Shri Vishashrimali Khambhati Gnati Trust, Vadodara V. CIT (Exemption), , Ahmedabad

ITA 1565/AHD/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8883 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-01-2020
• Assessment Year: misc
• Appeal Filed On: 20-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PF JAIN
• Keywords: Charitable institution; Principle of natural justice; Competent authority; Cancellation of registration; Set aside
• Section: 11A; 12AA

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO.1565/AHD/2018 SHRI VISHASHRIMALI KHAMBHATI GNATI TRUST RAMAN SMRUTI ZANDA BAZAR, NR. GUJARATI SCHOOL AT & POST PADRA VADODARA-GUJARAT. PAN : AAETS 9675 D VS CIT (EXEMPTION) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI P.F. JAIN, AR REVENUE BY : SHRI SUBHASH BAINS, CIT-DR / DATE OF HEARING : 08/01/2020 /DATE OF PRONOUNCEMENT : 16/01/2020 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(EXE MPTION), AHMEDABAD DATED 26.2.2018 PASSED UNDER SECTION 12AA OF THE IN COME TAX ACT, 1961. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(EXEMPTION) HAS ERRED IN NOT GRANTING REGISTRATION TO THE TRUST UND ER SECTION 12AA OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED AN APPLICATION ON 4.8.2017 IN FORM NO.10A UNDER RULE 11A OF THE AC T FOR GRANT OF REGISTRATION TO THE TRUST UNDER SECTION 12AA OF THE ACT. IT WAS PLEADED ITA NO.1565/AHD/2018 - 2 - BY THE ASSESSEE THAT ITS TRUST CAME INTO EXISTENCE ON 8.5.1953 WHEN IT WAS REGISTERED WITH CHARITY COMMISSIONER UNDER BOMBAY C HARITABLE TRUST ACT, 1950. THE LD.CIT AFTER EXAMINATION OF THE DET AILS SUBMITTED BY THE ASSESSEE REJECTED THE APPLICATION OF THE ASSESSEE B Y OBSERVING AS UNDER: 2. A LETTER DATED 22.09.2017 WAS ISSUED TO THE APP LICANT TO FURNISH DETAILED NOTE ON THE ACTIVITIES ACTUALLY CARRIED OUT BY THE TRUST AS WELL AS THE DOCUMENTS / DETAILS. THE ABOVE-MENTIONED INQUIRY ABOUT THE AC TUAL ACTIVITIES OF THE TRUST IS NECESSARY IN VIEW OF THE MANDATORY PROVISIONS OF THE PROCEDURE FOR REGISTRATION U/S.12AA ACCORDING TO WHICH THE CIT (EX EMPTION) SHALL - (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE WAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, (C) HE SHALL PASS AN ORDER IN WRITING REGISTERING T HE TRUST OR INSTITUTION; (C) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL B E PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD.' 3. HOWEVER, ON GIVEN DATE, NEITHER APPLICANT ATTEND ED THE OFFICE NOR FURNISHED ANY DETAILS/ DOCUMENTS NOR SOUGHT ANY ADJ OURNMENT. 4. FOLLOWING THE PRINCIPLES OF NATURAL JUSTICE, FIN AL OPPORTUNITY WAS GIVEN TO THE ASSESSEE AND NOTICE WAS ISSUED TO THE APPLICANT ON 01.01.2018 FIXING HEARING FOR 22.01.2018. IN THIS LETTER, IT WAS MADE AMPLY DEAR TO THE APPLICANT THAT IN CASE OF NON-COMPLIANCE, THEIR APPLICATION F OR REGISTRATION IS LIABLE TO BE REJECTED FOR WANT OF THE DETAILS AS ASKED FOR IN TH E ABOVE-SAID LETTER. PART COMPLIANCE WAS FILED ON 29.01.2018. SINCE THE APPLI CANT HAS NOT FURNISHED THE REQUIRED DETAILS, ACCORDINGLY I AM CONSTRAINED TO D ISPOSE OF THE REGISTRATION APPLICATION ON THE BASIS OF MATERIAL AVAILABLE ON R ECORD. 5. PERUSAL OF PART COMPLIANCE FILED BY THE ASSESSE E TRUST REVEALS THAT THE AUDITED ACCOUNTS AND FOR 1 .Y. 2012-13, 2013-14 AND 2015-16 HAVE BEEN FILED WHEREIN INCOME-EXPENDITURE ACCOUNTS DO NOT REFLECT ;MY CHARITABLE ACTIVITIES ITA NO.1565/AHD/2018 - 3 - CARRIED OUT BY THE TRUST. FURTHER, THE ACCOUNTS FOR F.Y. 2016-17 AND COPY OF TRUST DEED DULY CERTIFIED BY THE TRUSTEE IS NOT FUR NISHED. IN THE ABSENCE OF THE DETAILS, THE GENUINENESS OF THE ACTIVITIES DOES NOT GET ESTABLISHED. THIS CLEARLY INDICATES THAT THE APPLICANT DOES NOT HAVE INTENTIO N EVEN TO START CHARITABLE/ RELIGIOUS ACTIVITIES. SECTION 12AA MAKES IT VERY CLE AR THAT BEFORE GRANTING REGISTRATION UNDER THIS SECTION, THE COMMISSIONER H AS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION AND ALSO HE HAS TO VERIFY THAT THESE ACTIVITIES ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. RELIANCE IN THIS REGARD IS PLACED ON J UDGMENT DELIVERED BY THE LION. SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME -TAX, UJJAIN VS DAWOODI BOHARA JAMAT CIVIL APPEAL NO. 2492 OF 2014. THE FACT S CONSIDERED IN PARA 14 OF THE JUDGEMENT BY THE HON'BLE APEX COURT ARE REPRODU CED FOR SAKE OF CONVENIENCE: ' SECTION 12AA LAYS DOWN THE PROCEDURE TO BE FOLLOWE D BY THE COMMISSIONER FOR GRANT OR REFUSAL OF APPLICATION FOR REGISTRATIO N MADE UNDER SECTION 12A. ACCORDING TO PROCEDURE SO LAID DOWN, THE COMMISSIONE R SHALL CALL FOR DOCUMENTS AND INFORMATION AND CONDUCT AN ENQUIRY TO SATISFY HIMSELF OF THE GENUINENESS OF THE TRUST AND UPON I CACHING SATISFA CTION OF THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND THE AUTHENTICIT Y OF THE ACTIVITIES OF THE TRUST, LIE. WOULD GRANT REGISTRATION. IF HE IS NOT SATISFI ED OF THE AFORESAID, THE REQUEST MADE IN THE APPLICATION MAY BE DECLINED. AS DISCUSSED ABOVE, THE APPLICANT HAS FAILED TO FILE DOCUMENTARY EVIDENCES TO ENABLE ME TO SATISFY ABOUT THE GENUINENESS OF ITS A CTIVITIES AND TO VERIFY THESE ACTIVITIES ARE IN CONSONANCE WITH ITS OBJECTS. 7. LOOKING TO THE ABOVE FACTS, I AM UNABLE TO ARRIV E AT THE SATISFACTION OF THE GENUINENESS OF THE ACTIVITIES. HENCE, THE APPLICATI ON FILED IN FORM NO.10A FOR THE APPROVAL U/S. 12AA OF THE INCOME-TAX ACT, IS REJ ECTED. 4. THE LD.COUNSEL FOR THE ASSESSEE WHILE IMPUGNING ORDER OF THE LD.CIT(EXEMPTION) HAS CONTENDED THAT FOR VERIFICATI ON OF ACTIVITIES OF THE ASSESSEE, IT IS NOT NECESSARY THAT TRUST SHOULD ACT IN PURSUANCE OF THE OBJECTS BEFORE GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. THE LD.CIT OUGHT TO HAVE EXAMINED OBJECTS OF THE TRUST. W ITH REGARD TO NON- SUBMISSIONS OF THE TRUST DEED IS CONCERNED, HE POIN TED OUT THAT BASICALLY THERE IS NO FORMAL TRUST DEED AVAILABLE WITH THE AS SESSEE. IT CAME INTO ITA NO.1565/AHD/2018 - 4 - EXISTENCE LONG BACK IN 1953 WHEN EVEN THE INCOME TA X ACT 1961 WAS NOT IN EXISTENCE. THE OBJECTS OF THE TRUST WERE REFLEC TED IN THE REGISTRATION, DETAILS OF CERTIFICATE ISSUED UNDER BOMBAY PUBLIC T RUST ACT, 1950. HE POINTED OUT THAT SUCH OBJECTS ARE AS UNDER: OBJECTS:- SHREE VISHA SHRIMALI KHAMBATI GYANTI TRUST WILL DO FOLLOWING WORKS. THE SAID OBJECTS WILL BE FULFILLED KEEPING IN VIEW THE PREVAILING PROVISIONS OF ACT AND WITH THE PRIOR APPROVAL OF GOVERNMENT WHEREVER NECE SSARY. 1. TO HELP MEMBERS. 2. FOR THE STUDY OF JAIN RELIGION TO MAINTAIN PATH SHALA, LIBRARY ETC. 3. TO ARRANGE FUND FOR SEVEN SHETRAS PREVALENT IN T HE JAIN RELIGION. 4. TO ARRANGE AND MAINTAIN BHOJAN SHALA FOR JAINS. 5. TO HELP CO-MEMBERS FOR THEIR WELFARE ETC. 6. TO ARRANGE FACILITY FOR JAIN TAPSVIS UNDERTAKING FAST CALLED AAIYAMBLE ETC. 7. TO CELEBRATE PARYUSHAN PARAV. 8. TO WORK FOR JIV DAYA- ANIMAL WELFARE ETC. 9. TO PROVIDE EDUCATIONAL AND HEALTH SERVICES. 10. TO DO ALL WORKS FOR THE BENEFIT OF JAIN SOCIETY IN CONFORMITY WITH JAIN TATVA- GYAN AND TO DO WORKS FOR THE ENCOURAGEMENT OF JAIN RELIGION. 5. THE LD.COUNSEL FOR THE ASSESSEE THEREAFTER TOOK US THROUGH SECTION 19 OF BOMBAY PUBLIC TRUST ACT, 1950 AND POINTED OUT THAT BEFORE GRANT OF REGISTRATION UNDER THE SAID ACT, SIMILAR EXERCISE W AS REQUIRED TO BE UNDERTAKEN. THE ASSESSEE HAS FULFILLED ALL THESE C ONDITIONS, AND THEREFORE IT DESERVES TO BE GRANTED REGISTRATION UNDER SECTIO N 12AA OF THE ACT. HE RELIED UPON THE JUDGMENT OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF CIT VS. KUTCHI DASA OSWAL MOTO PARIWAR, 362 ITR 194 (GUJ). ON THE STRENGTH OF THIS JUDGMENT, IT WAS SUBMITTED BY THE LD.COUNSEL FOR THE ASSESSEE THAT HONBLE COURT HAS LAID DOWN THAT COMM ENCEMENT OF ACTIVITIES OF THE TRUST IS NOT AN ESSENTIAL CONDITI ON FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. COMPETENT AUTHORITY OUGHT TO HAVE ASSESSED GENUINENESS OF THE OBJECTS, WHETHER THEY A RE CHARITABLE OR NOT. SIMILARLY, HE MADE REFERENCE TO THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF PR.COMMISSIONER OF INCOME TAX (EXEMPTION) VS. ITA NO.1565/AHD/2018 - 5 - DAWOODI BOHRA MASJID, REPORTED IN 90 TAXMNAN.COM 31 2 (GUJ). IN THIS CASE ALSO EXISTENCE OF TRUST DEED WAS NOT PROVED, B UT FACTUM OF THE OBJECTS WERE DEMONSTRATED. HE SUBMITTED THAT IN TH IS CASE ALSO TRUST DEED WAS NOT THERE, BUT OBJECTS WERE ASCERTAINED BY THE TRIBUNAL FROM DETAILS AVAILABLE WITH WAKF BOARD AS WELL AS ON THE BASIS OF OTHER RECORDS. THE TRIBUNAL WAS SATISFIED WITH THE OBJEC TS OF THE ASSESSEE THAT THEY ARE CHARITABLE IN NATURE AND GRANTED REGISTRAT ION. THIS ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIG H COURT. 6. ON THE OTHER HAND, THE LD.DR RELIED UPON ORDERS OF THE LD.CIT. HE SUBMITTED THAT ASSESSEE DID NOT FURNISH COMPLETE DE TAILS, AND THEREFORE, THERE WAS NO CHOICE FOR THE LD.COMMISSIONER EXCEPT TO REJECT THE APPLICATION OF THE ASSESSEE. 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GO NE THROUGH THE RECORD CAREFULLY. LD.CIT (EXEMPTION) HAS REPRODUCE D THE RELEVANT CLAUSE OF SECTION 12AA IN THE IMPUGNED ORDER EXTRAC TED (SUPRA). A PERUSAL OF THE ABOVE WOULD INDICATE THAT THE LD.COM MISSIONER WAS REQUIRED TO CALL FOR DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTI TUTION, AND ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEH ALF. THE LD.COMMISSIONER HAS CARRIED OUT THIS EXERCISE AND O BSERVED THAT THE ASSESSEE FAILED TO SUBMIT COMPLETE DETAILS I.E. TRU ST DEED, AND ALSO FROM PERUSAL OF THE ACCOUNTS WOULD INDICATE THAT IT HAS NOT INCURRED EXPENDITURE ON THE ACTIVITIES OF THE TRUST. QUA FIRST REASON ASSIGNED BY THE LD.COMMISSIONER THAT IN THE ABSENCE OF TRUST DE ED IT IS DIFFICULT TO ITA NO.1565/AHD/2018 - 6 - ASCERTAIN OBJECTS OF THE ASSESSEE AND GENUINENESS O F THE TRUST, IN THIS BEHALF, WE WOULD LIKE TO TAKE NOTE OF SECTION 19 OF THE BOMBAY PUBLIC TRUST ACT, 1950 WHICH READS AS UNDER: 19. INQUIRY FOR REGISTRATION: ON THE RECEIPT OF AN APPLICATION UNDER SECTION 18, OR, UPON AN APPLICATION MADE BY ANY PERSON HAVING INTEREST IN A PUBLIC TRUST OR ON HIS OWN MOTION, THE DEPUTY OR ASSISTANT CHARITY COMMISSIONER SHALL MAKE AN INQUIRY IN THE PRESCRIBED MANNER FOR THE PURPOSE OF ASCERTAINING: [(I) WHETHER A TRUST EXISTS AND WHETHER SUCH TRUST I S A PUBLIC TRUST. II) WHETHER ANY PROPERTY IS THE PROPERTY OF SUCH TRUST, III) WHETHER THE WHOLE OR ANY SUBSTANTIAL PORTION OF THE SUBJECT-MATTER OF THE TRUST IS SITUATE WITHIN HIS JURISDICTION, IV) THE NAMES AND ADDRESSES OF THE TRUSTEES AND M ANAGER OF SUCH TRUST, V) -THE MODE OF SUCCESSION TO THE OFFICE OF THE T RUSTEES OF SUCH TRUST, (VI) THE ORIGIN, NATURE AND OBJECT OF SUCH TRUST, (VII) THE AMOUNT OF GROSS AVERAGE ANNUAL INCOME AND EXPENDITURE OF SUCH TRUST, AND (VIII) ANY OTHER PARTICULARS AS MAY BE PRESCRIBED U NDER SUBSECTION (5) OF SECTION 18. 7. A PERUSAL OF THE CONDITIONS ENUMERATED IN THIS S ECTION WOULD INDICATE THAT BEFORE REGISTERING ANY TRUST UNDER BO MBAY PUBLIC TRUST ACT, DEPUTY OR ASSISTANT CHARITY COMMISSIONER IS RE QUIRED TO MAKE INQUIRY IN THE PRESCRIBED MANNER FOR THE PURPOSE OF ASCERTAINING DIFFERENT ASPECTS OF THE TRUST. IN THE CASE OF THE ASSESSEE THIS INQUIRY WAS DONE, AND THEREAFTER IT WAS REGISTERED UNDER THE BO MBAY PUBLIC TRUST ACT, 1950 VIDE REGISTRATION NO.A/832/VADODARA DATED 8.5.1953. IN THE LIST OF MOVABLE PROPERTY CERTAIN VESSELS WERE MENTI ONED WHOSE APPROXIMATE VALUE WAS DETERMINED AT RS.416.01. THE OBJECTS OF THE TRUST HAVE BEEN NOTICED BY US; EXTRACTED (SUPRA). A PERU SAL OF THE OBJECTS WOULD INDICATE THAT THEY ARE CHARITABLE IN NATURE. ONE OF THE OBJECTS IS TO PROVIDE EDUCATION AND HEALTH SERVICES, WHICH IS PER SE CHARITABLE IN THE DEFINITION OF EXPRESSION CHARITABLE PURPOSE PROVI DED IN SECTION 2(15) ITA NO.1565/AHD/2018 - 7 - OF THE INCOME TAX ACT. IN THE JUDGMENT OF KUTCHI D ASA OSWAL MOTO PARIWAR (SUPRA), HONBLE HIGH COURT HAS HELD THAT C OMMENCEMENT OF ACTIVITIES OF THE TRUST IS NOT NECESSARY FOR GRANT OF REGISTRATION UNDER SECTION 12AA THOUGH IN THE PRESENT CASE, TRUST HAS BEEN FULFILLING ITS ACTIVITY, BUT FOR THE PURPOSE OF INCOME-TAX, IT WAS NOT MAINTAINING SUCH DETAILS, AND DETAILS WOULD BE MAINTAINED ONCE THE R EGISTRATION IS BEING GRANTED TO IT. ACCORDING TO THE DECISION OF HONB LE GUJARAT HIGH COURT IT IS NOT ESSENTIAL CONDITION FOR EXAMINING THE GEN UINENESS OF THE TRUST FOR THE PURPOSE OF GRANT OF REGISTRATION. THE OBJE CTS OF THE TRUST ARE REQUIRED TO BE LOOKED INTO WHICH TO OUR MIND FULFIL LED THE CRITERION. THEREFORE, WE SET ASIDE ORDER OF THE LD.COMMISSIONE R AND ALLOW THE APPLICATION OF THE ASSESSEE. WE DIRECT THE REVENUE TO ISSUE A REGISTRATION CERTIFICATE UNDER SECTION 12AA OF THE ACT TO THE AS SESSEE, WHICH SHOULD BE SUBJECT TO OTHER FUTURE CONDITIONS I.E. IN CASE IT IS FOUND THAT THE ASSESSEE IS NOT PERFORMING IN ACCORDANCE WITH ITS O BJECTS, THEN REVENUE WILL BE AT LIBERTY TO FOLLOW THE PROCEDURE UNDER SE CTION 12AA(3) OF CANCELLATION OF REGISTRATION ETC. AT PRESENT, THE ASSESSEE DESERVES TO BE GRANTED REGISTRATION UNDER SECTION 12AA. ACCORDINGL Y, THE APPEAL OF THE ASSESSEE IS ALLOWED 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 16 TH JANUARY, 2020 SD/- SD/- (WASEEM AHMED) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 16/01/2020