GIAN SAGAR EDUCATIONAL & CHARITABLE TRUST ,DELHI vs. ACIT CC-27 , NEW DELHI

आदेश /O R D E R PER C.N. PRASAD, J.M.

I.T.A. Nos. 1801 to 1805/Del/2021

Assessee challenged the order of the Ld. PCIT in withdrawing registration u/s 12AA of the Act and the Tribunal by order dated 03/01/2017 set aside the order of the Ld. PCIT passed on 01/03/2016 and restored the I.T.A. Nos. 1801 to 1805/Del/2021 proceedings to the Ld. PCIT to decide afresh. The Ld. PCIT thereafter passed order on 27.10.2017 cancelling the registration granted u/s 12AA of the Act to the assessee since inception on the ground that the assessee trust is allegedly involving in nefarious activities for inducting fresh batch of students for academic session without requisite infrastructure. This order of the Ld. PCIT dated 27/10/2017 was also challenged by the assessee before the Tribunal and the Tribunal by order dated 03/09/2020 in held that the order of the Ld. PCIT dated 27/10/2017 cancelling the registration u/s 12AA(3) since inception is legally not valid. While holding so the Tribunal observed as under:

“37. We observe that, the Id. PCIT has revoked the approval u/s 12AA(3) holding that the assessee trust was engaged in the nefarious activities for inducting of fresh batch of students for the academic session without the requisite infrastructure. It was held that it is a clear violation of (ii) of para 4 of the trust deed, simultaneously, violating the provision of Section 2(15) of the Act while carrying out of its activity. The Id. PCIT also held that the society was established for a charitable purpose and since there was criminal misconduct by the assessee trust, registration of the trust was cancelled since inspection. For the sake of ready reference, the operative portion of the order of the Id. PCIT cancelling the registration u/s !2AA(3) is reproduced hereunder: "7. After considering the submission of AR, material available on record, it is noticed that CBI team had arrested Sh. Kamaljit Singh, CEO of M/s Gian Sagar Medical College & Hospital while on his official duty on 22.04.2010 on the allegations that he has delivered an amount of Rs.2 crore to Sh. Ketan Desai, President of Executive Committee of MCI through a middleman Mr. J.P. Singh. And also on the same date, Dr. Sukhwinder Singh, Vice Chairmna of M/s Gian Sagar Medical College & Hospital was chargesheeted and arrested by CBI team. The assessee trust was engaged in the nefarious activities for inducting of fresh batch of students for academic session without

I.T.A. Nos. 1801 to 1805/Del/2021 the requisite infrastructure. It is clearly violation of (ii) of para 4 of trust deed, simultaneously/ violating the provision of Section 2(15) of the I.T. Act while earring out of its activity. The society was established with the sole intention of helping charitable and philanthropic venture of running of medicai college and thereby seeking to claim exemption on the income so generated under section 11 and 12 of the I.T. Act. It is further noted that due to nexus of corruption by way of bribe and criminal misconduct by the assessee trust, registration of the trust was can ceiled since inception u/s 12AA(3) of the Income Tax Act; 1961. A Charitable trust conduct must be at par with its provision of trust deed and as, per existing law. Its misconduct and desire * to defy rules and norms have been exposed by virtue of the bribe activities. Such incidents cannot be classified as charitable by any reckoning. Such organizations which do not carry any charitable activity cannot be granted registration. In these facts & circumstances, I am satisfied that the activities of the trust axe not genuine and not being carried out in accordance with the objects of the trust. Accordingly, after affording reasonable opportunity to the trust, registration granted u/s 12A vide order dated 02.04.2005 to the assessee trust is cancelled since inception."

I.T.A. Nos. 1801 to 1805/Del/2021 iii) To organize School health programs in coordination with local doctors including government doctors. iv) To organize seminars or various education & health topics in schools, educational institutions. v) To set up and run or assist the setting up and running of Adult education centers and coaching centers. vi) To educate and train medical students, engineering students, nurses, midwives and hospital administrators and to grant such diplomas/degrees or recognition as the Trust may prescribe or deem fit from time to time. vii) To grant stipend, scholarship or any other assistance or otherwise to deserving students or scholars in the field of education with special emphasis on the following specialties with an undertaking from them that they would support a similar scholarship when able, after their settlement in life: Medicine, Dentistry, Pharmacy, Computer, Science, Engineering, Agriculture and banking. The trustees reserve the right to grant stipends or scholarships in any field of education that they deem fit in any part of India. viii) To provide relief to poor students and poor patients free of cost or at minimum possible charges to others, without any profit motive whatsoever. ix) To provide nutrition and education, specially, in cases like- a) Anemia in girl child and b) during pregnancy of women. x) To promote small family norms through: a) Population education b) MCH (Maternal and Child Health) including immunization, safe delivery, identification of high risk pregnancies. xi) To organize and promote literacy programmes particularly in Urban, slums and backward rural areas.

I.T.A. Nos. 1801 to 1805/Del/2021 xii) To set up Counseling Centres for providing counseling and guidance to the educated youth for career and job opportunities and seek coordination and cooperation of educational institutions for the purpose. xiii) To set up and run or assist the setting up and running of Adult education centres and coaching centers for moral upliftment, educational skills towards self reliance. xiv) To grant stipend, scholarships or any other assistance or otherwise to deserving students or scholars in the field of education with special emphasis on the following specialties Medicine, Pharmacy, Computer Science, Engineering, Agriculture Environmental sciences and banking. The trustees reserve the right to grant stipends or scholarships in any field of Education that they deem fit in any part of India. xv) To lift the poor from the curses of poverty, hunger, illiteracy and diseases by starting and carrying out concentrated and intensive programmes. 4. i) To borrow, raise loans from any person, bank or financial institution in such a manner as the Trustees shall think proper or convenient for the furtherance of objects of the Trust and for this purpose the Trustees may secure repayment of these loans. To reach this objective Trustees will always try to have a balanced budget, so that revenues and expenses balance and not produce losses. The objective of the operations of the Trust is not to create a losing operations, but to operate the minimum charges for the services rendered, so as not be forced to borrow from financial institutions. ii) Trust shall not be involved in any activity which promotes violence, terrorism, fanaticism or political favouritism between the political party verses another. Trust's objective is strictly humanitarian with no political agenda of any sort whatsoever. iii) To receive grants, or aid in the form of money or material for the fulfillment of the objects of the Trust from the Central Government, State Government, Social services organizations and individuals.

I.T.A. Nos. 1801 to 1805/Del/2021 iv) To do all necessary things for and incidental or conducive for the attainment of the above objectives of the Trust. v) The above objects shall be independent of each other."

I.T.A. Nos. 1801 to 1805/Del/2021 (2) Every order granting or refusing registration under clause (b) of sub-section (1) shad be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of section 12A.1 [(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (N'o. 2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] [(4) Without prejudice to the provisions of sub¬section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any lime under section 12A fas it stood before its amendment by the Finance (No. 2)'Act, 1996 (33 of 1996)] and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub- section (1) of section 13. then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.]"

I.T.A. Nos. 1801 to 1805/Del/2021 1) There has been a violation of clause (ii) of the para 4 of the trust deed and 2) Violation of provision of Section 2(15) of the Act while carrying out the activity. The two reasons given by the Id, PCIT are also being examined.

I.T.A. Nos. 1801 to 1805/Del/2021 (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous yearf do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;]]"

I.T.A. Nos. 1801 to 1805/Del/2021 the outcome of any proceeding under any other Acts promulgated under Constitution of India. 3) The revenue shall be at liberty to approach the Tribunal for re-institution of the appeal on re- commencement of trial against Sh. Ketan Desai which has been since dropped. 5. On perusal of the reassessment order and the appellate order, we observe that the lower authorities have denied claim for exemption u/s 11/12 of the Act to the assessee for the reason that the Ld. PCIT (Central)-3, New Delhi cancelled the registration granted u/s 12AA of the Act by order dated 01/03/2016. However, since the Tribunal by order dated 03/09/2020 cancelled the order of the Ld. PCIT passed on 01/03/2016 and 27/10/2017 withdrawing the registration u/s 12AA of the Act, the reassessments made by the Assessing Officer u/s 147/143 on the ground that the PCIT had withdraw the registration u/s 12AA of the Act will not stand and there has to be a fresh assessment in the light of the order of the Tribunal restoring the registration u/s 12AA of the Act.

Thus, we set aside the order of the Ld.CIT(Appeals) and restore all these assessments to the file of the Assessing Officer for denovo assessments in the light of the decision of the Tribunal in restoring the registration granted to the assessee u/s 12AA of the Act. The Assessing Officer is directed to complete the denovo assessments for the assessment years 2009-10 to 2013-14 after providing adequate opportunity of being heard to the assessee.

I.T.A. Nos. 1801 to 1805/Del/2021

Order pronounced in the open court on 21.04.2023