Subbarati KKB Charitable Trust, V. CIT,

ITA 1681/DEL/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3989 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-05-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SAMPATH MS MONA MOHANTY
• Keywords: Charitable institution; Retrospective amendment; Condonation of delay
• Section: 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO.1681/DEL/2008 ASSESSMENT YEAR : - SUBHARATI KKB CHARITABLE TRUST, SUBHARATIPURAM, NH-58, MEERUT BYEPASS ROAD, MEERUT. VS. COMMISSIONER OF INCOME TAX, AYAKAR BHAWAN, BAINSALI GROUND, MEERUT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH, ADVOCATE REVENUE BY : MS MONA MOHANTY, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED A GAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX, MEERUT (CIT) DATED 25 TH MARCH, 2008 U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1 961. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, A ND IN LAW, THE ACTION OF THE COMMISSIONER OF INCOME TAX I N REFUSING REGISTRATION FOR EXEMPTION U/S 80G(5) (VI) IS ARBITRARY, ERRONEOUS, UNWARRANTED AND ILLEGAL AND MUS T BE QUASHED WITH DIRECTIONS FOR RELIEF. 2. THAT THE COMMISSIONER OF INCOME TAX NOT HAVING PASSED THE REQUISITE ORDER WITHIN THE MANDATED PERIOD BY THE HIGH COURT, IT AUTOMATICALLY CAUSES THE PRIVILEGE OF REGISTRATION TO ENURE TO THE APPELLANT, WHICH IS PRAYED A ND MUST BE SO DIRECTED. ITA NO.1681/DEL/2008 2 2. THE APPLICATION FOR APPROVAL U/S 80G WAS FILED BY THE ASSESSEE ON 22 ND OCTOBER, 2007 WHICH HAS BEEN DENIED BY THE IMPUGNED ORDER. THE SEQUENCE OF EVENTS NARRATED IN THE FIRST PARA OF T HE IMPUGNED ORDER AND ACCORDING TO THE FACTS MENTIONED THEREIN, THE TRUST (THE ASSESSEE) WAS INITIALLY FORMED BY SMT. RAJWATI BHATNAGAR VIDE REGISTERED DEED DATED 15 TH MARCH, 1991 AND IT WAS GRANTED REGISTRATION U/S 12A ON 15 TH NOVEMBER, 1991 AND APPROVAL U/S 80G INITIALLY WAS GRANTED ON 6 TH APRIL, 1992. SINCE THEN, RENEWAL U/S 80G WAS BEING GRANTED TO THE ASSESSEE EXCEPT IN FINANCIAL YEAR 2005-0 6, AS, ACCORDING TO THE THEN CIT, THE ASSESSEE DID NOT APPLY FOR REGISTRA TION OF TRUST REGISTERED ON 17 TH AUGUST, 1995 AND APPROVAL GRANTED U/S 80G WAS WITHDRAWN VIDE ORDER DATED 17 TH MARCH, 2006. THE DEED OF THE TRUST EXECUTED ON 15 TH MARCH, 1991 WAS RE-EXECUTED ON 17 TH AUGUST, 1995 AND IT WAS REGISTERED ON 9 TH AUGUST, 1995. THE THEN CIT TREATED THE TWO TRUSTS SEPARATELY; ONE EXISTING VIDE DEED DATED 15 TH MARCH, 1991 AND THE OTHER VIDE DEED DATED 17 TH AUGUST, 1995. AGGRIEVED, ASSESSEE FILED WRIT PETITION AGAINST THE SAID ORDER OF WITHDRA WAL OF THE REGISTRATION U/S 12A BEFORE THE HONBLE ALLAHABAD HIG H COURT AND IN PURSUANCE OF ORDER PASSED IN WRIT, CIT, MEERUT, VIDE H IS ORDER DATED 19 TH JANUARY, 2007 HAD REGISTERED THE TRUST. IN THE SAID ORDER IT WAS MADE CLEAR BY THE CIT THAT REGISTRATION IS GRANTED TO THE TRUST ESTABLISHED IN 1995 WHICH IS WHOLLY DIFFERENT FROM TH E TRUST ESTABLISHED IN 1991. IT IS IN THESE CIRCUMSTANCES THE PRESENT CIT HAS CONSIDERED THE QUESTION THAT WHETHER OR NOT THE APPROVAL U/S 80G SHOULD BE GRANTED. HE HAS FIRST NOTICED THAT THE ASSESSEE IS UNCONSC IONABLY PROFITING FROM THE SIMILARITY OF THE NAME OF THE TRU ST OF 1991 AND, SECONDLY, THERE WAS DISPUTE BETWEEN THE TRUSTEES AND UNSA VORY ACTIVITIES OF THOSE CONTROLLING THE TRUST. THIRDLY, HE NOTICED THAT IN COLUMN NO.14 OF FORM NO.10G FILED ON 22 ND OCTOBER, 2007, THE ASSESSEE HAS REPLIED THE COLUMN NO.14 IN NEGATIVE WHEREI N THE ASSESSEE WAS REQUIRED TO SUBMIT THAT WHETHER ANY PART OF INCOME OR ITA NO.1681/DEL/2008 3 ANY PROPERTY OF THE ASSOCIATION IS USED OR APPLIED IN A MANNER WHICH RESULTS DIRECTLY OR INDIRECTLY IN CONVERTING ANY BENE FIT, AMENITY OR PERQUISITES (WHETHER CONVERTED INTO MONEY O NOT) ON A NY INTERESTED PERSON AS SPECIFIED IN SUB-SECTION (3) OF SECTION 13. H E CALLED FOR DETAILS OF THE AUDITED ACCOUNT FOR THE YEAR ENDING 3 1 ST MARCH, 2007 AND NOTICED THAT ` 6,45,079/- WAS PAID TO DR. ATUL KRISHN A [PRESIDENT (FOR LIFE)] AND ` 6,20,219/- TO DR. MUKTI BHATNAGAR TRUST EE AND WIFE OF DR. ATUL KRISHNA AND DR. MUKTI BHATNAGAR WERE STAYING IN THE ACCOMMODATION PROVIDED BY THE TRUST AND, THUS, THE ASSE SSEE WAS REQUIRED TO FILE THE DETAILS REGARDING ANY OTHER PER QUISITES BEING ENJOYED BY THE TRUSTEES. IN RESPONSE, IT WAS SUBMITTED T HAT BOTH OF AFOREMENTIONED PERSONS WERE PROVIDED WITH ACCOMMODATI ON BY THE TRUST WHICH WAS NOT FOUND TO BE MENTIONED IN THE AUDI T REPORT AS BOTH OF THE ABOVE MENTIONED PERSONS WERE GROUPED WITH OTHE R EMPLOYEES AND IT WAS STATED THAT THIS WAS DUE TO INADVERTENT MISTA KE. HOWEVER, LD. CIT HAS NOT ACCEPTED SUCH EXPLANATION AND HAS OBSER VED THAT SUCH ACT OF THE ASSESSEE IMPARTS A COLOUR OF DISHONESTY TO THE INADVERTENT MISTAKE OF THE AUDITOR. 3. LEARNED CIT HAS ALSO FOUND THAT THE ACCOUNTS OF THE ASSESSEE WERE QUALIFIED WITH THE FOLLOWING OBSERVATIONS:- WE HAVE EXAMINED THE ANNEXED BALANCE SHEET OF SUBHAR TI K.K.B. CHARITABLE TRUST, MEERUT AS AT 31 ST MARCH, 2007 AND THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2007 WHICH ARE IN AGREEMENT WITH THE BOOKS OF ACCOUNTS MAINTAINED BY THE SAID TRUST. WE HAVE OBTAINED ALL THE INFORMATION AND EXPLANATIONS W HICH TO THE BEST OF OUR KNOWLEDGE AND BELIEF WERE NECESSARY F OR THE PURPOSE OF OUR AUDIT. IN OUR OPINION, PROPER BOOKS OF ACCOUNT HAVE BEEN KEPT BY THE TRUST SO FAR AS APPEARS FROM OUR EXAMINATION OF THE BOOKS. IN OUR OPINION AND TO THE BEST OF OUR INFORMATION AND A CCORDING TO THE EXPLANATIONS GIVEN TO US, THE SAID ACCOUNTS GIVE A TRUE AND FAIR VIEW: ITA NO.1681/DEL/2008 4 I) IN THE CASE OF THE BALANCE SHEET OF THE STATE OF AFFAI RS OF THE TRUST AS AT 31 ST MARCH, 2007 AND II) IN THE CASE OF THE INCOME AND EXPENDITURE ACCOUNT O F THE EXCESS OF INCOME OVER EXPENDITURE FOR THE YEAR ENDED 31 ST MARCH, 2007. FURTHER WE HAVE TO REPORT THAT THE PRESIDENT OF TRUST HAVE INTIMATED VIDE LETTER DATED 10.11.2005 THAT ONE OF THE TRUSTE ES MR. HARIOM ANAND CEASED TO BE TRUSTEE FROM 7.5.2005. HE WAS LOOKING AFTER ACCOUNTS AND FINANCE. MR. HARIOM ANAN D TOOK AWAY ALMOST ALL THE DOCUMENTS RELATED TO ACCOUNTS. THE MANAGEMENT OF THE TRUST HAS COLLECTED INFORMATION FROM VA RIOUS PLACES AND HAS COMPLIED THE BOOKS OF ACCOUNTS. HOWE VER, THERE IS A POSSIBILITY THAT SOME FIGURES MAY HAVE BEEN ADOPTE D ON ESTIMATED BASIS IN THE ABSENCE OF ACTUAL BILLS/VOUCHERS/DOCUMENTS. THE BOARD OF TRUSTEES HAS RE SOLVED TO RECTIFY AND INCORPORATE IN FUTURE SUCH OMISSIONS. THE PRESCRIBED PARTICULARS ARE ANNEXED HERETO. 4. REFERRING TO ABOVE QUALIFICATION BY THE AUDITOR IT HAS BEEN OBSERVED BY LD. CIT THAT IN ORDINARY COURSE, AN EVENT OF THE NATURE NARRATED ABOVE WOULD HAVE AN EFFECT ON THE ACCOUNTS ONLY FOR THE YEAR IN WHICH THE DOCUMENTS WERE ALLEGEDLY TAKEN AWAY I.E ., FINANCIAL YEAR 2005-06. IN THE INSTANT CASE, THE ACCOUNTS WERE CALLE D FOR BEYOND THE RELEVANT PERIOD WITHOUT GIVING DETAILS OR QUANTIFICA TION. IN THESE CIRCUMSTANCES, LD. CIT HAS COME TO THE CONCLUSION THAT ACCOUNTS SUBMITTED BY THE ASSESSEE ARE NOT FULLY RELIABLE AND THE ASSESSEE TEND TO HIDE VITAL FACTS. HE OBSERVED THAT IT IS A SAD FACT OF LIFE THAT PERSONS CONTROLLING VAST AMOUNTS OF PUBLIC MONEY OFTEN APPLY THE SAME FOR THEIR OWN BENEFIT TO THE DETRIMENT OF PUBLIC INTERE ST AND, IN THIS MANNER, THE ASSESSEE HAS BEEN DENIED APPROVAL U/S 80G AND LD. CIT HAS DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ACCOUN TS OF THE ASSESSEE MINUTELY KEEPING IN VIEW THE CONTENTS OF HIS ORD ER. 5. AFTER NARRATING THE FACTS, IT WAS PLEADED BY LD. C OUNSEL OF THE ASSESSEE THAT THE IMPUGNED ORDER OF CIT IS DATED 25 TH MARCH, 2008. THE ASSESSEE AFTER THE SAID DATE HAS BEEN ASSESSED FOR ASSESSMENT YEARS 2006-07 AND 2007-08 VIDE ASSESSMENT ORDERS DATED 30 TH ITA NO.1681/DEL/2008 5 DECEMBER, 2008 AND 20 TH DECEMBER, 2009 RESPECTIVELY UNDER THE PROVISIONS OF SECTION 143 (3) OF THE ACT. HE SUBMITTE D THAT VIDE THESE ORDERS THE ASSESSEE HAS BEEN ASSESSED IN THE STATUS OF CHARITAB LE INSTITUTION HAVING NIL INCOME. HE HAS SUBMITTED BEFOR E US COPY OF BOTH THESE ASSESSMENT ORDERS. HE FURTHER SUBMITTED THAT THOUGH VIDE ORDER DATED 19 TH JANUARY, 2007 THE CIT HAD REGISTERED THE TRUST, BUT IT DID NOT GRANT REGISTRATION WITH RETROSPECTIVE EFFECT I.E., 17 TH AUGUST, 1995 I.E., THE DAY OF RE-EXECUTION OF THE TRUST. HE HAS PLACED BEFORE US THE COPY OF THE ORDER OF THE TRIBUNAL DATED 31 ST JULY 2008 PASSED IN ITA NO.1368/DEL/2007 IN THE CASE OF THE ASSESSEE WHEREIN THE ASSESSEE HAD SOUGHT THE RELIEF FROM THE TRIBUNAL FOR GRANT OF REGISTRATION W.E.F. 17 TH AUGUST, 1995 AND THE TRIBUNAL HAS ACCEPTED THE CLAIM OF THE ASSESSEE FOR CONDONATION OF DELAY IN FILING THE APPLICA TION AND THE ASSESSEE WAS GRANTED REGISTRATION W.E.F. 17 TH AUGUST, 1995. HE HAS SUBMITTED THAT THE ASSESSEE ALL ALONG IS RECOGNIZED AS REL IGIOUS AND CHARITABLE INSTITUTION AND HAS ALSO BEEN ASSESSED IN THE ST ATUS OF A CHARITABLE TRUST RIGHT FROM THE BEGINNING. HE HAS PR ODUCED BEFORE US COPY OF APPELLATE ORDER PASSED BY COMMISSIONER OF INCOM E-TAX (APPEALS), MEERUT DATED 15 TH DECEMBER, 2008 IN WHICH LD. CIT HAS DIRECTED THE ASSESSING OFFICER TO GRANT THE RELIEF TO T HE ASSESSEE ALLOWING THE BENEFIT OF DEDUCTION U/S 11 IN RESPECT O F ASSESSMENT YEARS 1999-2000 TO ASSESSMENT YEAR 2005-06. HE SUBMITTED THAT FOR SUBSEQUENT ASSESSMENT YEARS, NAMELY, ASSESSMENT YEAR 2006-07 A ND 2007-08 THE ASSESSMENT ORDERS HAVE ALREADY BEEN FILED. IN THE LIGHT OF THE AFOREMENTIONED DOCUMENTS HE SUBMITTED THAT THOUGH LD. CIT HAS DIRECTED THE ASSESSING OFFICER TO MINUTELY EXAMINE THE ACCOUNTS OF THE TRUST IN THE LIGHT OF THE CONTENTS OF HIS ORDER AND TH ESE DIRECTIONS ARE GIVEN VIDE ORDER DATED 25 TH MARCH, 2008. HE SUBMITTED THAT AFTER THE DIRECTIONS ARE GIVEN TO THE ASSESSING OFFICER, THE CONCE RNED ASSESSING OFFICER FOR ASSESSMENT YEAR 2006-07 AND 2007-08 HAS PASSED ORDERS U/S 143 (3) ON 30 TH DECEMBER, 2008 AND 21 ST DECEMBER, 2009 AND THE ITA NO.1681/DEL/2008 6 ASSESSING OFFICER HAS NOT FOUND ANYTHING ADVERSELY AFFECT ING THE CASE OF THE ASSESSEE AND THE ASSESSEE HAS BEEN ASSESSED IN THE STATUS O F CHARITABLE TRUST AND HAS BEEN ASSESSED AT NIL INCOME. TH EREFORE, HE CONTENDED THAT NOTHING ADVERSE HAS BEEN FOUND AGAINST THE ASSESSEE AND THE ASSESSEE HAS BEEN CONSTANTLY GIVEN THE STATUS OF CH ARITABLE TRUST AND, THEREFORE, APPROVAL U/S 80G HAS BEEN DENIED TO THE ASSESSEE WITHOUT ANY VALID REASON. HE SUBMITTED THAT LD. CIT SHOULD BE DIRECTED TO GRANT APPROVAL TO THE ASSESSEE TRUST AND HIS ORDER REF USING TO GRANT APPROVAL SHOULD BE SET ASIDE. 6. ON THE OTHER HAND, RELYING UPON THE ORDER OF CIT IT WAS SUBMITTED BY LD. DR THAT HIS ORDER SHOULD BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WE HAVE CAREFULLY GO NE THROUGH THE ORDER PASSED BY LD. CIT AND THE SEQUENCE OF EVENTS MENT IONED THEREIN. AFTER THE IMPUGNED ORDER IS PASSED, THE TRIBUNAL VIDE ITS ORDER DATED 31 ST JULY, 2008 HAS DIRECTED THE CIT TO GRANT REGISTRATIO N W.E.F. 17 TH AUGUST, 1995 I.E., SINCE THE INCEPTION OF THE TRUST. THE APPROVAL U/S 80G HAS BEEN REFUSED TO THE ASSESSEE MAINLY ON THE GROUND THAT VARIOUS ACTIVITIES OF THE TRUST AND ITS TRUSTEES DO NOT C ONFORM TO THE EXPECTED STANDARD OF PROPRIETARY, BUT, TO THE CONTRA RY, EVEN IN SUBSEQUENT ASSESSMENT YEARS DESPITE THE DIRECTIONS OF CIT TO THOROUGHLY EXAMINE THE ACCOUNTS OF THE ASSESSEE, THE ASSE SSING OFFICER COULD NOT FIND ANY INFIRMITY EITHER IN THE ACCOUNTS OF THE ASSESSEE OR IN ITS OPERATION SO AS TO DISENTITLE THE ASSESSEE T O BE CONSIDERED AS A CHARITABLE INSTITUTION NOT GENUINELY W ORKING FOR ITS CAUSE. WE HAVE GONE THROUGH THE ASSESSMENT ORDERS PASSED B Y THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2006-07 AND 2007-08 W HICH ARE AFTER THE DATE OF DIRECTIONS GIVEN BY THE IMPUGNED O RDER OF CIT AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER . THERE IS NO MATERIAL ON RECORD TO SUGGEST THAT ANY OF THE ALLE GATION MADE BY ITA NO.1681/DEL/2008 7 THE CIT IN THE IMPUGNED ORDER HAS BEEN FOUND TO BE T RUE IN THE SUBSEQUENT PROCEEDINGS. THEREFORE, THE REQUEST OF THE ASSESSEE FOR GRANT OF APPROVAL U/S 80G HAS BEEN DENIED WITHOUT VAL ID REASONS. IN THESE CIRCUMSTANCES, THE ORDER DENYING THE ASSESSEE FOR AP PROVAL U/S 80G IS NOT JUSTIFIED AND HAS TO BE SET ASIDE. LD. CIT I S DIRECTED TO GRANT APPROVAL TO THE ASSESSEE U/S 80G. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALL OWED IN THE MANNER AFORESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.05.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 20.05.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES