Commissioner Of Income Tax (Exemption), Bhopal, vs. Peoples University,

NEUTRAL CITATION NO. 2025:MPHC-JBP:1583 IN THE HIGH COURT OF MADHYA PRADESH A T J A B A L PU R BEFORE HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI & HON'BLE SMT. JUSTICE ANURADHA SHUKLA ON THE 10th OF JANUARY, 2025 INCOME TAX APPEAL No. 195 of 2024 COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL, Versus PEOPLES UNIVERSITY,

Appearance: Shri Siddharth Sharma – learned counsel for the appellant. Shri Sumit Nema – learned Senior counsel with Shri Ayush Gupta – counsel for the respohndent.

This appeal coming on for admission this day, Justice Sushrut Arvind Dharmadhikari passed the following order : ORDER Heard on I.A.No.21045/2024, which is an application for exemption from filing certified copy of the impugned order. For the reasons mentioned in the application, the same is allowed. Also heard on the question of admission. 2. This appeal under section 260A of the Income Tax Act, 1961, has been filed by the appellant being aggrieved by the order dated 31.1.2024 passed by the Income Tax Appellate Tribunal, Indore, in I.T.A.No.539/Ind/2013 for the Assessment Year 2013-14. The following substantial question of law has been proposed in this appeal : 2

“1. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT has erred in observing that if there is any mistake in the audit report on account of any particular item not reported in appropriate column, the same cannot be a reason for denying registration u/s 12A/12AA of the Act which is in contradiction to Section 12(1)(a) (i) of the Income Tax Act, 1961 as the Commissioner of Income Tax requires complete and accurate documentation to verify the authenticity of the trust's activities. Without such information, it is challenging to determine the genuineness of the trust's operations.

2) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in observing that the alleged lapse of not giving the statement of particulars as per Annexure to Form 10B is also contrary to the record because the Annexure has duly reported all the items which is factually incorrect as the Annexure do not provide any information regarding application or use of Income or property for the benefit of persons referred to in Section 13(3) and investments held at any time during the previous year(s) in concerns in which persons referred to in Section 13(3) have a substantial interest.

(3)Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has inappropriately disregarded the Commissioner of Income Tax's observations concerning the object clause (f) of the assessee trust, which states "To provide consultancy to the industry and public organizations." This activity is non-charitable and distinctly commercial in nature, contravening Section 2(15) of the Income Tax Act. Consequently, the assessee should not qualify for registration under Section 12AA of the Income Tax Act, 1961.

(4) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erroneously overlooked the concerns raised by the Commissioner of Income Tax about the object clause (m) of the assessee trust, which states "To pursue any other objectives as may be approved by the Sponsoring Body (Sarvajanik Jankalyan Parmarthik Nyas, Bhopal). "This clause is problematic as it allows any activity sanctioned by the Sponsoring Body rather than the University's Governing Body. Furthermore, this clause could 3

permit activities that are not charitable in nature. This is in contravention to Section 2(15) of the Income Tax Act, 1961 and therefore, the assessee is not eligible for registration u/s 12AA of the Income Tax Act, 1961.

(5)Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has justified the illicit activities done by the assessee, when the Hon'ble M.P. High Court in order dated 24.02.2006 (Writ Petition No. 12623, 12694 & 12946 / 2005) decided against the assessee and observed that the college had acted arbitrarily in denying the admissions to the students of state quota in MBBS/BDS Course, they have been wrongfully deprived of the admissions in the aforesaid case. There were many such observations made by the Hon'ble High Court after conducting a thorough enquiry. Thus, the activities of the assessee cannot be said to be charitable within the meaning of Section 2(15) of the Income Tax Act. Further, it attracts Section 12AA(3) of the Income Tax Act as the activities of the assessee are found to be not genuine.

(6) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has justified the illicit activities done by the assessee while being registered as charitable trust u/s 12A of the Income Tax Act, 1961 merely on the grounds that the Medical Council of India (MCI) found no infirmity or irregularity regarding functioning of the medical institutions run by the assessee and the Hon'ble High Court has passed the directions to undo the irregularities ignoring the fact that the assessee had actually done certain illicit activities and attracted provisions of Section 12AA(3) of the Income Tax Act, 1961.

No.10A on 28.9.2012. The application was rejected by the Commissioner of Income Tax, Bhopal vide order dated 28.3.2013. Being aggrieved, the assessee filed appeal before the ITAT Indore Bench, Indore. The I.T.A.T. set aside the order of the CIT(E) and directed for grant of registration under section 12A of the Income Tax Act to the assessee vide impugned order dated 31.1.2024. 5. Now, being aggrieved by the order dated 31.1.2024 passed by the learned I.T.A.T. Indore, the revenue is before this Court in the present appeal. 6. Learned counsel for the appellant contended that the learned I.T.A.T. has erred in allowing the appeal filed by the respondent/assessee and has formulated the aforesaid substantial questions of law. On the aforesaid ground, it is a fit case to be entertained. 7. Per contra, learned counsel for the respondent/ assessee contended that no substantial question of law is made out so as to entertain this appeal. He further brought to the notice of this Court the order passed by the Rajasthan High Court in Civil Special Appeal (W) No.128/2012 – Chief Commissioner of Income Tax and another Vs. Geetanjali University Trust, which came to be dismissed vide order dated 21.2.2013 wherein identical substantial questions of law were considered and rejected. The issue in the present appeal is squarely covered by the decision in the case of Geetanjali University Trust (supra), therefore, this appeal deserves to be dismissed. 8. Heard learned counsel for the parties and perused the substantial questions of law. 5

(2) The Principal Chief Commissioner or Chief Commissioner or the Principal Commissioner or Commission or an assessee aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub- section shall be

(a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner;

(b) xxx

(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) The High Court may admit an appeal after the expiry of the period of one hundred and twenty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period.

(3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.

(4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question,

(5) The High Court shall decide the question of law so formulated and deliver such a judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit.

(6) The High Court may determine any issue which- 6

(a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reasons of a decision on such question of law as is referred to in sub-Section (1). (7) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.

"A point of law which admits of no two opinions may be a proposition of law but cannot be a substantial question of law. To be "substantial" a question of law must be debatable, not previously settled by law of the land or a binding precedent, AIR 1962 SC 1314 (2001) 3 SCC 179 and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law "involving in the case" there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis."

consideration or legal principles have not been applied in appreciating the evidence, or when the evidence has been misread. (See: Madan Lal Vs. Mst. Gopi and Anr. (1980) 4 SCC 255; Narendra Gopal Vidyarthi Vs. Rajat Vidyarthi, (2009) 3 SCC 287; Commissioner of Customs (Preventive) Vs. Vijay Dasharath Patel (2007) 4 SCC 118; Metroark Ltd. Vs. Commissioner of Central Excise, Calcutta (2004) 12 SCC 505; West Bengal Electricity Regulatory Commission Vs. CESC Ltd. (2002) 8 SCC 715). 15. The Apex Court in case of K.Ravindranathan Nair vs. CIT, (2001) 1 SCC 135 has observed as under : ''The High Court overlooked the cardinal principle that it is the Tribunal which is the final fact finding authority. A decision on fact of the Tribunal can be gone into by the High Court only if a question has been referred to it which says that the finding of the Tribunal on facts is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there was no such question before the High Court. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before it.

well reasoned and speaking order taking into consideration all the material available on record. The Tribunal being a final fact finding authority, in the absence of demonstrated perversity in its finding, interference with the concurrent findings of the CIT (A) as well as the ITAT therewith by this Court is not warranted. 17. For the aforesaid reasons, we have no hesitation in holding that no question of law, much less any substantial question of law arises from the order of the Tribunal requiring consideration of this court. There is no merit in the appeal as making addition/deletion cannot be said to be erroneous and prejudicial to the interest of revenue. Thus, in our opinion, the present case does not involve any substantial question of law so as to meet the provisions of Section 260(A) of the Act for admitting the appeal. 18. In view of the aforesaid discussion, we do not find any merit in this appeal, which in our opinion deserves to be and is hereby dismissed in limine. (SUSHRUT ARVIND DHARMADHIKARI) (ANURADHA SHUKLA) JUDGE JUDGE HS

HEMANT SARAF 2025.01.17 18:18:28 +05'30'