Suvarna Bharathi Society for Rural Development, Hindupur, Hyderabad V. CIT(Exemptions), Hyd, Hyderabad

ITA 1376/HYD/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2489 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 16-05-2017
• Assessment Year: 2016-2017
• Appeal Filed On: 14-10-2016
• Court: TRIBUNAL
• Department Lawyers: G. APARNA RAO
• Assessee Lawyers: P. MURALI MOHAN
• Keywords: Set aside
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA NO. 1376/HYD/2016 ASSESSMENT YEAR: 2016-17 SUVARNA BHARATHI SOCIETY FOR RURAL DEVELOPMENT, HINDUPUR. PAN AAHAS4748R VS. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN REVENUE BY : SMT. G. APARNA RAO DATE OF HEARING : 16-05-2017 DATE OF PRONOUNCEMENT : 19-05-2017 ORDER PER D. MANMOHAN, VICE PRESIDENT: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), HYDERABAD, WHEREIN THE LD. COMMISSION ER REFUSED TO GRANT REGISTRATION U/S 12AA OF THE IT AC T ON THE GROUND THAT THE GROSS RECEIPTS ARE MORE THAN THE RE CEIPTS SHOWN IN THE BOOKS OF ACCOUNTS FOR THE A.YS 2014-15 AND 2015-16. 2. BEFORE US, LD. COUNSEL SUBMITTED THAT AT THE TIME OF REGISTRATION THE COMMISSIONER IS DUTY BOUND TO GO THROUGH THE TRUST DEED TO VERIFY AS TO WHETHER ITS OBJECTS 2 ITA NO. 1376/HYD/2016 SUVARNA BHARATHI SOCIETY FOR RURAL DEVELOPMENT, HIN DUPUR. ARE A CHARITABLE NATURE AND IF IT IS SHOWN THAT THE OBJECTS ARE CHARITABLE IN NATURE, MERELY ON ACCOUNT OF THE FACT THAT NO ACTIVITY HAD TAKEN PLACE IN THE YEAR UNDER CONSIDERATION, OR FOR ANY OTHER EXTRANEOUS REASONS, REGISTRATION SHOULD NOT BE REJECTED. IN THIS REGAR D THE LD. COUNSEL SUBMITTED THAT THE LD. COMMISSIONER OF INCO ME TAX (EXEMPTIONS) STEPPED OUTSIDE ITS JURISDICTION I N ASKING THE INCOME TAX OFFICER (EXEMPTIONS) TO MAKE INSPECT ION AND BY OBTAINING REPORT FROM THE INCOME TAX OFFICER (EXEMPTIONS) WITH REGARD TO THE GROSS RECEIPTS AND RECEIPTS DECLARED IN THE RETURN OF INCOME; HE OUGHT NOT HAVE CONCLUDED THAT THERE WERE IRREGULARITIES AND CONSEQ UENTLY THE ACTIVITIES ARE NOT GENUINE, SINCE THIS EXERCISE IS IN THE REALM OF THE ASSESSING OFFICER BEFORE WHOM REGULAR RETURNS OF INCOME ARE TO BE FILED. THE CASE OF THE LD. COU NSEL IS THAT THE COMMISSIONER OF INCOME TAX DID NOT NOTICE ANY IRREGULARITY IN THE TRUST DEED AND THOUGH THE BOOKS WERE PRODUCED AFTER 21-07-2016 THEY WERE NOT PROPERLY EXAMINED; IN FACT THE ASSESSEE WAS TO DECLARE ONLY THE CURRENT YEARS INCOME, AND NOT ALL THE RECEIPTS WHIC H ACCRUED IN THE SUBSEQUENT YEARS, AND THUS CIT HAS N O JURISDICTION TO MAKE AN ENQUIRY WITH REGARD TO RECE IPTS AND EXPENDITURE FOR THE A.YS 2014-15 AND 2015-16. HE A LSO RELIED UPON A DECISION OF ITAT HYDERABAD B BENCH IN THE CASE OF LITTLE FLOWER WOMEN CHARITABLE SOCIETY (IT A 1678/HYD/2016 DATED 23-03-2017) WHEREIN THE BENCH, ON IDENTICAL FACTS AND CIRCUMSTANCES, OBSERVED AS UNDE R: 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE RECORD. IT IS WELL SETTLED THAT AT THE TIME OF EXAMINING THE APPLICATION, SEEKING REGISTRATION UNDER SECTION 12A A OF THE ACT, THE 3 ITA NO. 1376/HYD/2016 SUVARNA BHARATHI SOCIETY FOR RURAL DEVELOPMENT, HIN DUPUR. MANNER OF APPLICATION OF FUNDS OF TRUST SHOULD NOT BE THE CRITERIA AND IF THERE IS ANY MISUSE OF FUNDS, THE REGISTRATION GRAN TED CAN ALWAYS BE WITHDRAWN/CANCELLED. THE POWER TO GRANT REGISTRATIO N IS VESTED IN THE COMMISSIONER WHO HAS TO SATISFY ABOUT THE GENUINENE SS OF THE ACTIVITIES OF THE TRUST AND SHOULD NOT GO BEYOND THAT. IN OTHE RWORDS, MERELY BECAUSE THERE IS SOME APPREHENSION THAT THE INCOME WOULD NOT BE USED IN PROPER MANNER, THE CIT SHOULD NOT RESORT TO REJE CTION OF THE CLAIM OF REGISTRATION. IN THE INSTANT CASE, THERE IS NO FIND INGS BY THE COMMISSIONER THAT THE ACTIVITIES OF THE TRUST MENTIONED IN THE M EMORANDUM ARE NON- CHARITABLE IN NATURE. IN FACT, THE COMMISSIONER IS ALWAYS ENTITLED TO DISCONTINUE THE REGISTRATION GRANTED IF THE ACTIVIT IES OF THE TRUST ARE NON- CHARITABLE IN NATURE, AT A LATER POINT OF TIME. SIN CE THE LD. CIT HAS RESORTED TO REJECTION OF THE CLAIM OF EXEMPTION ON MERE SURMISES, WE DEEM IT FAIR AND REASONABLE TO SET ASIDE THE MATTER TO THE FILE OF THE CIT (EXEMPTIONS) WITH A DIRECTION TO HIM TO GRANT REGIS TRATION IF THE ACTIVITIES OF THE TRUST, AS ENSHRINED IN THE MEMORANDUM OF ASS OCIATION, ARE CHARITABLE IN NATURE WITH A RIDER THAT IF THERE IS CONTRAVENTION OF WHAT IS STATED IN THE ACTIVITIES, THE COMMISSIONER IS ALWAY S ENTITLED TO WITHDRAW THE REGISTRATION EARLIER GRANTED. LD. D.R. HAS NOT RAISED ANY SERIOUS OBJECTIONS ON THE MATTER BEING SET ASIDE TO THE FIL E OF THE COMMISSIONER. ACCORDINGLY, WE SET ASIDE THE MATTER TO THE FILE OF THE COMMISSIONER FOR GRANT OF REGISTRATION IN ACCORDANCE WITH LAW. 3. LD. DR, ON THE OTHER HAND, HAS NO OBJECTION IF THE MATTER IS SET ASIDE TO THE FILE OF THE COMMISSI ONER FOR PROPER INQUIRY, INTO THE GENUINENESS OF THE ACTIVIT IES, WITH A SIMILAR DIRECTION AS WAS GIVEN IN THE CASE OF LIT TLE FLOWER WOMEN CHARITABLE SOCIETY (SUPRA). 4. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOM E TAX (EXEMPTIONS) AND DIRECT HIM TO GRANT REGISTRATION I F THE ACTIVITIES OF THE TRUST, AS ENSHRINED IN THE MEMORA NDUM OF ASSOCIATION, ARE CHARITABLE IN NATURE; WITH A RIDER THAT IN THE EVENT OF CONTRAVENTION OF ANY CLAUSE THE COMMI SSIONER IS ALWAYS ENTITLED TO WITHDRAW THE REGISTRATION GRA NTED. WITH THESE OBSERVATIONS WE SET ASIDE THE ORDER OF T HE COMMISSIONER AND DIRECT HIM TO RECONSIDER THE MATTE R 4 ITA NO. 1376/HYD/2016 SUVARNA BHARATHI SOCIETY FOR RURAL DEVELOPMENT, HIN DUPUR. AFRESH AND IN ACCORDANCE WITH LAW. WITH THESE OBSERVATIONS, THE APPEAL FILED BY THE ASSESSEE IS T REATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2017. SD/- S D/- (D.S. SUNDER SINGH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 19 TH MAY, 2017. KRK 1 SUVARNA BHARATHI SOCIETY FOR RURAL DEVELOPMENT, HIN DUPUR C/O P. MURALI & CO., CAS, 6-3-655/2/3, IST FLOOR, SOMAJI GUDA, HYDERABAD-82. 2 CIT (EXEMPTIONS), HYDERABAD. 3 ITO (EXEMPTIONS), TIRUPATHI. 4 THE DR, ITAT HYDERABAD 5 GUARD FILE