Indian Association of Cardiovascular Thoracic Anaesthesiologists (IACTA), New Delhi V. CIT(E), New Delhi

ITA 2503/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6876 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: misc
• Appeal Filed On: 29-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Business income; Opportunity of being heard
• Section: 12A; 12AA; 12

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2503/DEL/2015 INDIAN ASSOCIATION OF CARDIOVASCULAR THROACIC ANAESTHESIOLOGISTS (IACTA). E - 969, LGF, CHITRANJAN PARK, NEW DELHI PAN: AAATI0574P VS. CIT(E), 26 TH FLOOR, E - 2, BLOCK, CIVIL CENTRE, MINTO ROAD, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHAN KHARE, ADV REVENUE BY: SHRI S. S. RANA, CIT DR DATE OF HEARING 02/07 / 2018 DATE OF PRONOUNCEMENT 0 2 / 07 / 2018 O R D E R PER PRASHANT MAHARISHI , A. M. 1 . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), NEW DELHI [ THE LD CIT ] DATED 26/3/2015 UNDER SECTION 12AA (3) OF THE INCOME TAX ACT 1961 WHEREIN THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12 A IS WITHDRAWN W.E.F. 1/4/2009. 2 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LEANED CIT (EXEMPTION) ERRED IN FACT AND IN LAW IN WITHDRAWING REGISTRATION W.E.F. 01.04.2009) WHICH IS NOT ONLY BAD IN LAW BUT ALSO AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (EXEMPTION) ERRED IN FACT AND IN LAW IN PASSING TH E WITHDRAWAL ORDER U/S 12AA(3) WHICH IS NOT ONLY ILLEGAL BUT VOID IB INITIO BECAUSE THE REGISTRATION WAS GRANTED U/S 12A OF THE INCOME TAX ACT, 1961. 3. THE LEARNED CIT (EXEMPTION) ERRED IN FACT AND IN LAW IN NOT FOLLOWING THE CBDT CIRCULAR NO. 11/2008 WHI LE PASSING THE ORDER WHICH BINDING ON THEM. 4. THE LEARNED CIT (EXEMPTION) ERRED IN FACT AND IN LAW IN WRONGLY INTERPRETING THE NATURE OF INCOME WHICH WAS RECEIVED FROM SUBSCRIPTION OF MEDICAL JOURNAL AND CONFERENCE INCOME AS BUSINESS INCOME. PAGE | 2 5. THE LEAR NED CIT(EXEMPTION) ERRED IN FACT AND IN LAW IN NOT TAKING INTO ACCOUNT THE DETAIL REPLY FILED ON 26.11.2014 HENCE, THE ORDER PASSED IS NOT ONLY ILLEGAL BUT ALSO AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3 . THE ONLY ISSUE INVOLVED IN THIS APPEAL IS TH AT THE LD. CIT (E) HAS WITHDRAWN THE EXEMPTION ALREADY GRANTED TO THE ASSESSEE UNDER SECTION 12 A OF THE INCOME TAX ACT BY PASSING AN ORDER UNDER SECTION 12 AA (3) OF THE INCOME TAX ACT, 1961. THE ASSESSEE IS CHALLENGING THE ACTION OF THE LD. CIT. 4 . THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE REGISTRATION ALREADY GRANTED TO THE ASSESSEE WAS T WITHDRAWN WITHOUT ANY VALID REASON. MERELY FOR THE REASON THAT ACTIVITIES OF THE SOCIETY ARE NOT GENUINE AND NOT AS PER ITS OBJECTS OF THE SOCIETY, THE LD CIT FOR THE SIMPLE REASON THAT SOME INFORMATION WAS RECEIVED THAT THE SOCIETY IS THOUGH NO LONGER APPROVED FOR EXEMPTION UNDER SECTION 80 G HOWEVER, IT CONTINUES TO USE ITS EARLIER APPROVALS OF CERTIFICATE WHILE ISSUING RECEIPT TO ITS DONORS STATING THAT IT IS APPROVED FOR EXEMPTION UNDER SECTION 80 G. IT WAS FURTHER ALLEGED THAT SUCH RECEIPTS ARE BEING ISSUED BY SOCIETY AND ITS CHAPTERS WHICH ORGANIZE ANNUAL CONFERENCE ON ITS BEHALF. HE SUBMITTED THAT THERE IS NO SUCH MISUSE OF ANY SUCH RECOGNITION GRANT ED TO THE TRUST. HE FURTHER SUBMITTED THAT THERE IS NO CHANGE IN THE OBJECT OF THE SOCIETY AND IT CONTINUES TO CARRY ON THE SAME OBJECT OF THE SOCIETY. HE THEREFORE SUBMITTED THAT THE ACTION OF THE LD. CIT (EXEMPTION) IN WITHDRAWING THE EXEMPTION UNDER SE CTION 12 A OF THE ACT OF THE SOCIETY IS NOT SUSTAINABLE IN LAW. 5 . THE LD. CIT DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT EXEMPTIONS STATING THAT ASSESSEE IS NOT CARRYING ON ACTIVITIES ACCORDING TO ITS OBJECT AND THE SOCIETYS ACTIVITIES ARE ALSO NOT GENUINE AND THEREFORE THE REGISTRATION ALREADY GRANTED TO THE ASSESSEE TRUST UNDER SECTION 12 A OF THE ACT WAS CORRECTLY WITHDRAWN BY INVOKING THE POWERS CONTAINED UNDER SUBSECTION 3 OF THAT SECTION. HE SUPPORTED THE ORDER WITHDRAWING THE EXEMPTION. 6 . WE HAV E CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LD CIT. THE BRIEF FACTS SHOW THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT AND AS WELL AS WAS PAGE | 3 GRANTED RECOGNITION UNDER SECTION 12 A OF THE INCOME TA X ACT ON 31/3/1998. THE ASSESSEE WAS ALSO GRANTED APPROVAL UNDER SECTION 80 G FROM TIME TO TIME AND THE LAST APPROVAL WAS GRANTED ON 20/4/2005 FOR THE PERIOD 01/04/2005 TO 31/ 3/2008. SUBSEQUENTLY THE CIT EXEMPTION RECEIVED SOME INFORMATION THAT SOCIETY IS ISSUING EXEMPTION CERTIFICATES UNDER SECTION 80 G DESPITE EXEMPTION LAPSED ON 31/3/2008. THEREFORE, SHOW CAUSE NOTICE WAS ISSUED THIS WAS REPLIED BY THE ASSESSEE. THE MAIN CONTENTION OF THE LD. CIT WAS THAT THE ASSESSEE IS ORGANIZING A CONFERENCE AND EA RNING PROFIT THERE FROM IT IS ALSO PUBLISHING A JOURNAL. FURTHER, WITH RESPECT TO THE MISUSE OF CERTIFICATE OF APPROVAL ISSUED UNDER SECTION 80 G OF THE INCOME TAX ACT ASSESSEE DID NOT REPLY. THEREFORE THE LD. CIT FURTHER ISSUED A SHOW CAUSE NOTICE ON 05/ 06/2014 IN WHICH IT WAS ALLEGED THAT THAT THE CONFERENCES WERE ORGANIZED AND THE NATURE AND THE DETAILS OF THE PROFIT THEREON WAS NOT GIVEN. IT WAS THEREFORE STATED THAT THE SOCIETY IS CARRYING ON THE ACTIVITIES IN A COMMERCIAL FASHION AND THEREFORE IT IS NO LONGER A CHARITABLE WITHIN THE MEANING OF PROVISIONS OF SECTION 2 (15) OF THE INCOME TAX ACT, 1961. FURTHER THE ASSESSEE HAS SHOWN RECEIPT OF RS. 11, 79, 958/ BECAUSE OF PUBLICATION OF THE JOURNAL AND DETAILS OF THE SAME HAVE NOT BEEN FILED. IT WAS FUR THER MENTIONED THAT THE SOCIETY THOUGH NOT APPROVED UNDER SECTION 80 G, IT HAS COME TO THE NOTICE OF THE INCOME TAX DEPARTMENT THAT SUCH RECEIPTS ARE BEING ISSUED CITING THE EARLIER EXEMPTION NUMBER WHENEVER THE CONFERENCES ARE ORGANIZED. THE ASSESSEE REP LIED BY LETTER DATED 20/6/2014 CLARIFIED THAT ASSESSEE IS CARRYING ON THE SAME ACTIVITIES, WHICH IT WAS CARRYING ON PRIOR TO THAT. IT WAS FURTHER STATED THAT THE PROFIT THAT ARISE IN BECAUSE OF CONFERENCE IS MERELY A SURPLUS WHICH HAS BEEN USED FOR THE PU RPOSE OF THE CHARITIES AND THE OBJECT OF THE TRUST. FURTHER THE LD. CIT EXEMPTION FURTHER STATED THAT ASSESSEE HAS NOT FILED ANY REPLY WITH RESPECT TO THE MISUSE OF CERTIFICATE ISSUED UNDER SECTION 80 G. DESPITE REPEATED OPPORTUNITIES THE REPLY WAS NOT FO RTHCOMING FROM THE ASSESSEE AND THEREFORE THE LD. CIT APPLIED THE PROVISIONS OF SECTION 12 AA (3) HELD THAT FOR THE REASON THAT SOCIETY IS MISREPRESENTING ITS STATUS TO ITS DONORS BY CONTINUING TO USE THE CERTIFICATE ISSUED BY THE OFFICE WHICH WAS VALID U P TO PAGE | 4 31/3/2008 EVEN AFTER THAT AND THEREFORE IT IS A CLEAR - CUT CASE OF SOCIETYS ACTIVITIES NOT BEING GENUINE. HE THEREFORE HELD THAT THE ASSESSEE SOCIETY IS NOT ELIGIBLE FOR REGISTRATION GRANTED BY THIS OFFICE AND THEREFORE IT IS LIABLE TO BE WITHDRAWN. H E FURTHER REFERRED TO THE PROVISIONS OF SECTION 12 AA (3) AND STATED THAT THERE ARE ADEQUATE PROVISIONS IN THE LAW FOR WITHDRAWAL OF THE CERTIFICATE ALREADY GRANTED UNDER SECTION 12 AA (3) OF THE ACT. THEREFORE HE HELD THAT THE ACTIVITIES OF THE SOCIETY A RE NOT GENUINE AND NOT AS PER ITS OBJECTS THEREFORE THE REGISTRATION GRANTED UNDER SECTION 12 A IS WITHDRAWN W.E.F. 1/4/2009. ACCORDING TO THE PROVISIONS OF SECTION 12 AA (3) [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB - SECTION (1) 29 [OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY THE 25 [PRINCIPAL COMMISSIONER OR] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB - SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD.] 7 . ON READING OF THE ABOVE SECTION IT IS CLEAR THAT THE ACTIVITIES OF THE INSTITUTION OR TRUST ARE NOT FOUND GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE TRUST OR INSTITUTION THEN ONLY THE LD. CIT E IS EMPOWERED TO PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. ON READING OF THE ORDER OF THE LD. CIT E WE DID NOT FIND THAT THERE IS ANY FINDING THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND FURTHER IT WAS ALSO NOT FOUND BY HIM THAT THE DUTIES ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECT FOR WHICH THE ASSESSEE TRUST WAS FORMED. FURTHER THERE ARE NO SUCH INSTANCES IN THE ORDER ALSO WHICH SHOWS THAT ASSESSEE HAS ISSUED CERTIFICATE TO THE DONORS SAYING THAT DONATION GIVEN TO THE SOCIETY ARE TAX DEDUCTIBLE U/S 80 G OF THE ACT . THEREFORE WE ARE NOT INCLINED TO UPHOLD ORDER OF THE LD. CIT E PASSING AN ORDER UNDER SECTION 12AA (3) IN CANCELLING THE REGISTRATION GRANTED TO THE ASSESSEE TRUST UNDER SECTION 12 A OF THE ACT. PAGE | 5 8 . HOWEVER WE HAVE ALSO PER USED THE REASONS FOR WHICH THE L D. CIT E HAS INVOKED PROVISIONS OF SECTION 12 AA (3) OF THE ACT THAT ASSESSEE TRUST WAS ALLEGEDLY MISUSING BY ISSUING RECEIPTS OF THE NATION MENTIONING THAT CERTIFICATE ISSUED TO IT UNDER SECTION 80 G OF THE INCOME TAX ACT. BEFORE THE LD. CIT E THE AS SESSEE HAS NOT ANSWERED THESE QUERIES. DESPITE THERE BEING SPECIFIC INFORMATION WITH THE INCOME TAX DEPARTMENT THE ASSESSEE HAS REMAINED SILENT ABOUT ISSUING OF CERTIFICATE TO THE DONORS. FURTHER, THE LD. CIT E HAS ALSO NOT BROUGHT OUT ANY INSTANCE ABOUT ISSUE OF SUCH RECEIPTS BY THE ASSESSEE AND TO WHOM. THEREFORE, THE ISSUE INVOLVED IS VERY SERIOUS AS IT INVOLVES THE NON - PAYMENT OF TAX BY THE DONOR ON THE WRONG REPRESENTATION MADE BY THE ASSESSEE SOCIETY. IT WAS ALSO NOT SURE THAT FOR WHAT PURPOSE THE A SSESSEE SOCIETY HAS ISSUED THE RECOGNITION CERTIFICATE TO THE VARIOUS DONORS, IF AT ALL ISSUED. IN ADDITION, WHETHER SUCH ACTIVITIES WERE PERMITTED BY THE OBJECT OF THE SOCIETY IS NOT KNOWN. IN VIEW OF THE ABOVE FACTS WE SET ASIDE THE WHOLE ISSUE BACK TO T HE FILE OF THE LD. CIT E TO EXAMINE THE ISSUE AFRESH. LD. CIT E IS ALSO DIRECTED TO TAKE NECESSARY ACTIONS IN ACCORDANCE WITH THE OTHER PROVISIONS OF THE LAW AGAINST THE DONORS FOR DISALLOWANCE OF ANY DEDUCTIONS CLAIMED BY THEM UNDER THE PROVISIONS OF SECTION 80 G OF THE ACT AS WELL AS AGAINST THE SOCIETY FOR ISSUING RECEIPTS, IF ANY. AFTER THIS, HE MAY DECIDE ABOUT THE CONTINUATION OF REGISTRATION UNDER SECTION 12 AA OF THE TRUST AFRESH. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATI STICAL PURPOSES. 10 . ORDER PRONOUNCED IN THE OPEN COURT ON 0 2/ 0 7/2018. - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 2 / 07 / 2018 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) PAGE | 6 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI