THE PUBLICATION OF NEWSPAPERS AND ARTICLES IN PR INT MEDIA HAVE BEEN RECOMMENCED, WHEN MOST OF THE DOCUMENTS PERTAIN TO POST 21.03.2016 WHEN THE ASSESS EE HAD WRITTEN A LETTER OFFERING FOR SUO MOTO SURRENDER OF REGISTRATION U/S. 12AA; AND SOME ARE EVEN POST FACT O CANCELLATION ORDER PASSED BY THE LD. CIT (E). SINCE WE HAVE PERMITTED THE PARTIES TO ARGUE AND PUT FORTH ALL TH EIR CONTENTIONS TO REFER TO ALL THE ADDITIONAL EVIDENCE S, THEREFORE, WE ARE NOT REJECTING THE ADDITIONAL EVID ENCES. BECAUSE, IN OUR OPINION THEY DO NOT STRENGTHEN THE CASE OF THE ASSESSEE BECAUSE THE FACTUM OF PRINTING AND PUBLICATION OF NEWSPAPER ARE POST FACTO EVENTS WHEN ASSESSEE ITSELF ACQUIESCED TO CANCELLATION OF REGIS TRATION FROM MARCH 2016. THIS IS EVIDENT FROM THE PERUSAL O F THE ADDITIONAL EVIDENCE PAPER BOOK; WHEREBY FOLLOWING DOCUMENTS HAVE BEEN FURNISHED:- SR. NO. DESCRIPTION OF DOCUMENT PAGE NOS. 1. THE MASTHEAD OF NATIONAL HERALD NEWSPAPERS PUBLISHED BY THE AJL FROM 24 SEPTEMBER 2017 TO 28 JULY 2019 1-92 2. THE MASTHEAD OF SUNDAY NAVJIVAN NEWSPAPERS PUBLISHED BY THE AJL FROM 14 OCTOBER 2018 TO 28 JULY 2019 93-132 3. COPIES OF VARIOUS REPORTS, PHOTOGRAPHS OF: A. LAUNCH OF COMMEMORATIVE EDITION OF NATIONAL HERALD (PUBLICATION) IN BANGALORE ON 12 JUNE 2017 133 ITA NO. 7751/DEL/2017 127 B. THE HINDU 134-135 C. NDTV 136-137 D. CHRONICLE 138-140 E. STAR OF MYSORE 141-143 F. COPY OF NATIONAL HERALD COMMEMORATIVE EDITION 144-153 4. COPIES OF VARIOUS REPORTS, PHOTOGRAPHS OF: A. LAUNCH OF COMMEMORATIVE EDITION OF NATIONAL HERALD (PUBLICATION) IN NEW DELHI ON 1 JULY 2017 154-156 B. ABP 157-158 C. DNA 159-162 D. DAINIK BHASKAR 163 E. FINANCIAL EXPRESS 164-165 F. HINDUSTAN TIMES 166-168 G- MINT 169-172 H. COPY OF NATIONAL HERALD COMMEMORATIVE EDITION 173-185 5. COPIES OF VARIOUS REPORTS, PHOTOGRAPHS OF : A. LAUNCH OF COMMEMORATIVE EDITION OF NAVJIVAN NEWSPAPERS (PUBLICATION) IN CHANDIGARH ON 10 DECEMBER 2018 186 B. THE TRIBUNE 187 C. INDIAN EXPRESS 188 D. AMAR UJALA 189 E. HINDUSTAN TIMES 190 F. COPY OF NAVJIVAN COMMEMORATIVE EDITION 191-203 6. LAUNCH OF NATIONAL HERALD WEBSITE ON 14 NOVEMBER 2016 204-205 A. THE INDIAN EXPRESS 206-207 B. THE ECONOMIC TIMES 208-209 C. AMAR UJALA 210-211 D. BW BUSINESS WORLD 212-213 7. LAUNCH OF URDU WEBSITE ON 12 AUGUST 2017 215-225 A. BUSINESS STANDARD 226 B. UNITED NEWS OF INDIA 227 C. INDIA TODAY 228 D. OUTLOOK 229 8. LAUNCH OF NAVJIVAN WEBSITE ON 29 AUGUST 2017 230-236 A. UNITED NEWS OF INDIA 237-238 ITA NO. 7751/DEL/2017 128 9. REGISTRATION CERTIFICATE OF NATIONAL HERALD NEWSPAPER WITH REGISTRAR OFFICE OF NEWSPAPERS FOR INDIAN, MINISTRY OF INFORMATION AND BROADCASTING DATED 23 JUNE 2017 AND 24 NOV 2017 239-241 10. REGISTRATION CERTIFICATE OF SUNDAY NAVJIVAN WITH REGISTRAR OFFICE OF NEWSPAPERS FOR INDIAN, MINISTRY OF INFORMATION AND BROADCASTING DATED 20 FEB 2018, 11 JAN 2019 242-244 11. AGREEMENT OF AJL WITH PRESS TRUST OF INDIA FOR WIRE NEWS SERVICES DATED 15 NOVEMBER 2016 245-249 12. CERTIFICATE ISSUED BY AUDIT BUREAU OF CIRCULATIONS CERTIFYING THE NUMBER OF NEWSPAPERS SOLD BY AJL DATED 7 SEPTEMBER 2018 AND 11 MARCH 2019 250-254 13. REPORT OF GOOGLE SHOWING THE OUTREACH OF THE ONLINE NEWS PORTALS OPERATED BY AJL FROM NOVEMBER 2016 TO TILL DATE 255-265 14. RESOLUTION PASSED BOARD OF DIRECTORS OF AJL TO RESUME THE PUBLICATIONS OF NEWSPAPERS DATED 26 SEPTEMBER 2016 266 15. LETTER OF AJL TO THE REGISTRAR OF NEWSPAPERS OF INDIA TO RESUME NEWSPAPER BUSINESS DATED 23 JANUARY 2014 267 16. AJL FORM - 23 SUBMITTED TO ROC ON 29 SEPTEMBER 2011 ALONG WITH AMENDED MOA AS PASSED BY SHAREHOLDERS ON 13 SEP 2011 268-280 17. AJL FORM - 14 SUBMITTED TO ROC ALONG WITH AMENDED MOA AS PASSED BY SHAREHOLDERS ON 21 JAN 2016 281-295 18. COPIES OF NATIONAL HERALD AND QAUMI AWAZ NEWSPAPERS DATED 1 APRIL 2008 PUBLISHING THE TEMPORARY SUSPENSION NOTICE OF PUBLICATIONS 296-299 19. LETTER TO AJL TO THE UNITED NEWS OF INDIA (UNI) DATED 31 MARCH 2008 INFORMING ABOUT TEMPORARY SUSPENSION OF PUBLICATIONS 300 20. VARIOUS PRESENTATIONS AND PHOTOGRAPHS SHOWING OPERATIONS OF YOUNG INDIAN 301-386 103 A BARE PERUSAL OF THE MOST OF THE DOCUMENTS, IT IS QUITE EVIDENT THESE ARE POST SURRENDER LETTER OF THE ASSE SSEE FILED ITA NO. 7751/DEL/2017 129 IN MARCH 2016 AND SOME ARE EVEN AFTER THE DATE OF P ASSING OF THE IMPUGNED CANCELLATION ORDER. ALL THESE DOCUM ENTS MERELY GO TO SHOW THAT AJL HAD RECOMMENCED OR ENDEAVORED TO RE-START THE PUBLICATION ACTIVITY FRO M THE YEAR 2016- 2017 ONWARDS. AS OPINED ABOVE, THESE DOCUMENT S EVEN IF WE ADMIT, ARE NOT OF MUCH SIGNIFICANCE FOR THE REASON THAT ALL THESE ACTIVITIES OF PRINTING AND PU BLICATION OF ARTICLES HAD STARTED WHEN THE ASSESSEE ITSELF HAD GIVEN UP ITS REGISTRATION IN MARCH 2016. PRIOR TO THIS DA TE, IT IS AN ADMITTED FACT THAT PUBLICATION OF NEWSPAPER BUSINESS OF AJL WAS SUSPENDED OR AS STATED BY THE LD. COUNSEL FO R THE ASSESSEE, THERE WAS TEMPORARY LULL IN THE BUSINESS F OR THE PERIOD 2008 TO 2016. NEITHER BETWEEN THE PERIODS 201 1 TO 2016, ANY SUCH PUBLICATION BUSINESS HAD STARTED NOR HAS IT BEEN BROUGHT ON RECORD BEFORE THE LD. DIT (E) EITHE R AT THE TIME OF GRANT OF REGISTRATION OR AT THE TIME OF ITS CANCELLATION. AS FAR AS THE DOCUMENTS, LIKE RESOLUT ION PASSED BY THE BOARD OF DIRECTORS OF AJL ON 26.09.20 16; LETTER WRITTEN TO REGISTRAR, NEWSPAPERS OF INDIA DAT ED 23.01.2014; FORM NO. 23 SUBMITTED BY AJL TO ROC ON 29.09.2011 ALONG WITH AMENDED MOA AND FORM-14 ETC., THOUGH INDICATE THAT AJL MAY HAD SOME KIND OF INTEN TION TO START THE PUBLICATION BUSINESS, BUT SUCH AN INTE NTION WAS NEVER STATED OR CANVASSED BEFORE THE DEPARTMENTA L AUTHORITIES IN THE COURSE OF CANCELLATION PROCEEDIN GS. IT IS ITA NO. 7751/DEL/2017 130 ONLY WHEN THE LD. CIT (E) HAD MADE CERTAIN ALLEGATIO NS IN THE IMPUGNED ORDER THAT THE AJL HAD CARRIED OUT SOM E ACTIVITIES OF REAL ESTATE, THE ASSESSEE HAS TAKEN T HIS PLEA BEFORE US TO JUSTIFY THAT IT INTENDED TO CARRY OUT THE ACTIVITIES BY ACQUIRING AJL IN FURTHERANCE OF ITS M AIN OBJECTS. GREAT DEAL OF ARGUMENTS HAVE BEEN MADE BY THE LD. COUNSEL THAT PUBLICATION BUSINESS OF AJL WAS A PLATFORM TO PROMOTE THE IDEALS AND OBJECTS OF YI AN D PRESS BEING FOURTH ESTATE OF DEMOCRACY IS A POWERFUL MEDI UM TO INCULCATE SUCH IDEALS. FIRST OF ALL, PRESS WILL BE U SED AS MEDIUM TO PROMOTE THE OBJECTS OF YI WAS NEVER STATED EARLIER AT ANY STAGE; NOR THERE IS ONE INSTANCE THA T YI HAS EVER USED ANY OTHER NEWSPAPER OR MEDIA TO PROPAGATE ITS SO CALLED OBJECTS OR DEMOCRATIC SECULAR IDEALS. IS IT THAT ONLY AJL CAN BE SUCH MEDIUM AND NO OTHER PRESS COMPANY O R IT IS ORCHESTRATED DEFENSE IN WAKE OF VARIOUS PROCEEDIN GS INITIATED AGAINST IT OR IS IT TO CAMOUFLAGE THE REA L NATURE OF ARRANGEMENTS? SECONDLY, THESE PLEADINGS AND DOCUMEN TS ONLY GO TO SHOW THAT FROM THE YEAR 2107-18 SOME NEWSPAPER ARTICLES HAVE BEEN PUBLISHED WHICH ASSESSE E IS TRYING TO LINK AND ALIGN ITSELF TO PROVE ITS GENUIN ENESS. ALL SUCH TOLL CLAIMS AND PUBLICATION OF ARTICLES ARE FR OM YEAR 2017 ONWARDS. THUS, THESE ADDITIONAL EVIDENCES DO NO T IMPINGE UPON THE CASE OF THE ASSESSEE OR IN ANY WAY STRENGTHEN THE CASE OF THE ASSESSEE. ITA NO. 7751/DEL/2017 131 104 THE LD. CIT (E) HAD RAISED VARIOUS POINTS IN HIS IM PUGNED ORDER FOR CANCELLING THE REGISTRATION, WHICH HAS BEE N SUMMARIZED BY HIM IN PARA 17. SEQUITUR OF HIS MAIN CHARGE/FINDINGS ARE THAT, FIRSTLY , THE ASSESSEE COULD NOT FURNISH ANY DETAILS OR EVIDENCES THAT THE ACTIVITIE S CARRIED OUT BY THE ASSESSEE COMPANY DURING THE A.Y. 2011-12 TO 2016-17 WAS IN ACCORDANCE WITH ITS OBJECTS OR WHETHER IT HAD ACTUALLY CARRIED OUT ANY GENUINE ACTIVITIES. IN FACT, HE NOTED THAT THE RETURN OF INCOME AND ANNUAL REPORT R EVEAL THAT THE ASSESSEE HAD NOT CARRIED OUT ANY SUCH ACTI VITIES WHICH COULD BE SAID TO BE IN ACCORDANCE WITH ITS OBJE CTS. SECONDLY , HE HAS ALSO TAKEN NOTE OF THE FACT THAT THE EXPENDITURE OF RS. 50 LACS WHICH HAS BEEN STATED TO BE FOR FULFILLMENT OF YOUTH COMMITMENT FOR IDEALS OF DEMOC RATIC AND SECULAR SOCIETY, IN FACT, WAS PAYMENT FOR REPAYI NG BACK THE LOAN AMOUNT ON BEHALF OF THE AJL TO AICC AND ACQUISITION OF SHARES OF AJL, AND INTEREST PAYMENT ON LOAN OF RS. 1 CRORES. THIRDLY , PUBLICATION OF NEWSPAPERS OF AJL HAD CEASED TO EXIST, ETC. AND THE ACTIVITIES OF AJL WERE INTO THE REAL ESTATE BUSINESS AND BY ACQUIRING AJL, THE ASSESSEE IS TRYING TO MANAGE, CONTROL AND ENGAGE IN REAL ESTATE BUSINESS OF AJL. LASTLY , THE FACTUM OF SUO MOTO SURRENDER OF REGISTRATION U/S. 12A HAS ALSO BEEN FO UND TO BE INCORRECT, AS IT WAS SEQUEL TO INVESTIGATION BY INVESTIGATION WING SINCE 2014 AND BASED ON THESE FI NDINGS ITA NO. 7751/DEL/2017 132 AND DETAILED DISCUSSION, HE HAS HELD THAT HE IS NOT SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE ARE GENUINE OR NOT CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. 105 ONE OF THE KEY CONTENTIONS RAISED AND HARPED UPON A T LENGTH ON BEHALF OF THE ASSESSEE, SUPPORTED WITH CAT ENA OF DOCUMENTS THAT AJL WAS NEVER INTO REAL ESTATE BUSINE SS, FOR WHICH WE HAVE ALREADY DISCUSSED IN DETAIL THE REL EVANT ARGUMENTS PLACED BY THE LD. COUNSEL. EVEN IF WE AGR EE, WITH THE LD. COUNSEL THAT AJL WAS NOT CARRYING OUT SYSTEM ATIC COMMERCIAL REAL ESTATE BUSINESS OF CONSTRUCTION AND SALE OF SHOPS OR PROPERTIES DURING THE RELEVANT PERIOD, BUT THERE IS NO DENYING FACT THAT AJL HAD LARGE NUMBER OF PROPER TIES WORTH HUNDREDS OF CRORES OF RUPEES ACROSS THE COUNTR Y AND HAD HUGE RENTAL INCOME FROM SUCH PROPERTIES HELD FR OM TIME TO TIME. THOUGH ONE OF THE MAIN POINTS HARPED UPON BY THE LD. CIT (E) IS THAT AJL IS REAL ESTATE COMPA NY MAY NOT BE TECHNICALLY CORRECT, BUT THE LD. CIT (E) HAS NOT CONFINED HIS FINDING MERELY THAT AJL IS REAL ESTATE COMPANY AND BY ACQUIRING AJL, THE ASSESSEE COMPANY ALSO ACQUIRED REAL ESTATE BUSINESS. 106 OTHER PIVOTAL AND UNDERPINNING REASONS FOR CANCELLI NG THE REGISTRATION BY THE LD. CIT(E) ARE THAT THE ASSESSE E COMPANY HAS NOT BEEN ABLE TO POINT OUT ANY SINGLE ACTIVITY CARRIED OUT IN FURTHERANCE OF ITS STATED OBJECTS, FOR WHICH IT WAS CREATED DURING THE SAID PERIOD, I.E., FROM A.Y.S 20 11-12 TO ITA NO. 7751/DEL/2017 133 2016-17; AND THE ONLY ACTIVITY OF THE ASSESSEE WAS BORROWING OF RS. 1 CRORE FROM KOLKATA BASED COMPANY AND MAKING THE PAYMENT OF RS. 50 LAKHS TO AICC AND APPL YING FOR ALLOTMENT OF SHARES AGAINST CANCELLATION OF LOA N OF RS. 90 CRORES ASSIGNED BY AICC TO YOUNG INDIAN. ALL THE SE ACTIVITIES DEFINITELY CANNOT BE HELD TO BE IN FURTH ERANCE OF THE OBJECTS OF THE YOUNG INDIAN, BECAUSE AT NO POIN T OF TIME, IT WAS EVER STATED WHAT WAS THE PURPOSE AND OBJ ECTIVE BEHIND ACQUIRING THE AJL AND MAKING PAYMENT OF RS. 50 LAKHS TO AICC. AS WE HAVE ALREADY HELD ABOVE, EVEN IF AJL WAS ACQUIRED FOR THE PURPOSE OF STATED OBJECTS, BUT THAT OBJECT WAS A NONSTARTER FROM DAY ONE AND TILL THE SU RRENDER OF REGISTRATION ALSO, SUCH AN ACTIVITY IN FURTHERAN CE OF OBJECTS WAS NEVER CARRIED OUT. RATHER, WHAT IS INFERA BLE IS THAT, THE ENTIRE MOVE FOR ACQUIRING THE AJL, WHICH H AD STOPPED/SUSPENDED ITS PUBLICATION ACTIVITIES AND WAS HOLDING LARGE NUMBER OF PROPERTIES WORTH HUNDREDS OF CRORES WITH HUGE RENTAL AND LEASE INCOME WAS FOR ACQU IRING CONTROL AND INTEREST IN SUCH PROPERTIES FOR MERE SU M OF RS. 50 LAKHS. CAN PRUDENCE JUSTIFY SUCH ACQUISITION WAS FOR FURTHERANCE OF CHARITY OR FOR FURTHERANCE OF THE OB JECTS OF THE YOUNG INDIAN? 107 HAD THE INTENTION OF THE ASSESSEE COMPANY BEING CLE AR AND BONA FIDE FROM THE DATE OF ITS INCEPTION, THAT IT W ANTED TO ACQUIRE AJL ONLY TO CARRY OUT ITS CHARITABLE ACTIVI TIES, THEN ITA NO. 7751/DEL/2017 134 IT SHOULD HAVE BEEN STATED SO AND BROUGHT ON RECORD NOT ONLY AT THE TIME OF SEEKING REGISTRATION U/S. 12AA, BUT ALSO AT THE TIME OF CANCELLATION. THE EVENTS CLEARLY POI NTED OUT THAT EVEN BEFORE INCORPORATION OF YOUNG INDIAN, THE REGISTERED OFFICE WAS SHIFTED TO DELHI AND THE DIREC TORS MANAGING THE AFFAIRS OF THE ASSESSEE COMPANY WERE T AKEN ON BOARD OF AJL. NOT ONLY THAT, YOUNG INDIAN WAS PERMITTED TO USE THE PROPERTY OF AJL AS ITS REGISTE RED OFFICE. FURTHER, THE MANNER, IN WHICH LOAN OF RS. 90 CRORES WAS ASSIGNED BY AICC TO YOUNG INDIAN FOR PALTRY CONSIDE RATION OF RS. 50 LAKHS DOES NOT REFLECT THE REAL INTENT OF THE TRANSACTION. NOT ALL THESE FACTS INDICATE THAT THE ASSESSEE COMPANY HAD ANY CLEAR CONSCIENCE OR INTENT FOR ACQU IRING THE AJL TO CARRY OUT THE CHARITABLE ACTIVITIES. NOT A SINGLE SUCH INSTANCE HAVE BEEN DEMONSTRATED THAT IT HAD CA RRIED OUT ANY ACTIVITY IN FURTHERANCE OF ITS OBJECTS, NOR ANY SUCH THING HAS BEEN PLACED BEFORE US THAT IT HAD CARRIED ANY ACTIVITY BETWEEN THE YEARS 2011 TO 2016 OR UP TO TH E DATE OF CANCELLATION OF REGISTRATION. EVEN AS NOTED BY THE LD. CIT (E) THAT THE INCOME-TAX RETURNS DO NOT INDICATE THAT AN Y EXPENDITURE HAS BEEN INCURRED IN FURTHERANCE OF THE OBJECTS EXCEPT FOR PAYMENT OF INTEREST ON LOAN BORROWED FRO M A KOLKATA BASED COMPANY. ONCE, AJL WAS NOT IN PUBLICAT ION OF ANY KIND OF NEWSPAPER IN PRINT OR DIGITAL FORM DU RING THE ENTIRE PERIOD, THEN IT CAN BE EASILY DEDUCED THAT T HE ITA NO. 7751/DEL/2017 135 INTENTION WAS NEVER TO CARRY OUT ANY CHARITABLE ACT IVITY BY ACQUIRING AJL. EVEN AFTER TAKEOVER OF AJL, NO ACTIV ITY HAS BEEN DONE BY AJL AT LEAST FOR A PERIOD OF 5 YEARS. ONE OF THE MAIN ALLEGATION OF THE LD. CIT (E) AND LD. SPEC IAL COUNSEL WAS THAT, IT WAS IN WAKE OF CERTAIN ENQUIRIES CONDUCTED BY THE INCOME TAX DEPARTMENT AND PROCEEDI NGS OF EVICTION INITIATED BY THE LAND DEVELOPMENT OFFIC E, STEPS WERE TAKEN BY THE AJL FOR RENEWAL OF NEWSPAPER BUSINE SS; AND EVEN THE SO CALLED RESUMING THE NEWSPAPER BUSINE SS POST SEPTEMBER 2016, IS MUCH AFTER THE ASSESSEE HAD WRITTEN TO THE DEPARTMENT SURRENDERING ITS REGISTRAT ION. THUS, THE ENTIRE CONTENTION AS RAISED BY THE LD. CO UNSEL THAT THE NEWSPAPER BUSINESS WAS STARTED LATER ON, WHIC H INDICATES THAT AJL WAS ACQUIRED ONLY TO PROMOTE THE IDEALS ENSHRINED IN THE OBJECTS OF YOUNG INDIAN, BELIES AL L SUCH INTENTS AND IN FACT THE ALLEGATIONS THAT SOME PRINT ING WORK HAD STARTED POST INQUIRIES BY THE GOVERNMENTAL AUTH ORITIES IS CONVINCING AND PROBABLE. 108 MUCH EMPHASIS HAS BEEN LAID BY THE LD. COUNSEL THAT AJL HAS CONVERTED ITSELF INTO A SECTION 8 COMPANY UNDER THE COMPANIES ACT 2013 IN JANUARY, 2016, I.E., AS A NON -PROFIT COMPANY, TO CARRY OUT THE OBJECTS OF YOUNG INDIAN A ND THE OBJECTS OF AJL WERE ALIGNED WITH THAT OF YOUNG INDIA N. SUCH A CONTENTION IS OF NO CONSEQUENCE FOR THE REASON TH AT, FIRSTLY , IT IS AN ADMITTED FACT THAT TILL DATE, THE ASSESS EE HAD ITA NO. 7751/DEL/2017 136 NOT BEEN GRANTED LICENSE BY ROC AS SECTION 8 COMPAN Y; AND SECONDLY , ALL THESE EVENTS HAVE NEITHER BEEN STATED BY THE ASSESSEE BEFORE THE LD. CIT (E) AND ARE POST 20 16. THE AMENDMENT IN MOA OF AJL IN THE YEAR 2011 IS AGAIN O F NO CONSEQUENCE BECAUSE TILL THE YEAR 2016, NO SUCH ACT IVITY HAS BEEN CARRIED OUT BY YOUNG INDIAN THROUGH AJL. I N ANY CASE, WE ARE IN TANDEM WITH THE CONTENTION OF THE LD . SPECIAL COUNSEL THAT MERELY ADOPTING THE CHANGES IN MOA DOES NOT MAKE THE COMPANY A SECTION 8 COMPANY OR A NON-PROFITABLE COMPANY, BECAUSE IT IS ALWAYS OPEN FO R THE BOARD OF DIRECTORS TO AMEND ITS MOA AND BECOME A PROFITABLE COMPANY AT ANY TIME AND SWEET WILL. THUS, ACQUISITION OF AJL TO FURTHER THE OBJECTS OF THE AS SESSEE COMPANY AS PURPORTED BY THE LD. COUNSEL, IS NOT ACC EPTABLE. 109 BEFORE US, THE LD. COUNSEL HAD ALSO SUBMITTED THAT WAY BACK ON 23.01.2014, AJL HAD FILED LETTER TO REGISTR AR FOR NEWSPAPERS OF INDIA, WHICH INDICATES THE ASSESSEES INTENTION TO RESUME THE PUBLICATION ACTIVITIES. HOW EVER, AS WE HAVE HELD EARLIER, SUCH AN INTENTION WAS NEVER BRO UGHT ON RECORD BEFORE THE DEPARTMENTAL AUTHORITIES OR EV EN BEFORE THE LD. CIT (E) DURING CANCELLATION PROCEEDI NGS. EVEN FILING OF LETTER TO REGISTRAR FOR NEWSPAPER OF INDI A TO START THE PUBLICATION BUSINESS, DOES NOT CARRY MUCH WEIGHT , BECAUSE ADMITTEDLY, SUCH AN INTENTION REMAINED ON P APER AND NOTHING HAD STARTED PRIOR TO THE YEAR 2016-17 B Y THAT ITA NO. 7751/DEL/2017 137 TIME THE ASSESSEE HAD ALREADY FORGONE ITS CLAIM FOR REGISTRATION U/S. 12AA. ACQUIRING AND CONSTRUCTION OF VARIOUS BUILDINGS OF AJL AT PANCHKULA, MUMBAI ETC. DOES NOT PROVE THAT THE PUBLICATION ACTIVITIES WERE CARR IED OUT AND EVEN IF THERE WAS SOME KIND OF FUTURE INTENT TO DO SO, THEN ALSO, IT DOES NOT MAKE AJL A NEWSPAPER PUBLICA TION COMPANY BETWEEN 2008 TO 2016, BECAUSE NOT A SINGLE ACTIVITY WAS CARRIED OUT THROUGH WHICH IT CAN BE INFE RRED THAT AJL WAS ACQUIRED BY YI TO USE THE PLATFORM OF NEWSPAPER PUBLICATION, ALBEIT ENTIRE CONDUCT OF THE ASSESSEE COMPANY SHOWS THAT AJL HAS BEEN ACQUIRED FO R SUCH NOMINAL AMOUNT OF RS. 50 LAKHS, TO CONTROL AND HAVE INTEREST IN HUGE IMMOVABLE ASSETS OF AJL THROUGHOUT THE COUNTRY WHICH WERE EARNING HUGE RENTAL INCOME, WHICH WA S NEVER THE OBJECT OF YI FOR WHICH IT WAS GRANTED REGIS TRATION. 110 AT THE STAGE OF HEARING OF THIS APPEAL, ONE VERY IM PORTANT MATERIAL FACT, WHICH HAS BEEN BROUGHT ON RECORD BY T HE REVENUE BEFORE US, ARE THE JUDGMENTS OF HONBLE DEL HI HIGH COURT. THIS JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT CLEARLY CLINCHES THE ENTIRE ISSUE AND SUPPORT S OUR FINDINGS AS GIVEN ABOVE. IN THE FIRST JUDGMENT DATE D 21.12.2018 PASSED BY HON. SINGLE JUDGE IN WRIT PETIT ION FILED BY THE AJL, AGAINST NOTICE SENT BY LAND DEVEL OPMENT OFFICE FOR EVICTION OF THE PROPERTY KNOWN AS HERALD HOUSE, 5A, BAHADUR SHAH ZAFAR MARG, THE HONBLE HIGH COURT HAD ITA NO. 7751/DEL/2017 138 CATEGORICALLY NOTED THAT AT THE TIME OF INSPECTION BY LDO, NO PRESS ACTIVITY WAS BEING CARRIED OUT BY AJL IN TH E SAID PROPERTY AND IN FACT, IT WAS RENTED OUT TO VARIOUS COMMERCIAL ESTABLISHMENTS. AFTER TAKING NOTE OF THE INSPECTION COMMITTEE REPORT, THE HONBLE COURT GAVE A CATEGORICAL FINDING THAT NO PRINTING PRESS WAS FUNCT IONING AND ONLY NATIONAL HERALD WEEKLY NEWSPAPER WAS STATED TO BE PUBLISHED ON 24.09.2017, WHICH TOO WAS OUTSOURCED ELSEWHERE. THE HONBLE COURT HAS NOTED THAT PRESS AC TIVITY OF EDITORIAL TEAM WAS NOT DISCERNIBLE WHEN THE INSPEC TION OF THE PREMISES WAS UNDERTAKEN IN THE PRESENCE OF THE CHAIRMAN OF AJL. THE COURT HAS ALSO NOTED THAT THE DOMINANT PURPOSE OF LEASING OUT THE PREMISES TO AJL FOR PUBLICATION HAS NOW PRACTICALLY LOST AND THERE IS HA RDLY ANY PRESS ACTIVITY. IT HAS ALSO BEEN NOTED THAT AJL HAS BEEN TAKEN OVER BY YI FOR ALL PRACTICAL PURPOSE. 