Arare Foundation, Pune V. CIT Exemption, Pune

ITA 132/PUN/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8490 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 20-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, J UDICIAL M EMBER . / ITA NO. 132 /PUN/20 21 ARARE FOUNDATION 1180/7/1, F.C ROAD, SHIVAJINAGAR, PUNE - 411 016 PAN : AATCA6948H ....... / APPELLANT / V/S. THE COMMISSIONER OF INCOME TAX (EXEMPTION) PUNE. / RESPONDENT A SSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 16 .0 8 .2021 / DATE OF PRONOUNCEMENT : 16 .08 .2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT (EXEMPTION) PUNE DATED 23.02.2021 PASSED U/S.12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. THE LD. CIT(EXEMPTION) ERRED IN NOT GRANTING REGISTRATION U/S.12A/12AA OF THE I.T A CT. 2 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION 2. THE LD. CIT(EXEMPTION) ERRED IN NOT APPRECIATING THE FACT THAT ASSESSEE IS ENGAGED IN PROVIDING SKILLS OF ART TO LESSER PRIVILEGED CHILDREN AND WOMEN. 3. T HE L D. CIT( E XEMPTION ) ERRED IN NOT APPRECIATING THE FACT THAT THE OBJECTS OF THE TRUS T ON CHARITABLE ACTIVITIES CANNOT BE THE ISSUE IN THE FIRST YEAR FOR REGISTRATION U/S.12 A /12 AA . 4. T HE APPEL LANT CRAVES ITS RI GHT TO ADD OR TO ALTER THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE COURSE OF HEARING OF TH E CASE. 2. I N THIS CASE, GROUNDS PERTAINS ONLY TO THE GRIEVANCE OF THE ASSESSEE I.E. REJECTION OF AP PLICATION FOR GRANTING REGISTRATION U/S.12 AA OF THE A CT IN RESPECT OF THE ASSESSEE TRUST . 3. T HE BRIEF F ACTS IN THIS CASE ARE THAT THE ASSESSEE/APPLICANT HAS MADE AN ONLINE APPLICATION IN F ORM N O.10 A FOR APPROVAL OF THE T RUST/ I NSTITUTION U/S.12 AA OF THE A CT ON 31.07.2020 UNDER THE CATEGORY OF C HARITABLE T RUST/ I NSTITUTION AS PER CBDT N OTIFICATION NO . S . O .2033 (E) DATED 24.06.2020 READ WITH PROVISIONS OF THE T AXATION AND O THER L AWS ( R E LAXATION OF C ERTAIN P ROVISIONS ) O RDINANCE 2020, N O.2 OF 2020 DATED 31.03.2020. T HE ASSESSEE/APPLICANT IS REGISTERED UNDER C OMPANIES A CT, 2013 . 4. T HAT AS EVIDENT FROM P ARA 3 OF THE L D. CIT(E XEMPTION ) S ORDER DATED 23.02.2021 THAT THE ASSESSEE TRUST HAD COME INTO EXISTENCE ON 16.07.2020. I T WAS NO T CLEAR FROM THE SUBMISSION OF THE A SSESSEE/ APPLICANT AS TO WHAT CHARITABLE ACTIVITIES HAVE BEEN CARRIED OUT BY IT SINCE INCEPTION. S UCH DETAILS WERE SPECIFICALLY CALLED FOR VIDE P O INT N O.7 AND 20 OF THE NOTICE DATED 28.08.2020. O N PERUSAL OF THE SUBMISSIONS UPLOADED ON E - PORTAL, THE ONLY TRANSACTION SINCE INCEPTION, AS PER BANK ACCOUNT WAS RECEIPT OF DONATION OF R S.4,00,000/ - FROM THE D IRECTOR OF THE C OMPANY U NITED C RANE C OMPONENTS P VT. L TD. AND THE AMOUNT OF R S.4,00,000/ - WAS PAID BACK TO THE SAID D IRECTOR C OMPANY FOR PURCHASING OF USED SEWING MACHINES. T HE ASSESSEE/ APPLICANT WAS , THEREFORE, ONCE AGAIN REQUESTED VIDE NOTICE DATED 28.01.2021 TO FURNISH 3 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION THE DETAILS OF ACTUAL ACTIVITIES CARRIED OUT SINCE I NCEPTION AND AS TO HOW THEY ARE CHARITABLE IN NATURE. H OWEVER, THE ASSESSEE/APPLICANT HAD NEITHER SUBMITTED ANY S UCH DETAILS NOR SUBMITTED ANY SUPPORTING CREDIBLE EVIDENCE IN THIS REG ARD. 5. T HEREAFTER, THE L D. CIT( E XEMPTION ) AT P ARA 4 OF HIS ORDER HELD THAT THE SATISFACTION ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE/APPLICANT TRUST COULD NOT BE ARRIVE D AT BY THE L D. CIT(E XEMPTION ) AND HENCE, THE APPLICATION FOR GRANTING REGISTRATION U/S.12 AA OF THE A CT WAS REJECTED. 6. T HAT IT IS THE CONTENTION OF THE ASSESSEE THAT THE REQUIRED DETAILS WERE FILED BEFORE THE L D. CIT(E XEMPTION ) WHICH WAS ALSO ANNEXED BEFORE US IN THE PAPER BOOK FILED. 7. O N THE CONTRARY, THE L D. DR SUGGESTED THAT SINCE THE EVIDENCES CALLED FOR BY THE L D. CIT(E XEMPTION ) WERE NOT FILED OR EVEN IF THEY HAD BEEN FILED, MAY HAVE SKIPPED THE ATTENTION OF THE L D. CIT(E XEMPTION ) , THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE REMANDED TO THE FILE OF THE L D. CIT(E XEMPTION ) TO ADJUDICATE AS PER LAW CONSIDERING EVIDENCES FILED BEFORE HIM ON C E AGAIN. 8. T HE L D. AR CONCEDED TO THIS SUGGESTION PUT FORTH BY THE L D. DR . T HE L D. AR FURTHER RELIED ON THE DECISION OF THE P UNE B ENCH OF THE T RIBUNAL IN THE CASE OF B ALWANT M EDICAL F OUNDATION V S . CIT (E XEMPTION ) , ITA N O.11/ PUN /2021 DATED 17.05.2021 WHEREIN IN THE IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THE P UNE B ENCH OF THE T RIBUNAL HAD REMAND ED THE MATTER BACK TO THE FILE OF THE L D. CIT(E XEMPTION ) FOR DETAILED EXAMINATION AS PER EVIDENCES FILED BEFORE HIM AND AS PER LAW. T HE RELEVANT FINDINGS OF THE T RIBUNAL READ AS FOLLOWS: 4 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION 7. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS AND CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES IN THIS CASE. WE FIND, ON ONE HAND THE ASSESSEE CONTENDS THAT THE PROVISIONS OF PRINCIPLES OF NATURAL JUSTICES WERE NOT FOLLOWED BY THE DEPARTMENT AND THE OPPORTUNITY OF HEARING WAS NOT PROPERLY ACCORDED TO THE ASSESSEE IN THIS CASE AND ON THE OTHER HAND, THE FACTS DEMONSTRATE AS FROM THE ORDER OF THE LD. CIT (EXEMPTION) THAT HE COULD NOT ARRIVE AT PROPER SATISFACTION AS REGARDS THE GENUINENESS OF THE ACTIVITIES OF THE TRUST SINCE THE RELEVANT DETAILS AS CALLED FOR BY THE LD. CIT (EXEMPTION) WERE NOT UPLOADED IN THE ITBA PORTAL BY THE ASSESSEE. THE PROVISION OF SECTION 12AA OF THE ACT MANDATES THAT THE SATI SFACTION HAS TO BE ARRIVED AT BY THE LD. CIT (EXEMPTION) BEFORE GRANTING ANY REGISTRATION UNDER THE SAID PROVISIONS. THE SATISFACTION CAN ONLY BE ARRIVED AT ONCE ALL THE RELEVANT DETAILS ARE PLACED BEFORE HIM. TAKING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE INTO CONSIDERATION, WE ARE OF THE CONSIDERED VIEW THAT ONE MORE OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE AND ACCORDINGLY, WE SET - ASIDE THE ORDER OF THE LD. CIT (EXEMPTION) AND RESTORE THE MATTER BACK TO HIS FILE FOR RE - ADJUDICA TION WHILE COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE AND AT THE SAME TIME, WE DIRECT THE ASSESSEE TO FURNISH ALL RELEVANT DETAILS AS CALLED FOR BY THE DEPARTMENT SO THAT THE CASE CAN BE REPRESENTED ON MERITS. WE FURTHER FIND THAT THE HONBLE APEX CO URT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT, 272 TAXMAN 7 HAS LAID DOWN THE SPECIFIC GUIDELINES, WHICH ARE AS FOLLOWS : - WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE ABOVE SUBMISSIONS MADE BY MS. AISHWARYA BHATI, LEARNED SENIOR COUNS EL APPEARING FOR THE APPELLANT DIRECTOR OF INCOME TAX AND FIND THAT IT IS NOT POSSIBLE TO AGREE WITH THE SAME. THE PURPOSE OF SECTION 12AA OF THE ACT IS TO ENABLE REGISTRATION ONLY OF SUCH TRUST OR INSTITUTION WHOSE OBJECTS AND ACTIVITIES ARE GENUINE. IN OTHER WORDS, THE COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE OBJECT OF THE TRUST ARE GENUINE AND THAT ITS ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS OF THE TRUST, THAT IS EQUALLY GENUINE. SINCE SECTION 12AA PERTAINS TO THE REGISTRATION OF THE TRUS T AND NOT TO ASSESS OF WHAT A TRUST HAS ACTUALLY DONE, WE ARE OF THE VIEW THAT THE TERM ACTIVITIES IN THE PROVISION INCLUDES PROPOSED ACTIVITIES. THAT IS TO SAY, A COMMISSIONER IS BOUND TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHARITA BLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST PROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE OBJECTS OF THE TRUST. IN CONTRAST, THE POSITION WOULD BE DIFFERENT WHERE THE COMMISSIONER PROPOSES TO CANCEL THE REGISTRAT ION OF A TRUST UNDER SUB - SECTION (3) OF SECTION 12AA OF THE ACT. THERE THE COMMISSIONER WOULD BE BOUND TO RECORD THE FINDING THAT AN ACTIVITY OR ACTIVITIES ACTUALLY CARRIED ON BY THE TRUST ARE NOT GENUINE BEING NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRU ST. SIMILARLY, THE SITUATION WOULD BE DIFFERENT WHERE THE TRUST HAS BEFORE APPLYING FOR REGISTRATION FOUND TO HAVE UNDERTAKEN ACTIVITIES CONTRARY TO THE OBJECTS OF THE TRUST. WE THEREFORE FIND THAT THE VIEW OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT IS CORRECT AND LIABLE TO BE UPHELD. MS. BHATI, LEARNED SENIOR COUNSEL FOR THE APPELLANT, FAIRLY DREW OUR ATTENTION TO A JUDGMENT OF THE ALLAHABAD HIGH COURT IN IT APPEAL NO.36 OF 2013 TITLED AS COMMISSIONER OF INCOME TAX - II VS. R.S. BAJAJ SOCIETY WHICH H AS TAKEN THE SAME VIEW AS THAT OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT. THE ALLAHABAD HIGH 5 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION COURT HAS ALSO REFERRED TO A SIMILAR VIEW TAKEN BY THE HIGH COURTS OF KARNATAKA AND PUNJAB & HARYANA. 8. THE LD. CIT (EXEMPTION) WHILE RE - ADJUDICATING THE MATTE R SHOULD FOLLOW THE SAID GUIDELINES AS LAID DOWN BY THE HONBLE APEX COURT IN THE AFORESAID DECISION (SUPRA). 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . I N THE ABOVE REFERRED DECISION, THE P UNE B ENCH OF THE T RIBUNAL HAD ALSO REFERRED THE DECISION OF THE H ON BLE A PEX C OURT IN THE CASE OF A NAND A S OCIAL AND E DUCATIONAL T RUST V S. CIT , 272 T AXMAN 7 WHEREIN IT HAS BEEN HELD THAT THE C OMMISSIONER IS BOUND TO SATISFY HIMSELF THAT T HE OBJECT OF THE TRUST ARE GENUINE AND THAT ITS ACTIVITIES ARE IN FURTHERANCE OF T HE OBJECTS OF THE TRUST, THAT IS EQUALLY GENUINE. 9. T HE LEGAL PRINC IPLE ENSHRINED IN THE DECISION OF THE H ON BLE A PEX C OURT ( SUPRA. ) IS THAT THE TERM ACTIVITIES IN THE PROVISION INCLUDES PROPOSED ACTIVITIES . T HAT IS TO SAY, A C OMMISSIONER IS BOUND TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHARITABLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST PROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE CHARITABLE OBJECTS OF THE T RUST. T HE REQUIREMENT S OF S ECTION 12 AA OF THE A CT ARE CATEGORICALLY CLEAR AND IT IS IN THAT RESPECT, THE H ON BLE A PEX C OURT HAD HELD THAT AT THE TIME OF GRANTING REGISTRATION U/S.12 AA , THE C OMMISSIONER IS SUPPOSED TO LOOK INTO THE OBJECTS OF THE TRUST WHETHER THEY ARE CHARITABLE OR NO T OR WHETHER THE ACTIVITIES OF THE TRUST ARE G ENUINE AND SUCH ACTIVITIES MAY ALSO INCLUDE PROPOSED ACTIVITIES OF THE ASSESSEE TRUST AND IT SHOULD BE IN LINE WITH THE CHARITABLE OBJECTS OF THE ASSESSEE TRUST. I N THIS CASE, THE SATISFACTION REGARDING OBJECTS AND THE ACTIVITIES PERFORMED OR PROPOSED TO BE PERFORMED COULD NOT BE ARRIVED AT BY THE L D. 6 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION CIT(E XEMPTION ) SINCE REQUISITE DETAILS/EVIDENCES WERE NOT FILED BY THE ASSESSEE . 10. H AVING HEARD THE PARTIES HEREIN, WE ARE OF THE CONSIDERED VIEW, IN THE INTEREST OF JUSTICE, THE MATTER MAY BE REMANDED BACK TO TH E FILE OF THE L D. CIT(E XEMPTION ) TO ADJUDICATE AS PER LAW CONSIDERING THE DETAILS / EVIDENCES/DOCUMENTS TO BE FILED BEFORE HIM OR WHICH MAY HAVE BEEN FILED BEFORE HIM BY THE ASSESSEE WHILE COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. I N VIEW THEREOF, WE SET ASIDE THE ORDER OF THE L D. CIT(E XEMPTION ) AND REMAND THE MATTER BACK TO HIS FILE AS INDICATED HEREINABOVE. 11. I N THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRO NOUNCED ON 16 TH DAY OF AUGUST , 20 2 1 . S D/ - S D/ - INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 16 TH AUGUST , 202 1 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. T HE CIT (E XEMPTION ) , P UNE. 4 . , , , / DR, ITAT, A BENCH, PUNE. 5 . / GUARD FILE. / BY ORDER, // T RUE C OPY // / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO. 132 /PUN/20 21 A RARE F OUNDATION DATE 1 DRAFT DICTATED ON 16 .08.2021 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 16 .08 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER