SHRI ATM VALLABH JAIN SARVMANGAL TRUST, LUDHIANA V. COMMISSIONER OF INCOME TAX ( EXEMPTIONS), CHANDIGARH

ITA 156/ASR/2020

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0459 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Appeal Filed On: 21-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12AA; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 156/Asr/2020 Assessment Year: 2020-21 Sh. Atam Vallabh Jain Sarvmangal Trust 266, Industrial Area-A, Ludhiana [PAN: AAYTS 0223M] Vs. Commissioner of Income Tax (Exemptions), Chandigarh (Appellant) (Respondent) Appellant by : None Respondent by: Sh. Sunil Gautam, CIT DR Date of Hearing: 11.05.2022 Date of Pronouncement: 05.07.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the impugned order dated 15.09.2020 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh in respect of the Assessment Year 2020-21. 2. The assessee has raised the following grounds of appeal: “1. That the order passed under section 12AA(1)(b)(ii) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Exemptions), Chandigarh is against law and facts on the file in as much as he was not ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 2 justified to deny the registration of the appellant u/s 12AA of the Income Tax Act, 1961. 2. That he was not justified to hold that the appellant Trust is not for the benefit for general public and thus, provisions of Section 13(1)(c) are applicable. 3. That he failed to consider that the appellant had duly filed a detailed reply dated 04.06.2020 which was sent vide Speed Post on 04.06.2020 and also on email ID [e-mail] on 04.06.2020 and was thus, not justified to hold that the Trust Deed did not contain a dissolution clause and provisions of section 13(1)(c) are attracted.” 3. This case was fixed for hearing on 08/12/2021, 16/12/2021, 19/04/2022 and 11/05/2022, however none has appeared on behalf of the assessee. The request application for adjournment of the appeal received on 09/05/2022 from the AR of the assessee on account of being engaged in prefix appeals with New Delhi benches has been rejected and we have decided to hear the appeal on merits after hearing the learned DR, in the interest of justice. 4. At the outset, we find that the learned CIT appeal has passed the order ex parte qua the appellant assessee vide para 6 to 8 as under: “6. On this date neither anybody attended nor was any request for adjournment received. In order to follow the principle of natural justice, another opportunity was accorded to the applicant on 29.05.2020 and matter was fixed for 05.06.2020. In response to letter dated 13.05.2020, the applicant has submitted the response through DAK on 08.06.2020. 7. On perusal of the submissions of the trust, it is revealed that one of the clause mentioned at Sr. No. 17 in the trust deed is restrictive in nature and the same is reproduced as under:- ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 3 “17. Members of Shree Atmanand Jain Sabha and Devotees of Acharya Nitya Nand Suri Ji who are not below the age of 18 years, shall only be eligible to become trustees of the trust” The above clause concludes that only the devotees of Acharya Nitya Nand Suri Ji are eligible to be trustees of the trust which makes itis restricted to the devotees of Acharya Nitya Nand Suri Ji makes it closely held and not enuring to benefit to the general public. Even though the applicant in its response did try to project that the trust is a public charitable entity, the same is not borne from the facts narrated above. Further, the Hon’ble lTAT Amritsar in the case of G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar (ITA No 594 (ASR) 2013) highlighted that the benefit of registration under section 12AA of the Act, cannot be granted to a trust controlled by the restrictive clauses to some specific group of people. The composition of applicant Trust being from a family clearly invites the coverage of the aforementioned decision. 8. It is also noticed that the trust deed does not include any dissolution clause & beneficiary clause. The provisions of section 13(1)(c) of the IT Act states that “in case of a trust/ society for charitable or religious purposes or a charitable or religious institution, any income thereof- 1. If such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or 2. If any part of income or any property of the trust or the institution (whenever created or established) is during the previous used or applied, directly or indirectly for the benefit of any person referred to in sub- section (3):” In the absence of the Dissolution clause, the presumption of the law is that the assets and liabilities of the trust will be distributed amongst the trustees of the trust in case the trust closes its operations or is disbanded. The provisions of Section 13(1)(c) of the Act are clearly attracted without this dissolution clause. The absence of these important clauses, make a trust revocable, not enuring to the benefit of general public and open to any possibility of strust property being utilized for the benefit of the members of the trust, hampers its quest for registration. It is pertinent to mention that the trust may, if it so desires, ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 4 file a fresh application after removing the deficiencies as explained in the above para and also if there were any new circumstances that required fresh application.” 5. The learned counsel for the assessee submitted that he has filed the details in compliance to the notice issued by the CIT exemption online on income tax site but could not be submitted due to technical error in the Summit button. He has filed, the paper book of compilation of statements comprising of 119 to 121 pages including the copy of reply dated.04.06.2020 and copy of adjournment requests dated 27.05.2020 and 28.05.2020 claim proposed to be filed before the learned Commissioner of income tax (exemption) with copy of statement of account but the same has not been considered while rejecting the assessee’s application for grant of registration by the learned principal Commissioner tax (exemption). The appellant contended that the order passed under section 12AA(1)(b)(ii) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Exemptions), Chandigarh is against law and facts on the file in as much as he was not justified to deny the registration of the appellant u/s 12AA of the Income Tax Act, 1961; that he was not justified to hold that the appellant Trust is not for the benefit for general public and thus, provisions of Section 13(1)(c) are applicable and that he has failed to consider that the appellant had duly filed a detailed reply dated 04.06.2020 which was sent vide Speed Post on 04.06.2020 and also on email ID [e-mail] on 04.06.2020 and was thus, not justified to hold that the Trust Deed did not contain a dissolution clause and provisions of section 13(1)(c) are attracted. ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 5 6. The learned D.R. supported the order of PCIT (Exemption) and the learned DR reiterated the observation of the PCIT (exemption). 7. We have heard the learned CIT DR, perused the material record, the impugned order and submissions/paper compilation of the counsel for the assessee. The main issue involved in the present appeal is grant of registration under section 12AA of the Act. The learned A.R. contended that all the details required by the learned CIT, could not be furnished before him due to the reason of technical error in the income tax system portal through which the notice was issued, has not been accepting the digital submissions of paper compilation by pressing the Summit button. We find that it was only due to the technical and in the system of income tax portal, which caused delay on the part of the appellant assessee to file the necessary paper compilation in compliance to the notice of the PCIT exemption. In our view, such technical constraints which were beyond the control of the assessee, constitute sufficient cause for non-compliance and accordingly the assessee is required to give on trash’ of being heard to decide the issue of grant of registration under section12AA of the act afresh as per law after considering the paper compilation of the assessee filed on record. ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 6 8. The ld. AR, contended that details required by the CIT were submitted on the portal but same was not taken on record by him due to error in the system. Considering the ld. AR contention that the assessee was prevented by sufficient cause in not producing the necessary documents as above, we find it deem fit to take the additional documentary evidence on record as it is required to go to the root of the case and shall be material for deciding the issues, in sub-judice and also in the larger interest of justice and fair play under Rule 29. 9. In view of the discussion as above, we are of the considered opinion that assessee trust should be given a fresh opportunity of being heard, considering the principle of natural justice. Accordingly, the case is restored to the PCIT (Exemption), for afresh consideration and examination of the application of assessee under section 12AA, with the following observation: 1. Consider the veracity of evidence claimed to be submitted before the then CIT and the additional evidence submitted by the assessee under rule 29. 2. Verify the genuineness of the objectives of the assessee society in the light of evidences prima facie relevant, for the year under consideration for the purpose of grant of registration u/s 12AA of the Act. 3. Assessee shall cooperate in the proceedings, before the CIT. ITA No. 156/Asr/2020 Atam Vallabh Jain Sarvmangal Trust v. CIT 7 4. All pleas available under the law shall remain so available to the assessee in the fresh proceedings before the Ld. PCIT. 10. In result, the appeal is treated allowed for statistical purposes in the terms indicated as above. Order pronounced in the open court on 05.07.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T True Copy By Order