GOPSAI AVIANDAN SANGHA,PASCHIM MEDINIPUR vs. C.I.T.(EXEMPTION), KOLKATA

Thereafter the assessee relied on a number of case laws on the proposition that the scope of enquiry for registration under section 12AA of the Act is to examine whether the objects of the Society are charitable in nature and whether the Trust of the Society is genuine. He further submitted as follows:- “It is pertinent that consequent upon the order of Ld. CCIT-X. Kolkata dated 22.07.2013. regular assessment of the Society either u/s. 147 or u/s. 143(3) have been made continuously from Assessment Year 2009-20 onwards i.e., from Assessment Years 2009-2010, 2010-2011, 2011-2012, 2012-2013, 2014- 2015, 2015-16 & 2016 - 17. In all such regular assessments, the Assessing Officer categorically found and mentioned that the Applicant - Society has been engaged in the field of 'Educational Activity' only. Copies of all such assessment orders are enclosed herein for your kind perusal and marked as page - 87 to 117. The relevant portion of each order (page nos. 87, 91, 98,104,109 & 114) is marked in fluorescent colour to prove the genuineness of our activities in the field of imparting education & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha

Ld. CIT(Exemptions), Kolkata considered this explanation of the assessee and thereafter rejected the claim of the assessee for grant of registration under section 12AA of the Act. Being aggrieved, the assessee is in appeal before us.

The ld. Counsel for the assessee submits that the ld. CIT(Exemptions), Kolkata raised certain issue based on the observations in the order passed by the ld. Chief CIT while revoking registration granted under section 10(23)(v),(vi) of the Act and has not considered the finding of the Assessing Officer on those very issues which attained during the course of scrutiny proceedings for all the impugned assessment years. He filed copies of the assessment orders passed for the A.Ys. 2009-10, 2012-13 as well as the orders of the ld. CIT(A) for the AY 2012-13, 2011-12, 2010-11 and 2009-10 and submitted that a perusal of these orders of assessment by the Assessing Officer and appellate orders of the ld. CIT(Appeals) for all the assessment years demonstrated that the allegations made by the ld. Chief CIT while revoking registration granted under section 10(23C) of the Act is factually incorrect. He submitted that no addition or adverse action has been taken by the Assessing Officer in the assessment order passed, on so-called material relied upon by the ld. Chief CIT which was found during survey. Thus he submits that all the points raised by the ld. CIT (Exemptions) for rejecting the application of the assessee for registration under section 12AA of the Act were factually incorrect, in view of the finding in the assessment order as well the appellate order. He thus submits that the grounds on which the claim of the assessee for registration under section 12AA of the Act were rejected are no more inexistence and that the assessee should be granted registration under section 12AA of the Act. & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha

On the scope and ambit of enquiry for the granting registration to the assessee under section 12AA of the Act, the assessee relied on a number of decisions and submitted that it has to be seen as to whether the objects of the assessee are charitable in nature and whether the activities of the assessee are genuineness or not. The assessee pointed out that there is no dispute that the objects of the assessee are for educational purposes and there is no dispute of the fact that the assessee runs educational institution. He disputed each and every finding of the ld. CIT(Exemptions) in the impugned order and supported his arguments with the findings of the Assessing Officer.

The ld. CIT(DR), on the other hand, opposed the contention of the assessee and submitted that the Revenue collected numerous evidences during the course of survey and basing on these evidences came to a conclusion that the assessee has not applied its income, wholly for educational purposes. The ld. D.R. pointed out that the claim of the assessee for granting registration under section 10(23C) was also rejected by the ld. PCCIT, Kolkata. He relied on the pages 1 & 2 of his impugned order dated 26.12.2019. He relied on the points raised by the ld. CIT(Exemptions) towards the end of his order and submitted that the activities of the assessee are not genuine. The ld. DR supported the order of the ld. CIT(Exemptions) and submitted that registration under section 12AA of the Act cannot be granted to the assessee.

Both parties agreed that ITA 233/KOL/2020 is consequential to the finding of the ITAT in the appeal ITA 232/KOL/2020 for granting registration.

Rival contentions heard. On a careful consideration of the facts and circumstances of the case, we hold as follows:- The ld. CIT(Exemption), while rejecting the assessee’s claim for registration under section 12AA of the Act has stated as follows:- & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha

The survey in question was conducted in November, 2010 and the material evidence during the course of survey was considered by the Assessing Officer while passing the scrutiny assessment order for AY 2011-12 passed on 27.03.2015 under section 143(3) of the Act The Assessing Officer has not drawn any adverse inference based on the material found during the course of survey while completing the assessments. The ld. CIT(A) in his order for the AY 2012-13 has also not drawn any adverse inference against the assessee, based on the material found during the course of survey. We note that the ld. CIT(Exemptions) is basing his order as material found during survey, as interpreted by the ld. CCIT in 10(23C)(vi) proceedings and has not personally examined any of the alleged material. Similar findings of the Assessing Officer in assessment orders passed under section 143(3)/153(3)(ii) of the Act for AY 2011-12 dated 28.03.2015, and assessment order passed under & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha section 147 read with section 143(3) of the Act for AY 2010-11 dated 28.03.2015. In fact the assessments were reopened on the basis of the material found during the survey. In the order passed under section 143(3) read with section 147 dated 28.03.2015 for the assessment year 2010-11, the Assessing Officer observed that the Hon’ble Calcutta High Court passed an order on 10.12.2013 directing the department to provide an opportunity to the assessee for inspection of documents impounded during the course of survey operation and also furnish the copies thereof. This order of the Hon’ble High Court proves that the observations of the ld. CCIT were without giving opportunity to the assessee and without furnishing copies of seized documents to it. These observations of the ld. CCIT formed the foundation of the finding of the ld. CIT(Exemptions).

In all the orders passed under section 143(3) of the Act, the Assessing Officer’s categorical finding is that the assessee is engaged in educational activities. The ld. CIT(Exemptions) has also not alleged that the objects of the assessee are not charitable in nature. He was only guided by the findings of ld. Chief CIT by rejecting the grant of registration under section 10(23C) of the Act. The orders of the assessment passed under section 143(3) are the final finding of fact on the material found during the course of search or survey. There is no adverse inference recorded in these orders under section 143(3), on the material found during the course of survey. Hence no adverse inference can be drawn by the ld. CIT(Exemption) on the very same material. It is not a case where the ld. CIT(Exemption) has conducted an enquiry or verification on a case. The ld. CIT(Exemption) has not confronted with the assessee with the material found during the course of survey and adjudicated the issue after receiving the replies/rejoinders of the assessee. In fact, the assessee replied to the allegations made by the ld. CIT(Exemptions). The conclusion and facts can only be drawn by the Assessing Officer during the course of assessment proceedings and as no adverse inference has been drawn in various assessment orders passed, & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha some of which were reopened based on the material found during the course of survey, we are of the considered opinion that the material found during the course of survey cannot be the basis for rejection of the claim of the assessee for registration under section 12AA of the Act.

Hon’ble Punjab & Haryana High Court in the case of CIT-1, Ludhiana –vs.- Spring Dale Educational Society (2011) 16 taxmann.com 285 in of 2011 held that, while examining application seeking registration under section 12AA of the Act, the Commissioner should only satisfy himself about genuineness of activities as enumerated in clause (b) of section (1) of section 12AA of the Act. The manner of application of funds does not fall within the purview of Commissioner at this stage.

Similarly the Hon’ble Karnataka High Court in the case of DIT –vs.- Garden City Educational Trust (2010) 191 Taxman 238 held that, the manner of application of funds and as to whether the assessee can claim benefit of exemption in terms of section 11 & 12 are questions which have to be examined by the Assessing Officer at this stage of assessment and not by the Commissioner while granting registration under section 12A of the Act.

The Hon’ble Allahabad High Court in the case of CIT-vs.- Red Rose School (2007) 163 Taxmann 19 (All.) held as follows:- “Section 12AA, which lays down the procedure for registration, does not speak anywhere that the Commissioner, 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, which accordingly would mean that they are in consonance with the objects of the Trust/Institution, and are not mere camouflage but are real, pure and sincere and not against the proposed objects. The profit earning or misuse of the income derived by charitable institution & 233/KOL/2020 Assessment Year: 2013-2014 Gopsai Avinandan Sangha

In all these cases, it is laid out that the ld. CIT(Exemption) should examine whether the objects of the Trust or Institution are charitable in nature or not and as to whether the activities of the Trust/Institution are in consonance with these objects. We find that the objects of the Society are charitable in nature. We also find that the activities of the Society are in accordance with the objects. The Assessing Officers in their assessment orders have recognized these facts as is clear from the following findings:- Assessment order dated 27.03.2015 for the assessment year 2012-13 in page 2 at para 1:- “The assessee is a voluntary organization. It is engaged in imparting education through different units, i.e., (i) Institute of Science and Technology (IST), which is approved by AICTE and affiliated to WBUT & WBSCTE, offers post graduate as well as diploma course on different branches of science & technology. (ii) Primary Teachers' Training Institute (PTTI) affiliated to WBBPE, offers diploma in elementary education, (iii) Bengal College of Teachers' Education (BCTE), which is affiliated to Vidyasagar University, offers bachelor's degree in education. The three units are under the aegis of Gopsai Avinandan Sangha (GAS), which is the head Office. Separate income Expenditure A/c., Receipts & Payment A/c. and Balance Sheet are maintained for each unit. The accounts of individual unit are consolidated with the accounts of Gopsai Avinandan Sangha. The date of Incorporation of the organization is 14/08/2003.

In view of the above, we direct the ld. CIT(Exemption) to grant registration to the assessee under section 12AA of the Act. Consequently we also direct the ld. CIT(Exemptions) to consider the approval of registration under section 80G(5) of the Act.

In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on April 12, 2021.