Shanta Educational Academy, Agra V. C.I.T.-I, Agra

ITA 110/AGR/2014

• Counselvise Citation: 11020314 RSA 2014
• Duration Of Justice: 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-06-2014
• Assessment Year: misc
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Assessee Lawyers: P K SEHGAL
• Keywords: Charitable institution
• Section: 12; 12A; 12AA

Judgement Text

I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA [CORAM : PRAMOD KUMAR AM AND JOGINDER SINGH JM] I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- SHANTA EDUCATION ACADEMY .APPELLANT 9 MILE STONE, KHASRA 294-296 BHAMRAULI KATARA, AGRA [PAN: ADIPG0770E] VS. COMMISSIONER OF INCOME TAX I, AGRA .RESPO NDENT APPEARANCES BY: P K SEHGAL FOR THE APPELLANT INDERJIT SINGH , FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING :JUNE 5, 2014 DATE OF PRONOUNCING THE ORDER :JUNE 6, 2014 ORDER PER PRAMOD KUMAR: 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 30 TH APRIL 2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX -I, AGRA, DECLINING REGI STRATION UNDER SECTION 12 AA .OF THE INCOME TAX ACT, 1961. 2. GRIEVANCES RAISED BY THE ASSESSEE APPELLANT ARE AS FOLLOWS: 1. THAT THE LEARNED CIT-1, AGRA HAS BEEN ARBITRARY AND UNJUST IN REJECTING THE APPLICATION MOVED BY THE ASSESSEE PUBLIC CHARITABLE TRUST (HEREINAFTER REFERRED TO AS ASSESSEE TRUST) FOR GRANT OF REGISTRATION U/ S 12AA OF I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BY COMPLETE DI SREGARD TO THE FACTS OF ITS CASE, SUBMISSIONS MADE AND EVIDENCES/MATERIAL PLACE D ON RECORDS AND/OR PRODUCED BEFORE HIM AND SOLELY ON THE BASIS OF HIS UNCALLED FOR UNILATERAL INFERENCES AND FOR THEORETICAL CONSIDERATION. 2. THAT THE OBJECTS OF ASSESSEE TRUST BEING IN CONF ORMITY WITH SECTION 2(15) OF TEHACT AND FURTHER THE ASSESSEE TRUST FULLY SATISFI ES THE PROVISIONS LAID DOWN IN SECTION 12A READ WITH SECTION 12AA OF THE ACT, THUS THE LEARNED CIT-I, AGRA HAS ERRED BOTH IN LAW AND FACTS IN REFUSING TO THE REGI STER IT U/S 12AA OF THE ACT I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- PAGE 2 OF 5 MORESO WHEN HE WAS SATISFIED ABOUT THE CHARITABLE O BJECTS OF THE ASSESSEE TRUST AND GENUINENESS OF ITS ACTIVITIES. 3. A) THAT AS THE LAND AND BUILDING WERE NOT OWNED BY THE ASSESSEE TRUST THUS THERE WAS NO OCCASION FOR REJECTING THE APPLIC ATION MOVED BY ASSESSEE TRUST IN FORM NO.10A FOR GRANT OF REGISTRATION U/S 12AA OF I.T. ACT, 1961 MERELY BECAUSE AUTHORITIES BELOW VIZ. ADDL. CIT AND THE AO DID NOT TESTIFY THE SOURCE OF INVESTMENT THEREIN. THERE BEING NO DOUBT ABOUT T HE CHARITABLE OBJECTS AND GENUINESS OF THE ACTIVITIES OF ASSESSEE TRUST THE L EARNED CIT-I, AGRA SHOULD HVE GRANTED REGISTRATION U/S 12AA OF THE ACT TO IT. B) THAT WITHOUT PREJUDICE TO THE FOREGOING GROUND 3(A), AS THE ASSESSEE TRUST DID NOT OWN LAND AND BUILDING THUS IT WAS UND ER NO STATUTORY