Young Indians Vs ACIT(E)
Date-31st March 2022
Forum-Income-tax Appellate Tribunal Delhi Benches

Sub- Whether a charitable Trust/ Institutions can surrender its registration at any time suo moto without the approval of Tax authorities and many other matters including reassessment, loan of Rs 1 crore from entity operated by Kolkata entry operator as well as the valuation of properties worth Rs 420 crores across the country in this high profile case involving Sri Rahul Gandhi, Smt Sonia Gandhi and All India Congress.

This is a classic case which has all ingredients of politics, corporate working, income-tax and how charitable institutions function and the intricacies. The Delhi Bench of ITAT in its 570 page judgement was dealing with a case where Young Indians was floated as a Section 25 Company and the ostensible purpose of incorporation was to take over Associated Journals Limited(ALJ) which had huge immovable properties worth more than Rs 420 crores in its name.

Moreover after the take over of the said ALJ , Sri Rahul Gandhi and Smt Sonia Gandhi were allotted shares of YI so as to assume control of the said ALJ. Not only this the loans of around Rs 90 crores which were granted to ALJ by All India congress were assigned to Young Indians for a paltry sum of Rs 50 lacs and the net effect of the said transaction was that Young Indians assumed control over ALJ and these properties without any money. Also the loan which was assigned as above to Young Indians was repaid by raising loan from a Calcutta based company Dotex which was operated by entry operators.

After all this the registration which was granted to the said Young Indians u/s 11 was surrendered voluntarily so as to go out of clutches of rigours of the exemption provisions.
On these facts the Delhi ITAT dismissed most of the grounds of Young Indian by holding that an act of surrender of registration is not permissible under the law for the reason that the registration granted was not any kind of award or some gratuitous action on the part of the government which could be rejected by the recipient or surrendered after the receipt.

The order of cancellation of registration is a statutory order. The cancellation of registration has to be followed in accordance with the statute. It would not be out of place to mention that even such surrender was not bonafide as it was post enquiries conducted by the Revenue and the materials found which clearly showed that the Appellant was not entitled for registration at all. Most of the other grounds of appeal were dismissed.

This judgement makes very interesting reading and unravels lot of materials including the interpretation of Section 148, 56(2) as well as Section 28(iv)

Ramesh Patodia