Guru Teg Bahadur Educational Trust, Jalandhar V. The Commissioner of Income Tax (Exemption), Chandigarh

ITA 234/ASR/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3741 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2016
• Assessment Year: 2014-2015
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURINDER MAHAJANCA
• Keywords: Principle of natural justice
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 234(ASR)/2016 ASSESSMENT YEAR: 2014-15 GURU TEG BAHADUR EDUCATIONAL TRUST, GURUDWARA THARA SAHIB, VILLAGE HAZARA, JALANDHAR. PAN:AAATG9403B VS. CIT(EXEMPTION) CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN(CA) RESPONDENT BY: SH. RAHUL DHAWAN (DR) DATE OF HEARING: 20.10.2016 DATE OF PRONOU NCEMENT: 30.12.2016 ORDER PER N. K. CHOUDHRY (JM): THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(EXEMPTION), CHANDIGARH, DATED 31.03.2016 FOR AS ST. YEAR:2014-15. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF A PPEAL. (I) THAT THE ORDER PASSED BY WORTHY CIT(EXEM PTIONS) IS AGAINST LAW & FACTS OF THE CASE. (II) THAT WORTHY CIT(EXEMPTIONS) CHANDIGARH HAS WRONGLY DECLINED APPROVAL UNDER SECTION 10(23C)(VI) TO THE ASSESSEE. (III) THAT THE ORDER PASSED IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE, AS SUFFICIENT OPPORTUNITY HAS NOT BEEN PRO VIDED TO THE ASSESSEE, BEING DATE FIXED FOR ADJUDICATION ON 31.0 3.2016 I.E. LAST DATE FOR DISPOSAL OF THE APPLICATION OF T HE ASSESSEE. I TA NO.234(ASR)/2016 A SST. YEAR: 2014-15 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN EDUCATIONAL TRUST CREATED WITH THE OBJECT TO MAINTAIN AND MANAG E GURU TEG BAHADUR PUBLIC SCHOOL, TO OPEN OTHER SCHOOLS, COLLEGES AND OTHER PROFESSIONAL/EDUCATIONAL INSTITUTES. THE ASSESSEE H AS FILED AN APPLICATION IN FORM 56D BEFORE THE LD. CIT(EXEMPTIONS) ON 24.03 .2015 SEEKING APPROVAL U/S 10(23C)(VI) OF THE ACT. THE APPLICATIO N REVEALS THAT THE TRUST IS IN ONGOING ENTITY THAT HAS BEEN IN OPERATION SIN CE 06.08.1998. AS PER ORDER DATED 31.03.2016, THE LD. CIT HAS DENIED EXEM PTION U/S 10(23C)(VI) OF THE ACT DUE TO THE FOLLOWING REASONS : (I) NON FILING OF CONSOLIDATED RECEIPTS AND PAYMEN TS ACCOUNTS FOR THE YEAR 2012-13, 2013-14 AND 2014-15. THE INCOME ARISING FROM THE ACTIVITIES OF THE TRUST CAN NOT BE PROPERLY APPRAISED IN THE ABSENCE OF CONSOLIDATED R ECEIPTS AND PAYMENTS ACCOUNT FOR THE PAST THREE YEARS. (II) NON FILING OF REGISTERED AMENDED TRUST DEED WH EREIN THE CLAUSE AS TO DISTRIBUTION OF MOVABLE AND IMMOVABLE ASSETS OF THE TRUST UPON ITS DISSOLUTION HAS BEEN AMENDED. 4. AT THE OUTSET, THE LD. AR HAS SUBMITTED THAT WO RTHY CIT(EXEMPTIONS) HAS WRONGLY DECLINED APPROVAL UNDER SECTION 10(23C( IV) TO THE ASSESSEE AND FURTHER SUBMITTED THAT THE ORDER PASSED IS AGAI NST THE PRINCIPLES OF NATURAL JUSTICE, AS SUFFICIENT OPPORTUNITY HAS NOT BEEN PROVIDED TO THE ASSESSEE, BEING DATE FIXED FOR ADJUDICATION ON 31.0 3.2016 I.E. LAST DATE FOR DISPOSAL OF THE APPLICATION OF THE ASSESSEE. IT WAS FURTHER ARGUED BY THE LD. AR THAT THE CONSOLIDATED FINANCIAL STATEMEN T QUA CASH RECEIPTS, EXPENDITURE AND SURPLUS FUNDS WERE FILED WITH THE L D. CIT(E), AND I TA NO.234(ASR)/2016 A SST. YEAR: 2014-15 3 PROVISIONAL BALANCE SHEET AND INCOME AND EXPENDITUR E ACCOUNT FOR THE YEAR 2014-15, STATEMENT SHOWING TOTAL RECEIPTS, TOT AL EXPENDITURE AND NET SURPLUS FOR THE FYS. 2006-07 TO 2014-15, AND CO PIES OF CONSOLIDATED BALANCE SHEET, INCOME AND EXPENDITURE ACCOUNT FOR T HE YEAR 2012-13, 2013,14 AND 2014-15 HAVE BEEN FILED, HOWEVER, THE L D. CIT(EXEMPTION) WRONGLY REJECTED THE APPLICATION BY MENTIONING THAT CONSOLIDATED RECEIPTS AND PAYMENTS ACCOUNTS FOR THE 2012-13 TO 2014-15 WE RE NOT FILED. IT WAS FURTHER SUBMITTED THAT THE LD. CIT(A) HAS COMPLETEL Y SKIPPED THE CONSOLIDATED FINANCIAL STATEMENTS FILED BY THE ASSE SSEE VIDE LETTERS DATED 27 TH JULY, 2015 AND 30 TH MARCH, 2016. THE LD. AR FURTHER SUBMITTED THAT TEST TO BE APPLIED FOR GRANT OF EXEMPTION U/S 10(23 C)(VI) OF THE ACT IS WHETHER PREDOMINANT NATURE OF THE ACTIVITIES OF TH E TRUST IS EDUCATIONAL AND INCIDENTALLY SURPLUS SHOULD NOT COME IN THE WAY OF GRANT OF EXEMPTION. WITH REGARD TO THE SECOND REASON FOR DENIAL OF EXEM PTION FOR NON- FILING OF REGISTERED AMENDMENT TRUST DEED. IT WAS S UBMITTED THAT IN VIEW OF THE JUDGMENTS PASSED BY THE JURISDICTION HIGH CO URT IN THE CASE OF ST. KABIR EDUCATIONAL SOCIETY VS. CENTRAL BOARD OF DIRE CT TAXES & ORS. (2014) 366 ITR 378(P&H). ORDER OF THE LD CIT(A) IS TOTALLY UNJUSTIFIED BEC AUSE THE UTILIZATION OF FUNDS IN THE EVENT OF DISSOLUTIO N OF THE TRUST WOULD BE AN EVENT WHICH YET TO TAKE PLACE, THEREFORE, ON THE AFORESAID SUBMISSIONS AND DOCUMENTS RELIED UPON BY ASSESSEE, THE ASSESSEE IS ENTITLED TO GET REGISTRATION. I TA NO.234(ASR)/2016 A SST. YEAR: 2014-15 4 5. ON THE CONTRARY, IT WAS ARGUED BY THE LD. DR THAT THE LD. CIT(EXEMPTION) IS EMPOWERED TO JUSTIFY HIMSELF ABOU T THE GENUINENESS OF THE ACTIVITIES AND EVEN OTHERWISE SURPLUS FUNDS WER E AVAILABLE WITH THE SOCIETY WHICH IS NOT BEING UTILIZED FOR EDUCATIONAL PURPOSES AND THE ASSESSEE HAS NOT COMPLIED WITH THE SHOW CAUSE NOTIC E ISSUED BY THE LD. CIT(EXEMPTION) WHILE ASKING SPECIFICALLY CONSOLIDAT ED RECEIPTS AND PAYMENTS ACCOUNTS FOR THE LAST THREE YEARS OF THE T RUST AND ALSO FAILED TO SUBMIT REGISTERED AMENDED MEMORANDUM ACCEPTING THE CHANGE IN THE CLAUSE. IT IS ALSO A FACT THAT THE MATTER WAS FIXED FOR FINAL ADJUDICATION ON 31 ST MARCH, 2016, HOWEVER, THE ASSESSEE DELIVERED THE P APERS ON DATED 30 TH MARCH, 2016 ONLY. IT WAS FURTHER ARGUED AS THE ASS ESSEE FAILED TO RECTIFY THE DEFECTS DESPITE AMPLE TIME WAS GIVEN BY THE LD. CIT (EXEMPTION), THEREFORE, THE CIT(EXEMPTION) WAS RIGH T IN REJECTING THE REQUEST FOR GRANT OF APPROVAL. 6. WE HAVE GONE THROUGH THE FACTS OF THE CASE AND S UBMISSION OF THE PARTIES, AS IN THE INSTANT CASE THE LD. CIT(EXEMPTI ON) REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF EXEMPTION U/S 10(23C)(VI) OF THE ACT DUE TO THE REASONS , FIRSTLY NON-FILING OF CONS OLIDATED RECEIPTS AND PAYMENTS ACCOUNT FOR THE YEAR 2012-13 TO 2014-15 AN D SECONDLY ON NON- FILING OF REGISTERED AMENDED TRUST DEED . AS IT REF LECTS FROM THE DOCUMENTS PLACED ON RECORD WITH A CERTIFICATION BY LD. AR OF THE ASSESSEE THAT WRITTEN SUBMISSION AND OTHER DOCUMENTS FILED B EFORE THIS BENCH, I TA NO.234(ASR)/2016 A SST. YEAR: 2014-15 5 WERE ALSO AVAILABLE WITH THE LOWER AUTHORITIES. CON SIDERING THE SAID CERTIFICATION BY THE LD. AR AND ALSO IT REFLECTS FR OM THE DOCUMENTS THAT THE CONSOLIDATED RECEIPTS AND PAYMENTS ACCOUNT FOR THE YEAR 2012-13, 2013-14 AND 2014-15 WERE AVAILABLE WITH THE LD. CIT (E) , HOWEVER, FACTUALLY IT IS TRUE THAT THE SAME HAVE BEEN FILED BEFORE THE LD. CIT(EXEMPTION) ONLY ON 30 TH MARCH, 2016 AND THE LD. CIT(EXEMPTION) PASSED AN ORDER FOR REJECTION OF THE EXEMPTION APPL ICATION OF THE ASSESSEE ON 31ST MARCH, 2016 ITSELF, THEREFORE, CONSIDERING THE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(EXEMPTION) MAY BE INADVERTENTLY SKIPPED THE DOCUMENTS , PLACED BY THE ASSESSEE. WITH REGARD TO THE SECOND GROUND FOR REJECTION OF THE DENIAL OF THE EXEMPTION FOR NON-FILING OF THE REGISTERED AMENDED TRUST DEED WITH A CLAUSE FOR DISTRIBUTION OF MOVABLE AND IMMOVABLE AS SETS OF TRUST UPON ITS DISSOLUTION, WE ARE OF THE CONSIDERED OPINION THAT IN VIEW OF DECISION OF ST. KABIR EDUCATIONAL SOCIETY VS. CENTRAL BOARD OF DIRECT TAXES & ORS (SUPRA), IT WAS A CURABLE DEFECT. ALTHOUGH IT REFLE CTS FROM THE IMPUGNED ORDER ITSELF THAT AMPLE OPPORTUNITIES HAVE BEEN GIV EN BY THE LD. CIT (EXEMPTION) TO THE ASSESSEE, HOWEVER, THE ASSESSEE FAILED TO DO SO BUT LATER ON GOT REGISTERED THE SAME ON 25 TH APRIL, 2016, WHICH IS NOT IN DISPUTE . IN OUR CONSIDERED OPINION, IN THE CUMULAT IVE EFFECT, WE SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND REMAND THE C ASE TO FILE OF CIT(EXEMPTION) TO GRANT THE EXEMPTION U/S. 12AA OF THE ACT AFTER CONSIDERING THE DOCUMENTS SUCH AS AMENDED TRUST DEED AND I TA NO.234(ASR)/2016 A SST. YEAR: 2014-15 6 STATEMENT SHOWING TOTAL RECEIPTS, TOTAL EXPENDITURE AND NET SURPLUS FOR THE FINANCIAL YEARS CONCERNED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30.12.2016. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED:30.12.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER