Asha Education Society, Kanpur V. Commissioner of Income Tax (Exemption), Lucknow

ITA 141/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0877 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 27-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K BAR
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 141/LKW/2017 ASSESSMENT YEAR: N.A. ASHA EDUCATION SOCIETY KANPUR V. CIT (EXEMPTIO N) LUCKNOW T AN /PAN : AAETA2233R (APP ELL A NT) (RESPONDENT) APP ELL ANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI A. K. BAR, CIT (DR) DATE OF HEARING: 12 11 201 8 DATE OF PRONOUNCEMENT: 16 11 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (EXEMPTIONS), LUCKNOW DATED 11/1/2017 AS PER FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED C.I.T. EXEMPTION HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT TH E ASSESSEE SOCIETY IS ENGAGED IN THE BUSINESS OF EDUCATION ON A COMMERCIAL BASIS WITH A MOTIVE OF PROFIT WITHOUT PROVIDING ANY ELEMENT OF CHA RI TY TO THE PUBLIC AT LARGE. 2. THAT THE LEARNED C.I.T. EXEMPTION HAS ERRED ON FACTS IN HOLDING THAT IT IS NOT DESI RABLE OF AN INSTITUTION THAT CLAIMS TO PROMOTE EDUCATION IN A CHARITABLE MANNER THAT IT, PURPORTS WAYS AND MEANS OF GENERATING INCOME BY LEVYING CHARGES UNDER VARIOUS HEADS LIKE THE ANNUAL FEES, LATE FEES ETC. 3. THAT THE LEARNED C.I.T. EXEMPTION HAS ERRED ON FACTS IN HOLDING THAT MOST EXPENSES UNDER THE VARIOUS DEBIT HEADS AS CLAIMED TO HAVE BEEN INCURRED BY THE SOCIETY UNDER INCOME & EXPENDITURE ITA NO.141/LKW/2017 PAGE 2 OF 4 A/C FOR F.Y. 2014 - 15 RELATES TO ADMINISTRATIVE EXPENSES THAT ARE AIMED AT SUSTAINING AND AUGMENTING THE BUSINES S OF EDUCATION. 4. THAT LEARNED C.I.T. EXEMPTION HAS ERRED ON FACTS IN HOLDING THAT NONE OF THE DEBIT HEADS RELATE TO ANY OF CHARITABLE ACTIVITIES CARRIED OUT IN PURSUANCE OF THE OBJECTS SET FORTH IN THE MEMORANDUM OF THE SOCIETY. 5. THAT LEARNED C.I.T. E XEMPTION HAS ERRED ON FACTS IN HOLDING THAT THE APPLICANT IS AN INSTITUTION WHICH EXISTS ON COMMERCIAL BASIS VOID OF ANY ELEMENT OF CHARITY AND IT GOES TO PROVE THAT THE APPLICANT IS MORE ENGROSSED IN GENERATING HUGE PROFITS VIDE ITS TRANSPORTATION BUSINES S. 6. THAT THE LEARNED C.I.T. EXEMPTION IS WRONG IN HOLDING THAT THE SOCIETY IS MERELY PURPORTING TO BE A CHARITABLE INSTITUTION TO SECURE BENEFITS UNDER THE GARB OF CHARITY. 7. THAT LEARNED C.I.T. EXEMPTION HAS ERRED ON FACTS IN HOLDING THAT THE ACTIVITI ES OF THE APPLICANT ARE NOT GENUINE AND THE APPLICATION FOR REGISTRATION IS A MERE ATTEMPT TO SECURE BENEFITS UNDER THE GARB OF CHARITY. 8. THAT THE ORDER DTD.11/01/17 PASSED BY THE C.I.T. EXEMPTION REJECTING THE REGISTRATION TO THE SOCIETY IS NEITHER BA SED ON THE FACTS OF THE CASE NOR TENABLE AS NO PROPER OPPORTUNITY WAS PROVIDED TO THE ASSESSEE APPLICANT BEFORE PASSING THE ORDER FOR REJECTION OF THE APPLICATION OF REGISTRATION U/SL2AOFTHEL.T. ACT. 9. THAT NO OPPORTUNITY WAS ALLOWED TO THE ASSESSEE APPEL LANT BY THE C.I.T. EXEMPTION TO DISTINGUISH THE FACTS OF THE CASE - LAWS, RELIED UPON BY THE C.I.T. EXEMPTION CITED IN THE ORDER IN SUPPORT OF HIS REMARKS FOR REJECTION OF THE APPLICATION. 10.THAT THE ORDER DTD.11/01/17 IS ARBITRARY, ILLEGAL, BAD IN LAW, LIA BLE TO BE QUASHED. 2 . THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS REJECTION OF APPLICATION FILED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. THE ITA NO.141/LKW/2017 PAGE 3 OF 4 FINDINGS IN THE ORDER OF CIT (EXEMPTIONS), LUCKNOW , WHILE REJECTING THE APPLICATION OF THE ASSESSEE , IS THAT ASSESSEE - SOCIETY IS ENGAGED IN ACTIVITIES OF COMMERCIAL INTEREST AND HAS BEEN CREATED FOR PROFIT MOTIVE WITHOUT ANY ELEMENT OF CHARITY TO THE PUBLIC AT LARGE AND CIT (EXEMPTIONS), LUCKNOW HAS GIVEN DETAILED REASON AND FINDINGS AS APPEARING IN HIS ORDER , W HICH IS ON RECORD. 3 . LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE TO SUPPORT ITS CASE ON MERIT BEFORE CIT (EXEMPTIONS), LUCKNOW AND IN THIS REGARD LD. A.R. OF THE ASSESSEE INVITED THE ATTENTION OF TH E BENCH TOWARDS PARA 2 OF THE ORDER OF CIT (EXEMPTIONS), LUCKNOW. LD. A.R. OF THE ASSESSEE, THEREFORE, SUBMITTED THAT IN THE INTEREST OF NATURAL JUSTICE, AN OPPORTUNITY SHOULD BE ACCORDED TO THE ASSESSEE TO PRESENT THE CASE ON MERITS BEFORE THE CIT (EXEMP TIONS), LUCKNOW AND PRAYED THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT (EXEMPTIONS), LUCKNOW. 4 . THE LD. D.R. CONCEDED TO THE PRAYER MADE BY THE LD. A.R. OF THE ASSESSEE. 5 . WE HAVE PERUSED THE CASE RECORD AND HEARD THE RIVAL CONTENTIONS AND AS FACTS ON RECORD , WE FIND THAT THE ABOVE NAMED SOCIETY FILED APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 26/7/2016 BEFORE THE CIT (EXEMPTIONS), LUCKNOW. SUBSEQUENTLY ASSESSEE WAS PROVIDED AN OPPORTUNITY OF BEING HEARD VIDE OFFICE LETTER DATED 16/12/2016 SENT TO THE ASSESSEES ADDRESS PROVIDED BY HIM IN FORM NO.10A VIA SPEED - POST CALLING FOR SPECIFIC QUERIES REGARDING ITS APPLICATION FOR REGISTRATION UNDER SECTION 12AA FOR COMPLIANCE ON 11/1/2017 WHICH HAS BEEN DELIVERED TO THE ASSESSEE ON 26/2/ 2016 AS CONFIRMED BY THE POSTAL AUTHORITIES. THEREAFTER ON 11/1/2017 ITSELF ORDER WAS PASSED BY THE CIT (EXEMPTIONS), LUCKNOW REJECTING THE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12AA OF THE ITA NO.141/LKW/2017 PAGE 4 OF 4 ACT. ASSESSEE HAS FILED A DETAILED PAPER BO OK BEFORE US AND THEREIN AT PAGES 1 & 2 THERE IS A COPY OF REPLY DATED 19/1/2017 FILED BEFORE CIT (EXEMPTIONS), LUCKNOW. HOWEVER, AS EVIDENT FROM RECORD, THE ORDER REJECTING THE APPLICATION OF THE ASSESSEE WAS PASSED BY CIT (EXEMPTIONS), LUCKNOW ON 11/1/2 017, T HEREFORE, IT IS CLEAR THAT ASSESSEE WAS NOT ABLE TO PRESENT ITS CASE ON MERIT BEFORE CIT (EXEMPTIONS), LUCKNOW. THEREFORE, I N THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THE ORDER OF CIT (EXEMPTIONS), LUCKNOW SHOULD BE SET ASIDE AND THE MATTER SHOULD BE RESTORED BACK TO HIS FILE FOR FRESH ADJUDICATION AFTER PROVIDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ORDER ACCORDINGLY. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 / 11 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH NOVEMBER , 201 8 JJ: 1211 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR