Leuva Patel Charitable Trust, AMRELI V. The Commissioner of Income Tax, Rajkot-III, RAJKOT-GUJARAT

ITA 207/RJT/2013

• Counselvise Citation: 20724914 RSA 2013
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-08-2013
• Assessment Year: misc
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: DM RINDANI
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Non compliance
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL : SMC BENCH : RAJKOT BEFORE SHRI D K SRIVASTAVA, AM ITA NO. 207 /RJT/2013 SHRI LEUVA PATEL CHARITABLE TRUST V. CIT, RAJKOT - III, RAJKOT 1 ST FLOOR, NEAR NARAYAN BHOJNALAYA AMRELI DATE OF HEARING : 23 . 0 8. 201 3 DATE OF PRONOUNCEMENT : 06 . 0 9 . 201 3 ASSESSEE BY : SHRI D M RINDANI, CA REVENUE BY : DR. M L MEENA, DR ORDER THE APPEAL FILED BY THE ASSESSEE - TRUST IS DIRECTED AGAINST THE ORDER PASSED BY THE L D. COMMISSI ONER OF INCOME - TAX, RAJKOT - III ON 04.04 .2013 BY WHICH HE HAS DECLINED TO GRANT RECOGNITION APPLIED FOR B Y THE ASSESSEE - TRUST U/S 80G(5) , WITH THE FOLLOWING OBSERVATIONS: - 4. IN VIEW OF THE FORGOING FACTS THE ASSESSEE TRUST WAS GRANTED AN OPPORTUNITY OF BEING HEARD VIDE THIS OFFICE LETTER DT. 14/03/2013 TO DECIDE THE ISSUE UNDER CONSIDERATION BY FIXING THE CASE ON 22/03/2013. THE HEARING FOR THE MATTER WAS RE - FIXED ON 2/4/2013 CONSIDERING THE ASSESSEES REQUEST FOR ADJOURNMENT OF THE HEARING FIXED ON 22/3 /2013. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE, NEITHER HAS THE ASSESSEE ATTENDED ON THE DATES OF HEARING NOR ANY WRITTEN SUBMISSION IS FILED. 6. IN ABSENCE OF ANY COMPLIANCE BY THE ASSESSEE THE ISSUE UNDER CONSIDERATION IS DECIDED ON THE BASIS OF THE D ETAILS AND DOCUMENTS AVAILABLE ON RECORD BY RELYING ON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT V/S MOTOR GENERAL FINANCE 254 ITR 449 HEREUNDER: THE TRUST HAS COME INTO EXISTENCE THROUGH A TRUST DEED ON 03.09.2009. SUBSEQUENTLY THE TRUST G OT REGISTERED UNDER THE BPT ACT ON 21/01/2010. IT HAS BEEN REGISTERED U/S 12AA OF THE ACT ON 17/02/2011 . HOWEVER ON VERIFICATION OF THE DOCUMENTS SUBMITTED, IT IS NOTICED THAT THE OBJECTS OF THE TRUST ARE EXCLUSIVELY FOR THE BENEFIT OF MEMBERS OF LEUVA PA TEL GNATI ONLY. IT IS ALSO NOTICED THAT THE OBJECT OF THE TRUST IS TO WORK FOR THE BETTERMENT OF A PARTICULAR 2 207 - RJT - 2013 LEUVA PATEL CHARITABLE TRUST (S 80G(5)) CASTE I.E. LEUVA PATEL GNATI. IT IS NOTICED FROM THE LETTER OF THE ASSESSEE TRUST DT. 7/3/2013, ADDRESSED TO THE ITO 2(4), AMRELI, WHEREIN THE TR UST HAS ADMITTED IN WRITING THAT ALL THE ACTIVITIES ARE CARRIED OUT BY IT FOR THE BENEFIT OF THE MEMBERS OF LEUVA PATEL GNATI ONLY. THUS THE TRUST HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITIES FOR THE WELFARE OF THE GENERAL PUBLIC EXCEPT FOR A PARTICULAR C OMMUNITY ONLY. IN VIEW OF THE ABOVE, IT IS CONCLUDED THAT THE TRUST IS EXCLUSIVELY MEANT FOR THE BENEFIT OF A PARTICULAR COMMUNITY I.E. LEUVA PATEL GNATI AND THEREFORE, THE TRUST FAILS TO FULFILL ALL THE CONDITIONS AS PRESCRIBED U/S 80G(5)(III) OF THE AC T. 2 . THE ASSESSEE - TRUST HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - 1. THE C.I.T. (APPEALS) - III, RAJKOT ERRED IN REJECTING THE APPLICATION OF THE ASSESSEE TRUST FOR RECOGNITION U/S 80G OF THE ACT. 2. THE C.I.T. (APPEALS) - III, RAJKOT ERRED HOLDING THA T THE APPELLANT TRUST WAS ESTABLISHED FOR BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, WITHDRAW ANY GROUND OF APPEAL ANYTIME UPTO THE HEARING OF THIS APPEAL. 3. IN SUPPORT OF APPEAL, THE LD . AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE - TRUST IS REGISTERED UNDER THE BPT ACT AND ALSO U/S 12AA OF THE INCOME - TAX ACT. ACCORDING TO HIM, THE MERE REGISTRATION OF THE ASSESSEE - TRUST BY THE COMMISSIONER U/S 12AA OF THE INCOME - TAX ACT , WHICH STILL SUBSIST S , SHOWS THAT THE COMMISSIONER WAS AND CONTINU ES TO BE SATISFIED ABOUT THE OBJECT S OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. HE FURTHER SUBMITTED THAT THE ASSESSEE - TRUST HAS BEEN DENIED RECOGNITION U/S 80G(5) ON THE SOLE GROUN D THAT THE OBJECTS OF THE TRUST WERE EXCLUSIVELY FOR THE BENEFIT OF THE MEMBERS OF THE LEUVA PATEL GNATI ONLY. IT WAS CONTENDED BY HIM THAT THE OBSERVATIONS MADE IN THE IMPUGNED ORDER PASSED BY THE COMMISSIONER THAT THE OBJECTS OF THE TRUST ARE EXC LUSIVEL Y FOR THE BENEFIT OF MEMBERS OF LEUVA PATEL GNATI ONLY ARE FACTUALLY INCORRECT IN AS MUCH AS THERE IS NO SUCH CLAUSE IN THE MEMORANDUM OF ASSOCIATION WHICH RESTRICTS THE MOTIVE/OBJECTIVE OF 3 207 - RJT - 2013 LEUVA PATEL CHARITABLE TRUST (S 80G(5)) THE ASSESSEE - TRUST FOR THE BENEFIT OF ANY PARTICULAR CASTE OR COM MUNITY, INCLUDING LEUVA PATEL GNATI COMMUNITY. 4. APROPOS THE OBSERVATIONS MADE BY THE LD COMMISSIONER TO THE LETTER DATED 07.03.2013 ADDRESSED BY THE ASSESSEE - TRUST TO THE ITO , HE SUB MITTED THAT CERTAIN ACTIVITIES AT THAT POINT OF TIME WERE CARRIED OUT IN WHICH THE MEMBERS OF THE LEUVA PATEL GNATI COMMUNITY HAD PARTICIPATED. HE FURTHER SUBMITTED THAT PARTICIPATION BY LEUVA PATEL GNATI COMMUNITY IN CERTAIN ACTIVITIES ORGANIZED BY THE ASSESSEE - TRUST WOULD NOT MEAN THAT ITS ACTIVITIES WERE CONFINED OR REST RICTED FOR THE BENEFIT OF THAT COMMUNITY ONLY. 5. THE LD . AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING JUDGMENTS: - I . AHMEDABAD RANA CASTE ASSOCIATION V. CIT, 82 ITR 704 (SC) II . CIT V. PT RAM SHANKER MISRA TRUST, 222 ITR 252 ( AII) III . UMAID CHARITABLE TRUST V. UNION OF INDIA & ORS, 307 ITR 226(RAJ) IV . CIT V. SURJI DEVI KUNJI LAL JAIPURIA CHARITABLE TRUST, 186 ITR 728(AII) V . CIT V. BHARTIYA KHATRI SEWA TRUST, 205 ITR 96 (AII) VI . NATIONAL ASSOC I ATION OF MUSLIMS FOUNDATION V. DIRECTOR OF INCO ME - TAX (EXEMPTIONS), 136 TTJ (HYD) (UO) 66 VII . SMT. VIMALABAI (JIJI) NEELKANTH JATAR CHARITABLE TRUST V. ITO, 1 SOT 961 (PUNE) (TM) 6 . IN REPLY, THE LD . DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LD . COMMISSIONER OF INCOME - TAX. HE HAS ALS O FILED A COPY OF LETTER DATED 21.07.2013 ADDRESSED BY THE CIT TO HIM, WHICH READS AS UNDER: 2. IN THIS CONNECTION, I AM DIRECTED TO SUBMIT THAT THE ORDER U/S 80G OF THE ACT WAS PASSED ON 04.04.2013, REJECTING THE APPLICATION OF THE ASSESSEE FOR RECOGNIT ION U/S 80G OF THE ACT, ON THE BASIS OF THE DETAILS AND DOCUMENTS AVAILABLE ON RECOR D AS WELL AS OF THE FILED INQUIRY REPORT OF THE AO EX - PARTE DUE TO NON COMPLIANCE TO THE OPPORTUNITY OF BEING HEARD, ACCORDED BY THIS OFFICE IN THE LIGHT OF NATURAL JUSTICE , BY THE ASSESSE E TRUST. HOWEVER I AM DIRECTED TO SUBMIT THE PARA WISE REPLY AS UNDER: A ) THE ASSESSEE HAS FAILED T SUBMIT THE PROOF OF CHARITABLE ACTIVITIES CARRIED OUT SINCE ITS INCEPTION DURING THE COURSE OF OPPORTUNITY GRANTED 4 207 - RJT - 2013 LEUVA PATEL CHARITABLE TRUST (S 80G(5)) TO IT BY THIS OFFICE. THERE FORE THE COPIES OF THE SAME ARE NOT AVAILABLE WITH THE RECORD OF THIS OFFICE. B ) THE COPY OF THE LETTER ISSUED TO THE TRUST BY THIS OFFICE VIDE DT. 14/3/2013 REQUESTING THE TRUST TO REMAIN PRESENT BEFORE THE CIT ALONG WITH THE DETAILS MENTIONED IN PARA - 5 OF THE IMPUGNED LETTER IS HEREBY PROVIDED. C ) THE COPY OF THE ASSESSEES LETTER DT.7/3/2013 ACCEPTING THE FACT THAT THE TRUST IS CARRYING OUT THE CHARITABLE ACTIVITY FOR A PARTICULAR COMMUNITY IS ALREADY SUBMITTED BY THE AO VIDE HIS LETTER DT. 28/6/2013. HOWE VER THE COPY OF THE SAME IS HEREBY PROVIDED. D ) THE ASSESSEE, DURING THE COURSE OF INQUIRY PROCEEDINGS, HAS FAILED TO AVAIL THE OPPORTUNITY OF BEING HEARD ACCORDED BY THIS OFFICE ON 22/3/2013 WHICH WAS ADJOURNED, AT THE REQUEST OF THE ASSESSEE, ON 2/4/2013. THEREBY THE GENUINE NE SS OF THE CHARITABLE ACTIVITIES CARRIED OUT BY THE TRUST OF THE BENEFIT OF GENERAL PUBLIC IS NOT PROVED. 7 . BOTH THE PARTIES HAVE BEEN HEARD. IT IS TRUE THAT THE ASSESSEE - TRUST SUBMITTED LETTER DATED 07.03.2013 BEFORE THE ASSESSING OFFICER STATING THAT THE ACTIVITIES ORGANIZED BY IT WERE INTENDED FOR THE BENEFIT OF LEUVA PATEL GNATI ONLY. IT IS WELL - SETTLED THAT FACTS ADMITTED BY THE ASSESSEE - TRUST ARE NEITHER REQUIRED TO BE PROVED NOR ARE THEY REQUIRED TO BE REBUTTED BY THE REVENUE. HOWEVER THAT SOLITARY LETTER BY ITSELF DOES NOT ESTABLISH THAT ALL THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE WERE INTENDED FOR THE BENEFIT OF THAT COMMUNITY ALONE. BESIDES, THE IMPUGNED ORDER DOES NOT MAKE ANY REFERENCE TO SPECIFIC CLAUSES IN THE TRUST DE ED OR MEMORANDUM OF ASSOCIATION BY WHICH THE ACTIVITIES OF THE ASSESSEE - TRUST ARE DIRECTED FOR THE BENEFIT OF MEMBERS OF LEUVA PATEL GNATI COMMUNITY ALONE. T HE ISSUE UNDER APPEAL HAS ALSO NOT BEEN EXAMINED IN THE LIGHT OF THE LAW EMERGING FROM THE DECISION S CITED BY THE ASSESSEE. I T IS THEREFORE CONSIDERED APPROPRIATE TO SET ASIDE THE ORDER PASSED BY THE LD. COMMISSIONER AND RESTORE THE MATTER TO HIS FILE FOR A FRESH DECISION , AFTER BRINGING RELEVANT MATERIAL S ON RECORD, IN THE LIGHT OF THE APPLICABLE LAW A FTER GIVING REASONABLE 5 207 - RJT - 2013 LEUVA PATEL CHARITABLE TRUST (S 80G(5)) OPPORTUNITY OF HEARING TO THE ASSESSEE. APPEAL FILED BY THE ASSESSEE - TRUST IS T REATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 06 .0 9 . 201 3 SD/ - ( D. K. SRIVASTAVA) ACCOUNTANT MEMBER RAJKOT: 06 .0 9 .2013 * BT COPY OF ORDER FORWARDED TO: - 5 . APPELLANT - SHRI LEUVA PATEL CHARITABLE TRUST, 1 ST FLOOR, NEAR NARAYAN BHOJNALAYA AMRELI 2 . RESPONDENT - CIT, RAJKOT - III, RAJKOT 3 . CONCERNED CIT 4 . DR, ITAT, RAJKOT 5 . GUAR D FILE. BY ORDER TRU E COPY PRIVATE SECRETARY, ITAT, RAJKOT