Birds Nest Charitable Trust, CHENNAI V. DIT, CHENNAI

ITA 1712/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8000 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-12-2015
• Assessment Year: misc
• Appeal Filed On: 24-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Assessee Lawyers: R VISWANATHAN
• Keywords: Charitable institution
• Section: 12AA; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NOS.1712 & 1713/MDS/2015 M/S. BIRDS NEST CHARITABLE TRUST 7B, V.R.NAGAR, KALADI SALARI, THRIUVERKADU, CHENNAI-600 077. VS DIRECTOR OF INCOME TAX (EXEMPTIONS), 121,M.G.ROAD, NUNGAMBAKKAM CHENNAI-600 034. PAN:AACTR2413Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R.VISWANATHAN, C.A. /RESPONDENT BY : DR.MILIND BHUSARI, CIT /DATE OF HEARING : 8 TH DECEMBER, 2015 /DATE OF PRONOUNCEMENT : 12 TH FEBRUARY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM: THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGGRIE VED BY THE SEPARATE ORDERS OF THE DIRECTOR OF INCOME TA X (EXEMPTIONS), CHENNAI DATED 30.09.2014 & 24.06.20 15 IN DIT(E) NOS.2(912)/13-14 & 2(584)/14-15 RESPECTIVE LY PASSED UNDER SECTION 12AA OF THE ACT DENYING REGIST RATION UNDER SECTION 12AA OF THE ACT. SINCE THE ISSUES INV OLVED IN THESE APPEALS ARE INTERRELATED, BOTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO.1712 & 1713/MDS/2015 2. ITA NO.1712/MDS/2015 WAS FILED BY THE ASSESSEE WITH A DELAY OF 234 DAYS AND THE ASSESSEE HAS FILED AN A FFIDAVIT FOR CONDONATION OF DELAY. THE ASSESSEE HAS EXPLAINE D IN THE AFFIDAVIT THAT IT DID NOT FILE THE APPEAL WITHIN TH E DUE DATE BECAUSE IT WAS UNDER THE FAIR EXPECTATION THAT APPL ICATION IN FORM 10A DATED 27.10.2014 WILL BE DECIDED IN ITS F AVOUR. AFTER CONSIDERING THE SAME, IN THE INTEREST OF JUSTICE, W E CONDONE THE DELAY OF 234 DAYS IN FILING OF APPEAL AND ADMIT THE SAME. ITA NO. 1712/MDS/2015: 3. THOUGH THE ASSESSEE HAS RAISED THREE GROUNDS, TH E CRUX OF THE ISSUE IS THAT THE LEARNED DIRECTOR OF I NCOME TAX (EXEMPTIONS) HAS ERRED IN DENYING REGISTRATION UNDE R SECTION 12AA OF ACT BY REJECTING THE APPLICATION FILED BY T HE ASSESSEE TRUST IN FORM 10A. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE TRUST WAS CONSTITUTED BY TRUST DEED DATED 05.09.2013 AN D IT HAD FILED APPLICATION IN FORM NO.10A FOR REGISTRATION U NDER SECTION 12AA OF THE ACT ON 26.02.2014 I.E. WITHIN AN APPRO XIMATE PERIOD OF FIVE AND HALF MONTHS. WHILE CONSIDERING THE APPLICATION FOR GRANTING REGISTRATION UNDER SECTION 12AA OF THE 3 ITA NO.1712 & 1713/MDS/2015 ACT, THE LEARNED DIT(EXEMPTIONS) CALLED UPON THE AS SESSEE TRUST TO PRODUCE BOOKS OF ACCOUNTS, BILLS & VOUCHER S IN SUPPORT OF ITS CLAIM. ON VERIFICATION OF THE SAME , THE LEARNED DIT(EXEMPTIONS) WAS OF THE VIEW THAT THE ASSESSEE H AS NOT PRODUCED PROPER VOUCHERS IN SUPPORT OF ITS CLAIM AS MOST OF THE BILLS/VOUCHERS ARE ONLY SELF-MADE AND THEY DO N OT SATISFY THE REQUIREMENTS OF PRINCIPLES OF ACCOUNTING. THERE FORE, THE LEARNED DIT(EXEMPTIONS) DENIED REGISTRATION TO THE ASSESSEE TRUST UNDER SECTION 12AA OF THE ACT BY REJECTING TH E APPLICATION FILED IN FORM 10A OF THE ACT, AGAINST W HICH THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED BEFORE US THAT AT THE TIME OF GRANTING REGISTRATIO N, THE LEARNED DIT(EXEMPTIONS) OUGHT TO HAVE EXAMINED THE OBJECTS OF THE TRUST, INSTEAD HE HAD VENTURED INTO EXAMININ G THE BOOKS OF ACCOUNTS AND DENIED REGISTRATION FINDING DISCREPANCIES IN THE SAME. THE LEARNED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT IF THERE ARE ANY DISCREPANCIES IN THE BOOKS OF ACCOUNTS, AT THE MOST , ADDITION COULD BE MADE BY DENYING BENEFIT OF SECTION 11 OF T HE ACT AT 4 ITA NO.1712 & 1713/MDS/2015 THE TIME OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER PLEADED THAT DIRECTIONS MAY BE GIVEN TO LEARNED DIT(EXEMPTI ONS) TO EXAMINE THE OBJECTS OF THE TRUST AND IF FOUND TO BE IN ORDER GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENT LY OPPOSED TO THE SUBMISSIONS OF THE ASSESSEE AND PRAY ED THAT ORDER OF THE LEARNED DIT(EXEMPTIONS)MAY BE CONFIRME D. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E ORDER OF THE LEARNED DIT (EXEMPTIONS), IT IS APPARENT THAT H E HAS DENIED REGISTRATION UNDER SECTION 12AA OF THE ACT B ASED ONLY ON CERTAIN DISCREPANCIES FOUND IN THE BOOKS OF ACCO UNT, BILLS VOUCHERS ETC. IT APPEARS THAT LEARNED DIT(EXEMPTION S) HAS NOT EXAMINED THE OBJECTS OF THE TRUST. OFTEN HIGHER JUDICIARY HAS LAID DOWN THAT AT THE TIME OF GRANTING OF REGIS TRATION UNDER SECTION 12AA OF THE ACT, THE REVENUE HAS TO EXAMINE THE OBJECTS OF THE TRUST AND GRANT REGISTRATION, IF THE OBJECTS ARE ACCEPTABLE AS PER THE PROVISIONS OF THE ACT. HOWEV ER AT THE TIME OF ASSESSMENT PROCEEDINGS THE REVENUE SHALL EX AMINE THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IF FUNDS ARE NOT 5 ITA NO.1712 & 1713/MDS/2015 APPROPRIATELY UTILIZED BENEFIT UNDER SECTION 11 OF THE ACT MAY BE DENIED. FURTHER ON EXAMINING THE ORDER OF THE LEARNED DIT (EXEMPTIONS), WE ARE OF THE OPINION THAT BASED ON THE DISCREPANCY FOUND IN THE BOOKS OF ACCOUNT, BILLS, V OUCHERS ETC., IN THE CASE OF THE ASSESSEE THE GENUINENESS O F THE ASSESSEE TRUST CANNOT BE DOUBTED. AT THE MOST THOSE DISCREPANCIES MAY ONLY LEAD TO WITHDRAWAL OF THE BE NEFIT OF SECTION 11 OF THE ACT. THEREFORE, CONSIDERING THE F ACTS AND CIRCUMSTANCES OF THE CASE, IN THE INTEREST OF JUSTI CE, WE REMIT BACK THE MATTER TO THE FILE OF LEARNED DIT (EXEMPTI ONS) IN ORDER TO EXAMINE THE OBJECTS OF THE TRUST AND IF TH E OBJECTS OF THE TRUST ARE FOUND TO BE CHARITABLE IN NATURE AS P ROVIDED UNDER THE ACT, THE LEARNED DIT(EXEMPTIONS) SHALL G RANT REGISTRATION UNDER SECTION 12AA OF THE ACT AND IF T HE OBJECTS OF THE TRUST ARE NOT FOUND TO BE NOT CHARITABLE, TH EN HE MAY PASS APPROPRIATE ORDERS AS PER LAW AND ON MERIT. 8. SINCE WE HAVE REMITTED BACK THE APPEAL IN ITA NO.1712/MDS/2015 WITH SPECIFIC DIRECTIONS, THE APPE AL IN ITA NO.1713/MDS/2015 HAS BECOME INFRUCTUOUS AND DISMISS ED AS SUCH BECAUSE THIS APPEAL IS ALSO ON IDENTICAL GR OUNDS. 6 ITA NO.1712 & 1713/MDS/2015 9. IN THE RESULT, APPEAL IN ITA NO.1712/MDS/2015 IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREI NABOVE AND APPEAL IN ITA NO.1713/MDS/2015 IS DISMISSED AS INFR UCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH FEBRUARY, 2016 SD/- SD/- ( ' $ % ) ( . ) (CHALLA NAGENDRA PRASAD) ( A.MOHAN ALANK AMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER /CHENNAI, & /DATED 12 TH FEBRUARY, 2016 SOMU !() *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) !!/ /DR 6. 2 /GF .