GIAN SAGAR EDUCATIONAL AND CHARITABLE TRUST,CHANDIGARH vs. COMMISSIONER OF INCOME TAX, EXEMPTION, CHANDIGARH, CHANDIGARH

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHANDIGARH HYBRID HEARING BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI RAJESH DAMODARLAL SHARMA, JM 1. आयकरअपीलसं./ ITA No.898/CHANDI/2025 & 2. आयकरअपीलसं./ ITA No.1478/CHANDI/2026 Gian Sagar Educational and CIT(E) Charitable Trust Central Revenue Building बनाम/ Vs. SCO – 109-110, Sector – 43B Himalaya Barg, Sector – 17E Chandigarh (UT) - 160041 Chandigarh – 160017 �ायीलेखासं./जीआइआरसं./PAN/GIR No. AAATG-5827-B (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Sh. Sudhir Sehgal (Advocate) – Ld. AR ��थ�कीओरसे/Respondent by : Smt. Jaishree Sharma (CIT) Ld. DR सुनवाईकीतारीख/Date of Hearing : 12-08-2026 घोषणाकीतारीख /Date of Pronouncement 01-09-2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals are connected appeals. First, we take up ITA No.898/Chandi/2025 which arises out of an order of Ld. Commissioner of Income Tax (Exemption), Chandigarh, [CIT(E)] dated 03-06-2025 denying registration u/s 12A(1)(ac)(ii) as sought by the assessee-trust. 2. Upon perusal of para 3.3.6 of the impugned order, it could be seen that the registration has been denied due to the fact that the

registration of the assessee-trust was cancelled u/s 12AA(3) r.w.s. 12A by Ld. Pr. CIT on 01.03.2016. This cancellation was set aside by Tribunal and the matter was restored back to Ld. Pr. CIT(Central)-3, New Delhi for deciding the dispute afresh. The registration was again denied to the assessee and the assessee’s further appeal to Tribunal stood dismissed on 08.04.2019. In the light of said cancellation, Ld. CIT(E) held that that the assessee could seek impugned registration only if it had regular registration which was not the case. The assessee fraudulently obtained regular registration from CPC on 28.05.2021 by misrepresentation of material facts. The assessee was also involved in non-genuine activities which was kept hidden. The assessee chose to file old 12AA granted to it on 01.04.2006 with its application filed u/s 12A(1)(ac)(ii) clearly with the intention of misleading the department. The activities of the assessee were not charitable at all. Accordingly, the present application was rejected against which the assessee is in further appeal before us. 3. The ld. AR, at the outset, stated that the assessee preferred misc. application MA No.805/Del/2019 against ITA No.6054/Del/2018 which stood accepted by Tribunal vide order dated 17.12.2019 wherein order dated 08.04.2019 was recalled. Subsequently, the order of Ld. Pr. CIT dated 27.10.2017 cancelling the registration was held by Tribunal to be legally not valid vide order dated 03.09.2020. The copies of the same have been placed on record. The Ld. AR, thus stated that the impugned adjudication proceeds on wrong premise and therefore, a

prayer has been made to remand back the matter to Ld. CIT(E) for re- adjudication in the light of correct facts. 4. At this stage, Ld. CIT-DR vehemently supported rejection of impugned registration and filed detailed written submissions as under: -

Written Submissions of Respondent / Revenue are as follows: 1. The present appeal is against the order dated 03.06.2025 passed by the CIT (Exemptions), Chandigarh u/s 12AB, rejecting the assessee’s application filed on 31.12.2024 u/s 12A(1)(ac)(ii). The CIT(E) examined the genuineness of activities and compliance with other applicable laws. 2. Subsequent material development – ED attachment Subsequent to the impugned order, a significant independent development has taken place. The Directorate of Enforcement, Delhi Zonal Office, vide official Press Release dated 01.06.2026 (Annexure-I), has stated that 14 immovable properties belonging to Gian Sagar Educational & Charitable Trust, situated at Ramnagar, Punjab, have been provisionally attached under the Prevention of Money Laundering Act, 2002. The attached properties have a stated current market value of Rs.1,595.85 crore, excluding bank liabilities. The attachment arises from ED investigation into the PACL Ltd. collective investment scheme case. Significantly, the ED has recorded that: “The attached 14 properties have been identified as having been acquired from investor funds, constituting Proceeds of Crime.” The ED has further recorded: “The investigation revealed that the land and infrastructure of Gian Sagar Educational & Charitable Trust were financed using funds diverted from M/s PACL, which were collected from gullible investors.” Thus, the ED investigation specifically concerns the land and infrastructure of the assessee-Trust itself and records a finding regarding the source of funds utilized for

4 their creation. This directly bears upon the genuineness of the activities and the manner in the Trust’s substantial infrastructure came into existence. The ED has further stated that the investigation emanated from the CBI FIR registered pursuant to directions of the Hon’ble Supreme Court; charge-sheets have been filed against 33 accused persons / entities and the alleged PACL scheme involved mobilization of more than Rs.48,000 crore from investors. The Special Court under PMLA has taken cognizance of the prosecution complaints. 3. Earlier PCAL-related proceedings The ED development is also relevant in the background of the Trust’s earlier registration proceedings. The Hon’ble ITAT, Delhi in its order dated 03.01.2017 (Annexure-II)- in the assessee’s own case – records investigation in the PACL group of cases and proceedings concerning an alleged payment of Rs.2 crore to the then Chief of the Medical Council of India. The assessment proceedings resulted in an addition of Rs.2 Crore in the hands of the Trust, stated to have been confirmed by the CIT(A). Further, the Hon’ble Bench in its order dated 03.09.2020 (Annexure-III) has recorded in para 45 that the proceedings against Sh. Ketan Desai were dropped in view of the order of the Hon’ble High Court awaiting the sanction for prosecuting. The Trust’s registration u/s 12AA was earlier cancelled on 01.03.2016 and again on 27.10.2017 which was confirmed by Hon’ble ITAT in its order dated 08.04.2019 in ITA No. 6054/DEL/2018 (Annexure-IV). The CIT(E) has considered this history while deciding the present application. 4. Registration obtained from CPC The CIT(E) has further recorded that, despite the earlier cancellation, the assessee obtained registration from CPC on 28.05.2021 by uploading earlier order of the Hon’ble ITAT dated 08.04.2019. The assessee failed to upload latter ITAT order dated 03.09.2020 which had granted registration. 5. Interruption in educational activities Public records also show a material interruption in the Trust’s educational activities. The PIB Press Release dated 18.12.2017 (Annexure-V) records that students of Gian

5 Sagar Medical College & Hospital, Patiala were permitted to be shifted to other medical colleges following withdrawal of the Essentiality Certificate. The Hon’ble Punjab and Haryana High Court, vide order dated 18.08.2022 (Annexure VI), also recorded that Gian Sagar Dental College & Hospital was shut down in 2017, with nearly 1,550 students shifted to other colleges. A new medical college was subsequently started following a change in management. 6. Compliance with the other laws The CIT(E) specifically required the Trust furnish compliance with laws material to its objects while examining the application u/s 12AB. In this regard, PPCB issued show-cause notice dated 09.12.2022 (Annexure-VII) to the Trust’s Medical College & Hospital and Dental College & Hospital for alleged violations of the Water Act, 1974 and Bio-Medical Waste Management Rules, 2016. During inspection dated 14.10.2022, the hospital was found operating with 440 beds and 100 dental chairs, against consent for 300 beds and 25 dental chairs. The inspection also recorded that the ETP was not operational and the enhanced capacity was being operated without prior PCCB consent. The matter is presently before the National Green Tribunal in Appeal No.20/2026, Gian Sagar Educational & Charitable Trust v. Punjab Pollution Control Board. These proceedings concern the Trust’s medical / hospital activities and are therefore relevant to the statutory examination of genuineness of activities and compliance with other applicable laws. (Source: Official NGT record and annexure filed Appeal No. 20/2026). 7. Prayer The revenue respectfully submits that the ED attachment dated 01.06.2026 is the most significant subsequent development. An independent statutory investigating agency has provisionally attached 14 properties standing in the name of the assessee-trust, valued at Rs.1,595.85 crore, and has specifically recorded that the Trust’s land and infrastructure from funds diverted from PACL.

6 The revenue is not seeking adjudication of the PMLA proceedings by this Hon’ble Bench. The ED material is placed as a subsequent factual development directly concerning the Trust’s own assets and infrastructure, relevant to examination of the genuineness of its activities. The revenue therefore prays that the ED Press Release dated 01.06.2026 and underlying attachment order / property schedule may kindly be taken on record as additional evidence / subsequent material under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, subject to the directions of the Hon’ble Bench. The assessee may further be directed to furnish a sworn affidavit explaining: (i) Source of funds for acquisition of the attached land and creation of infrastructure; (ii) Financial transactions/nexus with PACL and related entities; (iii) Complete disclosures made while obtaining CPC registration dated 28.05.2021;and (iv) Present status of the PMLA proceedings. (v) Whether the fees charged for hospital and education is akin to charity. In view of the above material, the Revenue submits that the application for registration cannot be examined merely with reference to the stated charitable objects. The actual conduct of the Trust, its regulatory history, source of its substantial assets and the subsequent ED findings concerning those very assets are material for determining genuineness of activities u/s 12AB. Submitted for kind consideration of the Hon’ble Bench.