OBLIGATION TO EXPLAIN THE SOURCE OF INVESTMENT THEREIN. HOWEVER, IT HAD DULY FURNISHED COMPLETE DETAILS AND DOCUMENTS/EVIDENCES IN SUPPORT OF OWNERSHIP AND SOURCE OF INVESTMENT THEREIN BY THE OWNER. THUS SIM PLY BECAUSE RANGE ADDL. CIT AND THE AO COULD NOT TESTIFY THE SOURCE OF SUCH INVESTMENT, THE ASSESSEE TRUST SHOULD HAVE NOT BEEN DENIED THE REGISTRATION U/S 12AA OF THE ACT WHICH IT WAS OTHERWISE ENTITLED FOR. 4. THAT THE IN VIEW OF VARIOUS AUTHORITATIVE DECISI ON, PARTICULARLY RECENT JUDGMENT OF JURISDICTIONAL HONBLE ALLAHABAD HIGH C OURT IN THE CASE OF HAR DAYAL CHARITABLE & EDUCATIONAL TRUST VS. CIT-II, AG RA REPORTED IN (2013) 32 TAXMANN.COM 341 AS WELL JUDGMENTS OF JURISDICTIONAL HONBLE ITAT, AGRA BENCH, AGRA, NOW IT IS WELL SETTLED LAW THAT WHILE GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT TO A CHARITABLE TRUS T, WHICH IS AT THE COMMENCEMENT STAGE, THE POWERS OF THE COMMISSIONER ARE LIMITED TO THE ASPECT OF EXAMINING THAT WHETHER OR NOT THE OBJECT ARE CHARITABLE IN NATURE AND NOTHING MORE THAN THAT. 3. ALL THE GROUNDS OF APPEAL RELATE TO REJECTION OF APPLICATION UNDER SECTION 12 AA BY THE LEARNED COMMISSIONER, AND, WE WILL, THEREFORE, TAKE UP ALL THESE GROUNDS OF APPEAL TOGETHER. 4. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE A SSESSEE TRUST MOVED AN APPLICATION, FOR REGISTRATION UNDER SECTION 12AA, BEFORE THE LEARNED COMMISSIONER ON 7 TH OCTOBER 2013. IT APPEARS THAT HEARING ON THIS APPLICATION WAS FIXED ON 4 TH FEBRUARY 2014 AND THE ASSESSEE ALSO FILED CERTAIN DOCUMENTS, AS REQUISITIONED, FOR THE PERUSAL OF LEARNED COMMISSIONER. AGAIN, THERE WERE HEARINGS ON 13 TH FEBRUARY AND 18TH FEBRUARY AND THE HEARING WAS CONCLUDED, ON 18 TH FEBRUARY 2014, WITH THE REMARKS AS FOLLOWS: SHRI P K SAHGAL, ADVOCATE/AR, ATTENDS, FURNISHES FU RTHER CLARIFICATIONS VIDE LETTER DATED TODAY. HE HAS BEEN HEARD. A CLARIFICAT ION MAY BE SOUGHT AFTER RECEIVING REPORT FROM THE AO. NO DATE IS BEING GIVE N. SD/XX I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- PAGE 3 OF 5 5. IT APPEARS THAT THERE WERE NO FURTHER DEVELOPMEN TS ON THIS ISSUE. AS EVIDENT FROM THE FILE NOTINGS ON RECORD, A REPORT WAS RECEIVED FROM THE AO IN WHICH ITO- 1(1), AGRA HAS RECOMMENDED, WHEREAS THE ADDL CIT, RANGE 1, AGRA HA S NOT RECOMMENDED ABOVE SOCIETY/TRUST FOR GRANT OF REGISTRATION UNDER SECTI ON 12AA OF THE INCOME TAX ACT, 1961 . POST CONCLUSION OF HEARING ON 18 TH FEBRUARY 2014, THE FOLLOWING NOTINGS WERE ALSO MADE ON THE FILE: 25.03.2014 SIR, LETTER DATED 05.3.2014 HAS BEEN SENT TO ADDL C IT, RANGE 1, AGRA, WHEREBY HE WAS REQUESTED TO PROPOSE A DATE IN THE MONTH OF APRIL WHEN THE LE ARNED CIT CAN ACCOMPANY HIM FOR INSPECTION OF THE ABOVE REFERRED EDUCATIONAL INSTITUTE. THE RE PLY OF THE ABOVE REFERRED LETTER IS STILL AWAITED. THE CASE HAS T.B. (TIME BARRING ) LIMITATION ON 30.4.2014 IF APPROVED, A REMINDER MAY BE SENT TO THE ADDL CIT -1, AGRA, REQUESTING HIM TO PROPOSE A DATE. DRAFT LETTER IS PUT FOR KIND PERUSAL, APPROVAL AND SIGNATURES, PLEASE. TA OS ITO (TECH) 10.04.2014 SIR, LETTER DATED 5.03. 2014, AND SUBSEQUENT REMIND ER DATED 25.03.2014 HAS BEEN SENT TO THE ADDL CIT, RANGE 1, AGRA, WHEREBY HE WAS REQUESTED TO PRO POSE A DATE IN THE MONTH OF APRIL WHEN THE LD CIT CAN ACCOMPANY HIM FOR INSPECTION OF THE ABOV E REFERRED EDUCATIONAL INSTITUTE. THE REPLY OF THE ABOVE REFERRED LETTER IS STILL AWAITED. THE CAS E HAS THE TB LIMITATION ON 30.04.2014 IF APPROVED, A REMINDER MAY BE SENT TO THE ADDL CIT -1, AGRA, REQUESTING HIM TO PROPOSE A DATE. DRAFT LETTER IS PUT FOR KIND PERUSAL, APPROVAL AND SIGNATURES, PLEASE. TA OS ITO (TECH) CIT-I, AGRA 17.04.2014 AS DIRECTED, DRAFT LETTER TO THE ADDL CIT, R 1, AGR A, REGARDING ENQUIRY/REPORT, WITH REGARD TO INVESTMENT IN CONSTRUCTION OF BUILDING, IS PUT UP F OR KIND APPROVAL/ DIRECTIONS. ITO TECH CIT I, AGRA ORDER PASSED SD/XX 30.4.14 6. LEARNED COMMISSIONER THEN PROCEEDED TO REJECT TH E APPLICATION UNDER SECTION 12 AA BY OBSERVING AS FOLLOWS: I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- PAGE 4 OF 5 THE TRUSTEE OF THE TRUST WERE REQUESTED TO ATTEND A ND PRODUCE EVIDENCE IN SUPPORT OF THEIR CLAIMS FOR GRANT OF REGISTRATION U /S 12AA. SHRI P.K. SEHGAL, ADVOCATE, THE AR OF THE APPLICANT ATTENDED AND FILE D WRITTEN SUBMISSION DATED 18.02.2014. WITH REFERENCE TO THE APPLICATION FOR R EGISTRATION, THE AUTHORITIES BELOW WERE REQUIRED TO VERIFY THE ASSERTIONS OF THE APPLICANT REGARDING ACQUISITION OF LAND AND THE SOURCE OF INVESTMENT OF RS.2,19,75,931/- TOWARDS CONSTRUCTION OF THE SCHOOL BUILDING. SINCE THE RANG E ADDL. CIT AND THE AO HAVE NOT TESTIFIED THE SOURCE OF INVESTMENT, IT IS NOT P OSSIBLE TO GRANT REGISTRATION U/S 12AA OF I.T. ACT, 1961 UNTIL THE SOURCE OF INVESTME NT IS BEYOND DOUBT AND FULLY EXPLAINED. THE APPLICATION IS, THEREFORE, BEING REJ ECTED. THE APPLICANT, HOWEVER, MAY APPLY AGAIN AS THE LIMITATION IS EXPIRING TODAY I.E. 30.04.2014 AND FURNISH SUITABLE CLARIFICATION REGARDING ACQUISITION OF LAN D AS WELL AS SOURCE OF INVESTMENT. 7. THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFOR E US. 8. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE IN THE LI GHT OF THE APPLICABLE LEGAL POSITION. WE HAVE ALSO PERUSED THE CASE RECORDS PRODUCED BEFORE US. 9. WE FIND THAT SO FAR AS REGISTRATION UNDER SECTIO N 12AA, IN RESPECT OF A NEW INSTITUTION IS CONCERNED, ALL THAT THE LEARNED COMMISSIONER HAS TO SEE AT THAT STAGE IS THE OBJECTIVES OF THE INSTITUTION AND THE RELATED ASPECTS. IN THE PRE SENT CASE, AS EVIDENT FROM PERUSAL OF CASE RECORDS, THE ASSESSEE HAD DULY FURNISHED ALL THE IN FORMATION AS REQUISITIONED, INCLUDING OBJECTIVES OF THE TRUST, LATEST ON 18 TH FEBRUARY 2014 AND THE LEARNED COMMISSIONER DID NOT HAVE ANY ISSUES WITH THE SAME. AS A MATTER OF FACT, LEARNED COMMISSIONER WAS SATISFIED WITH THE SAME AND THE HEARING WAS CONCLUDED ON THAT ASPE CT. AS REGARDS INVESTMENT OF RS 2,19,75,931 IN THE CONSTRUCTION, AND ACQUISITION OF LAND, THE ASSESSEE HAD DULY EXPLAINED THE SAME VIDE LETTER DATED 10 TH FEBRUARY 2014 AND THE RELEVANT PART OF EXPLANATION IS ALSO PLACED BEFORE US AT PAGE 23 OF THE COMPILATION OF P APERS. IT WAS CATEGORICALLY STATED THAT THIS INVESTMENT WAS MADE BY MR KRISHAN KALRA AND HIS INC OME TAX DETAILS WERE ALSO PLACED ON RECORD. THERE IS NOTHING MORE THAT THE ASSESSEE CO ULD DO, NOR DID THE LEARNED COMMISSIONER ASK HIM TO DO ANYTHING MORE THAN THAT. YET, LEARNED COMMISSIONER HAS REJECTED THE REGISTRATION ON THE GROUND THAT THE RANGE ADDL. CIT AND THE AO HAVE NOT TESTIFIED THE SOURCE OF INVESTMENT. THIS STAND OF THE LEARNED COMMISSIONER IS ENTIRELY UNSUSTAINABLE IN LAW. THE ASSESSEE CANNOT HAVE ANY CONTROL ON THE INTERNAL FUNCTIONING OF THE TAX AUTHORITIES, AND HIS APPLICATION CANNOT BE REJECTED ON THE GROUND THAT SOME INTERNAL REPORTS, WHICH ARE ANYWAY NON-STATUTORY IN NATURE, HAVE NOT BEEN RECEIVED. GRANT OF REGISTRATION IS A TIME BOUND MATTER AND WHEN NOTHIN G ADVERSE IS FOUND WITHIN SIX MONTHS, THE I.T.A. NO.:110/AGRA/2014 ASSESSMENT YEAR:- PAGE 5 OF 5 REGISTRATION IS TO BE NECESSARILY GIVEN. EVEN WHEN NO SPECIFIC REGISTRATION IS GRANTED IN THE PRESCRIBED TIME LIMIT, IT IS DEEMED TO HAVE BEEN GR ANTED. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, LEARNED COMMISSIONER DID INDEED ER R IN REJECTING THE APPLICATION- PARTICULARLY AS THERE WERE NO ADVERSE FINDINGS ON T HE FUNDAMENTAL ISSUE REGARDING OBJECTIVES OF THE TRUST. AS FOR THE ISSUES REGARDING INVESTMEN TS ETC, UNLESS THERE IS A CATEGORICAL FINDING ABOUT LACK OF BONAFIDES IN ACTIVITIES, THESE ASPE CTS DONOT AFFECT THE REGISTRATION AND CAN BE ADDRESSED AT THE TIME OF ASSESSMENT. 10. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING I N MIND ENTIRETY OF THE CASE, WE ARE UNABLE TO SUSTAIN THE IMPUGNED ORDER. HOWEVER, LEAR NED COUNSEL FOR THE ASSESSEE HAS FAIRLY STATED THAT HE HAS NO OBJECTION TO THE MATTER BEING REMITTED TO THE FILE OF THE LEARNED COMMISSIONER FOR THE LIMITED PURPOSES OF VERIFICATI ONS REGARDING OBJECTS OF THE TRUST AS NO CATEGORICAL FINDINGS HAVE BEEN GIVEN ON THE SAME. A CCORDINGLY, WITH THE CONSENT OF THE PARTIES, THE MATTER STANDS RESTORED TO THE FILE OF THE LEARNED COMMISSIONER FOR THIS LIMITED PURPOSE. IN CASE, THERE ARE NO ISSUES WITH THE OBJE CTS OF THE ASSESSEE APPELLANT, LEARNED COMMISSIONER WILL GRANT THE REGISTRATION UNDER SECT ION 12 AA. WE DIRECT SO. 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON 6 TH DAY OF JUNE, 2014. SD/- SD/- JOGINDER SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AGRA, THE 6 TH DAY OF JUNE, 2014. COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA