Aryans Educational & Charitable Trust Vs CIT (Exemptions) (ITAT Chandigarh)
The Trust, registered u/s 12AA since 2006 & later re-registered u/s 12A(1)(ac)(iii) on 18.07.2023, was accused by CIT(E) of misusing its funds, receiving anonymous donations & conferring undue benefit on its Chairman, Shri Anshu Kataria. The basis for such action was the set of assessment orders for AYs 2013-14 to 2015-16, wherein the AO had invoked the provisions of Section 13(1)(c) & 13(1)(d).
Assessee contended that these very assessments had already been considered & substantially set aside by the Tribunal in July 2024. At that stage, Tribunal had held that the donations received were genuine & not hit by Section 13(1)(c) or 13(1)(d), & exemption u/s 11 & 12 had to be allowed. Tribunal had sustained only limited additions relating to small imprest balances held in the Chairman’s account of Rs. 11.33 lakh & Rs. 13.46 lakh. On this basis, Assessee argued that CIT(E) could not re-appreciate settled facts, as doing so would be per incuriam & a violation of judicial discipline. It was further pointed out that the show cause notice for cancellation issued in 2024 sought to rake up matters of 2013-16 & was therefore vitiated by laches. Assessee also submitted that Section 12AB(4) contemplates cancellation only when a specified violation is reported, normally by AO or by system-based risk management, & that a mere communication from the CIT(DR) could not trigger such action. Importantly, the principle of “predominant object” was invoked, highlighting that even if minor infractions exist, the charitable character of the Trust’s educational activities cannot be denied & exemption can be restricted only to the portion misapplied.
