Arpan Educational Society For Under Privileged Children, Gurgaon V. DIT(E), New Delhi

ITA 1851/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52803 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-10-2011
• Assessment Year: misc
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'A' BEFORE SHRI I.P. BANSAL, JM & SHRI A N PAHUJA,AM ITA NO.1851/DEL/2011 ASSESSMENT YEAR :-2011-12 ARPAN EDUCATIONAL SOCIETY FOR UNDER PRIVILEGED CHILDREN, 446, UDYOG VIHAR, PHASE-V, GURGAON V/S D.I.T. (E), LAXMI NAGAR DISTRICT CENTRE, DELHI-110092 PAN: AABAA 4499 B [APPELLANT] [RESPONDENT] ASSESSEE BY :- S/SHRI PRADEEP DINODIA & R.K. KAPOOR, ARS REVENUE BY:- SHRI ROHIT GARG, DR DATE OF HEARING 03-10-2011 DATE OF PRONOUNCEMENT 07-10-2011 O R D E R A N PAHUJA: THIS APPEAL FILED ON 15.4.2011 BY THE AFORESAID S OCIETY AGAINST AN ORDER DATED 28-02-2011 OF THE LD. DIT(EX EMPTIONS), DELHI- 92, RAISES THE FOLLOWING GROUNDS:- 1. THAT THE ORDER U/S 12AA(1)(B) READ WITH SECTION 12A OF THE INCOME-TAX ACT DATED 28.02.2011 PASSED BY THE DIREC TOR OF INCOME TAX (EXEMPTION) DELHI REJECTING APPELLANTS APPLICATION DATED 06.09.2011 FOR REGISTRATION OF CHARITABLE INS TITUTION U/S 12A(A) OF THE INCOME-TAX ACT IS BAD IN LAW ON THE F ACTS OF THE CASE AND IN VIEW OF THE FACT THAT IT HAS BEEN PASSE D WITHOUT ALLOWING OPPORTUNITY OF BEING HEARD UNDER PROVISO T O SECTION 12AA(1) OF THE INCOME-TAX ACT. 2. THAT THE LEARNED DIT(E) WHILE REJECTING THE APPL ICATION ERRED IN OBSERVING THAT NO CHARITABLE ACTIVITY WAS DONE BY T HE APPELLANTS AND THAT EXPENSES INCURRED WERE OF ADMINISTRATIVE N ATURE IGNORING THE DETAILS OF ACTIVITIES & THE DETAILS OF EXPENSES PROVIDED IN APPELLANTS LETTER DATED 21.01.2011 FIL ED ON 31.01.2011. 3. THAT THE LEARNED DIT(E) HAS NOT PROVIDED TO THE APPELLANTS ANY OPPORTUNITY OF BEING HEARD BEFORE REJECTING THE APP LICATION FOR ITA NO.1851 /DEL/2011 2 2 REGISTRATION AS PER PROVISION OF SECTION 12AA(1) OF THE INCOME- TAX ACT. 4. THAT THE APPELLANTS WAS NOT EVEN INFORMED ABOUT THE REJECTION OF APPLICATION FOR REGISTRATION VIDE ORDER DATED 28 .02.2011 WHEN LETTER DATED 03.03.2011 WAS FILED WITH THE INSPECTO R WHO WAS THEN CONDUCTING THE PROCEEDINGS AND PROMISED TO PLA CE THAT LETTER ON RECORDS. 5. THAT THE APPELLANTS PRAYS THAT THE LEARNED DIT( E) MAY KINDLY BE DIRECTED TO GRANT REGISTRATION TO THE SOCIETY. 6. THAT THE GROUNDS OF APPEAL MENTIONED ABOVE ARE M UTUALLY EXCLUSIVE AND INDEPENDENT OF EACH OTHER. 2. FACTS, IN BRIEF, IN THIS CASE ARE THAT THE AFOR ESAID SOCIETY FILED AN APPLICATION IN FORM NO.10A ON 06.09.2010, SEEKING R EGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). ACCORDINGLY, THE DIT(E) VIDE HIS LETTER DATED 12.11.2010 SOUGHT FOLL OWING DOCUMENTS/EXPLANATIONS ON 25 TH NOVEMBER, 2010:- I) JUSTIFY WITH THE BILLS/VOUCHERS OF THE INCOME A PPLIED FOR CHARITABLE ACTIVITIES ALONG WITH PROOF OF BENEFICIA RIES. II) PLEASE FILE THE UNDERTAKING THAT THERE SHALL BE NO INFRINGEMENT TO THE PROVISO TO THE SECTION 2(15) OF THE INCOME-TAX ACT. III) NO OBJECTION CERTIFICATE FROM THE LANDLORD ALO NG WITH THE PROOF OF OWNERSHIP/OCCUPANCY. IV) COPY OF ACCOUNTS FOR THE PERIOD SINCE THE INCEP TION OF THE TRUST/SOCIETY OR LAST 5 YEARS DURING WHICH THE TRUS T HAS BEEN IN EXISTENCE. V) A NOTE ON ACTIVITIES CARRIED OUT SINCE INCEPTION /LAST 1/2/3/4 YEARS WITH SUPPORTING DOCUMENTARY EVIDENCE. VI) PLEASE JUSTIFY YOUR CLAIM OF REGISTRATION U/S 1 2A & EXEMPTION U/S 80G. VII) PLEASE FURNISH THE DETAILS OF DONATION INCLUDI NG CORPUS DONATIONS RECEIVED AND MADE GIVING NAME, ADDRESS, P AN OF DONORS. VIII) PLEASE FURNISH CONTACT NO. & E MAIL ADDRESS O F THE APPLICANT AND ITS MEMBERS. IX) COPY OF I.T. RETURNS LAST ASSESSMENT YEARS. X) ORIGINAL MOA & REGISTRATION CERTIFICATE FROM REG ISTRAR/TRUST DEED FOR VERIFICATION. 2.1 AFTER CONSIDERING THE REPLY OF THE ASSESSEE FIL ED ON 20 TH DECEMBER, 2010 AND 31 ST JANUARY, 2011, THE LEARNED DIT(E) CONCLUDED AS UND ER:- ITA NO.1851 /DEL/2011 3 3 ON PERUSAL OF THE RECORDS IT IS FOUND THAT THE SOC IETY HAS NOT DONE ANY ACTIVITY SO FAR AND MOST OF THE EXPENSES ARE OF ADMINISTRATIVE NATURE. AND THERE IS NO DOCUMENTARY EVIDENCE FOR A NY CHARITABLE ACTIVITY. IN THE VIEW OF THE ABOVE, IT WAS FOUND T HAT NO ACTIVITY CONDUCTED BY THE SOCIETY SO FAR. FURTHER, THE ABOV E VIEW FINDS STRENGTH FROM THE DECISION OF KERALA HIGH COURT (20 01) 247 ITR 0018 IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT, WHEREIN IT WAS HELD THAT A REFERENCE TO THE BYE-L AWS OF THE SOCIETY WOULD SHOW THAT THROUGH SEVERAL CHARITABLE ACTIVITI ES WERE INCLUDED IN THE OBJECTS OF THE SOCIETY, THE SOCIETY WAS NOT ABLE TO DO ANY OF THE CHARITABLE ACTIVITIES. IT DO NOT QUALIFY ANY M ERIT FOR GRANT OF CERTIFICATE WHICH IS ONE OF THE CONDITIONS TO BE SA TISFIED FOR GRANTING REGISTRATION U/S 12A OF THE INCOME-TAX ACT. ACCORD INGLY, THE APPLICATION FILED BY THE APPLICANT FOR GRANT OF REG ISTRATION U/S 12A IS HEREBY REJECTED. 3. THE SOCIETY IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. DIT(E). THE LD. AR ON BEHALF OF THE SOCIETY WHILE CARRYING US THROUGH PAGE NOS. 5, 35, 37 AND 52 OF THE PAPER BOOK SUBMITTED T HAT THE SOCIETY WAS CONSTITUTED FOR PROVIDING TUITION TO UNDERPRIVILEGE D AND POOR STUDENTS IN THE PREMISES AT A-3, NARAIN INDUSTRIAL AREA, PHASE-II, NEW DELHI-28. THE USE OF THE PREMISES WAS ALLOWED WITHOUT PAYMENT OF ANY RENT. TO A QUERY BY THE BENCH, THE LD. AR WHILE INVITING OUR ATTENTION TO AFFIDAVI T DATED 18.12.2010 [PG. 37 OF THE PAPER BOOK] OF DIRECTOR OF M/S HOUSE OF PEARL FASHI ONS LIMITED SUBMITTED THAT A BUS CARRIED THE CHILDREN TO THE AFORESAID PREMISES AT NARAINA INDUSTRIAL AREA AND HIRING CHARGES FOR THE BUS WERE NOT DEBITED TO THE ACCOUNTS OF THE SOCIETY. TO A FURTHER QUERY BY THE BENCH, THE LD. AR SUBMITTED TH AT THE DIT(E) DID NOT CONSIDER THEIR LETTER DATED 3 RD MARCH, 2011 IN HIS ORDER DATED 28 TH FEBRUARY, 2011 NOR ALLOWED SUFFICIENT OPPORTUNITY BEFORE REJECTING THE IR APPLICATION FOR REGISTRATION. THE SOCIETY HAD PAID SALARY OF ` 2,38,971/- UNTIL 31.12.2010 TO THE TEACHERS, THE LD. AR ADDED. ON THE OTHER HAND, THE LD. DR SUPPORT ED THE ORDER OF LD. DIT(E) AND ADDED THAT THE LETTER DATED 3 RD MARCH, 2011 HAVING BEEN FILED AFTER THE CONCLUSION OF PROCEEDINGS BEFORE THE DIT(E) ,COULD NOT BE CON SIDERED NOR THE APPLICANT FILED ANY EVIDENCE, ESTABLISHING GENUINENESS OF THE ACTIV ITIES UNDERTAKEN BY THE SOCIETY. ITA NO.1851 /DEL/2011 4 4 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE APPLICANT SOCIETY WAS ESTABLISHED ON 25 TH JUNE, 2009 WITH THE FOLLOWING AIMS AND OBJECTS:- A) THE SOCIETY IS BEING ORGANIZED FOR THE PROMOTIO N OF EDUCATIONAL DEVELOPMENT AND UPLIFTMENT OF CHILDREN AND CHILDREN OF ALL AGES AND IN THE INTEREST OF MANKIND IN GENERAL AND TO OPEN A NY SCHOOL COLLEGE AND EDUCATION INSTITUTIONS. B) TO ADMINISTER EDUCATIONAL, SOCIAL, ECONOMIC, CUL TURAL AND ALL ROUND DEVELOPMENT PROGRAMMES FOR THE PROMISING AND TALENT ED PERSONS IN GENERAL AND FOR THE PEOPLE BELONGING TO THE WEAK ER AND DEPRIVED SECTIONS OF SOCIETY IN PARTICULAR. C) TO AID OR ESTABLISH, TAKEOVER OR COLLABORATE WIT H ANY INSTITUTION OR SCHOOL OR ASSOCIATION, FOR PHYSICAL, MENTAL, SPIRIT UAL, EDUCATIONAL DEVELOPMENT UPLIFT OF INTELLIGENCE OR ITS DEVELOPME NT. D) TO AID OR ESTABLISH ANY INSTITUTION OR ADOPT MEA NS FOR IMPARTING, PROMOTION OF ANY ART, SCIENCE OR ANY OTHER FIELD OF EDUCATION, PROPAGATE FOR REMOVAL OF SOCIAL EVILS, CUSTOMS OR R ENDER OR PROMOTE SELF-HELP TO OVERCOME ANY OF THESE EVILS PARTICULAR LY FOR THE POOR OR WEAKER SECTIONS OF THE SOCIETY IN INDIA OR ABROAD. E) TO ESTABLISH ANY INSTITUTION OR SOCIETY FOR THE WELFARE OF VICTIMS OF NATURAL CALAMITIES AND/OR TO PROVIDE WAYS AND MEANS TO THE UPLIFT OF POOR AND /NEEDY CHILDREN OR INDIVIDUALS AND TO INCU LCATE MORAL DISCIPLINE. F) TO AWARD PRIZES IN COMPETITION OF PHYSICAL GAMES AND EDUCATIONAL COMPETITIONS AND TO AWARD SCHOLARSHIPS FOR THE NEED Y AND TO PROVIDE WAYS AND MEANS TO THE UPLIFT OF POOR AND NE EDY CHILDREN OR INDIVIDUALS AND TO INCULCATE MORAL DISCIPLINE. G) TO ARRANGE AND PROVIDE SUCH MEDICAL AID SUCH OTH ER ASSISTANCE NECESSARY FOR LIVING TO THE NEEDY PERSONS WHO ARE O THERWISE INCAPABLE OR HANDICAPPED OR MENTALLY OR PHYSICALLY RETARDED AND FINANCIALLY UPLIFT ANY PERSON OF POOR CLASS. H) TO RENDER ANY SOCIAL MORAL AND FINANCIAL ASSISTA NCE FOR BETTERMENT OF LIFE OF ANY UNMARRIED GIRL OR BOY FROM TIME TO T IME. I) TO PROVIDE FOR ALL ACTIVITIES FOR IMPROVING THE MORAL STANDARDS OF THE PEOPLE, PROMOTING RESPECT FOR ALL RELIGIONS OF TOLE RANCE AND CORDIAL FEELINGS BETWEEN MAN AND MAN IRRESPECTIVE OF DIFFER ENCE OF CASTE, COLOUR, CREED OR RELIGION. J) TO START, MAINTAIN AND ASSIST IN RELIEF MEASURES IN THOSE PARTS WHICH ARE OR BECOME SUBJECTED TO NATURAL CALAMITIES LIKE FAMINE, FIRE, FOOD, EARTHQUAKES ETC. K) TO GIVE MONETARY HELP TO DISABLED OR BLIND PERSO NS IN THE FORM OF MONTHLY ALLOWANCE OR GRATITUDES. L) TO OPEN FOUND, ESTABLISH, MAINTAIN AND ASSIST LE PER ASYLUMS OR OTHER INSTITUTIONS FOR HELPING THE POOR DESTITUTE, WIDOWS AND ORPHANS OF ALL FAITHS AND COMMUNITIES. M) TO ESTABLISH, FOUND AND MAINTAIN LIBRARIES READI NG ROOMS FOR THE USE AND CONVENIENCES OF GENERAL PUBLIC. ITA NO.1851 /DEL/2011 5 5 N) TO AWARD PRIZES, MEDALS AND THAT LIKE IN UNIVERS ITIES, COLLEGES, SCHOOLS ETC. TO ENCOURAGE STUDENTS FOR HIGHER AND B ETTER EDUCATION. O) TO ESTABLISH AND RUN EDUCATIONAL, MEDICAL, DENTA L, ENGINEERING, MANAGEMENT INSTITUTE, TECHNICAL INSTITUTE AND PROFE SSIONAL COLLEGES, UNIVERSITIES, INSTITUTES, COACHING INSTIT UTES ETC. AND TO PROVIDE HOSTEL FACILITIES FOR STUDENTS. P) TO MAKE ARRANGEMENT FOR IMPARTING INSTRUCTIONS I N THE COURSES OF STUDY APPROVED BY THE UNIVERSITY AND SUCH OTHER INS TITUTE AND SUCH OTHER ALLIED COURSES. Q) TO DEVELOP SUCH RESEARCH DESIGN, DEVELOPMENT AND CONSULTING ACTIVITIES AS ARE INCIDENTAL OR CONDUCTIVE TO THE A TTAINMENTS OF HIGHER STANDARDS OF EDUCATION. R) TO TAKE MEASURES FOR SPREADING SUCH KIND OF EDUC ATION AS MAY CONTRIBUTE TO THE HIGHEST PUBLIC GOODS AND TO THE N EEDS OF THE TIME. S) TO DO ANY ACT OR THING WHICH IS ANCILLARY TO THE AC HIEVEMENT OF ANY OF THE ABOVE STATED OBJECTS. 4.1 IN ORDER TO ACHIEVE THE AFORESAID AIMS AND OBJECTS, THE APPLICANT SOCIETY IS STATED TO HAVE ENGAGED A FEW TEACHERS TO WHOM SALAR Y OF ` `2,38,961/- WAS PAID UNTIL 31 ST DECEMBER, 2010 AS REVEALED FROM THE PROVISIONAL BA LANCE SHEET AS ON 31.12.2010 PLACED ON THE PAPER BOOK AT PAGE 43 AND 44. THOUGH, THE LEARNED AR WHILE REFERRING TO AFFIDAVIT DATED 18.12.2010 OF THE DIRECTOR OF M/S HOUSE OF PEARL FASHIONS LIMITED SUBMITTED THAT CHILDREN WERE CARRIED BY BUS TO THE PREMISES AT A-3, NARAINA INDUSTRIAL AREA, PHASE-3, NEW DELHI AND NO HIRING CHARGES FOR THE BUS WERE DEBITED TO THE ACCOUNTS OF APPLICANT OF THE SOCIETY, IN THE LETTER DATED 20 TH DECEMBER, 2010 FILED BY THE COUNSEL OF THE APPLICA NT SOCIETY BEFORE THE DIT(E) , IT IS MENTIONED THAT AT PRESENT, THE SOCIETY IS PROVIDING TUTION TO UND ERPRIVILEGED AND POOR STUDENTS IN THE PREMISES AT VASANT VIHAR OWNED BY M/S LITTLE P EOPLE EDUCATION SOCIETY WITHOUT PAYMENT OF ANY RENT. THE STUDENTS FROM POOR FAMILIES IN THE NEIGHBORHOOD ATTEND CLASSES. THEY ARE PROVIDED REFRESHMENT DURIN G SCHOOL TIME.THE EDUCATION IS IMPARTED AFTER SCHOOL HOURS OF THE POOR STUDENTS IN THE AFTERNOON WHEN THE PREMISES OF M/S LITTLE PEARLS AT VASANT VIHAR ARE FREE 4.2. THE AFORESAID STATEMENTS MADE BY THE LD. COU NSEL SHRI M.C.NAGPAL IN THE LETTER DATED 20.12.2010 ARE APPARENTLY AT VARIA NCE WITH THE SUBMISSIONS OF THE LD. AR BEFORE US AND AVERMENTS IN THE AFFIDAVIT DATED 18 TH DECEMBER, 2010 OF THE DIRECTOR OF M/S HOUSE OF PEARL FASHIONS LIMITED .IN ANY CASE, THERE IS NOTHING TO SUGGEST AS TO WHETHER OR NOT THE DIT(E) CONDUCTE D ANY INDEPENDENT ENQUIRIES TO ASCERTAIN THE GENUINENESS OF ACTIVITIES OF THE S OCIETY BEFORE REJECTING THE APPLICATION FOR REGISTRATION NOR ATTEMPTED TO VERIF Y THE AFORESAID STATEMENTS ITA NO.1851 /DEL/2011 6 6 MADE IN LETTER DATED 20.12.2010 OR AVERMENTS MADE IN THE AFFIDAVIT DATED 18.12.2010 OF SHRI ASHUTOSH P BHUPATKAR , DIRECTOR OF M/S HOUSE OF PEARL FASHIONS LIMITED . IN THESE CIRCUMSTANCES ,ESPECIA LLY WHEN THE SOCIETY HAVE RAISED SPECIFIC GROUNDS RELATING TO LACK OF OPPORT UNITY BY THE DIT(E) BEFORE REJECTING THEIR APPLICATION FOR REGISTRATION WHILE PROVISIONAL ACCOUNTS REVEAL PAYMENT OF SALARY OF ` 2,38,971/- TO TEACHERS, WE CONSIDER IT FAIR AND A PPROPRIATE TO VACATE THE FINDINGS OF LEARNED DIT(E) AND RESTOR E THE MATTER TO HIS FILE WITH THE DIRECTIONS TO ALLOW A FINAL OPPORTUNITY TO THE ASS ESSEE FOR ESTABLISHING GENUINENESS OF THE ACTIVITIES OF THE SOCIETY AND TH EREAFTER, PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW . WE MAY CLARIFY THAT THE LD . DIT(E) IS FREE TO UNDERTAKE ANY INDEPENDENT ENQUIRIES, NECESSARY TO ASCERTAIN THE GENUINENESS OF ACTIVITIES OF THE SOCIETY. WITH THESE DIRECTIONS GROUND NOS.1 TO 5 IN THE APPEAL ARE DISPOSED OF. 5. GROUND NO.6 IS IN THE APPEAL BEING GENERAL IN NA TURE , DOES NOT REQUIRE ANY SEPARATE ADJUDICATION, ACCORDINGLY, THIS GROUND IS DISMISSED. 6. IN RESULT, APPEAL IS ALLOWED BUT FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (I.P. BANSAL) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO: 1. ARPAN EDUCATIONAL SOCIETY FOR UNDER PRIVILEGED CHILDREN,446, UDYOG VIHAR, PHASE-V, GURGAON 2. DIRECTOR OF INCOME TAX (EXEMPTION), LAXMI NAGAR DISTRICT CENTRE, DELHI-110092. 3. DIT(E) CONCERNED 4. DIT(E), NEW DELHI 5. DR, ITAT, DELHI BENCH-A, NEW DELHI 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, NEW DELHI