ITO, Coimbatore V. M/s. Carmel Prayer Tower, Coimbatore

ITA 1471/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61299 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 26-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VI KRAMADITYA
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution; Assessment record
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 1471/MDS/2011 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, COMPANY WARD I, 1 ST FLOOR, OLD BUILDING, 63, RACE COURSE, COIMBATORE 641 018. (APPELLANT) V. M/S CARMEL PRAYER TOWER, 225, JAYASHREE NAGAR, SINGANALLUR, COIMBATORE 641 005. PAN : AAATC2473R (RESPONDENT) APPELLANT BY : SHRI VIKRAMADITYA, JCIT RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE DATE OF HEARING : 11.07.2012 DATE OF PRONOUNCEMENT : O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, ITS GRIEVANC E IS THAT CIT(APPEALS) DELETED THE ADDITION OF ` 1,51,13,899/- MADE BY THE A.O. AND ALSO DIRECTED THE ASSESSING OFFICER TO TREAT TH E ASSESSEE AS ONE REGISTERED UNDER SECTION 12A OF INCOME-TAX ACT, 196 1 (IN SHORT 'THE ACT'). AS PER THE REVENUE, THE CIT(APPEALS) HAD IGNORED TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF DI RECTOR OF EXEMPTIONS V. 2 I.T.A. NO. 1471/MDS/11 ANJUMAN-E-KHYKHAH-E-AAM (237 CTR 509) WHILE DIRECTI NG THE A.O. TO DEEM THE ASSESSEE AS REGISTERED UNDER SECTION 12A O F THE ACT. 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED ITS RETURN FOR IMPUGNED ASSESSMENT YEAR CLAIMING EXEMPTION UNDER S ECTION 11 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED BY THE A.O. THAT ASSESSEE HAD CLAIMED A SUM OF ` 1,44,52,901/-, AS UTILIZED FOR CHARITABLE PURPOSES. ASSESSEE WAS REQUIRED TO PROD UCE SUPPORTING RECORDS FOR SUCH A CLAIM. ASSESSING OFFICER WAS OF THE OPINION THAT EXCEPT FOR FILING A CONVEYANCE DEED FOR LAND PURCHA SE OF ` 44,94,550/-, NOTHING ELSE WAS FILED BY THE ASSESSEE JUSTIFYING I TS VARIOUS CLAIMS. ASSESSING OFFICER ALSO NOTED THAT ASSESSEE WAS GRAN TED REGISTRATION BY CIT UNDER SECTION 12A OF THE ACT ONLY WITH EFFECT F ROM 1.4.2008 AND, THEREFORE, ACCORDING TO HIM, FOR IMPUGNED ASSESSMEN T YEAR, ASSESSEE WAS NOT HAVING REQUIRED REGISTRATION FOR GIVING EXE MPTION UNDER SECTIONS 11 AND 12 OF THE ACT. HE, THEREFORE, DISALLOWED TH E CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT AND ASSESSED ACCORDINGL Y. 3. IN ITS APPEAL BEFORE CIT(APPEALS), ARGUMENT OF T HE ASSESSEE WAS THAT IT WAS CARRYING ON LEGITIMATE CHARITABLE ACTIV ITIES FALLING WITHIN THE AMBIT OF SECTION 2(15) OF THE ACT. AS PER THE ASSE SSEE, THE ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED AND CERTIFIED BY A Q UALIFIED CHARTERED 3 I.T.A. NO. 1471/MDS/11 ACCOUNTANT AND IT HAD FULFILLED THE REQUIREMENTS SE CTIONS 11 AND 12 OF THE