Sahaini Social Service Society, Meerut V. ACIT, Meerut

ITA 1725/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2668 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 26-06-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Keywords: Charitable institution; Principle of natural justice; Condonation of delay
• Section: 12AA; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI I.C.SUDHIR, JUDICIAL MEMBER SHRI I.C.SUDHIR, JUDICIAL MEMBER SHRI I.C.SUDHIR, JUDICIAL MEMBER SHRI I.C.SUDHIR, JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.1725/DEL/2011 1725/DEL/2011 1725/DEL/2011 1725/DEL/2011 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009- -- -10 1010 10 SAHAINI SOCIAL SERVICE SAHAINI SOCIAL SERVICE SAHAINI SOCIAL SERVICE SAHAINI SOCIAL SERVICE SOCIETY, SOCIETY, SOCIETY, SOCIETY, C/O KRIPA C/O KRIPA C/O KRIPA C/O KRIPA- -- -OM OMOM OM- -- -KI MATA KI MATA KI MATA KI MATA HOS HOS HOS HOSPITAL, PITAL, PITAL, PITAL, SARDHANA P.O., SARDHANA P.O., SARDHANA P.O., SARDHANA P.O., DISTRICT MEERUT DISTRICT MEERUT DISTRICT MEERUT DISTRICT MEERUT 250 342. 250 342. 250 342. 250 342. PAN : AAEAS1462K. PAN : AAEAS1462K. PAN : AAEAS1462K. PAN : AAEAS1462K. VS. VS. VS. VS. ADDITIONAL COMMISSIONER OF ADDITIONAL COMMISSIONER OF ADDITIONAL COMMISSIONER OF ADDITIONAL COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, RANGE RANGE RANGE RANGE- -- -2, 2, 2, 2, MEERUT. MEERUT. MEERUT. MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.V.S.R.KRISHNA, CA. RESPONDENT BY : SMT.RENUKA JAIN GUPTA, SR.DR. ORDER ORDER ORDER ORDER PER I.C.SUDHIR, JM PER I.C.SUDHIR, JM PER I.C.SUDHIR, JM PER I.C.SUDHIR, JM : : : : THE ASSESSEE-SOCIETY HAS QUESTIONED REFUSAL OF REQ UIRED REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX A CT, 1961 BY THE LEARNED CIT. 2. BEFORE PROCEEDING WITH THE APPEAL, THE LEARNED A R SUBMITTED THAT THE APPEAL HAS BEEN FILED LATE BY ONE YEAR AND FOUR MONTHS AND, THEREFORE, THE SOCIETY HAS PRAYED FOR CONDONATION O F DELAY VIDE APPLICATION DATED 4 TH APRIL, 2011. THE REASON ASSIGNED THEREIN FOR DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL HAS BEEN SHOWN IGNORANCE OF THE EXECUTIVES/MEMBERS OF THE SOCIETY ABOUT THE PROVISIONS OF THE ACT, ESPECIALLY ABOUT THE PRESCRI BED TIME LIMIT UNDER WHICH APPEAL WAS TO BE PREFERRED BEFORE THE TRIBUNA L AGAINST THE REFUSAL OF THE REGISTRATION BY THE LEARNED CIT. TH E LEARNED AR SUBMITTED THAT THE ASSESSEE, A CHARITABLE SOCIETY, IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT. THE SOCIETY IS RUN BY THE CHRISTIAN ITA-1725/DEL/2011 2 SISTERS WHO ARE NOT FAMILIAR WITH THE INCOME-TAX AC T AND THUS, THEY WERE UNDER THE BONA FIDE IMPRESSION THAT THE LETTER FROM INCOME TAX AUTHORITIES HAD BEEN RECEIVED AS A ROUTINE AND KEPT IT IN THE FILE OF THE RECORDS WITHOUT NOTICING THAT IT WAS REJECTION OF T HEIR REGISTRATION UNDER SECTION 12AA OF THE ACT. IT IS ONLY WHEN THE SISTE RS VISITED THE OFFICE OF M/S V.SANKAR AIYAR & CO., CHARTERED ACCOUNTANTS UPO N RECEIVING NOTICE UNDER SECTION 148 OF THE ACT DATED 22.02.2011, IT W AS NOTICED THAT THE REGISTRATION WAS IN FACT REJECTED BY THE CIT, MEERU T. THEREAFTER, UPON THE ADVISE OF THE CHARTERED ACCOUNTANT, THE PRESENT APPEAL HAS BEEN FILED. HE POINTED OUT THAT THE ORDER WAS SERVED ON 09.10.2009 AND THE APPEAL HAS BEEN PREFERRED ON 09.04.2011 I.E., THERE IS A DELAY OF ONE YEAR AND FOUR MONTHS. LEARNED AR ACCORDINGLY PRAYE D FOR CONDONATION OF DELAY IN FILING THE PRESENT APPEAL. IN SUPPORT, HE PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F COLLECTOR, LAND ACQUISITION VS. MST. KATIJI [1987] 167 ITR 471. 