S Lakha Singh Bahra Charitable Trust, Phagwara V. The Commissioner of Income tax, Jalandhar

ITA 282/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5814 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.L. KARWA, VICE PRESIDENT AND SH. MEHAR SINGH, ACCOUNTANT MEMBER I.T.A. NO. 282(ASR)/2010 ASSESSMENT YEAR:2010-2011 ONWARDS S. LAKHA SINGH BAHRA CHARITABLE TRUST VS. COMMISSIO NER OF INCOME-TAX, PHAGWARA. JALANDHAR-II. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.J.S. BHASIN, ADV RESPONDENT BY: SH. TARSEM LAL, DR ORDER PER MEHAR SINGH, AM, THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, JALANDHAR, DATED 30 TH APRIL, 2010, PASSED UNDER SECTION 80G(5) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE, RE AD AS UNDER: 1. THAT THE LD. CIT, JALANDHAR, HAS ERRED IN REJEC TING THE APPLICATION FOR APPROVAL U/S 80G(5)(VI) OF THE INCO ME-TAX ACT, 1961. 2. THE ORDER OF THE LD. C.I.T. JALANDHAR US BARRED BY TIME. 3. THE CIT, JALANDHAR, HAS ERRED IN REJECTING EXEMPTIO N U/S 80G TO THE DONORS. 4. THE CITS ORDER IS VITIATED BEING AGAINST THE PRINC IPLES OF NATURAL JUSTICE BECAUSE MANY EVIDENCES AND INFORMAT ION COLLECTED AND RELIED UPON AT ASSESSEES BACK WAS NO T CONFRONTED TO THE APPELLANT. 2 5. THAT THE APPELLANT CRAVES TO RESERVE THE RIGHT TO ALTER, AMEND OR ADD ANY OF THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 3. A BARE PERUSAL OF THE GROUNDS OF APPEAL REVEAL T HAT ALL THE GROUNDS OF APPEAL PERTAIN TO REJECTION OF APPLICATION FOR APPR OVAL UNDER SECTION 80G(5)(VI) OF THE ACT. IN THE COURSE OF PRESENT AP PELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE ASSESSEE, SOLELY LAID EMPHASIS ON GROUND NO.2 AND CONTENDED THAT THE ORDER OF APPEAL DATED 30 TH APRIL,2010, PASSED BY THE LD. C.I.T. JALANDHAR-II, IS BARRED BY TIME. IT WAS CON TENDED THAT APPLICATION WAS FILED ON 15.10.2009. THE LD. COUNSEL FOR THE ASSESS EE, REFERRED TO RULE 11AA(6) OF THE INCOME-TAX RULES, 1962, WHICH STATES THAT THE TIME LIMIT WITHIN WHICH THE COMMISSIONER OF INCOME-TAX, SHALL PASS AN ORDER EITHER GRANTING THE APPROVAL OR REJECTING APPLICATION SHAL L NOT EXCEED SIX MONTHS FROM THE DATE ON WHICH SUCH APPLICATION WAS MADE. H E FURTHER STATED THAT LD. CIT, FAILED TO ADHERE TO THE TIME LIMIT PRESCRIBE D UNDER THE RULES. CONSEQUENTLY, DEEMED APPROVAL DESERVED TO BE GRANTE D TO THE ASSESSEE. HE PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABA D HIGH COURT, IN THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS. COMMISSIONER OF INCOME-TAX & ORS . (2008) 5 DTR (ALL) 329, WHEREIN IT HAS BEEN HELD AS UNDER: CHARITABLE REGISTRATION UNDER SECTION 12A-EFFECT OF NON-PASSING OF ORDER WITHIN THE TIME-LIMIT TAKING THE VIEW THAT NON-CONSIDERATION OF THE REGISTRATION APPLICATION WITHIN THE TIME FI XED BY SECTION 12AA(2) WOULD RESULT IN DEEMED REGISTRATION, MAY AT THE WORST CAUSE LOSS OF SOME REVENUE OR INCOME-TAX PAYABLE BY THE I NDIVIDUAL ASSESSEE- ON THE OTHER HAND, IF A CONTRARY VIEW IS TAKEN, IT WOULD LEAVE THE ASSESSEE TOTALLY AT THE MERCY OF THE IT AUTHORI TIES IN ASMUCH AS THE ASSESSEE HAS NOT BEEN PROVIDED ANY REMEDY UNDER THE ACT AGAINST NON- DECISION-MOREOVER, THE FORMER VIEW FURTHERS THE OBJ ECT AND PURPOSE OF 3 THE STATUTORY PROVISION THUS, THE BETTER INTERPRE TATION WOULD BE TO HOLD THAT THE EFFECT OF NON-CONSIDERATION OF THE AP PLICATION FOR REGISTRATION UNDER SECTION 12A WITHIN THE TIME FIXE D BY S. 12AA(2) WOULD BE A DEEMED GRANT OF REGISTRATION. 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE O RDER OF THE LD. CIT. 5. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND MATERIAL AVAILABLE ON RECORDS, INCLUDING THE CASE L AW RELIED UPON BY THE ASSESSEE. IT IS EVIDENT FROM THE PERUSAL OF THE ORD ER OF THE CIT DATED 30 TH APRIL,2010 THAT THE APPLICATION WAS MADE ON 15.10.2 009 AND THE LD. CIT PASSED AN ORDER ON 30 TH APRIL,2010 THEREON. HOWEVER, AS PER TIME LIMIT, CONTEMPLATED UNDER RULE 11AA (6), THE IMPUGNED ORDE R SHOULD HAVE BEEN PASSED WITHIN SIX MONTHS FROM THE DATE ON WHICH SUC H APPLICATION WAS MADE. THE RELEVANT RULE IS REPRODUCED HEREUNDER: RULE 11AA(6): THE TIME LIMIT WITHIN WHICH THE COMM ISSIONER SHALL PASS AN ORDER EITHER GRANTING THE APPROVAL OR REJEC TING THE APPLICATION SHALL NOT EXCEED SIX MONTHS FROM THE DATE ON WHICH SUCH APPLICATION WAS MADE. PROVIDED THAT IN COMPUTING THE PERIOD OF SIX MONTHS, ANY TI ME TAKEN BY THE APPLICANT IN NOT COMPLYING WITH THE DIRECTIO NS OF THE COMMISSIONER UNDER SUB-RULE (3) SHALL BE EXCLUDED. 5.1. FURTHER, A BARE PERUSAL OF THE ORDER PASSED BY THE LD. CIT, REVEALS THAT THERE IS NO DELAY IN COMPLYING WITH THE DIRECTION O F THE COMMISSIONER UNDER SUB-RULE 3 OF RULE 11AA OF THE I.T. RULES, 1962, AS CONTEMPLATED UNDER PROVISO TO SUB-CLAUSE (6) OF THE SAID RULE. IN VIEW OF THIS, THE LD. CIT, IN TERMS OF RULE 11AA (6), SHOULD HAVE PASSED AN ORDER ON 15.04.2010. HOWEVER, THE DATE MENTIONED ON THE FACE OF THE ORD ER PASSED BY THE CIT, IS 30 TH APRIL, 2010.THUS, THERE IS VIOLATION OF RULE 11AA( 6) OF THE INCOME-TAX RULES, 1962. HOWEVER, THE DELAY IN PASSING THE ORDE R IS OF 15 DAYS ONLY. THE LD. CIT, HAS REJECTED THE APPLICATION FOR APPROVAL UNDER SECTION 80G(5) OF 4 THE ACT, VIDE ORDER DATED 30 TH APRIL,2010. HOWEVER, AS DISCUSSED EARLIER, THE ORDER WAS NOT PASSED WITHIN PRESCRIBED TIME LIMIT. 5.2. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIAN CE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT, IN THE CASE OF SOCIET Y FOR THE PROMOTION OF EDUCATION ADVENTURE SPORT &CONSERVATION OF ENVIRONM ENT VS. COMMISSIONER OF INCOME TAX & ORS. 2008) 5 DTR (ALL) 329, WHICH WAS RENDERED IN THE CONTEXT OF REGISTRATION UNDER SECTI ON 12A OF THE ACT. A BARE PERUSAL OF THE TRUE RATIO RELIED UPON BY THE ASSESS EE REVEALS THAT IN THE EVENT OF NON-ADHERENCE TO PRESCRIBED TIME LIMIT UNDER SEC TION 12AA(2) OF THE ACT, THE DEEMED REGISTRATION DESERVES TO BE GRANTED. THE HONBLE ALLAHABAD HIGH COURT, PLACED INTERPRETATION THAT NON-CONSIDERATION OF THE REGISTRATION APPLICATION WITHIN THE TIME FIXED BY SECTION 12AA(2 ) OF THE ACT, WOULD RESULT IN DEEMED REGISTRATION, AS THE CONTRARY VIEW WOULD RENDER THE ASSESSEE VULNERABLE AND LEAVE THEM AT THE MERCY OF THE INCOM E-TAX AUTHORITY. THE RELEVANT RATIO OF THE DECISION IS REPRODUCED HEREUN DER: EFFECT OF NON-CONSIDERATION OF THE APPLICATION FOR REGISTRATION UNDER SECTION 12A WITHIN THE TIME FIXED BY SECTION 12AA(2 ) WOULD BE A DEEMED GRANT OF REGISTRATION. 5.3. IT IS PERTINENT TO REPRODUCE RELEVANT PROVISIO NS OF SECTION 80G(5)(VI) OF THE ACT, HEREUNDER: SECTION 80G(5)(VI) IN RELATION TO DONATIONS MADE AFTER THE 31 ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES MADE IN THIS BEHALF: PROVIDED THAT ANY APPROVAL SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING [FIVE] ASSE SSMENT YEARS, AS MAY BE SPECIFIED IN THE APPROVAL. 5 5.4. THE PROVISO TO THE ABOVE MENTIONED SECTION WAS OMITTED BY THE FINANCE (NO.2) 2009 W.E.F. 1.10.2009. THUS, THERE I S NO PROVISION FOR WITHDRAWAL OF RENEWAL OF APPROVAL GRANTED BY THE CI T UNDER SECTION 80G(5) OF THE ACT. IN THIS CONTEXT, THE CORRESPONDING PROV ISION AS PROVIDED UNDER SECTION 12AA(3) READS AS UNDER: 12AA(3): WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF S UCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACC ORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELING THE REGISTRATION OF SUC H TRUST OR INSTITUTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASS ED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONA BLE OPPORTUNITY OF BEING HEARD. THERE IS A PROVISION FOR CANCELING OF REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT. 5.5. THE ASSESSEE MADE THE IMPUGNED APPLICATION FOR RENEWAL UNDER SECTION 80G(5)(VI) OF THE ACT. HOWEVER, THE COMPETE NT AUTHORITY, THE LD. CIT, FAILED TO TAKE APPROPRIATE ACTION IN THE MATTE R WITHIN PRESCRIBED TIME LIMIT UNDER RULE 11AA(6) OF THE INCOME-TAX RULES, 1 962. THERE IS NO SPECIFIC PROVISION PRESCRIBING CONSEQUENCES FOR NO N-PASSING OF SUCH ORDER. THE ASSESSEE HAS DONE WHAT WAS EXPECTED OF IT UNDER THE LAW. THE DEPARTMENT SHOULD HAVE ACTED VIGILANTLY TO PASSEE AN APPROPRIATE ORDER IN THE MATTER. HAVING NOT DONE SO, THE COMPETENT AUTHO RITY HAS PLACED THE ASSESSEE IN A JEOPARDY AND HELPLESS SITUATION. THUS , NEGLIGENCE ON THE PART OF THE REVENUE AUTHORITY CANNOT BE CONFERRED JUDICIAL BENEDICTION. THE ASSESSEE- APPELLANT, CANNOT BE KEPT AT THE MERCY OF THE REVEN UE AUTHORITY, HAVING 6 COMPLIED WITH HIS PART IN THE MATTER, AS IT WOULD S UBVERT THE SOUL OF RULE OF LAW. THE CASE OF THE ASSESSEE, IS ALSO SUPPORTED BY THE DECISION OF ITAT, BANGALORE BENCH, IN THE CASE OF KARNATAKA GOLF ASSO CIATION VS. DIRECTOR OF INCOME-TAX (EXEMPTION) (2005) 272 ITR (A.T.) 123. 5.6. IN VIEW OF THE ABOVE LEGAL AND FACTUAL DISCUSS IONS AND FOLLOWING THE DECISION CITED BY THE ASSESSEE (SUPRA), THE ASSESSE E IS LEGITIMATELY ENTITLED FOR APPROVAL OF RENEWAL, AS APPLIED FOR. HOWEVER, THE REVENUE IS FREE, IF SO ADVISED, TO TAKE APPROPRIATE ACTION IN THE MATTER IN TERMS OF RELEVANT PROVISIONS OF THE ACT. HENCE, THE APPEAL OF THE AS SESSEE IS ALLOWED. 5.7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 15TH JUNE, 2011. SD/- SD/- (H.L. KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 15TH JUNE, 2011 /SKR/ COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE:S. LAKHA SINGH BAHRA CHARITABLE TRUST, PHAGWARA. 2. THE C.I.T. JALANDHAR -II 3. THE SR DR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH : AMRITSAR.