EI Shaddai Ministries, Bellary V. CIT, Gulbarga

ITA 1072/BANG/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51312 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-10-2011
• Assessment Year: misc
• Appeal Filed On: 13-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ETWA MUNDA CITIIIDR
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER ITA NO.1072/BANG/2010 ASSESSMENT YEAR : NOT APPLICABLE EL SHADDAI MINISTRIES, C/O. M/S. K.R. PRASAD, 9/3, OLD MADRAS BANK ROAD, BANGALORE. PAN : AAATE 1320P VS. THE COMMISSIONER OF INCOME TAX, GULBARGA. APPELLANT RESPONDENT APPELLANT BY : SHRI ASHOK KULKARNI, ADVOCATE RESPONDENT BY : SHRI ETWA MUNDA, CIT-III(DR) DATE OF HEARING : 10.10.2011 DATE OF PRONOUNCEMENT : 10.10.2011 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 30.06.2010 OF THE COMMISSIONER OF INCOME-TAX, GULBARGA. 2. GROUND NOS.1 & 6 ARE GENERAL IN NATURE AND REQUI RE NO ADJUDICATION. THE OTHER GROUNDS OF APPEAL READ AS UNDER: ITA NO.1072/BANG/10 PAGE 2 OF 5 2. THE HONBLE COMMISSIONER OF INCOME TAX ERRED IN REFUSING REGISTRATION U/S 12AA OF THE ACT. 3. THE HONBLE COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE OBJECTS OF THE TRUST, AS THEY STOO D, ATTRACTS THE BAR CONTAINED IN SECTION 13(1)(B) OF THE ACT. 4. THE HONBLE COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE OBJECTS OF THE TRUST ARE NOT ORIEN TED TO THE PUBLIC AT LARGE AND ARE CONFINED TO A SPECIFIC RELIGIOUS C OMMUNITY. 5. THE ORDER OF THE HONBLE COMMISSIONER OF INCOME TAX PASSED U/S. 12AA OF THE ACT IS BARRED BY LIMITATION . 3. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE REFUSAL FOR REGISTRATION U/ S. 12AA OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT IN SHORT]. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE IS A PUBLIC CHARITABLE TRUST FORMED ON 18.2.01 AND FILED THE AP PLICATION IN FORM 10A SEEKING REGISTRATION U/S 12A OF THE ACT ON 5.6.2007 . HOWEVER, REGISTRATION WAS DENIED VIDE ORDER DATED 27.12.07. AGAINST THE SAID ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE ITAT, WHEREIN V IDE ORDER DATED 31.3.09 OF THE TRIBUNAL, THE LD. CIT, GULBARGA WAS DIRECTED TO PASS A SPEAKING ORDER AFTER CONSIDERING THE DECISION OF TH E JURISDICTIONAL HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST V. DIRECTOR OF INCOME TAX (EXEMPTIONS) 285 ITR 327. THEREAFTER, THE LD. CIT CONSIDERED THE CASE OF THE ASSESSEE FOR REGISTRATIO N U/S. 12A OF THE ACT. THE LD. CIT AGAIN REJECTED THE APPLICATION BY MENTI ONING THAT IF SECTIONS 11, 12 & 13 OF THE ACT ARE TO BE CONSTRUED AS A UNIFIED CODE A CIT CAN NOT OVERLOOK APPLICABILITY OF SECTION 13(1)(B). NOW T HE ASSESSEE IS IN APPEAL. ITA NO.1072/BANG/10 PAGE 3 OF 5 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT WHILE REJECTING THE APPLICATION HAD NOT POINTED OUT HOW A ND IN WHAT MANNER THE OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATU RE. HE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE LD. CIT IS A NON-SPEAKING ORDER. 6. IN HIS RIVAL SUBMISSIONS, THE LD. CIT(DR) SUPPOR TED THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX. 7. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL ON RECORD, IT APPEARS THAT THE LD. CIT REJ ECTED THE APPLICATION OF THE ASSESSEE BY STATING THAT THE APPLICABILITY OF SECTI ON 13(1)(B) OF THE ACT COULD NOT BE OVERLOOKED, PARTICULARLY WHEN THE ONLY PURPO SE OF REGISTRATION U/S. 12AA IS A PREQUEL TO SECTION 11 OF THE ACT. IN OUR OPINION, THE LD. CIT WAS NOT JUSTIFIED IN REJECTING THE APPLICATION U/S. 12A OF THE ACT SIMPLY BY MENTIONING THAT IF SECTIONS 11, 12 & 13 OF THE ACT ARE TO BE CONSTRUED AS A UNIFIED CODE A CIT CAN NOT OVERLOOK APPLICABILITY O F SECTION 13(1)(B) BECAUSE THE PROVISIONS OF SECTION 12AA(1) OF THE AC T ARE DIFFERENT FROM THE PROVISIONS OF SECTION 11 AND 13(1) OF THE ACT. TH E PROVISIONS CONTAINED IN SECTION 12AA(1) WHICH ARE PROCEDURAL IN NATURE READ AS UNDER: 12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE ( A ) OR CLAUSE ( AA ) OF SUB-SECTION (1) OF SECTION 12A, SHALL ( A ) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE T RUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THI S BEHALF; AND ( B ) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE ( I ) SHALL PASS AN ORDER IN WRITING REGISTERING THE TR UST OR INSTITUTION; ( II ) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER I N WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, ITA NO.1072/BANG/10 PAGE 4 OF 5 AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE ( II ) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD. 8. FROM THE ABOVE PROVISIONS, IT IS CRYSTAL CLEAR T HAT WHILE GRANTING OR REFUSING REGISTRATION UNDER SUB-SECTION (1) OF SECT ION 12A, THE LD. CIT IS REQUIRED TO SATISFY ABOUT THE GENUINENESS OF THE AC TIVITIES OF THE TRUST OR INSTITUTION, FOR THAT PURPOSE HE CAN MAKE SUCH INQU IRIES AS HE MAY DEEM NECESSARY. ANOTHER CONDITION IS THAT THE LD. CIT M UST BE SATISFIED ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF ITS ACTIVITIES. BUT IN THE INSTANT CASE, THE LD. CIT HAS NOT BROUGHT ON RE CORD TO SUBSTANTIATE HOW AND IN WHAT MANNER THE OBJECTS OF THE ASSESSEE WERE NOT CHARITABLE IN NATURE AND THE ACTIVITIES WERE NOT GENUINE. THE PR OVISIONS OF SECTION 13(1)(B) OF THE ACT COMES INTO PLAY ONLY WHEN THE I NSTITUTION OR THE TRUST IS REGISTERED U/S. 12A(1) OF THE ACT. THE PROVISIONS OF SECTION 13(1) ARE TO BE CONSIDERED ONLY AT THE TIME OF ASSESSMENT AND NOT A T THE TIME OF GRANTING REGISTRATION BECAUSE AT THE TIME OF GRANTING REGIST RATION THE LD. CIT IS REQUIRED TO SEE THE NATURE OF THE OBJECTS AND GENUI NENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION. SINCE IN THE PRESENT CASE, THE LD. CIT HAD NOT DISCUSSED ABOUT THE OBJECTS AND THE ACTIVITIES OF T HE ASSESSEE, THEREFORE THE ORDER PASSED BY HIM IS A NON-SPEAKING ORDER IN THE EYES OF LAW. WE, THEREFORE, REMAND THE ISSUE BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME-TAX TO BE ADJUDICATED AFRESH IN ACCORDANCE W ITH THE LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. THE LD. CIT IS ALSO DIRECTED TO DECIDE THIS CASE EX PEDITIOUSLY, PREFERABLY WITHIN THREE MONTHS FROM THE DATE OF RECEIPT OF THI S ORDER. ITA NO.1072/BANG/10 PAGE 5 OF 5 9. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF OCTOBER, 2011. SD/- SD/- ( GEORGE GEORGE K. ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 10 TH OCTOBER, 2011. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.