111 THE SAID JUDGMENT PASSED BY THE HONBLE SINGLE JUDG E WAS CHALLENGED BY WAY OF APPEAL BEFORE THE DIVISION BENC H OF HON. DELHI HIGH COURT IN LPA 10/2019 AND CM NO. 566 & 649/2019. THE HONBLE DELHI HIGH COURT SPEAKING THR OUGH THE HON. CHIEF JUSTICE, AFTER CONSIDERING THE ENTI RE GAMUT OF FACTS AND ARGUMENTS PLACED ON RECORD HAVE NOT ON LY UPHELD THE JUDGMENT PASSED BY THE WRIT COURT EARLIE R, BUT ALSO GAVE VERY IMPORTANT OBSERVATIONS BASED ON MATE RIAL ON RECORD. THE RELEVANT OBSERVATIONS AND FINDINGS, WHIC H ARE ITA NO. 7751/DEL/2017 139 COMPLETELY GERMANE TO THE ISSUE IN HAND BEFORE US, ARE EXTRACTED AS UNDER: 46. ..AS FAR AS THE ASSERTION MADE WITH RE GARD TO THE TRANSFER OF SHARES OF AJL TO YOUNG INDIA AND THE SHARE HOLDINGS OF YOUNG INDIA AND VARIOUS OTHER ISSUES CON NECTED THERETO ARE CONCERNED, THEY ARE BASED ON CERTAIN FAC TS STATED IN THE SHOW CAUSE NOTICE ISSUED BY THE INCOME TAX AU THORITIES ON 15TH JUNE, 2018 AND EVEN IF SHOW CAUSE NOTICE IS IGNORED, THEY DO FORM PART OF THE FACTS STATED BY CO-ORDINATE BENCH OF THIS COURT WHILE DECIDING THREE WRIT PETITIONS DECID ED ON 10TH SEPTEMBER, 2019, THAT IS, W.P.(C) NO.8482/2018 AND OT HER CONNECTED MATTERS WHICH WERE FILED BY THE SHAREHOLDER S OF YOUNG INDIA WHILE CHALLENGING THE ACTION TAKEN BY T HE INCOME TAX AUTHORITIES. THERE IS NO WHISPER OR SERIOUS CHA LLENGE TO THESE FACTUAL ASPECTS BY THE APPELLANT. THEY DO NOT SAY, EVEN ORALLY, THAT THESE FACTS STATED AND RELIED UPON BY TH E RESPONDENTS ARE FALSE, INCORRECT, FABRICATED, UNTRUE ETC. THEY ONLY SAY THAT CERTAIN FACTS HAVE BEEN STATED WITHOUT FILING A COUNTER AFFIDAVIT. IF THE FACTS SO STATED, COGNIZANC E OF WHICH HAVE BEEN TAKEN BY THE WRIT COURT, ARE BASED ON MATE RIALS AVAILABLE IN PROCEEDINGS HELD BEFORE THE L&DO AND BY A CO- ORDINATE BENCH OF THIS COURT IN A WRIT PETITION, WE SEE NO REASON AS TO WHY WE CANNOT TAKE COGNIZANCE OR JUDIC IAL NOTICE OF THESE FACTS AND PROCEED TO CONSIDER THEM FOR DECIDI NG THE LIS IN QUESTION, PARTICULARLY, WHEN THERE IS NO SPE CIFIC OR CATEGORICAL DENIAL OF THEM EVEN ORALLY BEFORE US AT THE TIME OF HEARING. ITA NO. 7751/DEL/2017 140 XXXXXXXXXXXXXXX 48. THE FIRST OBJECTION OF THE APPELLANTS WERE TO T HE FINDING RECORDED BY THE LEARNED WRIT COURT IN THE IMPUGNED ORDE R PASSED ON 22ND DECEMBER, 2018 PERTAINING TO THERE BE ING NO PRESS ACTIVITY IN THE PREMISES IN QUESTION, THAT IS , FINDING IN PARA-17 OF THE IMPUGNED ORDER. THE FACTS THAT HAVE CO ME ON RECORD CLEARLY SHOWS AND IT IS AN ADMITTED POSITION I F WE ANALYSE THE SHOW CAUSE NOTICES ISSUED TO THE APPELLA NTS ON 10TH OCTOBER, 2016 REPLIED TO THE SAME ON 19TH NOVEM BER, 2016, THE SECOND SHOW CAUSE NOTICE DATED 5TH APRIL, 2 018, THE THIRD SHOW CAUSE NOTICE DATED 18TH JUNE, 2018 AND THE FOURTH SHOW CAUSE NOTICE DATED 24TH SEPTEMBER, 2018 A ND THE SERIES OF REPLIES FILED BY THE APPELLANTS ON 19T H NOVEMBER, 2016, 7TH APRIL, 2018, 16TH JULY, 2018 AND 9TH OCTOB ER, 2018 ALONG WITH THE COMMUNICATION MADE BY SH. MOTILAL VOR A ON 26TH SEPTEMBER, 2018 AVAILABLE AT PAGE-406 OF THE PA PERBOOK THAT BETWEEN THE PERIOD FROM THE YEAR 2008 TO 2016, THE APPELLANT THEMSELVES ADMITTED THAT THERE WAS NO PUBLICATION OF THE NEWSPAPER FROM THE PREMISES IN QUESTION OR FROM ANY OTHER PLACE AND IT WAS ONLY AF TER THE INSPECTION OF THE PREMISES WAS CONDUCTED FOR TH E FIRST TIME ON 26TH SEPTEMBER, 2016 THAT INDICATION WAS MADE ABOUT COMMENCEMENT OF NEWSPAPER PUBLICATION FOR 2016 - 2017. 49. IN THIS REGARD, WE MAY TAKE NOTE OF THE COMMU NICATION MADE BY SH. MOTILAL VOHRA ON 26TH SEPTEMBER, 2016 A T PAGE- ITA NO. 7751/DEL/2017 141 406 OF THE PAPER BOOK. IN THIS COMMUNICATION REFERE NCE IS MADE TO AN INSPECTION NOTICED DATED 15TH SEPTEMBER, 20 16 AND IT INDICATES THAT ONE SH. RAVI DAYAL IS AUTHORIZ ED TO BE PRESENT AS A REPRESENTATIVE OF AJL AT THE TIME OF I NSPECTION AT 11 A.M. ON 26TH SEPTEMBER, 2016. THAT APART, AS REQ UESTED IN THE NOTICE ISSUED, CERTIFIED COPIES OF THE SANCTIONED PLAN AND OCCUPATION CERTIFICATES WERE ALSO SUBMITTED WITH TH IS LETTER. THE LETTER FURTHER STATES THAT THE BASEMENT AND THE FOURTH FLOOR OF THE BUILDING ARE BEING USED FOR PRESS AND O FFICES OF THE LESSEE AND SURPRISINGLY THE LETTER FURTHER SAYS 'I A M PLEASED TO INFORM YOU THAT THE ASSOCIATED JOURNALS LTD. HAS TAKEN STEPS TO RESUME NEWSPAPER PUBLICATION. TOWARDS THIS OBJECTION AN EDITOR-IN-CHIEF WAS APPOINTED IN AUGUST , 2016' AND THE LETTER FURTHER SAYS THAT PREPARATIONS ARE I N FULL SWING TO RESUME PUBLICATION OF THE NEWSPAPER IN THE CURRE NT FINANCIAL YEAR 2016-17. REFERRING TO THIS LETTER, T HE LEARNED SOLICITOR GENERAL HAD ARGUED THAT THIS LETTER WAS WRI TTEN ONLY FOR PRE-EMPTING THE AUTHORITIES SO THAT THEY ARE NO T SURPRISED IF NO PRINTING ACTIVITIES ARE FOUND IN THE PREMISES. IN FACT, SH.TUSHAR MEHTA IS RIGHT IN CONTENDING THAT THIS WA S AN ATTEMPT BY THE APPELLANTS AND, IN FACT, AN ADMISSION BY THEM THAT NO PRINTING ACTIVITY WAS BEI NG CARRIED OUT IN THE PREMISES AT THAT POINT OF TIME. THAT APART, WHEN WE GO THROUGH THE FOUR SHOW CAUSE NOTIC ES AVAILABLE ON RECORD ISSUED ON 10TH OCTOBER, 2016, 5 TH APRIL, 2018, 18TH JUNE, 2018 AND 24TH SEPTEMBER, 2018 AND TH E REPLY FILED THERETO, WE FIND THAT VARIOUS BREACHES WE RE ITA NO. 7751/DEL/2017 142 POINTED OUT IN ALL THESE SHOW CAUSE NOTICES AND THEY WERE REPLIED TO BY THE APPELLANT COMPANY AND THE CUMULAT IVE ADMITTED POSITION THAT CAN BE MADE OUT FROM THE READ ING OF THESE DOCUMENTS ARE AS UNDER. XXXXXXXXXXXXXXXX 50. WHEN THE PREMISES WAS INSPECTED ON 26TH SEPTEMBER, 2016, NO PRESS ACTIVITY WAS BEING CARRIE D OUT IN THE AREA. PRESS ACTIVITY AND PUBLICATION OF T HE NEWSPAPER WAS SUSPENDED RIGHT FROM THE YEAR 2008 AND ALL THE EMPLOYEES WERE GRANTED VRS. AFTER THE COMMUNICATION DATED 26TH SEPTEMBER, 2016 WAS MADE BY SH. MOTILAL VOHRA DIGITAL PUBLICATION OF THE ENG LISH VERSIONS OF THE NEWSPAPER, NATIONAL HERALD COMMENCE D FROM 4TH NOVEMBER, 2016. 51. DIGITAL VERSION OF URDU EDITION QAUMI AWAZ COM MENCED ON 12TH AUGUST, 2017. DIGITAL VERSION OF NAVJIVAN, THAT IS, HINDI VERSION COMMENCED ON 28TH AUGUST, 2017 AND THE PRINT WEEKLY NEWSPAPER, NATIONAL HERALD SUNDAY RESUMED PUBLICATION FROM 24TH SEPTEMBER, 2017 AND IT IS THE CASE OF THE APPELLANTS THAT THESE NEWSPAPERS WERE PRINTED I N A PRESS AT NOIDA. FINALLY THE PRINTING OF HINDI WEEKLY NEWS PAPER NAVJIVAN COMMENCED PUBLICATION ON 14TH NOVEMBER, 201 8 AND THE NECESSARY LICENSE AND AUTHORIZATION FOR THE PURPOSE OF PUBLICATION INDICATED HEREINABOVE WAS GRANTED BY T HE REGISTRAR OF NEWSPAPERS FOR INDIA ON 21ST NOVEMBER, 2017 AVAILABLE AT PAGE-581 IS A CERTIFICATE OF REGISTRAT ION ISSUED BY SH. K. GANESHAN, REGISTRAR OF NEWSPAPER FOR INDIA GI VING ITA NO. 7751/DEL/2017 143 REGISTRATION CERTIFICATE FOR A NEWSPAPER TITLED NAT IONAL HERALD SUNDAY . ACCORDINGLY IT IS CLEAR THAT PUBLICATION OF THE NEWSPAPERS COMMENCED AFTER A GAP OF EIGHT YEARS AS IS INDICATED HEREINABOVE. IF THIS IS THE FACTUAL POSIT ION, IT CAN VERY WELL BE CONCLUDED THAT ON 26TH SEPTEMBER, 2016 WHEN THE FIRST INSPECTION TOOK PLACE, ADMITTED LY, THERE WAS NO PRINTING OF PRESS OR PUBLICATION ACTIV ITY AND THE DIGITAL VERSIONS IN ENGLISH COMMENCED PUBLICATION ONLY ON 14TH NOVEMBER, 2016, THAT IS, ABOUT ONE AND HALF MONTH AFTER THE INSPECTION TOOK PLACE ON 26TH SEPTEMBER, 2016. EVEN THOUGH IN THE BREACH NOTICE DATED 10TH OCTOBER, 2016, THERE IS NO MENTION OF THERE BEING NO PRESS ACTIVITY BUT THE ADMITTED POSITION IS THAT WHEN THIS NOTICE WAS ISSU ED ON 10TH OCTOBER, 2016 AFTER INSPECTION ON 26TH SEPTEMBER, 2016 AND THE ADMISSION OF SH.VOHRA ON 26TH SEPTEMBER, 2016 THAT THERE IS NO PRINTING ACTI VITY, THREE OTHER SHOW CAUSE NOTICES WERE ISSUED AS HAVE BEEN DETAILED HEREINABOVE AND IN THE FINAL SHOW CAU SE NOTICE ISSUED, THAT IS, 24TH SEPTEMBER, 2018 BEFORE TAKING THE IMPUGNED ACTION THERE IS A MENTION ABOUT NO PRESS ACTIVITY BEING CARRIED OUT IN THE PREMISES WH EN THE FIRST INSPECTION WAS ORDERED ON 26 TH SEPTEMBER, 2016. XXXXXXXXXXXXXXXX 57. THE NEXT ISSUE WHICH WAS VEHEMENTLY CANVASSE D BEFORE US ON BEHALF OF THE APPELLANT WAS WITH REGARD TO THE TRANSFER ITA NO. 7751/DEL/2017 144 OF SHAREHOLDING FROM AJL TO YOUNG INDIA. IT IS THE CASE OF THE APPELLANT THAT MERE TRANSFER OF SHAREHOLDING CANNOT BE A GROUND FOR HOLDING THAT TO BE CHANGE OF OWNERSHIP O R TRANSFER OF THE LEASE. PLACING RELIANCE ON THE JUDGMENT OF B ACHA F. GUZDAR (SUPRA) DETAILED SUBMISSIONS WERE MADE BY DR. SINGHVI TO EMPHASIZE THAT A SHAREHOLDER ONLY ACQUIR ES A RIGHT TO PARTICIPATE IN THE PROFIT OF THE COMPANY. HE GET S NO INTEREST IN THE PROPERTY OF THE COMPANY AND EVEN IF THE SHARE HOLDERS OF THE COMPANY DO HAVE SOME VOICE IN ADMINISTERING THE AFFAIRS OF THE COMPANY, BUT THEIR INTEREST IS LIMIT ED TO SHARING THE PROFITS OF THE COMPANY AND THE COMPANY, A JURIST IC PERSON, WHICH IS DISTINCT FROM THE SHAREHOLDERS STILL OWNS THE PROPERTY. IT IS ARGUED THAT IN THE BACKDROP OF THIS L EGAL POSITION EVEN IF SOME OF THE SHARES OF THE COMPANY HAVE BEEN TRANSFERRED THAT WOULD NOT MEAN THAT THE OWNERSHIP OF THE LEASED PREMISES ALSO GET TRANSFERRED TO YOUNG INDIA LTD. IT WAS EMPHASIZED THAT THE OWNERSHIP STILL REMAINS EVEN ON SUCH TRANSFER WITH AJL AND THE SAID TRANSFER WOULD NO T HAVE ANY EFFECT ON THE OWNERSHIP OR TRANSFER OF THE LEAS ED PREMISES. TO CONSIDER THIS ASPECT OF THE MATTER, WE ARE REQUIRED TO TAKE NOTE OF THE SHAREHOLDING PATTERN O F BOTH THE COMPANIES AND THE MANNER IN WHICH THE TRANSACTIONS H AVE TAKEN PLACE AND FURTHER IN CASE THE LIFTING OF THE V EIL THEORY IS APPLIED, WHAT WOULD BE ITS EFFECT WITH REGARD TO THE I SSUE IN QUESTION. 58. INDIAN NATIONAL CONGRESS SOMETIMES REFERRED T O AS AICC HAD ADVANCED A LOAN OF RS.90 CRORES TO AJL. THE LOAN ITA NO. 7751/DEL/2017 145 WAS ADVANCED ON THE CONDITION THAT THE AMOUNT SHALL BE UTILIZED BY AJL TO WRITE OFF THEIR ACCUMULATED DEBTS AND TO RECOMMENCE PUBLICATION OF ITS NEWSPAPER. AS PER THE FACTS RECORDED BY THE CO-ORDINATE BENCH OF THIS COURT IN I TS DECISION RENDERED ON 10TH SEPTEMBER, 2018 IN W.P.(C) 8482/201 8, THE BOOKS OF ACCOUNT OF AJL FROM 1ST APRIL, 2010 TO 31S T MARCH, 2011 SHOWED AN OUTSTANDING DEBT OF RS.88,86,68,976/- AND IT ULTIMATELY BECAME RS.90,21,68,980/- AS ON 15TH D ECEMBER, 2010. ON 13TH AUGUST, 2010, AN APPLICATION WAS MADE FOR INCORPORATION OF A CHARITABLE NON-PROFIT COMPANY (A COMPANY UNDER SECTION 25 OF THE COMPANIES ACT NAMED YOUNG IND IA). THE APPLICATION WAS IN FORM 1A WITH THE COMPETENT S TATUTORY AUTHORITY AND ON 18TH NOVEMBER, 2010 YOUNG INDIA WAS INCORPORATED AND ON 18.11.2010 LICENSE WAS GRANTED AN D ULTIMATELY ON 23RD NOVEMBER, 2010 YOUNG INDIA WAS INCORPORATED WITH SH.SUMAN DUBEY AND SH.SAM PITRODA A S ITS FOUNDER DIRECTORS. THIS COMPANY HAD AN AUTHORIZED SHARE CAPITAL OF 5,000 SHARES OF RS.100/- EACH VALUED AT RS.5,00,000/- AND THE PAID UP SHARE CAPITAL WAS 110 0 SHARES OF RS.100/- EACH VALUED AT RS.1,10,000/- AND THE COMPANY AT THAT POINT OF TIME HAD TWO SHAREHOLDERS, (A) SHRI SAM PITRODA - 550 SHARES VALUED AT RS.100/- EACH AND (B) SHRI SUMAN DUBEY - 5,000 SHARES VALUED AT RS.100/- EAC H. ON 13TH DECEMBER, 2010, THE FIRST MANAGING COMMITTE E MEETING OF YOUNG INDIA TOOK PLACE AND SHRI RAHUL GANDH I WAS APPOINTED AS ITS DIRECTOR, NAMELY, A NON-SHAREHO LDER AND SHRI MOTILAL VORA AND SHRI OSCAR FERNANDES AS ORDINARY ITA NO. 7751/DEL/2017 146 MEMBERS. WITHIN FIVE DAYS THEREAFTER, THAT IS, ON 1 8TH DECEMBER, 2010, BY A DEED OF ASSIGNMENT THE LOAN OF RS.90 CRORES AND ODD OUTSTANDING IN THE BOOKS OF INDIAN NATI ONAL CONGRESS AS RECOVERABLE FROM ASSOCIATED LAW JOURNALS FOR THE PERIOD 2002 TO 2011 WAS TRANSFERRED TO YOUNG IND IA. THREE DAYS THEREAFTER, ON 21ST DECEMBER, 2010, A BO ARD MEETING OF AJL CALLED FOR AN EGM WHICH WAS SUBSEQUEN TLY HELD ON 24TH DECEMBER, 2010 AND ON THE SAID DATE A LOA N OF RS.1 CRORE WAS RECEIVED BY YOUNG INDIA FROM ANOTHER COMPANY M/S DOTEX AND THEREAFTER ON 28TH DECEMBER, 2 010 I.E. WITHIN A WEEK A FORMAL DEED OF ASSIGNMENT WAS EX ECUTED BY AICC ASSIGNING THE LOAN OF RS.90 CRORES IN FAVOU R OF YOUNG INDIA. IMMEDIATELY THEREAFTER ON 21ST JANUARY, 2011 , AN EGM OF ASSOCIATED LAW JOURNAL WAS HELD APPROVING FRESH IS SUE OF 9.021 CRORES SHARES TO YOUNG INDIA AND ON 22ND JANUA RY, 2011 I.E. ON THE NEXT DAY THE SECOND MANAGING COMMIT TEE OF YOUNG INDIA WAS HELD IN WHICH SMT. SONIA GANDHI, MR. MOTILAL VOHRA AND MR. OSCAR FERNANDES WERE APPOINTED AS DIRECTORS AND THE 550 SHARES OF THE EXISTING SHAREHO LDERS OF YOUNG INDIA - SUMAN DUBEY AND SAM PITRODA WERE TRANSFERRED TO SMT.SONIA GANDHI AND MR.OSCAR FERNANDES AND ON THE SAME DAY FRESH ALLOTMENT OF YOUNG INDIA SHARES WERE MADE IN THE FOLLOWING MANNER: (A) 1,900 SHARES HAVING PAID UP VALUE OF RS.1,90,000/- TO SHRI RAHUL GANDHI, ( B) 1,350 SHARES WITH A PAID UP AMOUNT OF RS.1,35,000/- IN THE NAME OF SMT. SONIA GANDHI, (C) 600 SHARES WITH A PAID U P VALUE OF RS.60,000 IN THE NAME OF SH. MOTILAL VOHRA AND (D) ITA NO. 7751/DEL/2017 147 50 SHARES WITH A PAID UP VALUE OF RS.5,000 IN THE NA ME OF SH.OSCAR FERNANDES AND AFTER ISSUANCE OF PAN BY THE I NCOME TAX DEPARTMENT A BANK ACCOUNT WAS OPENED BY YOUNG IN DIA WITH CITIBANK ON 14TH FEBRUARY, 2011 AND THE CHEQUE ISSUED BY M/S DOTEX FOR RS.1 CRORE WAS DEPOSITED IN THE YOU NG INDIA BANK ACCOUNT ON THE SAID DAY AND ON 26TH FEBRUARY, 20 11 YOUNG INDIA ISSUED A CHEQUE OF RS.50 LAKHS TO AICC A S CONSIDERATION FOR ASSIGNMENT OF RS.90 CRORE DEBT PAYA BLE BY ALJ TO AICC. ON THE SAME DAY, I.E., 26TH FEBRUARY, 2011, ALJ ALLOTTED 9,02,16,899 EQUITY SHARES TO YOUNG INDIA IN PURSUANCE TO THE AGM MEETING DECISION HELD ON 21ST JANUARY, 2011 AND THE ALJ BOARD MEETING ON 26TH FEBR UARY, 2011 AND THEREAFTER YOUNG INDIA APPLIED FOR EXEMPTION UNDER SECTION 12-A ON 29TH MARCH, 2011 AND ON 9TH MAY, 2011 THE INCOME TAX AUTHORITIES GRANTED THE EXEMPTIO N WITH EFFECT FROM THE F.Y. 2010-11. 59. BE THAT AS IT MAY, BY THE AFORESAID TRANSACTION THA T HAD TAKEN PLACE YOUNG INDIA ACQUIRED BENEFICIAL INTEREST ON AJLS PROPERTY WHICH ON THE SAID DATE W AS VALUED AT MORE THAN RS.400 CRORES ON PAYMENT OF A SUM OF RS.50 LAKHS TO AICC. THIS, ACCORDING TO THE RESPONDENT, IF VIEWED IN THE BACKDROP OF THE PURPOS E OF TRANSFER LEASE AND THE MODUS OPERANDI ADOPTED IS NOTHING BUT A DEVISE TO TRANSFER THE PROPERTY HELD ON LEASE FROM THE GOVERNMENT BY AJL, YOUNG INDIA WHICH BECAME 99% OR RATHER 100% SHAREHOLDER OF AJL. WITH THESE FACTS, WE NOW PROPOSE TO EXAMINE THE JUDGMENTS RELIED ITA NO. 7751/DEL/2017 148 UPON BY BOTH THE PARTIES TO EVALUATE THE LEGAL IMPL ICATION AND THE PRINCIPLES CULLED OUT FROM THESE JUDGMENTS AND EXA MINE THEIR APPLICABILITY IN THE PRESENT FACTUAL MATRIX T O DECIDE THE ISSUE OF BREACH OF CONDITIONS OF THE LEASE ON THIS COUNT. 60. IN THE CASE OF BACHA F. GUZDAR (SUPRA) RELIED UP ON BY DR. SINGHVI, A CONSTITUTION BENCH OF THE SUPREME COURT H AS TAKEN NOTE OF CERTAIN JUDGMENTS WITH REGARD TO CORPORATE I DENTITY AND A LEGAL POSITION WITH REGARD TO THE RIGHTS TO PR OPERTY OF A COMPANY, A JURISTIC PERSON, AND THE RELATIONSHIP OF A SHAREHOLDER WITH THE COMPANY AND ITS PROPERTY, AS CA NVASSED BY DR. SINGHVI AND AS OBSERVED BY THE HONBLE SUPREME COURT THE PRINCIPLE INDICATES THAT A SHAREHOLDER ACQUIRES A RIGHT TO PARTICIPATE IN THE PROFIT OF THE COMPANY BUT HE DOES NOT ACQUIRE ANY RIGHT OR INTEREST IN THE ASSETS OF THE COMPANY. IT HAS BEEN HELD THAT BY INVESTING MONEY IN THE PURCHAS E OF SHARES THE SHAREHOLDER DOES NOT GET ANY RIGHT TO PR OPERTY OF THE COMPANY THOUGH HE ACQUIRES A RIGHT IN THE PROFI TS IF AND WHEN THE COMPANY DECIDES TO DIVIDE IT. EVEN THOUGH T HE SHAREHOLDER OF THE COMPANY HAVE THE SOLE DETERMININ G VOICE IN ADMINISTERING THE AFFAIRS OF THE COMPANY AND ARE ENTITLED TO AS PROVIDED IN THE ARTICLES OF ASSOCIATION TO DECLARE THE DIVIDENDS AND DISTRIBUTE THE PROFITS OF THE COMPANY B UT THEIR RIGHT INDIVIDUALLY OR COLLECTIVELY IS NOTHING MORE T HAN PARTICIPATING IN THE PROFITS OF THE COMPANY, IT IS HELD THAT THE COMPANY IS A JURISTIC PERSON AND IS DISTINCT FROM T HE SHAREHOLDERS. IN FACT, IT IS THE COMPANY WHICH OWNS THE PROPERTY AND NOT THE SHAREHOLDER. THE JUDGMENT FURTH ER GOES ITA NO. 7751/DEL/2017 149 TO SAY THAT THERE IS NOTHING IN THE INDIAN LAW TO W ARRANT THE ASSUMPTION THAT THE SHAREHOLDER WHO BY HIS SHARE BUY S ANY INTEREST IN THE PROPERTY OF THE COMPANY WHICH IS A JURISTIC PERSON ENTIRELY DIFFERENT FROM THE SHAREHOLDER. THI S IN FACT IS THE LAW LAID DOWN BY THE CONSTITUTION BENCH OF THE SU PREME COURT IN THE AFORESAID CASE. 61. IT WAS VEHEMENTLY ARGUED BY DR. SINGHVI THAT ONC E THIS IS THE ACCEPTED LEGAL POSITION THAT IS CULLED OUT ON A P ERUSAL OF THE LAW LAID DOWN BY THE CONSTITUTION BENCH, THEN BY NO STRETCH OF IMAGINATION CAN IT BE ARGUED THAT ON TRAN SFER OF SHARES OF AJL TO YOUNG INDIA LTD., THERE IS TRANSFE R OF OWNERSHIP OR LEASE OR PROPERTY AS CONTEMPLATED IN CL AUSE 13(3) OF THE LEASE IN QUESTION. BY REFERRING TO THE JUDGMENT IN THE CASE OF MONSANTO MANUFACTURERS (SUPRA) AND THE T ERMS AND CONDITIONS OF THE LEASE DEED WHICH PROHIBITED TRA NSFER IN THE SAID CASE AND BY COMPARING IT TO CLAUSE XIII(3) O F THE LEASE DEED IN QUESTION, WE WERE TOLD THAT IN THE ABSENCE OF THERE BEING ANY SPECIFIC PROHIBITION PERMITTING TRANSFER OF OWNERSHIP OF SHARES OR CHANGE IN THE ARTICLE OF MEMORANDUM, T HE FINDING RECORDED WITH REGARD TO TRANSFER OF OWNERSHIP OF THE PROPERTY RECORDED BY THE LEARNED WRIT COURT AND THE COMPETENT AUTHORITY IS UNSUSTAINABLE. THE PRINCIPLES LAID DOWN IN JUDGMENT OF THE SUPREME COURT IN M/S K.G. ELECTRONI CS (SUPRA) AND BY THIS COURT IN DDA V. HUMAN CARE MEDIC AL CHARITABLE TRUST WERE ALSO RELIED UPON TO CANVASS THIS CONTENTION. ITA NO. 7751/DEL/2017 150 62. ON A CONSIDERATION OF THE ARGUMENT AS CANVASSED B Y DR. SINGHVI, AT THE FIRST INSTANCE, THE SAME LOOKS VERY ATTRACTIVE AND THE FINDINGS RECORDED MAY LOOK TO BE UNSUSTAINA BLE AND PERVERSE, HOWEVER, IT IS AN EQUALLY SETTLED PRINCIPL E OF LAW THAT IN PUBLIC INTEREST AND FOR ASSESSING THE ACTUAL NATURE OF A TRANSACTION OR THE MODUS OPERANDI EMPLOYED IN CARRYIN G OUT A PARTICULAR TRANSACTION, THE THEORY OF LIFTING OF TH E CORPORATE VEIL IS PERMISSIBLE AND A COURT CAN ALWAYS APPLY THIS DOC TRINE TO SEE AS TO WHAT IS THE ACTUAL NATURE OF TRANSACTION THAT HAS TAKEN PLACE, ITS PURPOSE AND THEN DETERMINE THE QUES TION BEFORE IT AFTER EVALUATING THE TRANSACTION OR THE M ODUS OPERANDI EMPLOYED IN THE BACKDROP OF PUBLIC INTEREST OR INTEREST OF REVENUE TO THE STATE ETC. THE THEORY AN D DOCTRINE OF LIFTING OF CORPORATE VEIL HAD BEEN CONSIDERED BY THE SUPREME COURT IN THE CASE OF