Maharaja Jagat Singh Vs CIT (Exemptions) (ITAT Chandigarh)
The appeal before the Income Tax Appellate Tribunal (ITAT), Chandigarh, concerned cancellation of registration granted under Section 12A of the Income Tax Act to a charitable medical society. The Commissioner of Income Tax (Exemptions) [CIT(E)] had cancelled the registration under Section 12AB(4) for Assessment Year 2022-23, primarily on the basis of doubts regarding certain donations received during Financial Year 2021-22.
The society, established in 1978 as Maharaj Jagat Singh Medical Relief Society and registered under the Registrar of Firms and Societies, Punjab, had been granted registration under Section 12A and approval under Section 80G. It operates four charitable hospitals and two outpatient dispensaries across Punjab, Haryana, and Himachal Pradesh, providing medical relief without profit motive. The objects include establishing hospitals, running medical facilities, conducting medical research, aiding disaster victims, and promoting welfare activities without discrimination of caste, creed, or religion.
The CIT(E) issued a notice seeking details of donations totaling approximately ₹70.94 crore, including domestic and foreign contributions. On test check, donations from three individuals were examined. Donations from two donors were accepted after verification. However, regarding a donation of ₹5.48 crore from one donor, who was a Non-Resident Indian (NRI), the CIT(E) questioned the source of funds and formed an apprehension that the donation might qualify as foreign contribution requiring reporting under the Foreign Contribution (Regulation) Act, 2010 (FCRA). The donation was made through banking channels from the donor’s NRE account, funded by transfers from his father. The CIT(E) treated the donation as doubtful and concluded that the trust had not acted in consonance with its objects, leading to cancellation of registration.
