CIT Vs. M/s. Apeejay Education Society, I.T.A. No. 402 of 2014 (O&M), Date of Decision: 10.03.2015, Punjab & Haryana High Court
Whether the revenue was justified in withdrawing the registration granted under Section 12AA(3) to the assessee on mere presumptions and on surmises that income derived by the trust or the institution would not be used in the proper manner and for the purposes relating to any charitable purpose?
Held_No
Brief Facts:
The assessee-society was granted registration under Section 12AA w.e.f. 01.04.1998. The society was running around 21 institutes which were spread over the country. A search and seizure operation under Section 132(1) was conducted by the Directorate of Income Tax at the premises of one Parag V. Mehta on 22.03.2011. It was accordingly found that one M/s. Washington Softwares Ltd. (M/s. WSL) being run by Sanjay D. Sonawani, was a bogus company and engaged in providing accommodation entries. Further, the statement of the said person was recorded on 12.05.2011 who also admitted that he had provided accommodation entries to the assessee. Accordingly, survey operations were also conducted on the business entities of the educational group of the assessee to consider the genuineness of purchase of software from M/s. WSL. The bogus bills were found entered in the books of accounts of asessee. Accordingly, after providing an opportunity, the CIT concluded that the activities of the society were not genuine and its funds were misutilized for many years after the registration was granted and accordingly the registration was withdrawn and cancelled. On appeal before ITAT, the withdrawal of registration was set aside on the basis that no finding had been recorded that the institute was not imparting education or not carrying out any activity which was the main object and the genuineness of the activities of the trust was held to be in consonance with the objects of the trust. Aggrieved revenue filed appeal before Hon’ble High Court.
The assessee-society was granted registration under Section 12AA w.e.f. 01.04.1998. The society was running around 21 institutes which were spread over the country. A search and seizure operation under Section 132(1) was conducted by the Directorate of Income Tax at the premises of one Parag V. Mehta on 22.03.2011. It was accordingly found that one M/s. Washington Softwares Ltd. (M/s. WSL) being run by Sanjay D. Sonawani, was a bogus company and engaged in providing accommodation entries. Further, the statement of the said person was recorded on 12.05.2011 who also admitted that he had provided accommodation entries to the assessee. Accordingly, survey operations were also conducted on the business entities of the educational group of the assessee to consider the genuineness of purchase of software from M/s. WSL. The bogus bills were found entered in the books of accounts of asessee. Accordingly, after providing an opportunity, the CIT concluded that the activities of the society were not genuine and its funds were misutilized for many years after the registration was granted and accordingly the registration was withdrawn and cancelled. On appeal before ITAT, the withdrawal of registration was set aside on the basis that no finding had been recorded that the institute was not imparting education or not carrying out any activity which was the main object and the genuineness of the activities of the trust was held to be in consonance with the objects of the trust. Aggrieved revenue filed appeal before Hon’ble High Court.
Held:
“Section 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit. The language used in the section only requires that activities of the trust or the institution must be genuine. The profit earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. Accordingly, keeping in view the peculiar facts and circumstances as noticed above, we are of the opinion that the CIT was not justified in passing the impugned order for withdrawing the exemption as admittedly, the assessee is carrying out educational activities by running a large number of educational institutions all over the country and, therefore, both the income tax appeals were dismissed.”
No comments:
Post a Comment