Happy Day's Shiksha Samiti, Shivpuri V. CIT, Gwalior

ITA 13/AGR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7067 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-04-2011
• Assessment Year: misc
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.13/AGR/2010 HAPPY DAYS SHIKSHA SAMITI, VS. COMMISSIONER OF IN COME TAX, P.O. KATHAMILL, GWALIOR. A.B. ROAD, SHIVPURI (M.P.) (PAN : AAAAH 1231 R). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARG, ADVOCATE RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. ORDER PER H.S. SIDHU, J.M. : THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 30.11.2009 PASSED BY THE LD. CIT, GWALIOR ON THE FOLLOWING GRO UNDS :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED C.I.T., GWALIOR HAS ERRED IN REJECTING THE APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT 1961 OF THE SOCIET Y WITHOUT PROVIDING PROPER OPPORTUNITY TO THE APPELLANT SOCIETY, WHICH IS AGAINST PRINCIPLE OF NATURAL JUSTICE & LAW. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED C.I.T. GWALIOR HAS ERRED IN NOT PROVIDI NG A COPY OF REPORT OBTAINED FROM THE ASSESSING AUTHORITY FOR ANY COMME NT WHICH IS AGAINST PRINCIPLE OF NATURAL JUSTICE AND LAW. 2 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ORDER PASSED BY THE C.I.T., GWALIOR ARE ARBITRA RY CAPRICIOUS AND ERRONEOUS AND WITHOUT ANY LEGAL BASIS, BEING CALLS FOR REJECTION. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE APPELLANT CLAIMED REGISTRATION U/S. 12AA AS EDU CATIONAL INSTITUTION BUT THE C.I.T. GWALIOR HAS ERRED IN PASSING THE ORD ER AS NON-CHARITABLE TRUST, WHICH IS AGAINST PRINCIPLE OF LAW AND NATURA L JUSTICE. 5. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE C.I.T. GWALIOR HAS ERRED IN TREATING THE SOCIET Y AS PROFIT MAKING AND CLAIMING THAT THE FUNDS WERE NOT UTILISED FOR SOCIE TY PURPOSES, IS AGAINST FACTS OF THE CASE AND IN LAW, THUS THE ORDER PASSED IS BAD IN LAW. 6. THAT THE ORDER PASSED BY CIT, GWALIOR IS WITHOUT CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW CALLS FOR CANCELLATION. 7. THAT UNDER THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LEARNED CIT IS BARRED BY LIMITA TION. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD TO ALTER, AMENDS, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL AND ANY OF TH E GROUNDS OF APPEAL ON OR BEFORE THE FINAL HEARING IF NECESSITY SO ARISES. 2. THE ASSESSEE HAS FILED AN APPLICATION BEFORE THE LD. CIT, GWALIOR UNDER SECTION 12AA OF THE INCOME TAX ACT, 1961 (THE ACT HEREINA FTER) ON 28.05.2009. THE LD. CIT CALLED FOR THE REPORT ON THE APPLICATION FILED BY THE ASSESSEE FROM THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE. THE LD. CIT, GWALIOR VIDE ITS LETTER DATED 27.11.2009 HAS GIVEN AN OPPORTUNITY OF HEARING TO THE ASSESSEE ON 30.11.2009 REQUIRING TO ATTEND THE HEAR ING ALONG WITH THE BOOKS OF ACCOUNTS, VOUCHERS AND RELEVANT DOCUMENTS SHOWING C HARITABLE ACTIVITIES CARRIED ON BY THE ASSESSEE SOCIETY. IN RESPONSE TO THE SAME, THE LD. A.R. OF THE ASSESSEE 3 APPEARED BEFORE THE LD. CIT AND FILED WRITTEN SUBMI SSION. THE LD. CIT CONSIDERED THE WRITTEN SUBMISSION OF THE ASSESSEE DATED 30.11. 2009 AND DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE BY HOLDING THAT THE AS SESSEE HAS NOT ASCERTAINED ABOUT THE GENUINENESS OF THE SOCIETY AND, THEREFORE, THE APPLICATION FOR REGISTRATION UNDER SECTION 12A(AA)(1) OF THE ACT DESERVES TO BE REJECT ED AND PASSED THE IMPUGNED ORDER ON THE SAME DATE I.E. 30.11.2009. AGAINST WHICH, T HE ASSESSEE HAS FILED THE PRESENT APPEAL. 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE GROUNDS OF APPEAL AND STATED THAT THE LD. CIT, GWAL IOR HAVE NOT GIVEN A PROPER OPPORTUNITY TO PROVE THE GENUINENESS OF THE ACTIVIT IES OF THE ASSESSEE AND DECIDED THE ISSUE IN DISPUTE AGAINST THE ASSESSEE IN A HURRY MA NNER. HE REQUESTED THAT THE IMPUGNED ORDER MAY BE CANCELLED. 4. ON THE CONTRARY, THE LD. D.R. RELIED UPON THE IM PUGNED ORDER PASSED BY THE LD. CIT, GWALIOR DATED 30.11.2009. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE ON RECORD, ESPECIALLY THE IMPUGNED ORDER DATED 30.11.2 009. FOR THE SAKE OF CONVENIENCE, THE SAME IS REPRODUCED AS UNDER :- 4 ORDER U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT 196 1 THE ABOVE NAMED SOCIETY HAS FILED APPLICATION IN FO RM NO.10A SEEKING REGISTRATION U/S 12AA OF THE INCOME TAX ACT , 1961 ON 28.05.2009. A REPORT WAS CALLED FOR FROM THE ASSESSING OFFICER IN ORDER TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE SOC IETY. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIR-3, GW ALIOR HAS SUBMITTED REPORT THROUGH THE JOINT COMMISSIONER OF INCOME TAX, RANGE-III, GWALIOR IN RESPECT OF REGISTRATION U/S 1 2AA OF THE INCOME TAX ACT, 1961, WHICH HAS BEEN CONSIDERED. VIDE LETTER DATED 27.11.2009 THE SECRETARY OF THE S OCIETY WAS GIVEN AN OPPORTUNITY OF BEING HEARD ON 30.11.2009 R EQUIRING HIM TO ATTEND THE HEARING ALONG WITH BOOKS OF ACCOUNTS VOU CHERS AND RELEVANT DOCUMENTS SHOWING CHARITABLE ACTIVITIES CARRIED ON BY THE SOCIETY. ON 30.11.2009 SHRI R.K. GANGAWAL, ADVOCATE ATTENDED TH E HEARING AND FILED WRITTEN SUBMISSION. ON PERUSAL OF THE SUBMISSIONS DATED 30.11.2009 AND RECORDS ON FILE IT IS SEEN THAT THE SAMITI HAS FAILED TO PRODU CE FACTS REGARDING AMOUNT OF SCHOLARSHIP EXPENSES. THE SAMITI IS IN R ECEIPT OF FOREIGN AID, THE SOURCE OF FOREIGNER AID HAS NOT BEEN DIVULGED. THE SAMITI IS ALSO ACCUMULATING MORE THAN 15% OF THE TOTAL RECEIPT AND NOT INVESTING THE SAME IN ANY SCHEDULED FUND AND MERELY ENHANCING THE DEVELOPMENT FUND AND UN-APPROPRIATED SURPLUS TO THE TUNE OF ` 23,75,000/- AND ` 31,43,713/- RESPECTIVELY BY CHARGING DEVELOPMENT FE ES AS WELL AS TUITION FEES WHICH IS AGAINST THE NORMS OF CHARITAB LE ACTIVITIES. AS PER THE NEWLY INSERTED PROVISO TO SECTION 2(15) WHERE THE PURPOSE OF A TRUST OR INSTITUTION IS RELIEF OF THE POOR, EDUCATION OR MEDICAL RELIEF, IT WILL CONSTITUTE CHARITABLE PURPO SE EVEN IF IT INCIDENTALLY INVOLVES THE CARRYING ON OF COMMERCIAL ACTIVITIES. HOWEVER, IN THIS CASE CONSIDERING THE LARGE AMOUNT OF DEVELOPMENT FEES/TUITION FEES COLLECTED AND ACCUMULATED ITS MAI N PURPOSE IS DEEMED TO BE COMMERCIAL ACTIVITY. HENCE THE SAMITI IS NOT FULFILLING THE CRITERIA AS LAID DOWN U/S 2(15) OF THE I.T. ACT. 5 IN VIEW OF THE ABOVE FACTS GENUINENESS OF THE SOCIE TY CAN NOT BE ASCERTAINED. THE APPLICATION FOR REGISTRATION U/S 12A(AA)(1) OF THE INCOME TAX ACT, 1961 THEREFORE, DESERVES TO BE REJE CTED. REGISTRATION U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 IS A CCORDINGLY NOT GRANTED TO THE SOCIETY. SD/- (SMT. REKHA VISHNOI) COMMISSIONER OF INCOME-TAX, GWALIOR 6. AFTER GOING THROUGH THE AFORESAID IMPUGNED ORDER , WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT, GWALIOR HAS NOT GIVEN ANY SUFFICIENT OPPORTUNITY TO THE ASSESSEE FOR PROVING THE GENUINENESS OF THE SOCIETY AS WELL AS THE CHARITABLE ACTIVITIES OF THE ASSESSEE SOCIETY. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ISSUE IN DISPUTE TO THE LD. CIT, GWALIOR WITH T HE DIRECTION TO DECIDE THE SAME AFRESH UNDER LAW AFTER GIVING FULL OPPORTUNITY TO T HE ASSESSEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 18.04.2011). SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 18 TH APRIL, 2011 PBN/* 6 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRI BUNAL, AGRA TRUE COPY