M/s Gian Sagar Educational & Charitable Trust, New Delhi V. DCIT, New Delhi

ITA 2292/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7121 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 03-01-2017
• Assessment Year: misc
• Appeal Filed On: 27-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT JAIN
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12AA; 12; 10; 2; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A.NO. 2292 /DEL/201 6 A.Y. : ------------ GIAN SAGAR EDUCATIONAL & CHARITABLE TRUST, SCO 109-110, SECTOR-43, CHANDIGARH (PAN: AAATG5827B) VS. DCIT, CENTRAL CIRCLE - 4, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ROHIT JAIN, ADV. & MS. DEEPASHREE RAO, CA DEPARTMENT BY : SH. VIJAY KUMAR, CIT(DR) ORDER PER H.S. SIDHU, JM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE IMPUGNED ORDER DATED 01/03/2016 PASSED BY THE LD. P RINCIPAL COMMISSIONER OF INCOME TAX, NEW DELHI ON THE FOLLOW ING GROUNDS:- 1. THAT THE PRINCIPAL COMMISSIONER OF INCOME TAX ERRED ON FACTS AND IN AW IN PASSING THE IMPUGNED ORDER DATED 1.3.2016 UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961, WITHDRAWING REGISTRATION GRANTED TO THE APPELLANT UNDER THAT SECTION. 2 2. THAT THE PR. CIT ERRED ON FACTS AND IN LAW IN PASSING THE IMPUGNED ORDER WITHOUT AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE APPELLANT AND CONSEQUENTLY, THE ORDER WITHDRAWING REGISTRATION UNDER SECTION 12AA IS ILLEGAL AND BAD IN LAW. 3. THAT THE PR. CIT ERRED ON FACTS AND IN LAW IN ALLEGING THAT : (A) THE APPELLANT VIOLATED THE PROVISIONS OF SECTION 2(15) OF THE ACT; (B) THE APPELLANT WAS ENGAGED IN NEFARIOUS / IMMORAL ACTIVITIES; (C) THE APPELLANT WAS NOT UNDERTAKING CHARITABLE ACTIVITIES; AND (D) THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND NOT BEING CARRIED IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 4. THAT THE PR. CIT ERRED IN NOT APPRECIATING THAT THERE WAS NO CHANGE IN THE NATURE OF CHARITABLE ACTIVITIES UNDERTAKEN INASMUCH AS THE APPELLANT CONTINUED TO RUN MEDICAL COLLEGE FOR PHILANTHROPIC PURPOSES AND WAS THEREBY ELIGIBLE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. 5. WITHOUT PREJUDICE, THAT THE PR. CIT ERRED ON FACTS AND IN LAW IN WITHDRAWING REGISTRATION UNDER SECTION 12AA(3) OF THE ACT SINCE INCEPTION. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR VARY FROM THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 3 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST IS RUNNING A MEDICAL COLLEGE & HOSPITAL UNDER THE NAME OF M/S GIAN SAGAR MEDICAL COLLEGE & HOSPITAL AT BANUR, PUNJAB. THE ASS ESSEE TRUST IS REGISTERED U/S 12AA OF THE INCOME TAX ACT, 1961 VIDE CIT-XI, CHANDIGARH - II, CHANDIGARH LETTER F. NO. CIT/CHD-II /TECH/3612 DATED 2.4.2005 AND REGISTERED AT S.NO.89. THE ASSESSE E-TRUST IS ALSO ELIGIBLE FOR TAX RELIEF U/S 80G OF THE I.T. ACT , 1961 VIDE ORDER DATED 07.05.2007. 2.1 DURING THE COURSE OF ENQUIRY CONDUCTED BY DDIT(I NV.), CHANDIGARH IN THE CASE OF M/S PACL GROUP OF CASES ON 22.3.2010, IT WAS OBSERVED THAT CBI ISSUED SUMMON TO SH. NIRMAL SING H BHANGOO, DIRECTOR OF M/S PACL IN CONNECTION WITH THE ARREST OF AN EMPLOYEE OF M/S PACL WHILE TRYING TO PAY BRIBE OF R S. 2 CRORE TO DR. KETAN DESAI, THE THEN CHIEF OF MEDICAL COUNCIL OF IND IA. ON THE BASIS OF THIS ENQUIRY, THE AO ADDED THE AMOUNT OF RS. 2 CROR ES AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE AY 2010-1 1 WHICH WAS SPECIFICALLY CONFIRMED BY THE LD. CIT(30), NEW DELHI VIDE ORDER DATED 20.1.2016. 