Virudhunagar Kammavadugan Educational, Virudhunagar V. CIT-II, Madurai

ITA 1268/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64202 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Assessee Lawyers: R SRINIVASAN
• Keywords: Charitable institution
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ] I.T.A.NO S . 1268 & 1269/MDS/2012 ASSESSMENT YEAR : N.A VIRUDHUN AGAR KAMMAVADUGAN EDUCATIONAL & CULTURAL PUBLIC CHARITABLE TRUST NO.2, SATYA SAIBABA STREET INDUSTRIAL ESTATE POST VIRUDHUNAGAR 626 003 VS THE CIT II MADURAI ( APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R. SRINIVASAN, ADVOCATE RESPONDEN T BY : DR S. MOHARANA, CIT/DR DATE OF HEARING : 03 - 09 - 2012 DATE OF PRONOUNCEMENT : 03 - 09 - 2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF THE CIT - II, MADURAI , DATED 06.03.2012, REFUSING REGISTRATION U/S 12AA OF THE ACT AND APPROVAL U/S 80G OF THE ACT. 2 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE CIT AND MATERIALS AVAILABLE ON RECORD. THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE - TRUST FILED APPLICATION FOR GRANT OF REGISTRATION U/S 12AA OF THE ACT ON 13.09.2011 TOGETHER WITH A COPY I.T.A.NO. 1268 & 1269/12 : - 2 - : OF THE TRUST DEED WHICH SHOWED THAT THE TRUST WAS CREATED ON 26.8.2002. THE CIT OBSERVED THAT A PERUSAL OF ACCOUNTS REVEALS THAT THE TRUST WA S COLLECTING RENT BY LETTING OUT OF KALYANAMANDAPAM ON A COMMERCIAL BASIS WHICH CANNOT BE CONSIDERED AS A CHARITABLE ACTIVITY. HE ALSO NOTED THAT AS ON 31.3.2011 THE CONTRIBUTION FROM MEMBERS STOOD AT ` 3 6,07,809/ - AND THAT A PERUSAL OF THE CONTRIBUTORS L IST REVEALED THAT SOME OF THE DONORS WERE NOT IDENTIFIABLE AS ONLY NAMES WERE GIVEN AND IN ABSENCE OF FULL ADDRESS, GENUINENESS OF DONATIONS COULD NOT BE PROVED. THE TRUST COULD NOT PROVE THE CREDITWORTHINESS OF SOME OF THE CONTRIBUTORS. THE TRUST WAS SA ID TO HAVE CARRIED OUT ACTIVITIES LIKE DISTRIBUTION OF NOTE BOOKS TO POOR STUDENTS AND SCHOLARSHIP TO SCHOOL AND COLLEGE STUDE NTS WHICH WAS NOT PROVED WITH PROPER EVIDENCES LIKE DETAILS OF BENEFICIARIES, BILLS FOR PURCHASE OF NOTE BOOKS ETC. THE CIT FURTH ER OBSERVED THAT UNDER THE STATUTORY PROVISIONS, HE WAS REQUIRED TO SATISFY HIMSELF ABOUT THE TWIN PARAMETERS I.E GENUINENESS OF THE TRUST AND ACTIVITIES BEING CARRIED OUT IN ACCORDANCE WITH THE TRUST DEED. IN ORDER TO ESTABLISH THESE BASIC PARAMETERS, TH E TRUST WAS SPECIFICALLY ASKED TO PRODUCE THE NECESSARY EVIDENCE IN SUPPORT OF THE APPLICATION FOR REGISTRATION, BUT INSPITE OF OPPORTUNITY ALLOWED, THE TRUST HAD NOT TAKEN ADEQUATE CARE TO PRODUCE THE DOCUMENTS TO HIS SATISFACTION. THEREFORE, THE CIT HEL D THAT SINCE THE TWIN PARAMETERS I.E GENUINENESS OF TRUST AND ITS ACTIVITIES BEING CARRIED OUT IN TERMS OF THE TRUST DEED, HAVE NOT BEEN I.T.A.NO. 1268 & 1269/12 : - 3 - : ESTABLISHED WITH DOCUMENTARY EVIDENCE INSPITE OF TWO OPPORTUNITIES ALLOWED, AS PER THE BOARD S CIRCULAR NO.762 DATED 1 8.2.1998, THE BENEFIT OF REGISTRATION CANNOT BE ALLOWED TO THE TRUST IN TERMS OF THE PROVISIONS OF SECTION 12AA(1)(B)(II) OF THE ACT AND HENCE, REJECTED THE APPLICATION FOR REGISTRATION TO THE ASSESSEE - TRUST. 3 . AS HE HAD REJECTED THE APPLICATION FOR REGISTR ATION OF THE TRUST, HE ALSO DID NOT GRANT APPROVAL U/S 80G OF THE ACT TO THE TRUST. 4 . THE A.R OF THE ASSESSEE SUBMITTED THAT AT THE TIME OF GRANT OF REGISTRATION TO THE TRUST, THE CIT HAS TO SATISFY HIMSELF WHETHER THE OBJECTS OF THE TRUST STATED IN THE TR UST DEED ARE CHARITABLE OR NOT. HE CANNOT REJECT THE APPLICATION FOR REGISTRATION OF THE TRUST ON THE GROUND THAT THE DONORS ARE NOT GENUINE OR DID NOT HAVE CREDITWORTHINESS. THE SE ARE MATTERS WHICH ARE TO BE CONSIDERED BY THE ASSESSING OFFICER WHILE MA KING THE ASSESSMENT OF THE ASSESSEE - TRUST TO GRANT EXEMPTION U/S 11 OF THE ACT. HE ALSO SUBMITTED THAT THE CIT DID NOT ALLOW ANY OPPORTUNITY TO THE TRUST TO FILE THE DETAILS AND PARTICULARS OF THE DONORS AND WITHOUT ALLOWING OPPORTUNITY TO THE TRUST, AR RIVED AT THE CONCLUSION THAT DONORS ARE NOT GENUINE AND DID NOT HAVE THE CAPACITY TO GRANT DONATIONS AND THAT THE ADDRESSES OF THE DONORS ARE NOT AVAILABLE WITH THE ASSESSEE - TRUST. HE SUBMITTED THAT HAD HE GRANTED OPPORTUNITY TO THE ASSESSEE - TRUST THE ASSESSEE WOULD HAVE SUBMITTED ALL THE REQUIRED PARTICULARS TO THE SATISFACTION OF THE CIT. HENCE, IT WAS I.T.A.NO. 1268 & 1269/12 : - 4 - : HIS SUBMISSION THAT THE REGISTRATION WAS REFUSED TO THE ASSESSEE ON CONJECTURES AND SURMISES OF THE CIT AND THEREFORE, ORDER OF THE CIT SHOULD BE SET ASIDE AND THE CIT BE DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE - TRUST AND ALSO APPROVAL U/S 80G OF THE ACT. HE RELIED ON THE DECISIONS OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF MADRAS RACE CLUB CHARITABLE TRUST VS CIT, [2000]245 ITR 240(MAD) AND IN THE CASE OF DIT(E) VS SAMYUKTHA GOWDA SARASWATHA SABHA, [2011]339 ITR 456(MAD). 5 . ON THE OTHER HAND, THE CIT/DR VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE CIT. 6 . WE FIND FROM THE ORDER OF THE CIT THAT ONLY TWO OPPORTUNITIES OF HEARINGS WERE GRA NTED TO THE TRUST TO PROVE THE GENUINENESS OF THE TRUST AND ACTIVITIES BEING CARRIED OUT IN ACCORDANCE WITH THE TRUST DEED. FURTHER, WE ALSO FIND FROM THE ORDER OF THE CIT THAT NO OPPORTUNITY WAS ALLOWED TO THE ASSESSEE TO GIVE THE NAMES, ADDRESSES AND PAN OF THE DONORS TO PROVE THE GENUINENESS OF THE DONATIONS, THE IDENTITY OF THE DONORS AND THEIR CREDITWORTHINESS. WE FURTHER OBSERVE THAT THAT THE CIT HAS NOT EXAMINED THE TRUST DEED OF THE ASSESSEE AND GIVEN ANY FINDING AS TO WHETHER THE OBJECT OF THE TRUST ARE CHARITABLE OR NOT. THUS, WE FIND THAT NECESSARY VERIFICATIONS WERE NOT CARRIED OUT BY THE CIT AND THAT BEFORE REFUSING REGISTRATION AND APPROVAL TO THE TRUST, SUFFICIENT OPPORTUNITY OF HEARING WAS ALSO NOT I.T.A.NO. 1268 & 1269/12 : - 5 - : GRANTED. WE, THEREFORE, SET ASIDE TH E ORDERS OF THE CIT AND RESTORE THE MATTERS BACK TO HIS FILE WITH A DIRECTION TO PASS A SPEAKING ORDER AFTER CARRYING OUT NECESSARY VERIFICATIONS IN THE LIGHT OF THE DISCUSSIONS MADE HEREIN ABOVE AND AFTER ALLOWING REASONABLE AND SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON MONDAY , THE 3 RD DAY OF SEPTEMBER, 2012, AT CHENNAI. SD/ - SD/ - (VIKAS AWASTHY) JUDICIAL MEMBER ( N.S.SAINI ) ACCOUNTANT MEMBER DATED: 03 RD SEPTEMBER , 2012 RD COPY TO: APPELLANT / RESPONDENT / CIT(A) /CIT/ DR