7 2. It was brought to the notice of the Hon’ble Bench that the order of ITAT, dated 08.04.2019 was called for by the Hon’ble Bench on 27.12.2019 in M.A. No.805/Del/2019 and finally, the ITAT vide order, dated 03.09.2020 had granted the registration and copy of such order have been placed at pages 22 to 28 and 29 to 55 of the Paper Book. Thus, the Ld. CIT(Exemptions) has not taken into consideration the subsequent order of the Hon’ble Bench and thereafter, has given certain comments that assessee did not meet the eligible criteria for maintaining the register u/s 12A. 3. The facts as borne out from the record of the file of the Trust that there was complete change of the Trustees as mentioned in the order of the Ld. CIT (Exemptions) at page 10 and 11 of the order way back in the year 2018 and major restructuring was done and the all the old trustees resigned from the trust and new trustees were inducted post acquisition of the trust and the outstanding amount towards the NPA accounts of PBN Bank were paid off. Further, none of new trustee was related to old trustees. 4. Gian Sagar Hospital is 680 bedded Multi Specialties Hospital attached to Gian Sagar Medical College. It has latest equipment in all the departments to work efficiently for the benefits of patients. Since inception, we are setting a track record based on quality facilities. We are fully aware of the opportunities and demands that modern education brings. Thus, the scope and breadth of academic programmes is being expanded. Gian Sagar Hospital bring together some of the most talented medical professionals with the best of technology and working environment to ensure the highest standard of patient care at an affordable cost. a). Charity Welfare we provide free delivery, and organize free dental checkup free camp like BP monitor sugar test etc.. and provide medicine to patients free of cost b). Pingalwara Ashram Patient treatment free of cost, and Ambulance is also free of cost c). As per charitable trust our rates are very nominal charges OPD card is also free and consultancy charges free of cost, and comparison to other private hospital our rates as per details below mentioned. Particulars Gian Sagar Neelam Hospital

CT Scan 600 2000-2500 Lab Test CBC 40 150-200 RBS 20 100 X Ray 200 600-700 Ultrasound 400 1000 ECG 50 150-200 RFT 120 300-400 LFT 250 500-600 Lipid Profile 200 500-600

9 reference to the order of the Hon’ble ITAT, dated 03.01.2017, which order has no sanctity, since, there has been subsequent order granting the registration to the assessee vide order, dated 03.09.2020 and, thus, it is apparently irrelevant as of today. b) Further, certain facts have been mentioned with regard to certain earlier order of the ITAT, which have been mentioned in the Brief Synopsis also at page 3 to 5, which facts clearly demonstrate in favour of assessee. c) Further, it is submitted that the Press Release, which is being referred to is, dated 01.06.2026 after passing of the order, dated 03.06.2025 by the Ld. CIT (DR) and, as such, these finding by way of Press Release are not relevant besides the fact that they relate to earlier Management and it had earlier been dropped, which facts have been mentioned in the order of Hon’ble ITAT, dated 03.09.2020. As regards the observation of the department that order, dated 03.09.2020 was not uploaded, it is very humbly submitted that this order is part of the record of the department and merely not uploading the order by the assessee, nothing will go against the assessee. d) Regarding the interruption in education activities, it is submitted that that what we are seeking is registration from Asstt. Year 2027-28 onwards and these facts has been mentioned with the Press Release, dated 18.12.2017 and, as such, these facts are not relevant at all and even the Hon’ble Punjab & Haryana High Court vide order, dated 18.08.2022 has passed the order in favour of assessee when the new Medical College had started functioning and this fact goes in favour of assessee. e) The department has referred to certain matter before the National Greet Tribunal in appeal No. 20/2026, which is still pending and, thus, the finding are not part and parcel of the order of CIT (Exemptions) and hence no reliance can be placed and further, the matter is sub-judicious before the relevant Authorities and any observation by the Ld.CIT (DR) on this point is not relevant at all.

10 The department has sought certain facts by way of this letter, it is submitted that these facts are not relevant to the facts and circumstances of the case and are not part of the order for seeking registration u/s 12A, for which, the registration has been refused on different grounds and further, when such facts are not part and parcel of the order u/s 12A, they cannot be considered in the present proceedings. We hope, your kind honour shall find the above said submissions in order and oblige.

been sought by Ld. AR on the strength of condonation petition dated 12.08.2026 wherein the delay has been attributed to change in assessee’s counsel. We find that the rejection of impugned approval u/s 80G is merely consequential in nature. Therefore, we admit the appeal and restore this appeal also back to Ld. CIT(E) on similar lines for fresh adjudication in the light of outcome of registration application u/s 12A(1)(ac)(ii). This appeal also stand allowed for statistical purposes. 8. Both the appeals stand allowed for statistical purposes. Order pronounced on 01st September, 2026

-Sd- -Sd- (RAJESH DAMODARLAL SHARMA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER AS Dated: 01-09-2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KENDRIYA SADAN, SECTOR – 9A CHANDIGARH