GOTAN LIME STONE (SUPRA) AND IN THE SAID CASE, JUDGMENTS IN THE CASE OF VODAFONE (SUPRA) AND SK IPPER CONSTRUCTION (SUPRA) ETC. HAVE BEEN TAKEN NOTE OF A ND IN PARA 30, SPECIFIC REFERENCE HAS BEEN MADE TO THE CONSTITU TION BENCH JUDGMENT IN THE CASE OF BACHA F. GUZDAR (SUPR A). AFTER REFERRING TO MOST OF THE JUDGMENTS INCLUDING THE JU DGMENT IN THE CASE OF BACHA F. GUZDAR (SUPRA) RELIED UPON BY D R.SINGHVI IS REFERRED TO AND FINALLY THE CONSIDERATION TO BE M ADE IS CULLED OUT IN PARA 19 OF THE JUDGMENT IN THE FOLLOWI NG MANNER: '19. AS ALREADY STATED, THE QUESTION FOR CONSIDERATION IS WHETHER IN THE GIVEN FACT SITUATION THE TRANSFER OF ENTIRE SHAREHOLDING AND CHANGE OF ALL THE DIRECTORS OF A NEWLY FORMED ITA NO. 7751/DEL/2017 151 COMPANY TO WHICH LEASE RIGHTS WERE TRANSFERRED BY A DECLARATION THAT IT WAS MERE CHANGE OF FORM OF PARTNERSHIP BUSINESS WITHOUT ANY TRANSFER FOR CONSIDERATION BEING INVOLVED CAN BE TAKEN AS UNAUTHORISED TRANSFER OF LEASE WHICH COULD BE DECLARED VOID.' 63. THEREAFTER, THE LEARNED COURT PROCEEDS TO DISCU SS VARIOUS ISSUES AND TAKES NOTE OF THE FACT THAT THE TRANSACTION IN FACT TECHNICALLY DOES NOT SELL THE L EASE RIGHT BUT ONLY SHARES ARE TRANSFERRED AND IN PARA 24, IT HA S BEEN HELD THAT THE PRINCIPLE OF LIFTING OF CORPORATE VEIL AS AN EXCEPTION TO THE DISTINCT CORPORATE PERSONALITY OF A COMPANY AND ITS MEMBER IS RECOGNIZED NOT ONLY TO UNRAVEL TAX EVASION BUT ALSO TO PROTECT PUBLIC INTEREST WHICH I S OF PARAMOUNT IMPORTANCE AND TO PREVENT A CORPORATE ENTI TY IN ATTEMPTING TO EVADE LEGAL OBLIGATION. IT HAS BEEN H ELD BY THE HONBLE SUPREME COURT AFTER RELYING UPON AN EARLIER JUDGMENT IN THE CASE OF WORKMEN VS. ASSOCIATED RUBBE R INDUSTRIES , (1985) 4 SCC 114 THAT THIS DOCTRINE IS EMPLOYED TO PREVENT DEVICE AND TO AVOID WELFARE LEGISLATION. AF TER OBSERVING SO, VARIOUS JUDGMENTS OF THIS COURT INCLU DING SKIPPER CONSTRUCTION (SUPRA) AND THE JUDGMENT OF THE H OUSE OF LORDS IN THE CASE OF SALOMON V. SALOMON, 1897 AC 22 IS TAKEN NOTE OF AND THE CARDINAL PRINCIPLE LAID DOWN IN THE CASE OF SALMON V. SALMON (SUPRA) WITH REGARD TO THE COMPANY BEING A DIFFERENT PERSON ALTOGETHER FROM ITS SUBSCRIBERS IS TAKEN NOTE OF AND IT IS OBSERVED THAT SINCE ITA NO. 7751/DEL/2017 152 AFTER THE JUDGMENT OF SALMON (SUPRA) THE COURTS HAV E RECOGNIZED SEVERAL EXCEPTIONS TO THE RULE LAID DOWN I N SALMON (SUPRA) AND ONE OF THE RELEVANT EXCEPTION IS THAT WHEN A CORPORATE PERSONALITY IS BEING BLATANTL Y USED AS A CLOAK FOR FRAUD OR IMPROPER CONDUCT OR WHERE THE PROTECTION OF PUBLIC INTEREST IS OF PARAMOUNT IMPORTANCE OR WHERE THE COMPANY HAS BEEN FORMED TO EVADE OBLIGATION IMPOSED UNDER THE LAW, THE THEORY WHICH HAS BEEN DESCRIBED BY CERTAIN JURISTS AS PEEPING BEHIND THE CORPORATE VEIL IS EMPLOYED AND IN PARA 27 AND 29, THE HON BLE SUPREME COURT GOES TO DETERMINE THE DOCTRINE IN THE FOLLOWI NG MANNER: '27. IT IS THUS CLEAR THAT THE DOCTRINE OF LIFTING T HE VEIL CAN BE INVOKED IF THE PUBLIC INTEREST SO REQUIRES OR IF THERE IS ALLEGATION OF VIOLATION OF LAW BY USING THE DEVICE OF A CORPORATE ENTITY. IN THE PRESENT CASE, THE CORPORATE ENTITY HAS BEEN USED TO CONCEAL THE REAL TRANSACTION OF TRANSFER OF MINING LEASE TO A THIRD PARTY FOR CONSIDERATION WITHOUT STATUTORY CONSENT BY TERMING IT AS TWO SEPARATE TRANSACTIONS--THE FIRST OF TRANSFORMING A PARTNERSHIP INTO A COMPANY AND THE SECOND OF SALE OF ENTIRE SHAREHOLDING TO ANOTHER COMPANY. THE REAL TRANSACTION IS SALE OF MINING LEASE WHICH IS NOT LEGALLY PERMITTED. THUS, THE DOCTRINE ITA NO. 7751/DEL/2017 153 OF LIFTING THE VEIL HAS TO BE APPLIED TO GIVE EFFECT TO LAW WHICH IS SOUGHT TO BE CIRCUMVENTED. XXX XXXXXX 29. IT IS ALSO WELL SETTLED THAT MINING RIGHTS ARE VESTED IN THE STATE AND THE LESSEE IS STRICTLY BOUND BY THE TERMS OF THE LEASE. [ ORISSA MINING CORPN. LTD. V. MINISTRY OF ENVIRONMENT AND FORESTS (2013) 6 SCC 476, PARA 58; STATE OF T.N. V. HIND STONE , (1981) 2 SCC 205, PARA 1; MONNET ISPAT& ENERGY LTD. V. UNION OF INDIA , (2012) 11 SCC 1, PARA 41; AMRITLALNATHUBHAI SHAH V. UNION OF INDIA , (1976) 4 SCC 108; GEOMIN MINERALS & MKTG. (P) LTD. V. STATE OF ORISSA, (2013) 7 SCC 571. ED.: SEE ALSO THRESSIAMMA JACOB V. DEPTT. OF MINING & GEOLOGY, (2013) 9 SCC 725 : (2013) 4 SCC (CIV) 559.] CASES OF ARUN KUMAR AGRAWAL V. UNION OF INDIA [ARUN KUMAR AGRAWAL V. UNION OF INDIA, (2013) 7 SCC 1] (VEDANTA CASE), BALCO EMPLOYEES' UNION V. UNION OF INDIA [BALCO EMPLOYEES' UNION V. UNION OF INDIA, (2002) 2 SCC 333] (BALCO CASE) AND VODAFONE INTERNATIONAL HOLDINGS BV V. UNION OF INDIA[VODAFONE INTERNATIONAL HOLDINGS BV V. UNION OF INDIA, (2012) 6 SCC 613 : (2012) 3 SCC (CIV) 867] CITED BY THE LEARNED COUNSEL FOR THE RESPONDENT HAVE NO APPLICATION TO THE PRESENT ITA NO. 7751/DEL/2017 154 CASE ONCE REAL TRANSACTION IS FOUND TO BE DIFFERENT FROM THE APPARENT TRANSACTIONS. IN FACT, THE PRINCIPLE OF LAW LAID DOWN IN VODAFONE CASE [ VODAFONE INTERNATIONAL HOLDINGS BV V. UNION OF INDIA , (2012) 6 SCC 613 : (2012) 3 SCC (CIV) 867] THAT THE COURT CAN LOOK TO THE REAL TRANSACTION GOES AGAINST THE RESPONDENT.' 64. FINALLY IN PARA 31, IT IS HELD BY THE HONBLE SUPREME COURT THAT WHILE DISCERNING THE TRUE NATURE OF THE ENTIRE TRANSACTION, THE COURT IS NOT TO MERELY SEE THE FOR M OF THE TRANSACTION WHICH IS OF SALE OF SHARES BUT ALSO THE SUBSTANCE WHICH IS THE PRIVATE SALE OF A MINING RIGHT AVOIDIN G LEGAL BAR AGAINST TRANSFER OF SALE RIGHTS. IN FACT, THE LEARN ED COURT DEALS WITH THE ISSUE IN PARA 31 IN THE FOLLOWING MAN NER: '31. ....THUS, WHILE DISCERNING THE TRUE NATURE OF THE ENTIRE TRANSACTION, THE COURT HAS NOT TO MERELY SEE THE FORM OF THE TRANSACTION WHICH IS OF SALE OF SHARES BUT ALSO THE SUBSTANCE WHICH IS THE PRIVATE SALE OF MINING RIGHTS AVOIDING LEGAL BAR AGAINST TRANSFER OF SALE RIGHTS CIRCUMVENTING THE MANDATORY CONSENT OF THE COMPETENT AUTHORITY. CONSENT OF COMPETENT AUTHORITY IS NOT A FORMALITY AND TRANSFER WITHOUT CONSENT IS VOID. THE MINERALS VEST IN THE STATE AND MINING LEASE CAN BE OPERATED STRICTLY WITHIN THE STATUTORY FRAMEWORK. THERE IS NOTHING TO REBUT THE ALLEGATION THAT RECEIPT OF RS 160 CRORES STYLED AS ITA NO. 7751/DEL/2017 155 INVESTMENT IN SHARES IS NOTHING BUT SALE PRICE OF THE LEASE. NO PRECEDENT HAS BEEN SHOWN PERMITTING SUCH A PRIVATE SALE OF A MINING LEASE FOR CONSIDERATION WITHOUT ANY CORRESPONDING BENEFIT TO THE PUBLIC.' 65. IF WE CONSIDER THE TRANSACTION IN THE PRESENT CA SE IN THE BACKDROP OF THE AFORESAID PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT, WE HAVE NO HESITATION IN HOLDING THAT THE PURPOSE FOR WHICH THE DOCTRINE OF LIFTING OF THE VEIL IS APPLIED IS NOTHING BUT A PRI NCIPLE FOLLOWED TO ENSURE THAT A CORPORATE CHARACTER OR PERSONALITY IS NOT MISUSED AS A DEVICE TO CONDUCT SOMETHING WHICH IS IMPROPER AND NOT PERMISSIBLE IN LAW, FRAUDULENT IN NATURE AND GOES AGAINST PUBLIC INTEREST AND IS EMPLOYED TO EVADE OBLIGATIONS IMPOS ED IN LAW. IF THAT IS THE PURPOSE FOR WHICH THE DOCTRI NE OF LIFTING OF THE VEIL IS TO BE EMPLOYED AND IF WE SEE THE TRANSACTION THAT HAS TAKEN PLACE IN THE PRESENT CAS E WITH REGARD TO HOW THE TRANSFER OF SHARES BETWEEN A JL AND YOUNG INDIA TOOK PLACE, WE FIND THAT WITHIN A PERIOD OF ABOUT THREE MONTHS, THAT IS, BETWEEN 23RD NOVEMBER, 2010 TO 26TH FEBRUARY, 2011, YOUNG INDIA WAS CONSTITUTED. IT TOOK OVER THE RIGHT TO RECOVER A LOAN OF MORE THAN 90 CRORES FROM ALL INDIA CONGRESS COMMITTEE FOR A CONSIDERATION OF RS.50 LAKHS, THEREAFTER REPLACED THE ORIGINAL SHAREHOLDERS OF YOUNG INDIA BY FOUR NEW ENTITIES INCLUDING SH. MOTI ITA NO. 7751/DEL/2017 156 LAL VOHRA, CHAIRMAN OF AJL AND YOUNG INDIA AFTER ACQUIRING 99% OF SHARES IN AJL, BECAME THE MAIN SHAREHOLDER WITH FOUR OF ITS SHAREHOLDERS ACQUIRING THE ADMINISTRATIVE RIGHT TO ADMINISTER PROPERTY OF MORE THAN 400 CRORES. EVEN THOUGH DR. SINGHVI HAD ARGUED THAT THERE IS NOTHING WRONG IN SUCH A TRANSACTION AND IT IS LEGALLY PERMISSIBLE, BUT IF W E TAKE NOTE OF THE PRINCIPLES AND THE DOCTRINE FOR WH ICH THE THEORY OF LIFTING OF THE CORPORATE VEIL HAS REC EIVED LEGAL RECOGNITION, WE HAVE NO HESITATION IN HOLDING THAT THE ENTIRE TRANSACTION OF TRANSFERRING THE SHA RES OF AJL TO YOUNG INDIA WAS NOTHING BUT, AS HELD BY TH E LEARNED WRIT COURT, A CLANDESTINE AND SURREPTITIOUS TRANSFER OF THE LUCRATIVE INTEREST IN THE PREMISES TO YOUNG INDIA. IN FACT, THE CONTENTION OF DR. SINGHVI HAS TO BE REJECTED AND RIGHTLY SO WAS REJECTED BY THE S INGLE JUDGE EVEN THOUGH WITHOUT APPLYING THE PRINCIPLE OF LIFTING OF THE CORPORATE VEIL. IN CASE THE THEORY O F LIFTING OF THE CORPORATE VEIL, AS DISCUSSED HEREINA BOVE, IS APPLIED AND THE TRANSACTION VIEWED BY ANALYZING AS TO WHAT WAS THE PURPOSE FOR SUCH A TRANSACTION, THE SO CALLED INNOCENT OR LEGAL AND PERMISSIBLE TRANSACTION AS CANVASSED BEFORE US, IN OUR CONSIDER ED VIEW, IS NOT SO SIMPLE OR STRAIGHT FORWARD AS PUT BEFORE US, BUT IT ONLY INDICATES THE DISHONEST AND FRAUDULENT DESIGN BEHIND SUCH A TRANSACTION AS LAID DOWN IN VARIOUS JUDGMENTS REFERRED TO NOT ONLY IN THE ITA NO. 7751/DEL/2017 157 CASE OF GOTAN LIME STONE KHANIJ UDYOG (P) LTD. (SUPRA ) BUT ALSO IN THE CASE OF UNION TERRITORY OF ESTATE OFFIC ER, UT, CHANDIGARH VS. S.C. INFORMATION TECHNOLOGIES , (2016) 12 SCC 582, SKIPPER CONSTRUCTION (SUPRA), WHEREIN ALSO T HE THEORY HAS BEEN APPLIED AFTER CONSIDERING THE PRINCI PLE LAID DOWN IN SALOMON (SUPRA) AND IN PARA 28, IN THE CASE O F SKIPPER CONSTRUCTION (SUPRA), THE LAW HAS BEEN CRYST ALLIZED IN THE FOLLOWING MANNER: '28. THE CONCEPT OF CORPORATE ENTITY WAS EVOLVED TO ENCOURAGE AND PROMOTE TRADE AND COMMERCE BUT NOT TO COMMIT ILLEGALITIES OR TO DEFRAUD PEOPLE. WHERE, THEREFORE, THE CORPORATE CHARACTER IS EMPLOYED FOR THE PURPOSE OF COMMITTING ILLEGALITY OR FOR DEFRAUDING OTHERS, THE COURT WOULD IGNORE THE CORPORATE CHARACTER AND WILL LOOK AT THE REALITY BEHIND THE CORPORATE VEIL SO AS TO ENABLE IT TO PASS APPROPRIATE ORDERS TO DO JUSTICE BETWEEN THE PARTIES CONCERNED. THE FACT THAT TEJWANT SINGH AND MEMBERS OF HIS FAMILY HAVE CREATED SEVERAL CORPORATE BODIES DOES NOT PREVENT THIS COURT FROM TREATING ALL OF THEM AS ONE ENTITY BELONGING TO AND CONTROLLED BY TEJWANT SINGH AND FAMILY IF IT IS FOUND THAT THESE CORPORATE BODIES ARE MERELY CLOAKS BEHIND WHICH LURKS TEJWANT ITA NO. 7751/DEL/2017 158 SINGH AND/OR MEMBERS OF HIS FAMILY AND THAT THE DEVICE OF INCORPORATION WAS REALLY A PLOY ADOPTED FOR COMMITTING ILLEGALITIES AND/OR TO DEFRAUD PEOPLE.' 66. APART FROM THE AFORESAID JUDGMENTS, THERE ARE VA RIOUS OTHER JUDGMENTS WHICH HAVE BEEN BROUGHT TO OUR NOTI CE WHEREIN THE SAID THEORY OF LIFTING OF THE CORPORATE VEIL HAS BEEN APPROVED AND WE HAVE NO HESITATION IN HOLDING T HAT THE TRANSFER IN QUESTION, IF ANALYZED IN THE BACKDROP OF THE PRINCIPLES AS DISCUSSED HEREINABOVE, WE SEE NO ERROR IN THE FINDINGS RECORDED BY THE LEARNED WRIT COURT TO HOLD THAT THE TRANSFER IN QUESTION COMES WITHIN THE PROHIBITED CA TEGORY UNDER CLAUSE XIII (3) OF THE LEASE AGREEMENT. [EMPHASIS IN BOLD IS OURS] 112 THE HONBLE HIGH COURT HAVE FURTHER HELD THAT THE B REACH WAS CONTINUING RIGHT FROM THE YEAR 2008 TILL COMMENCEMENT OF DIGITAL PUBLICATION ON 14.11.2016 A ND WENT ON TO HOLD THAT THE COURT HAS NO HESITATION IN HOLDING THAT THE BREACH OF THERE BEING NO PUBLICATION ACTIV ITY OR PAPER PUBLICATION FOR A LONG PERIOD STANDS ESTABLIS HED. THIS WOULD COME WITHIN THE PURVIEW OF THE BREACH OF TERMS A ND CONDITIONS OF THE LICENSE. THEIR LORDSHIPS HAVE HEL D THAT ADMITTEDLY PRINTING ACTIVITIES AND PUBLICATION OF NEWSPAPERS WAS NOT CARRIED OUT IN THE PREMISES WHEN T HE INSPECTION TOOK PLACE INITIALLY ON 26.09.2016 AND N OT EVEN ITA NO. 7751/DEL/2017 159 WHEN SECOND INSPECTION TOOK PLACE ON 09.10.2018. REGARDING TRANSFER OF SHARES/PROPERTY FROM AJL TO Y I AND THE MANNER IN WHICH ENTIRE TRANSACTION WAS DONE HAS BEEN FROWNED UPON BY THE HONBLE COURT AS A CLANDESTINE AND SURREPTITIOUS TRANSFER OF THE LUCRATIVE INTEREST IN THE PREMISES TO YOUNG INDIA . AFTER APPLYING THE PRINCIPLE OF LIFTING OF THE CORPORATE VEIL , THEIR LORDSHIPS HAVE HELD THAT THE TRANSACTION VIEWED BY ANALYZING AS TO WHAT WAS THE PURPOSE FOR SUCH A TRANSACTION, THE SO CALLED INNOCENT OR LEGAL AND PERMISSIBLE TRANSACTION AS CANVASSED BEFORE US, IN OUR CONSIDERED VIEW, IS NOT SO SIMPLE OR STRAIGHT FORWARD AS PUT BEFORE US, BUT IT ONLY INDICATES THE DISHONEST AND FRAUDULENT DESIGN BEHIN D SUCH A TRANSACTION. 113 THE SEQUITUR OF THE FINDINGS AND OBSERVATIONS OF HO NBLE HIGH COURT IN THE CASE OF AJL CLEARLY CLINCHES THE ISSUE IN HAND WHEREIN THE COURT HAS TAKEN NOTE OF IDENTICAL F ACTS AS DISCUSSED HERE IN THIS ORDER AND HAVE CATEGORICALLY HELD THAT; THE SHARE HOLDING PATTERN OF BOTH THE COMPANIES, I. E., AJL & YI AND THE MANNER IN WHICH THE TRANSACTION HAS TAKEN PLACE, PRINCIPLE OF LIFTING OF CORPORATE VEIL IS CLEARLY APPLICABLE; THEIR LORDSHIPS HAVE NARRATED THE ENTIRE FACTUM OF ADVANCING OF LOAN OF RS. 90 CRORES BY AICC TO AJL A ND ITA NO. 7751/DEL/2017 160 THE MANNER IN WHICH IT HAS BEEN ASSIGNED TO YI FOR A MEAGER SUM OF RS. 50 LAKHS, BRINGS THE ENTIRE TRANSACTION WITHIN THE AMBIT OF SOME KIND OF COLOURA BLE DEVICE BECAUSE YI HAD ACQUIRED BENEFICIAL INTEREST ON AJLS PROPERTIES WHICH HAVE BEEN VALUED FOR MORE THA T 400 CRORES ON A MEAGER PAYMENT OF RS. 50 LAKHS TO AICC. IT HAS BEEN FURTHER OBSERVED THAT MODUS OPERANDI IS NOTHING BUT A DEVICE TO TRANSFER THE PROPERTY HELD ON LEASE FROM THE GOVERNMENT TO AJL T O YI, WHICH BECAME ALMOST 100% SHAREHOLDER OF AJL. THEIR LORDSHIPS HAVE ALSO CONSIDERED THE JUDGMENT O F HONBLE SUPREME COURT IN THE CASE OF BACHA F. GUZDA R (SUPRA) WHICH HAS BEEN STRONGLY RELIED BY THE ASSESS EE BEFORE US AND HELD THAT THOUGH THE PRINCIPLE LAID D OWN BY THE CONSTITUTIONAL BENCH OF HONBLE SUPREME COUR T CANNOT BE IN DISPUTE AND IT IS AN ACCEPTED PRINCIPL E OF LAW, HOWEVER, IN THE PUBLIC INTEREST AND FOR ASSESSI NG THE ACTUAL NATURE OF TRANSACTION OR MODUS OPERANDI EMPLOYED IN CARRYING OUT A PARTICULAR TRANSACTION, THE THEORY OF LIFTING OF THE CORPORATE VEIL IS PERMISSI BLE AND THE COURT CAN ALWAYS APPLY THIS DOCTRINE TO SEE AS T O WHAT IS THE ACTUAL NATURE OF TRANSACTION THAT HAS TA KEN PLACE, ITS PURPOSE AND THEN DETERMINE THE QUESTION BEFORE IT AFTER EVALUATING THE TRANSACTION OR THE M ODUS OPERANDI EMPLOYED IN THE BACKDROP OF PUBLIC INTERES T OR ITA NO. 7751/DEL/2017 161 INTEREST OF REVENUE TO THE STATE. THE PRINCIPLE OF LIFTING OF CORPORATE VEIL IS AN EXCEPTION TO THE CORPORATE PERSONALITY OF A COMPANY, BUT CAN BE RESORTED TO UNRAVEL TAX EVASION TO PUBLIC INTEREST, WHICH IS OF PARAMOUNT INTEREST TO PREVENT A CORPORATE ENTITY IN ATTEMPTING TO EVADE LEGAL OBLIGATION. IF A CORPORAT E PERSONALITY IS BEING BLATANTLY USED AS A CLOAK FOR FRAUD OR IMPROPER CONDUCT OR WHERE THE PROTECTION OF PUBLI C INTEREST IS UNDERMINED AND THE COMPANY HAS BEEN FORMED TO EVADE IMPOSITION OF REVENUE UNDER LAW, TH E PRINCIPLE OF LIFTING OF CORPORATE VEIL IS JUSTIFIED TO BE APPLIED. IN PARA 65 OF THE JUDGMENT, IT HAS BEEN CLEARLY HEL D THAT THE TRANSACTION WHICH HAS TAKEN PLACE AND THE MANNER THERE HAS BEEN TRANSFER OF SHARES BETWEEN TH E AJL AND YI BETWEEN THE PERIOD OF THREE MONTHS START ING FROM 23.11.2010 TO 26.02.2011 ITSELF SHOWS THAT THE ENTIRE TRANSACTION OF TRANSFERRING THE SHARES TO YI WAS NOTHING BUT A CLANDESTINE AND SURREPTITIOUS TRANSFE R OF LUCRATIVE INTEREST TO THE PREMISE OF YI. THE HON. C OURT HAS COME DOWN VERY HEAVILY IN STATING THAT THE ENTIR E TRANSACTION IS NOT ONLY DISHONEST, BUT ALSO FRAUDUL ENT DESIGN. 114 THE AFORESAID OBSERVATIONS AND FINDINGS OF THE HON BLE JURISDICTIONAL HIGH COURT CLEARLY HAVE A BINDING PR ECEDENCE ITA NO. 7751/DEL/2017 162 BECAUSE NOT ONLY IT PROVES THAT THE CONDUCT OF THE ASSESSEE COMPANY RIGHT FROM THE INCORPORATION OF YI TILL THE APPLICATION FOR REGISTRATION U/S. 12AA BEFORE THE D IT (E), WAS NOT TO CARRY OUT ANY CHARITABLE ACTIVITY, BUT TO ACQUIRE HUGE ASSETS OF HUNDREDS CRORES OF RS FOR A NEGLIGIB LE AMOUNT. SEEKING A STATUS OF CHARITABLE INSTITUTION AND TO GET REGISTERED UNDER WELFARE LEGISLATION LIKE SECTI ON 12A/12AA, WITH SUCH KIND OF CONDUCT CLEARLY INDICATE S THAT IT IS A MISUSE OF LAW AND SOME KIND OF COLOURABLE DE VICE. THIS IS PERPETUATED BY THE FACT THAT ALL THESE TRAN SACTIONS WERE COMPLETELY HIDDEN FROM THE INCOME-TAX DEPARTMEN T AND DIT (E) WHILE SEEKING THE REGISTRATION U/S. 12AA . IF ALL THESE THINGS ARE PUT IN PERSPECTIVE, THEN THE CONTE NTION OF THE LD. SPECIAL COUNSEL AND LD. CIT (E) IS TO BE BE LIEVED THAT IT IS ONLY WHEN THE INVESTIGATION WING AND INCOME-TA X DEPARTMENT STARTED MAKING CERTAIN INVESTIGATION AND ENQUIRIES AND ALSO LOOKING TO THE FACT THAT NO GENU INE ACTIVITY WAS CARRIED OUT FOR THE PERIOD OF FIVE YEAR S, THE ASSESSEE MAY HAVE BEEN PROMPTED TO SURRENDER ITS REGISTRATION U/S. 12AA. 115 THERE IS ANOTHER ANGLE WHICH PONDERS US IS THAT, IF NO ACTIVITIES WERE CARRIED OUT BY YI TOWARDS CHARITABLE ACTIVITY BETWEEN THE PERIOD 2011 TO 2016, THEN WHY SO MUCH OF CLAMOUR THAT ASSESSEE SHOULD BE RECOGNIZED AS CHARI TABLE INSTITUTION QUA THAT PERIOD ONLY SHOULD HAVE THE BE NEFIT OF ITA NO. 7751/DEL/2017 163 REGISTRATION U/S. 12AA FOR THIS PERIOD OF FIVE YEAR S, I.E., FROM THE ASSESSMENT YEAR 2011-12 TO A.Y. 2016-17 AN D POST 21 ST MARCH 2016, THE ASSESSEE ITSELF CHOSE TO SURRENDER ITS REGISTRATION AND WILLINGLY GIVE UP ITS CHARITY STATUS UNDER THE INCOME TAX ACT. IF BOTH YI AND AJL ARE NON-PROFITABLE COMPANY, THEN WHY SUCH A DISPUTE ON CANCELLATION FROM RETROSPECTIVE DATE. 116 BEFORE US, THE LD. COUNSEL HAD VERY STRONGLY OBJECT ED TO REFER AND RELY UPON THE JUDGMENTS OF HONBLE DELHI HIGH COURT AS CITED (SUPRA) ON THE GROUND THAT, HONBLE SUPREME COURT IN SLP NO.7345/2019 HAD STAYED THE FURTHER PROCEEDINGS PURSUANT TO THE HIGH COURT ORDER VIDE O RDER DATED 05.04.2019. THE RELEVANT DIRECTIONS OF THE HO NBLE SUPREME COURT READ AS UNDER: THERE SHALL BE STAY OF THE FURTHER PROCEEDINGS PURSUANT TO HIGH COURTS ORDER. NOT ONLY THAT, IT HAS BEEN STRONGLY CONTENDED THAT ONCE THE OPERATION OF THE ORDER HAS BEEN STAYED THEN EITHER THE SAID JUDGMENT SHOULD NOT BE TAKEN INTO COGNIZANCE OR THE MATTER SHOULD BE ADJOURNED SINE DINE TILL THE MATTER STANDS DECIDED BY THE HONBLE APEX COURT. WE ARE UNABLE TO ACCEPT SUCH A PLEA RAISED BY THE LD. COUNSEL FOR TH E ASSESSEE FOR THE REASON THAT FIRSTLY , THE HONBLE SUPREME COURT HAD STAYED FURTHER PROCEEDINGS PURSUANT TO HI GH ITA NO. 7751/DEL/2017 164 COURTS ORDER, WHICH WAS EVICTION OF THE PROPERTY SIT UATED AT 