Young Men's Christian Association, Chandigarh V. CIT(E), Chandigarh

ITA 1632/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2310 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 01-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDEEP GOYAL
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Charitable institution; Principle of natural justice; Competent authority
• Section: 12A; 12AA; 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1632/CHD/2017 (UNDER SECTION 12AA OF THE ACT) YOUNG MENS CHRISTIAN ASSOCIATION VS. THE CIT(EXEMPTIONS) SECTOR 11, CHANDIGARH. CHANDIGARH. PAN: AAATY0063F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARISH NAYYAR, CA RESPONDENT BY : SHRI JAGDEEP GOYAL, CIT DR DATE OF HEARING : 27.08.2018 DATE OF PRONOUNCEMENT : 31.08.2018 ORDER PER ANNAPURNA GUPTA, A.M . : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS),(HEREINAFTER REFERRED TO AS CIT(E)], CHANDIGARH, DATED 29.9.2017 REJECTING THE ASSESSEE S APPLICATION FOR GRANT OF REGISTRATION U/S 12A OF TH E INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY STATED, THE ASSESSEE HAD FILED AN APPLI CATION IN FORM NO.10A SEEKING REGISTRATION U/S 12A OF THE ACT ON 22.3.2017. THE CIT(E) NOTED FROM THE SAID APPLICATI ON THAT THE SOCIETY WAS ONGOING ENTITY IN OPERATION SINCE 0 3.08.1964 AND ITS STATED OSTENSIBLE AIMS AND OBJECTS WERE TO PROMOTE AND PROVIDE FOR THE DEVELOPMENT OF THE HUMAN PERSON ALITY OF YOUNG IN THOUGHT AND ACTION, BASED ON THE IDEALS OF LOVE, SACRIFICE AND SERVICE, TO FOSTER PROGRAMMES O F ACTIVITIES ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 2 DESIGNED TO PROMOTE THE INTELLECTUAL, SPIRITUAL, SO CIAL AND PHYSICAL WELL BEING OF ITS MEMBERS AND TO GIVE THEM OPPORTUNITIES TO UNDERSTAND AND TO PRACTICE RESPONS IBILITIES OF DEMOCRATIC CITIZENSHIP. WITH THIS BACKGROUND THE LD.CIT(E) PROCEEDED TO CONSIDER THE APPLICATION OF THE ASSESSEE ISSUED NOTICE TO THE APPLICANT ASSESSEE ASKING IT TO FILE NECESSARY DETAILS AS REPRODUCED IN PARA 5 O F THE ORDER. DUE REPLY WAS FILED BY THE APPLICANT ASSESSE E AFTER CONSIDERING WHICH, THE LD.CIT(E) DENIED REGISTRATI ON FOR THE REASON THAT THE REGISTRATION GRANTED EARLIER TO THE ASSESSEE U/S 12A HAD BEEN CANCELLED BY THE CIT-I, CHANDIGARH AND NO RATIONALE HAS BEEN BROUGHT OUT BY THE APPLICANT/ASS ESSEE FOR RECONSIDERING THE MATTER NOW. THE CIT(E) ALSO NOTED THAT THE CASE OF THE APPLICANT SOCIETY FOR ASSESSMENT YEAR 2 009-10 HAD BEEN REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER BY THE I.T.A.T. VIDE ORDER IN ITA NO.457/CHD/2015 D ATED 18.1.2017 AND CONSIDERING THE SAID FACT HELD THAT I N SUCH CIRCUMSTANCES ANY FRESH CONSIDERATION OF THE MATTER WOULD TANTAMOUNT TO SUBVERTING THE JUDICIAL PROCESS. HE F URTHER NOTED THAT NO EVIDENCE IN SUPPORT OF THE CLAIMED CH ARITABLE ACTIVITY HAD BEEN PROVIDED BY THE APPLICANT SOCIETY AND FURTHER THAT IT APPEARED THAT THE FOCUS OF THE APPL ICANT SOCIETY WAS ON A GROUP OF PERSONS HAVING PARTICULAR FAITH AND BELIEF AND NOT FOR THE GENERAL PUBLIC THUS GOIN G AGAINST THE VERY CHARACTER OF CHARITABLE PURPOSE. THE RELEV ANT FINDINGS OF THE CIT(E) AT PARA 6 -9 OF THE ORDER AR E AS UNDER: ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 3 6. NEITHER DID ANY ONE ATTEND ON THE DATE FIXED NO R WAS ANY REQUEST FOR ADJOURNMENT RECEIVED. IN ORDER TO F OLLOW THE PRINCIPLES OF NATURAL JUSTICE ANOTHER OPPORTUNI TY WAS ACCORDED TO THE APPLICANT AND THE MATTER WAS FIXED FOR 11.09.2017. ON 11.09.2017 SH. HARISH NAYYAR, CA AND COUNSEL OF THE APPLICANT ATTENDED AND FILED REPLY IN RESPONSE TO THE ABOVE NOTED SHOW CAUSE QUERIES. THE APPLICANT IN HIS REPLY DATED 11 TH SEPTEMBER, 2017 AT POINT NO. (VII) SUBMITTED THAT THE APPLICANT WAS GRANTED REGISTRATION UNDER SECTION 12A BY CIT, PATIALA ON 09.03.1992. THE APPLICANT FURTHER SUBMITTED THAT THE REGISTRATION GRANTED EARLIER UNDER SECTION 12A OF THE ACT WAS CANCELLED BY CIT-1, CHANDIGARH BUT THE APPELLANT DID NOT SUBMIT ANY COPY OF THE ORDER PASSED BY CIT-1, CHANDIGARH WITHDRAWING THE REGISTRATION GRANTED EARLI ER. THERE IS NO RATIONALE BROUGHT OUT FOR RECONSIDERATI ON OF A MATER THAT HAS BEEN ADJUDICATED UPON BY THE EAR LIER JURISDICTION. 7. THE COUNSEL SUBMITTED A COPY OF THE ORDER IN IT A NO. 457/CHD/2015 DATED 18.01.2017 PASSED BY THE ITAT,, DIVISION BENCH, CHANDIGARH IN THE CASE OF THE APPLICANT SOCIETY FOR A.Y. 2009-10 WHERE THE CASE OF THE ASSESSEE HAS BEEN REMANDED BACK TO THE FILE OF THE AO. TH E SAID ORDER WAS PASSED AGAINST AN APPEAL FILED BY THE ASSESSEE AGAINST AN ORDER PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)-I, CHANDIGARH IN THE CASE OF THE APPLICANT SOCIETY WHICH WAS INITIATED BY THE PROCEEDI NGS UNDER SECTION 148 OF THE I.T. ACT, 1961. NOW WHEN TH E CASE OF THE APPLICANT SOCIETY HAS BEEN REFERRED BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION THE APPLICAN T CHOSE TO COME UP WITH AN APPLICATION IN FORM 10A FOR GRANT OF APPROVAL U/S 12AA OF THE ACT. ANY FRESH CONSIDERATIO N OF THE MATTER AT THIS JUNCTURE SHALL TANTAMOUNT TO SUBV ERTING THE JUDICIAL PROCESS. 8. FINANCIAL STATEMENT OF THE SOCIETY REVEAL THAT THE MAJOR PORTION OF THE INCOME HAS BEEN RECEIVED THROUG H COLLECTION OF HOSTEL FEE AND THE MAJOR EXPENDITURE H AS BEEN SHOWN UNDER THE HEAD SALARIES & ALLOWANCES, CAREER COUNSELING AND YOUTH TRAINING & EMPOWERMENT ETC. NO EVIDENCE IN SUPPORT OF THE CLAIMED CHARITAB LE ACTIVITY HAS BEEN PROVIDED BY THE APPLICANT. FURTHE R IT IS OBSERVED THAT THE 'SCHEDULE I' OF THE RULES AND REGULATIONS OF THE SOCIETY AT PAGE 16 READS AS UNDER:- THE YOUNG MEN'S CHRISTIAN ASSOCIATION SEEK TO UNIT E THOSE YOUNG MEN, WHO REGARDING JESUS CHRIST AS THEI R GOD AND SAVIOUR ACCORDING TO THE HOLY SCRIPTURES, D ESIRE TO HE HIS DISCIPLES IN THEIR FAITH AND IN THEIR- LIFE, AND TO ASSOCIATE THEIR EFFORTS FOR THE EXTENSION OF HIS KI NGDOM AMONGST YOUNG MEN ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 4 THE CONTENT OF THE SCHEDULE APPEARS 'TO BE PARTIAL AND FOCUSES ON GROUP OF PERSON HAVING PARTICULAR FAITH AN D BELIEF AND NOT FOR THE GENERAL PUBLIC MARRING THE VERY CHARA CTER OF CHARITABLE PURPOSE THE APPLICANT SEEMS TO PROJECT. T HERE IS AN ESTABLISHED INDULGENCE IN ACTIVITIES THAT ARE COMMER CIAL IN NATURE. 9. IN THE LIGHT OF ALL THE ABOVE THE ACTIVITIES OF THE APPLICANT SOCIETY CANNOT BE TERMED TO FALL UNDER TH E PURVIEW OF SECTION 2(15) OF THE IT. ACT AND ALSO DOESN'T MER IT A FRESH CONSIDERATION AFTER A WITHDRAWAL ORDER HAD BEEN PASS ED BY THE COMPETENT AUTHORITY. 3. AGGRIEVED BY THE SAME, THE APPLICANT ASSESSEE HA S COME UP IN APPEAL BEFORE US, RAISING FOLLOWING GROUNDS: 1) THAT THE ORDERS OF CIT (EXEMPTIONS), CHANDIGARH HAVE BEEN PASSED IN HASTE AND HAVE IGNORED BASIC ASPECTS AND FACTS OF THE CASE THUS CAUSING UNDUE HARDSHIP TO THE APPELLANT. 2. THAT THE CIT (EXEMPTIONS), CHANDIGARH HAS ERRED BO TH ON FACTS AND LAW IN DENYING REGISTRATION TO THE APPELLANT UNDER SECTION 12A OF THE INCOME TAX ACT O N THE GROUND THE ACTIVITIES OF THE APPLICANT SOCIETY CANNOT BE TERMED TO FALL UNDER THE PURVIEW OF SECTION 2(15) OF THE I.T. ACT AND ALSO DOESN'T MERIT A FRESH CONSIDERATION AFTER A WITHDRAWAL ORDER HAD BEEN PASSED BY THE COMPETENT AUTHORITY. THE ACTION OF CIT(EXEMPTIONS), CHANDIGARH IN DENYING REGISTRATION T O THE APPELLANT UNDER SECTION 12AA OF THE INCOME TAX AC T IS NOT BASED UPON THE CORRECT APPRECIATION OF FACTS A ND OTHER MATERIAL ON RECORD. IT IS PRAYED THAT THE DIRECTIONS MAY BE GIVEN TO THE CIT (EXEMPTIONS), CHANDIGARH FOR GRANT OF REGISTRATION TO THE APPELLANT UNDER SECTION 12A OF T HE INCOME TAX ACT 1961. 3. THAT THE APPELLANT CRAVES TO ADD, DELETE, CONCEDE, MODIFY ANY OR ALL THE GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. 4. DURING THE COURSE OF HEARING BEFORE US, THE SOLE CONTENTION AND PRAYER OF THE LD. COUNSEL FOR ASSESS EE WAS THAT THE APPLICANT ASSESSEE HAD BEEN REFUSED REGIST RATION WITHOUT BEING GIVEN ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT GIVING A SHOW CAUSE NOTICE ON THE ISSUES WHICH THE ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 5 CIT(E) FOUND WENT AGAINST THE ASSESSEE. OUR ATTENTI ON WAS DRAWN TO THE FINDINGS OF THE CIT(E) AT PARA 6-9 OF THE ORDER WHICH HAS BEEN REPRODUCED ABOVE IN OUR ORDER AND IT WAS POINTED OUT THEREFROM THAT THE ASSESSEE WAS GIVEN A N OPPORTUNITY TO FILE REPLY ON 11.9.2017 ON THE ISSUE S RAISED IN THE SHOW CAUSE NOTICE ISSUED TO IT, ASKING FOR RELE VANT DETAILS VIS--VIS THE APPLICANT SOCIETY, REPRODUCED IN PARA 5 OF THE CIT(E)S ORDER AS UNDER: 5. IN ORDER TO ACCORD AN OPPORTUNITY THE DATE WAS F IXED ON 02.08.2017. THE MATTER WAS FIXED FOR 17.08.2017. ON THE BASIS OF MATERIAL AVAILABLE WITH THE APPLICATION THE SH OW CAUSE LETTER WAS ISSUED AND SENT TO THE ADDRESS PROVI DED BY THE APPLICANT IN ITS APPLICATION IN FORM 10A VIDE WHICH IT WAS REQUESTED THAT THE FOLLOWING DOCUMENTS/CLARIFICA TIONS BE PROVIDED BY THE DATE FIXED:- I. DETAILS OF PROPERTY VESTED IN THE SOCIETY, AS ENVISA GED U/S 11 OF THE I.T. ACT, INCOME FROM WHICH WAS SOUGH T TO BE EXEMPTED. II. DETAILS OF VOLUNTARY CONTRIBUTIONS RECEIVED BY THE SOCIETY, AS ENVISAGED U/S 12 OF THE I.T. ACT AND WHETHER ANY SPECIFIC DIRECTIONS HAD BEEN RECEIVED B Y THE PERSONS MAKING VOLUNTARY CONTRIBUTIONS. III. THE ORIGINALS OF MOA/BYE-LAWS OF THE SOCIETY ALONG WITH THE REGISTRATION CERTIFICATE. IV. THE COPIES OF BANK STATEMENTS THROUGH WHICH ACTIVITIES WERE BEING PROPAGATED. THE RECEIPTS AND THE DIFFERENT ITEMS OF EXPENDITURE THAT WERE BEING CLAIMED. V. THE COMPLETE DETAILS OF THE DONATIONS RECEIVED, OR INTENDED TO BE RECEIVED AND DOCUMENTARY EVIDENCE AS REGARDS TO GRANTS RECEIVED. VI. COPIES 'OF THE I.T RETURNS FOR THE LAST THREE ASSESS MENT YEARS I.E. A.Y. 2014-15 TO A.Y. 2016-17 ALONGWITH A NOTE REGARDING ANY KIND OF EXEMPTIONS UNDER I.T. ACT HAVING CLAIMED EARLIER DURING ANY OF THE PAST YEARS. VII. WHETHER THE APPLICATIONS FOR REGISTRATION WAS FILED FOR THE FIRST TIME. THE FATE OF THE EARLIER APPLICATION ALONG WITH COPY OF THE ORDER (IF ANY). ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 6 VIII. IF ANY DONATION UNDER FCRA HAD BEEN RECEIVED, THE RELEVANT DETAILS. THE COPY OF THE RETURN FOR FCRA AN D THE COPY OF SPECIFIED BANK ACCOUNT (IF ANY). IX. THE DETAILS OF CORPUS FUND AND WHETHER THE SAME WERE WITH ANY WRITTEN SPECIFIC DIRECTIONS. X. THE DETAILS REGARDING CHARITABLE ACTIVITIES BEING CONDUCTED BY THE SOCIETY. YOU ARE REQUIRED TO CLARIF Y AS TO WHICH SPECIFIC LIMB UNDER SECTION U/S 2(15) OF THE I.T. ACT WAS BEING PURSUED. XI. THE DETAILS OF SALARY PAID DURING THE LAST THREE YEAR S AND EXPLAIN WHETHER THE SAME ARE GUIDED BY TDS PROVISIONS OR NOT? XII. THE COPY OF FINANCIAL STATEMENTS FOR THE LAST FOUR FINANCIAL YEARS I.E. FROM F.Y. 2013-14 TO F.Y. 2016-17. XIII. DETAILS OF DONATION RECEIVED IN F.Y. 2016-17 WITH NAM E, ADDRESS, AMTS AND RECEIPTS OF THE SAME. XIV. THE NOTE ON ACTIVITIES OF THE SOCIETY XV. DETAILS OF CASH DEPOSITS IN THE BANK ACCOUNT FROM 08.11.2016 TO 31.03.2017. THE APPLICANT WAS FURTHER ASKED TO PROVIDE A RATIONALE WHY REGISTRATION SHOULD BE GRANTED IN THE ABSENCE OF ANY APPARENT CHARITABLE ACTIVITY BEING PURSUED AND EVID ENCE THEREOF. 5. THE LD. COUNSEL FOR ASSESSEE POINTED OUT DUE REP LY WAS FILED BY THE APPLICANT/ASSESSEE AND THAT THEREAFTE R THE LD.CIT(E) DREW HIS OWN CONCLUSION FROM THE DETAILS FILED AND WITHOUT CONFRONTING THE SAME TO THE ASSESSEE AND WI THOUT GIVING HIM DUE OPPORTUNITY TO FILE REPLY FOR THE SA ME, WENT FORWARD AND DENIED GRANT OF REGISTRATION TO THE APP LICANT SOCIETY. THE LD. COUNSEL FOR ASSESSEE VEHEMENTLY AR GUED THAT THE IMPUGNED ORDER PASSED FLOUTED ALL PRINCIPLES OF NATURAL JUSTICE. 6. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ER OF THE CIT(E). ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 7 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE GON E THROUGH THE IMPUGNED ORDER IN APPEAL. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE. THE REA SONS FOR REJECTING THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12A OF THE ACT AS POINTED OUT ABOV E, WERE NOT CONFRONTED TO THE ASSESSEE AT ALL FOR SUBMITTIN G HIS RELY TO THE SAME. THE CIT(E), WE AGREE, HAD ARRIVED AT H IS OWN CONCLUSION FROM THE DETAILS FILED BY THE ASSESSEE A ND PROCEEDED TO DENY THE REGISTRATION WITHOUT GIVING A N OPPORTUNITY TO THE ASSESSEE TO REBUT THE SAME. THE LD.CIT(E) HAS DENIED GRANT OF REGISTRATION STATING THAT NO RA TIONALE WAS BROUGHT OUT BY THE ASSESSEE FOR RECONSIDERING ITS A PPLICATION ONCE IT HAD BEEN REJECTED BY THE CIT, CHANDIGARH EA RLIER. THE CIT(E) HAS ALSO STATED THAT SINCE THE ORDER PASSED IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10, H AD BEEN RESTORED TO THE ASSESSING OFFICER FOR RECONSIDERATI ON, ANY FRESH CONSIDERATION WOULD AMOUNT TO SUBVERTING THE JUDICIAL PROCESS. THE LD.CIT(E) HAS ALSO STATED THAT NO EVI DENCE OF CHARITABLE ACTIVITY HAS BEEN PROVIDED BY THE ASSESS EE AND ITS FOCUS APPEARED TO BE ON A GROUP OF PERSONS HAVING P ARTICULAR FAITH. NONE OF THE ABOVE REASONS FOR DRAWING AN ADV ERSE VIEW AGAINST THE APPLICANT ASSESSEE, HAVE BEEN SHOWN BY THE REVENUE TO HAVE BEEN CONFRONTED TO THE APPLICANT AS SESSEE BEFORE REJECTING THE APPLICATION OF THE ASSESSE FOR THE SAID REASONS. IT IS A CLEAR CASE, THEREFORE, OF PASSING AN ORDER WITHOUT FOLLOWING THE BASIC PRINCIPLES OF NATURAL J USTICE I.E. ITA NO.1632/CHD/2017 U/S 12AA OF THE ACT 8 OF GIVING DUE AND ADEQUATE OPPORTUNITY OF HEARING T O THE ASSESSEE. WE, THEREFORE, CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE FILE OF CIT(E) TO PASS ORDER AFRESH AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE LD. CIT(E) IS DIRECTED TO PASS THE ORDER WITHIN SIX MONTHS FROM T HE DATE OF RECEIPT OF THE COPY OF THIS ORDER. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST AUGUST, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH