M/S PARMESHWARI HANSRAJ JAIN KHANGA DOGRA TRUST, LUDHIANA V. CIT (EXAMPTION), CHANDIGARH

ITA 220/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5740 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2018
• Assessment Year: misc
• Appeal Filed On: 26-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Competent authority
• Section: 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 220(ASR)/2017 ASSESSMENT YEAR: [PAN: AACTP 4714A] M/S. PARMESHWARI HANSRAJ JAIN KHANGA DOGRA TRUST, 160-F, MAJOR GURDIAL SINGH ROAD, CIVIL LINES, LUDHIANA. VS. C. I. T. (EXEMPTIONS), C. R. BUILDING, 17-E, CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. HARI OM ARORA ( ADV.) RESPONDENT BY: SMT. BALWINDER KAUR (D.R.) DATE OF HEARING: 31.01.2018 DATE OF PRONOUNCEMENT: 16.02.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL AGITATING THE ORDER U/S. 12AA(B)( II) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) BY THE COMMISSION ER OF INCOME TAX (EXEMPTIONS), CHANDIGARH ('CIT(E)', FOR SHORT) DATE D 28.02.2017, DENYING REGISTRATION TO THE ASSESSEE TRUST U/S. 12AA. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSE SSEES COUNSEL, THAT CONSEQUENT TO ITS APPLICATION FOR REGISTRATION U/S. 12AA OF TH E ACT ON 18.08.2016, IT WAS QUERIED IN THE MATTER AS WELL AS SHOW CAUSED VIDE L ETTER DATED 13.12.2016 BY THE ITA NO.220 (ASR)/2017(AY) PARMESHWARI HANSR AJ JAIN KD TRUST V. CIT 2 OFFICE OF THE LD. CIT(E) (ALSO REFERRED TO AS A COM PETENT AUTHORITY) (PB PAGES 1-2). THE SAME WAS DULY REPLIED VIDE LETTER DATED 20.12.2 016, ALSO ATTENDING BEFORE THE DY. CIT (EXEMPTIONS) (HQ), CHANDIGARH (DY. CIT(E) , FOR SHORT), WHO HAD SIGNED THE LETTER DATED 13.12.2016 (AT PB PAGES 3-4 ). FURTHER REQUISITIONS AS MADE AND INFORMATION/CLARIFICATIONS CALLED FOR WERE FURN ISHED VIDE LETTERS DATED 08.02.2017 (ON 09.02.2017), 17.02.2017 (ON 20.02.20 17) AND FINALLY ON 21.02.2017 (PB PAGES 5, 6-7, 8), ADDRESSED TO AND APPEARING BE FORE THE DY. CIT(E), WHO CONDUCTED THE PROCEEDINGS. THE IMPRESSION CONVEYED BY HIM WAS THAT THE REGISTRATION WOULD FOLLOW, WHILE WHAT THE ASSESSEE- TRUST RECEIVED WAS THE IMPUGNED ORDER REJECTING THE APPLICATION FOR REGISTRATION. N O PERSONAL HEARING IN THE MATTER WAS AT ANY STAGE GRANTED BY THE COMPETENT AUTHORITY , WHO COULD NOT POSSIBLY DELEGATE THE POWER TO GRANT OR REFUSE REGISTRATION TO ANOTHER AUTHORITY AND, BESIDES, IS TO EXERCISE THE POWER OF REFUSAL (OF REGISTRATIO N) ONLY AFTER GRANT OF PERSONAL HEARING, AS MANDATED BY SECTION 12AA(B)(II), READIN G AS UNDER, THROUGH WHICH WE WERE TAKEN THROUGH DURING HEARING. PROCEDURE FOR REGISTRATION. 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12 A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, ITA NO.220 (ASR)/2017(AY) PARMESHWARI HANSR AJ JAIN KD TRUST V. CIT 3 AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD . [EMPHASIS, SUPPLIED] THE HON'BLE JURISDICTIONAL HIGH COURT HAD RECENTLY PER ITS DECISION IN CIT(E) V. AMELIORATING INDIA [2017] 399 ITR 196 (P&H) HELD LIKEWISE, READING OU T THE CACHE NOTES OF THE SAID DECISION, WHICH READ AS UND ER: SECTION 12AA OF THE INCOME-TAX ACT, 1961 PROVIDES THAT THE COMMISSIONER ON RECEIPT OF THE APPLICATION FOR REGISTRATION SHALL CALL FOR THE DOC UMENTS AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER REGISTERING THE INSTITUTION OR REFUSING TO REGISTER THE INSTITUTION. IT ALSO PROVIDES THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE AS SESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THE SECTION DOES NOT EN ABLE THE COMMISSIONER OF INCOME-TAX TO DELEGATE HIS POWER. EVEN ON MERITS, THE IMPUGNED ORDER IS WITHOUT DUE A PPLICATION OF MIND IN-AS-MUCH AS IT DRAWS ON IRRELEVANT CONSIDERATIONS AND WRONG PREMISES. FURTHER, THOUGH IN THE FACTS OF THAT CASE, THE MATTER WAS REMANDED BACK FO R GRANT OF OPPORTUNITY TO THE APPLICANT BY THE COMPETENT AUTHORITY, THE IMPUGNED ORDER IS VOID AB INITIO AS THE APPLICANT-APPELLANT HAD SUBMITTED ALL THE DETAILS/I NFORMATION CALLED FOR FROM TIME TO TIME. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD SUBM IT THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE DY. CIT HAD CONV EYED A NO OBJECTION TO THE GRANT OF REGISTRATION, AS BEING SUGGESTED BY THE LD . AR. THE COMPETENT AUTHORITY HAD PASSED A SPEAKING ORDER BY CONSIDERING ALL THE MATERIAL ON RECORD, INCLUDING THE ASSESSEES EXPLANATIONS/CLARIFICATIONS, CONSIDE RATION OF WHICH IS APPARENT FROM THE IMPUGNED ORDER. THE SAME COULD BE POSSIBLY CHAL LENGED ON MERITS, BUT ON PROCEDURE; THE DY. CIT(E) ACTING AS A CHANNEL FOR T HE PROCESSING OF THE APPLICATION. ITA NO.220 (ASR)/2017(AY) PARMESHWARI HANSR AJ JAIN KD TRUST V. CIT 4 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WITHOUT ANY IOTA OF DOUBT, THE INFORMATION, DETAIL S AND CLARIFICATIONS SOUGHT FOR DURING THE COURSE OF THE PROCEEDINGS BEFORE, AN D THE SHOW CAUSE DATED 13.12.2016 ISSUED BY, THE DY. CIT(E) IS ONLY FOR AN D ON BEHALF OF THE COMPETENT AUTHORITY, OF WHOSE OFFICE HE FORMS AN OFFICIAL AND INTEGRAL PART. HE HAS, IT MAY BE APPRECIATED, NO LOCUS STANDI IN THE MATTER OTHERWISE. IN FACT, THE LD. DR HAS SHOWN THAT HIS LETTER ALSO MAKES THIS ABUNDANTLY CLEAR IN -AS-MUCH AS HE STATES OF HAVING BEEN DIRECTED TO ACT IN THE MANNER HE DOES. THE LET TER-HEAD USED FOR COMMUNICATION ITSELF IS OF THE OFFICE OF THE COMPETENT AUTHORITY. HIS ACTIONS, AND THE PROCEEDINGS BEFORE HIM, CANNOT BE REGARDED AS DE HORS OR INDEPENDENT OF THE COMPETENT AUTHORITY. ALL OFFICIAL ACTS MUST EVEN OTHERWISE BE , IN TERMS OF SECTION 114(E) OF THE EVIDENCE ACT, 1872, REGARDED AS REGULARLY PERFORMED . THE SAID NOTICES/ REQUISITIONS OR PROCEEDINGS THEREFORE CANNOT BE CAL LED INTO QUESTION. WHY, WOULD THE ASSESSEE, EVEN AS OBSERVED BY THE BENCH DURING HEARING, OBJECT THERETO IF IT HAD BEEN SUCCESSFUL, AND HAD BEEN GRANTED REGISTRATION IN PURSUANCE TO ITS SAID APPLICATION AND THE SAID PROCEEDINGS? WE ARE THEREF ORE UNABLE TO PERSUADE OURSELVES TO AGREE WITH THE CONTENTION THAT THE PRO CEEDINGS ARE LEGALLY NOT VALID AS THE SAME WERE CONDUCTED BY THE DY. CIT(E). IN FACT, THE ASSESSEE RELIES ON THE INFORMATION AND CLARIFICATIONS FURNISHED IN THE SAI D PROCEEDINGS TO ARGUE OF THE IMPUGNED ORDER AS BEING VOID AB INITIO. THAT IS, CONTRADICTS ITSELF. BE THAT AS IT MAY, WE FIND CONSIDERABLE FORCE IN T HE ASSESSEES FIRST ARGUMENT. THIS IS AS THE LAW ITSELF CLEARLY PROVIDES THAT ANY ORDER REFUSING REGISTRATION, AS THE IMPUGNED ORDER, COULD ONLY FOLLOW A REASONABLE OPPO RTUNITY OF HEARING (TO THE APPLICANT TRUST OR INSTITUTION). THIS HEARING, FIRS TLY, IS TO BE BEFORE THE COMPETENT AUTHORITY, AND CANNOT BE DELEGATED, EVEN AS CLARIFI ED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN AMELIORATING INDIA (SUPRA). THIS IS AS IT IS HE WHO IS TO BE IN LAW SATISFIED, OR NOT SO, ABOUT THE MERITS QUA THE GRANT OF REGISTRATION. THAT IS, IT IS HIS ITA NO.220 (ASR)/2017(AY) PARMESHWARI HANSR AJ JAIN KD TRUST V. CIT 5 PERSONAL SATISFACTION AND JUDGMENT ALONE THAT IS RE LEVANT, AND IT IS HE WHO IS THEREFORE TO FORM AN INFORMED OPINION AFTER HEARING THE APPLICANT. TWO, THE HEARING HAS TO BE SPECIFICALLY QUA THE GROUNDS WITH REFERENCE TO WHICH THE COMPETENT AUTHORITY CONSIDERS THE APPLICATION FOR REGISTRATIO N AS FAILING OR AS INFIRM, SO THAT THE SAME OUGHT TO BE REFUSED/NOT ALLOWED. NOT SO DO ING WOULD RENDER NUGATORY THE VERY PURPOSE OF HEARING. WHY, TIME AND AGAIN WE FIN D THE ASSESSEES BRINGING TO OUR NOTICE FACTS WHICH COULD HAVE EASILY BEEN BROUGHT T O THE NOTICE OF THE REVENUE AUTHORITIES IF ONLY THEY HAD DISCLOSED THE DOUBTS B EING ENTERTAINED OR CLARIFICATIONS DEEMED PROPER BY THEM. RATHER, IT IS THE GRANT OF O PPORTUNITY THAT THE LAW POSTULATES IN-AS-MUCH AS AN ADJUDICATING AUTHORITY CANNOT COMPEL THE APPLICANT TO AVAIL THAT OPPORTUNITY. IN THE FACTS OF THE PRESENT CASE, THE ONLY ASPECT, AMONG THE SEVERAL THAT INFORM THE DENIAL OF REGISTRATION, AS A PERUSAL OF THE IMPUGNED ORDER SHOWS, ON WHICH THE ASSESSEE WAS SHOW CAUSED, IS TH E ABSENCE OF DISSOLUTION CLAUSE IN THE TRUST DEED. AND QUA WHICH IN FACT THE ASSESSEE, VIDE PARA (XI) OF ITS LETTER DATED 20.12.2016, STATES TO HAVE BEEN SINCE ADDED. UNDER THE CIRCUMSTANCES, THEREFORE, THE IMPUGNED O RDER, PASSED WITHOUT OBSERVING THE DUE PROCESS OF LAW, IS PROCEDURALLY D EFICIENT, CONSTITUTING AN IRREGULARITY. THE SAME THEREFORE WOULD WARRANT A RE STORATION BACK TO THE STAGE AT WHICH THE IRREGULARITY HAD OCCURRED ( HAZARI MAL KUTHIALA V. ITO [1961] 41 ITR 12 (SC)). THERE IS, IT NEEDS TO BE APPRECIATED, NO VES TED RIGHT IN PROCEDURE ( CWT V. SHARVAN KUMAR SWARUP [1994] 210 ITR 886 (SC)). WE, ACCORDINGLY, SETTING ASIDE THE IMPUGNED ORDER, DIRECT THE DISPOSAL OF THE ASSE SSEES APPLICATION BY THE COMPETENT AUTHORITY IN ACCORDANCE WITH LAW, EVEN AS WAS BY THE TRIBUNAL IN AMELIORATING INDIA (SUPRA), WHOSE ORDER STANDS UPHELD BY THE HON'BLE JURISDICTIONAL HIGH COURT. NEEDLESS TO ADD, WE DO N OT, IN DOING SO, EXPRESS ANY OPINION ON THE MERITS OF THE ASSESSEES APPLICATION . WE DECIDE ACCORDINGLY. ITA NO.220 (ASR)/2017(AY) PARMESHWARI HANSR AJ JAIN KD TRUST V. CIT 6 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 16, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16.02.2018. /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: PARMESHWARI HANSRAJ JAIN KHA NGA DOGRA TRUST, (2) THE RESPONDENT: CIT (E), CHANDIGARH (3) THE CIT(E), CHANDIGARH. (4) THE CIT, CONCERNED. (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER