Shree Venkata Sai Seva Trust, Chitradurga V. CIT, Bangalore

ITA 1259/BANG/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7590 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 24-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Assessee Lawyers: RAMASUBRAMANIAN
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH 'A' BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.1259 & 1260/BANG/2 016 (ASST. YEAR ---) SHREE VENKATA SAI SEVA TRUST, NARAHARIANGARA NAGARAMGERE POST, BENGALURU ROAD, CHALAKERE, CHITRADURGA. . APPELLANT PAN AAMTS 8160 P. VS. THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS), BENGALURU. . RESPONDENT APPELLANT BY : SHRI RAMA SUBRAMANIAN, C.A RESPONDENT BY : SHRI C.H SU NDAR RAO, CIT DATE OF HEARING : 17-07-2018 DATE OF PRONOUNCEMENT : 20-07-2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE CIT (EXEMPTION) BANGALORE U/S 12A AND 80G(5)(B)(VI) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) DATED 27/4/2016. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- ITA NO.1259 & 1 260/B/16 2 2.1 THE ASSESSEE IS A TRUST ESTABLISHED BY TRUST DE ED DATED 14/5/2012 AND AMENDED VIDE TRUST DEED DATED 26/8/20 13. IT IS SUBMITTED THAT THE ASSESSEE FILED AN APPLICATION FO R REGISTRATION U/S 12AA OF THE ACT ON 23/1/2014 WHICH WAS REJECTED VIDE ORDER DATED 30/7/2014. SUBSEQUENTLY, THE ASSESSEE FILED ANOTHER APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT ON 13/10/2015 IN RESPECT OF WHICH THE ASSESSE WAS GRANTED REGISTR ATION U/S 12AA OF THE ACT VIDE ORDER, DATED 27/4/2016 AS A RELIGI OUS TRUST. SIMULTANEOUSLY, ON 13/10/2015, THE ASSESSEE HAD ALS O FILED AN APPLICATION FOR GRANT OF REGISTRATION U/S 80G OF TH E ACT. IN VIEW OF THE FACT THAT THE ASSESSEE WAS GRANTED REGISTRAT ION AS A RELIGIOUS TRUST ITS APPLICATION FOR RECOGNITION U /S 80G WAS CONSEQUENTLY REJECTED BY THE CIT(EXEMPTION) BANGALO RE VIDE ORDER DATED 27/4/2016. 2. THE ASSESSEE, BEING AGGRIEVED WITH THE AFORESAI D ORDERS OF THE CIT(EXEMPTION) DATED 27/4/2016 U/S 12AA AND U/S 80G(5)(B)(VI) OF THE ACT HAS FILED THESE APPEALS. WE NOW PROCEED TO DISPOSE OFF THESE APPEALS IN SERIATUM, C OMMENCING WITH APPEAL FILED IN RESPECT THE REGISTRATION GRAN TED U/S 12AA OF THE ACT. ITA NO.1259/BANG/2016 (APPEAL AGAINST ORDER U/S 12A A) 4. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX IN SO FAR IT IS PREJUDICIAL TO THE INTER ESTS ITA NO.1259 & 1 260/B/16 3 OF THE APPELLANT IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) ERRED IN LAW AND ON FACTS INHOLDING THAT THE APPELLANT IS A RELIGIOUS TRUST AND GRANTIN G REGISTRATIONLS I 2AA AS A RELIGIOUS TRUST. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) OUGHT TO HAVE GRANTED THE REGISTRATION AS A CHARITABLE TRUST AS THE OBJECTS OF THE APPELLA NT ARE ONLY CHARITABLE AND NOT RELIGIOUS. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE APPELLANT-TRUST IS A RELIGIOUS TRUST WITHO UT GIVING AN OPPORTUNITY OF BEING HEARD. 4.2.1 IN THESE GROUNDS (SUPRA), THE MAIN THRUST OF THE ASSESSEES GRIEVANCE IS THAT THE LD CIT(E) ERRED IN HOLDING THAT THE ASSESSEE IS A RELIGIOUS TRUST WHILE GRANTING THE RE GISTRATION U/S 12A OF THE ACT IN THE IMPUGNED ORDER. ACCORDING TO THE ASSESSEE A PERUSAL OF THE OBJECTS OF THE TRUST WOULD SHOW TH AT THEY ARE CHARITABLE IN NATURE AND NOT RELIGIOUS AS HELD BY T HE LD CIT(E) IN THE IMPUGNED ORDER . 4.2.2 IT WAS FURTHER CONTENDED BY THE LD AR, THAT T HE LD CIT(E) GROSSLY ERRED IN HOLDING THE ASSESSEE TO BE A RELIGIOUS TRUST WITHOUT PUTTING THE ASSESSEE ON NOTICE AND A FFORDING IT ADEQUATE OPPORTUNITY OF BEING HEARD; WHICH IS IN GR OSS VIOLATION ITA NO.1259 & 1 260/B/16 4 OF THE PRINCIPLES OF NATURAL JUSTICE. IN THIS REGA RD, THE LD AR INVITED THE ATTENTION OF THE BENCH FOR PERUSAL OF T HE IMPUGNED ORDER IN ORDER TO ESTABLISH THAT THE IMPUGNED ORDER HOLDING THE ASSESSEE TO BE A RELIGIOUS TRUST IS A NON-SPEAKIN G ORDER AS THE LD CIT(E) HAS NEITHER DISCUSSED THE OBJECTS OF THE TRUST NOR ASSIGNED ANY REASON FOR HIS HOLDING THE ASSESSEE TO BE A RELIGIOUS TRUSTS AND NOT A CHARITABLE TRUST. IT WAS CONTEND ED THAT ON THIS SHORT POINT ITSELF, THE IMPUGNED ORDER OF THE LD CI T(A), IS LIABLE TO BE CANCELLED AND SET ASIDE. 4.2.3 IN SUPPORT OF THE ASSESSEES CONTENTIONS THA T THE ASSESSEE IS A CHARITABLE TRUST AND NOT A RELIGIOUS TRUST AS CONTENDED BY THE ASSESSEE, THE LD AR PLACED RELIANCE INTER A LIA, ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS; THE PRINCIPLE AN D RATIOS WHICH REQUIRE TO BE CONSIDERED WHILE DETERMINING T HE STATUS OF THE ASSESSEE TRUST:- (I) CIT VS. DAWOODI BOHRA JAMAT (2014) 364 ITR 31 (SC) (II) ADIT (EXEMP) VS. ISLAMIC RESEARCH FOUNDATION 29 ITR (TRIB) 588 (MUM). 4.3 THE LD DR RELIED ON THE IMPUGNED ORDER OF THE C IT(E). 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD INCLUDI NG THE JUDICIAL PRONOUNCEMENTS CITED (SUPRA). ON A PERUSAL OF THE IMPUGNED ORDER OF THE CIT(E) DATED 27/4/2016 GRANTING THE AS SESSEE REGISTRATION U/S 12A R.W.S 12AA OF THE ACT, WE FIND , THAT AS CONTENDED BY THE ASSESSEE, THE LD CIT(E) HAS, WHILE GRANTING THE ASSESSEE REGISTRATION; HELD IT TO BE A RELIGIOUS T RUST WITHOUT ANY ITA NO.1259 & 1 260/B/16 5 DISCUSSION ON THE OBJECTS OF THE TRUST WHICH THE A SSESSEE CONTENDS ARE CHARITABLE IN NATURE, AND WITHOUT ASSIGNING ANY REASONS WHATSOEVER AS TO HOW HE HAS COME TO SUCH A FINDING IN THE MATTER. WE ALSO OBSERVE THAT THE LD CIT(E) HAS COME TO THIS FINDING BEHIND THE ASSESSEES BACK, WITHOUT PUTTING THE ASS ESSEE ON NOTICE BY AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITIES OF BEING HEARD IN THE MATTER. IN OUR CONSIDERED VIEW, THIS IS IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY. BEFORE US, THE LD DR OF REVENUE WAS NOT ABLE TO CONTROVERT THE ARGUME NTS PUT FORTH BY THE ASSESSEE AND OUR ABOVE OBSERVATIONS IN THE MATTER. 4.4.2 IN VIEW OF THE ABOVE FACTUAL MATRIX OF THE CA SE AS DISCUSSED ABOVE (SUPRA), WE ARE OF THE VIEW THAT TH ERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE IMPUGNED, DUMB, NON- SPEAKING ORDER OF THE LD CIT(E) IS LIABLE TO BE QUA SHED NOT ONLY FOR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE BUT ALSO FOR NO DISCUSSION OF THE OBJECTS OF THE TRUST AND NO REASO NS BEING ADDUCED AS TO WHY THE ASSESSEE IS GRANTED REGISTRAT ION AS A RELIGIOUS TRUST AND NOT AS CHARITABLE TRUST AS PRAYED FOR. IN THAT VIEW OF THE MATTER, WE SET ASIDE THE IMPUGNED ORDER OF THE LD CIT(E) TO THE EXTENT OF THE MATTER OF DETERMINATION OF THE STATUS OF THE ASSESSEE TRUST. WE ACCORDINGLY RESTORE THIS MATTER TO THE FILE OF CIT(E) FOR PROPER ADJUDICATION THEREON IN A CCORDANCE WITH LAW, AND AFTER AFFORDING THE ASSESSEE ADEQUATE OPPO RTUNITIES OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS REQUIRE D WHICH SHALL BE DULY CONSIDERED ALONG WITH THE PRINCIPLES LAID D OWN IN THE JUDICIAL PRONOUNCEMENTS CITED BY THE ASSESSEE (SUPR A AT PARA ITA NO.1259 & 1 260/B/16 6 4.2.3 OF THIS ORDER) AND OTHERS THAT MAY BE RELIED UPON IN FRESH PROCEEDINGS. WE HOLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1260/BANG/2016 - + (APPEAL AGAINST ORDER U/S 80G(5)(B)(VI) 6. IN THIS APPEAL (GROUNDS 1 TO 5) THE SUM AND SUBS TANCE OF THE ASSESSEES CONTENTIONS IS THAT THE LD CIT(E) ERRED IN FACTS IN HOLDING THE ASSESSEE TO BE RELIGIOUS TRUST WHILE GRANTING IT REGISTRATION U/S 12AA OF THE ACT AND THEREFORE REJE CTED THE ASSESSEES APPLICATION FOR RECOGNITION U/S 80G IN V IEW OF SUB SECTION (5) THEREOF. AS WE HAVE ALREADY SET ASIDE THE ORDER OF THE CIT(E) U/S 12A OF THE ACT WITH REGARD TO THE DETERM INATION OF THE STATUS OF THE ASSESSEE, THE REASON AND BASIS FOR REJECTION OF THE ASSESSEES APPLICATION FOR RECOGNITION U/S 80G OF T HE ACT NO LONGER EXISTS. WE, THEREFORE, CONSEQUENTLY, SET AS IDE THE IMPUGNED ORDER PASSED U/S 80G(5)(B)(VI) OF THE ACT DATED 27/4/2016 AND REMAND THIS ISSUE TO THE FILE OF THE LD CIT(E) FOR FRESH CONSIDERATION. 7. IN THE RESULT, BOTH THE ASSESSEES APPEALS ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018 . SD/- SD/- (LALIET KUMAR) (JAS ON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : /7/2018 .VMS ITA NO.1259 & 1 260/B/16 7 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETAR Y, ITAT, BANGALORE