Chandernagore Barasat Gate Cultural Association, Hooghly V. CIT-XX, KOLKATA, Kolkata

ITA 1469/KOL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1404 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-06-2017
• Assessment Year: misc
• Appeal Filed On: 30-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: J P KHAITAN
• Keywords: Charitable institution; Opportunity of being heard; Condonation of delay; Cancellation of registration
• Section: 80G; 12A; 12

Judgement Text

1 ITA NO.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT G ATE CULTURAL ASSOCIATION IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM ] ITA NOS.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT GATE -VS- C.I.T.- XX, CULTURAL ASSOCIATION, KOLKATA KOLKATA (PAN:AAATC 5113 A) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI J.P.KHAITAN, SR.ADVOCAT E & SHRI PRATYUSH JH UNJHUNWALA, ADVOCATE FOR THE RESPONDENT: MD. USMAN , CIT(DR) DATE OF HEARING : 22.02.2018. DATE OF PRONOUNCEMENT : 01.03.2018. ORDER PER N.V.VASUDEVAN, JM: ITA NO.1468/KOL/2014 IS AN APPEAL BY THE ASSESSEE A GAINST THE ORDER DATED 31.03.2014 OF C.I.T.-20, KOLKATA PASSED U/S 12AA( 3) OF THE INCOME TAX ACT, 1961 (ACT) CANCELLING THE REGISTRATION GRANTED TO THE AS SESSEE U/S 12A OF THE ACT DATED 8.11.1998. ITA NO.1469/KOL/2014 IS AN APPEAL AGAINST THE ORDER DATED 31.03.2014 OF CIT- XX, KOLKATA WITHDRAWING THE APPROVAL GRANTED TO THE ASSESSEE U/S 80G(5)(VI) OF THE ACT. 2. THERE IS A DELAY OF 3 DAYS IN FILING THESE APPEA LS. IT HAS BEEN EXPLAINED BY THE ASSESSE IN AN APPLICATION FILED FOR CONDONATION OF DELAY THAT THE DELAY WAS BECAUSE OF THE MISTAKEN BELIEF OF THE ASSESSEES TAX CONSULTAN T THAT THE IMPUGNED ORDERS WERE RECEIVED BY THE ASSESSEE ON 28.04.2014 WHEREIN THE ORDERS WERE RECEIVED BY THE ASSESSEE ON 25.04.2014. THE DELAY IN FILING THE APP EAL DUE TO THE ABOVE REASON IS ACCEPTED AS REASONABLE AND SUFFICIENT CAUSE AND THE DELAY IN FILING THE APPEAL IS CONDONED. 3. AS FAR AS THE MERITS OF THE APPEALS ARE CONCERNE D, WE SHALL FIRST TAKE UP FOR CONSIDERATION APPEAL AGAINST THE ORDER U/S 12AA(3) OF THE ACT. THE FACTUAL BACKGROUND 2 ITA NO.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT G ATE CULTURAL ASSOCIATION OF THIS APPEAL IS THAT THE ASSESSEE IS A SOCIETY RE GISTERED W.E.F. 08.03.1995 UNDER THE WEST BENGAL SOCIETIES REGISTRATION ACT, 1961. THE O BJECTS OF THE SOCIETY WERE FOUND TO BE CHARITABLE IN NATURE AND THE ASSESSEE WAS GRA NTED REGISTRATION U/S 12A OF THE ACT BY CIT-IX, KOLKATA CERTIFICATE DATED 20.11.1998, A COPY OF WHICH IS PLACED AT PAGE 8 OF THE ASSESSEES PAPER BOOK. THE ASSESSEE ALSO GOT APPROVAL U/S 80G OF THE ACT VIDE APPROVAL DATED 27.07.2005 VALID UPTO 31.03.2007. 4. THE INSTITUTION DID NOT RENEW THE APPROVAL U/S 8 0G(5)(VI) WITHIN THE EXPIRY THE VALIDITY PERIOD. BELATEDLY, IT APPLIED ON 8/9/2010 FOR RENEWAL OF THE APPROVAL, ON EXAMINING THE CASE, THE THEN CIT-XX, KOLKATA WAS NO T SATISFIED JUT THE DEGREE OF PURSUIT OF CHARITABLE PURPOSES. HE TURNED DOWN THE APPLICATION IN HIS ORDER DATED 30/3/2011. AS A RESULT, THE ASSESSEE-TRUST DID NOT GET THE EXTENSION OF APPROVAL U/S 80G(5)(VI) SINCE 1/4/2007. ON THE BASIS OF THE FINDINGS EMANATING FROM THE REN EWAL PROCEEDINGS U/S 80G(5)(VI) THAT THE EXTENT OF CHARITABLE ACTIVITIES IS NOT SATISFACTORY, THIS OFFICE REGISTERED THE INSTITUTION U/S 12AA(3) IN OUR ORDER DATED 31/3/2011. BEING AGGRIEVED, THE INSTITUTION PREFERRED APPEAL B EFORE THE LD. ITAT AGAINST BOTH THE ORDERS. IN ITS ORDER DATED 22/8/2011 AGAINST ITA NO S. 859, 860 & 861/KOI/2011, LD. ITAT-'B'- BENCH, KOLKATA MADE THE FOLLOWING OBSERVA TIONS:- 1. THE ORDER OF THE LD. CIT-XX IS SET ASIDE WITH TH E DIRECTION TO CONSIDER THE REGISTRATION U/S 12A AFRESH 2. IN VIEW OF THE AMENDMENT VIDE FINANCE ACT, 2009 READ WITH THE CBDT CIRCULAR NO. 7/2010 DATED 27/~0/20 0, NO PERMISSION IS REQUIRED FOR RENEWAL OF APPROVAL U/S 80G(5)(VI) 5. PURSUANT TO THE ORDER OF THE TRIBUNAL THE CIT TO OK FOR CONSIDERATION THE QUESTION OF CANCELLATION OF REGISTRATION OF THE ASS ESSEE U/S 12AA(3) OF THE ACT. THERE WAS A HEARING BEFORE THE CIT ON 24.03.2014. THE C IT HAD POINTED OUT THAT THE TREASURER AND JOINT SECRETARY OF THE ASSESSEE ABOUT NON FILING OF TAX AUDIT REPORT IN FORM-10B FOR F.Y.2008-09, 2009-10 AND 2010-11. THE CIT AFTER REFERRING THE ABOVE ASPECT FURTHER OBSERVED AS FOLLOWS IN THE IMPUGNED ORDER : 3 ITA NO.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT G ATE CULTURAL ASSOCIATION THE LD. ARS APPEARED FOR THE CASE. HOWEVER NO MAT ERIALS OR DOCUMENTS COULD BE PRODUCED WHICH CAN SUGGEST THAT THE INSTITUTION IS ENGAGED IN CHARITABLE ACTIVITIES. FROM THE DISCUSSION, IT ONLY TRANSPIRED THAT THE ACTIVITIES PREDOMINANTLY DIRECTLY TOWARD RELIGIOUS AND/OR CULTURAL ACTIVITIE S . AMOUNT SPENT AFTER CHARITABLE ACTIVITIES AND GENERAL PUBLIC UTILITY STANDS AT MIN IMAL THE ABOVE-STATED DISCUSSION DOES SUGGEST THAT THE ASSESSEE FAILED TO ESTABLISH THAT THE INSTITUTE IS ENGAGED IN ACTIVITIES OF GENERAL PUBLIC UTILITY AND/OR ACTIVIT IES CULTURAL IN NATURE. THEY WERE GIVEN 3 DAYS' TIME TO RESPOND. AS NO REPLY CAME, IT IS REASONABLY INFERRED THAT THE INSTITUTION CANNOT COUNTER THE FI NDINGS DISCUSSED IN THE COURSE OF HEARING ON 24/3/2014. ON CAREFUL CONSIDERATION OF THE MATERIALS ON RECORD, I DO NOT CONSIDER IT A FIT CASE FOR GRANT OF REGISTRATION U/S 12A. SO, THE INS TITUTION STANDS DEREGISTERED U/S 12AA(3) OF IT ACT'61. 6. BASED ON THE CANCELLATION OF REGISTRATION U/S 12 AA(3) OF THE ACT AND OTHER REASONS THE CIT WITHDREW THE APPROVAL GRANTED U/S 8 0G(5) (VI) OF THE ACT ALSO. THE FOLLOWING WERE THE OBSERVATIONS OF THE CIT IN THIS REGARD : THE' INSTITUTION HAS BEEN DE-REGISTERED U/S 12AA( 3) OF IT ACT'61 VIDE ORDER NO.5954 DATED 31/3/2014. IN VIEW OF THIS, THE INSTITUTION DOES NOT SATISFY T HE CONDITION LAID DOWN IN SECTION 80G(S)(I) OF IT ACT. THUS IN TERMS OF RULE 11AA(5) OF INCOME-TAX RULES, 1962, THE INSTITUTION CANNOT BE GRANTED APPR OVAL U/S 80G(5)(VI) OF IT ACT'61. THIS APART, THE ACCOUNTS ALSO REVEAL THAT INSTITUTI ON WAS PRIMARILY ENGAGED IN RELIGIOUS AND CULTURAL ACTIVITIES. AMOUNT SPENT AFT ER CHARITABLE ACTIVITIES AND GENERAL PUBLIC UTILITY STANDS AT MINIMAL. IN THE CO URSE OF HEARING, THE ATTENTION OF THE LD. AR WAS DRAWN TO THE SECTION 80G(5B) THAT MA KES' AN INSTITUTION INELIGIBLE FOR GRANT OF APPROVAL U/S 80G, IF THE SHARE OF RELI GIOUS EXPENDITURE EXCEEDS 5%. ACCOUNTS OF THE INSTITUTION SHOW THAT THIS PROVISIO N IS ATTRACTED. IT IS RELEVANT TO QUOTE THE RELEVANT PORTIO N OF THE BOARD'S CIRCULAR 7/2010 DATED 27/10/2010:- 'TO REMOVE ANY DOUBTS IN THIS REGARD. IT IS REITERA TED THAT ANY APPROVAL UNDER SECTION 80G(5) ON OR AFTER 1-10-2009 WOULD BE A ONE TIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN. THUS THERE IS A PROVISION FOR WITHDRAWAL OF TH E APPROVAL IN THE HANDS OF THE AUTHORITY. BESIDES, THE APPROVAL GIVEN LAST TIME WA S VALID TILL 31/3/2007. IN THE LIGHT OF THE ABOVE DISCUSSION, THE INS TITUTION CANNOT ENJOY THE APPROVAL U/S 80G(5) VI) BEYOND THIS DATE, UNLESS OF COURSE, IT IS SPECIFICALLY GRANTED IN FUTURE. 7. AGGRIEVED BY THE AFORESAID ORDERS OF THE CIT, TH E ASSESSEE HAS FILED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 4 ITA NO.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT G ATE CULTURAL ASSOCIATION 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. COU NSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE DATE OF HEARING BEFORE THE C IT WAS 24.03.2014 AND THE ASSESSEES REPRESENTATIVES WERE GIVEN ONLY THREE DAYS TIME TO RESPOND TO QUERIES RAISED BY THE CIT. THE ASSESSEE SENT A VERY DETAILED REPLY TO ALL THE QUERIES OF THE CIT VIDE ITS LETTER DATED 16.04.2014. THE CIT HAS HOWEVER PASSED THE OR DER ON 31.03.2014 EVEN BEFORE THE ASSESSEES REPLY COULD REACH THE CIT. THE REPLY OF THE ASSESSEE DATED 16.04.2014 REACHED THE CIT AFTER THE IMPUGNED ORDERS WERE PASS ED. 9. WE HAVE SEEN THE REPLY DATED 16.04.2014 AND THE ANNEXURES TO THE SAID LETTER. THESE ARE AVAILABLE AT PAGES 111 TO 381 OF THE ASSE SSEES PAPER BOOK. IN THIS REPLY THE ASSESSEE HAS EXPLAINED THE NATURE OF ITS ACTIVITIES AND AS TO HOW THEY ARE NOT RELIGIOUS IN NATURE. THE LD. COUNSEL FOR ASSESSEE HAS ALSO BR OUGHT TO OUR NOTICE THAT THE MAIN OBJECT OF THE ASSESSEE IS TO EVOLVE SENSE OF SOCIAL AND RELIGIOUS TOLERANCE. 10. WE HAVE CONSIDERED HIS SUBMISSIONS AND ARE OF T HE VIEW THAT THE IMPUGNED ORDERS HAVE TO BE SET ASIDE AND REMANDED TO THE CIT FOR FRESH CONSIDERATION AS THERE WAS LACK OF PROPER OPPORTUNITY OF BEING HEARD AFFOR DED TO THE ASSESSEE OR AVAILED BY THE ASSESSEE. THE REPLY OF THE ASSESSEE DATED 16.04 .2014 TOGETHER WITH ITS ANNEXURES SHOULD BE CONSIDERED AFRESH BY THE CIT. THE CIT SHO ULD AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE CASE AND ALSO PERMIT THE ASSESSEE TO FILE SUCH OTHER DOCUMENTS AND EVIDENCE AS MAY BE NECESSARY AS CALLED UPON BY THE CIT. THE ASSESSEE SHALL DULY AND DILIGENTLY ATTEND THE PROCE EDINGS AND EXTEND COOPERATION TO ENABLE EXPEDITIOUS DISPOSAL BY THE CIT. 11. IN THE RESULT THE APPEALS ARE TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON 01.03.2018. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 01.03.2018. [RG SR.PS] 5 ITA NO.1468 & 1469/KOL/2014 CHANDERNAGORE BARASAT G ATE CULTURAL ASSOCIATION COPY OF THE ORDER FORWARDED TO: 1.CHANDERNAGORE BARASAT GATE CULTURAL ASSOCIATION, CHANDANNAGAR, HOOGHLY-712136. 2. C.I.T.-XX, KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES