Shree Digamber Jain Bhawan, Ranchi V. CIT(Exemptio), Patna

ITA 28/RAN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6521 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 22-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Section: 12AA; 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH, E-COURT AT KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. GODARA, JUDICIAL MEMBER) I.T.A. NO. 28/RAN/2019 ASSESSMENT YEAR: SHREE DIGAMBER JAIN BHAWAN.........................................................................................APPELLANT [PAN: AAWAS 8148 N] VS. CIT (EXEMPTION), PATNA..........................................................................RESPONDENT APPEARANCES BY: SH. DEVESH PODDAR, ADV., APPEARED ON BEHALF OF THE ASSESSEE. SH. INDERJIT SINGH, CIT, APPEARED ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : SEPTEMBER 2 ND , 2020 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 16 TH , 2020 ORDER PER J. SUDHAKAR REDDY, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION)-PATNA, [HEREINAFTER THE CIT(E)], REJECTING HIS APPLICATION FOR REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (THE ACT), DATED 09.11.2018. 2. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT THE LD. CIT(E) REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT ON THE FOLLOWING GROUNDS: (A) KEEPING INTO CONSIDERATION OF THE FULL ADHERENCE TO THE NORMS DELINEATED IN THE ABOVE SECTION OF THE ACT, THE MATERIALS AVAILABLE ON RECORD HAVE BEEN PERUSED TO EXAMINE THE APPLICATION ON BOTH THE PRESCRIBED GROUNDS I.E. (I) OBJECTS OF TRUST/ SOCIETY AND (II) GENUINENESS OF ACTIVITIES CLAIMED. DURING THE COURSE OF EXAMINATION, IT IS FOUND THAT THE APPLICANT ACCORDING TO HIS RECEIPT/PAYMENT ACCOUNT ENDED ON 31.03.2018 HAS GOT TOTAL RECEIPT OF RS. 8,81,600/-. IT IS FURTHER FOUND THAT OUT OF THIS GROSS RECEIPT ACTIVITY EXPENSE IS ONLY RS. 55,230/-, WHICH COMES ONLY TO 6.26% AND FOR WHICH BILLS/VOUCHERS WERE NOT PRODUCED TOO. HUGE EXPENSES ARE MADE TOWARDS ADMINISTRATIVE EXPENSE. IN THIS SITUATION THE CHARITABLE NATURE OF EXPENSES COULD NOT BE ESTABLISHED BEYOND ALL DOUBTS. (B) IT IS NATURAL THAT NO CHARITABLE ACTIVITY COULD BE PERFORMED WITHOUT SPENDING SOME MONEY. IN REVERSE, DURING THE COURSE OF EXAMINATION, IF AMOUNT SPENT AGAINST A CLAIMED ACTIVITY 2 I.T.A. NO. 28/RAN/2019 ASSESSMENT YEAR: SHREE DIGAMBER JAIN BHAWAN. REMAINS UNVERIFIED, THE PERFORMANCE OF ACTIVITY AUTOMATICALLY BECOMES DOUBTFUL. HENCE, IT BECOMES NATURAL AND INCIDENTAL TO VERIFY THE EXPENSES MADE AGAINST A PARTICULAR ACTIVITY FOR THE PURPOSE OF EXAMINING ITS GENUINENESS. DURING THE COURSE OF EXAMINATION IT IS FOUND THAT THE APPLICANT HAS NOT SUBMITTED ANY BILLS OR VOUCHERS OF THE EXPENSES MADE AGAINST THE ACTIVITIES CLAIMED. HENCE, THE EXPENSES CLAIMED AGAINST THE PERFORMANCE OF ACTIVITIES REMAINED UNVERIFIED. CONSEQUENTLY AND NATURALLY, THE CLAIMED ACTIVITIES REMAINED DOUBTFUL. 3. THE HONBLE SUPREME COURT IN THIS CASE OF M/S. ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT IN CIVIL APPEAL NO(S). 5437-5438/2012 JUDGEMENT DATED 19.02.2020 HELD AS FOLLOWS: 11. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE ABOVE SUBMISSIONS MADE BY MS. AISHWARYA BHATI, LEARNED SENIOR COUNSEL APPEARING FOR THE APPELLANT - DIRECTOR OF INCOME-TAX AND FIND THAT IT IS NOT POSSIBLE TO AGREE WITH THE SAME. THE PURPOSE OF SECTION 12AA OF THE ACT IS TO ENABLE REGISTRATION ONLY OF SUCH TRUST OR INSTITUTION WHOSE OBJECTS AND ACTIVITIES ARE GENUINE. IN OTHER WORDS, THE COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE OBJECT OF THE TRUST ARE GENUINE AND THAT ITS ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS OF THE TRUST, THAT IS EQUALLY GENUINE. 12. SINCE SECTION 12AA PERTAINS TO THE REGISTRATION OF THE TRUST AND NOT TO ASSESS OF WHAT A TRUST HAS ACTUALLY DONE, WE ARE OF THE VIEW THAT THE TERM 'ACTIVITIES' IN THE PROVISION INCLUDES 'PROPOSED ACTIVITIES'. THAT IS TO SAY, A COMMISSIONER IS BOUND TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHARITABLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST PROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE OBJECTS OF THE TRUST. IN CONTRAST, THE POSITION WOULD BE DIFFERENT WHERE THE COMMISSIONER PROPOSES TO CANCEL THE REGISTRATION OF A TRUST UNDER SUB-SECTION (3) OF SECTION 12AA OF THE ACT. THERE THE COMMISSIONER WOULD BE BOUND TO RECORD THE FINDING THAT AN ACTIVITY OR ACTIVITIES ACTUALLY CARRIED ON BY THE TRUST ARE NOT GENUINE BEING NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. SIMILARLY, THE SITUATION WOULD BE DIFFERENT WHERE THE TRUST HAS BEFORE APPLYING FOR REGISTRATION FOUND TO HAVE UNDERTAKEN ACTIVITIES CONTRARY TO THE OBJECTS OF THE TRUST. 13. WE THEREFORE FIND THAT THE VIEW OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT IS CORRECT AND LIABLE TO BE UPHELD. 14. MS. BHATI, LEARNED SENIOR COUNSEL FOR THE APPELLANT, FAIRLY DREW OUR ATTENTION TO A JUDGMENT OF THE ALLAHABAD HIGH COURT IN TITLED AS CIT V. R.S. BAJAJ SOCIETY [2014] 42 TAXMANN.COM 573/222 TAXMAN 111 (ALL.) WHICH HAS TAKEN THE SAME VIEW AS THAT OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT. THE ALLAHABAD HIGH COURT HAS ALSO REFERRED TO A SIMILAR VIEW TAKEN BY THE HIGH COURTS OF KARNATAKA AND PUNJAB & HARYANA. 15. APPARENTLY, A CONTRARY VIEW HAS BEEN TAKEN BY THE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V. CIT [2000] 113 TAXMAN 703/[2001] 247 ITR 18. THAT VIEW HOWEVER DOES NOT COMMEND ITSELF. HOWEVER, THE FACTS IN SELF EMPLOYERS SERVICE SOCIETY (SUPRA) SUGGEST THAT THE COMMISSIONER OF INCOME-TAX HAD OBSERVED THAT THE APPLICANT FOR REGISTRATION AS A TRUST HAD UNDERTAKEN ACTIVITIES WHICH WERE CONTRARY TO THE OBJECTS OF THE TRUST. 16. IN THE RESULT, WE FIND THAT THERE IS NO REASON TO INTERFERE WITH THE IMPUGNED JUDGMENT OF THE HIGH COURT OF DELHI. THE APPEAL IS, ACCORDINGLY, DISMISSED. 4. THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S 12AA HAS NOT BEEN REJECTED BY THE LD. CIT(E) FOR THE REASON THAT THE OBJECTS OF THE SOCIETY TRUST ARE NOT IN CONSONANCE WITH THE REQUIREMENTS OF THE ACT. HENCE, WE HOLD THAT THE ORDER OF THE LD. CIT(E), PATNA IS NOT IN ACCORDANCE WITH LAW. HENCE WE DIRECT THE GRANT OF REGISTRATION TO 3 I.T.A. NO. 28/RAN/2019 ASSESSMENT YEAR: SHREE DIGAMBER JAIN BHAWAN. THIS TRUST U/S 12AA OF THE ACT BY APPLYING THE PROPOSITIONS OF LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE REFERRED ABOVE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. KOLKATA, THE 16 TH SEPTEMBER, 2020. SD/- SD/- [S.S. GODARA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16.09.2020 BIDHAN COPY OF THE ORDER FORWARDED TO: 1. SHREE DIGAMBER JAIN BHAWAN, HARMU ROAD, RANCHI, JHARKHAND-834 001. 2. CIT (EXEMPTION), PATNA. 3. CIT(A)- 4. CIT- 5. CIT(DR), RANCHI BENCH, RANCHI. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY ITAT, KOLKATA BENCHES