5A, BAHADUR SHAH ZAFAR MARG LEASED TO AJL. THUS, IN OUR OPINION, WHAT HAVE BEEN STAYED ARE ANY FURTHER PROCEEDINGS PURSUANT TO THE ORDER OF HONBLE HIGH C OURT AND NOT THE ENTIRE FINDING ARRIVED AT BY THE HONBL E COURT. IT IS A SETTLED PRINCIPLE OF LAW REITERATED BY HON BLE SUPREME COURT IN THE CASE OF SHREE CHAMUNDI MOPEDS LTD. VS. CHURCH OF SOUTH INDIA TRUST ASSOCIATION CS I CINOD SECRETARIAT, MADRAS (1992) 3 SCC 1 , THAT DISTINCTION HAS TO BE MADE BETWEEN QUASHING OF ORDE R AND STAY OF OPERATION OF ORDER BECAUSE QUASHING OF ORDE R RESULTS IN RESTORATION OF POSITION AS IT STOOD ON THE DATE OF PASSING OF THE ORDER WHEREAS THE STAY OF OPERATION ONLY MEAN S THAT IT WOULD NOT BE OPERATIVE ON THE DATE OF PASSING OF THE STAY ORDER, BUT IT DOES NOT MEAN THAT THE SAID ORDER HAS BEEN WIPED OUT FROM EXISTENCE. THE RELEVANT OBSERVATIONS READ AS UNDER: 10. IN THE INSTANT CASE, THE PROCEEDINGS BEFORE TH E BOARD UNDER SS. 15 AND 16 OF THE ACT HAD BEEN TERMINATED BY ORDER OF THE BOARD DATED APRIL 26, 1990 WHEREBY THE BOARD, UPON CONSIDERATION OF THE FACTS AND MATERIAL BEFORE IT, FOUND THAT THE APPELLANT-COMPANY HAD BECOME ECONOMICALLY AND COMMERCIALLY NON-VIABLE DUE TO ITS H UGE ACCUMULATED LOSSES AND LIABILITIES AND SHOULD BE WOUND UP. THE APPEAL FILED BY THE APPELLANT-COMPANY UNDER SECTION 25 OF THE ACT AGAINST SAID ORDER DATED JANUARY 7, 1991. AS A RESULT OF THESE ORDERS, NO PROCEEDINGS U NDER THE ACT WAS PENDING EITHER BEFORE THE BOARD OR BEFOR E THE ITA NO. 7751/DEL/2017 165 APPELLATE AUTHORITY ON FEBRUARY 21, 1991 WHEN THE D ELHI HIGH COURT PASSED THE INTERIM ORDER STAYING THE OPE RATION OF THE APPELLATE AUTHORITY DATED JANUARY 7, 1991. TH E SAID STAY ORDER OF THE HIGH COURT CANNOT HAVE THE EFFECT OF REVIVING THE PROCEEDINGS WHICH HAD BEEN DISPOSED OF BY THE APPELLATE AUTHORITY BY ITS ORDER DATED JANUARY 7 , 1991. WHILE CONSIDERING THE EFFECT OF AN INTERIM ORDER STAYING THE OPERATION OF THE ORDER UNDER CHALLENGE, A DISTINCTION HAS TO BE MADE BETWEEN QUASHING OF AN ORDER AND STAY OF OPERATION OF AN ORDER QUASHING OF AN ORDER RESULTS IN THE RESTORATI ON OF THE POSITION AS IT STOOD ON THE DATE OF THE PASS ING OF THE ORDER WHICH HAS BEEN QUASHED. THE STAY OF OPERATION OF AN ORDER DOES NOT, HOWEVER, LEAD TO SU CH A RESULT. IT ONLY MEANS THAT THE ORDER WHICH HAS BE EN STAYED WOULD NOT BE OPERATIVE FROM THE DATE OF THE PASSING OF THE STAY ORDER AND IT DOES NOT MEAN THAT THE SAID ORDER HAS BEEN WIPED OUT FROM EXISTENCE. THIS MEANS THAT IF AN ORDER PASSED BY THE APPELLATE AUTHORITY IS QUASHED AND THE MATTER IS REMANDED, THE RESULT WOULD BE THAT THE APPEAL WHICH HAD BEEN DISPOSED OF BY THE SAID ORDER OF THE APPELLATE AUTHORITY WOULD BE RESTORED AND IT CAN BE SAID TO B E PENDING BEFORE THE APPELLATE AUTHORITY AFTER THE QUASHING OF THE ORDER OF THE APPELLATE AUTHORITY. T HE SAME CANNOT BE SAID WITH REGARD TO AN ORDER STAYING THE OPERATION OF THE ORDER OF THE APPELLATE AUTHORI TY BECAUSE IN SPITE OF THE SAID ORDER, THE ORDER OF TH E APPELLATE AUTHORITY CONTINUES TO EXIST IN LAW SO LO NG AS IT EXISTS, IT CANNOT BE SAID THAT THE APPEAL WHI CH HAS BEEN DISPOSED OF BY THE SAID ORDER HAS NOT BEEN DISPOSED OF AND IS STILL PENDING . WE ARE, THEREFORE, OF THE OPINION THAT THE PASSING OF THE INTERIM ORDER D ATED FEBRUARY 21, 1991 BY THE DELHI HIGH COURT STAYING T HE OPERATION OF THE ORDER OF THE APPELLATE AUTHORITY DA TED JANUARY 7, 1991 DOES NOT HAVE THE EFFECT OF REVIVING THE ITA NO. 7751/DEL/2017 166 APPEAL WHICH HAD BEEN DISMISSED BY THE APPELLATE AUTHORITY BY ITS ORDER DATED JANUARY 7, 1991 AND IT C ANNOT BE SAID THAT AFTER FEBRUARY 21, 1991, THE SAID APPEAL STOOD REVIVED AND WAS PENDING BEFORE THE APPELLATE AUTHORITY. IN THAT VIEW OF THE MATTER, IT CANNOT BE SAID THAT ANY PROCEEDINGS UNDER THE ACT WERE PENDING BEFORE TH E BOARD OR THE APPELLATE AUTHORITY ON THE DATE OF THE PASSING OF THE ORDER DATED AUGUST 14, 1991 BY THE LEARNED SING LE JUDGE OF THE KARNATAKA HIGH COURT FOR WINDING UP OF THE COMPANY OR ON NOVEMBER 6, 1991 WHEN THE DIVISION BE NCH PASSED THE ORDER DISMISSING O.S.A. NO. 16 OF 1991 FIL ED BY THE APPELLANT-COMPANY AGAINST THE ORDER OF THE LEARN ED SINGLE JUDGE DATED AUGUST 14, 1991. SECTION 22(1) OF THE ACT COULD NOT, THEREFORE, BE INVOKED AND THERE WAS NO IMPEDIMENT IN THE HIGH COURT DEALING WITH THE WINDI NG UP PETITION FILED BY THE RESPONDENTS. THIS IS THE ONLY Q UESTION THAT HAS BEEN CANVASSED IN CIVIL APPEAL NO. 126 TO 1 992, DIRECTED AGAINST THE ORDER FOR WINDING UP OF THE APPE LLANT- COMPANY. THE SAID APPEAL, THEREFORE, FAILS AND IS LI ABLE TO BE DISMISSED. [EMPHASIS IN BOLD IS OURS] 117 THUS, IT HAS BEEN CLEARLY HELD THAT STAYING THE OPE RATION OF THE ORDER OF THE COURT DOES NOT MEAN THAT THE SAID ORDER DOES NOT EXIST IN LAW. HONBLE BOMBAY HIGH COURT IN NILKAMAL LIMITED VS. UNION TERRITORY OF DADAR & NAG AR HAVELI, IN CRIMINAL WRIT PETITION NO. 3794 OF 2014, AFTER REFERRING TO VARIOUS JUDGMENTS INCLUDING THAT OF SH REE CHAMUNDI MOPEDS LTD. (SUPRA) HELD THAT EVEN IF A DE CISION OF THE HIGH COURT IS STAYED BY THE APEX COURT, THE SUBORDINATE COURTS ARE BOUND BY THE SAME UNLESS THE ITA NO. 7751/DEL/2017 167 DECISION IS SET ASIDE BY THE APEX COURT. ACCORDINGL Y, THE HIGH COURT DIRECTED THE MAGISTRATE TO FOLLOW THE JUD GMENT OF HIGH COURT UNLESS AND UNTIL IT IS SET ASIDE BY T HE HONBLE APEX COURT. 118 IN VIEW OF THE AFORESAID LAW, THE CONTENTION RAISED B Y THE LD. COUNSEL IS HEREBY REJECTED. EVEN OTHERWISE, ALSO HER E IT IS NOT THE CASE THAT THE ORDER OF THE HONBLE HIGH COU RT HAS BECOME NON-OPERATIVE, ALBEIT THE CONSEQUENCES OF EV ICTION PURSUANT TO THE DIRECTIONS OF HONBLE HIGH COURT, H AS BEEN STAYED AND NOT THE ORDER. THE LD. COUNSEL HAS ALSO RELIED UPON THE JUDGMENT OF DELHI HIGH COURT IN THE CASE O F BHUSHAN STEEL (SUPRA) AND OF CALCUTTA HIGH COURT IN THE CASE EXIDE INDUSTRIES LTD. (SUPRA) WHERE THE ORDER H AS BEEN STAYED BY HONBLE SUPREME COURT, AND IN SUBSEQUENT JUDGMENT, HONBLE DELHI HIGH COURT HAS NOT FOLLOWED THE SAID ORDER. SUCH A PLEA AND REFERENCE DOES NOT COME TO AID FOR THE REASON THAT IN THE JUDGMENT OF DELHI HIGH C OURT (BHUSHAN STEEL) IT HAS BEEN HELD THAT THE SALES TAX SUBSIDY IS THE REVENUE RECEIPT AND THE HONBLE SUPR EME COURT HAD ADMITTED THE SLP AND THE ENTIRE ORDER WAS STAYED. HERE SITUATION AND DIRECTION ARE NOT SIMILA R. FURTHER THE JUDGMENT OF HONBLE CALCUTTA HIGH COURT IN EXIDE INDUSTRIES LTD.(SUPRA), WHEREIN THE PROVISIONS OF SECTION 43B(F) WAS DECLARED UNCONSTITUTIONAL WHERE A LSO SLP WAS FILED BEFORE THE HONBLE SUPREME COURT THE E NTIRE ITA NO. 7751/DEL/2017 168 OPERATION OF THE ORDER WAS STAYED. IN ANY CASE, ONC E THE JURISDICTIONAL HIGH COURT HAS PASSED THE JUDGMENT WH ICH HAS NOT BEEN SET ASIDE OR REVERSED BY HONBLE SUPRE ME COURT, THEN FOR LOWER COURTS WITHIN ITS JURISDICTION CONSTITUTES A BINDING PRECEDENCE SPECIFICALLY WHEN THE JUDGMENT HAS BEEN RENDERED ON SIMILAR FACTS AND TRANSACTION AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF SHREE CHAMUNDI MOPEDS LTD. (SUPRA), WHEREIN HONBLE SUPREME COURT HAS CLEARLY HELD THAT THE ORD ER OF THE APPELLATE AUTHORITY WHERE THE OPERATION HAS BEEN STAYED CONTINUE TO EXIST IN LAW. WE ARE CLEARLY BOUN D BY THE OBSERVATIONS AND FINDINGS OF THE HONBLE JURISDICTI ONAL HIGH COURT. 119 LASTLY, IN SO FAR AS FILING OF SECOND SET OF ADDITI ONAL EVIDENCES AT THE TIME OF REJOINDER MADE BY THE LD. COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS FILED VARIOUS DO CUMENTS WHICH ARE LISTED HEREUNDER: ADDITIONAL EVIDENCE PAPER BOOK - II SR. NO. DESCRIPTION OF DOCUMENT PAGE NOS. COPIES OF:- 1. APPLICATION FILED WITH THE REGISTRAR OF COMPANIES FOR LICENSE U/S. 25 OF THE COMPANIES ACT, 1956 387-436 2. PRINTED BOOKLET CONTAINING COPY OF THE PRINTED MOA AND AOA ALONG WITH THE INCORPORATION CERTIFICATE AND OTHER RELEVANT DOCUMENTS 437-467 3. ASSIGNMENT AGREEMENT DATED 28.12.2010 468-474 4. ASSESSMENT ORDER OF AJL FOR AY 2011- 12 475-481 ITA NO. 7751/DEL/2017 169 5. ORDER OF THE ELECTION COMMISSION OF INCOME DATED 06.11.2012 IN RELATION TO LOAN GIVEN AICC TO AJL AND ITS ASSIGNMENT 482-485 6. RELEVANT EXTRACT OF ANNUAL ACCOUNTS OF RPG LIFE SCIENCE LTD. FOR FINANCIAL YEAR 2010 - 11 486-489 7. RELEVANT EXTRACT OF ANNUAL ACCOUNTS OF CEAT LTD. FOR FINANCIAL YEAR 2010- 11 490-493 8. RELEVANT EXTRACT OF ANNUAL ACCOUNTS OF CESC LIMITED FOR FINANCIAL YEAR 2010 - 11 494-497 9. AJL FORM - 23 SUBMITTED TO ROC ON 29 SEPTEMBER 2011 ALONG WITH ACKNOWLEDGEMENT AND SRN ISSUED BY MCA FOR AMENDING MOA IN 2011 498-502 10. NOTICE OF EGM PUBLISHED IN ENGLISH AND HINDI NEWSPAPER FOR CHANGING MOA FOR INCORPORATING NOT FOR PROFIT CLAUSES IN MOA IN 2016 503-504 11. AJL FORM - MGT 14 SUBMITTED TO ROC ALONG WITH AMENDED MOA ALONG WITH ACKNOWLEDGEMENT AND SRN ISSUED BY MCA FOR AMENDING MOA AS PASSED BY SHAREHOLDERS IN 2016 505-510 12. EMAIL DATED 25.02.2016 RECEIVED FROM MCA AFTER FILING THE AJL FORM - MGT 14 IN 2016 511 13. FORM - MGT 14 WAS RESUBMITTED ALONG WITH RESPONSE 512-519 OF AJL DATED 10.03.2016 TO EMAIL DATED 25.02.2016 RECEIVED FROM MCA 14. PROOF THAT SAID RESPONSE OF AJL DATED 10.03.2016 ALSO SEND THROUGH COURIER, REGISTERED POST AND SPEED POST TO MCA 520-522 15. APPLICATION DATED 15.10.2012 FOR REGISTRATION FOR ESTABLISHMENT EMPLOYING CONTRACTOR LABOUR FOR CONSTRUCTION OF PANCHKULA BUILDING 523-525 16. REGISTRATION CERTIFICATE DATED 31.10.2012 ISSUED BY DY. LABOUR COMMISSIONER, AMBALA IN RESPECT OF EMPLOYING CONTRACTOR LABOUR FOR CONSTRUCTION OF PANCHKULA BUILDING 526-528 17. RELEVANT EXTRACT OF APPROVED BUILDING PLAN FOR PANCHKULA BUILDING DATED 26.11.2012 529-532 18. RELEVANT EXTRACT OF APPROVED BUILDING PLAN FOR MUMBAI BUILDING DATED 3.11.2016 533-538 19. RELEVANT EXTRACT OF MINUTES OF THE BOARD OF DIRECTORS OF AJL HELD ON FEBRUARY 22, 2013 WHEREIN IT WAS NOTED THAT THE PUBLICATION OF NATIONAL HERALD WOULD BE CONSIDERED ON WEB - SITE. 539 ITA NO. 7751/DEL/2017 170 20. INVOICE OF PURCHASE OF INTERNET / WEB DOMAIN NAME WWW.NATIONALHERALD.COM BY AJL ON SEPTEMBER 12, 2014 540 21. RELEVANT EXTRACT OF MINUTES OF THE BOARD OF DIRECTORS OF AJL HELD ON FEBRUARY 24, 2016 WHEREIN IT WAS NOTED THAT THE ROUGH ESTIMATES OF MONTHLY EXPENDITURE FOR PUBLISHING THE NEWS PAPERS 541 22. RELEVANT EXTRACT OF MINUTES OF THE BOARD OF DIRECTORS OF AJL HELD ON JUNE 28, 2016 DISCUSSING THAT THE NEWSPAPER BUSINESS SHALL BE RESUMED AT THE 542 23. ON JULY 10, 2016, ZEE NEWS WRITES A REPORT TITLED EIGHT YEARS AFTER IT WAS SHUT DOWN, CONGRESS RE LAUNCH NATIONAL HERALD NEWS PAPER 543-544 24. RESOLUTION PASSED IN THE MEETING OF BOARD OF DIRECTORS OF AJL HELD ON SEPTEMBER 26, 2016 TO THE NEWSPAPER BUSINESS SHALL BE RESUMED 546 25. BREACH NOTICE DATED 10.10.2016 ISSUED BY LDO 547-548 26. LETTER DATED 07.04.2018 AJL LETTER TO LDO STATING THAT THE BREACHES MENTIONED IN 10.10.2016 BREACH NOTICE WERE RECTIFIED 549-565 27. SHOW CAUSE NOTICE DATED JUNE 18, 2018 ISSUED BY LDO ALLEGING FO R THE FIRST TIME THAT NO PRINTING ACTIVITY WAS BEING CARRYING OUT IN THAT PREMISES. 566-567 28. LIST OF ARTICLES PUBLISHED UNDER YOUNG INDIA TAB ON WWW.NATIONALHERALDLNDIA.COM ALONG WITH BREAKUP OF ARTICLES WRITTEN BY NH REPORTERS, EDITORS AND OTHER AUTHORS 568 29. REPORT OF GOOGLE ANALYTICS SHOWING OUTREACH TO YOUTH BY ONLINE NEWS PORTALS OPERATED BY AJL UP TO 21.09.2019 569 30. RANKING OF AJLS ONLINE NEWS PORTALS AS PER ALEXA, AN 570 AMAZON.COM COMPANY 31. LETTER DATED 21.07.2014 WRITTEN TO DDIT, UNIT 4(3), NEW DELHI COMPLAINING ABOUT LEAKAGE OF THE INFORMATION TO MEDIA AND CARRYING A WITCH HUNT 571- 576 32. LETTER DATED 05.08.2014 WRITTEN TO DDIT, UNIT 4(3), NEW DELHI STATING THAT ALL THE DOCUMENTS SOUGHT ARE ALREADY AVAILABLE IN THE PUBLIC DOMAIN 577- 579 33. LETTERS WRITTEN TO CHAIRMAN, CBDT IN DECEMBER 2017, JANUARY 2018 AND JULY 2018 POINTING OUT VARIOUS VIOLATIONS U/S. 138 OF THE ACT IN THE APPELLANTS CASE AND REQUESTING TO TAKE NECESSARY ACTIONS 580- 592 ITA NO. 7751/DEL/2017 171 34. CLASSIFICATION OF AJL AS A NEWSPAPER COMPANY BY ROC AS PER ITS CIN NUMBER S 593- 600 120 MOST OF THESE DOCUMENTS, THOUGH SUBMITTED AT THE REJOINDER STAGE, ARE IN NATURE OF CLARIFICATIONS TO THE SUBMISSIONS MADE BY THE LD. DR AND THE LETTERS WRITT EN TO DDIT IN 2014 AND CERTAIN NOTICES ISSUED BY LDO, BUT NONE OF THE DOCUMENTS FILED IMPINGE UPON OUR FINDING IN ANY MANNER AS GIVEN ABOVE, BECAUSE NONE OF THESE DOCUME NTS PROVE THAT ACQUISITION OF AJL BY THE ASSESSEE COMPA NY WAS FOR CARRYING OUT ANY CHARITABLE ACTIVITIES IN PURSU ANCE OF ITS OBJECTS NOR ANY SUCH ACTIVITY WAS CARRIED DURING THE RELEVANT PERIOD. ACCORDINGLY, THESE ADDITIONAL EVID ENCES, AS FILED BY THE ASSESSEE, THOUGH ARE TAKEN ON RECORD, BUT WE DO NOT DEEM FIT TO ADJUDICATE ON EACH AND EVERY DOC UMENT FOR THE REASONS GIVEN IN THE FOREGOING PARAGRAPHS. 121 ONE OF THE KEY CONTENTIONS RAISED BY THE LD. COUNSE L BEFORE US IS THAT THE LD. CIT(E) DOES NOT HAVE THE POWER T O CANCEL THE REGISTRATION FROM RETROSPECTIVE DATE AND ANY SU CH CANCELLATION CAN ONLY BE PROSPECTIVE, I.E., FROM TH E DATE OF PASSING OF THE ORDER AND IN SUPPORT OF WHICH CERTAIN DECISIONS HAVE ALSO BEEN RELIED UPON. FROM A BARE R EADING OF SECTION 12AA (3) IT IS SEEN THAT, SECTION PROVID ES THAT WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION AND IF SUBSEQUENTLY, PR. CIT OR CIT IS SATISFIED THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR ARE NOT ITA NO. 7751/DEL/2017 172 CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TR UST, HE MAY CANCEL THE REGISTRATION BY WAY OF AN ORDER IN WRI TING. CONSEQUENTLY, IF THERE IS VIOLATION OF ANY SUCH CON DITIONS, THEN THE REGISTRATION SO GRANTED CAN BE CANCELLED B Y THE CIT. NOWHERE, THE STATUTE ENVISAGES THAT THE CANCELL ATION CANNOT BE RETROSPECTIVE OR IT HAS TO BE NECESSARILY PROSPECTIVE. WHAT IT PROVIDES THAT THE COMMISSIONER HAS STATUTORY POWERS TO CANCEL THE REGISTRATION U/S. 12 A/12AA IF HE FINDS REASON TO BELIEVE THAT THE ACTIVITIES O F THE ASSESSEE ARE NOT IN LINE WITH ITS OBJECTS OR THE ACT IVITIES CARRIED OUT BY THE ASSESSEE ARE NOT GENUINE IN NATU RE. IF FROM THE DATE WHEN REGISTRATION HAS BEEN GRANTED, T HE ASSESSEE HAS NOT CARRIED OUT ANY ACTIVITY IN LINE WI TH ITS OBJECTS OR THE ACTIVITIES CARRIED OUT ARE NOT GENUI NE, THEN FROM THAT DATE ITSELF, THE REGISTRATION CAN BE CANC ELLED BECAUSE IT IS ONLY WHEN THE KNOWLEDGE OF SUCH BREACH COME TO THE NOTICE OF THE COMMISSIONER, THEN HE HAS THE POWER TO CANCEL THE REGISTRATION FROM THE DATE HE NOTICES THE INFRINGEMENT. THE CANCELLATION OF REGISTRATION, WHET HER WITH RETROSPECTIVE EFFECT OR PROSPECTIVE, DEPENDS UPON T HE FACTS AND CIRCUMSTANCES OF THE CASE AND THE COMMISSIONER HAS POWER TO CANCEL THE REGISTRATION FROM THE TIME WHEN SUCH BREACH HAS OCCURRED. SUPPOSE, IF THE ASSESSEE AFTER GRANT OF REGISTRATION CARRIES OUT ITS ACTIVITIES IN ACCORDAN CE WITH ITS OBJECTS AND THE ACTIVITIES ARE ALSO GENUINE THEN TH E ITA NO. 7751/DEL/2017 173 ASSESSEE IS ENTITLED FOR BENEFITS OF SECTION 12AA; AND IF FROM A PARTICULAR PERIOD OR YEAR, THE ACTIVITIES ARE FOU ND TO BE EITHER NON-GENUINE OR NOT CARRIED OUT IN ACCORDANCE WITH ITS STATED OBJECTS, THEN THE COMMISSIONER CAN CANCE L THE REGISTRATION FROM THE DATE OR PERIOD WHEN SUCH NON GENUINENESS IS FOUND. HONBLE MADRAS HIGH COURT IN THE CASE OF PRATHYUSHA EDUCATIONAL TRUST (SUPRA) HAVE C LEARLY REITERATED THIS PROPOSITION, RELEVANT TEXT OF WHICH HAS BEEN ALREADY INCORPORATED ABOVE, WHEREIN THEIR LORDSHIPS HAVE HELD THAT IT A MISNOMER TO SATE THAT THE ORDER IS RETROSPECTIVE OR RETROACTIVE AND THE ORDER OF THE CANCELLATION OF REGISTRATION EVEN PASSED ON SUBSEQU ENT DATE WOULD TAKE EFFECT FROM THE YEAR WHEN CAUSE OF ACTION AROSE. 122 HERE, IN THIS CASE, AS WE HAVE GATHERED FROM THE MA TERIAL FACTS ON RECORD AND DISCUSSED IN DETAIL, THE ASSESS EE AT THE TIME OF SEEKING REGISTRATION ITSELF HAS CONCEALED T HE MATERIAL FACTS AND NOT DISCLOSED THE ENTIRE EVENTS OF TRANSACTIONS WHICH HAD UNDERGONE FROM THE DATE OF INCEPTION OF ASSESSEE COMPANY TILL THE GRANT OF REG ISTRATION AND ONE OF THE CONDITIONS ON WHICH THE REGISTRATION HAS BEEN GRANTED STOOD VIOLATED FROM THE DAY ONE AND TH EREFORE, UNDER THESE CIRCUMSTANCES, THE LD. CIT(E) WAS FULLY JUSTIFIED IN LAW AND ON FACTS IN CANCELLING THE REGI STRATION FROM THE DATE OF GRANTING OF REGISTRATION ITSELF, I .E., FROM THE ASSESSMENT YEAR 2011-12. SECONDLY, HERE IN THIS CAS E IT ITA NO. 7751/DEL/2017 174 HAS BEEN FOUND THAT EVEN AFTER GRANT OF REGISTRATIO N U/S. 12AA, NO GENUINE ACTIVITIES HAVE BEEN CARRIED OUT B Y THE ASSESSEE EITHER IN FURTHERANCE OF ITS OBJECTS OR OT HERWISE, WHICH CAN BE HELD TO BE FOR CHARITABLE PURPOSE BECAU SE ONE OF THE SO CALLED PURPOSE OF ACQUIRING AJL WAS NOT CA RRIED OUT AT ALL. OTHERWISE, ALSO, WE HAVE ALREADY DISCUSS ED AND GIVEN OUR CATEGORICAL FINDINGS THAT TILL THE GRANT OF REGISTRATION AND SURRENDER MADE BY THE ASSESSEE, NO WORTHWHILE ACTIVITIES WERE CARRIED OUT BY AJL. IN FAC T, WHAT IT TURNS OUT TO BE IS THAT, THE ASSESSEE HAS ACQUIR ED AJL, A COMPANY THAT OWNS PROPERTY WORTH HUNDREDS OF CRORES FROM WHICH THE AJL HAD BEEN ENJOYING ONLY RENTAL INC OME. CLEARLY, AJL, WHICH HAD BEEN EARNING RENTAL INCOME, CANNOT BE HELD THAT ITS ACTIVITIES WERE ALIGNED WITH THE OBJECTS OF THE ASSESSEE COMPANY OR THROUGH AJL; IT WAS CARRYING OUT ACTIVITIES IN PURSUANCE OF ITS OBJECTS QUA THAT PERIOD. HENCE, IN THAT SENSE, THE ASSESSEES ACTIVI TIES CANNOT BE HELD TO BE GENUINE. THUS, THE CANCELLATIO N OF REGISTRATION U/S 12AA BY THE LD. CIT (E) FROM A.Y. 2011-12 IS UPHELD. 123 THOUGH WE HAVE TRIED TO NOTE DOWN VARIOUS ARGUMENTS PLACED BY THE PARTIES AND THE JUDGMENTS RELIED UPON AND HAVE ALSO DEALT WITH ALL THE CORE ARGUMENTS, BUT SOM E OF THE CONTENTIONS AND SUBMISSIONS MADE ARE NOT BEING DEALT WITH, AS WE DO NOT FIND THEM TO BE RELEVANT ON THE FA CTS AND ITA NO. 7751/DEL/2017 175 CIRCUMSTANCES AND ALSO IN VIEW OF OUR DETAIL DISCUSS ION AND FINDINGS GIVEN ABOVE. 124 ACCORDINGLY, IN VIEW OF OUR FINDINGS GIVEN ABOVE, WE HOLD THAT THE LD. CIT (E) WAS JUSTIFIED IN CANCELLING THE REGISTRATION FROM THE ASSESSMENT YEAR 2011-12, BECA USE NONE OF THE ACTIVITIES OF THE ASSESSEE WAS CARRIED O UT IN ACCORDANCE WITH ITS OBJECTS NOR ITS ACTIVITIES CAN B E HELD TO BE GENUINE. CONSEQUENTLY, THE APPEAL OF THE ASSESSE E IS DISMISSED. 125 IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER 2019 . SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH NOVEMBER, 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI