MAHAWAR VAISHY SEWA SANSTHA, JAIPUR V. CIT(EXEMPTION), JAIPUR

ITA 10/JPR/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2093 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 06-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Keywords: Charitable institution
• Section: 12A; 12AA; 22

Judgement Text

ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA B-3, DEEPAK MARG, ADARSH NAGAR, JAIPUR. CUKE VS. THE CIT (E) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABTM 1812 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C.PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B.K. GUPTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/03/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 28/04/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(E), JAIPUR DATED 19.12.2019 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING GROUNDS:- 1. THE LD. CIT(E) HAS ERRED ON FACTS AND IN LAW IN REJECTING THE APPLICATION OF ASSESSEE FOR GRANT OF REGISTRATION U/S 12AA OF T HE INCOME TAX ACT, 1961. 1.1THE LD. CIT(E) HAS ERRED ON FACTS AND IN LAW IN REJECTING THE APPLICATION BY INCORRECTLY HOLDING THAT ASSESSEE HAS FAILED TO PRODUCE DETAILS AND DOCUMENTS IN SUPPORT OF HIS CLAIM FOR REGISTRATION IGNORING THAT ASSESSEE IN RESPONSE TO NOTICE DATED 03.10.2019 HAS FILED THE R EPLY VIDE LETTER DATED ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 2 13.11.2019 SUBMITTING THE DOCUMENTS AS REQUIRED AND IN RESPONSE TO NOTICE DATED 18.11.2019 & 28.11.2019 HAS FILED THE RESPONSE STATING THAT IT HAS NOT RECEIVED ANY QUESTIONNAIRE AS STATED IN THE NOTICE. 2. THE LD AR SUBMITTED THAT THE ASSESSEE SOCIETY IS REGISTERED UNDER RAJASTHAN SANSTHA REGISTRATION ACT, 1958 VIDE REGIS TRATION CERTIFICATE DATED 13.01.2003. THE MAIN OBJECT OF THE SOCIETY IS TO CA RRY OUT VARIOUS WELFARE ACTIVITIES FOR THE STUDENTS AND FOR SOCIETY AT LARG E. IN PURSUANCE TO THESE OBJECTS, THE ASSESSEE SOCIETY IS OPERATING A HOSTEL AT B-3, DEEPAK MARG, ADARSH NAGAR, JAIPUR WHICH IS THE PROPERTY OF MAHAWAR VAISHYA SEW A SANGH, ALWAR. 3. IT WAS SUBMITTED THAT THE ASSESSEE FILED AN ONL INE APPLICATION FOR SEEKING REGISTRATION U/S 12AA OF THE IT ACT, 1961 IN FORM N O.10A ON 07.06.2019. THEREAFTER, IN PURSUANCE TO A DETAILED SHOW CAUSE N OTICE DATED. 03.10.2019, THE ASSESSEE FIELD REPLY VIDE LETTER DATED. 11.11.2019 EXPLAINING THE NATURE OF ACTIVITIES CARRIED OUT BY IT AS PER ITS OBJECTS. AF TER RECEIPT OF THE SAID REPLY, IT APPEARS THAT THE LD. CIT(E) VIDE COMMUNICATION DATE D 18.11.2019 AGAIN SENT A QUESTIONNAIRE. IN RESPONSE TO SAME, THE ASSESSEE IN FORMED THAT IT HAS NOT RECEIVED ANY ATTACHMENT OF QUESTIONNAIRE AS MENTION ED AND THEREFORE, IT WAS REQUESTED TO KINDLY RE-ISSUE THE SAME. THE LD. CIT( E) VIDE ITS LETTER DATED 28.11.2019 INFORMED THE DOCUMENT IDENTIFICATION NUM BER THROUGH WHICH QUESTIONNAIRE DATED 18.11.2019 WAS STATED TO HAVE B EEN SENT. THE ASSESSEE AGAIN INFORMED THAT IT HAS NOT RECEIVED ANY ATTACHM ENT AS MENTIONED. THE LD. CIT(E), WITHOUT SUPPLYING THE QUESTIONNAIRE, PASSED THE IMPUGNED ORDER ON 19.12.2019 BY MAKING FOLLOWING OBSERVATIONS:- (A) AS PER RULE 17A OF INCOME TAX RULES, 1962, ASSE SSEE IS REQUIRED TO PRODUCE ORIGINAL DOCUMENTS REGARDING ESTABLISHMENT OF THE T RUST/ SOCIETY FOR VERIFICATION BUT THE SAME HAS NOT BEEN DONE BY THE ASSESSEE. ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 3 (B) ON PERSONAL OF ACCOUNTS, IT IS NOTICED THAT THE ASSESSEE IS INDULGED IN COMMERCIAL ACTIVITIES OF RUNNING OF HOSTELS AND GET TING RECEIPTS FROM HOSTELS. (C) THE ASSESSEE HAS NOT SUBMITTED ANY SUCH DETAILS AND OTHER INFORMATION ABOUT THE CHARITABLE ACTIVITIES AS PER ITS OBJECTS. (D) SUFFICIENT OPPORTUNITY HAS BEEN PROVIDED TO PRO DUCE DETAILS AND DOCUMENTS IN SUPPORT OF ITS CLAIM FOR REGISTRATION U/S 12AA OF I T ACT, 1961 BUT ASSESSEE HAS FAILED TO DO SO. 4. IT WAS SUBMITTED THAT AGAINST THE QUESTIONNAIRE DATED 03.10.2019 CONTAINING 26 ISSUES, THE ASSESSEE FILED POINT WISE REPLY DATED 11.11.2019. IN THIS REPLY AT POINT NO. 7, 22 & 23, IT WAS EXPLAINE D THAT IT IS RUNNING A HOSTEL WHERE THE STUDENTS FROM SMALL CITIES ARE PROVIDED A CCOMMODATION AT VERY LOW COST TO HELP THEM TAKE BETTER EDUCATION WHICH IS NO T AVAILABLE AT THEIR NATIVE PLACE. FURTHER, IT IS ORGANIZING BLOOD DONATION CAM P AND OTHER MOTIVATIONAL LECTURE FOR THE STUDENTS. ALL THESE ACTIVITIES ARE AS PER THE OBJECT OF THE TRUST. IT WAS SUBMITTED THAT PROVIDING HOSTEL FACILITY TO THE STUDENTS IS PART OF EDUCATIONAL ACTIVITIES AS HELD BY AHMEDABAD BENCH OF THE TRIBUN AL IN CASE OF SHREE AHMEDABAD LOHANA VIDYARTHI BHAVAN VS. INCOME TAX OF FICER (EXEMPTION) 172 ITD 11 WHERE THE ASSESSING OFFICER HELD THAT RU NNING A HOSTEL BY CHARGING FEES FROM THE STUDENTS DOES NOT FALL WITHIN THE AMB IT OF CHARITABLE PURPOSE U/S 2(15) OF THE ACT. THE TRIBUNAL AFTER EXAMINING THE FACTS AS ALSO THE LAW HELD THAT PROVIDING HOSTEL FACILITY IS ONE OF THE ESSENTIAL C OMPONENTS OF AN EDUCATIONAL INSTITUTION AND IS TO BE CONSIDERED AS IMPARTING ED UCATION. 5. IT WAS FURTHER SUBMITTED THAT THE VARIOUS OBJECT IONS RAISED BY LD. CIT(E) CANNOT BE A BASIS FOR DENYING REGISTRATION U/S 12AA OF THE ACT TO THE ASSESSEE. IT IS SUBMITTED THAT RULE 17A SUBSTITUTED BY THE INCOM E-TAX (FIRST AMENDMENT) RULE, 2018, W.E.F. 19.02.2018 PROVIDES THAT AN APPL ICATION U/S 12A FOR ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 4 REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN FORM NO. 10A ACCOMPANIED BY SELF CERTIFIED COPY OF THE I NSTRUMENT CREATING THE TRUST OR ESTABLISHING THE INSTITUTION, WHERE THE TRUST IS CREATED OR INSTITUTION IS ESTABLISHED UNDER AN INSTRUMENT. THE ASSESSEE HAS F ILED THE CERTIFIED COPY OF THE BYE LAWS OF TRUST AND ANNUAL ACCOUNTS OF THREE YEAR S ALONG WITH THE APPLICATION. THUS, WHEN NEITHER THE ACT NOR THE RULES PROVIDE FO R PRODUCING THE ORIGINAL DOCUMENT AS A CONDITION PRECEDENT FOR GRANTING REGI STRATION, THE SAME SHOULD NOT BE DENIED ON THIS GROUND. SO FAR AS RUNNING OF THE HOSTEL IS CONCERNED, AS EXPLAINED ABOVE, IT IS AS PER THE OBJECT OF TRUST A ND NO COMMERCIALITY IS INVOLVED AS EVIDENT FROM THE AUDITED ACCOUNTS. THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCE IN SUPPORT OF A CHARITABLE ACTIVITY CARRY OUT BY IT IN WHICH NO DISCREPANCY WAS FOUND BY LD. CIT(E). SO FAR AS THE QUESTIONNAIRE DATED 18.11.2019 IS CONCERNED, THE SAME WAS NOT PROVIDED TO THE ASSESSEE EVEN WHEN REQUESTED TWICE. IN ANY CASE SINCE DETAILED REPLY H AS BEEN FURNISHED IN RESPONSE TO THE EARLIER QUESTIONNAIRE, IT IS INCORRECT ON PA RT OF LD. CIT(E) TO HELD THAT ASSESSEE HAS FAILED TO PROVIDE DETAILS AND DOCUMENT S IN SUPPORT OF HIS CLAIM FOR REGISTRATION U/S 12AA OF THE ACT. IN VIEW OF THE A BOVE, THE LD. CIT(E) MAY BE DIRECTED TO GRANT REGISTRATION U/S 12AA TO THE ASSE SSEE SOCIETY. 6. PER CONTRA, THE LD. DR SUBMITTED THAT A LETTER D ATED 03.10.2019 WAS ISSUED AT THE E-MAIL ADDRESS PROVIDED IN THE APPLICATION R EQUIRING THE ASSESSEE TO SUBMIT CERTAIN DOCUMENTS/EXPLANATIONS ALONG WITH ORIGINAL TRUST DEED FOR VERIFICATION HOWEVER, NO COMPLIANCE WAS MADE BY THE ASSESSEE. FU RTHER, ANOTHER OPPORTUNITY WAS PROVIDED VIDE LETTER DATED 27.11.20 19 FIXING THE DATE FOR HEARING ON 05.12.2019. AGAIN THERE WAS NO COMPLIANCE ON TH E PART OF THE ASSESSEE AND THEREAFTER, THE CIT(E) DECIDED THE MATTER ON THE BA SIS OF MATERIAL AVAILABLE ON RECORD. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE DID NOT SUBMIT ORIGINAL DOCUMENTS REGARDING ESTABLISHMENT OF THE TRUST AND AS REQUIRED UNDER RULE 17A, ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 5 THE CERTIFIED COPY OF INSTRUMENT ESTABLISHING THE T RUST NEEDS TO BE VERIFIED WITH ORIGINALS. IT WAS FURTHER SUBMITTED THAT ON PERUSAL OF THE ACCOUNTS OF THE ASSESSEE FOR THE FINANCIAL YEAR 2015-16 TO 2017-18, IT WAS NOTICED THAT THE APPLICANT HAS INDULGED IN COMMERCIAL ACTIVITIES OF RUNNING OF HOSTELS AND GETTING RECEIPTS FROM THE HOSTELS. FURTHER, THE APPLICANT HAS NOT SUBMITTED ANY DETAILS ABOUT THE CHARITABLE ACTIVITY CARRIED OUT BY IT BEF ORE THE CIT(E), THEREFORE, IT CANNOT BE KNOWN THAT THE APPLICANT IS ACTUALLY CARR YING OUT ANY CHARITABLE ACTIVITIES AS PER ITS OBJECTS. IT WAS ACCORDINGLY S UBMITTED THAT SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE APPLICANT TO PRODUC E DETAILS AND DOCUMENTS IN SUPPORT OF ITS CLAIM FOR REGISTRATION U/S 12AA OF T HE ACT BUT THE APPLICANT HAS FAILED TO DO SO. ACCORDINGLY, THE APPLICATION SEEKI NG REGISTRATION U/S 12AA OF THE ACT WAS RIGHTLY REJECTED BY THE LD. CIT(E). IT WAS ACCORDINGLY SUBMITTED BY THE LD CIT DR THAT NO INTERFERENCE IS CALLED FOR IN THE OR DER SO PASSED BY THE CIT(E). ALTERNATIVELY, IT WAS SUBMITTED THAT WHERE THE BENC H SO DECIDE, THE MATTER MAY BE REMANDED BACK TO THE FILE OF LD. CIT(E) TO EXAMI NE THE SAME AFRESH. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. TO OUR MIND, GIVEN THE ADVENT OF E-FILING OF APPLICATION AND WHERE ALL FURTHER CORRESPONDENCE NEED TO BE DONE TH ROUGH AN ONLINE-PLATFORM, THERE ARE CERTAIN TEETHING TECHNOLOGICAL PROBLEMS W HICH NEEDS TO BE ADDRESSED AS OBSERVED IN THE PRESENT CASE WHERE THERE ARE CLA IMS AND COUNTER-CLAIMS REGARDING SEEKING INFORMATION AND FILING OF SUBMISS IONS IN RELATION TO THE PROCESSING OF APPLICATION FILED BY THE ASSESSEE TRU ST FOR SEEKING REGISTRATION U/S 12AA. THEREFORE, IN THE INTEREST OF JUSTICE AND FA IR PLAY, WE DEEM IT APPROPRIATE TO SET-ASIDE THE MATTER TO THE FILE OF THE LD CIT(E ) TO EXAMINE THE APPLICATION OF THE ASSESSEE TRUST AFRESH AFTER GRANTING APPROPRIAT E OPPORTUNITY TO THE ASSESSEE TRUST TO APPEAR IN PERSON THROUGH ITS AUTHORIZED RE PRESENTATIVE. THE ASSESSEE SHALL BE AT LIBERTY TO RAISE THE VARIOUS CONTENTION S AS ADVANCED BY THE LD AR ITA NO. 10/JP/2020 MAHAWAR VAISHYA SEWA SANSTHA VS. CIT(E) 6 INCLUDING THE DECISION OF THE COORDINATE BENCH REFE RRED SUPRA BEFORE THE LD CIT(E) AND IS ALSO DIRECTED TO SUBMIT NECESSARY INF ORMATION/DOCUMENTS AS CALLED FOR BY THE LD CIT(E) AND THE LATTER SHALL DECIDE TH E SAME AFRESH AS PER LAW. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 28/04/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/04/2020. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- MAHAWAR VAISHYA SEWA SANSTHA, JAIPUR . 2. IZR;FKHZ@ THE RESPONDENT- CIT (EXEMPTION), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 10/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR