JAYPEE UNIVERSITY OF INFORMATION TECHNOLOGY,WAKNAGHAT vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

आयकर अपीलीय अिधकरण,च�ीगढ़ �ायपीठ “A” , च�ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: HYBRID MODE �ी लिलत कुमार, �ाियक सद� एवं �ी मनोज कुमार अ�वाल, लेखा सद� BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA Nos. 858 & 859/Chd/2026 �नधा�रण वष� / Assessment Year : 2026-27 Jaypee University of बनाम CIT(E), Information Technology, Chandigarh Waknaghat, Kandaghat, Distt. Solan H.P. �ायी लेखा सं./PAN NO: AAATJ4059Q अपीलाथ�/Appellant ��थ�/Respondent िनधा�रती की ओर से/Assessee by : Sh. Naveen N.D. Gupta, CA (Virtual) राज� की ओर से/ Revenue by : Smt. Jaishree Sharma, CIT DR (Virtual) सुनवाई की तारीख/Date of Hearing : 23.06.2026 उदघोषणा की तारीख/Date of Pronouncement : 30.06.2026 आदेश/Order PER LALIET KUMAR, J.M: These two appeals are filed by the Assessee bearing ITA Nos 858 & 859/Chd/2025 feeling aggrieved by the separate orders passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh, each dated 16.03.2026 for the A.Y 2026-27. 2. Brief Facts- 2.1 The assessee, Jaypee University of Information Technology, Waknaghat, Solan, Himachal Pradesh, is an educational institution

2 858 & 859/Chd/2025 established under the provisions of the Jaypee University of Information Technology Act enacted by the State Legislature of Himachal Pradesh and is engaged in imparting education. The assessee was already enjoying registration under section 12AB of the Income-tax Act, 1961 and, upon expiry of the earlier registration, filed an application in Form No. 10AB seeking renewal of registration under section 12AB of the Act. 2.2 During the course of proceedings, the ld. Commissioner of Income Tax (Exemptions), Chandigarh called for various details to examine the genuineness of the activities of the assessee and its compliance with the statutory requirements. Upon examination of the material placed on record, the ld. CIT(E) observed that the assessee had acquired immovable properties situated at Noida and Shimla during the relevant financial year and had allegedly failed to establish their nexus with its charitable and educational objects. The ld. CIT(E) further observed that the assessee had not satisfactorily explained the instances of non-deduction of tax at source under section 194Q of the Act, as reported in the audit report. Holding that these facts raised doubts regarding the genuineness of the activities of the assessee, the ld. CIT(E), vide

3 858 & 859/Chd/2025 order dated 16.03.2026, rejected the application for renewal of registration under section 12AB of the Act. 2.3 Aggrieved by the aforesaid order of the ld. CIT(E), the assessee has preferred the present appeal before the Tribunal.

4 858 & 859/Chd/2025 3.3 The ld. AR submitted that the ld. CIT(E) has travelled beyond the limited scope of enquiry permissible under section 12AB. It was argued that at the stage of grant or renewal of registration, the competent authority is only required to satisfy himself regarding the genuineness of the activities and the charitable nature of the objects of the institution. The provisions do not empower the authority to undertake an assessment of the application of income or adjudicate upon alleged violations which may arise during the course of assessment proceedings. 3.4 With regard to the purchase of immovable properties situated at Noida and Shimla, the ld. AR submitted that the observations recorded in the impugned order are factually incorrect and contrary to the material available on record. It was submitted that the properties were acquired exclusively for institutional purposes with the object of expanding the infrastructure and educational activities of the University. The investments were made out of accumulated funds and surplus generated in earlier years, and the purchase had been duly approved by the competent governing authorities of the University through resolutions passed by the Board of Management. Copies of the relevant resolutions and supporting documents had

5 858 & 859/Chd/2025 been furnished before the ld. CIT(E), but the same were ignored while passing the impugned order. 3.5 The ld. AR further submitted that merely because the properties had not yet been put to actual educational use on the date of consideration of the application could not lead to an inference that the investments were not for charitable purposes. It was argued that acquisition of land or buildings for future expansion of educational infrastructure is a normal and legitimate activity of an educational institution. The provisions of section 12AB do not require that every asset purchased should be immediately put to use before registration can be granted. 3.6 The ld. AR also assailed the findings of the ld. CIT(E) regarding non-deduction of tax at source under section 194Q. It was submitted that the appellant is not carrying on any business or commercial activity and is solely engaged in imparting education. Therefore, the provisions of section 194Q, which are applicable to specified buyers carrying on business, have been erroneously invoked by the ld. CIT(E). It was further submitted that the issue regarding applicability or otherwise of section 194Q is a matter relating to assessment and tax compliance and cannot form the sole basis for denying registration under section 12AB.

6 858 & 859/Chd/2025 3.7 The ld. AR contended that even assuming, without admitting, that there was any procedural lapse relating to deduction of tax at source, such alleged non-compliance does not establish that the activities of the appellant are not genuine. The appellant continues to carry on only educational activities in accordance with its objects and there is no allegation of diversion of income for private benefit or carrying on activities contrary to its objects. 3.8 Referring to the judgment of the Hon'ble Supreme Court in Ananda Social & Educational Trust v. CIT [(2020) 426 ITR 340 (SC)], the ld. AR submitted that while considering an application under section 12AA/12AB, the authority is only required to examine the objects and genuineness of the activities and cannot refuse registration by entering into issues relating to the application of income or alleged future violations. 3.9 The ld. AR further relied upon the decision of the Hon'ble Supreme Court in New Noble Educational Society v. Chief Commissioner of Income Tax [(2022) 143 taxmann.com 276 (SC)] to submit that the stage of registration is distinct from the stage of assessment and that compliance with various provisions relating to computation or application of income has to be examined by the Assessing Officer in the assessment proceedings.

7 858 & 859/Chd/2025 3.10 The ld. AR distinguished the reliance placed by the ld. CIT(E) upon the judgment of the Hon'ble Supreme Court in CIT (Exemptions) v. Jagannath Gupta Family Trust [(2019) 411 ITR 235 (SC)] by submitting that the said decision was rendered on entirely different facts where non-genuine transactions had been established. In the present case, there is neither any finding nor any evidence suggesting that the appellant has carried out any non- genuine activity or has deviated from its educational objects. 3.11 It was further submitted that the impugned order is founded merely on presumptions and surmises without recording any categorical finding that the activities of the appellant are not genuine or that its objects are not charitable. The ld. CIT(E) has proceeded on issues which properly fall within the domain of assessment proceedings and has ignored the settled legal position governing registration under section 12AB. 3.12 The ld. AR accordingly prayed that the impugned order rejecting renewal of registration under section 12AB be quashed and the ld. CIT(E) be directed to grant registration to the appellant. Alternatively, it was submitted that if any further factual verification is considered necessary, the matter may be restored to

8 858 & 859/Chd/2025 the file of the ld. CIT(E) with appropriate directions after affording adequate opportunity of hearing to the assessee.

9 858 & 859/Chd/2025 relevant financial year the assessee had made substantial investments in residential immovable properties situated at Noida and Shimla. Despite specific opportunities, the assessee failed to produce any cogent documentary evidence demonstrating that the said properties were being utilized or were intended to be utilized for educational or charitable purposes. No evidence regarding commencement of institutional activities, administrative offices, educational infrastructure or any other functional use of the said properties was furnished before the ld. CIT(E). 4.4 The ld. DR further submitted that the assessee merely produced copies of sale deeds and certain extracts of Finance Committee proceedings, which were recorded after acquisition of the properties and could not substitute a proper authorization by the competent governing body prior to making such substantial investments. According to the ld. DR, the assessee failed to establish any direct nexus between the acquisition of the residential properties and the advancement of its charitable objects. 4.5 Referring to the findings recorded in the impugned order, the ld. DR submitted that the assessee had also failed to satisfactorily explain the instances of non-deduction of tax at source on payments exceeding the prescribed monetary limits. It was pointed

10 858 & 859/Chd/2025 out that the tax auditor himself had reported such defaults in Form No. 10B. Despite issuance of a detailed questionnaire, the assessee failed to justify why the provisions of section 194Q were not applicable in its case. The explanation offered by the assessee that it was not carrying on business activities was duly considered and rejected by the ld. CIT(E) after examining the statutory provisions. 4.6 The ld. DR submitted that compliance with statutory provisions of the Income-tax Act constitutes an important indicator while examining the genuineness of the activities of an institution. Persistent or substantial statutory non-compliance legitimately raises doubts regarding financial discipline and the manner in which the institution conducts its affairs. Therefore, the ld. CIT(E) was justified in taking these facts into consideration while recording satisfaction under section 12AB. 4.7 The ld. DR further argued that the contention of the assessee that issues relating to application of income or statutory compliance can be examined only during assessment proceedings is misconceived. The provisions of section 12AB specifically require the competent authority to satisfy itself regarding the genuineness of activities and compliance with such requirements of law as are relevant for grant of registration. Therefore, the authority cannot be

11 858 & 859/Chd/2025 expected to ignore glaring discrepancies or statutory violations brought on record during the proceedings. 4.8 The ld. DR distinguished the judgments relied upon by the assessee by submitting that those decisions were rendered on their own peculiar facts and do not lay down an absolute proposition that the Commissioner is precluded from examining whether the activities carried on by an institution are genuine. On the contrary, the Hon'ble Supreme Court in CIT (Exemptions) v. Jagannath Gupta Family Trust [(2019) 411 ITR 235 (SC)] has categorically held that satisfaction regarding genuineness of activities is a mandatory prerequisite for grant of registration and that even a single non- genuine activity may disentitle an institution from claiming registration under the Act. 4.9 The ld. DR submitted that the impugned order nowhere questions the educational objects of the assessee; rather, the rejection is based upon the assessee's failure to satisfactorily establish that its activities and financial decisions were genuinely directed towards achieving those charitable objects. The burden of establishing such genuineness squarely rests upon the applicant institution, which burden, according to the Revenue, has not been discharged in the present case.

12 858 & 859/Chd/2025 4.10 It was, therefore, contended that the ld. CIT(E) had exercised his jurisdiction strictly in accordance with law after considering all the relevant facts and material available on record. No infirmity or perversity could be pointed out in the findings recorded in the impugned order warranting interference by this Tribunal. 4.11 The ld. DR accordingly prayed that the order of the ld. Commissioner of Income Tax (Exemptions), Chandigarh rejecting the application for renewal of registration under section 12AB be upheld and the appeal filed by the assessee be dismissed.

13 858 & 859/Chd/2025 acquisition of immovable properties situated at Noida and Shimla without, according to the ld. CIT(E), establishing their nexus with the charitable and educational objects of the University; and (ii) alleged non-compliance with the provisions relating to deduction of tax at source under section 194Q of the Act. The ld. CIT(E) has, on the basis of these observations, recorded dissatisfaction regarding the genuineness of the activities of the assessee and consequently rejected the application for renewal of registration. 5.4 At the same time, we find considerable force in the contention of the assessee that the appellant is an educational institution duly established under a State enactment and that there is no dispute regarding its charitable objects. The material available on record also shows that the assessee had furnished certain explanations and supporting documents before the ld. CIT(E), including copies of the sale deeds and resolutions of the governing authorities. However, the impugned order does not reveal any detailed examination of these documents or any independent verification regarding the proposed institutional use of the properties acquired by the assessee. 5.5 Similarly, with regard to the applicability of section 194Q of the Act, we are of the considered opinion that the issue requires a

14 858 & 859/Chd/2025 proper factual and legal examination after considering the nature of the activities carried on by the assessee, the relevant statutory provisions and the explanation offered by it. The impugned order does not indicate that such examination has been undertaken in sufficient detail before arriving at the conclusion that the alleged non-compliance itself establishes lack of genuineness of activities. 5.6 It is well settled that while exercising jurisdiction under section 12AB, the competent authority is required to satisfy itself regarding the charitable objects of the institution and the genuineness of its activities. Equally, such satisfaction has to be based upon a proper appreciation of the material available on record after affording adequate opportunity to the applicant. Where the explanation furnished by the applicant requires further verification, the proper course is to conduct such verification before arriving at an adverse conclusion. 5.7 Considering the totality of the facts and circumstances of the case, and in the interest of substantial justice, we are of the view that the matter deserves to be restored to the file of the ld. CIT(Exemptions) for a fresh adjudication. The assessee shall be at liberty to place on record all documentary evidence in support of its claim, including the approvals/resolutions of the competent

15 858 & 859/Chd/2025 governing body, documents evidencing the purpose and proposed utilization of the immovable properties, details regarding the source of investment, as well as its explanation with respect to the applicability or otherwise of the provisions of section 194Q and other statutory compliances. The ld. CIT(E) shall examine the same objectively, make such enquiries as may be considered necessary, and thereafter pass a fresh speaking order strictly in accordance with law after affording reasonable and adequate opportunity of being heard to the assessee. 5.8 We clarify that we have not expressed any opinion on the merits of the rival contentions, and all issues are left open to be adjudicated afresh by the ld. CIT(Exemptions) in accordance with law. 5.9 Accordingly, the impugned orders are set aside and the matters are restored to the files of the ld. CIT(Exemptions) for fresh adjudication in the light of the observations made hereinabove. The assessee is directed to extend full cooperation and furnish all requisite details and evidences as may be called for by the ld. CIT(E). Needless to say, the ld. CIT(E) shall pass a reasoned and speaking orders after granting adequate opportunity of hearing to the assessee.

16 858 & 859/Chd/2025 6. In the result, both the appeals of the assessee are treated as allowed for statistical purposes. Order pronounced in the open court on 30/6/2026 Sd/- Sd/- (MANOJ KUMAR AGGARWAL ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER rkk आदेश की �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��थ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�ीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File

सहायक पंजीकार/ Assistant Registrar