Dada Jethanand Pagrani Trust, Nashik V. CIT (Exemption), Pune

ITA 137/PUN/2021

AI Insights

The Dada Jethanand Pagrani Trust appealed against the decision of the Commissioner of Income Tax (Exemption), Pune, which had rejected their application for registration under section 12AA of the Income Tax Act. The CIT(E) had concerns regarding the genuineness of the trust's activities and the validity of the amended trust deed. The trust argued that all necessary documents were provided and that the CIT(E)'s objections were unfounded. The tribunal found that the CIT(E) had not adequately verified the trust's objects and activities nor the submission of the amended trust deed to the Charity Commissioner. Consequently, the tribunal set aside the CIT(E)'s decision and remanded the case for a thorough re-examination.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 134147 (ITAT-PUNE)
• Duration Of Justice: 15 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-12-2022
• Assessment Year: misc
• Appeal Filed On: 27-09-2007
• Other Referred Cases: Ananda Social & Education Trust vs. CIT, G D Kavita Singla Charitable Trust vs. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11; 12AA; 13

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.137/PUN/2021 िनधाᭅरण वषᭅ / Assessment Year : N.A. Dada Jethanand Pagrani Trust, 5869, Jajuwadi Indrakund, Nasik – 422003. PAN: AADTD 0396 H V s The CIT(Exemption), Pune. Appellant/ Assessee Respondent /Revenue Assessee by Shri Pramod S Shingte – AR Revenue by Shri Keyur Patel CIT(DR) Date of hearing 09/12/2022 Date of pronouncement 19/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Exemption), Pune dated 29.03.2021 under section 12AA(1)(b)(ii) of the Act. The Assessee has raised the following grounds of appeal: “1. The learned Commissioner of Income Tax (“CIT”) was not justified in rejecting your appellant’s application for registration under section 12AA. 2. The learned CIT was wrong in stating that he was not satisfied about the genuineness of the activities of the trust, merely because tax had not been paid on specific donations received for a capital purpose in earlier years. 3. The learned CIT failed to appreciate that section 12AA requires satisfaction regarding genuineness of activities of the trust, and not of the fund raising by the trust, nor of the claim made by the trust for exemption of certain receipts. ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 2 4. The learned CIT erred in holding that prima facie the applicant trust indulged in such activities from which huge receipt had been generated and thus charitable/religious object of trust was not proved. 5. The learned CIT’s statement that the applicant trust had escaped amount of donation from taxation by not showing amount of said donations in the total income for the above said years, was not justified in law. 6. The learned CIT erred in not considering the submissions of the appellant dated 26 th March 2021, while disposing of the application. 7. The learned CIT erred in holding your appellant to be a religious- cum-charitable trust, and not a charitable trust.” 2. The ld.Authorised Representative(ld.AR) of the assessee submitted that assessee is a Charitable Trust and has applied for registration under section 12AA of the Act. The assessee had produced all the necessary documents before the ld.CIT(E). During the 12AA proceedings, ld.CIT(E) has to verify only the objects of the assessee and all the objects of the assessee are charitable in nature. The ld.AR also filed written submissions as under: “In this regards we keep on record the fact that the petitioner trust has submitted all the necessary details before Ld CIT (Exemp.) and after perusal of the same he has neither found any fault with any of the object of the trust nor commented anything adverse above genuineness of trust. His objections were in connection with non- filling of IT return and applicability of provisions of Section 11 (1)(d) of the IT acts 1961. We have already placed on record number of case laws of co- ordinate bench from Pune jurisdiction through our legal compilation, wherein it has been held that CIT exemption while granting the registration u/s. 12AA, shall not dwell into any other aspect of trust but he has to check in detailed the object and genuineness of the such object. We also wish to point out that under similar circumstances learned ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 3 CIT (Exemp.) has denied the registration under section 12AA in the case of Shri. Lad Shakhiya Wani Samaj Kalyan & Shikshan Prasarak Mandal. in ITA No. 572/PUN/2020 order dated 05.02.2021 ( copy enclosed at page no. 1 to 7 of supplementary paper book containing case laws) and Hon’ble Pune bench has allowed the registration it is submitted that the order rejecting registrating u/.s12AA in the case of Shri. Lad Shakhiya Wani Samaj Kalyan & Shikshan Prasarak Mandal was identical order copy of the same is attached as Annexure 1 to this letter for your reference.” 3. The ld.Departmental Representative(ld.DR) for the Revenue had stated that Assessee file application under section 12AA on 30.12.2019. However, the assessee has amended the Trust Deed on 20.02.2020. Therefore, assessee should have filed fresh application. The ld.CIT(DR) also submitted that assessee has obtained registration from the Charity Commissioner vide order dated 02.02.2018 which is with reference to its Original Trust Deed dated 25.09.2017. It means, assessee has not obtained registration from Charity Commissioner for the amended Trust Deed. Thus, it is not a valid registered trust. The ld.CIT-DR submitted written submission, relevant submissions is reproduced here under: 2.0 The objects of the trust 2.3.1 The objects of the trust are mentioned in the Trust Deed dated 25/09/2017 in Clause 5. English version of the same is given in appellant's paper book pages 19 to 21 (internal page 7 to 9). Under clause 5 i.e. 'Purpose of the Trust' there are 10 objects (1 to 10) mentioned. It is transpired that the object of 'construction of Dharamshala' did not figure in the objects as per the original Trust Deed. In the revised Trust Deed dated 28/02/2020 the objects of the trust were amended and the phrase 'to provide Pharamshalas' was added to the object at SI. No. 10. However, the amendment was carried out on 28/02/2020 as per the Revised Deed. Thus, the fact that construction of Dharamshala was not one of the object in ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 4 F.Y. 2018-19 is undisputed fact. Further, in the F.Y. 2019-20 also it was amended from 28/02/2020 only. It is thus, highlighted that during the F.Y. 2018-19, the construction of Dharamshala was not the object / (one of the objects) of the appellant. It was introduced only in the amended Trust Deed dated 28/02/2020. Further, the appellant has submitted that construction of 'Dharamshala' was done at 5869, Jajuwadi, Indrakund, Panchvati, Nashik. But as per Balance Sheet as on 31/03/2019, no land was owned by the trust. The acquisition of land of Rs.11,99,600/- was shown in the subsequent F.Y. i.e. in the provisional Balance Sheet as on 31.03.2020. Thus, it is crystal clear that the land i.e. 5869, Jajuwadi, Indrakund, Panchvati, Nashik on which the construction was claimed to be carried out during the F.Y. 2018-19 to the tune of Rs. 64.16 lakhs was not owned / belonged to appellant trust. Further, no details / proof in support of the so called construction was produced before the CIT(E). 2.4 The trustees of the trust are from one family and closely related to each other The names of the trustees given in the Trust Deed are as under: (i) Narayandas Jethanand Pagarani (ii) Tikamdas Jethanand Pagarani (iii) Parshottam Jethanand Pagarani (iv) Tulsidas Jethanand Pagarani (v) Narendra Narayandas Pagarani (vi) It is seen that from SI. No. (i) to (iv) are brothers and SI. No. (v) is son of (i). 2.4.1 Further, no charitable activity has been taken up during the period of 2 Financial Years i.e. 2018-19 and 2019-20. It is seen from the Income & Expenditure Account for the F.Y. 2018-19 and 2019-20 i.e. before the finalisation of case for registration u/s 12AA, the appellant has not spent even a single penny during the above period, (copies of the Income & Expenditure Account are placed at Annexure 12 & 13 to the written submissions filed on 28/07/2022 before the Fion'ble Bench). As discussed above the, the construction of Dharamshala was not the object of the Assessee Trust and further the land i.e. 5869, Jajuwadi, Indrakund, Panchvati, Nashik on which the construction was claimed to be carried out during the F.Y. 2018-19 to the tune of Rs. 64.16 lakhs was not owned by the trust. Further, no details / proof in support of the so called construction was produced. 2.4.2 The ITAT Amritsar in the case of G D Kavita Singla Charitable Trust [ITA No. 594(Asr)/2013] has held the trust is not entitled for registration in view of the facts that "the assessee has not done anything nor produced any evidence satisfying learned ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 5 CIT-II, Amritsar, about the genuineness of the activities of the trust or institution for grant of registration under Section 12AA of the Act where the trust has been constituted by a family member like the assessee-trust on hand." 4. We have heard both the parties and perused the records. In this case, assessee had filed application for registration under section 12AA of the Act on 30.12.2019. The assessee had submitted copy of the Trust Deed dated 25.09.2017. However, subsequently, assessee has amended Trust Deed in February, 2020. We have gone through the paper book filed by the assessee and it is observed that the registration granted by the Charity Commissioner is dated 02.02.2018. Therefore, it is not clear whether assessee had filed copy of the Amended Trust Deed before the Charity Commissioner or not! In Maharashtra, registration of the Charity Commissioner is mandatory. It has been submitted by the ld.CIT-DR, assessee has not carried out any activity. However, the ld.AR submitted that in the order under section 12AA, ld.CIT(E) has not rejected the 12AA on this ground. 5. It is observed from the order of ld.CIT(E) that ld.CIT(E) has not verified the objects and activities carried out by the assessee. The ld.CIT(E) has also not verified whether the revised Trust Deed has been submitted before the Charity Commissioner or not!. The Hon’ble Supreme Court in the case of Ananda Social & Education Trust vs. CIT [2020] 114 taxmann.com 693 (SC) has observed as under : ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 6 “11. 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. 12. Since section 12AA pertains to the registration of the Trust 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 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 objects of the Trust. ..... ..... ..... ..... ....... Similarly, the situation would be different where the trust has before applying for registration found to have under taken activities contrary to the objects of the Trust.” 6. Thus, the ld.CIT(E) has to analyse the objects and activities of the assessee, therefore, it is set-aside to ld.CIT(E) for denovo adjudication after giving opportunity to the assessee. The ld.CIT(E) shall decide the case in the light of Hon’ble Supreme Court’s decision in the case of Ahmedabad Urban Development Authority and Noble Education Trust by which the Hon’ble Supreme Court explained the entire law on charitable activities. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose. ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 7 7. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 19 th December, 2022. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 19 th December, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune. ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] 8 S.No Details Date Initials Designation 1 Draft dictated on 08.12.2022 Sr. PS/PS 2 Final Draft placed before author 19.12.2022 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 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