Tca/366/2019 Of M/S.prathyusha Educational Trust v. Principal Commissioner Of Income Tax

THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 27.06.2019Order Reserved on:Order delivered on:17.06.2019 27.06.2019CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMANDTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.366 to 368 of 2019and C.M.P.Nos.12438, 12446, 12447, 12450 and 12452 of 2019 Prathyusha Educational Trust,3rd Floor, Old No.8, New No.18,12th Cross Street, Indira Nagar,Chennai - 600 020.PAN: ...Appellant in all the appeals -vs- Principal Commissioner of Income Tax,Central-2,Room No.302, Investigation Wing,No.46, M.G.Road,Chennai – 600 034. ...Respondent in all the appealsThe Assistant Commissioner of Income taxCentral Circle-2(3),Chennai 6....Respondent in TCA 367/19& 368/19 COMMON PRAYER: Tax Case Appeals filed under Section 260A ofthe Income Tax Act, 1961 against the common order of theIncome Tax Appellate Tribunal Chennai 'C' Bench, dated27.05.2019 in ITA Nos.637, 638 and 370/CHNY/2017 for theAssessment years 2010-2011 and 2011-2012 against thecommon order of Commissioner of Income Tax(appeals)18,46,Mahathma Gandhi Road, Nungambakkam,Chennai -34 madein ITA.NO. 628&732/15-16 DATED 12.01.2017 for theAssessment year 2010-2011 &2011-2012 against the AssistantCommissioner of Income Tax Circle II(3) 1[st] Floor, NewIncomeTaxBuilding46,MahathmaGandhiRoad,Nungambakkam,Chennai -34 made in PA.NO. AAA TP 5521 HDATED 28.03.13 for the Assessment years 2011-2012&2010-2011. https://hcservices.ecourts.gov.in/hcservices/ For Appellantin all the appeals: Mr.Anirudh Krishnan Assisted by Mr.Adith Narayan and Mr.Adarsh Subramanian For Respondentin all the appeals: Mr.T.R.Senthil Kumar Senior Standing Counsel COMMON JUDGMENT (Judgment was delivered by T.S.Sivagnanam, J.) These Tax Case Appeals filed by the assessee underSection 260A of the Income Tax Act, 1961 (for brevity 'theAct') are directed against the common order dated27.05.2019 in I.T.A.Nos.637, 638 and 370/CHNY/2017 for theassessment years 2010-2011 and 2011-2012. 2.I.T.A.Nos.637 and 638/CHNY/2017 are appeals filedchallenging the common order passed by the Commissioner ofIncome Tax (Appeals) (CIT(A)) dated 12.01.2017 who hadconfirmed the assessment order passed by the AssistantCommissioner of Income Tax, Central Circle-II(3), Chennaidated 28.03.2013 for both the assessment years.I.T.A.No.370/CHNY/2017 was filed challenging the orderpassed by the Principal Commissioner of Income Tax,Central-II, Chennai dated 07.12.2016 under Section 12AA(3)of the Act, whereby the registration granted to theassessee Trust under Section 12AA vide order dated22.10.2002 passed by the Director of Income Tax(Exemption), Chennai was cancelled with effect from01.04.2009, i.e. from the assessment year 2010-2011onwards. To be noted that an order dated 18.11.2014passed by the Director General of Income Tax(Investigation), Tamil Nadu & Puducherry withdrawing theexemption under Section 10(23C)(vi) from the assessmentyear 2010-2011 onwards had not been challenged by theappellant assessee by way of any independent proceedings. 3.These appeals have been filed raising the followingsubstantial questions of law: 1. Whether assessment can be carried out underSection 143(3) of the Income Tax Act, 1961 onthe appellant without duly following the https://hcservices.ecourts.gov.in/hcservices/ mandatory procedure laid down in the provisoto Section 143(3) of the Income Tax Act, 1961? 2. Whether the approval granted to the Appellantunder Section 10(23C)(vi) of the Income TaxAct, 1961 can be withdrawn by the authoritiesunder the Income Tax Act, 1961 withretrospective effect to ratify erroneousassessment orders? 3.These appeals have been filed raising the followingsubstantial questions of law: 1. Whether assessment can be carried out underSection 143(3) of the Income Tax Act, 1961 onthe appellant without duly following the https://hcservices.ecourts.gov.in/hcservices/ mandatory procedure laid down in the provisoto Section 143(3) of the Income Tax Act, 1961? 2. Whether the approval granted to the Appellantunder Section 10(23C)(vi) of the Income TaxAct, 1961 can be withdrawn by the authoritiesunder the Income Tax Act, 1961 withretrospective effect to ratify erroneousassessment orders? 7. Whether an order of a statutory authority thatinherently lacks jurisdiction or is void canbe challenged in a collateral proceedings?8. Whether the Hon'ble Income Tax AppellateTribunal's finding are perverse and thereforeliable to be set aside? 4.The case of the assessee is as hereunder: The assessee is a Public Charitable Trust having itsmain object of running and operating EducationalInstitutions, formed vide Deed of Trust dated 01.08.2000and granted registration under Section 12AA of the Act byorder dated 22.10.2002. Approval under Section 10(23C)(vi) of the Act was granted by order dated 30.04.2008. On 7. Whether an order of a statutory authority thatinherently lacks jurisdiction or is void canbe challenged in a collateral proceedings?8. Whether the Hon'ble Income Tax AppellateTribunal's finding are perverse and thereforeliable to be set aside? 4.The case of the assessee is as hereunder: The assessee is a Public Charitable Trust having itsmain object of running and operating EducationalInstitutions, formed vide Deed of Trust dated 01.08.2000and granted registration under Section 12AA of the Act byorder dated 22.10.2002. Approval under Section 10(23C)(vi) of the Act was granted by order dated 30.04.2008. On 02.07.2010, a search under Section 132 of the Act wasconducted in the premises of the assessee and subsequently,assessment was completed for the assessment years underconsideration. The Assessing Officer for reasons recordeddenied exemption which was granted to the assessee underSection 10(23C)(vi) of the Act; benefit available underSection 11 of the Act was denied on the ground that theassessee was an Association of Persons (AOP) and not aTrust. Disallowance was made under various heads on theground that they were unaccounted expenses/investmentsconsequently demands were raised for both the assessmentyears under consideration. The assessee preferred appealsbefore the CIT(A) primarily contending that the mandatorypre-condition prescribed under Section 143(3) of the Actwas not adhered to by the Assessing Officer therebyrendering the assessment untenable in law. During thependency of the appeals before the CIT(A), the DirectorGeneral of Income Tax (Instigation) issued show causenotice dated 16.07.2013 calling upon the assessee toexplain as to why approval granted under Section 10(23C)(vi) should not be withdrawn. The assessee submitted theirreply. The reply was not accepted and the approval grantedunder Section 10(23C)(vi) was withdrawn by order dated18.11.2014 with effect from the assessment year 2010-2011.The assessee filed a petition for rectification underSection 154 of the Act. The Department initiated recoveryproceedings which was challenged by the assessee by filingW.P.Nos.3376 and 3377 of 2014. Subsequently, theattachment of the bank account of the assessee was liftedby the Department. The Assessing Officer issued acorrigendum dated 22.01.2015 seeking to rectify theassessment order dated 28.03.2013 stating that in thepreface, in Column No.10, the section and sub-section underwhich assessment made was erroneously mentioned as Section143(3) r/w. Section 154A of the Act instead of Section 144of the Act as the assessment was actually made underSection 144 of the Act, as brought out in paragraph 4 ofthe assessment order, it was stated that this error whichis apparent from the record is corrected and the assessmentorder shall read as an order passed under Section 144 ofthe Act. The assessee challenged the corrigendum by filingW.P.Nos.23341 and 23342 of 2015 and the writ petitions weredismissed by order dated 05.07.2016, permitting theassessee to challenge the correctness of the corrigendum byraising additional grounds before CIT(A). Show causenotice dated 18.07.2013 was issued directing the petitionerto show cause as to why the registration granted underSection 12AA of the Act should not be cancelled as theassessee has been found to be carrying on its activitiesnot in accordance with the objects of the trust and in clear violation of the objects of the Trust. The assesseefiled their reply dated 08.08.2013. Subsequently, anothershow cause notice was issued on 26.09.2016 directing theassessee to explain as to why the registration grantedunder Section 12AA of the Act should not be cancelled. Theassessee submitted their reply dated 06.10.2016. ThePrincipal Commissioner of Income Tax by order dated07.12.2016 cancelled the registration granted to theassessee under Section 12AA of the Act. Aggrieved by suchorder, the assessee preferred an appeal before the Tribunalin ITA No.370/CHNY/2017. The appeals filed before the CIT(A) challenging the assessment orders dated 28.03.2013 weredismissed by order dated 12.01.2017 which were challengedby the assessee before the Tribunal in I.T.A.Nos.637 and638 of 2017. The appeals were rejected by the Tribunal bycommon order dated 19.06.2018. The assessee filedmiscellaneous petitions in M.P.Nos.186 to 188/Chny/2018 toadjudicate the grounds which according to the assessee werenot adjudicated by the Tribunal in its order dated19.06.2018. The miscellaneous petitions were allowed byorder dated 13.03.2019 and the assessee was heard and theTribunal passed orders on issues other than those whichwere decided by it in its common order dated 19.06.2018 andpassed final orders on 27.05.2019. Thus, aggrieved by thecommon order passed by the Tribunal the assessee is beforeus by way of these tax case appeals. 5.Mr.Anirudh Krishnan, learned counsel appearing forthe appellant/assessee assisted by Mr.Adith Narayan andMr.Adarsh Subramanian, elaborately referred to the factualposition, much of which has been set out by us in thepreceding paragraphs. The learned counsel prefaced hissubmission by contending that it may be true that theassessee has not laid a separate challenge to the orderdated 18.11.2014 withdrawing the approval granted underSection 10(23C)(vi) of the Act, the same can be challengedin a collateral proceedings i.e. while challenging theorder cancelling the registration under Section 12AA of theAct and while challenging the correctness of the assessmentorders dated 28.03.2013 and the order of the CIT(A) dated12.01.2017. It is the submission of Mr.Anirudh Krishnanthat when an order is a nullity, the assessee is notestopped from questioning the correctness of the said orderin collateral proceedings. 6.The first contention advanced by Mr.Anirudh Krishnanis by submitting that the corrigendum dated 22.01.2015stating that the assessment orders should be read as orders 6.The first contention advanced by Mr.Anirudh Krishnanis by submitting that the corrigendum dated 22.01.2015stating that the assessment orders should be read as orders passed under Section 144 of the Act is not sustainable onaccount of non-adherence to the mandatory procedure underSection 144 of the Act. By referring to the proviso underSection 144(1) of the Act, it is submitted that issuance ofshow cause notice is mandatory and no such show causenotice was issued to the assessee, hence, the corrigendumdated 22.01.2015 is vitiated. The second contentionadvanced by the learned counsel is that the cancellation ofthe registration granted under Section 12AA of the Actdated 07.12.2016 cannot be with retrospective effect fromthe assessment year 2010-2011 nor the order withdrawing theapproval granted under Section 10(23C)(vi) of the Act dated18.11.2014 with retrospective effect from the assessmentyear 2010-2011 is wholly without jurisdiction. It isfurther submitted that these issues which were canvassedbefore the CIT(A) were not considered in a properperspective. It is submitted that before the Tribunal allgrounds were canvassed but however the Tribunal dismissedthe appeal filed by the assessee by common order dated19.06.2018 and subsequently miscellaneous petition wasfiled and the other points were urged before the Tribunal,nevertheless the Tribunal did not adjudicate into thosecontentions and erroneously rejected the appeals by orderdated 27.05.2019. It is the submission of Mr.AnirudhKrishnan, that the assessment order passed under Section143(2) of the Act had attained finality and the same cannotbe now directed to be treated as an order under Section 144of the Act more so when the mandatory procedure under theProviso under Section 144(1) of the Act is not compliedwith. It is the further submission of the learned counselthat the non-compliance of the mandatory provision ascontained in Section 144 of the Act being an incurableillegality will render the assessment order as null andvoid and the same cannot be rectified by issuance of acorrigendum. In support of such contention reliance wasplaced on the judgment of the Division Bench of this Courtin the case of Assistant Commissioner of Income Tax, MediaCircle-11, Chennai vs. Vijay Television (P) Ltd. ([2018]407 ITR 642 (Madras)). 7.With regard to the effect of corrigendum as to howthe best judgment assessment can be made under Section 144of the Act, reliance was placed on the decision of the HighCourt of Calcutta in Maya Debi Bansal vs. Commissioner ofIncome Tax ([1979] 117 ITR 125 (cal)). To support hiscontention that the orders cancelling the registrationunder Section 12AA of the Act having been done withretrospective effect is illegal, reliance was placed on the https://hcservices.ecourts.gov.in/hcservices/ 7.With regard to the effect of corrigendum as to howthe best judgment assessment can be made under Section 144of the Act, reliance was placed on the decision of the HighCourt of Calcutta in Maya Debi Bansal vs. Commissioner ofIncome Tax ([1979] 117 ITR 125 (cal)). To support hiscontention that the orders cancelling the registrationunder Section 12AA of the Act having been done withretrospective effect is illegal, reliance was placed on the https://hcservices.ecourts.gov.in/hcservices/ decision of the High Court of Allahabad in AssistantCommissioner of Income Tax-I vs. Agra Development Authority([2018] 407 ITR 562 (Allahabad)). Further with regard tothe procedure to be followed by the Assessing Officer whilepassing an order withdrawing the exemption under Section 10(23C)(vi) of the Act, reliance was placed on the decisionof the High Court of Karnataka in the case of Commissionerof Income Tax, Central Circle, Bangalore vs. PeoplesEducation Society ([2014] 42 taxmann.com 353 (Karnataka)).On the facts of the case, Mr.Anirudh Krishnan, learnedcounsel submitted that the decision in the case of Directorof Income Tax (Exemptions) vs. Sri Belimatha MahasamsthanaSocio Cultural and Educational Trust ([2011] 336 ITR 694(Karnataka)) and the decision of the Division Bench of thisCourt in the case of Commissioner of Income Tax vs. BalajiEducational and Charitable Public Trust ([2015] 374 ITR 274(Mad) would also come to the aid and assistance of theassessee. With regard to the challenge to a proceedingswhich is void by questioning its correctness in acollateral proceedings and it is presumability, reliancewas placed on the decision of the Hon'ble Supreme Court inthe case of Nawabkhan Abbaskhan vs. The State of Gujarat([1974] 2 SCC 121) and the decision of the High Court ofAllahabad in the case of Commissioner of Income Tax vs.Kamla Town Trust ([2005] 279 ITR 89 (Allahabad)). On theabove grounds, the learned counsel sought for setting asidethe order of the Tribunal and answering the substantialquestions of law in favour of the appellant/assessee. 8.Mr.T.R.Senthilkumar, learned Senior Standing Counselfor the respondent/revenue contended that the corrigendumissued is perfectly legal and valid and a perusal of theassessment order will clearly reveal that it is an orderunder Section 144 of the Act. Further, it is contendedthat the mandatory procedure required to be complied withhave been fully complied with which have been clearlybrought out in the assessment order, more particularly inparagraph 4 therein. It is submitted that the assessee'scase would fall under Clause (c) of Section 144(1) of theAct and therefore, the Assessing Officer was well justifiedin issuing the corrigendum. It is further submitted thatinspite of repeated notices, the assessee did not cooperatewith the assessment proceedings, time granted till21.03.2003 for production of documents was not utilized, nodocuments were produced and the assessment would get timebarred on 31.03.2003. Further, a reading of the assessmentorder will clearly show that there has been diversion offunds, fanciful salary was paid to the daughter-in-law ofthe promoter of the assessee and such other matters and therefore, the Assessing Officer rightly assessed theassessee as an Association of Persons (AOP). Further, theAssessing Officer recommended for cancellation of exemptionunder Section 10(23C)(vi) of the Act and cancellation ofregistration under Section 12AA of the Act. To support thestand of the revenue that the assessment order is in fact abest judgment assessment, reliance was placed on thedecision of the Hon'ble Supreme Court in the case ofKachwala Gems vs. Joint Commissioner of Income Tax, Jaipur([2007] 288 ITR 10). The learned Senior Standing Counselalso referred to the decision of the Hon'ble Supreme Courtin the case of Visveswaraya Technological University vs.Assistant Commissioner of Income Tax ([2016] 384 ITR 37).To sustain the finding regarding the cancellation of theexemption granted under Section 10(23C)(vi) of the Act,reliance was placed on the decision of the High Court ofKarnataka in Navodaya Education Trust vs. Union of India([2018] 405 ITR 30). 9.We have heard the learned counsels for the parties. 10.The first issue to be decided is with regard to theeffect of corrigendum dated 22.01.2015. The assessee'scontention is that the assessment having been completedunder Section 143(3) r/w. 153(A) of the Act by way of abelated corrigendum the assessment cannot be treated to beone under Section 144 of the Act. 11.The following facts would be relevant to decidethis issue. A search under Section 132 of the Act wasconducted on 02.07.2010 at the premises of the assessee.Notice under Section 153A of the Act was issued and servedon the assessee and in response, return of income was filedon 09.11.2011 declaring total income at NIL. Subsequentlynotices under Sections 143(2) and 142(1) were issued, inresponsetowhich,theassessee'sauthorizedrepresentative, their chartered accountant submittedcertain details. However, the said chartered accountantsubmitted a letter dated 13.03.2013 stating that he iswithdrawing himself from representing the assessee. Evenearlier notice dated 12.02.2013 was issued under Section142(1) of the Act calling for details. The assessee didnot respond to this notice, consequently summons underSection 131 of the Act was issued on 04.03.2013 directingthe Chairman Trustee to appear on 11.03.2013 and submitdetails called for vide notice under Section 142(1) of theAct. The Chairman Trustee did not respond to the summon nor details called for were furnished. On 14.03.2013, theGeneral Manager (Finance) of the assessee appeared beforethe Assessing Officer, it is stated that he did not submitany details. On 19.03.2013, the Chairman of the assesseeTrust appeared and stated before the Assessing Officer thatthe details called for would be submitted by 21.03.2013.However, till the assessment was completed no details weresubmitted that therefore, the Assessing Officer with theparticulars available on records, seized documents andstatements recorded during the course of search completedthe assessment. The corrigendum dated 22.01.2015 statesthat while passing the assessment order in the case of theassessee in the preface in column No.10, it was erroneouslymentioned as Sections 143(3) r/w. 153A of the Act insteadof Section 144 of the Act as the assessment was actuallymade under Section 144 of the Act, as brought out inparagraph 4 of the assessment order. Therefore, theAssessing Officer issued corrigendum stating that thiserror which is apparent from the record is corrected andthe assessment order shall be read as an order passed underSection 144 of the Act. 12. The Hon'ble Supreme Court in the case of KachwalaGems, pointed out that in a best judgment assessment thereis always a certain degree of guess work. However, theauthorities concerned should try to make an honest and fairestimate of the income even in a best judgment assessmentand shall not act totally arbitrarily, there is necessarilysome amount of guess work involved in a best judgmentassessment and the assessee himself who is to be blamed ashe did not submit proper accounts. 13.Mr.Anirudh Krishnan, learned counsel for thepetitioner would contend that the assessment cannot betreated as a best judgment assessment under Section 144 ofthe Act as the mandatory provision under the Proviso toSection 144(1) of the Act has not been complied with. 14.We have noted the averments set out in paragraph 4of the assessment order dated 28.03.2013, from which, it isseen that notice under Section 142(1) of the Act was issuedas early as on 12.02.2013, wherein details were called forfrom the assessee, the assessee did not respond, summonsunder Section 131 of the Act was issued directing theChairman of the assessee Trust to be present, the Chairmandid not honour the summons nor submitted any details,subsequently the General Manager (Finance) of the assesseeappeared but did not submit any details and subsequently,the Chairman appeared and stated that he will give the https://hcservices.ecourts.gov.in/hcservices/ details by 21.03.2013 which commitment he did not honour.Before all these events could happen the assessee receivednotice under Section 153A of the Act, filed his return ofincome on 09.11.2011, responded to the subsequent noticeissued under Sections 143(2) and 142(1) of the Act,appointed a Chartered Accountant who appeared in the matterbut subsequently had withdrawn his appearance by letterdated 13.03.2013. 15.Section 144 of the Act deals with best judgmentassessment. Three contingencies have been contemplatedunder Sub-Section (1) of Section 144 of the Act whichempowers the Assessing Officer to proceed on best judgmentbasis. The case of the assessee would fall with Clauses(b) and (c) of Section 144(1) of the Act, which reads asfollows: 144.(1).If any person- (a) .........(b) fails to comply with all the terms of anotice issued under sub-section (1) of Section142 or fails to comply with a direction issuedunder sub-section (2A) of that section, or(c) having made a return, fails to comply withall the terms of a notice issued under sub-section (2) of section 143. 16.The assessee failed to comply with the notice underSection 142(1) of the Act dated 12.02.2013. The summonwhich followed the notice under Section 131 of the Act wasalso ignored. The assessee having filed his return ofincome on 09.11.2011 failed to comply with the terms of thenotice issued under Section 143(2) of the Act. In suchcontingency, the Assessing Officer after taking note of theparticulars available on record, seized the documents andstatements recorded during the course of search completedthe assessment. This has been clearly brought out inparagraph 4 of the assessment order. Therefore, we are ofthe clear view that the assessment for the year underconsideration were under Section 144 of the Act andmentioning of Section 143(3) of the Act in the preamble ofthe assessment order is an error which is apparent on theface of the order and requires to be rectified. Therefore,the corrigendum dated 22.01.2015 is legal and valid. 17.The learned counsel for the assessee relied on the decision in the case of Vijay Television (P) Ltd. The saiddecision is clearly distinguishable on facts and the Courtin the said case on appreciation of the factual matrix heldthat the mandatory requirement under Section 144C of theAct was not complied with and therefore, held that it is anincurable defect. No such contingency arises in theinstant case. 17.The learned counsel for the assessee relied on the decision in the case of Vijay Television (P) Ltd. The saiddecision is clearly distinguishable on facts and the Courtin the said case on appreciation of the factual matrix heldthat the mandatory requirement under Section 144C of theAct was not complied with and therefore, held that it is anincurable defect. No such contingency arises in theinstant case. 18.The decision in the case of Maya Debi Bansal of theHigh Court of Calcutta also will not be of assistance tothe case of the assessee as in the said case the assesseehad not filed return of income in the usual course underthe provisions of the Act. In the said factual background,the Court held that the provision of Sections 143 and 144of the Act cannot be said to be in parimateria. Section 144of the Act provides for circumstances under which in theabsence of a return, a best judgment assessment can be madeand the duties of the ITO in making such best judgmentassessment are well known and there is no question of anyreliance or reference to any return in that case. However,in an assessment under Section 143(3) of the Act as wasdone in the said case the basis is the return. In theinstant case, the return of income was filed on 09.11.2011declaring the total income at NIL. Subsequently, noticeswere issued under Sections 143(2) and 142(1) of the Act.On account of the assessee's non-compliance and non-cooperation in the assessment proceedings which clearlyfall within the Clauses (b) and (c) of Section 144(1) ofthe Act, the assessment made on the appellant assessee areindeed best judgment assessments. 19.The next contention of Mr.Anirudh Krishnan is thatthe cancellation of the exemption under Section 10(23C)(vi)of the Act and cancellation of the registration underSection 12AA of the Act with retrospective effect isillegal. At the first blush, the Court assumed that theargument of Mr.Anirudh krishnan is to the effect that thecancellation/withdrawal was with effect from the date ofgrant of exemption/registration. However, on a perusal ofthe order dated 18.11.2014 withdrawing the approval grantedunder Section 10(23C)(vi) of the Act, it is seen that ithas been given effect to from the assessment year 2010-2011. Likewise the order cancelling the assessee'sregistration under Section 12AA of the Act is from theassessment year 2010-2011. Can it be said that theseorders of cancellation are with retrospective effect. Thedefinite answer for this question is an emphatic 'No'.Admittedly, the business premises of the assessee was subjected to search during the assessment year 2010-2011.The Assessing Officer while completing the assessment foundlarge scale diversion of funds and several improper actionson the part of the assessee in direct conflict to the termsoftheDeedofTrustandconditionsofregistration/exemption. Therefore, it was recommended tothe competent authority to initiate proceedings forcancellation of the exemption/registration. The matter wasdecided after due opportunity to the assessee and speakingorders have been passed and obviously these orders willtake effect from the assessment year 2010-2011 and it is amis-nomer to state that the orders are retrospective orretroactive. The lis which was the subject matter is forthe assessment year 2010-2011 and though the orders ofcancellation of the exemption/registration was passed on18.11.2014 and 07.12.2016 they would take effect from theassessment year 2010-2011 during which year the cause ofaction arose. This being the factual position, thedecision in the case of Agra Development Authority is notapplicable to the facts of the present case. 20.Mr.T.R.Senthil Kumar, learned Senior StandingCounsel appearing for the respondent revenue had pointedout that the order withdrawing the approval granted underSection 10(23C)(vi) of the Act dated 18.11.2014 was notchallenged by the assessee.21.Mr.Anirudh Krishnan, learned counsel for theappellant assessee in reply to this preliminary objectionsubmitted that an order which is void can be challenged incollateral proceedings which is what the assessee hadprecisely done by challenging the same before the Tribunalwhen the assessee challenged the cancellation of theassessee's registration under Section 12AA of the Act. Twosubmissions were made to state that the order of withdrawalof approval under Section 10(23C)(vi) of the Act is a voidorder. Firstly on the ground that such order withretrospective effect is bad in law and void. The secondargument is that there was no basis for withdrawal of theapproval under Section 10(23C)(vi) of the Act. On thefirst issue, we have already held that the order ofwithdrawal of approval is not an order with retrospectiveeffect but with effect from the assessment year in whichcause of action arose for such withdrawal, i.e. afterissuance of show cause notice based on the materialunearthed during the course of search operations which wasconducted on 02.07.2010. Therefore, the first contentionof the learned counsel for the assessee is rejected. Insupport of his contention, the learned counsel referred tothe decision in the case of Nawabkhan Abbaskhan of the Apex Court. With all humility we observe that the decision inthe case of Nawabkhan Abbaskhan can be never be relied onby the assessee to substantiate their case. Court. With all humility we observe that the decision inthe case of Nawabkhan Abbaskhan can be never be relied onby the assessee to substantiate their case. 22.The question which arose for consideration inNawabkhan Abbaskhan is whether when has the citizen thediscretion to disobey an order. While answering thequestion, the Court pointed out that it is right and dutyof every man to resist unconstitutionally exercised publicpower. To be noted that Section 10(23C) of the Act fallsin Chapter III of the Act which deals with income which donot form part of total income. Clause (vi) of Section 10(23C) of the Act would stand attracted in cases where incomputing the total income of a previous year of any personany income falling within the University or EducationalInstitution existing solely for educational purposes andnot for purposes of profit shall not be included in thetotal income. But for the registration granted in favourof the assessee, this benefit will not accrue to theassessee. Therefore, the assesee cannot take a stand thathe will refuse to obey the conditions stipulated in theorder granting approval under Section 10(23C)(vi)of theAct. It is a beneficial provision to aid the Universitiesand educational institutions which are functioning solelyfor educational purposes and not for purposes of profit.Therefore, a person who has not complied with theconditions has absolutely no right to contend that he neednot obey the order. The approval being in the nature of anexemption provision should be considered with utmoststrictness and question of adding or substituting words orphrases in the statute is impermissible. As noted above,the second contention raised by Mr.Anirudh Krishnan is thatthere is absolutely no material to come to the conclusionthat the approval granted to the assessee needs to bewithdrawn or the registration granted under Section 12AA ofthe Act needs to be cancelled. In an appeal under Section260A of the Act, we are not required to go into the factsnor or we are entitled to re-adjudicate the factual detailsin the absence of any perversity or illegality. Yet sincethe learned counsels had advanced arguments on those lines,we perused the orders dated 18.11.2014 and 07.12.2016, fromwhich we find that there are substantial documentaryevidence and other details which clearly show that theassessee Trust has violated all the conditions and they arenot entitled for any approval under Section 10(23C)(vi) ofthe Act or a registration under Section 12AA of the Act.Hence, both the grounds raised by the learned counsel forthe assessee has to necessarily fail. 23.The decision in the case of Sri Belimatha wasrendered considering the fact that there were no materialswhich was available on record and the Court found thatbased on presumption the Assessing Officer cannot concludethat the Trust has received donations merely because it wasrunning a professional courses. In the case of BalajiEducational and Charitable Public Trust, the fact situationwas more or less identical as that of Sri Belimatha. TheTribunal on appreciation of the factual details found thatthe finding rendered by the Assessing Officer washypothetical and based on surmises and conjunctures. Abare perusal of the orders dated 18.11.2014 and 07.12.2016will clearly show that there has been large scale diversionof funds disentitling the assessee to approval/registration. 24.We have also perused the annexures which were taggedalong with the order cancelling the registration underSection 12AA of the Act. The annexures are photocopies ofthe various diary notings and hand written notings. In anevent there was no endeavour on the part of the assessee togo into the factual thicket to substantiate their case. Inthe case of Kamla Town Trust, the High Court of Allahabadheld that the onus lies on the revenue to bring on recordcogent materials/evidence to establish that thetrust/charitable institution is hit by provisions ofSection 13 of the Act. As noted above, the onus has beendischarged by the revenue by bringing on record materialsjustifying the cancellation of the approval/registration. 25.Furthermore, we find that the Assessing Officerwhile completing the assessment had held that the factsclearly prove that the affairs of the assessee are managedby the Managing Trustee in such a manner the fundscollected from some of the students admitted to theinstitutions run by the assessee are taken away outside thebooks of accounts of the assessee without even issuingreceipts and thereby setting apart these funds of theassessee for purposes other than the objects of the Trust.Further, the Assessing Officer pointed out that theassessee has violated its own objectives by divertingsubstantial portion of its funds by and to the ManagingTrustee without truly recording in the books of accountsmaintained by it and as these funds were diverted outsideits books of accounts the audit report furnished does notreflect the true and correct affairs of the assessee.After referring to the facts discovered during the courseof search coupled with the admission of the ManagingTrustee and the officers incharge of the accounts in theirdeposition, the Assessing Officer held that such acontumacious conduct in running the affairs of the Trust to go against the basic tenets of the Trust and Trusteeshipwarrants cancellation of the approval. All these factualfindings are perfectly justified and consequently, approved. 26.In the result, the appeals filed by the assessee aredismissed and the substantial questions of law are answeredagainst the assessee. No costs. Consequently, connectedmiscellaneous petitions are closed. Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant RegistrarcseTo1.Principal Commissioner of Income Tax, Central-2, Room No.302, Investigation Wing, No.46, M.G.Road, Chennai – 600 034.2.The Income-tax Appellate Tribunal, “C” Bench, Chennai.3.The Assistant Commissioner of Income taxCentral Circle-2(3),Chennai 6.4.The Commissioner of Income Tax(appeals)18,46,Mahathma Gandhi Road, Nungambakkam,Chennai -345.The Assistant Commissioner of Income Tax Circle II(3),1[st] Floor, New Income Tax Building,46,Mahathma Gandhi Road, Nungambakkam,Chennai -34 6.The Assistant Registrar,Income tax Appellate Tribunal,III Floor,Rajaji Bhavan,Besant Nagar, Chennai 90+3ccs to Mr.Anirudh Krishnan , Advocate SR.No. 53198+1cc to Mr.T.R.Senthil Kumar , Advocate SR.No. 54249T.C.A.Nos.366 to 368 of 2019and C.M.P.Nos.12438, 12446,12447, 12450 and 12452 of 2019 A.SK(07/08/2019)