3. THE LEARNED DR OPPOSED THE APPLICATION WITH THE SUBMISSION THAT THE SOCIETY HAS GOT ASSISTANCE OF EXPERTS. HENCE, THERE WAS NO SUFFICIENT REASON FOR PREFERRING THE APPEAL LATE BY ONE YEAR AND FOUR MONTHS. 4. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THERE IS NO REASON TO DOUBT THE EXPLANATION OF THE SOCIETY RUN BY THE CHRISTIAN SISTERS THAT THE DELAY IN PREFERRING THE APPEAL WAS DUE TO THEIR IGNORANCE OF THE PROVISIONS OF INCOME-TAX ACT, NOR IS THERE ANY REASON TO DRAW AN ADVERSE INFERENCE THAT THE APPEAL WAS NO T PREFERRED BY THEM IN TIME BEFORE THE TRIBUNAL DUE TO SOME ULTERI OR MOTIVE. CONSIDERING THESE FACTS IN TOTALITY, WE FIND IT A F IT CASE FOR CONDONING THE DELAY OF ONE YEAR AND FOUR MONTHS IN PREFERRING THE PRESENT APPEAL BEFORE THE TRIBUNAL BY THE ASSESSEE SOCIETY. IT IS ORDERED ACCORDINGLY. THE APPLICATION IS THUS ALLOWED. ITA-1725/DEL/2011 3 5. THE CONTENTION OF THE LEARNED AR AGAINST THE REF USAL OF REGISTRATION BY THE LEARNED CIT REMAINED THAT THE L EARNED CIT HAS REFUSED THE REGISTRATION ONLY ON THE BASIS THAT THE SOCIETY APPLICANT IS NOT HAVING ANY INDEPENDENT STATUS TO CARRY OUT ITS OBJECTS AND IS MERELY A PART OF AND IS WORKING ON BEHALF OF THE PA RENT SOCIETY WITHOUT APPRECIATING THAT AT THE TIME OF GRANTING OF REGIST RATION, THE LEARNED CIT IS TO SEE THE VERY OBJECT OF THE SOCIETY AS TO WHETHER IT IS FOR THE CHARITABLE PURPOSES OR NOT. HE SUBMITTED FURTHER T HAT THE ABOVE FINDING OF THE LEARNED CIT IS BASED ON THE REPORT O F THE ITO WHICH WAS NEVER SUPPLIED TO THE APPLICANT SOCIETY TO CONFRONT THE SAME. THE LEARNED AR ALSO REFERRED PAGE NOS.1 TO 24 OF THE PA PER BOOK FILED ON BEHALF OF THE ASSESSEE I.E., COPIES OF REGISTERED T RUST DEED, FORM NO.10A FILED ON 31.03.2009 AND REPLY DATED 10.09.20 09 AND 29.09.2009 SUBMITTED BEFORE THE LEARNED CIT. HE CI TED THE FOLLOWING DECISION IN SUPPORT:- (I) CIT VS. RED ROSE SCHOOL [2007] 212 CTR 394 (ALL.) . (II) AGGARWAL MITRA MANDAL TRUST VS. DIRECTOR OF INCOME- TAX (EXEMPTION) [2007] 293 ITR (A.T.) 259 ITAT (DEL). (III) AJIT EDUCATION TRUST VS. CIT [2010] 42 SOT 415 ITAT(AHM.). (IV) CIT VS. KARIMIA TRUST [2008] 302 ITR 0057 (JHAR). (V) OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CHIEF COMMISSIONER OF INCOME-TAX [2009] 315 ITR 382 (AL L). 6. THE LEARNED DR, ON THE OTHER HAND, OPPOSED THE A PPEAL ON THE BASIS THAT UNDER THE PROVISIONS OF SECTION 12AA OF THE ACT FOR GRANTING THE REGISTRATION, THE LEARNED CIT IS NOT ONLY TO SA TISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION BUT ABOUT THE G ENUINENESS OF ITS ACTIVITIES. SINCE HE WAS NOT SATISFIED WITH THE AC TIVITY OF THE SOCIETY MEANT FOR CHARITABLE PURPOSE, HE WAS JUSTIFIED IN R EFUSING THE REGISTRATION. ITA-1725/DEL/2011 4 7. HAVING GONE THROUGH THE ORDER IMPUGNED, WE FIND THAT THE LEARNED CIT HAS REFUSED THE REQUESTED REGISTRATION UNDER SECTION 12AA OF THE ACT BY THE SOCIETY MAINLY ON TWO BASIS. FIR STLY, IT DOES NOT HAVE INDEPENDENT STATUS OR FUNDS AND SECONDLY, THE ACTIV ITIES SHOWN DO NOT REFLECT THAT THESE WERE TO MEET OUT THE OBJECTIVES LAID DOWN UNDER SECTION 2(15) OF THE ACT. 8. COMING TO THE FIRST CONCLUSION THAT THE APPELLAN T SOCIETY DOES NOT HAVE INDEPENDENT STATUS, THE LEARNED CIT HAS OBSERV ED THAT AS PER CLAUSE 24 OF THE TRUST DEED, THE FUNDS OF THE SOCIE TY IN THE EVENT OF DISSOLUTION WILL BE DIVERTED TO THE PARENT SOCIETY, I.E., FRANCISCAN SISTERS OF OUR LADY OF GRACES, SOME INDIVIDUAL OF P ARENT SOCIETY GAVE CASH TO THE APPELLANT SOCIETY AND INQUIRY REPORT FU RNISHED AFTER VISITING OF THE REGISTERED OFFICE OF THE APPELLANT SOCIETY R EVEALED THAT THE APPELLANT SOCIETY RUNS ON PAPER ONLY AS NO ACTIVITY OF THE SOCIETY WAS FOUND THERE. OBJECTION OF THE LEARNED AR IS THAT T HE LEARNED CIT DID NOT AFFORD OCCASION TO THE APPELLANT TO CONFRONT THE SA ID SPOT INQUIRY REPORT BEFORE ARRIVING AT THE CONCLUSION THAT THE SOCIETY RUNS ON PAPERS ONLY. 9. HAVING GONE THROUGH THE ORDER IMPUGNED, WE FIND SUBSTANCE IN THE ABOVE CONTENTION OF THE LEARNED AR AS IT IS NOW HERE APPARENT FROM THE ORDER THAT THE COPY OF THE SPOT REPORT ON THE B ASIS OF WHICH LEARNED CIT HAS RECORDED HIS FINDING THAT THE SOCIETY RUNS ON PAPER ONLY, WAS SUPPLIED TO THE APPELLANT FOR ITS COMMENT ON IT. O BVIOUSLY, IT IS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. WE, THU S, IN THE INTEREST OF JUSTICE, SET ASIDE THE MATTER TO THE FILE OF THE LE ARNED CIT TO CONSIDER THE APPLICATION FOR REGISTRATION FILED UNDER SECTIO N 12AA AFRESH AFTER HAVING REACTION OF THE APPELLANT ON THE SAID SPOT R EPORT AS WELL AS OF THE ASSESSING OFFICER, IF SO REQUIRED. WHILE DECID ING THE ISSUE OF ELIGIBILITY OF THE APPELLANT FOR REGISTRATION, THE LEARNED CIT WILL ALSO ITA-1725/DEL/2011 5 CONSIDER OTHER SUBMISSIONS OF THE APPELLANT WHICH H AVE BEEN FURNISHED BY IT BEFORE THE TRIBUNAL ALONG WITH COURT RULINGS IN SUPPORT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 5 TH JULY, 2013. SD/- SD/- ( (( (S.V.MEHROTRA S.V.MEHROTRA S.V.MEHROTRA S.V.MEHROTRA) )) ) (I.C.SUDHIR (I.C.SUDHIR (I.C.SUDHIR (I.C.SUDHIR) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 05.07.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SAHAINI SOCIAL SERVICE SOCIETY, SAHAINI SOCIAL SERVICE SOCIETY, SAHAINI SOCIAL SERVICE SOCIETY, SAHAINI SOCIAL SERVICE SOCIETY, C/O KRIPA C/O KRIPA C/O KRIPA C/O KRIPA- -- -OM OMOM OM- -- -KI MATA HOSPITAL, KI MATA HOSPITAL, KI MATA HOSPITAL, KI MATA HOSPITAL, SARDHANA P.O., DISTRICT MEERUT SARDHANA P.O., DISTRICT MEERUT SARDHANA P.O., DISTRICT MEERUT SARDHANA P.O., DISTRICT MEERUT 250 342. 250 342. 250 342. 250 342. 2. RESPONDENT : ADDITIONAL COMMISSIONER OF INCOME T AX, ADDITIONAL COMMISSIONER OF INCOME TAX, ADDITIONAL COMMISSIONER OF INCOME TAX, ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE RANGE RANGE RANGE- -- -2, MEERUT. 2, MEERUT. 2, MEERUT. 2, MEERUT. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR