Blank Noise, C/o Srishti Institute of Art Design and Technology, Bangalore V. Commissioner of Income Tax, Bangalore

ITA 1878/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7626 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S. SUKUMAR
• Keywords: Reasonable cause; Condonation of delay; Set aside
• Section: 12A; 12AA; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . A. NO S . 1878 & 1879 /BANG/20 16 (ASSESSMENT YEAR : 20 16 - 17 ) M/S. BLANK NOISE, C/O SRISHTI INSTITUTE O F ART DESIGN & TECHNOLOGY, CA SITE NO.16, YELAHANKA NEW TOWN, DODDABALLAPUR ROAD, OPP. WHEEL & AXLE PLANT, BANGALORE - 560 106 . . APPELLANT. VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI S. SUKUMAR, ADVOCATE. R E SPONDENT BY : SHRI G.R. REDDY, CIT (DR) (ITAT) - 1, BENGALURU. DATE OF H EARING : 24.0 8.2017. DATE OF P RONOUNCEMENT : 15.09.2 01 7 . O R D E R PER SHRI VIJAY P AL RAO, J .M . : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE TWO SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), BANGALORE BOTH DT.24.08.2016 PASSED UNDER SECTION 12AA AND 80G(5)(VI) OF THE 2 IT A NO S . 1878 & 1879 /BANG/20 16 INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') RESPECTIVELY. THERE IS A DELAY OF 12 DAYS IN FILING THESE APPEA LS BY THE ASSESSEE. THE ASSESSEE HAS FILED PETITION FOR CONDONATION OF DELAY SUPPORTED BY AN AFFIDAVIT. 2. WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS LEARNED DEPARTMENTAL REPRESENTATIVE ON CONDONATION OF DELAY. WE HAVE ALSO GONE THROUGH THE CONTENTS OF THE PETITION FILED BY THE ASSESSEE EXPLAINING CAUSE OF DELAY. THE ASSESSEE HAS EXPLAINED CAUSE OF DELAY THAT THE MANAGING TRUSTEE OF THE ASSESSEE WAS OUT OF INDIA FROM 30.09.2016 AND WAS EXPECTED TO RETURN TO INDIA IN - TIME TO SIGN AND FILE THE APPEALS. HOWEVER S HE WAS NOT ABLE TO DO SO BECAUSE SHE FELL ILL WHILE AT ABROAD. AS SOON AS THE MANAGING TRUSTEE RECOVERED FROM HIS ILLNESS HE RETURNED TO INDIA, THE ASSESSEE FILED THESE APPEALS WITHOUT ANY FURTHER DELAY. THUS THE ASSESSEE HAS EXPLAINED THE CAUSE OF DELAY OF 12 DAYS AND PLEADED THAT THE DELAY WAS NEITHER INTENTIONAL NOR DELIBERATE BUT DUE TO THE UNAVOIDABLE CIRCUMSTANCES. THE ASSESSEE HAS ALSO FILED THE COPY OF THE PASSPORT AND VISA OF THE MANAGING TRUSTEE IN SUPPORT OF TH E EXPLANATION. T HE LEARNED DEPARTMENTAL REPRESENTATIVE HAS VEHEMENTLY OBJECTED TO THE CONDONATION OF DELAY. 3 IT A NO S . 1878 & 1879 /BANG/20 16 3 . HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE CONTENTS OF THE AFFIDAVIT, WE FIND THAT THE MANAGING TRUSTEE OF THE ASSESSEE MRS. JA SMINE KAUR PATHEJA WAS ABROAD DURING THE MONTH OF SEPT. AND OCT. OF 2016 AND SHE RETURNED TO INDIA ONLY ON 2.11.2016 AS PER THE IMMIGRATION CLEARANCE DT.2.11.2016 AT BANGALORE AIRPORT. CAUSE OF DELAY AS EXPLAINED BY THE ASSESSEE IN THE AFFIDAVIT IS DULY S UPPORTED WITH THE DOCUMENTS AND HENCE WE ARE SATISFIED THAT THE ASSESSEE WAS HAVING A REASONABLE CAUSE FOR DELAY OF 12 DAYS IN FILING THESE APPEALS. ACCORDINGLY, WE CONDONE THE DELAY OF 12 DAYS IN FILING THE APPEALS. 4 . FIRST WE TAKE UP THE APPEAL AGA INST THE ORDER PASSED UNDER SECTION 12AA OF THE ACT WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 4 IT A NO S . 1878 & 1879 /BANG/20 16 5 . THE ASSESSEE FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A ON 24.2.2016. THE CIT (EXEMPTIONS) VIDE ITS LETTER DT.24.2.2016 ASKED THE ASSESSEE TO FILE CERTAIN DETAILS AND CLARIFICATIONS . T HEREAFTER THE CIT (EXEMPTIONS) NOTED THAT THE DETAILS FILED BY THE ASSESSEE WERE NOT COMPLETE AND AGAIN VIDE LETTER DT.3.8.2016 CALLED FOR DETAILS AND CLARIFICATION FOR FILING THE PROVISIONA L ACCOUNTS FOR THE QUARTER ENDED 31.12.2015. THEREAFTER THE CIT (EXEMPTIONS) REJECTED THE APPLICATION FOR 5 IT A NO S . 1878 & 1879 /BANG/20 16 REGISTRATION UNDER SECTION 12A ON THE GROUND THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING THE APPLICATION. 6. BEFORE US, T HE LEARNED CO UNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE FILED ALL THE REQUISITE DETAILS AS CALLED FOR BY THE LD. CIT (EXEMPTIONS). HE HAS REFERRED TO THE DOCUMENTS AND DETAILS IN THE PAPER BOOK AND SUBMITTED THAT ALL THE RELEVANT DOCUMENTS AND DETAILS WE RE FILED BY THE ASSESSEE HOWEVER , THE CIT (EXEMPTIONS) HAS REJECTED THE APPLICATION WITHOUT EXAMINING THE DETAILS AND DOCUMENTS FILED BY THE ASSESSEE. THUS THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE REASONS GIVEN BY THE CIT (EXEMPTIONS) FOR REJECTING THE APPLICATION O N CONTRARY TO THE FACTS WHEN THE ASSESSEE COMPLIED WITH THE DIRECTIONS FOR FILING THE DOCUMENTS AND DETAILS. HE HAS FURTHER CONTENDED THAT THE ASSESSEE FILED THE TRUST DEED DT.23.11.2015 AND AMENDED TRUST DEED DT.23.5.2016. THE CIT (EXEMPTIONS) HAS NOT DISPUTED THE OBJECTS OF THE ASSESSEE BEING CHARITABLE. HE HAS REFERRED TO THE LETTER DT.4.5.2016 AND SUBMITTED THAT THE ASSESSEE DULY REPLIED AND COMPLIED WITH ALL THE REQUIREMENTS AS SOUGHT BY THE CIT (EXEMPTIONS). THUS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT WHEN NO 6 IT A NO S . 1878 & 1879 /BANG/20 16 INFIRMITY WAS FOUND IN THE RECORD FILED BY THE ASSESSEE AND FURTHER THE OBJECTS OF THE ASSESSEE WERE FOUND AS CHARITABLE IN NATURE THEN THE CIT (EXEMPTIONS) WAS REQUIRED TO GRANT REGISTRATION UNDER SECTION 12A OF THE ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DIT (E XEMPTIONS ) VS. MEENAKSHI AMMA ENDOWMENT TRUST 354 ITR 219 AND SUBMITTED THAT THE HON'BLE HIGH COURT AFTER TAKING NOTE OF THE FACT THAT AFTER FORMING A TRUST WITHIN A PERIOD OF 9 MONTHS THEREAFTER FILED AN APPLICATION UNDER SECTION 12A OF THE ACT FOR REGISTRATION T H EN ONE CANNOT EXPECT T O DO ACTIVITY OF CHARITY IMMEDIATELY AFTER THE FORMATION . IN SUCH A SITUATION THE AUTHORITY CANNOT COME TO A CONCLUSION THAT THE TRUST WAS NOT INTENDING TO DO ANY CHARITY. THUS THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE ASSESSEE MAY BE GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE CIT (EXEMPTIONS) HAS POINTED OUT THAT THE ASSESSEE HAS NOT FURNISHED THE COMPLETE DETAILS SO THAT IT COULD HAVE BEEN VERIFIED AND SATISFIED ITSELF WITH THE EXISTENCE OF TH E ASSESSEE IS GENUINE AND THE 7 IT A NO S . 1878 & 1879 /BANG/20 16 ACTIVITIES OF THE ASSESSEE ARE IN ACCORDANCE WITH THE OBJECTS. HE HAS RELIED UPON THE ORDER OF THE CIT (APPEALS). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISP UTE THAT THE ASSESSEE - TRUST W A S FORMED ON 23.11.2015 AND THEREAFTER WITHIN A PERIOD OF FOUR MONTHS THE ASSESSEE APPLIED FOR REGISTRATION UNDER SECTION 12A OF THE ACT ON 24.2.2016. IN THE MEANTIME THE ASSESSEE AMENDED THE TRUST DEED ON 23.5.2016 AND FILE D A COPY OF THE SAME BEFORE THE CIT (EXEMPTIONS). THUS IN THE SHORT PERIOD OF FOUR MONTHS THE ASSESSEE CANNOT BE EXPECTED TO DO MUCH ON ACCOUNT OF ITS ACTIVITY AND CHARITY. EVEN THE CIT (EXEMPTIONS) HAS ADMITTED THE FACT THAT THE ASSESSEE FILED THE DETAI LS IN RESPONSE TO HIS QUERY HOWEVER IN HIS VIEW THE DETAILS WERE NOT COMPLETE AS THE PROVISIONAL ACCOUNTS FOR THE QUARTER ENDING 31.12.2015 WERE NOT FURNISHED. IT IS PERTINENT TO NOTE THAT THE ASSESSEE - TRUST WAS FORMED ON 23.11.2015 THEN THERE IS HARDLY A NY TRANSACTION OR ACTIVITY UPTO 31.12.2015 AS REQUIRED BY THE CIT (EXEMPTIONS). EVEN OTHERWISE THE CIT (EXEMPTIONS) HAS RECORDED IN PARA 4 THAT THE ASSESSEE - TRUST FILED DETAILS / CLARIFICATIONS. THIS STATEMENT OF THE CIT (EXEMPTIONS) IS SUBSEQUENT TO 8 IT A NO S . 1878 & 1879 /BANG/20 16 THE SHORTCOMINGS FOUND BY IT FOR NOT FILING THE PROVISIONAL ACCOUNTS FOR THE QUARTER ENDING 31 . 1 2 .2015. THEREAFTER THE CIT (EXEMPTIONS) HAS REJECTED THE APPLICATION FOR REGISTRATION ON THE GROUND THAT THE ASSESSEE DID NOT FILE THE DETAILS CALLED FOR. FOR RE ADY REFERENCE, WE REPRODUCE THE PARAS 4 & 5 AS UNDER : 4. THE APPLICANT TRUST FILED DETAILS/CLARIFICATIONS. 5. AGAIN THE APPLICANT TRUST DID NOT FURNISH THE DETAILS CALLED FOR. WHEN THE ASSESSEE'S REPRESENTATIVE APPEARED FOR HEARING, HE WAS SPECIFIC ALLY ASKED TO CLARIFY AS TO WHY THE APPLICATION SHOULD NOT BE REJECTED IN VIEW OF APPLICANT S ACTIVITIES ARE DIFFERENT FROM ITS OBJECTIVES. HE COULD NOT GIVE SATISFACTORY REPLY. AS IT IS MANIFEST FROM THESE TWO PARAS THAT IN PARA NO.4, THE CIT (EXEMPTIO NS) STATED THAT THE ASSESSEE FILED THE DETAILS WHEREAS IN PARA 5 THE CIT (EXEMPTIONS) HAS SATED THAT THE ASSESSEE - TRUST DID NOT FILE THE DETAILS CALLED FOR. AS WE HAVE ALREADY DISCUSSED THAT THE ONLY SHORTCOMING FOUND BY THE CIT (EXEMPTIONS) IS THE PROVIS ION ACCOUNTS FO R THE QUARTER ENDING 31.12.2015. WE FIND THAT THE ASSESSEE HAS FURNISHED THE BANK ACCOUNT DETAILS AND ALL OTHER DETAILS UPTO DATE AND EXPLAINING THE ACTIVITY OF THE ASSESSEE CARRIED OUT TILL THE DATE OF FILING THE APPLICATION AND SUBSEQUEN T DATE ON WHICH THE ASSESSEE FILED THE DETAILS. 9 IT A NO S . 1878 & 1879 /BANG/20 16 WE FURTHER NOTE THAT THE ASSESSEE FILED THE PROVISIONAL ACCOUNTS FOR THE PERIOD ENDING 31.3.2016. A LL THESE DETAILS NEGATE THE GROUND S ON WHICH THE APPLICATION FOR R EGISTRATION UNDER SECTION 12A WAS REJECTE D BY THE CIT (EXEMPTIONS). HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE DIT (EXEMPTIONS) VS. MEENAKSHI AMMA ENDOWMENT TRUST (SUPRA) HAS OBSERVED IN PARAS 5 & 6 ARE AS UNDER : 5. ON A PERUSAL OF THE RECORDS WE NOTE THAT THE TRUST WAS FORMED ON JANUARY 23, 2008, AND WITHIN A PERIOD OF NINE MONTHS THEY HAD FILED AN APPLICATION UNDER SECTION 12A FOR ISSUANCE OF THE REGISTRATION CLAIMING EXEMPTION. THE FACT THAT THE CORPUS OF THE TRUST IS NOTHING BUT THE CONTRIBUTION OF RS. 1,000 BY EACH OF THE TRUSTEES AS CORPUS FUND GOES TO SHOW THAT THE TRUSTEES WERE CONTRIBUTING THE FUNDS BY THEMSELVES IN A HUMBLE WAY AND WERE INTENDING TO COMMENCE CHARITABLE ACTIVITIES. IT IS NOT EVEN THE CASE OF THE REVENUE THAT BY THE TIME THE APPLICATION OF THE ASSESSEE CAME TO BE C ONSIDERED BY THEM, THE ASSESSEE HAD COLLECTED LOTS OF DONATIONS FOR THE ACTIVITIES OF THE TRUST. ON THE OTHER HAND, THE GRIEVANCE OF THE CONCERNED AUTHORITIES SEEMS TO BE THAT THERE WAS NO ACTIVITY WHICH COULD BE TERMED AS CHARITABLE AS PER THE DETAILS FUR NISHED BY THE ASSESSEE, THEREFORE, SUCH REGISTRATION COULD NOT BE GRANTED. WHEN THE TRUST ITSELF WAS FORMED IN JANUARY, 2008, WITH THE MONEY AVAILABLE WITH THE TRUST, ONE CANNOT EXPECT THEM TO DO ACTIVITY OF CHARITY IMMEDIATELY AND BECAUSE OF THAT SITUATIO N THE AUTHORITY CANNOT COME TO A CONCLUSION THAT THE TRUST WAS NOT INTENDING TO DO ANY ACTIVITY OF CHARITY. IN SUCH A SITUATION THE OBJECTS OF THE TRUST HAVE TO BE TAKEN INTO CONSIDERATION BY THE AUTHORITY AND THE OBJECTS OF THE TRUST COULD BE READ FROM TH E TRUST DEED ITSELF. IN THE SUBSEQUENT RETURNS FILED BY THE TRUST, IF THE REVENUE COMES ACROSS THAT FACTUALLY THE TRUST HAS NOT CONDUCTED ANY CHARITABLE ACTIVITIES, IT IS ALWAYS OPEN TO THE AUTHORITIES CONCERNED TO WITHDRAW THE REGISTRATION ALREADY GRANTED OR CANCEL THE SAID REGISTRATION UNDER SECTION 12AA(3) OF THE ACT. 6. A TRUST COULD BE FORMED TODAY AND WITHIN A WEEK REGISTRATION UNDER SECTION 12A COULD BE SOUGHT AS THERE IS NO PROHIBITION UNDER THE ACT SEEKING SUCH REGISTRATION. THE ACTIVITIES OF THE T RUST HAVE TO BE CONSIDERED IF SUCH REGISTRATION IS SOUGHT MUCH LATER THAN THE FORMATION OF THE TRUST OR AFTER EXPIRY OF THE EARLIER REGISTRATION GRANTED IN FAVOUR OF THE TRUST. THEREFORE, IN A CASE OF THIS NATURE WHERE THE TRUST HAS APPROACHED THE AUTHORIT Y FOR REGISTRATION UNDER SECTION 12A WITHIN A SPAN OF EIGHT MONTHS OF ITS FORMATION, THE ABOVEMENTIONED CRITERIA, NAMELY, THE OBJECTS OF THE TRUST FOR WHICH IT WAS FORMED WILL HAVE TO BE EXAMINED TO BE SATISFIED ABOUT ITS GENUINENESS AND THE ACTIVITIES OF THE TRUST CANNOT BE THE CRITERION, SINCE IT IS YET TO COMMENCE ITS ACTIVITIES. 10 IT A NO S . 1878 & 1879 /BANG/20 16 THUS WHEN THE ASSESSEE FILED ALL THE RELEVANT DETAILS UPTO 31.03.2016 THEN REJECTING THE APPLICATION FOR REGISTRATION BY THE CIT (EXEMPTIONS) ON THE GROUND THAT THE ASSESSE E IS NOT INTERESTED IN PROSECUTING THE APPLICATION IS NOT IN CONSISTENT WITH THE FACTS AND RECORD FILED BY THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER AND DIRECT THE CIT (EXEMPTIONS) TO GRANT THE REGISTRATION UNDER SECTION 12A OF THE ACT SP ECIFICALLY ON THE FACTS AND CIRCUMSTANCES WHERE THE CIT (EXEMPTIONS) DID NOT FIND ANY INFIRMITY IN THE OBJECTS OF THE ASSESSEE - TRUST BEING CHARITABLE IN NATURE AND THE RELEVANT RECORD WAS ALSO PRODUCED BY THE ASSESSEE. 9. AS REGARDS THE APPEAL AGAINST THE REJECTION OF APPROVAL UNDER SECTION 80G(5) OF THE ACT, THE CIT (EXEMPTIONS) HAS SIMPLY REJECTED THE APPLICATION DUE TO THE REASON THAT THE APPLICATION FOR REGISTRATION UNDER SECTION 12A WAS REJECTED. THEREFORE IT WAS ONLY CONSEQUENTIAL TO GRANT APPR OVAL UNDER SECTION 80G(5) OF THE ACT. IN VIEW OF OUR FINDING ON THE ISSUE OF GRANT OF REGISTRATION UNDER SECTION 12A, THE IMPUGNED ORDER PASSED BY THE CIT (EXEMPTIONS) UNDER SECTION 80G(5) IS SET ASIDE. THE 11 IT A NO S . 1878 & 1879 /BANG/20 16 CIT (EXEMPTIONS) IS DIRECTED TO GRANT RECOGNITI ON UNDER SECTION 80G(5) OF THE ACT. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH SEPT., 2017. SD/ - ( INTURI RAMA RAO ) AC COUNTANT MEMBER SD/ - ( VIJAY PAL RAO ) JUDICIAL MEMBER BANGALORE, DT. 15 .09.2017. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.