SEWA SIMRAN TRUST GURUDWARA NANAKSAR, JALANDHAR V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 142/ASR/2020

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6650 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 13-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Set aside
• Section: 12AA; 208

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & DR. M.L. MEENA, ACCOUNTANT MEMBER) ITA. No: 142/Asr/2020 (Assessment Year: 2019-20) Sewa Simran Trust Gurudwara Nanaksar Village Gharowal Kalan, Thath Dhaha VPO Sowaddi Tehsil Jagraon Ludhiana 142025, Punjab PAN No. AAPTS8805A V/S Commissioner of Income Tax (Exemptions), Chandigarh (Appellant) (Respondent) Appellant by : Shri Sudhir Sehgal, A.R. . Respondent by : Smt. Abha Rani Singh, CIT/DR (आदेश आदेशआदेश आदेश)/ORDER Date of hearing : 08 -12-2021 Date of Pronouncement : 10 -12-2021 PER MAHAVIR PRASAD, J.M. 1. This appeal filed by the Assessee is directed against the order of the Ld. CIT(E) vide order dated 27/02/2020 for A.Y. 2019-20. Assessee has taken following grounds of appeal: ITA No. 142/Asr/2020 . A.Y. 2019-20 2 1. That the Worthy CIT (Exemptions), Chandigarh has erred in denying the registration to the charitable Trust u/s 12AA of the Income Tax Act, 1961. 2.That the finding of the CIT (Exemptions) in denying the registration to the Trust that the corpus donation received during financial year 2015-16 and 2016-17 should have been the income of the appellant for those years since at that time, the Trust has not been registered u/s 12AA, is not relevant for the purposes of granting registration u/s 12AA, as discussed in para 7.1 of the order by the CIT (Exemptions). 3.That the finding of the CIT(Exemptions) as mentioned in para 7.2 of the order that the funds of the charitable Trust have not been deployed to the charitable purpose and rather the funds have been used for personal cause, is devoid of any valid reasoning. 4.That the CIT(Exemptions) has failed to appreciate the fact that for granting registration only two things are required to be seen i.e. the objects of the Trust and genuineness of activities of the Trust and there being no doubt about the same, the refusal to grant registration u/s 12AA is not proper. 5. That the CIT(Exemptions) has failed to consider the various submissions and other documents as filed during the course of proceedings u/s 12AA. 6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2. At the outset, Ld. A.R. argued that the present appeal is delayed by 140 days. Ld. CIT(E) passed the impugned order on 27.02.2020 and applicant ought to have filed the present appeal on or before 26.04.2020 but applicant filed appeal on 24.03.2020. The delay is covered by the Hon’ble Supreme Court of India order in Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020 for grant of extension of limitation. Therefore, respecting the aforesaid Apex Court order, we condone the delay and proceed with the appeal on merit. 3. In this case, applicant filed an application for grant of registration u/s. 12AA of Income Tax Act on 21.08.2019. The Ld. CIT(E) did not grant registration u/s. 12AA for the reason that the trust was started on 03.03.2015 and it has diverted the receipts amounting to Rs. 1,20,000/- and Rs. 6,00,000/- during financial year 2015-16 and 2016-17 respectively to the balance sheet which, rather, should have been taken as income in the income and expenditure account for F.Y. 2015-16 and F.Y. 2016-17 respectively. ITA No. 142/Asr/2020 . A.Y. 2019-20 3 4. We have heard both the parties and in our considered opinion, on the above said reasons, Ld. CIT(E) ought not to have rejected an application for grant of registration u/s. 12AA of the Act. In our considered opinion, Ld. CIT(E) ought to have seen and examine the aim and object of the trust whether same are consonance to the spirit of law or not. Ld. CIT(E) should have seen the genuineness of activities of the trust. In this present case, Ld. CIT(E) has not exercised the same before rejecting the registration. Ld. CIT(E) has neither pointed out any defect in aim and object of the society nor doubted the genuineness of the activity of the society. 5. In support of its contention, Ld. A.R. cited an order of Pune Bench in ITA NO. 568/Pune/2020 wherein in similar facts and circumstances, ITAT Bench granted relief to the assessee with following observations: 6. We have heard the submissions of rival sides and perused the materials available on record. We are of the considered view that the provisions of section 12AA of the Act provides that the Ld. CIT(E) at the time of granting registration to the assessee trust or society shall look into the objects of the trust/society and be satisfied about the genuineness of the activities carried out by such applicant trust/ society at the time of granting registration u/s. 12AA of the Act. Whether any tax had accrued to be paid or whether such taxes have been paid or not are to be looked into at the stage of assessment proceedings 6.1 The Hon’ble Allahabad High Court in the case of Fifth Generation Education Society Vs. CIT (1990) 185 ITR 634 (All) has held that “the Commissioner is not to examine the application of income at the stage of application made by assessee for granting registration u/s.12AA of the Act. The Commissioner may examine whether the application was made in accordance with the requirements of Section 12AA r.w.r 17A and whether Form 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At that stage, it is not proper to examine the application of income. “ 6.2 That further, the Department in this case before us has not disputed the objects of the trust or genuineness of activities conducted by the assessee trust. In this scenario, it was observed by the Pune Bench of the Tribunal in the case of Kai Shri Mahadebrao Naykude Dnyanvikas Prabhodhini Trust Vs. Commissioner of Income Tax (Exemption) (2020) 208 TTJ (Pune) 296 that when the objects of the trust were not disputed by the Department, nor they have disputed genuineness of activities of the assessee trust, then non filing of return u/s. 139(4A) of the Act cannot be the ground to deny registration U/S.12AA of the Act to the assessee. It is only at the assessment proceedings, the Assessing Officer can take appropriate steps as per law regarding the non-filing of return. However, at the time of granting registration, the object of the assessee trust has ITA No. 142/Asr/2020 . A.Y. 2019-20 4 to be looked into and genuineness of the activities of the assessee trust should be considered. 7. Reverting to the facts of the present case, the Ld.CIT(E) has not granted registration u/s. 12AA of the Act since whatever donations were received by the assesee trust, the taxes were not paid and on this premise, the registration u/s. cannot be denied. It is left always to the Assessing Officer to take appropriate steps at the time of assessment proceedings with regard to payment of taxes and application of income of the trust/society. Further, we find the Hon’ble Bombay High Court in the case of CIT Vs. Manekji Mota Charitable Trust (2019) 267 TAXMAN 0016 (Bombay) has held “at the time of the registration of the trust u/s.l2A, the question of application of income of the trust is premature.” Thus, whether taxes are due to be paid on any income received that issue has to be looked into only at the time of assessment proceeding. 8. The Hon’ble Supreme Court in the case of Anand Social and Educational Trust Vs. CIT, 272 Taxman 7 (SC) has held that even in the absence of any activities a trust can be considered for registration u/s,12AA of the Act and the term ‘activities’ contemplated u/s.l2AA of the Act includes ‘proposed activities’. At the time of granting registration, the only issue to be examined by the Ld. CIT(Exemption) is regarding the true nature of the objects of the trust i.e. whether charitable or not. 9. In the present case, the objects of the trust are not doubted by the Department and they have also not disputed the charitable nature of the activities conducted by the assessee trust. Meaning thereby, all the relevant records were submitted before the Ld. CIT(Exemption) and he had verified the same and was satisfied on this aspect fulfilling the requirement of Section 12AA of the Act. Considering the aforesaid judicial pronouncements, facts and circumstances in this case, we are of the considered view that this is not a fit case for rejection of application for registration U/S.12AA of the Act on the reasons mentioned in the order of the Ld. CIT(Exemption). There is no finding on facts that the activities carried out by the assessee are not genuine. Further, the Ld. CIT(Exemption) has not mentioned in his finding that the objects of the trust were not in order or that the application made for registration was also not in accordance with law. In absence of these findings, just because, the taxes were not paid on the donations/voluntary contributions received cannot be the ground for rejection of application U/S.12AA of the Act. These things can be examined by the Department and scrutinized at the assessment stage. When all the requirements of registration U/S.12AA of the Act have been satisfied by the assessee trust, registration therein should be granted. In view thereof, we set aside the order of the Ld. CIT(Exemption) and direct the Department to grant registration u/s. 12AA of the Act to the assessee trust. ITA No. 142/Asr/2020 . A.Y. 2019-20 5 6. Thus, in view of the foregoing discussion and in parity with the ITAT Pune Bench order, we direct Ld. CIT(E) to grant registration u/s. 12AA of Income Tax Act to the applicant within 60 days from the receipt of this order. 7. In the result, appeal filed by the applicant is allowed. Order pronounced in Open Court on 10 - 12- 2021 Sd/- Sd/- (DR. M. L. MEENA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Dated 10/12/2021 Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER Deputy/Asstt.Registrar ITAT,Amritsar