M/s Nandana Educational Trust, Shimoga V. CIT, Davangere

ITA 1158/BANG/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7709 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 25-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12A; 12AA

Judgement Text

ITA.1158/BANG/2011 P AGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. GEORGE GEORGE K. JUDICIAL MEMBER I.T.A NO.1158/BANG/2011 (ASSESSMENT YEAR : NA) M/S. NANDANA EDUCATIONAL TRUST, BY PASS ROAD, BEHIND SYADRI COLLEGE, SHIMOGA 577 201 .. APPELLANT PAN : NA IN FILE V. COMMISSIONER OF INCOME-TAX, DAVANGERE .. RESPONDENT APPELLANT BY : SHRI. RAGHAVENDRA R. CHAKRAVARTHY, CA RESPONDENT BY : SHRI. FARHAT HUSSAIN QURESHI, CIT- II, DR DATE OF HEARING : 03.07.2012 DATE OF PRONOUNCEMENT : 03.07.2012 O R D E R PER N. BARATHVAJA SANKAR, VICE PRESIDENT : THIS IS AN APPEAL PREFERRED BY THE ASSESSEE, M/S. NANDANA EDUCATIONAL TRUST, SHIMOGA, AGAINST THE ORDER OF TH E CIT, DAVANGERE, REFUSING REGISTRATION U/S.12AA OF THE IT ACT. THE EFFECTIVE GROUNDS OF APPEAL OF THE ASSESSEE ARE AS UNDER : I) THE LEARNED DIT(E) IS NOT JUSTIFIED IN REFUSING TO REGISTER THE TRUST U/S.12AA OF THE I.T ACT, ON THE GROUND THAT T HE APPELLANT HAS NOT COMPLIED THE REQUIREMENTS UNDER T HE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE. ITA.1158/BANG/2011 P AGE - 2 II) THE LEARNED DIT(E) FAILED TO APPRECIATE THAT THE OB JECTS OF TRUST IS CHARITABLE IN NATURE AND THEREFORE, THE LE ARNED DIT(E) IS NOT JUSTIFIED IN REJECTING THE APPLICATIO N FOR REGISTRATION UNDER SECTION 12A OF THE ACT ON THE UNSUSTAINABLE GROUND THAT THE APPELLANT HAS NOT COM PLIED WITH THE DETAILS CALLED FOR. THE LEARNED DIT(E) OU GHT TO HAVE APPRECIATED THAT THE APPELLANT IS CARRYING ON ACTIVITY WHICH IS CHARITABLE IN NATURE AND THEREFORE, THE FI NDING OF THE LEARNED DIT(E) AS WELL AS HIS ORDER REFUSING TO REG ISTER THE TRUST U/S.12A OF THE ACT IS VITIATED AND ULTRA VIRE S THE PROVISIONS OF SEC.12AA OF THE ACT AND THE IMPUGNED ORDER MAY BE SET-ASIDE AND THE DIT(E) MAY BE ORDERED TO G RANT REGISTRATION U/S.12AA OF THE ACT. 02. THE BRIEF FACTS OF THE CASE ARE THAT THE ABOVE TRUST WAS CREATED ON 25.08.2008 AND HAD FILED AN APPLICATION FOR REGISTRATION U/S.12A(A) OF THE IT ACT 1961 IN THE PRESCRIBED FOR M ON 21.03.2011. IN RESPONSE TO THE NOTICE OF HEARING, THE APPELLANT 'S REPRESENTATIVE ALONG WITH THE TRUSTEE, APPEARED BEFORE THE CIT. T HE LEARNED CIT ASKED THE ASSESSEE TO PRODUCE THE FOLLOWING DETAILS : I) FULL NAME AND ADDRESS OF THE DONORS IN RESPECT O F DONATIONS RECEIVED OF RS.5,000/- AND ABOVE ; II) DETAILS OF LOANS AND ADVANCED PAID. HOWEVER, THE APPELLANT'S REPRESENTATIVE WAS UNABLE TO PRODUCE THE ABOVE INFORMATION DURING THE HEARING AND AGREED TO PRODUCE THE SAME WITHIN 29.09.2011. ON 29.09.2011, THE RECEIPT BOOK IN RESPECT OF ITA.1158/BANG/2011 P AGE - 3 DONORS OF RS.5,000/- AND ABOVE WAS PRODUCED. ON VE RIFICATION OF THE BILLS, NAME APPEARING IN SOME BILLS DID NOT TALLY W ITH THE BILLS ALREADY FURNISHED BEFORE THE CIT. HE ALSO NOTICED THAT BIL L NOS.30 TO 45 WERE PREPARED IN ADVANCE IN ANTICIPATION TO RECEIVE DONA TIONS, WITHOUT NAME. HENCE THE CIT FELT THAT THERE WAS NO COMPLIA NCE ON 29.09.2011 AND HENCE HE DECIDED TO DISPOSE OFF THE APPLICATION ON MERITS. HOWEVER, THE LEARNED DIT REJECTED THE REGISTRATION U/S.12AA, BY OBSERVING AS UNDER : 'UNDER THESE CIRCUMSTANCES, THE TRUST HAS NOT FULFI LLED THE CONDITIONS LAID DOWN FOR GRANT OF REGISTRATION U/S. 12AA OF THE INCOME TAX ACT, 1961. IN VIEW OF THIS, THE REQUEST OF THE TRUST FOR GRANT OF REGISTRATION U/S.12AA IS REJECTED.' AGGRIEVED BY THIS ORDER OF THE CIT, THE ASSESSEE IS ON APPEAL BEFORE US WITH THE GROUNDS OF APPEAL EXTRACTED ELSEWHERE IN T HIS ORDER. 03. AT THE TIME OF HEARING, THE LEARNED CHARTERED A CCOUNTANT APPEARING FOR THE ASSESSEE PLACED ON RECORD A DECIS ION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. M/S. A. S. KUPPURAJU CHARITABLE FOUNDATION TRUST, BANGALORE IN ITA.NO.10 89 OF 2006, DATED.07.09.2011. BY PLACING A COPY OF THE ABOVE J UDGEMENT, THE LEARNED CHARTERED ACCOUNTANT SUBMITTED THAT THE HON 'BLE KARNATAKA HIGH COURT HAS OBSERVED IN THE ABOVE SAID ORDER AS UNDER : ITA.1158/BANG/2011 P AGE - 4 I) IN DECIDING THE GENUINENESS OF THE TRUST WHAT IS TO BE SEEN IS WHETHER IN TERMS OF THE OBJECTS SET OUT IN THE TRUS T DEED WHETHER THE TRUST IS CARRYING ON ITS ACTIVITIES OR NOT. IF IN THE PROCESS OF CARRYING ON THE TRUST ACTIVITIES, IF THERE IS ANY MISAPPLICATIO N OF THE PROPERTY, MISAPPROPRIATION OF FUNDS THAT WOULD NOT RENDER THE TRUST ITSELF AS NON- EST. II) WHEN ONCE IT IS ADMITTED THAT IN PURSUANCE OF T HE TRUST DEED AND IN TERMS OF THE OBJECTS SET OUT THEREIN SCHOOLS AND CO LLEGES ARE BEING RUN AND EDUCATIONAL INSTITUTIONS AS RIGHTLY HELD BY THE TRIBUNAL, NOTHING MORE REQUIRES TO BE ESTABLISHED THAT THE TRUST IN Q UESTION IS A GENUINE TRUST AND THEREFORE THE ASSESSEE IS ENTITLED TO REG ISTRATION U/S.12AA OF THE INCOME-TAX ACT. 04. IN EFFECT, IT WAS THE CONTENTION OF THE LEARNED CHARTERED ACCOUNTANT THAT WHILE GRANTING REGISTRATION U/S.12A A OF THE ACT, THE CIT HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES BEFORE PASSING ORDER U/S.12AA AND HE CANNOT GO BEYOND THESE TWO ASPECTS. 05. PER CONTRA, THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNED CIT AND REITERATED THE CONTENTS OF THE SAME. ITA.1158/BANG/2011 P AGE - 5 06. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE FACTS AND MATERIAL ON RECORD, INCLUDING THE DECISION OF T HE HON'BLE KARNATAKA HIGH COURT, CITED BEFORE US. ON GOING TH ROUGH THE ORDER PASSED BY THE LEARNED CIT, DAVANGERE, WE FIND THAT IT IS A CRYPTIC ORDER AND NOT EXPLAINING ELABORATELY THE REASONS FOR NOT GRANTING THE REGISTRATION. IT MERELY STATES THAT THE TRUST HAS NOT FULFILLED THE CONDITIONS LAID DOWN FOR GRANT OF REGISTRATION U/S. 12AA, BECAUSE THE ASSESSEE COULD NOT PRODUCE THE NAMES AND ADDRESSES OF DONORS AND THE DETAILS OF LOANS AND ADVANCES PAID. THE HON'BLE KA RNATAKA HIGH COURT HAS POINTED OUT THE DUTIES OF THE CIT WHILE G RANTING REGISTRATION U/S.12AA. IN OUR CONSIDERED VIEW, THE CIT HAS NOT ACTED IN ACCORDANCE WITH THE HON'BLE HIGH COURT'S OBSERVATIO NS IN THE CASE CITED BEFORE US. HOWEVER, THIS IS NOT A SPEAKING O RDER. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW THAT THIS IS A FIT C ASE FOR RESTORING BACK TO THE FILE OF THE CIT, DAVANGERE FOR PASSING A SPE AKING ORDER AND INCORPORATING HIS REASONS IN DETAIL FOR GRANTING/NO T GRANTING THE REGISTRATION U/S.12AA OF THE ACT. IT IS NEEDLESS T O SAY THAT THE LEARNED CIT SHALL KEEP IN MIND THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT CITED BEFORE US AND GIVE EFFECTIVE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE BEFORE PASSING ANY ORDER U/S.12AA OF T HE ACT. THE APPELLANT IS ALSO DIRECTED TO COOPERATE WITH THE CI T BY PRODUCING NECESSARY DETAILS THAT WOULD BE SOUGHT FOR BY THE A SSESSING OFFICER. ITA.1158/BANG/2011 P AGE - 6 07. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSE ONLY. ORDER PRONOUNCED IN THE OPEN COURT AT THE END OF HE ARING ON 03.07.2012. SD/- SD/- (GEORGE GEORGE K) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT