Jain Dehrasar Khandhali Trust, Ahmedabad V. The CIT (Exemption), Ahmedabad

ITA 274/AHD/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9441 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 22-05-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 274/AHD/2020 JAIN DEHRASAR KHANDHALI TRUST 1404/2, ASTODIA KAPAD BAZAR, AHMEDABAD 380001 / VS. COMMISSIONER OF INCOME-TAX (EXEMPTION) AHMEDABAD ./ ./ PAN/GIR NO. : AABTJ3995Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HIMANSHU SHAH, A.R. / RESPONDENT BY : SHRI R. R. MAKWANA, SR.D.R. / DATE OF HEARING 23/12/2020 !'# / DATE OF PRONOUNCEMENT 06/01/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER DATED 23.01.2020 PASSED BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), AHMEDABAD (CIT(E) IN SHORT), UNDER S. 12AA(1)(B)(II) OF THE INCOME TAX A CT WHEREBY THE REGISTRATION SOUGHT UNDER S.12AA OF THE INCOME TAX ACT, 1961 (THE ACT) FOR REGISTRATION OF TRUST WAS DECLINED. 2. AGGRIEVED BY THE REJECTION OF APPLICATION FOR RE GISTRATION UNDER S.12AA OF THE ACT, THE ASSESSEE PREFERRED APPEAL BE FORE THE TRIBUNAL. ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 2 - 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND PERUSED THE ORDER OF THE CIT(E) AS WELL AS MATERIAL PLACED ON RECORD. THE ASSESSEE HAS IMPUGNED THE ACTION OF THE CIT(E) FOR EXERCISING DI SCRETION AGAINST THE ASSESSEE FOR REGISTRATION OF APPLICANT TRUST. 4. ON PERUSAL OF THE ORDER OF THE CIT(E), IT IS NOT ICED THAT CIT(E) HAS DENIED REGISTRATION ON THE GROUND THAT CERTAIN REQUIREMENTS AS LISTED IN PARA 4 OF ITS ORDER HAS NOT BEEN MET/ PAR TIALLY MET. CONSEQUENTLY, REPLIES TO POINTS RAISED TO TEST THE OBJECT TRUST AND THE GENUINENESS OF ITS ACTIVITIES WAS NOT FOUND SATISFA CTORY BY THE CIT(E) AS REQUIRED UNDER S.12AA(1) OF THE ACT. 5. IN ITS DEFENSE, AS STATED ON BEHALF OF THE ASSE SSEE, THE SCOPE OF ENQUIRY CONDUCTED BY THE CIT(E) WERE BROADLY MET AN D RELEVANT DOCUMENTS WERE PLACED. IT WAS SUBMITTED THAT THE A SSESSEE TRUST HAD APPLIED FOR REGISTRATION UNDER S.12AA OF THE ACT EL ECTRONICALLY ON 19.07.2019 IN PRESCRIBED FORM 10A AS STIPULATED ALO NGWITH CERTIFICATE OF REGISTRATION, EVIDENCE TOWARDS CREATION OF TRUST AND ANNUAL ACCOUNTS AND AUDIT REPORTS FOR AY 2016-17, 17-18 & 18-19. THE ASSESSEE HOWEVER COULD NOT FILE THE AUDIT REPORT AN D AUDITED FINANCIAL STATEMENT FOR AY 2019-20 BEFORE THE CIT(E) WHICH IS , HOWEVER, PLACED BEFORE THE TRIBUNAL. IT IS THE CONTENTION O N BEHALF OF THE ASSESSEE THAT CIT(E) HURRIEDLY REJECTED APPLICATION FOR REGISTRATION OF TRUST EXPRESSING ITS INABILITY TO VERIFY THE GENUIN ENESS OF OBJECTS AND ACTIVITIES CARRIED OUT BY THE TRUST. THE CIT(E) NAR RATED THAT THE TRUST HAD FAILED TO FURNISH REQUISITE DETAILS CALLED FOR AND ALLEGED THAT THE TRUST HAS NOT INTENDED TO START THE CHARITABLE/RELI GIOUS ACTIVITIES. IN THIS REGARD, IT IS THE CASE OF THE ASSESSEE THAT TR UST HAS FILED REPLIES VIDE LETTER DATED 31.12.2019 AND 08.01.2020 IN RESP ONSE TO NOTICE ISSUED BY THE CIT(E) ON TWO OCCASIONS. IT IS ASSER TED THAT THE SUBSTANTIAL DETAILS AS PLACED BY WAY OF PAPER BOOK BEFORE THE TRIBUNAL WERE DULY FILED BEFORE THE CIT(E). SOME DOCUMENTS HOWEVER COULD NOT BE FILED OWING TO THE REASON THAT THE CONCERNED ACCOUNTANT ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 3 - CONVERSANT WITH THE FACTS DISCONTINUED IN JANUARY 2 020 CAUSING DISARRAY. IT IS THE CASE OF THE ASSESSEE THAT THE CIT(E) WAS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSES SEE EX PARTE VIDE ORDER DATED 23.01.2020 WITHOUT AFFORDING ADEQUATE O PPORTUNITY. IT IS ALLEGED THAT THE CIT(E) HURRIED TO SEEK MULTIPLE DE TAILS IN A SHORT PERIOD OF ONE MONTH AFTER NO APPARENT ACTION TAKEN INITIALLY ON REGISTRATION APPLICATION FOR THREE MONTHS. IT IS T HUS URGED ON BEHALF OF THE ASSESSEE THAT APPARENTLY HURRIED DISPOSAL OF TH E APPLICATION OF THE ASSESSEE EX PARTE WITHOUT PROVIDING ENOUGH OPPORTUNITY IS UNJUST AND REQUIRES TO BE CANCELLED. 6. IN THIS BACKDROP, WE STRAIGHTWAY NOTICE THAT AS PER PROVISO TO SECTION 12AA(1), NO ORDER UNDER SUB CLAUSE (II) TO SECTION 12AA(1) OF THE ACT SHALL BE PASSED UNLESS THE APPLICANT HAS BE EN AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. THE REQUIRE MENT OF REASONABLE OPPORTUNITY IS THEREFORE EXPRESSLY INBUILT IN LAW I TSELF GOVERNING REGISTRATION. EVIDENTLY, ENQUIRIES WERE CONDUCTED BY THE CIT(E) VIDE TWO LETTERS ISSUED IN THE MONTH OF DECEMBER 2019 IN RESPONSE TO REGISTRATION APPLICATION FILED IN THE MONTH OF JULY 2019. IT IS NOT THE CASE OF CIT(E) THAT THE ASSESSEE HAS FAILED TO COMP LY ALTOGETHER. THE ASSESSEE HAS ALSO FILED TWO REPLIES; ONE IN THE MON TH OF DECEMBER AND OTHER IN THE BEGINNING OF JANUARY 2020. THE CIT(E) HAS THEREAFTER PASSED ORDER ADVERSE TO THE ASSESSEE IN JANUARY 202 0 ITSELF WITHOUT ANY FURTHER OPPORTUNITY ON ALLEGED UNSATISFACTORY COMPL IANCE. IN THE CIRCUMSTANCES, WHERE THE ASSESSEE HAS ADMITTEDLY FU RNISHED MANY DETAILS AND IS NOT GROSSLY NEGLIGENT IN FURNISHING THE INFORMATION, IT IS ONLY DESIRABLE THAT ONE MORE OPPORTUNITY IS GRANTED TO THE ASSESSEE TO SATISFY THE DESIGNATED AUTHORITY I.E. CIT(E), FOR I TS RIGHTFUL ENTITLEMENT FOR REGISTRATION IN ACCORDANCE WITH LAW. THIS WILL PROMOTE FAIR PLAY AND WELL ACCORD WITH PRINCIPLE OF NATURAL JUSTICE A S ENSURED BY THE LEGISLATURE IN UNEQUIVOCAL TERMS. ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 4 - 7. CONSEQUENTLY, WE SET ASIDE THE ORDER OF THE CIT( E) DATED 19 TH JULY, 2019 AND RESTORE THE ISSUE BACK TO THE FILE O F THE DESIGNATED AUTHORITY FOR DE NOVO CONSIDERATION OF ALL ASPECTS FOR THE PURPOSES OF REGISTRATION IN THE LIGHT OF FACTS INVOLVED AS WELL AS THE JUDICIAL PRECEDENTS RENDERED IN THE CONTEXT. NEEDLESS TO SA Y, THE APPLICATION SHALL BE DISPOSED OF BY THE DESIGNATED AUTHORITY AF TER GRANTING PROPER OPPORTUNITY TO THE APPLICANT ASSESSEE. THE ASSESSE E IS ALSO CAUTIONED TO DUTIFULLY ATTEND THE DE NOVO PROCEEDINGS BEFORE THE DESIGNATED AUTHORITY WITHOUT ANY DEMUR. ALL POINTS ARE KEPT O PEN FOR RE- CONSIDERATION OF THE DESIGNATED AUTHORITY WITHOUT A NY FETTERS. IT SHALL BE OPEN TO THE ASSESSEE TO SUPPORT THE APPLICATION FOR REGISTRATION AFRESH BEFORE THE DESIGNATED AUTHORITY WITH ALL DOC UMENTARY EVIDENCES AS IT MAY CONSIDER EXPEDIENT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 06/01/2021 TRUE COPY S. K. SINHA ! / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 06/01/2021 , B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 274/AHD/2020 JAIN DEHRASAR KHANDHALI TRUST 1404/2, ASTODIA KAPAD BAZAR, AHMEDABAD 380001 / VS. COMMISSIONER OF INCOME-TAX (EXEMPTION) AHMEDABAD ./ ./ PAN/GIR NO. : AABTJ3995Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HIMANSHU SHAH, A.R. / RESPONDENT BY : SHRI R. R. MAKWANA, SR.D.R. / DATE OF HEARING 23/12/2020 !'# / DATE OF PRONOUNCEMENT 06/01/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER DATED 23.01.2020 PASSED BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), AHMEDABAD (CIT(E) IN SHORT), UNDER S. 12AA(1)(B)(II) OF THE INCOME TAX A CT WHEREBY THE REGISTRATION SOUGHT UNDER S.12AA OF THE INCOME TAX ACT, 1961 (THE ACT) FOR REGISTRATION OF TRUST WAS DECLINED. 2. AGGRIEVED BY THE REJECTION OF APPLICATION FOR RE GISTRATION UNDER S.12AA OF THE ACT, THE ASSESSEE PREFERRED APPEAL BE FORE THE TRIBUNAL. ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 2 - 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND PERUSED THE ORDER OF THE CIT(E) AS WELL AS MATERIAL PLACED ON RECORD. THE ASSESSEE HAS IMPUGNED THE ACTION OF THE CIT(E) FOR EXERCISING DI SCRETION AGAINST THE ASSESSEE FOR REGISTRATION OF APPLICANT TRUST. 4. ON PERUSAL OF THE ORDER OF THE CIT(E), IT IS NOT ICED THAT CIT(E) HAS DENIED REGISTRATION ON THE GROUND THAT CERTAIN REQUIREMENTS AS LISTED IN PARA 4 OF ITS ORDER HAS NOT BEEN MET/ PAR TIALLY MET. CONSEQUENTLY, REPLIES TO POINTS RAISED TO TEST THE OBJECT TRUST AND THE GENUINENESS OF ITS ACTIVITIES WAS NOT FOUND SATISFA CTORY BY THE CIT(E) AS REQUIRED UNDER S.12AA(1) OF THE ACT. 5. IN ITS DEFENSE, AS STATED ON BEHALF OF THE ASSE SSEE, THE SCOPE OF ENQUIRY CONDUCTED BY THE CIT(E) WERE BROADLY MET AN D RELEVANT DOCUMENTS WERE PLACED. IT WAS SUBMITTED THAT THE A SSESSEE TRUST HAD APPLIED FOR REGISTRATION UNDER S.12AA OF THE ACT EL ECTRONICALLY ON 19.07.2019 IN PRESCRIBED FORM 10A AS STIPULATED ALO NGWITH CERTIFICATE OF REGISTRATION, EVIDENCE TOWARDS CREATION OF TRUST AND ANNUAL ACCOUNTS AND AUDIT REPORTS FOR AY 2016-17, 17-18 & 18-19. THE ASSESSEE HOWEVER COULD NOT FILE THE AUDIT REPORT AN D AUDITED FINANCIAL STATEMENT FOR AY 2019-20 BEFORE THE CIT(E) WHICH IS , HOWEVER, PLACED BEFORE THE TRIBUNAL. IT IS THE CONTENTION O N BEHALF OF THE ASSESSEE THAT CIT(E) HURRIEDLY REJECTED APPLICATION FOR REGISTRATION OF TRUST EXPRESSING ITS INABILITY TO VERIFY THE GENUIN ENESS OF OBJECTS AND ACTIVITIES CARRIED OUT BY THE TRUST. THE CIT(E) NAR RATED THAT THE TRUST HAD FAILED TO FURNISH REQUISITE DETAILS CALLED FOR AND ALLEGED THAT THE TRUST HAS NOT INTENDED TO START THE CHARITABLE/RELI GIOUS ACTIVITIES. IN THIS REGARD, IT IS THE CASE OF THE ASSESSEE THAT TR UST HAS FILED REPLIES VIDE LETTER DATED 31.12.2019 AND 08.01.2020 IN RESP ONSE TO NOTICE ISSUED BY THE CIT(E) ON TWO OCCASIONS. IT IS ASSER TED THAT THE SUBSTANTIAL DETAILS AS PLACED BY WAY OF PAPER BOOK BEFORE THE TRIBUNAL WERE DULY FILED BEFORE THE CIT(E). SOME DOCUMENTS HOWEVER COULD NOT BE FILED OWING TO THE REASON THAT THE CONCERNED ACCOUNTANT ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 3 - CONVERSANT WITH THE FACTS DISCONTINUED IN JANUARY 2 020 CAUSING DISARRAY. IT IS THE CASE OF THE ASSESSEE THAT THE CIT(E) WAS NOT JUSTIFIED IN REJECTING THE APPLICATION OF THE ASSES SEE EX PARTE VIDE ORDER DATED 23.01.2020 WITHOUT AFFORDING ADEQUATE O PPORTUNITY. IT IS ALLEGED THAT THE CIT(E) HURRIED TO SEEK MULTIPLE DE TAILS IN A SHORT PERIOD OF ONE MONTH AFTER NO APPARENT ACTION TAKEN INITIALLY ON REGISTRATION APPLICATION FOR THREE MONTHS. IT IS T HUS URGED ON BEHALF OF THE ASSESSEE THAT APPARENTLY HURRIED DISPOSAL OF TH E APPLICATION OF THE ASSESSEE EX PARTE WITHOUT PROVIDING ENOUGH OPPORTUNITY IS UNJUST AND REQUIRES TO BE CANCELLED. 6. IN THIS BACKDROP, WE STRAIGHTWAY NOTICE THAT AS PER PROVISO TO SECTION 12AA(1), NO ORDER UNDER SUB CLAUSE (II) TO SECTION 12AA(1) OF THE ACT SHALL BE PASSED UNLESS THE APPLICANT HAS BE EN AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. THE REQUIRE MENT OF REASONABLE OPPORTUNITY IS THEREFORE EXPRESSLY INBUILT IN LAW I TSELF GOVERNING REGISTRATION. EVIDENTLY, ENQUIRIES WERE CONDUCTED BY THE CIT(E) VIDE TWO LETTERS ISSUED IN THE MONTH OF DECEMBER 2019 IN RESPONSE TO REGISTRATION APPLICATION FILED IN THE MONTH OF JULY 2019. IT IS NOT THE CASE OF CIT(E) THAT THE ASSESSEE HAS FAILED TO COMP LY ALTOGETHER. THE ASSESSEE HAS ALSO FILED TWO REPLIES; ONE IN THE MON TH OF DECEMBER AND OTHER IN THE BEGINNING OF JANUARY 2020. THE CIT(E) HAS THEREAFTER PASSED ORDER ADVERSE TO THE ASSESSEE IN JANUARY 202 0 ITSELF WITHOUT ANY FURTHER OPPORTUNITY ON ALLEGED UNSATISFACTORY COMPL IANCE. IN THE CIRCUMSTANCES, WHERE THE ASSESSEE HAS ADMITTEDLY FU RNISHED MANY DETAILS AND IS NOT GROSSLY NEGLIGENT IN FURNISHING THE INFORMATION, IT IS ONLY DESIRABLE THAT ONE MORE OPPORTUNITY IS GRANTED TO THE ASSESSEE TO SATISFY THE DESIGNATED AUTHORITY I.E. CIT(E), FOR I TS RIGHTFUL ENTITLEMENT FOR REGISTRATION IN ACCORDANCE WITH LAW. THIS WILL PROMOTE FAIR PLAY AND WELL ACCORD WITH PRINCIPLE OF NATURAL JUSTICE A S ENSURED BY THE LEGISLATURE IN UNEQUIVOCAL TERMS. ITA NO. 274/AHD/2020 [JAIN DEHRASAR KHANDHALI TRUST VS. CIT(E)] - 4 - 7. CONSEQUENTLY, WE SET ASIDE THE ORDER OF THE CIT( E) DATED 19 TH JULY, 2019 AND RESTORE THE ISSUE BACK TO THE FILE O F THE DESIGNATED AUTHORITY FOR DE NOVO CONSIDERATION OF ALL ASPECTS FOR THE PURPOSES OF REGISTRATION IN THE LIGHT OF FACTS INVOLVED AS WELL AS THE JUDICIAL PRECEDENTS RENDERED IN THE CONTEXT. NEEDLESS TO SA Y, THE APPLICATION SHALL BE DISPOSED OF BY THE DESIGNATED AUTHORITY AF TER GRANTING PROPER OPPORTUNITY TO THE APPLICANT ASSESSEE. THE ASSESSE E IS ALSO CAUTIONED TO DUTIFULLY ATTEND THE DE NOVO PROCEEDINGS BEFORE THE DESIGNATED AUTHORITY WITHOUT ANY DEMUR. ALL POINTS ARE KEPT O PEN FOR RE- CONSIDERATION OF THE DESIGNATED AUTHORITY WITHOUT A NY FETTERS. IT SHALL BE OPEN TO THE ASSESSEE TO SUPPORT THE APPLICATION FOR REGISTRATION AFRESH BEFORE THE DESIGNATED AUTHORITY WITH ALL DOC UMENTARY EVIDENCES AS IT MAY CONSIDER EXPEDIENT. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 06/01/2021 TRUE COPY S. K. SINHA ! / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 06/01/2021