Ram Niwas Sharma Charitable Trust, Secunderabad V. Commissioner of Income Tax, Exemptions , Hyderabad

ITA 1870/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1281 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: misc
• Appeal Filed On: 11-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: LAKSHMI NIWAS SHARMA
• Keywords: Charitable institution
• Section: 12; 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 1 870 /HYD/201 8 RAM NIWAS SHARMA CHARITABLE TRUST, SECUN DERABAD [PAN: A A C TR72 89Q ] VS COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI LAKSHMI NIWAS SHARMA , AR FOR REVENUE : S HRI Y. V.S.T. SAI, CIT - DR DATE OF HEARING : 0 6 - 0 2 - 201 9 DATE OF PRONOUNCE MENT : 1 5 - 0 3 - 201 9 O R D E R PER S. RIFAUR RAHMAN, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( EXEMPTION S) - HYDERABAD , DATED 2 9 - 0 6 - 201 8 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHA R ITABLE TRUST , W AS GRANTED REGISTRATION U/S. 12 AA OF THE INCOME TAX ACT [ACT] W.E.F. 10 - 02 - 2016 BY THE COMMISSIONER OF INCOME TAX, HYDERABAD . HOWEVER, T H E APPLICATION FOR APPROVAL U/S. 80G OF THE ACT WAS REJECTED FOR WANT OF SIGNIFICANT ACTIVITIES C ONDUC TED BY THE ASSESS EE TRUST. ITA NO. 1 870 /H YD/201 8 : - 2 - : 3 . THE ASSESSEE AGAIN FILED AN APPLICATION IN FORM NO. 10G ON 07 - 12 - 2017 , SEEKING APPROVAL U/S. 80G OF THE A CT, FOR GRANT OF EXEMPTION U/S. 80G. THE CIT (E) , ACCORDINGLY, ISSUES NOTICE TO THE ASSESSEE ON 01/05/2018 REQU I RIN G THE ASSESSEE TO PRO DUCE THE ORIGINAL TRUST DEED FOR VERIFICATION AND TO FURNISH DETAILED REPLY ON SPECIFIC POINTS. ACCO R DINGLY, THE AR OF THE ASSESSEE FURNIS HED THE INFORMATION AS CALLED FOR. 4. THE CIT (E) OBSERVED THAT AS PER SECTION 80G(5) READ WITH RULE 11AA, THE COMMI SSIONER HAS TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES. HE FURTHER OBSERVED THAT THE ASSES SEE HAS NOT PRODUCED THE BILLS AND VOUCHE R S TO VERIFY THE GENUINENESS OF THE ACTIVITIES AND SINCE THE ASSESSEE FA ILED TO PRODUCE T HE SAME, IT IS NOT P OSSIBLE TO VERI FY THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE, WHICH IS PRE - CON DITION FOR GRANTING REGISTRATION U/S 80G. 4.1 THE CI T (E) FURTHER OBSERVED THAT AS PER SECTION 80G(5)( (IV), IT IS MANDATORY FOR THE ASSESSEE TO MAINTAI N REGULAR ACCOUNTS O F ITS RECEIPTS AND EXPENDITURE. SINCE THE ASSESSEE FAILED TO PRODUCE THE BILLS/VO U C HERS/RECEIPTS, IT IS NOT PO SSIBLE TO VERIFY WHETHER THE ASSESSEE HAS COMPLIED SECTION 80G(5)(IV) OR NOT. 4.2 IN VIEW OF THE ABOVE OBSERVATIONS, THE AP P LICATION IN FOR M NO. 10G FILED BY THE ASSESSEE FOR 80G APPROVAL WAS REJECTED BY THE CIT (E) . 5. AGG RIEVED BY THE ORDER OF CIT (E) , THE ASSESSEE IS IN APPEAL B EFORE US R AISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(E) ERRED IN FACTS AND LAW WH ILE PASSING THE ORDE R ULS 80G(5) (VI ). ITA NO. 1 870 /H YD/201 8 : - 3 - : 2. THE LEARNED CIT (E) ERRED IN REJECTING THE A PPLICATION F OR APPROVAL U /S. 80G ON THE BASIS THAT 'ASSESSEE HAS NOT PRODUCED THE BILLS AND VOUCHERS' IG N ORING THAT ALL VOU CHERS WITH INVOICES AND BILLS WERE PRODUCED FOR VERIFICATION BEFORE INCOME TAX OFF ICER ALONG - WITH OUR LETTER DATED 30.05.2018 ADDRESSED TO CIT (E ), HANDED OVER TO AO WHILE VERIFICATION. 3. THE LEARNED CIT (E) ERRED IN ST ATING THAT THE A S SESSEE HAS NOT P RODUCED ANY BILLS & VOUCHERS AND THE GENUINENESS OF THE ACTIVITIES C ANNOT BE VERIFIE D IGNORING THAT DETAILED NOTE ON ACTIVITIES WAS G IVEN DURING TH E COURSE OF HEARING ALONG - WITH THE RECEIPTS AND PAYMENTS ACCOUNTS, INC OME AN D EXPENDITURE AC C OUNTS, BALANCE SHEETS AND COPIES OF BILLS AND VOUCHERS WERE ALSO GIVEN. 4. THE LEA RNED CIT(E) ERRE D IN STATING IN PARA 10 OF ORDER THAT 'SEPARATE PROCEEDING HAVE BEEN INITIATED FOR CANCELLATION OF 12A REGISTRATION'. 5. FOR THESE AND AN Y OTHER GROUNDS W HICH MAY B E RAISED ON OR BEFORE HEARING OF THE APPEAL . 6. BEFO RE US, THE LD. AR O F THE ASSESSEE FILED WRITTEN SUBMISSION WHEREIN, I NTER - ALIA, IT WAS STATED THAT THE CIT (E) HAS NOT GIVEN PROPER REAS ONING FOR REJECTING THE APPLICATION FOR APPROVAL U/S 80G AND HA S MERELY STATED THAT ASSESSEE HAS FAILED TO PRODUCE BILL S/VOUCHERS/RECEIPTS IGNORING THAT THE A CCOUNT BILLS, VOUCHERS WERE VERIFIED BY THE ITO DURING THE COURSE OF REV IEW OF APP LICATION AND SAME WERE ALSO SUBMITTED TO CIT (E) ALONG WITH SUBMISSION DATED 30/05/2018. AS SESSEE RELIE D ON THE FOLLOWING CASES: 1. RAJA BAHADUR VENKA T RAM A REDDY SOCIETY VS. DIT (E) , ITA NO. 1005/HYD/2014, ORDER DATED 27/09/2017. 2. SAI LOVE VS. CIT (E) , ITA NO. 566/HYD/2016, O RDER DATE D 24/08/2016. 3. P.R. CHELLARAM CHARITABLE TRUST VS. DIT (E) , ITA N O. 596/ H YD/2013 4. CIT VS. M/S UDDAN E K MEETHA SAPNA SOCI ETY, ITA NO . 63 OF 2018, ORDER DATED 08/10/2008. (P&H HIGH COURT) 5. CIT VS. BABBAR CHARITABLE TRUST, [2018] 11 ITR - OL 595 (ALL.) ITA NO. 1 870 /H YD/201 8 : - 4 - : 7 . ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF LD.CIT( E) . 8 . C ONSIDERED THE RIVAL SUBMIS SIONS AND M ATERIAL ON RECORD. THERE IS N O DISPUTE THAT ASSESSEE WAS GRANTED REGISTRATION U/S 12A AFTER DUE VERIFICATION. NOW ASSESSEE SEEKING REGISTRATION U/S 80G OF THE ACT, FOR WHICH, LD. CIT(E) REJE CT ED BY OBSERVING THAT THE RE ARE NO ACT IVITIES IN THE TRUST, AS H ELD IN THE CASE OF RAJA BAHADUR VENKAT RAMA REDDY SOCIETY (SUPRA) WHEREIN THE COORDINATE BENCH HELD AS UNDER: 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS RUNNING A SCHOOL AND HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT. WHILE GRANTING REGISTRATION U/ S 12A OF THE ACT, THE DIT (E) WAS SATISFIED THAT THE A SSESSEE'S OBJECTIVES ARE CHARITABLE IN NATURE. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF HIRALAL BHAGWATI VS. COMMISSIONER OF INCOME - TAX, REPORTED IN 246 ITR 188 (GUJ.), HAS HELD THAT THE PROCEDURE PRESCRIBED FOR REGISTRATION IS] S 12A OF THE ACT IS NO T A MERE/ EMPTY FORMALITY AS IT REQUIRES THAT NOT ONLY AN APPLICATION SHOULD BE FILED IN THE PRESCRIBED FORM STATING ABOUT THE DETAILS OF THE ORIGIN OF THE TRUST BUT ALSO THE NAMES AND ADDRESSES OF THE TRUST AND/ OR MANAGERS SHOULD BE FURNISHED AND THE DIT (E) HAS TO EXAMINE THE OBJECTS OF CREATING THE TRUST AS WELL AS EMPIRICAL STUDY OF THE PAST OF THE APPLICANT AND HAS TO EXAMINE THAT IT IS REALLY A CHARITABLE TRUST OR INSTITUTION ELIGIBLE FOR REGISTRATION. IT WAS HELD THAT ONCE REGISTRATION SX] S 12A OF T HE ACT HAS BEEN GRANTED, THEN THE DEPARTMENT WAS NOT JUSTIFIED IN REFUSING THE APPROVAL U/ S 800(5) OF THE ACT. 8. FURTHER, IN THE CASE OF N.M. DESAI CHARITABLE TRUST VS. CIT (CITED SUPRA), THE HON'BLE GUJAR AT HIGH COURT HAS HELD THAT WHILE CONSIDERING T HE APPLICATION FOR REGISTRATION U/ S 80G OF THE ACT, THE AUTHORITY GRANTING APPROVAL CANNOT ACT AS AN ASSESSING AUTHORITY ONCE CONDITIONS SPECIFIED ARE SATISFIED AND THE INQUIRY SHOULD BE CONFINED TO FIND OUT IF THE INSTITUTION SATISFIED THE PRESCRIBED CON DITIONS. AS IT IS NOT DISPUTED THAT THE ASSESSEE HAS BEEN GRANTED REGISTRATION U/ S 12A OF THE ACT AND SUCH REGISTRATION HAS NOT BEEN WITHDRAWN, WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD HAVE BEEN GRANTED REGISTRATION U/ S 80G OF THE ACT. WE THEREFORE , DIRECT THE DIT (E) TO GRANT APPROVAL TO THE ITA NO. 1 870 /H YD/201 8 : - 5 - : ASSESSEE IS] S 80G, IF THE ASSESSEE CONTINUES TO ENJOY REGISTRATION U/S 12A OF THE ACT. RES PECTFULLY FOLLOWING THE A BOVE DECISION, IN OUR VIEW, CIT(E) SHOULD GRANT APPROVAL U/S 80G TO THE ASSESSEE . ANY VIOL ATION AS PER LAW MAY BE EVALUATED IN THE ASSESSMENT PROCEEDINGS AND SUITABLE ACTION MAY BE TAKEN AFTER DUE VERIFICATION OF THE ACTIVITIES , BUT, NOT AT THIS STAGE , PARTICULARLY, WHEN THE DEPARTMENT HAS ALREAD Y GRA N T ED REGIST RATION U/S 12A. THEREFORE, WE DIR ECT THE CIT(E) T O GRANT APPROVAL U/S 80G . A CCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED . 9 . IN T HE RESULT, THE APP EAL OF ASSESSEE IS ALLOWED. ORD ER P RONOU NCED IN THE OP EN C OURT ON 15 TH MARCH , 201 9 SD/ - SD/ - (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) J UDICIA L MEMBER AC COUNTANT MEMBER HYDERA BAD, DAT ED 15 TH MARC H , 201 9 KV COPY TO : 1. RAM N I WAS SHARMA CHARITABLE TRUST, C/O. LAXMINIWAS & CO., CH ARTERED ACCOUNTANTS, D.NO. 6 - 3 - 569, 4 TH FL OOR, OPP: RTA OFFICE, ABO VE BMW SHOW ROOM, KHAIRATABAD, HYDERABAD . 2. COMMISSIONER OF INCOME TA X ( EXEMPTIONS), HYDERABAD. 3 . JT. CIT( EX ) - HYDE RABAD . 4 . D.R. ITAT, HYDERABAD. 5 . GUARD FILE.