ACT. ASSESSEE POINTED OUT TO THE CIT(APPEALS) THAT IT HAD MADE AN APPLICATION FOR REGISTRATION UNDER SECTION 12A ON 7 .12.2000 ITSELF AND THIS WAS ACKNOWLEDGED BY THE DEPARTMENT. AS PER THE ASS ESSEE, IT HAD ALSO FILED DETAILS CALLED FOR BY THE REVENUE IN SUCH APP LICATION. BUT THE FATE OF SUCH APPLICATION WAS NEVER LET KNOWN TO THE ASSESSE E. ACCORDING TO ASSESSEE, WHEN NO ORDER WAS PASSED ON ITS APPLICATI ON DATED 7.12.2000 DESPITE THE LAPSE OF SIX MONTHS, THE STATUTE REQUIR ED THE REGISTRATION TO BE DEEMED AS GRANTED. ASSESSEE ALSO SUBMITTED THAT IT HAD MADE AVAILABLE TO THE A.O. ALL SUPPORTING RECORDS FOR TH E CLAIM OF ` 1,44,52,901/- APPLIED FOR CHARITABLE PURPOSES. AS PER THE ASSESSEE, IT HAD PRODUCED BOOKS OF ACCOUNTS, VOUCHERS AND ALL NE CESSARY RECORDS BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFI CER HAD IGNORED SUCH RECORDS AS ALSO BANK STATEMENTS FOR THE RELEVANT PR EVIOUS YEAR. FURTHER, AS PER THE ASSESSEE, ALL THE DETAILS REQUIRED BY TH E ASSESSING OFFICER WERE SUBMITTED IN TIME AND THE CLAIM OF THE A.O. TH AT NO DETAILS WERE FURNISHED, WAS INCORRECT. CIT(APPEALS) SOUGHT A RE MAND REPORT FROM THE ASSESSING OFFICER ON THE SUBMISSIONS OF THE ASSESSE E. THE A.O. IN HIS REMAND REPORT DATED 10 TH MAY, 2011, STATED AS UNDER:- VIDE PARA 1.1 OF THE ASSESSMENT ORDER, THE A.O. HA S GIVEN A FINDING THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE ACTIV ITIES OF THE TRUST AND ITS OBJECTS AS NARRATED IN THE TRUST DEED. WHI LE EXPLAINING THIS, 4 I.T.A. NO. 1471/MDS/11 THE A.R. HAS STATED THAT THE TOTAL AMOUNT OF RS.1,45, 28,414.90 HAS BEEN SPENT UNDER VARIOUS HEAD AS SUPPORTED BY THE A UDITED FINANCIAL STATEMENTS FILED AT THE TIME OF ASSESSMENT PROCEEDI NGS. THE A.R. PRODUCED BOOKS OF ACCOUNTS FOR VERIFICATION. AS PE R THIS, THE EXPENSES UNDER THE HEAD BIBLE COLLEGE EXPENSES ARE IN THE NATURE OF BOOKS AND NOTE BOOKS FOR STUDENTS, MEDICAL, PROVISI ONS, UNIFORM, SALARY ETC. ORPHANAGE EXPENSES ARE UNDER THE HEAD P ROVISIONS, CLOTHING AND MEETING EXPENSES CONSISTS OF PANDAL AND STAGE, ADVERTISEMENTS, PRINTING, CHAIR RENT, PHOTO EXPENSES ETC. VARIOUS ITEMS OF EXPENSES LIKE TRAVELLING, ELECTRICITY CHARG ES, REPAIRS AND MAINTENANCE OF BUILDING AND VEHICLES FUEL ETC. ARE GROUPED UNDER THE HEAD ADMINISTRATIVE EXPENSES. A COPY OF THE BANK AC COUNT LEDGER PRODUCED AT THE TIME OF ASSESSMENT, WHICH IS PART O F THE ASSESSMENT RECORDS INDICATE THAT SEVERAL PAYMENTS WERE MADE BY CHEQUE WITH THE NATURE OF EXPENSES LIKE PURCHASE OF BUILDING MAT ERIALS, TRAVELLING, EMI FOR VEHICLES, UNIFORM EXPENSES AND SO ON NOTED T HEREIN. THE A.R. ALSO PRODUCED PHOTOGRAPHIC EVIDENCE FOR THE BU ILDING ON WHICH AN AMOUNT OF RS.47,76,816 HAS BEEN SPENT AND MANY PAYMENT S FOR PURCHASE OF MATERIAL HAVE BEEN MADE BY CHEQUES AS E VIDENCED BY BOOKS AS WELL AS BANK ACCOUNT COPY ON RECORD. THE AR HAS STATED THAT THEY DO NOT POSSESS ANY APPROVED PLAN FOR THE BUILDING BUT PLAN OF CONSTRUCTION AND PHOTOGRAPHS OF THE BUILDING ARE PRODUCED. THE AR ALSO PRODUCED EVIDENCES FOR THE MEETINGS IN THE FORM OF ADVERTISEMENTS AND BROCHURES. REGARDING THE PURCHASE OF LAND THE TRANSACTION HAS BEEN FULLY EXPLAINED IN THE REPLY FILED AND THE DIFFERENCE OF R S.14,05,000 POINTED OUT CONSTITUTES ONLY THE ADVANCE PAID DURIN G THE PREVIOUS YEAR FOR WHICH LEDGER ACCOUNT COPY HAS BEEN FILED I NDICATING THE SAID AMOUNT OUTSTANDING AS ON 1.4.2006. PARA 1.3 OF THE ASST.ORDER THIS REFERS TO NON PRODUCTION OF EVIDENCE FOR THE C RUSADE OFFERINGS RECEIVED TO THE EXTENT OF RS.47,74,861. EXPLAINING THIS, T HE AR HAS STATED THAT CRUSADE OFFERINGS ARE VOLUNTARY CONTRIB UTIONS MOSTLY IN SMALL DENOMINATIONS COLLECTED FROM PUBLIC DURING TH E CRUSADE MEETINGS IN CASH IN DROP BOXES. IT IS STATED THAT THESE COLLECTIONS ARE REMITTED IN THE BANK ACCOUNT AND ARE PROPERLY A CCOUNTED IN THE BOOKS OF ACCOUNTS. THESE ARE IN THE FORM OF CASH D EPOSITS IN THE BANK ACCOUNT AND THE AR COULD ONLY FURNISH PROOF FO R CONDUCTING THE 5 I.T.A. NO. 1471/MDS/11 MEETINGS AND CLAIMED THAT AS THE COLLECTIONS ARE MA DE IN DROP BOXES FROM PUBLIC AT LARGE, NO OTHER EVIDENCE FOR RECEIPT OF THIS MONEY IS AVAILABLE WITH THEM. WITH REFERENCE TO THE BANK ACCOUNT THE AR IN HIS NO TE EXPLAINS THAT THE ACCOUNT NUMBER ORIGINALLY GIVEN WAS 2292 WHICH WAS INCORPORATED IN THE RBI STATEMENTS. ON INTRODUCTION OF CORE BANK ING SYSTEM IN THE BANK THE NUMBER OF THE SAME ACCOUNT WAS CHANGED . THE AR HAS FILED COPY OF A LETTER TO THIS EFFECT FROM THE BANK . THE CHANGE COULD NOT BE INCORPORATED AS THE SAME HAS TO BE DON E BY THE BANKER, AS CLAIMED. IT IS FURTHER CLAIMED THAT CRUSADE COL LECTIONS MADE IN CASH WERE ERRONEOUSLY DEPOSITED IN THIS ACCOUNT WHI CH WAS LATER REVISED. THE AR ALSO CLAIMS THAT THE TRUST HAS COM PLIED WITH THE REGULATIONS OF FEMA AND SO FAR NO VIOLATION OR IRRE GULARITY HAS BEEN POINTED BY FEMA. 4. AFTER GOING THROUGH THE ABOVE REMAND REPORT, CIT (APPEALS) CAME TO AN OPINION THAT THE A.O. HAD ALL THE DETAILS WHI CH WERE CALLED FOR AND ASSESSEE WAS ABLE TO CLARIFY ALL THE ISSUES. FURTH ER, ACCORDING TO HIM, ON THE ORIGINAL APPLICATION FILED BY THE ASSESSEE ON 7 .12.2000, NO ORDER WAS PASSED AND HENCE, REGISTRATION WAS TO BE DEEMED AS GRANTED AND FOR TAKING THIS VIEW, HE RELIED ON THE DECISION OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF SOCIETY FOR PROMOTION OF EDUCA TION, ADVENTURE OF SPORTS, CONSERVATION OF ENVIRONMENT V. CIT (2008) 2 16 CTR 167. HE THUS DIRECTED THE A.O. TO ALLOW THE ASSESSEE ITS CL AIM UNDER SECTIONS 11 AND 12 OF THE ACT. 5. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF CIT(APPEALS), SUBMITTED THAT NOTHING WAS PRODUCED B Y THE ASSESSEE BEFORE THE ASSESSING OFFICER TO SHOW THAT IT HAD MA DE AN APPLICATION IN 6 I.T.A. NO. 1471/MDS/11 FORM NO.10A ON 7.12.2000 FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. EVEN THOUGH CIT(APPEALS) REQUIRED A REMAN D REPORT FROM THE A.O., THIS ISSUE WAS NOT PUT BEFORE THE ASSESSING O FFICER. THEREFORE, ACCORDING TO HIM, THERE WAS VIOLATION OF NATURAL JU STICE IN CONSIDERING THE SUBMISSION OF THE ASSESSEE THAT IT HAD MADE AN APPL ICATION IN FORM NO.10A ON 7.12.2000. NEVERTHELESS, LEARNED D.R. FA IRLY AGREED THAT THE ASSESSEE HAD SUBMITTED ALL DETAILS FOR ITS CLAIM OF EXPENDITURE TOWARDS CHARITABLE PURPOSES, BEFORE THE ASSESSING OFFICER I N THE REMAND PROCEEDINGS AND ASSESSING OFFICER WAS SATISFIED IN THIS RESPECT. 6. PER CONTRA, LEARNED A.R. SUBMITTED THAT ASSESSEE HAD PROVED UTILIZATION OF ITS INCOME FOR CHARITABLE PURPOSES. LD. CIT(APPEALS) HAD CLEARLY ACCEPTED ASSESSEES CLAIM THAT AN APPLICATI ON FOR REGISTRATION UNDER SECTION 12A WAS FILED ON 7.12.2000. IN VIEW OF THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SOCIETY FOR PROMOTION OF EDUCATION, ADVENTURE OF SPORTS, CONSERVATION OF ENV IRONMENT (SUPRA), LEARNED A.R. SUBMITTED THAT THE CIT(APPEALS) RIGHTL Y DIRECTED THE A.O. TO DEEM THE ASSESSEE AS REGISTERED UNDER SECTION 12A O F THE ACT. 7. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. THE ISSUE REGARDING UTILIZATION OF INCOME FOR CHARI TABLE PURPOSES IS NO MORE DISPUTED. ASSESSING OFFICER IN HIS REMAND REP ORT HAS ACCEPTED THE DETAILS FURNISHED BY THE ASSESSEE AND ALL QUERIES R AISED BY HIM STOOD 7 I.T.A. NO. 1471/MDS/11 ANSWERED. THIS LEAVES US WITH ONLY ONE QUESTION I. E. WHETHER ASSESSEE COULD BE DEEMED AS REGISTERED UNDER SECTION 12A OF THE ACT FOR THE IMPUGNED ASSESSMENT YEAR. AS PER THE ASSESSEE, IT HAD SUBMITTED FORM NO.10A FOR THE PURPOSE OF SUCH REGISTRATION AS EARLY AS 7.12.2000. IT HAD ALSO SUBMITTED FURTHER DETAILS CALLED FOR BY THE DEPARTMENT WITH REGARD TO SUCH APPLICATION. NEVERTHELESS, HAVING N OT RECEIVED ANY ORDER ON SUCH APPLICATION, ASSESSEE SUBMITTED ONE MORE AP PLICATION ON 13.12.2008. THE CIT ACTED ON SECOND APPLICATION AN D GRANTED IT REGISTRATION UNDER SECTION 12A OF THE ACT WITH EFFE CT FROM 1.4.2008. WE ARE OF THE OPINION THAT SUBMISSION OF SECOND APPLIC ATION BY THE ASSESSEE ON 13.12.2008 WILL NOT EFFACE THE EFFECT OF ITS EAR LIER APPLICATION ON 7.12.2000. THE LEGAL CONSEQUENCE ARISING OUT OF SU CH APPLICATION WILL CONTINUE UNBLEMISHED. IF THE ASSESSEE HAD MADE AN APPLICATION ON 7.12.2000 IN FORM NO.10A FOR A REGISTRATION UNDER S ECTION 12A OF THE AND IF SUCH APPLICATION WAS NOT DEALT WITH BY THE D EPARTMENT EITHER BY ISSUING AN ORDER DENYING REGISTRATION OR BY ISSUING AN ORDER GRANTING