M/S NEST EDUCATIONAL & WELFARE SOCIETY SAMITI, Indore V. THE CIT(EXEMPTION), Bhopal

ITA 1049/IND/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6513 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 14-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: N D PATWA
• Keywords: Additional evidence
• Section: 12A; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE , , BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER . . /. I.T.A. NO. 1049 /IND/2016 [[ / ASSESSMENT YEAR : - NEST EDUCATIONAL & WELFARE SOCIETY SAMITI, INDORE. VS. CIT ( EXEMPTION), BHOPAL / APPELLANT / RESPONDENT . . ./ PAN: AACAN2772R / APPELLANT BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA , ADV. / RESPONDENT BY : SHRI LAL CHAND, CIT DR / DATE OF HEARING : 04 .0 7 .2018. / DATE OF PRONOUNCEMENT : 12 .0 7 .2018 NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 2 : - / O R D E R PER KUL BHARAT , J.M. : APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (EXEMPTION) , BHOPAL DATED 7 TH SEPTEMBER, 2016. 2 . THE ASSESSEE HAS CHALLENGED THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (EXEMPTION) DENYING REGISTRATION U/S 12 - A OF THE INCOME - TAX ACT, 1961, WHEN THE SOCIETY HAS NO OTHER ACTIVITY THAN RUNNING AN EDUCATIONAL INSTITUTION AND ITS EDUCATIONAL ACTIVITIES ARE GENUINE AND SUBJECT TO REVIEW BY THE LICENSING AUTHORITIES EVERY YEAR. 3 . BRIEFLY STA TED, THE FACTS ARE THAT THE ASSESSEE SOCIETY HAD MADE AN APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME - TAX ACT, 1961, IN FORM NO.10A . THE SAID APPLICATION WAS REFUSED ON THE BASIS OF THE REASONS RECORDED IN PARA 2.4OF THE ORDER. AGAINST THIS, THE ASS ESSEE NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 3 : - IS IN PRESENT APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN APPLICATION UNDER RULE 29 OF THE INCOME TAX RULES, 1962. THE CONTENTS OF THE APPLICATION ARE AS UNDER : - 1 . MAY IT PLEASE YOUR HONORS, 1. IN THE PRESENT CASE THE APPELLANT SOCIETY APPLIED FOR 12AA REGISTRATION ON 04.03.2016. THE SOCIETY WAS RUNNING A PGDM COLLEGE IN THE NAME OF 'SAPPHIRE INSTITUTE OF BUSINESS MANAGEMENT 'AT BORKHEDI, MHOW. 2 . THE INSPECTOR WAS DEPUTED, FOR ON - SPOT VERIFICATION OF THE ABOVE COLLEGE, WITHOUT THE KNOWLEDGE OF APPELLANT. HE VISITED ON TWO DIFFERENT OCCASIONS. AT BOTH THE OCCASIONS, THE COLLEGE WAS FOUND TO BE NOT OPERATIONAL. THE APPELLANT SUBMITS THAT DUE TO VACATIONS, THE COLLEGE WAS NOT RUNNING. HOWEVER, THE ID INSPECTOR ASSUMED THAT NO COLLEGE WAS BEING RUN. NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 4 : - 3 . THE APPELLANT IS NOW SUBMITTING RECORDS WHICH WILL FURTHER PROVE THAT THE COLLEGE WAS RUNNING WITH ALL THE REQUISITE INFRASTRUCTURE AND RESOURCES, A.) SPOT VERIFICATION REPORT BY AICTE DATED 23.11.2016 (P. B. 81 - 82 23.11.2016. (PB 81 - 82) . B) APPLICATION TO AICTE FOR THE EXTENSION AND APPROVAL FOR ACADEMIC YEAR 2017 - 18 DATED 30.;03.2017 ( PB 83 - 121) THIS APPLICATION IS BASED ON THE PRESCRIBED APPLICATION FORM DULY NOTIFIED BY THE AICTE REGULATIONS. THE INFORMATION SUBMITTED IN THIS FORM IS ACCOMPANIED BY THE DECLARATION BY THE PRINCIPAL. THE SAME COULD NOT BE SUBMITTED BEFORE AS THE APPLICATION IS MADE AFTER THE ORDER U/S 12AA(1)(B)(II) OF THE COMMISSIONER OF INCOME - TAX (EXEMPTION) WAS ISSUED, I.E. 07 .09.2016. NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 5 : - C.) EXAMINATION SCHEDULE DATED 31.01.2017 FOR THE 1 ST YEAR AND 2 ND YEAR EXAMINATION IN FEB,2017 ( PB 199 - 200 ) D.) EXAM ATTENDANCE RECORDS ( PB 201 - 216 ) E.) SURPRISE INVESTIGATION REPORT BY BACKWARD CLASS AND MINORITIES WELFARE DEPARTMENT DATED 06.02.2018 (PB 295) F.) VISIT REPORT BY CHIEF MANAGER - PUNJAB NATIONAL BANK DATED 17.02.2018. ENCLOSED AS ANNEXURE - 1 ALONG WITH THIS APPLICATION. THE ABOVE DOCU MENTS COULD NOT BE SUBMITTED BEFORE AS THEY RELATES TO THE PERIOD AFTER THE CIT(EXEMPTION) ORDER DATED 07.09.2016 WAS ISSUED, THESE ARE FURTHER SUBMITTED TO PROVE THAT THE EDUCATIONAL INSTITUTION WAS FULLY OPERATIONAL IN PREVIOUS YEAR ALSO. THERE ARE NO NE W SUBMISSIONS BUT PROVIDING ADDITIONAL DOCUMENT TO CONFIRM THE EARLIER SUBMISSIONS MADE IN THIS REGARD. NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 6 : - THE APPELLANT TAKES SUPPORT FROM THE FOLLOWING CASE LAWS, WHERE ADDITIONAL EVIDENCES WERE ADMITTED IN INTEREST OF JUSTICE: - CIT VS. KUM. SATYA SETIA ( 1983) 37 CTR 66 (M.P) CIT VS. GANI BHAI WAHAB BHAI (1998)145 CTR 526 (M.P) RAJMOTI INDUSTRIES VS. ITO - (1995) 52 I TD 286 (AHMEDABAD) IT IS MOST HUMBLY PRAYED, THAT THE ABOVE DOCUMENTS MAY BE ADMITTED IN THE INTEREST OF JUSTICE. THE APPELLANT PRAYS AND SHALL EVER REMAIN OBLIGED FOR THIS ACT OF KINDNESS. 4 . THE SAID APPLICATION WAS REFUSED ON THE BASIS OF THE REASONS RECORDED IN PARA 2.4 OF THE ORDER . AGAINST THIS, THE ASSESSEE IS IN PRESENT APPEAL . THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION AS MADE IN THE APPLICATION MADE UNDER RULE 29 OF THE I.T. RULES, 1962. NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 7 : - 5 . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE APPLICATIO N IS REJECTED ON THE BASIS THAT THE COLLEGE IS NOT FUNCTIONING. HE SUBMITTED THAT ON THE DATE OF INSPECTION, IT WAS HOLIDAY. HE SUBMITTED THAT INQUIRY CAN BE MADE IN THIS BEHALF. 6 . ON THE CONTRARY , THE LD. DEPARTMENTAL REPRESENTATIVE OPPOSED THE SUBMISSIONS. 7 . WE HAVE CONSIDERED THE FACTS, RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT HAS DECLINED TO GRANT REGISTRATION U/S 12A BY OBSERVING AS UNDER : - 2.4 IN VIEW OF CONTINUED INSISTENCE OF THE SOCIETY REGARDING ACTUAL AND GENUINE ACTIVITIES BEING CARRIED OUT AFTER VACATION, ANOTHER ON THE SPOT VERIFICATION WAS CONSIDERED NECESSARY DURING ONGOING ACADEMIC SESSION ON A WORKING DAY. HOWEVER, AS THE SOCIETY ALLEGED THAT INSPECTOR, WHO VISITED LAST HAD A CLOSED MIND AND PR E - DECIDED VIEW, THIS TIM E THE INCOME TAX OFFICER HIMSELF WAS NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 8 : - ASKED TO PERSONALLY CARRY OUT VERIFICATION AND REPORT TO THE UNDERSIGNED. THE ITO (EXEMPTION), INDORE, VISITED ON 25.08.2016, AND SUBMITTED HIS REPORT AS UNDER : - . . . . .( ) / 12 / 2016 - 17 25 . 08 . 2016 , ( AACAN2772R ) [ - [ 1 . [ [ [ 26 . 08 . 2016 11 : 45 SAPPHIRE INSTITUTE OF BUSINESS MANAGEMENT , , , ( ) [ [ ( ANNE XURE PAGE 1 TO 5) NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 9 : - 2 . [ , 3 . [ [ 2 - 5 - [ 4 . [ [ [ ( PAGE 6) 5 . [ [ ( PAGE 7) 6 . CLASSROOM , STUDENTS ( PAGE 8 & 9 ) 7 . STRUCTURE , ( PAGE 10 ) NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 10 : - 8 . / PRINCIPAL ( PAGE 11 ) 9 . [ ( PAGE 12 ) 10 . , 11 . [ [ [ 3. IN THE LIGHT OF ABOVE MENTIONED IRREGULARITIES REPORTED IN SUCCESSIVE ON THE SPOT VERIFICATION VISITS MADE BY LOWER AUTHORITIES, THE REPLY TO SHOW CAUSE NOTICE IS REJECTED AND THE ASSOCIATION IS HELD NOT DOING CHARITABLE ACTIVITIES BUT ONLY EXISTS ONLY ON PAPER. IT ALSO APPEARS THAT OTHER AGENCIES LIKE AICTE (ALL INDIA COUNCIL FOR TECHNICAL EDUCATION) AND STATE GOVERNMENT OF M.P., HAVE ALSO N OT DONE DUE DILIGENCE IN GRANTING RECOGNITION AND DISBURSEMENT OF SCHOLARSHIP TO THE SOCIETY AND THEREFORE THE SAME ARE OF NO CONSEQUENCE IN DECIDING THE GENUINENESS NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 11 : - OF ACTIVITIES ON THE GROUND FOR THE PURPOSE OF SECTION 12A OF THE INCOME - TAX ACT, 1961. TH EREFORE, ACTIVITIES CANNOT BE SAID TO BE GENUINE. THE ASSESSEE IS THEREFORE NOT ENTITLED FOR REGISTRATION U/S 12AA OF THE INCOME - TAX ACT, 1961. THEREFORE, ACTIVITIES CANNOT BE SAID TO BE GENUINE. THE ASSESSEE IS THEREFORE NOT ENTITLED FOR REGISTRATION U/S 12AA OF THE INCOME - TAX ACT, 1961. ACCORDINGLY, THE APPLICATION IN FORM NO.10A, RECEIVED IN THIS OFFICE ON 04.03.2016 SEEKING REGISTRATION U/S 12AA IS HEREBY REJECTED AND REGISTRATION SOUGHT U/S 12AA IS REFUSED. 8 . LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE VEHEMENTLY ARGUED THAT THE ASSESSEE IS RUNNING A COLLEGE. THIS FACT CAN BE VERIFIED. WE FIND THAT THE REGISTRATION IS DECLINED BY THE LD. CIT ON THE GROUND THAT THE INSTITUTE IS NOT FUNCTIONING. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND THE S UBMISSION OF THE PARTIES, WE DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF LD. CIT FOR DECISION AFRESH WITH A DIRECTION THAT FUNCTIONING OF THE INSTITUTE BE VERIFIED AGAIN AND WHILE MAKING SPOT VERIFICATION, NOTICE TO THE NEST EDUCATION & WELFARE SOCIETY, INDORE. - : 12 : - ASSESSEE BE GIVEN TO REMAIN PRESENT AT THE TIME OF SPOT VERIFICATION. AFTER RECEIVING THE REPORT, THE LD. CIT WILL DECIDE THE ISSUE OF REGISTRATION AFRESH . HENCE, THE IMPUGNED ORDER IS SET - ASIDE FOR DECISION AFRESH. GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 9 . IN THE RESULT, THE APP EAL IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 1 2 . 0 7 .2018 . S D / - ( ) S D / - ( ) (MANISH BORAD) (KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER INDORE; DATED : 1 2 /0 7 /2018 CPU * / SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUARD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE