Ch. Naresh Yadav Charitable Trust, Ghaziabad V. CIT (Exemptions), Lucknow

ITA 1260/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3053 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 07-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEETA SINGH
• Keywords: Charitable institution
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1260/DEL./2016 CH. NARESH YADAV CHARITABLE TRUST, VS. CIT (EXEMPTI ONS), 268A, RAM NAGAR, LUCKNOW. GHAZIABAD. (PAN : AABTC2921R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SMT. MEETA SINGH, CIT DR DATE OF HEARING : 21.03.2018 DATE OF ORDER : 23.03.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, CH. NARESH YADAV CHARITABLE TRUST (HEREINAFTER REFERRED TO AS THE ASSESSEE TRUST) B Y FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 04.01.2016 PASSED BY LD. CIT(EXEMPTIONS), LUCKNOW ON THE GROUN DS INTER ALIA THAT :- 1. THE LD. CIT (EXEMPTION) IS UNJUSTIFIED, ILLEGAL AND WRONG FOR PASSING THE ORDER U/S 12AA(1 )(B)(II) OF THE IN COME TAX ACT FOR REJECTION OF APPLICATION TO GRANT REGISTRATION OF TRUST U/S 12AA OF INCOME TAX ACT, 1961. 2. THE STATEMENT THAT BOOKS OF ACCOUNT WERE NOT PRO DUCED BY LD. CIT (EXEMPTION) IS NOT CORRECT. ITA NO.1260/DEL/2016 2 3. THE VERSION OF LD. CIT (EXEMPTION) THAT TRUST IS ENGAGED IN MONEY LAUNDRY ACTIVITIES IS NOT CORRECT. 4. THE FINDINGS OF LD. CIT (EXEMPTION) THAT THE TRU ST IS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES IS NOT CORRE CT. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : LD. CIT (EXEMPTIONS) DECL INED THE REGISTRATION SOUGHT FOR BY THE ASSESSEE TRUST UNDER SECTION 12A (1) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) O N THE GROUNDS INTER ALIA THAT THE ASSESSEE TRUST HAS FAILED TO PR OVE THE GENUINENESS OF THE HUGE CASH RECEIVED BY IT FROM ITS TRUSTEE WH ICH SHOWS THAT THE ASSESSEE TRUST IS INDULGING INTO MONEY LAUNDERI NG ACTIVITIES UNDER THE GARB OF CHARITABLE ACTIVITIES; THAT THE A SSESSEE TRUST HAS ALSO FAILED TO PROVE THAT ITS OBJECTIVES ARE CHARIT ABLE NOR IT HAS PROVED THE GENUINENESS OF THE CHARITABLE ACTIVITIES NECESSARY FOR REGISTRATION U/S 12A OF THE ACT. 3. FEELING AGGRIEVED, THE ASSESSEE TRUST HAS COME U P BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. TO PROCEED FURTHER IN ORDER TO DECIDE THE CONTRO VERSY AT HAND, IT IS NECESSARY TO PERUSE AIMS AND OBJECTS OF THE ASSESSEE ITA NO.1260/DEL/2016 3 TRUST, WHICH ARE AVAILABLE AT PAGE 17 OF THE PAPER BOOK AND REPRODUCED AS UNDER FOR READY REFERENCE :- THE TRUST IS FORMED WITH THE MAIN OBJECT OF DEVEL OPMENT OF EDUCATION IN ALL AREAS OF SOCIETY. TO ATTAIN THI S OBJECT, THE TRUST WILL ESTABLISH THE SCHOOL, INSTITUTES OF ENGINEERIN G, MANAGEMENT, LAW AND MEDICAL INSTITUTE. THE TRUST WILL ALSO HELP POOR BY PROVIDING THEM SCHOLARSHIP TO STUDENTS, BOOKS AND UNIFORMS, STIPEN D AND MEDICAL HELP TO POORS. THE TRUST WILL ALSO PROVIDE FINANCIAL SUPPORT TO OT HER SCHOOLS, SOCIETIES OR TRUST HAVING SIMILAR OBJECTS. THE TRUST WILL ALSO WORK FOR CREATING AWARENESS REG ARDING POPULATION CONTROL & CREATING AWARENESS REGARDING E NVIRONMENT. IT WILL ESTABLISH AND MAINTAIN PARKS, GARDENS AND O THER USE OF PUBLIC IN GENERAL. THE TRUST WILL PROVIDE RELIEF DURING NATURAL CALAMI TIES , SUCH AS RAIN , EARTH QUAKE, FLOOD, FIRE AND OTHER O CCASIONS OF CALAMITIES OF SIMILAR NATURE. 6. WHEN WE EXAMINE THE AIMS AND OBJECTS OF THE ASSE SSEE TRUST IN ENTIRETY IT GOES TO PROVE THAT THE TRUST IS PRIM ARILY CONSTITUTED WITH PRIME AIM AND OBJECT OF DEVELOPMENT OF EDUCATI ON IN ALL AREAS OF SOCIETY BY ESTABLISHING THE SCHOOL, INSTITUTES O F ENGINEERING, MANAGEMENT, LAW AND MEDICAL INSTITUTE; THAT THE TRU ST WILL ALSO HELP POOR BY PROVIDING THEM SCHOLARSHIP TO STUDENTS , BOOKS AND UNIFORMS, STIPEND AND MEDICAL HELP TO POOR; THAT TH E TRUST WILL ALSO PROVIDE FINANCIAL SUPPORT TO OTHER SCHOOLS, SOCIETI ES OR TRUST HAVING SIMILAR OBJECTS; THAT THE TRUST WILL ALSO WORK FOR CREATING AWARENESS ITA NO.1260/DEL/2016 4 REGARDING POPULATION CONTROL & CREATING AWARENESS R EGARDING ENVIRONMENT; AND TO PROVIDE RELIEF DURING NATURAL C ALAMITIES. 7. THE FIRST GROUND TAKEN BY THE LD. CIT FOR REJECT ION OF GRANT OF REGISTRATION U/S 12A OF THE ACT IS THAT THE GENUINE NESS OF THE HUGE CASH DONATION MADE BY THE TRUSTEE AS HAS BEEN TABUL ATED IN PARA 3 OF THE IMPUGNED ORDER COULD NOT BE ESTABLISHED BY T HE ASSESSEE AND THEIR CREDITWORTHINESS COULD NOT BE ASCERTAINED AND IT SHOWS THAT THEY ARE INTO MONEY LAUNDERING ACTIVITIES. WE ARE OF THE CONSIDERED VIEW THAT CERTAINLY THIS IS A SUBJECTIVE OPINION OF THE LD. CIT BECAUSE WHEN CASH DONATION BY THE TRUSTEE HAS R EACHED INTO THE KITTY OF ASSESSEE TRUST, ITS APPLICATION FOR CH ARITABLE PURPOSES IS TO BE EXAMINED AT THE TIME OF ASSESSMENT. SO FAR A S QUESTION OF APPREHENSIONS RAISED BY LD. CIT THAT UNDER THE GARB OF CHARITABLE ACTIVITIES, THE TRUSTEE ARE INDULGING INTO MONEY LA UNDERING IS CONCERNED, THIS QUESTION CAN BE TAKEN CARE OF BY TH E APPROPRIATE FORUM AS THE PERSON WHO IS DONATING HUGE CASH MUST BE AN INCOME- TAX ASSESSEE, IF NOT HE OR SHE CAN BE BROUGHT TO TA X BY THE TAX AUTHORITIES. 8. SO FAR AS QUESTION OF DISPUTING THE OBJECT OF TH E ASSESSEE TRUST TO BE CHARITABLE AND GENUINENESS OF THE CHARI TABLE ACTIVITIES ARE CONCERNED, AGAIN WHEN THE ASSESSEE TRUST HAS PR OVED TO HAVE PURCHASED THE LAND TO ESTABLISH THE EDUCATIONAL INS TITUTION AND ITA NO.1260/DEL/2016 5 BROUGHT ON RECORD THE SALE DEEDS AND ALSO BROUGHT O N RECORD THE COMPLETE DETAIL OF THE CONSTRUCTION WORK-IN-PROGRES S BEING CARRIED OUT BY THE ASSESSEE TRUST AND ALSO BROUGHT ON RECOR D COPIES OF THE BANK LEDGER OF THE ASSESSEE TRUST SHOWING ITS COMPL ETE INCOME AND EXPENDITURE, THERE IS NO MATERIAL ON RECORD TO DISP UTE THE SAME AT THE JUNCTURE OF ACCORDING REGISTRATION U/S 12A OF T HE ACT RATHER ALL THESE APPREHENSIONS RAISED BY CIT CAN BE TAKEN CARE OF BY THE AO AT THE TIME OF ASSESSMENT AND AS SUCH ARE BEYOND TH E PURVIEW OF CIT (EXEMPTIONS). 9. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF VIDYADAYANI SHIKSHA SAMITI VS. CIT (EXEMPTIONS)-5, LUCKNOW IN ITA NO.309/DEL/2016 DATED 14.12.2017 EXAMINED THE POWER OF COMMISSIONER WHILE GRANTING REGISTRATION U/S 12A OF THE ACT AND HELD AS UNDER :- 16. NOW, COMING TO THE POWERS OF THE COMMISSIONER AS TO WHETHER WHILE GRANTING REGISTRATION U/S 12A HE IS R EQUIRED TO EXAMINE THE BOOKS OF ACCOUNT ETC. OR HE IS ONLY TO SATISFY HIMSELF REGARDING THE OBJECTS OF THE TRUST AND GENUINENESS OF THE ACTIVITIES OF THE TRUST, WE FIND VARIOUS COURTS HAV E HELD THAT WHILE GRANTING REGISTRATION U/S 12A THE LD. CIT IS REQUIR ED TO SEE ONLY THE OBJECTS OF THE ASSESSEE TRUST/SOCIETY AND NOT T O EXAMINE THE APPLICATION OF INCOME. HE IS NOT REQUIRED TO EXAMI NE WHETHER THE INCOME DERIVED BY THE TRUST IS BEING SPENT FOR CHARITABLE PURPOSES OR THE TRUST IS EARNING PROFIT WHILE GRANT ING REGISTRATION. HE IS ONLY REQUIRED TO EXAMINE THE OBJECTS OF THE T RUST. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF BHARTIYA KISAN SANGH SEWA NIKETAN (SUPRA). IN THE SAID CASE ALSO THE ASSESSEE TRUST DID NOT PRODUCE THE BOOKS O F ACCOUNT, BILLS AND VOUCHERS ETC. FOR VERIFICATION OF THE LD. CIT F OR WHICH THE LD. CIT HELD THAT THE ASSESSEE SOCIETY IS NOT CARRYING OUT ANY CHARITABLE ACTIVITIES. DUE TO NON-COMPLIANCE OF AS SESSEE SOCIETY, ITA NO.1260/DEL/2016 6 THE GENUINENESS OF THE ACTIVITIES COULD NOT BE VERI FIED. THE LD. CIT, THEREFORE, RELYING ON VARIOUS DECISIONS INCLUD ING THE DECISIONS WHICH HAVE BEEN RELIED ON BY THE LD. CIT IN THE PRESENT CASE, REJECTED THE CLAIM OF REGISTRATION U/S 12A(1) OF THE I.T. ACT. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL, THE TRIB UNAL ALLOWED THE CLAIM OF REGISTRATION BY HOLDING THAT AT THIS S TAGE ON GRANTING REGISTRATION U/S 12A THE LD. CIT IS REQUIRED TO SEE THE OBJECTS OF THE SOCIETY AND NOT REQUIRED TO EXAMINE THE APPLICA TION OF INCOME WHICH WILL HAVE TO BE UNDERTAKEN BY THE ASSESSING O FFICER ON A YEAR TO YEAR BASIS AFTER THE ASSESSEE FILES THE RET URN OF INCOME CLAIMING EXEMPTION U/S 11 OF THE I.T. ACT. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT WHEN THE ASSESSEE TRUST HAS BR OUGHT ON RECORD ALL THE NECESSARY DOCUMENTS TO ACHIEVE THE A IMS AND OBJECTS OF THE ASSESSEE TRUST ENSHRINED IN ITS MEMORANDUM O F ARTICLES AND UNDISPUTEDLY IS INTO CHARITABLE ACTIVITIES BY ESTAB LISHING EDUCATIONAL INSTITUTIONS, MERELY DENYING THE REGIST RATION ON THE BASIS OF APPREHENSIONS, CONJECTURES AND SURMISES TH AT SINCE TRUSTEES OF THE ASSESSEE HAVE DONATED HUGE CASH AMOUNT TO AS SESSEE TRUST, THERE APPEARS TO BE MONEY LAUNDERING, IS NOT SUSTAI NABLE IN THE EYES OF LAW, HENCE WE SET ASIDE THE ORDER PASSED BY LD. CIT BY ALLOWING THE APPEAL FILED BY THE ASSESSEE AND DIRECT HIM TO GRANT REGISTRATION U/S 12A OF THE ACT. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF MARCH, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 23 RD DAY OF MARCH, 2018/TS ITA NO.1260/DEL/2016 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(E), LUCKNOW. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.