REGISTRATION, DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF SOCIETY FOR PROMOTION OF EDUCATION, ADVENTURE OF SP ORTS, CONSERVATION OF ENVIRONMENT (SUPRA) WILL COME INTO PLAY. IT WAS HELD BY HONBLE ALLAHABAD HIGH COURT IN THE ABOVE MENTIONED DECISIO N THAT IN ABSENCE OF AN ORDER EITHER DENYING REGISTRATION OR GRANTING REGISTRATION, WHERE THE STATUTORILY ALLOWED TIME FOR DEALING WITH AN APPLIC ATION IN THIS REGARD HAD 8 I.T.A. NO. 1471/MDS/11 EXPIRED, REGISTRATION WOULD BE DEEMED AS GRANTED. THE SAME VIEW HAS BEEN TAKEN BY THE SPECIAL BENCH OF THIS TRIBUNAL EA RLIER ALSO IN THE CASE OF BHAGWAD SWARUP SHRI SHRI DEVRAHA BABA MEMORIAL S HRI HARI PARMARTH DHAM TRUST V. CIT (111 ITD 175). AS FOR T HE RELIANCE PLACED BY THE REVENUE ON THE DECISION OF HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF ANJUMAN-E-KHYKHAH-E-AAM (SUPRA), THERE AN ORDER WAS INDEED PASSED BY THE CIT(APPEALS) WITHIN SIX MONTHS TIME FRAME ALLOWED UNDER THE STATUTE ON AN APPLICATION FOR REG ISTRATION UNDER SECTION 12AA OF THE ACT AND IT WAS FOR THIS REASON THAT HON BLE JURISDICTIONAL HIGH COURT CANCELLED THE DEEMED REGISTRATION GRANTED TO THE CONCERNED ASSESSEE. HERE, ON THE OTHER HAND, AS PER THE ASSE SSEE, THERE WAS NO ORDER ON ITS APPLICATION DATED 7.12.2000. HOWEVER, DESPITE THE LEGAL POSITION BEING IN FAVOUR OF ASSESSEE, THERE IS SUBS TANCE IN THE SUBMISSION OF LEARNED D.R. THAT WHETHER AN APPLICAT ION WAS FILED BY THE ASSESSEE ON 7.12.2000 IN FORM 10A AND WHETHER ASSES SEE HAD FILED FURTHER DETAILS CALLED FOR BY THE REVENUE ON SUCH A PPLICATION, WAS NEVER PUT BEFORE THE A.O., AND THIS INFORMATION WAS NOT A VAILABLE TO THE ASSESSING OFFICER. SUCH AN ARGUMENT WAS ALSO NOT R AISED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER DURING THE CO URSE OF ASSESSMENT PROCEEDINGS. THE CIT(APPEALS) ALSO DID NOT PUT THI S ISSUE BEFORE THE ASSESSING OFFICER WHILE ASKING FOR A REMAND REPORT. WE ARE, THEREFORE, OF THE OPINION THAT THE MATTER HAS TO GO BACK TO TH E FILE OF THE A.O. FOR 9 I.T.A. NO. 1471/MDS/11 VERIFYING WHETHER ASSESSEE HAD INDEED MADE AN APPLI CATION PRIOR TO THE IMPUGNED ASSESSMENT YEAR, BEFORE THE APPROPRIATE AU THORITY FOR REGISTRATION UNDER SECTION 12A OF THE ACT IN FORM 1 0A. IF SUCH AN APPLICATION HAS, INDEED, BEEN FILED BY THE ASSESSEE , THEN OF COURSE REGISTRATION WOULD HAVE TO BE DEEMED AS GRANTED, AS ALREADY HELD BY US. 8. FOR THIS LIMITED PURPOSE, WE ARE REMITTING IT BA CK TO THE FILE OF THE A.O. AND SETTING ASIDE THE ORDER OF CIT(APPEALS). 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON THURSDAY, THE 19 TH OF JULY, 2012, AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH JULY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-I, COIMBATORE (4) CIT-I, COIMBATORE (5) D.R. (6) GUARD FILE