M/s. Jesus Gives Redeem Ministries Trust, CHENNAI V. ITO, Madurai

ITA 262/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51711 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-08-2011
• Assessment Year: misc
• Appeal Filed On: 18-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Assessee Lawyers: S SRIDHAR
• Keywords: Charitable institution
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE SHRI HARI OM MARATHA, J.M. SHRI N.S. SAINI , AM .. I.T.A. NOS. 261 & 262/MDS/2011 JESUS GIVES REDEEM MINISTRIES TRUST ARATHENCODE, EDAICODE DESOM EDICODE POST 629 152 PAN : VS. THE INCOME-TAX OFFICER WARD II(4) MADURAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S. SRIDHAR DEPARTMENT BY : DR. I. VIJAYAKUMAR, CIT, DR O R D E R PER N.S. SAINI, A.M :- THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST THE SEPARATE ORDERS PASSED BY THE CIT- I, MADURAI D ATED 01.03.2010. PAGE 2 OF 7 I.T.A. NO. 261 & 262/MDS/2011 2. BOTH THE APPEALS ARE BARRED BY LIMITATION BY 110 DAYS. THE ASSESSEE FILED CONDONATION APPLICATION. THE LD. D.R . HAD NO OBJECTION IN CONDONING THE DELAY. THEREFORE, THE D ELAY IN FILING THE APPEALS WAS CONDONED BY THE BENCH AND THE APPEALS W ERE ADMITTED FOR HEARING. 2. GRIEVANCE OF THE ASSESSEE IN I.T.A. NO. 261/MDS/ 2011 IS THAT THE LD. CIT(A) ERRED IN NOT GRANTING REGISTRATION U /S 12AA OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT] AND IN I.T .A. NO. 262/MDS/2011 IS AGAINST DENIAL OF APPROVAL U/S 80G OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LD. CIT HAS OBSERVED THAT THE TRUST WAS CREATED ON 17.01.2006 BY ONE BR O. E. VIJAYA RAJ OF EDAICODE POST, KANYAKUMARI DISTRICT, WHO WAS DEC LARED AS MANAGING TRUSTEE OF THE TRUST. HE FURTHER OBSERVED THAT THERE IS NO INFORMATION REGARDING THE FINANCIAL CAPACITY OR PRO FESSIONAL COMPETENCE OF THE TRUSTEES TO RUN ANY CHARITABLE OR GANIZATION, EVEN A RELIGIOUS ONE. THE SAID INFORMATION WAS NECESSAR Y TO ASCERTAIN THE GENUINENESS OF THE CONSTITUTION OF THE TRUST AN D ITS ACTIVITIES, AFTER THE AMENDMENT OF THE ACT W.E.F 1.4.1997 BY WH ICH SECTION PAGE 3 OF 7 I.T.A. NO. 261 & 262/MDS/2011 12AA OF THE ACT WAS INTRODUCED, MAKING IT MANDATORY FOR THE COMMISSIONER TO CONDUCT NECESSARY ENQUIRY BEFORE GR ANTING REGISTRATION AND GRANT REGISTRATION ONLY IF HE IS S ATISFIED ABOUT THE GENUINENESS OF THE TRUST. HE FURTHER OBSERVED THAT FROM ENQUIRY, IT WAS FOUND THAT THE TRUSTEES DO NOT HAVE ANY COMPETE NCE TO RUN ANY CHARITABLE ORGANIZATION, THE ACTIVITIES OF THE TRUS TEES CANNOT BE HELD AS GENUINE. HE FURTHER OBSERVED THAT THE OBJE CTS OF THE TRUST WERE PREDOMINANTLY MENTIONED AS PROPAGATING THE TEA CHINGS OF CHRIST WHICH IS PURELY A RELIGIOUS ACTIVITY. FROM THE ACTIVITIES REPORT, HE FOUND THAT THE ONLY ACTIVITY OF THE TRUS T WAS PROPAGATION OF RELIGION. HE FURTHER NOTED THAT EVEN TO BE CONS IDERED AS A RELIGIONS TRUST, NONE OF THE TRUSTEES HAVE THE NECE SSARY QUALIFICATION AS PER THE ECCLESIASTICAL NORMS TO PREACH THE CHRIS TIAN RELIGION. FROM THE DETAILS OF THE TRUSTEES FURNISHED, IT WAS OBSERVED THAT THEY DO NOT HAVE ADEQUATE SOURCE OF INCOME EVEN FOR THEIR LIVELIHOOD. THEREFORE, IT WAS NOT POSSIBLE FOR THE M TO CONTRIBUTE ANYTHING TOWARDS CHARITY. FROM THE NOTES OF ACTIVI TIES AND COPIES OF ACCOUNTS, IT WAS OBSERVED THAT THE APPLICANT TRUST CLAIMED THAT IT WAS SUPPORTING THE FOLLOWING PROGRAMMES: PAGE 4 OF 7 I.T.A. NO. 261 & 262/MDS/2011 (I) EDUCATIONAL HELP (II) SUPPORT TO WIDOWS III) SUPPORT TO ORPHANAGE; AND IV) GOSPEL REVIVAL MEETING EXPENSES HE OBSERVED THAT ON CORROBORATION OF MATERIAL FACTS PRODUCED DURING THE COURSE OF PROCEEDINGS, IT WAS FOUND THAT THE APPLICANT TRUST HAD PREPARED ONLY SELF MADE VOUCHERS FOR THE PAYMENT OF FINANCIAL SUPPORT FOR THE ABOVE PROGRAMMES. THE VO UCHERS CONTAINED ONLY ILLEGIBLE SIGNATURES OF THE RECIPIEN TS. THE INSPECTOR OF THE INCOME-TAX HAD REPORTED THAT THE IDENTITY OF THE RECIPIENTS COULD NOT BE ESTABLISHED. THEREFORE, THE TRUST HAD GROSSLY MISREPRESENTED THE FACTS. FOR THE ABOVE REASONS, T HE LD. CIT HELD THAT THE TRUST WAS NOT PROPERLY CONSTITUTED AND NEI THER THE ACTIVITIES WERE SUPPORTED BY CREDIBLE EVIDENCE. TH EREFORE, HE REFUSED TO GRANT REGISTRATION U/S 12AA OF THE ACT A ND APPROVAL U/S 80G OF THE ACT OBSERVING THAT IN THE EYES OF LAW, T HE ASSESSEE TRUST DOES NOT EXIST. 4. BEING AGGRIEVED BY THE SAID ORDERS OF THE LD. CI T, THE ASSESSEE IS IN APPEAL BEFORE US. PAGE 5 OF 7 I.T.A. NO. 261 & 262/MDS/2011 5. THE LD. A.R. OF THE ASSESSEE SIMPLY SUBMITTED TH AT THE LD. CIT HAD REJECTED THE APPLICATION FOR REGISTRATION U/S 1 2AA OF THE ACT AND APPROVAL U/S 80G OF THE ACT WITHOUT AFFORDING P ROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AND THEREFOR E, HE PRAYED THAT ONE MORE OPPORTUNITY SHOULD BE GRANTED TO THE ASSESSEE TO PRESENT HIS CASE BEFORE THE LD. CIT. 6. THE LD. D.R. DID NOT OBJECT TO THE ABOVE SUBMISS IONS OF THE LD. A.R. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IN THE INSTANT CASE, THE LD. A.R. OF THE ASSESSEE HAS ARGU ED THAT THE LD. CIT HAS REFUSED REGISTRATION TO THE ASSESSEE TRUST WITH OUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND ALSO NOT CON FRONTING THE ASSESSEE WITH THE REPORT OF THE INSPECTOR RELIED UP ON IN PARA 4 OF ITS ORDER BY THE LD. CIT AND THAT THE LD. CIT FAILED TO APPRECIATE THAT THE MISTAKE AND ERROR POINTED OUT IN THE EXAMINATIO N OF VOUCHERS DOES NOT EFFECT THE CLAIM OF REGISTRATION IN AS MUC H AS HAVING ESTABLISHED THE GENUINENESS OF THE APPELLANT TRUST, READ WITH DEFINITION OF PROVISIONS OF SECTION 2(15) OF THE AC T, REJECTION OF PAGE 6 OF 7 I.T.A. NO. 261 & 262/MDS/2011 CLAIM OF REGISTRATION WAS WRONG, INCORRECT, UNJUSTI FIED AND ERRONEOUS, BOTH ON FACTS AND IN LAW. THEREFORE, TH E LD. A.R. HAS PLEADED BEFORE US THAT THE MATTER SHOULD BE RESTORE D BACK TO THE FILE OF THE LD. CIT FOR GRANTING ONE MORE OPPORTUNI TY TO THE ASSESSEE TO EXPLAIN ITS CASE BEFORE THE LD. CIT. THE LD. D. R. HAS NO OBJECTION TO THE SUBMISSIONS OF THE LD. A.R OF THE ASSESSEE. WE FIND THAT THE LD. CIT REFUSED TO GRANT REGISTRATION U/S 12AA AND APPROVAL U/S 80G OF THE ACT ON THE GROUND OF PROFESSIONAL COMPETENCY OR FINANCIAL CAPACITY OF THE TRUSTEES AND DEFECT IN VOUCHERS ON APPLICATION FOR CHARITABLE PURPOSES BY THE TRUST. IN OUR CONSIDERE D OPINION, THE ABOVE CANNOT BE THE GROUND FOR NON GRANT OF REGISTR ATION OR APPROVAL. IN OUR CONSIDERED VIEW, THE MATTER OF CO MPETENCY OF TRUSTEES IS THE MATTER TO BE DECIDED BY THE SETTLER AND NOT BY THE REVENUE. FURTHER THE ALLOWABILITY OF EXPENDITURE E VEN AFTER GRANT OF REGISTRATION CAN BE CONSIDERED BY THE ASSESSING OFFICER. THEREFORE, MERELY BECAUSE OF TECHNICAL DEFECT IN TH E VOUCHERS, THE GENUINENESS OF THE TRUST CANNOT BE DOUBTED. AS PER THE PROVISIONS OF SECTION 12AA OF THE ACT, THE COMMISSIONER HAS TO SATISFY HIMSELF WITH THE GENUINENESS OF THE CHARITABLE TRUST ON EXA MINATION OF ITS OBJECTS CLAUSE AND ACTIVITIES TILL THE DATE OF APPL ICATION. WE, PAGE 7 OF 7 I.T.A. NO. 261 & 262/MDS/2011 THEREFORE, SET ASIDE THE ORDERS OF THE LD. CIT AND REMAND THE MATTER BACK TO THE FILE OF THE LD. CIT FOR READJUDI CATING THE ISSUE OF GRANTING REGISTRATION U/S 12AA AND GRANTING APPROVA L U/S 80G OF THE ACT AFTER CONSIDERING THE CONTENTIONS OF THE ASSESS EE AND THEREAFTER BY PASSING A SPEAKING ORDER AFTER BRINGING ALL MATE RIAL ON RECORD AND AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AS PER LAW. 8. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 9TH AUGUST, 2011. SD/- SD/- (HARI OM MARATHA) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 9 TH AUGUST, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE