Sankalp, Cuttack V. CIT, Bhubaneswar

ITA 217/CTK/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0752 (ITAT-CUTTACK)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 31-05-2010
• Court: TRIBUNAL
• Department Lawyers: J KHANRADR
• Assessee Lawyers: BIBEK MOHANTY
• Keywords: Charitable institution

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 217/CTK/2010 / ASSESSMENT YEAR SANKALP, AT: PATRAKANA, P.O. KASARDA,P.S.NIALI, DIST. CUTTACK. PAN: AADAS 5404 J - - - VERSUS - COMMISSIONER OF INCOME - TAX, BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI BIBEK MOHANTY, AR / FOR THE RESPONDENT: / SHRI J.KHANRA,DR / ORDER . . . , , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX DT.26.3.2010 REJECTING THE APPLICATION FOR REGISTRATION U/S.12AA OF THE INCOME - TAX ACT,1961. 2. THE LEARNED AR OF THE ASSESSEE VE HEMENTLY CONTENDED BEFORE US INTER ALIA THAT THE LEARNED CIT HAS NOT APPLIED PROPERLY THE LAW APPLICABLE TO THE ASPECTS OF CONSIDERATION AS CAN BE SEEN FROM THE IMPUGNED ORDER. HE FURTHER SUBMITTED THAT UNDISPUTEDLY THE ASSESSEE - SOCIETY IS REGISTERED ON26. 10.2007 UNDER THE SOCIETY REGISTRATION ACT,1860. THE MAIN OBJECT OF THE SOCIETY ARE, (1) TO EDUCATE PEOPLE TO BE AWARE OF THEIR PROBLEMS AND TO SOLVE THEM WITH THE AVAILABLE RESOURCES THROUGH THEIR ORGANIZED AND COLLECTIVE ACTION, (2) TO UNDERTAKE VARIOUS PROGRAMMES FOR RURAL DEVELOPMENT SUCH AS DRINKING WATER SUPPLY, SANITATION, LOW COST HOUSING, USE OF NON - CONVENTIONAL ENERGY, ANTI - POVERTY PROGRAMME, RURAL TECHNOLOGY I.T.A.NO. 217/CTK/2010 2 AND MANAGEMENT PROGRAMMES ETC., (3) TO PROMOTE AGRICULTURE, ANIMAL HUSBANDRY, FISHERY, P OULTRY FARMING, CATTLE FEED, DIARY FARMING, FLORICULTURE ,MEDICINE PLANTS, HANDICRAFTS AND HANDLOOMS. THE ASSESSEE IS FILING RETURNS IN TIME BEFORE THE DEPARTMENTAL AUTHORITIES. IT HAS APPLIED FOR REGISTRATION/S.12AA OF THE INCOME - TAX ACT,1961 TO THE CIT. DURING THE COURSE OF HEARING, THE ASSESSEE APPEARED THROUGH ITS AUTHORITIES REPRESENTATIVES AND FUNCTIONARIES AND SUBMITTED ALL THE DETAILS THAT WERE REQUIRED BY THE CIT. BUT THE LEARNED CI/T HAS REJECTED THE APPLICATION FOR REGISTRATION OBSERVING THAT THE ASSESSEE HAS ACCUMULATED MORE THAN 15% OF ITS INCOME DURING THE YEAR 2007 - 08 AND 2008 - 09. IT HAS ACCUMULATED 94% OF ITS INCOME IN THE FINANCIAL YEAR 2007 - 08 AND THE PERCENTAGE OF ACCUMULATION WAS 19.8% IN THE FINANCIAL YEAR 2008 - 09. SINCE ITS INCEPTION TH E SOCIETY HAS BEEN CONSISTENTLY ACCUMULATING ITS INCOME AT MORE THAN 15%. IT HAS FAILED TO FURNISH COPIES OF INCOME - TAX RETURN ACKNOWLEDGEMENT AND IT HAS VIOLATED THE PROVISIONS OF SECTION 11(2) OF THE ACT. WHILE PASSING THE IMPUGNED ORDER, THE LEARNED CIT HAS IGNORED THAT THERE WAS UTILIZATION OF AROUND 97.5% OF INCOME DURING THE FINANCIAL YEAR 2007 - 08. THEREFORE, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND ACCORDINGLY IT IS TO BE SET ASIDE DIRECTING THE LEARNED C IT TO GIVE REGISTRATION/S.12AA OF THE ACT TO THE ASSESSEE. 3. CONTRARY TO THIS, THE LEARNED DR HAS SUPPORTED THE ORDER PASSED BY THE LEARNED CIT CONTENDING THAT THE ORDER IS VERY MUCH A SPEAKING ORDER AS IT HAS MENTIONED THE REASONS FOR REJECTING THE REGI STRATION. IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER IS NOT AT ALL INFIRM IN ANY WAY REQUIRING INTERFERENCE. HENCE, HE SOUGHT FOR UPHOLDING THE SAME BY DISMISSING THE APPEAL OF THE ASSESSEE. I.T.A.NO. 217/CTK/2010 3 4. HAVING HEARD BOTH PARTIES AND ON CAREFUL CONSIDERATION OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LEARNED CIT HAS OBSERVED IN PARA 2 OF THE IMPUGNED ORDER THAT THE AUDITED FINANCIAL STATEMENTS FURNISHED BY THE ASSESSEE ALONG WITH THE APPLICATION DISCLOSES THAT THE ASSESSEE HAS ACCUMULATED MORE THAN 15% OF ITS INCOME DURING THE YEARS 2007 - 08 AND 2008 - 09 AND IT HAS ACCUMULATED 94% OF ITS INCOME IN THE FY 2007 - 08 WHEREAS THE ACCUMULATION FOR THE YEAR 2008 - 09 IS 19.8%. HE INFERRED FROM THIS THAT SINCE ITS INCEPTION THE SOCIETY IS CONSISTENTLY ACCUMULATING I TS INCOME AT MORE THAN 15%. BUT AT THE SAME TIME, THE LEARNED CIT HAS NOT AT ALL CONSIDERED THE UTILIZATION OF AROUND 97% OF INCOME DURING THE FINANCIAL YEAR 2007 - 08 AND 89% OF INCOME DURING THE FY 2008 - 09. APART FROM THAT THERE IS NO FINDING BY THE LEARNE D CIT THAT THE ASSESSEE - SOCIETY IS NOT CARRYING OUT THE OBJECTS OF CHARITABLE PURPOSES AS ENUMERATED AS ITS MAIN OBJECTS AND IT IS NOT THE CASE OF THE LEARNED CIT THAT THE ASSESSEE IS DIVERTING ITS INCOME TO NON - CHARITABLE ACTIVITIES THAT ARE NOT RELATED T O THE MAIN OBJECT OF THE ASSESSEE. THEREFORE , IN THE LIGHT OF NON - OBSERVATION OF ANYTHING ABOUT THE UTILIZATION OF INCOME BY THE ASSESSEE AND NON - FINDING OF ANY FACT REGARDING DIVERSION OF FUNDS FOR NON - CHARITABLE PURPOSES, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THIS IS A FIT CASE WHICH IS TO BE DE NOVO CONSIDERED BY THE LEARNED CIT WITH REFERENCE TO THE IMPORTANT ASPECTS OF UTILIZATION OF THE INCOME BY THE ASSESSEE T HAT TOO FOR THE OBJECTS OF THE ASSESSEE AND THEREAFTER COME TO A DEFINITE CONCLUSION AS PER LAW AND PASS NECESSARY ORDER AS PER LAW. WITH THESE OBSERVATIONS, THE MATTER IS RESTORED TO THE FILE OF THE LEARNED CIT. HOWEVER, THE ASSESSEE IS HEREBY DIRECTED TO COOPERATE WITH THE DEPARTMENT FOR EARLY DISPOSAL OF THE MATTER. I.T.A.NO. 217/CTK/2010 4 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 14 TH MARCH, 2011 S D/ - S D/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER. ( ) DATE: 14 TH MARCH, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : SANKALP, AT: PATRAKANA, P.O. KASARDA,P.S.NIALI, DIST. CUTTACK. 2 / THE RESPONDENT: COMMISSIONER OF INCOME - TAX, BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRI VATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.