2.2 ON THE BASIS OF FACTS AND CIRCUMSTANCES EXPLAINE D ABOVE, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE NAMELY M /S GIAN SAGAR EDUCATIONAL AND CHARITABLE TRUST, SCO-119-120, SECTOR-43, 4 CHANDIGARH REQUIRING THE ASSESSEE TO SHOW CAUSE AS T O WHY REGISTRATION GRANTED U/S. 12AA OF THE I.T. ACT MAY N OT BE CANCELLED. THE AUTHORITY CONCERNED FIXED THE DATE OF HEARING ON 16.02.2016, BUT IN RESPONSE TO THE SAME, THE ASSESSEE NOR ITS A.R. FILED ANY APPLICATION FOR ADJOURNMENT NOR FILED ANY REPLY/ SU BMISSIONS AND THE PR. CIT, NEW DELHI PRESUMED THAT ASSESSEE HAS NOTHIN G TO SAY AND DECIDED THE MATTER EXPARTE QUA ASSESSEE AND PASSED THE IMPUGNED ORDER DATED 01.03.2016 HOLDING THAT THE ASSESSEE HAS VI OLATED THE PROVISIONS OF SECTION 2(15) OF THE I.T. ACT WHILE CA RRYING OUT ITS ACTIVITIES. THE ASSESSEE HAS BEEN ESTABLISHED FOR THE SOLE INTENTION OF HELPING CHARITABLE AND PHILANTHROPIC VENTURE OF RUN NING A MEDICAL COLLEGE AND THEREBY SEEKING TO CLAIM EXEMPTION ON THE INCOME SO GENERATED U/S. 11 & 12 OF THE INCOME TAX ACT, 1961 NOTHWITHSTANDING THE FACT THAT ITS IMMORAL ACTIVITIES AND DESIRE TO DEFY RULES AND NORMS HAVE BEEN EXPOSED BY VIRTUE OF THE BRIBERY SCANDAL. SUCH INCIDENTS CANNOT BE CLASSIFIED AS CHAR ITABLE BY ANY RECKONING. THE PR. CIT, NEW DELHI FURTHER HELD THAT SUCH ORGANIZATIONS WHO DO NOT CARRY ANY CHARITABLE ACTIVITY , CANNOT BE GRANTED REGISTRATION. KEEPING IN VIEW OF THE FACTS, H E HELD THAT THE ACTIVITY OF THE TRUST ARE NOT GENUINE AND NOT BEING CA RRIED OUT IN ACCORDANCE WITH THE OBJECTIONS OF THE TRUST AND HE CA NCELLED THE REGISTRATION GRANTED U/S. 12A OF THE I.T. ACT VIDE OR DER DATED 5 02.04.2005 VIDE HIS IMPUGNED ORDER DATED 01.03.2016 PASSED U/S. 12AA(3) READ WITH SECTION 12A OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE AFORESAID ORDER DATED 01.03.201 6 ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, SH. ROHIT JAIN, ADV, ALON GWITH MS. DEEPASHREE RAO, CA APPEARED FOR THE ASSESSEE AND STATE D THAT THE LD. PR. CIT, NEW DELHI PASSED THE IMPUGNED ORDER E XPARTE WITHOUT HEARING THE ASSESSEE-TRUST. HE ALSO DRAW OUR ATTENTI ON TOWARDS PARA NO. 5 OF THE IMPUGNED ORDER IN WHICH THE PR. CIT, N EW DELHI HAS ISSUED A SHOW CAUSE NOTICE DATED 29.1.2016 TO THE ASS ESSEE ON THE ADDRESS I.E. SCO 119-120, SECTOR-43, CHANDIGARH. LD. COUNSEL FOR THE ASSESSEE ALSO STATED THAT THIS NOTICE WAS NOT SERVED UPON THE ASSESSE, BECAUSE AT THE TIME OF SETTLEMENT, THE REGI STERED AND HEAD OFFICE OF THE TRUST WAS SITUATED AT HIG-1441, PHA SE-9, MOHALI, PUNJAB. THE REGISTERED OFFICE WAS SHIFTED TO SCO 10 9-110, SECTOR- 43, CHANDIGARH VIDE SUPPLEMENTARY TRUST DEED DATED 2 8.12.2011. HE HAS ALSO PLACED THE SAME IN THE PAPER BOOK AT PAGE NO. 4-14 @6 AND 15-26@24 OF THE PAPER BOOK). HE FURTHER STATED THAT IN THE REGULAR ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 2011-12 VARIOUS REPLIES WERE FILED BEFORE THE AO MENTIONING THE NEW ADDRESS OF THE APPELLANT I.E. SCO 109-110, SECTOR-43, CHANDIGARH. 6 HE ALSO DRAW OUR ATTENTION FOR THE PROOF OF THE SAME TOW ARDS THE REPLY DATED 23.1.2014 AT PAGE NO. 165 OF THE PAPER B OOK; REPLY DATED 7.2.2014 AT PAGE NO. 181 AND REPLY DATED 18.2.20 14 AT PAGE NO. 196 OF THE PAPER BOOK. THE SHOW CAUSE NOTICE DATE D 29.1.2016 WAS ISSUED BY THE PR. CIT ERRONEOUSLY AT SCO 119-120, SECTOR-43, CHANDIGARH IN PLACE OF CORRECT ADDRESS I.E. SCO-109 -110, SECTOR-43, CHANDIGARH. THEREFORE, THE ASSESSEE COULD NOT APPE AR BEFORE THE LD. PR. CIT, NEW DELHI AND HE REQUESTED THAT IN THE I NTEREST OF JUSTICE, THIS EXPARTE IMPUGNED ORDER MAY BE CANCELLE D AND THE OPPORTUNITY OF HEARING FOR ESTABLISHING THE CASE OF T HE ASSESSEE MAY BE GIVEN TO THE ASSESSEE BY SENDING BACK THE MATTER TO THE PR. CIT, NEW DELHI FOR FRESH CONSIDERATION. NO OTHER ARGUMENT HAS BEEN ADVANCED BY THE LD. COUNSEL OF THE ASSESSEE. 5. ON THE OTHER HAND, SH. VIJAY KUMAR, CIT(DR) APPE ARED FOR THE DEPARTMENT AND HAS NOT RAISED ANY OBJECTION ON THE REQUEST OF THE ASSESSEES COUNSEL. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEV ANT RECORDS AVAILABLE ESPECIALLY THE IMPUGNED ORDER DATE D 01.3.2016 PASSED BY THE PR. CIT, NEW DELHI ALONGWITH THE PAPER B OOK FILED BY THE ASSESSEE CONTAINING PAGES NO. 1 TO 218 IN WHICH THE LD. COUNSEL OF THE ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCE S FOR 7 SUBSTANTIATING THE ARGUMENTS. AFTER PERUSING THE SA ME, WE ARE OF THE CONSIDERED VIEW THAT LD. PR. CIT, NEW DELHI HAS PA SSED THE IMPUGNED ORDER CONTRARY TO THE PRINCIPLE OF NATURAL J USTICE WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW. AS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS SUPPLIED THE CORRECT ADDRESS I.E. SCO 109-110, SECTOR-43, CHANDIGARH AS MENTIONED IN H IS WRITTEN ARGUMENTS AND FOR THE SUBSTANTIATING HIS ARGUMENTS HE ALSO FILED THE DOCUMENTARY EVIDENCES MENTIONED IN THE WRITTEN ARGUMENT S. ASSESSEE HAS ALSO APPEARED BEFORE THE REGULAR ASSES SMENT PROCEEDINGS FOR ASSESSMENT YEAR 2011-12 AND FILED VA RIOUS DOCUMENTARY EVIDENCES ALONGWITH THE NEW ADDRESS OF THE ASSESSEE, BUT THE LD. PR. CIT, NEW DELHI HAS NOT ISSUED ANY NOT ICE ON THE CORRECT ADDRESS OF THE ASSESSEE AND PASSED THE IMPUGNE D ORDER IN A HASTE MANNER WITHOUT FOLLOWING THE PRESCRIBED PROCEDUR E UNDER THE LAW. THEREFORE, THE IMPUGNED ORDER IS NOT SUSTAINABL E IN THE EYES OF LAW, HENCE, WE CANCEL THE IMPUGNED ORDER DATED 01.03 .2016 PASSED BY THE PR. CIT, NEW DELHI AND SET ASIDE THE IS SUE IN DISPUTE TO THE FILE OF THE PR. CIT, NEW DELHI (CENTRAL)-3, 3 RD FLOOR, ARA CENTRE, E-2 JHANDEWALAN EXTN., NEW DELHI - 110 055 WITH THE DIRECTION TO DECIDE THE ISSUE IN DISPUTE AFRESH UNDE R THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. THE ASSESSEE IS DIRECTED THROUGH HIS COUNSEL TO APPEAR B EFORE THE PR. 8 CIT, NEW DELHI ON 23.02.2017 AT 10.00 AM . IT IS MADE CLEAR THAT NO NOTICE SHALL BE ISSUED TO THE ASSESSEE FOR 23.02.2 017. THE ASSESSEE IS ALSO DIRECTED TO FULLY COOPERATE WITH THE L D. PR. CIT, NEW DELHI FOR THE QUICK DISPOSAL OF THE CASE AND DID N OT TAKE ANY UNNECESSARY ADJOURNMENT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/01/2017. SD/- SD/- [O.P. KANT] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 03/01/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 9