M/s. Word In Action Outreach, Rajahmundry V. The CIT, Rajahmundry

ITA 258/VIZ/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9473 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Keywords: Right to appeal; Capital receipt; Condonation of delay; Capital expenditure
• Section: 143(3); 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 258 / VIZ /201 6 M/S. WORD IN ACTION OUTREACH, H .NO. 107, D.NO. 23 - 7 - 4, MUNICIPAL COLONY, RAJAHMUNDRY. V S . CIT, RAJAHMUNDRY. PAN NO. AAAAW 1519 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI T.S.N. MURTHY SR. DR DATE OF HEARING : 19 / 1 1 /201 9 . DATE OF PRONOUNCEMENT : 08 / 1 2 /201 9 . O R D E R PER V. DURGA RAO , JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX , RAJAHMUNDRY , DATED 23 /0 9 /201 1 WHEREBY REGISTRATION U/SEC. 12AA HAS BEEN REJECTED. 2. IN THIS APPEAL TH E RE IS A DELAY OF 1613 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT BY EXPLAINING THE DELAY , WHICH IS REPRODUCED AS UNDER: - 7 . THE APPLICATION FILED BY THE PETITIONER WAS REJECTED VIDE EX - PARTE ORDER DT.23 - 9 - 2011 AND THE SAME WAS SERVED ON THE PETITIONER ON 29.09.2011 . 8. THE PETITIONER WAS UNDER THE BONA - FIDE BELIEF THAT THE 2 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) REGISTRATION U/S 12AA IS REQUIRED ONLY FOR ENABLING THE PETITIONER TO COLLECT DONATIONS IN TERMS OF S.80G OF THE INCOME TAX ACT, 1961. FURTHER, THE PETITIONER WAS NOT AWARE OF THE LEGAL POSITION THAT A REMEDY LIES IN THE FORM OF APPEAL BEFORE THE HON'BLE ITAT AGAINST THE ORDER OF THE LD. CIT REJECTING THE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT . THERE WAS NO SUCH INSTRUCTION IN THE ORDER SERVED ON THE PETITIONER. 9. LATER, THE ASSESSMENTS OF THE PETITIONER WERE REOPENED AND ASSESSMENTS WERE FRAMED U/S 143(3) R.W.S. 147 OF THE ACT VIDE ORDERS DT.3 1 - 3 - 2016. EVEN DURING THE REASSESSMENT PROCEEDIN GS, THE PETITIONER WAS MADE TO BELIEVE THAT THE CAPITAL EXPENDITURE INCURRED BY THE PETITIONER FROM OUT OF CAPITAL RECEIPTS WOULD BE ALLOWED AS DEDUCTION AND AS SUCH THERE WOULD BE NO TAX LIABILITY. 10. HOWEVER, ON RECEIPT OF THE ASSESSMENT ORDERS ON 31ST MARCH, 2016 THE PETITIONER WAS SHOCKED TO NOTICE THAT HUGE TAX DEMAND WAS RAISED BY THE ASSESSING OFFICER. 11. APPRECIATING THE SITUATION, THE PETITIONER CONSULTED SENIOR TAX CONSULTANT AT VISAKHAPATNAM TO ENSURE THAT THE CASE IS HANDLED IN A PROPER AND EF FECTIVE MANNER. DURING THE DISCUSSION WITH THE TAX CONSULTANT, THE PETITIONER CAME TO REALIZE THAT IT OUGHT TO HAVE PREFERRED AN APPEAL AGAINST THE ORDER DT.23 - 9 - 2011 OF LEARNED COMMISSIONER OF INCOME TAX. 12. WITHOUT WASTING FURTHER TIME, THE PETITIONER TOOK NECESSARY STEPS AND ENSURED THAT THE APPEAL WAS FILED ON 28.04.2016. SINCE, THE ORDER DT.23 - 9 - 2011 WAS SERVED ON THE APPELLANT ON 29.09.2011 THE APPEAL OUGHT TO HAVE BEEN FILED ON OR BEFORE 28.11.2011. THUS, THERE WAS A DELAY OF 1622 DAYS IN FILING TH E APPEAL. 13. FOR THE DETAILED FACTS STATED ABOVE, THE PETITIONER SUBMITS THAT THE DELAY OF 1622 DAYS IN FILING THE APPEAL WAS DUE TO REASONS BEYOND THE CONTROL OF THE APPELLANT AND IS NEITHER INTENTIONAL NOR DELIBERATE. HENCE, THE PETITIONER RESPECTFULLY PRAYS THE HON'BLE ITAT TO CONDONE THE DELAY OF 1622 DAYS IN FILING THE APPEAL AND PASS APPROPRIATE ORDERS IN THE INTEREST OF RENDERING SUBSTANTIAL JUSTICE. INCONVENIENCE CAUSED IN THIS REGARD IS SINCERELY REGRETTED. 3 . LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PRESIDENT OF THE TRUST IS A DEAF PERSON RUNNING HOME FOR DEAF AND DUMB PERSONS CARRYING CHARITABLE ACTIVITIES. HE FURTHER SUBMITTED 3 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) THAT LD.CIT REJECTED 12A REGISTRATION ON 2 3 /09/2011 . IMMEDIATELY, THE PRESIDENT OF THE SOCIETY HAD CONSUL TED THE CHARTERED ACCOUNTANT SHRI E.MADHUSUDANA REDDY , WHO ADVISED THE PRESIDENT OF THE SOCIETY NO NEED TO FILE APPEAL FOR THE REASON THAT MOST OF THE FUNDS ARE RECEIVING FROM ABROAD AND SUBMITTED THAT DELAY MAY BE CONDONED. 4 . ON THE OTHER HAND, LD.DR STRO N GLY OPPOSED FOR CONDONATION OF DELAY BECAUSE THERE IS A HUGE DELAY IN FILING THE APPEAL. 5. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE AFFIDAVIT FILED FOR CONDONATION OF DELAY . AS PER THE AFFIDAVIT FILED BY THE ASSESSEE - SOCIETY APPEARS TO US THAT THE DELAY IS CAUSED DUE TO WRONG ADVICE GIVEN BY THE CA SHRI E.MADHUSUDANA REDDY. EVEN WE HAVE GONE THROUGH THE AFFIDAVIT FILED BY THE CA SHRI E.MADHUSUDANA REDDY, IT HAS BEEN CLEARLY MENTIONED THAT MOST OF THE FUNDS ARE RECEIVING FROM ABROAD , THERE FORE ON HIS ADVICE , APPEAL HAS NOT BEEN FILED. B Y CONSIDERING THE AFFIDAVIT FILED BY THE ASSESSEE SOCIETY AS WELL AS CA, THE DEL A Y IS OCCURRED DUE TO WRONG ADVICE GIVEN BY THE CA. THEREFORE, IN OUR OPINION, THERE IS A SUFFICIENT CAUSE TO CONDONE THE DELAY. RECENTLY, THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/ S. MERIDIAN PROMOTERS P. LTD. VS. DCIT IN ITTA NO. 157/2019, DATED 18/10/2019 WHEREIN IT HAS BEEN HELD THAT WHILE CONSIDERING THE APPLICATIONS FOR 4 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) CONDONATION OF DELAY, WHAT IS TO BE SEEN IS WHETHER THE INTEREST OF THE REVENUE WILL STAND PROTECTED, EVEN WHILE RECOGNIZING THE RIGHT OF THE ASSESSE E TO EXERCISE THE ST ATUTORY REMEDIES AVAILABLE TO THE ASSESSE E AND THE STATUTORY RIGHT OF APPEAL CANNOT BE MADE REDUNDANT BY DISMISSING THE APPLICATION FOR CONDONATION OF DELAY AND REJECTING THE APPEAL ON TECHNICAL GROUNDS. IN OUR CONSIDERED VIEW WHEN SUBSTANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINS T EACH OTHER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED, AS HELD BY THE SUPREME COURT IN COLLECTOR, LAND ACQUISITION, ANANTNAG V. MST. KATIJI . 6 . T HEREFORE , RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE AB OVE REFERRED TO CASE, WE FIND THAT THERE IS A SUFFICIENT CAU S E TO C O NDONE THE DELAY. ACCORDINGLY, DELAY IS CONDONED. 7 . SO FAR AS MERITS OF THE CASE IS CONCERNED, THE ASSESSEE SOCIETY HAS FILED AN APPLICATION IN FORM NO. 10A ON 08/03/2011 WITH THE FOLLOWING OBJECTS: - 1. TO ESTABLISH NEW CHU R CHES IN RURAL. URBAN AND TRIBAL AREAS AND ENCOURAGE AND FEED THE NEEDY PASTORS AND ENVANGELISTS TO PREACH THE WORD OF GOD FOR THE GLORY AND HONOUR OF THE LORD JESUS CHRIST . 2. TO SHOW AND SHARE THE LOVE OF CHRI ST AMONG THE STARVED AND HUNGRY ORPHAN AND STREE T GOING CHILDREN AND TO GIVE FREE FOOD, SHELTER, CLOTHING AND MEDICAL CARE TO ORPHANS CHILDREN AND HELPLESS NEEDY OLD AGED PEOPLE & RELIEVE CENTERS FOR V IC TIMS. 5 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) 3. TO GIVE FREE MEDICINES TO THE HELPLESS AND POOR TRIBAL AND SLAM AREAS PEOPLE THROUGH THE MOBILE CLINICS AND FREE HOSPITALS. 4. TO VISIT PRISONS AND SPREAD THE WORD OF GOD FOR PRISONERS. 5. TO CONDUCT OPEN AIR GOSPEL AND HEALING MEETINGS AND CRUSADES. TO VISIT THE SICK AND POOR, WHO ARE SUFFERING IN HOSPITALS AND SLUMS. 6. TO MAINTAIN SUNDAY SCHOOLS, BIBLE SCHOOLS AND COLLEGES AND PREPARE PREACHERS AND ALSO MAINTAIN EDUCATIONAL INSTITUTIONS IN GENERAL, PROFESSIONAL AND VOCATIONAL IN RURAL & URBAN AND TRIBAL AREA AND LITERACY FOR THEM. 7. TO PROVIDE COACHING CENTRES BY GIVING TRAINING IN SELF - HELP FOR BOTH MEN AND WOMEN FOR SELF - SUPPORT AND THE BETTERMENT OF THEIR LIVING STANDARDS. 8. TO MAINTAIN INSTITUTION FOR PROVIDING WELFARE SERVICES NOT ONLY TO DISTRESSED, DEJECTED, NEGLECTED, SUPPRESSED AND DISPARATED PEOPLE BUT ALSO TO LEPERS BY WAY OF SUPPLYING MEDICINES, USEFUL LITERATURE FOOD AND CLOTHES. 9. TO DISTRIBUTE PAMPHLETS, LEAFLETS, PERIODICALS, JOURNALS AND ALL KINDS OF CHRISTIAN LITERATURE IN ANY NEEDED LANG UAGE AND GIVE AWAY FREE OF COST SUCH LITERATURE COPIES OF THE BIBLE OR NEW TESTAMENTS OR PORTIONS OF THE BIBLE TO ANY DESIRING OR DESER V ING PERSON S. 10. TO UPLIFT THE POOR AND DOWN TRODDEN PEOPLE BY ORGANIZING SELF - HELP ECONOMIC DEVELOPMENT PROGRAMM E S BY PROVIDING INTEGRATED SERVICES AND FACILITIES FOR INCREASING EMPLOYMENT FOR THE DEVELOPMENT OF RURAL POOR IN PARTICULAR TRIBAL POOR PEOPLE & ESTABLISH FREE PREGNANCY CENTERS. 11. TO CONDUCT MEDICAL CAMPS, EYE CAMPS IMMUNIZATION AND VACCINATION CAMPS IN RUR AL AREAS ALSO PROVIDE PREVENTIVE MEDICINES IN REMOTE AREAS. 12. TO ENCOURAGE AND START AND ALPHA COURSES IN CHURCHES AND PRISONS. 13. TO DO ALL OTHER SUCH THINGS AS WILL HELP THE ATTAINMENT OF THE OBJECTS OF THE SOCIETY. 8 . THE LD. CIT HAS REJECTED THE 12A REGISTRATION ON THE GROUND THAT THE OBJECTS OF THE ASSESSEE - SOCIETY ARE MIXED OBJECTS I.E. BOTH RELIGIOUS AND CHARITABLE, BUT PREDOMINANTLY RELIGIOUS IN NATURE . IN THE ABSENCE OF BOOKS OF ACCOUNT , GENUINENESS OF THE 6 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) ACTIVITIES CARRIED OUT BY THE ASSES SEE CA N NOT BE CONSIDERED AS GENUINE. WE HAVE GONE THROUGH THE OBJECTS OF THE ASSESSEE SOCIETY AND MOST OF THE OBJECTS ARE RELATED TO EDUCATION, HEALTH AND HELP TO THE POOR PEOPLE, THEREFORE THE LD. CIT IS NOT JUSTIFIED IN REJECTING 12A REGISTRATION TO THE ASSESSEE. INSOFAR AS GENUINENESS OF THE ACTIVITIES ARE CONCERNED, THE LD. CIT SIMPLY DOUBTED THE GENUINENESS ON ACCOUNT OF ABSENCE OF BOOKS OF ACCOUNT, IN OUR OPINION WHEN THE ASSESSEE HAS FILED AN APP LICATION FOR 12A REGISTRATION, HE HAS TO SEE THE OBJECTS AND HAS TO BE CONSIDERED, IF AT ALL ASSESSEE IS NOT CARRYING ACTIVITIES AS PER OBJECTS, IT IS OPEN TO THE ASSESSING OFFICER TO REJECT EXEMPTION U/SEC. 11 AND TAKE NECESSARY STEPS AS PER LAW. AT THE INITIAL STAGE OF GRANTING REGISTRATION U/SEC. 12A, ACTIVITIES CANNOT BE DOUBTED PARTICULARLY IN THE CASE WHERE ASSESSEE IS RUNNING HOME FOR CHILDREN WHO ARE DEAF AND DUMB AND CARRYING OTHER EDUCATIONAL ACTIVITIES. WE FIND THAT THERE IS NO BASIS FOR THE LD. CIT TO COME TO A CONCLUSION THAT THE ACTIVITIES OF THE ASSESSEE - SOCIETY ARE NOT GENUINE. I N OUR OPINION, THE ASSESSEE IS ENTITLED FOR 12A REGISTRATION. ACCORDINGLY, WE GRANT THE 12A REGISTRATION. ORDERED ACCORDINGLY. 7 ITA NO. 2 58/VIZ/2016 ( M/S. WORD IN ACTION OUTREACH ) 9. IN THE RESULT, APPEAL FI LED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 0 8 T H DAY OF JAN . , 20 20 . S D / - S D / - (D.S. SUNDER SINGH) (V. DURGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 8 T H JANUARY , 20 20 . VR/ - COPY TO: 1. THE ASSESSEE M/S. WORD IN ACTION OUTREACH, H.NO. 107, D.NO. 23 - 7 - 4, MUNICIPAL COLONY, RAJAHMUNDRY. 2. THE REVENUE - CIT, RAJAHMUNDRY. 3. THE D.R . , VISAKHAPATNAM 4. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.