The Indian Educational Foundation, Ranchi V. CIT, Ranchi

ITA 14/RAN/2013

• Counselvise Citation: 1425114 RSA 2013
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 19-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY BARA
• Assessee Lawyers: V K GADDHYAN
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI CIRCUI T BENCH, RANCHI (BEFORE SHRI P.K.BANSAL, HONBLE A.M.& SHR I D,T. GARASIA, HONBLE J.M.) I.T.A. NO. 14/RAN/2013 THE INDIAN EDUCATIONAL FOUNDATION, RANCHI -VS- C.I.T., RANCHI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V. K. GADDHYAN, C.A. RESPONDENT BY : SHRI SANJAY BARA, D.R. DATE OF CONCLUDING THE HEARING : 29.04.2013 DATE OF PRONOUNCING THE ORDER : 03.05.2013 O R D E R PER BENCH : THIS APPEAL HAS BEEN FILED BY THE APPELLANT, THE IN DIAN EDUCATIONAL FOUNDATION AGAINST THE ORDER OF THE CIT, RANCHI DAT ED 17.01.2013 UNDER SECTION 12AA(3) CANCELLING THE REGISTRATION GRANTED TO THE APPELLANT INSTITUTE UNDER SECTION 12A OF THE INCOME TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SO CIETY WAS THE INSTITUTE OF MINES FOR WHICH THE SEPARATE BANK ACCOUNT IN THE NA ME OF THE INSTITUTE WAS TO BE OPENED. THE BANK REFUSED TO OPEN THE ACCOUNT. THE A CCOUNT WAS OPENED IN THE NAME OF SHRI PRAMOD KUMAR, SECRETARY OF THE TRUST A S INDIVIDUAL AND IN THAT ACCOUNT, THE CIT RECEIVED THE INFORMATION FROM THE INVESTIGATION WING FROM FINANCIAL INTELLIGENCE UNIT, HE DEPOSITED RS.49,500 /- SEVEN TIMES. THUS, A TOTAL SUM OF RS.5,82,000/- WAS DEPOSITED WITHIN A SPAN OF 23 DAYS (FROM 03.08.2009 TO 26.08.2009). EVEN IN THAT, PA NUMBER WAS ALSO NOT P ROVIDED TO THE BANKER. SUBSTANTIAL CASH DEPOSITS OF THIS MONEY WERE NOT FO UND TO BE BONAFIDE, EVEN THOUGH THE ASSESSEE CLAIMED THAT ALL THE MONIES DEP OSITED IN THIS ACCOUNT WERE 2 DULY ACCOUNTED FOR IN THIS BANK ACCOUNT OF THE SOCI ETY. THE BANKER REFUSED TO OPEN TWO BANK ACCOUNTS, ONE IN THE NAME OF THE MINE S AND THE OTHER IN THE NAME OF THE SOCIETY, DUE TO WHICH ASSESSEE HAS TO OPEN T HE BANK ACCOUNT IN INDIVIDUAL NAME OF THE TRUST. THE CIT, AFTER NOTING THIS FACT AN ALSO THE FACT THAT ALMOST ALL THE TRUSTEES HAPPEN TO BE THE FAMILY MEMBERS OF SRI PRAMOD KUMAR, CANCELLED THE REGISTRATION, AFTER GIVING THE OPPORTUNITY TO THE A SSESSEE UNDER SECTION 12AA BY THE ORDER DATED 17.01.2013. 3. THE LD. A.R. BEFORE US VEHEMENTLY CONTENDED THAT THE ACCOUNT WAS OPENED IN THE NAME OF THE SECRETARY SINCE 1991 AS THE BANK ER REFUSED TO OPEN TWO BANK ACCOUNTS, ONE IN THE NAME OF THE INSTITUTE AND THE OTHER IN THE NAME OF THE SOCIETY. IN THE ACCOUNT, WHEN QUESTIONED BY THE BEN CH, IT WAS INFORMED THAT STATUS OF THE ASSESSEE WAS SHOWN AS INDIVIDUAL, EVE N NO PA NUMBER WAS GIVEN. HE SUBMITTED THAT THE OPENING OF THE BANK ACCOUNT W AS CONSIDERED BY THE CIT AS SUSPICIOUS. IF THE BANK TRANSACTIONS WERE FOUND TO BE SUSPICIOUS, THE SOCIETY SHOULD HAVE BEEN GIVEN AN OPPORTUNITY. THE ASSESSEE S HEARING WAS FIXED ON 16.01.2013 BUT THE ORDER FOR CANCELLATION OF THE RE GISTRATION WAS PASSED ON 17.01.2013. IF THE TRANSACTIONS WERE SUSPICIOUS, TH E ONUS IS ON THE REVENUE TO PROVE THAT THE TRANSACTIONS ARE NOT BONA FIDE . THERE IS NO DIVERSION OF THE FUNDS. THE AMOUNTS WHATEVER WERE DEPOSITED IN THE NEW ACCO UNT WERE DULY ACCOUNTED FOR IN THE BOOKS OF THE SOCIETY. THE REGISTRATION U NDER SECTION 12AA(3) CAN BE CANCELLED BY THE CIT, IF IT IS SATISFIED THAT THE I NSTITUTIONS ARE NOT GENUINE AND ARE NOT BEING CARRIED OUT IN RESPECT OF THE OBJECTS OF THE TRUST. NO SUCH ALLEGATION HAS BEEN BROUGHT HERE ON RECORD. IT IS NOT THE CASE WHY THE ACTIVITIES OF THE INSTITUTION ARE NOT GENUINE OR THE ACTIVITIES ARE BEING CARRIED OUT, NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THERE IS NO PR OVISION UNDER THE LAW THAT FAMILY MEMBERS OF A FAMILY CANNOT BECOME TRUSTEES TOGETHER . THUS, IT IS CONTENDED THAT 3 THE ORDER PASSED BY THE CIT BE SET ASIDE AND THE OR DER PASSED UNDER SECTION 12AA BE RESTORED. 4. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF THE CIT AND VEHEMENTLY CONTENDED THAT THE OPENING OF A SEPARATE BANK ACCOUNT IN THE NAME OF THE SECRETARY AND BY SHOWING IT AS INDIVIDUAL ACCOU NT, IT WAS PROVED THAT THE FUNDS OF THE TRUST HAVE NOT BEEN UTILIZED FOR THE O BJECTS OF THE TRUST. THE OBJECT OF THE TRUST DOES NOT NEED THAT THE SECRETARY SHOULD O PEN THE ACCOUNT IN THE INDIVIDUAL NAME AND KEEP THE MONEY IN THE BANK IN H IS INDIVIDUAL ACCOUNT. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIALS AVAILABLE ON RECORD ALONGWITH THE ORDER O F THE CIT. THE ONLY QUESTION BEFORE US AS TO WHETHER THE ORDER PASSED UNDER SECT ION 12AA(3) OF THE INCOME TAX ACT IS VALID OR NOT. THE SECTION 12AA(3) STATES AS UNDER: (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUBSECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIE D OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION AS THE CASE MAY BE, BE SHALL PASS AN ORDER IN WRITING CANCELLIN G THE REGISTRATION OF SUCH TRUST OR INSTITUTION. FROM THE PERUSAL OF THE SECTION, IT IS APPARENT THA T THE COMMISSIONER OF INCOME TAX IS INTERESTED WITH THE POWER TO CANCEL THE REGI STRATION WHERE THE TRUST OR INSTITUTION HAS BEEN GRANTED THE REGISTRATION UNDER SECTION 12A(1)(B) AND AFTER GETTING THE TRUST OR INSTITUTION REGISTERED, IF THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF THE TRUST OR THE INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST OR INSTITUT ION AS THE CASE MAY BE. IF THE CIT IS SATISFIED IN RESPECT OF EITHER OF THE THINGS, HE IS BOUND TO PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST O R INSTITUTION. THE FACTS OF THE CASE IS APPARENTLY CLEAR THAT THE SECRETARY OF THE TRUST IN THIS CASE HAS OPENED THE BANK ACCOUNT IN HIS INDIVIDUAL NAME AS INDIVIDUAL AND DU RING 03.08.2009 TO 26.08.2009 4 WITHIN A SPAN OF 23 DAYS, HE DEPOSITED A SUM OF RS. 5,82,000/- I.E. @RS.49,500/- SEVEN TIMES. THE SECRETARY HAS ALSO NOT GIVEN THE P A NUMBER. EVEN THE BYE-LAWS OF THE TRUST DID NOT AUTHORISE THE SECRETARY TO OPE N THE BANK ACCOUNT IN ITS INDIVIDUAL NAME. IT IS NOT DENIED THAT THE MONEY BE LONG TO THE TRUST AS THE ASSESSEE TRUST HAS DULY ACCOUNTED FOR THE SAID MONEY IN HIS BOOKS OF ACCOUNTS. EVEN NO RESOLUTION OF THE MINUTES OF THE TRUST WAS BEING PR ODUCED BY THE ASSESSEE WHICH MAY PROVE THAT THE INSTITUTE HAS AUTHORISED THE SEC RETARY TO OPEN THE ACCOUNT IN THE INDIVIDUAL NAME. HAD THERE BEEN THE INTENTION O F THE SECRETARY THAT THE ACCOUNT BELONG TO THE INSTITUTE OR THE TRUST, THE A SSESSEE WOULD HAVE NOT REPRESENTED IN THE ACCOUNT OPENING FORM BEFORE THE BANKER AS INDIVIDUAL. THIS, IN OUR OPINION, CLEARLY PROVES THAT THE ACTIVITIES OF THE INSTITUTE ARE NOT GENUINE. HAD THE ACTIVITIES OF THE TRUST OR THE INSTITUTION BE G ENUINE, THE INSTITUTION WOULD NOT HAVE OPENED THE ACCOUNT IN THE NAME OF THE SECRETAR Y AS INDIVIDUAL. THIS SHOWS MALA FIDE INTENTION ON THE PART OF THE INSTITUTION TO UTILIZ E THE MONEY. WE HAVE ALSO GONE THROUGH THE DECISION OF SMT. MANSUKHI DEV I BIHANI JAN HITKARI TRUST VS- CIT (2005) 277 ITR (AT) 140 (JODHPUR). THIS DEC ISION, IN OUR OPINION, WILL NOT ASSIST THE ASSESSEE, AS THE FACTS INVOLVED IN T HIS DECISION ARE ENTIRELY DIFFERENT. THUS, IN OUR OPINION, THIS IS A CLEAR-CUT CASE WHIC H FALLS WITHIN THE PURVIEW OF SECTION 12AA(3) AND CIT, IN OUR OPINION, HAS RIGHTL Y CANCELLED THE REGISTRATION GRANTED UNDER SECTION 12AA(3) TO THE INSTITUTION. W E ACCORDINGLY CONFIRM THE ORDER OF THE CIT AND DISMISS THE APPEAL OF THE ASSE SSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 3 RD MAY 2013. SD/- SD/- [D.T.GARASIA] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 3 RD MAY, 2013 5 COPY OF ORDER FORWARDED TO : 1. THE INDIAN EDUCATIONAL FOUNDATION, RANCHI 2. C.I.T., RANCHI 3. C.I.T.(A), 4. THE C.I.T., RANCHI 5. THE D.R., I.T.A.T., TRUE COPY, BY ORDER, SR. PRIVATE SECRETARY, ITAT, RANCHI [MST, SR.PS]