Vankayala Kuppaiah Chetty Vysya Dharma Sathram, CHENNAI V. DIT, CHENNAI

ITA 1224/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52115 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-11-2011
• Assessment Year: misc
• Appeal Filed On: 30-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RANGARAJAN JUNIOR
• Assessee Lawyers: DR ANITA SUMANTH
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1224/MDS/2011 M/S VANKAYALA KUPPAIAH CHETTY VYSYA DHARMA SATHRAM, 34/33, RAILWAY BORDER ROAD, KODAMBAKKAM, CHENNAI 600 024. PAN : AABTV2548K (APPELLANT) V. THE INCOME TAX OFFICER (EXEMPTIONS), CHENNAI 600 034. (RESPONDENT) APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE RESPONDENT BY : SHRI K.E.B. RAN GARAJAN, JUNIOR STANDING COUNSEL DATE OF HEARING : 29.11.2011 DATE OF PRONOUNCEMENT : 29.11.2011 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ASSAILS ORDER O F DIRECTOR OF INCOME TAX (EXEMPTIONS), CHENNAI, DATED 29.9.2010, DENYING REGISTRATION UNDER SECTION 12AA OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT). I.T.A. NO. 1224/MDS/11 2 2. THE APPEAL HAS BEEN FILED WITH A DELAY OF 164 DA YS AND THE PLEA FOR CONDONATION HAS ALSO BEEN FILED ALONG WITH THE APPEAL. LEARNED A.R. SUBMITTED THAT THE IMPUGNED ORDER OF L D. DIT(E) WAS RECEIVED BY SMT. M. SABITHA, WIFE OF SHRI SREENIVAS ULU, ONE OF THE TRUSTEES OF THE ASSESSEE-TRUST. AS PER THE LEARNED A.R., SMT. M. SABITHA WAS AGED 70 YEARS AND NEVER UNDERSTOOD IMPO RTANCE OF THE ORDER AND DID NOT GIVE INFORMATION OF RECEIPT OF TH E SAME TO HER HUSBAND. LEARNED A.R. FURTHER SUBMITTED THAT THE A SSESSEE WAS ALWAYS UNDER THE IMPRESSION THAT APPLICATION FILED BEFORE LD. DIT(E) WAS STILL PENDING. THE DELAY, AS PER LEARNED A.R., WAS NOT WANTON NOR WILLFUL, BUT DUE TO THE FACT THAT THE ASSESSEE COULD FILE THIS APPEAL ONLY WHEN ITS TRUSTEE SHRI SREENIVASULU FOUND OUT T HE ORDER REJECTING ITS APPLICATION. 3. LEARNED D.R. DID NOT RAISE ANY SERIOUS OBJECTION AGAINST CONDONING THE DELAY. 4. WE FIND THAT ASSESSEE BEING A TRUST AND REASONS GIVEN FOR THE DELAY HAVING NOT BEEN REBUTTED, THE DELAY HAS TO BE CONDONED. EFFECTUATION OF SUBSTANTIAL JUSTICE IS THE PRIMARY OBJECT OF ANY COURT OR TRIBUNAL AND TECHNICALITIES SHOULD NOT BE ALLOWED T O DEFEAT THIS I.T.A. NO. 1224/MDS/11 3 AVOWED OBJECT. WE, THEREFORE, CONDONE THE DELAY AN D ADMIT THE APPEAL. 5. SHORT FACTS GIVING RAISE TO THE APPEAL ARE THAT ASSESSEE HAD FILED AN APPLICATION BEFORE LD. DIT(E) IN FORM 10A ON 22.3.2010 FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. CERTAI N CLARIFICATIONS WERE SOUGHT BY LD. DIT(E) AND ON THE DATE OF HEARIN G, ASSESSEES REPRESENTATIVE FILED DETAILS SHOWING THAT THE ASSES SEE WAS IN EXISTENCE FROM 1923. COPIES OF RESOLUTIONS PASSED BY THE ASSESSEE ON 16.2.2007 AND 13.4.2008 WERE ALSO FILED. THOUGH THE ASSESSEE WAS IN EXISTENCE FROM 1923, IT SEEMS NO RETURNS WER E FILED BY THE ASSESSEE. THERE WAS ALSO A SUPPLEMENTARY DEED EXEC UTED WHICH, AS PER LD. DIT(E), WAS NOT SIGNED BY THE ORIGINAL TRUS TEES. LD. DIT(E) WAS OF THE OPINION THAT ASSESSEE COULD NOT BE GIVEN REGISTRATION UNDER SECTION 12AA FOR THREE REASONS (1) SUPPLEME NTARY DEED WAS SIGNED BY THE TRUSTEES WHO WERE NOT AUTHORIZED BY T HE ORIGINAL TRUSTEES WHO WERE NAMED IN THE ORIGINAL DEED OF THE TRUST DATED 11 TH AUGUST, 1923; (2) ACTIVITIES OF THE ORIGINAL TRUST WERE NOT KNOWN TO THE DEPARTMENT SINCE IT HAD NEVER FILED RETURN OF INCOM E; AND (3) ACTIVITIES OF THE TRUST WERE NOT TRANSPARENT, AND COULD NOT BE EXAMINED PROPERLY. THUS, ACCORDING TO LD. DIT(E), ASSESSEE COULD NOT SATISFY THE CONDITIONS PRESCRIBED UNDER SECTION 12AA OF THE ACT. I.T.A. NO. 1224/MDS/11 4 6. NOW BEFORE US, LEARNED A.R. POINTED OUT THAT CHA RITABLE NATURE OF THE OBJECTS OF THE ASSESSEE-TRUST HAS NOT BEEN Q UESTIONED BY THE LD. DIT(E) IN HIS ORDER. THE ONLY REASONS FOUND BY LD. DIT(E) WERE THAT ASSESSEE HAD NOT FILED ITS RETURNS, SUPPLEMENT ARY DEED WAS NOT SIGNED BY THE ORIGINAL TRUSTEES AND ACTIVITIES WERE NOT TRANSPARENT. AS PER LEARNED A.R., ALL THESE WERE ERRONEOUS CONCL USIONS OF LD. DIT(E) SINCE OBJECTS OF THE ASSESSEE-TRUST WERE CLE AR FROM DOCUMENT NO.2358 OF 1923 DATED 11 TH AUGUST, 1923 WHICH WAS AVAILABLE WITH LD. DIT(E). AS PER LEARNED A.R., INCOME OF THE TRUST W ERE RENTALS RECEIVED FROM THREE PROPERTIES AND OUT OF SUCH RENT ALS, AFTER PAYING THE EXPENSES ON ACCOUNT OF REPAIRS, MUNICIPAL CHARG ES AND SALARIES, BALANCE WAS TO BE SPENT FOR ANNA SAMARADHANA. AS P ER LEARNED A.R., BY RESOLUTION PASSED ON 9.3.1986, PLACED AT P APER-BOOK PAGES 23 TO 25, SHRI MADDALI SREENIVASULU CHETTY WAS INDU CTED AS TRUSTEE, VIDE RESOLUTION DATED 27.4.1992, PLACED AT PAPER-BO OK PAGES 31 TO 33, SHRI M.V. NARAYANA GUPTA WAS INDUCTED AS TRUSTE E, VIDE RESOLUTION DATED 19.2.1993, PLACED AT PAPER-BOOK PA GES 39 TO 41, SHRI THANEERU RAMAMOHAN RAO WAS INDUCTED AS TRUSTEE AND VIDE RESOLUTION DATED 30.1.2002, PLACED AT PAPER-BOOK PA GES 51 TO 55, SHRI A.S. HARI PRASAD AND SHRI K. SANKARRAO WERE IN DUCTED AS TRUSTEES. ACCORDING TO LEARNED A.R., THEREFORE, TH E OBSERVATION OF LD. I.T.A. NO. 1224/MDS/11 5 DIT(E) THAT TRUSTEES WERE NOT AUTHORIZED TO SIGN TH E SUPPLEMENTARY DEED IS INCORRECT. 7. PER CONTRA, LEARNED D.R. SUBMITTED THAT ASSESSEE HAD NEVER FILED ANY RETURN OF INCOME AND ITS ACTIVITIES WERE NOT AT ALL TRANSPARENT. AS PER THE LEARNED D.R., LD. DIT(E) WAS WELL JUSTIF IED IN DENYING REGISTRATION UNDER SECTION 12AA OF THE ACT. 8. WE HAVE PERUSED THE ORDER OF LD. DIT(E) AND HEAR D THE RIVAL CONTENTIONS OF THE LEARNED COUNSEL. IN SO FAR AS T HE ISSUE REGARDING GENUINENESS OF THE TRUST IS CONCERNED, WE ARE OF TH E OPINION THAT THE TRUST HAVING BEEN IN EXISTENCE SINCE 1923, ITS GENU INENESS COULD NEVER BE QUESTIONED. LD. DIT(E) WENT THROUGH THE D OCUMENTS AND NEVER DOUBTED THE CHARITABLE NATURE OF THE ASSESSEE S OBJECTS. IN SO FAR AS EXECUTION OF SUPPLEMENTARY DEED WAS CONCERNE D, AS POINTED OUT BY THE LEARNED A.R., THE CONCERNED TRUSTEES WER E ALL APPOINTED VIDE RESOLUTIONS PASSED BY THE TRUST. IN ANY CASE, WE CANNOT EXPECT THE ORIGINAL TRUSTEES WHO WERE APPOINTED IN 1923 TO HAVE PERPETUAL EXISTENCE, FOR SIGNING SUPPLEMENTARY DEEDS EVEN AFT ER 70-80 YEARS. IN SO FAR AS NON-FILING OF RETURNS ARE CONCERNED, T HE INCOME OF THE TRUST WAS ALWAYS BELOW THE TAXABLE LIMIT AS SUBMITT ED BY THE LEARNED A.R. AND THIS HAS NOT BEEN DISPUTED BY THE REVENUE. IF WE LOOK AT I.T.A. NO. 1224/MDS/11 6 THE ORIGINAL TRUST DEED NO.2358 OF 1923 DATED 11 TH AUGUST, 1923, IT COULD BE SEEN THAT ITS INCOME WAS ONLY FROM RENTALS COLLECTED FROM THREE PROPERTIES AND THE RENTAL AMOUNTS WERE MUCH L ESS THAN ` 100/- FOR EACH OF THE PROPERTY. WE ARE, THEREFORE, OF TH E OPINION THAT THE DENIAL OF REGISTRATION WAS WITHOUT ANY REASONABLE C AUSE. THE ORDER OF DIT(E) IS QUASHED AND HE IS DIRECTED TO GRANT REGIS TRATION UNDER SECTION 12AA OF THE ACT FROM THE DATE OF ITS APPLIC ATION. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 29 TH NOVEMBER, 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH NOVEMBER, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) DIT(E), CHENNAI (4) D.R. (5) GUARD FILE