Case Law Details
Wholesale Cloth Merchant Association Vs PCIT (ITAT Jaipur)
ITAT observed that due to the negligence or cheating of past executive members and bad intention of misappropriation of funds by ex-president, they had not maintained the books of accounts and get their accounts audited by a chartered accountant. But after change of management and involvement of new committee, books of accounts have been prepared and audit has also been done. During the A.Y. from 2014-15 to 2016-17 heavy amount was withdrawn by the ex-president, out of total amount some entries are debited in account of Sh. Tejendra Pal Singh and some entries are debited in other parties account because vouchers was made in the name of other parties name and later on came to know that these parties have not received amount and when management went to bank to trace out the truth all disputed entries were bearer cheques, but at that time books of accounts have been finalized and audited, so assessee was not able to change the account name. Therefore, FIR was filed by the trust against the ex-president (i.e. Tejendra Pal Singh) for the cheating or fraud. Therefore, we are of the view that because of the misdeeds of ex-president, the whole trust cannot be allowed to suffer, which is otherwise against the principles of natural justice. Further nowhere it has been proved that the Act of the President was in the knowledge of the assessee and the other members were involved knowingly and were part of that fraud. And if any fraud has been done behind the assessee, then the same cannot be treated as done by the assessee. Therefore, keeping in view our above discussion and observation, we are of the view that registration of the assessee could not be cancelled because of non-filing of I.T. return and audit report or on account of misdeeds of ex-president.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The present appeal has been filed by the assessee against the order of the ld. Pr.CIT(Central), Rajasthan, Jaipur dated 22/03/2019 passed U/s 12AA(3) and 12AA(4) of the Income Tax Act, 1961 (in short, the Act). Following grounds have been taken by the assessee:
“1. That in the facts and in the circumstances of the case and in law, the ld Pr. CIT(Central), Rajasthan, Jaipur has grossly erred in cancelling the registration of the assessee appellant trust under Section 12A of the Act by invoking Section 12AA(4) of the Act w.e.f. 01/04/2013.
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