Vivekanand Educational Society, Jagadhri V. CIT(Exemption), Chandigarh

ITA 13/CHANDI/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5997 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 06-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Opportunity of being heard; Competent authority; Benefit of exemption; Set aside
• Section: 12; 12AA; 201; 13; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH (VIRTUAL COURT) .., ! '# .. , $ %& BEFORE: SHRI. N.K.SAINI, VP & SHRI , R.L. NEGI, JM ITA NO. /CHD/ ASSESSMENT YEAR : VIVEKANAND EDUCATIONAL SOCIETY SECTOR-17, HUDA JAGADHRI-135003 HARYANA CIT(EXEMPTIONS) CHANDIGARH !' PAN NO: AAAJV0306N # APPELLANT $% # RESPONDENT &'()! ASSESSEE BY : MS. HASNEETA MATTA, CA *()! REVENUE BY : SHRI SANDEEP DAHIYA, CIT + ,('-' DATE OF HEARING : 06/09/2021 ./01('-' DATE OF PRONOUNCEMENT : 09/09/2021 %'/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 27/11/2019 OF LD. CIT(E), CHANDIGARH. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E CIT(E) HAS ERRED IN LAW IN REFUSING TO GRANT REGISTRATION U/S 12AA OF THE INCO ME TAX ACT, 1961 TO THE APPELLANT. 2. THAT THE ORDER OF THE CIT(EXEMPTIONS) IS BAD IN LAW AND PRESERVE AS THE SAME HAS BEEN PASSED WITHOUT CONSIDERING THE SUBMISSION OF T HE APPELLANT AND WITHOUT TAKING A HOLISTIC VIEW OF THE MATTER. 3. THE APPELLANT CRAVES LEAVE TO ADD, DELETE, MODIFY O R VARY ANY OF THE GROUNDS OF APPEAL AT ANY TIME DURING THE PENDENCY OF THE APPEA L OR AT THE TIME OF HEARING. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE E-F ILED APPLICATION IN FORM NO. 10A ON 29/05/2019 SEEKING REGISTRATION UNDER SECTION 12 AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT). THE CIT(E) OBSERV ED THAT THE SAID APPLICATION REVEALED 2 THAT THE ASSESSEE SOCIETY CLAIMED TO BE IN OPERATION SI NCE 31/10/1964. THE CIT(E) DISCUSSED THE PROVISIONS CONTAINED IN SECTION 12AA OF THE ACT IN PARA 3 OF THE IMPUGNED ORDER AND TO APPRAISE AND AS TO WHETHER THE ACTI VITIES WERE IN SYNC WITH THE OBJECTS OF THE SOCIETY, ASKED THE ASSESSEE TO FURNIS H CERTAIN DOCUMENTS WHICH ARE MENTIONED IN PARA 5 OF THE IMPUGNED ORDER, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. 3.1 IN RESPONSE THE ASSESSEE FURNISHED THE REPLY WHICH WER E KEPT ON RECORD BY THE LD. CIT(E) WHO AGAIN ASKED THE ASSESSEE, ANOTHER QUERIE S WHICH ARE INCORPORATED IN PARA 6 OF THE IMPUGNED ORDER. 3.2 THE LD. CIT(E) OBSERVED THAT THE REPLY FURNISHED B Y THE ASSESSEE REVEALED THAT THE ASSESSEE WAS EARLIER REGISTERED UNDER SECTION 12AA O F THE ACT SINCE 24/12/1986 VIDE ORDER DT. 26/07/1988 PASSED BY THE LD. CIT ROHTAK AND THEREAFTER THERE WERE SOME CHANGES MADE BY THE ASSESSEE SOCIETY IN ITS OBJECT. T O CLARIFY FURTHER, THE LD. CIT(E) RAISED SEVERAL QUERIES ON 19/11/2019 WHICH ARE INCORPO RATED IN PARA 7 OF THE IMPUGNED ORDER. 3.3 THE LD. CIT(E) MENTIONED IN PARA 8 OF THE IMPUGNED OR DER THAT THE ASSESSEE SOCIETY WAS REGISTERED AS A SOCIETY ON 31/10/1964 AND WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT SINCE 24/12/1986 VIDE ORDER P ASSED BY THE LD. CIT, ROHTAK. THE LD. CIT(E) ALSO MENTIONED THAT THE ASSESSEE ADDED PARA 4(A) AND PARA 4(L) IN THE ORIGINAL AIMS & OBJECTS OF THE ASSESSEE SOCIETY, HE A SKED THE ASSESSEE TO FURNISH THE COPY OF RESOLUTION PASSED BY THE MEMBERS APPROVING THE CHANGES IN THE OBJECT OF THE SOCIETY. IN RESPONSE THE ASSESSEE FURNISHED THE COPY OF RESOLUTION DT. 01/05/2015 WHICH HAS BEEN REPRODUCED AT PAGE 8 & 9 OF THE IMPUGNED ORDE R. 3.4 THE LD. CIT(E) AGAIN ASKED THE ASSESSEE TO PROVIDE THE RESPONSE TO VARIOUS SPECIFIC QUERIES DT. 19/11/2019 ONE OF WHICH WAS AS UND ER: PLEASE PROVIDE DETAILS AS TO WHEN AND WHY THE ACT IVITIES OF THE SOCIETY WERE DIVERTED FROM THE OBJECTS MENTIONED IN THE ORIGINAL MOA BASED ON WHIC H THE REGISTRATION U/S 12AA WAS GRANTED EARLIER. 3.5 ACCORDING TO THE LD. CIT(E) THE ASSESSEE EVADED T O GIVE THE RESPONSE TO THE AFORESAID SPECIFIC QUERIES, HE ASKED THE ASSESSEE TO FURNISH THE COPY OF DOCUMENTS 3 SUBMITTED TO THE REGISTERING AUTHORITY / SUB REGISTRA R / REGISTRAR FOR MAKING CHANGES IN THE OBJECTS IN MOA OF THE ASSESSEE SOCIETY AND TO FURN ISH THE EVIDENCE OF REGISTERING AMENDED MOA BY CONCERNED SOCIETY. IN RESPONSE THE ASSES SEE FURNISHED THE COPY OF ACKNOWLEDGEMENT OF THE DOCUMENTS SUBMITTED ONLINE TO THE DISTRICT REGISTRAR OF SOCIETY, HARYANA FOR MAKING CHANGES IN THE OBJECTS IN THE MOA AND BYLAWS. 3.6 THE LD. CIT(E) OBSERVED THAT IN THE SAID ACKNOWLEDG EMENT RECEIVED FROM DISTRICT REGISTRAR, HARYANA IT WAS MENTIONED THAT THE RESOLUTI ON OF GOVERNING BODY / GOVERNING MEETING HELD ON 30/09/2016, WAS RECEIVED ON 20/03/2017 WHEREAS THE COPY OF RESOLUTION SUBMITTED BY THE ASSESSEE ON RECORD WAS DT. 01/05/2015. THE LD. CIT(E) WAS OF THE VIEW THAT THE ASSESSEE FAILED, TO PROVE THAT THE RE SOLUTION TO CHANGE THE OBJECT OF THE ASSESSEE SOCIETY WAS PASSED BY ITS MEMBERS AND TO PROVE THAT ANY SUCH RESOLUTION WAS SUBMITTED TO THE REGISTRAR OF THE SOCIETIES. THE L D. CIT(E) REJECTED THE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION UNDER SECTION 1 2AA OF THE ACT BY OBSERVING IN PARA 11 TO 13 AS UNDER: 11. SCHEDULE-D OF THE FINANCIAL STATEMENT OF SWAMI VIVEKANAND MULTISPECIALTY HOSPITAL FOR F Y 2018-19 SHOWS THAT THE BUILDING OF THE HOSPITAL IS SHOWN TO BE AT WDV OF RS 10.05.470/- HOWEVER, THE REPLY OF THE APPLICANT DATED 14.11 201 9 MENTIONED THAT THE AREA OCCUPIED BY THE HOSPITAL IS 1422 SQUARE METERS. ALSO, THE MA P OF THE HOSPITAL SUBMITTED ON RECORD SHOWS THAT THE HOSPITAL IS A THREE STOREY FULL-FLED GED BUILDING WHICH IS BEING USED AS A MULTI SPECIALTY HOSPITAL. FURTHER, THE LAND ON WHICH THE HOSPITAL IS BUILT IS IN THE NAME OF SOCIETY SINCE 1984 THE BALANCE SHEETS OF THE HOSPITAL FOR P REVIOUS YEARS ALSO REVEAL THAT THE FUNDS OF THE SOCIETY WHICH SHOULD HAVE BEEN USED FOR THE PURPOSES OF THE SOCIETY S APPROVED OBJECTS HAVE BEEN USED IN THE HOSPITAL CLEARLY, THE SOCIETY HAS USED THE ASSE TS SUCH AS LAND AND BUILDING FOR RUNNING OF A HOSPITAL ON COMMERCIA L LINES WHILE THESE ASSETS WERE MEANT TO BE USED FOR THE PURPOSES OF EDUCATION AS PER THE OBJECTS OF THE SOCIETY. THE COPY OF CLAIMED RESOLUTION DATED 01 05 2015 ALSO MENTIONS T HAT A PROPOSAL WAS FORWARDED IN THE MEETING THAT A HOSPITAL SHOULD BE ESTABLISHED ON TH E LAND ADJACENT TO THE SCHOOL PREMISES. THIS ACTIVITY OF SETTING UP A HOSPITAL HA S GONE BEYOND THE APPROVED OBJECTS OF THE SOCIETY MOREOVER THE APPLICANT HAS SUBMITTED THE COPY OF CE RTIFICATE OF PROVISIONAL REGISTRATION OF THE HOSPITAL AS PER THE CERTIFICATE THE REGISTRATION HAS BEEN ISSUED ON 22 10 2018 WHILE THE HOSPITAL HAS BEEN IN OPERATION SINCE FY. 2015-16 THE APPLICANT WAS REQUESTED TO SUBMIT THE COPY OF APPROVAL GRANTED BY THE COMPETENT AUTHORITY FOR RUNNING THE HOSPITAL BUT THE APPLICANT DID NOT SUBMIT ANY D OCUMENTARY EVIDENCE ON RECORD SHOWING ANY SUCH APPROVAL. CLEARLY, THE HOSPITAL WA S BEING RUN BY THE SOCIETY WITHOUT NECESSARY APPROVAL SINCE FY 2015-16 AS THE PROVISIO NAL REGISTRATION CERTIFICATES DATED 22 10 2018. 12 IT IS FURTHER PERTINENT TO MENTION HERE THAT THE REGISTRATION U/S 12AA OF THE ACT WAS GRANTED TO THE APPLICANT BASED ON THE ENQUIRY OF SO CIETY S OBJECTS AND PROOFS OF ACTIVITIES IN ACCORDANCE TO THOSE OBJECTS WHICH WERE PRODUCED BEFORE THE COMPETENT AUTHORITY AT THAT TIME NOW. THE EXAMINATION CONDUCTED BY THIS OF FICE OF THE APPLICANT'S SUBMISSIONS REVEALED THAT THE ACTIVITIES OF THE APPLICANT ARE N OT IN LINE WITH THE OBJECTS BASED ON WHICH 4 THE APPLICANT WAS GRANTED 12AA REGISTRATION. THE AP PLICANT CHANGED ITS OBJECTS WITHOUT FOLLOWING THE PROCEDURE OF THE LAW AND STARTED RUNN ING THE ACTIVITIES OUTSIDE THE SCOPE OF ITS OBJECTS WHICH WERE APPROVED BY THE THEN COMMISS IONER FOR 12AA REGISTRATION THE APPLICANT HAS COMPLETELY FAILED TO PROVE THAT IT HA D FOLLOWED THE REQUIRED PROCEDURE FOR RETAINING THE 12AA REGISTRATION THE DETAILS OF THE PRESENT CASE WILL BE SENT TO THE JURISDICTIONAL ASSESSING OFFICER AND A FACTUAL DETAILED REPORT IN THE CASE WILL BE C ALLED FOR IN RESPECT OF THE ACTIVITIES OF THE SOCIETY FOR THE TIME PERIOD FALLING BETWEEN THE DAT E WHEN THE SOCIETY S OBJECTS WERE CHANGED AND THE DATE WHEN THE SOCIETY HAS FILED THE PRESENT APPLICATION. ACCORDINGLY, AFTER RECEIPT OF THE DETAILED REPORT IN THE CASE, T HE PROCEEDINGS FOR WITHDRAWAL OF REGISTRATION GRANTED U/S 12AA OF THE ACT TO THE APP LICANT SOCIETY WILL BE INITIATED, IF NEEDED. 13. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THA T THE APPLICANT SOCIETY DOES NOT QUALIFY TO GET THE BENEFIT OF EXEMPTION PROVISIONS AND, ACCORDINGLY, I REJECT THE PRESENT APPLICATION DATED 29.05.2019 FILED BY THE APPLICANT FOR REGISTRATION U/S 12AA OF INCOME TAX ACT, 1961. 4. NOW THE ASSESSEE IS IN APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE LD. CIT(E) WITHOUT CONSIDERING THE VARIOUS DOCUMENTS FURNISHED BY THE ASSESSEE, WAS NOT JUSTIFIED IN REJECTING THE APPLICATION MOVED BY THE ASSESSEE FOR REGISTRATION UND ER SECTION 12AA OF THE ACT. IT WAS ALSO SUBMITTED THAT THE LD. CIT(E) WAS ALSO NOT JUSTI FIED IN OBSERVING THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY WERE NOT INLINE WITH THE OBJECTS BASED ON WHICH THE REGISTRATION UNDER SECTION 12AA OF THE ACT WAS GRANTED AND THAT THE ASS ESSEE CHANGED ITS OBJECT WITHOUT FOLLOWING THE PROCEDURES OF LAW AND STARTED R UNNING THE ACTIVITIES OUTSIDE THE SCOPE OF ITS OBJECTS WHICH WERE APPROVED BY THE THEN COM MISSIONER FOR GRANTING THE REGISTRATION UNDER SECTION 12AA OF THE ACT. IT WAS ALSO SUBMITTED THAT THE ASSESSEE ON THE CONTRARY FOLLOWED THE PROCEDURE OF LAW AND THE ACTIV ITIES UNDERTAKEN WERE IN ACCORDANCE WITH THE OBJECTS OF THE ASSESSEE SOCIETY. 6. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(E) AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(E). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTI ES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESE NT CASE IT IS NOTICED THAT IN PARA 12 OF THE IMPUGNED ORDER THE LD. CIT(E) CLEARLY MENTIONED THAT THE DETAILS OF THE PRESENT CASE WILL BE SENT TO THE JURISDICTIONAL A.O. A ND FACTUAL DETAILED REPORT IN THE CASE WOULD BE CALLED FOR IN RESPECT OF THE ACTIVITY O F THE ASSESSEE SOCIETY FOR THE TIME 5 PERIOD FALLING BETWEEN THE DATE WHEN THE SOCIETYS OBJEC TS WERE CHANGED AND THE DATE WHEN THE SOCIETY HAS FILED THE PRESENT APPLICATION, ACCORDINGLY AFTER RECEIPT OF THE DETAILED REPORT IN THE CASE, THE PROCEEDING FOR WITH DRAWAL OF THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE SO CIETY WILL BE INITIATED IF NEEDED. HOWEVER THE LD. CIT(E) REJECTED THE APPLICATION OF THE ASSESSEE SOCIETY WITHOUT WAITING FOR THE REPORT FROM THE JURISDICTIONAL A.O. WHICH WAS CALLED FOR BY HIM. WE THEREFORE DEEM IT APPROPRIATE TO SET ASIDE THIS CA SE BACK TO THE FILE OF THE LD. CIT(E) TO BE ADJUDICATE AFRESH IN ACCORDANCE WITH LAW AFTER P ROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 09/09/2021) SD/- SD/- .. .., (R.L. NEGI ) ( N.K. SAIN I) $ %&/ JUDICIAL MEMBER ! / VICE PRESIDENT AG DATE: 09/09/2021 /!2($'345!4' COPY OF THE ORDER FORWARDED TO : 1. # THE APPELLANT 2. $% # THE RESPONDENT 3. + 6' CIT 4. + 6'78 THE CIT(A) 5. 49$';<-;<=>?@ DR, ITAT, CHANDIGARH 6. ?A, GUARD FILE /!2 + BY ORDER, B * ASSISTANT REGISTRAR