Sphere India, New Delhi V. DIT (E), New Delhi

ITA 1131/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7433 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 10-08-2016
• Assessment Year: misc
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K SINGH
• Keywords: Opportunity of being heard
• Section: 80G; 12A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH G NEW DELHI BEFORE : SHRI I.C. SUDHIR, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO S . 1331 & 1332/DEL./2014 SPHERE INDIA, VS. DIT(EXEMPTION), BUILDING NO. 3, FLAT NO. 401/3, NEW DELHI. SONA APARTMENTS, KAUSHILYA PARK, HAUZ KHAS, NEW DELHI. (PAN: AALTS9559J) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K. SAMPATH, ADVOCATE & SH. V. RAJA KUMAR, ADVOCATE RESPONDENT BY : SH. B.K. SINGH, D.R. DATE OF HEARING : 10.08.2016 DATE OF PRONOUNCEMENT : 24 .08.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE DIT (EXEMPTION), NEW DELHI DATED 30.12.2013 ON THE GROUND THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. DIT(EXEMPTION) WAS NOT JUSTIFIED IN REFUSING REGISTRATION U/S. 12A AND 80G OF THE IT ACT, 1961 ( THE ACT FOR SHORT). ITA NO. 1131 & 1132/DEL./2014 2 2. SINCE BOTH THE APPEALS ARE INTERCONNECTED AND WERE H EARD TOGETHER , THEREFORE, THE SAME ARE BEING DECIDED BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT FILED APPLICATION ON 27.06.2013 IN FORM NO. 10A AND 10G FOR SEEKING REGISTRATION U/S. 12A(A) AND 80G OF THE ACT RESPECTIVELY . NOTICES WERE ISSUED FOR HEARING AND DOCUMENTS WERE CALLED FOR. AS PER DETAILS SUBMITTED BY THE APPELLANT BEFORE THE DIT(E), THE APPELLANT IS ENGAGED IN FOLLOWING PROGRAMS : HUMANITARIAN COORDINATION UNIFIED RE SPONSE STRATEGY (URS) TRAINING AND CAPACITY BUILDING PROGRAMME (TVBP) KNOWLEDGE MANAGEMENT INTER - AGENCY COLLABORATIVE ADVOCACY AS PER MEMORANDUM OF ASSOCIATION SUBMITTED BY APPELLANT, THE SOCIETY GOT REGISTRATION ON 31.08.2012 IN THE NAME OF SPHERE IND IA. ON THE BASIS OF DOCUMENTS , HE FOUND THAT THE ABOVE INSTITUTION IS ENGAGED SINCE 2004 IN THE ABOVE ACTIVITIES. THE FINANCIAL DETAILS WERE ALSO CALLED FOR EXAMINATION. THE LD. DIT (E) EXAMINED THE SAME FOR THE PERIOD FROM 01.04.2013 TO 18.11.2013 WHICH AR E AVAILABLE AT PAGE NO. 1 OF THE ORDER OF DIT(E). ON THE BASIS OF ABOVE FINANCIAL DATA, THE LD. DIT(E) NOTED THAT THE APPELLANT IS NOT ENGAGED IN ANY ITA NO. 1131 & 1132/DEL./2014 3 OTHER ACTIVITY AS STATED (SUPRA). THE FINDINGS OF THE DIT(E) RECORDED IN PARA 3.1 & 3.2 OF THE IMPUGNED OR DER READ AS UNDER : 3.1 ON A QUERY, IT WAS EXPLAINED THAT THE APPLICANT SOCIETY HAS BEEN EARLIER CARRYING OUT ACTIVITY UNDER ''SPHERE INDIA' WITHOUT GETTING ITSELF REGISTERED AS A LEGAL ENTITY. HOWEVER, TO GET BENEFIT U/S. 12A AND 80G, IT GOT ITSELF REGISTERED UNDER SOCIETY REGISTRATION ACT ON 31.08.2012. IT WAS FURTHER STATED THAT 'SPHERE INDIA' HAS BEEN PROVIDING NETWORKING AND CO - ORDINATION SUPPORT TO VARIOUS AGENCIES, GOVERNMENT AND NON - GOVERNMENT ENGAGED IN RELIEF WORK. IT WAS HOWEVER SEEN THAT A CCOUNTS OF THE APPLICANT DO NOT REFLECT ANY SUCH ACTIVITY HAVING BEEN UNDERTAKEN. ON A QUERY IT WAS EXPLAINED THAT THE FUNDS FOR CARRYING OUT SUCH ACTIVITIES ARE NOT RECEIVED IN THE ACCOUNTS OF 'SPHERE INDIA'. ON THE CONTRARY THE PAYMENTS ARE DIRECTLY MA DE TO THE PERSONS ENGAGED IN CARRYING OUT THE PROJECT, I.E., WHENEVER THE 'SPHERE INDIA' GETS A PROJECT, IT HIRES PEOPLE TO EXECUTE THE SAME. THE PEOPLE/MANPOWER SO HIRED, GETS PAID DIRECTLY BY THE AGENCY FOR WHICH THE PROJECT IS TO BE CARRIED OUT. IT WAS ALSO STATED THAT SH. VIKRANT MAHAJAN, THE CEO GETS PAID DIRECTLY AS A CONSULTANT. ON BEING FURTHER QUESTIONED ON THE REASONS FOR NOT ROUTING THE RECEIPT THROUGH THE ACCOUNT OF THE 'SPHERE INDIA', THE CEO HAD NO PLAUSIBLE EXPLANATION. THE CEO COULD NOT EVEN BRING ON RECORD THE DETAILS OF THE VARIOUS PROJECTS CARRIED OUT BY IT IN TERMS OF WORK DONE, PAYMENTS RECEIVED. NO CONFIRMATIONS WERE FILED. 3.2 IT IS EVIDENT THAT THE TRUST HAS NOT BEEN CARRYING OUT/CONDUCTING ITS AFFAIRS IN A TRANSPARENT MANNER. ITS A CTIVITIES CANNOT BE TERMED AS GENUINE. IT APPEARS THAT THE APPLICANT HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY. IN FACT THE CEO, SH. VIKRANT MAHAJAN, HAS ACTED AS CONSULTANT TO OTHER AGENCIES ENGAGED IN RELIEF WORK FOR WHICH HE GETS REMUNERATION BY WAY O F REIMBURSEMENT OF EXPENSES AND HONORARIUM. IN THAT SCENARIO, THE CEO OF THE APPLICANT IS USING THE SOCIETY AS A FRONT TO CARRY OUT ITS ACTIVITIES WHICH ARE COMMERCIAL IN NATURE. THE LD. DIT(E) WAS NOT SATISFIED WITH THE GENUINENESS OF THE ACTIVITIES O F THE INSTITUTION AS SET OUT IN SECTION 12AA(1)(B) FOR GRANTING REGISTRATION UNDER SECTION 12A AND 80G OF THE ACT. HE FURTHER NOTED THAT THE APPELLANT HAS FAILED ITA NO. 1131 & 1132/DEL./2014 4 TO ESTABLISH THAT THE SOCIETY IS DOING ACTIVITIES WHICH ARE CHARITABLE AND COMMENSURATE TO THE OBJECTS OF THE MEMORANDUM OF ASSOCIATION. IN VIEW OF THE ABOVE, THE REGISTRATION WAS NOT GRANTED U/S. 12AA(1)(B) AND 80G OF THE ACT. AGAINST THE ORDER OF THE DIT( E ), THE APPELLANT IS IN SEPARATE APPEAL S BEFORE THE TRIBUNAL. 4. THE LD. AR SUBMITTED THAT SPHERE INDIA IS DOING CHARITABLE ACTIVITIES SINCE 2004, BUT IT WAS NOT REGISTERED AT THAT TIME. IT FORMED ITS MEMORANDUM OF ASSOCIATION AND GOT REGISTRATION ON 31.08.2012. SINCE THEN THE SOCIETY IS ENGAGED IN THE ACTIVITIES IN THE NATURE OF CHARITY. NO ANY COMMERCIAL ACTIVITIES HAVE BEEN UNDERTAKEN. SPHERE INDIA IS THE MEMBER OF MANY INSTITUTIONS. HE SUBMITTED T HAT HIS VISION AND MISSION ARE AS UNDER : VISION: TO BUILD A SAFER AND DISASTER RESILIENT INDIA BY PROMOTING QUALITY AND ACCOUNTABILITY IN HUMANITARIAN ACTION THROUGH A PRINCIPLE BASED INCLUSIVE PROCESS OF COLLABORATION OF ALL HUMANITARIAN ACTORS INCLUDIN G GOVERNMENT AGENCIES, UN AGENCIES, RED CROSS, INTERNATIONAL, NATIONAL AND LOCAL NGOS, CBOS AND COMMUNITIES. MISSION: TO ENHANCE THE QUALITY AND ACCOUNTABILITY OF HUMANITARIAN ACT IN INDIA AND PROTECTING THE RIGHTS AND DIGNITY OF THE PEOPLE AFFECTED BY NATURAL CALAMITIES OR CONFLICT SITUATIONS IN INDIA. THE LD. AR FURTHER SUBMITTED THAT THE FINDING RECORDED BY THE DIT(E) ARE NOT CORRECT. HE HAS NOT PROPERLY CONSIDERED THE DOCUMENTS FILED BEFORE HIM AND HAS DENIED THE REGISTRATION. THE ACTIVITIES UNDERT AKEN BY THE SOCIETY ARE ITA NO. 1131 & 1132/DEL./2014 5 TOTALLY CHARITABLE IN NATURE. NO ANY COMMERCIAL ACTIVITY HAS BEEN DONE. THE SOCIETY WAS ENGAGED IN THE RELIEF WORK ALSO IN UTTARKHAND DURING FLOOD. THE OTHER NGOS WHICH ARE CONNECTED WITH THE APPELLANT ARE ALSO PERFORMING CHARITABLE WORK. SUM OF RS.2,10,301/ - HAS BEEN SPENT WHOLLY FOR THE CHARITABLE ACTIVITIES OR ON THE PEOPLE WHO ARE CONNECTED WITH SUCH ACTIVITIES. IT IS THEREFORE PRAYED THAT THE MATTER MAY BE SENT BACK TO THE LOWER AUTHORITY TO EXAMINE THE GENUINENESS OF THE ACTIVI TIES UNDERTAKEN BY THE INSTITUTION AS PER REQUIREMENT OF LAW. 5. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE DIT (E). 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE APPELLANT HAS MADE AVAILABLE BEFORE US ONLY THE ORDER OF DIT(E) AND A COMPUTER PRINTOUT WHICH CONTAINS THE VISION AND MISSION, CORE COMMITMENTS AND NAMES OF SPHERE INDIA MEMBERS AND PROGRAMMES AND STRATEGY COMMITTED. THE LD.AR STATED THAT ALL THE SUBMISSIONS HAVE NOT BEEN PR OPERLY CONSIDERED BY THE DIT(E) AND THEREFORE, THE MATTER BE SENT BACK TO THE FILE OF LD. DIT(E) . ON RESTORATION OF CASE BACK TO THE FILE OF DIT(E), THE LD. DR HAS NO OBJECTION. HE, HOWEVER, RELIED ON THE ORDER OF THE DIT(E). WE, THEREFORE, THINK IT PROPER TO SEND THE MATTER BACK TO THE FILE OF DIT(E) FOR FRESH ITA NO. 1131 & 1132/DEL./2014 6 EXAMINATION SO AS TO CONSIDER THE ACTUAL ACTIVITIES OF THE ASSESSEE WHETHER CHARITABLE OR NOT AND WHETHER SUCH ACTIVITIES ARE IN CONSONANCE WITH THE REQUIREMENTS OF SECTION 12A AND 80G OF THE ACT O R NOT. FOR THIS, THE DIT(E) CAN MAKE ANY ENQUIRY/INVESTIGATION WHICH HE DEEMS FIT. THE ASSESSEE IS ALSO DIRECTED TO FURNISH COGENT EVIDENCE BEFORE THE DIT(E) IN SUPPORT OF ITS ACTIVITIES WHICH ARE CHARITABLE IN NATURE. WE, THEREFORE, RESTORE THE MATTER TO THE FILE OF DIT(E) TO DECIDE THE MATTER AFRESH IN THE LIGHT OF OBSERVATIONS MADE ABOVE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RES ULT, THE APPEAL S ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 .08.2016 SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 .08.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI