Sayfty Trust, Kanpur V. Commissioner of Income Tax (Exemption), Lucknow

ITA 285/LKW/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 0667 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 10-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Reasonable cause
• Section: 80G; 12A; 12AA; 205; 13; 10; 11

Judgement Text

I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.285/LKW/2019 ASSESSMENT YEAR:N.A. SAYFTY TRUST, 113/158 SWAROOP NAGAR, KANPUR. PAN:AAUTS9835K VS. CIT (EXEMPTIONS), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT (EXEMPTIONS), DATED 18/03/2019. 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL BUT THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS THE ACTION OF LEARNED CIT (EXEMPTIONS) BY WHICH HE HAS REJECTED THE APPLICATION OF THE ASSESS EE MOVED U/S 12AA OF THE ACT. 3. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, INVITED OUR ATTENTION TO THE ORDER OF LEARNED CIT (EXEMPTIONS) AND SUBMIT TED THAT WHILE REJECTING APPELLANT BY SHRI P. K. KAPOOR, C. A. RESPONDENT BY SHRI S. K. MADHUK, CIT (D.R.) DATE OF HEARING 04/11/2020 DATE OF PRONOUNCEMENT 16 / 12 /20 20 I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 2 THE APPLICATION, THE LEARNED CIT (EXEMPTIONS) HAS H ELD THAT NO EVIDENCE OF ANY CHARITABLE ACTIVITY WAS SHOWCASED BY THE ASSESS EE. IT WAS SUBMITTED THAT LEARNED CIT (EXEMPTIONS) ALSO HELD THAT ASSESS EE HAD FILED PART REPLY TO THE NOTICE WHICH IN FACT IS INCORRECT AS COMPLET E REPLY TO THE NOTICE OF CIT (EXEMPTIONS) WAS FILED VIDE LETTER DATED18/03/2 019 AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGES 20 38 OF THE PAPE R BOOK WHEREIN A COPY OF LETTER, COVERING REPLY TO ALL 25 QUERIES RAISED, WAS PLACED. AS REGARDS THE OBSERVATION OF LEARNED CIT (EXEMPTIONS) THAT THE AS SESSEE HAS NOT PRODUCED BOOKS OF ACCOUNT, LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO PARA 21 OF THE REPLY DATED 18/03/2019 WHEREIN THE ASSESSEE HAD MENTIONED THAT BOOKS OF ACCOUNT WERE AVAILABLE FOR EXAMINATION. AS REGARDS THE OBSERVATION OF LEARNED CIT (EXEMPTIONS) THAT NO EVIDENCE OF ANY CHARITABLE ACTIVITY COULD BE SHOWCASED BY THE A SSESSEE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E TRUST WAS CREATED ON 30/01/2018 AND WITHIN FIVE MONTHS FROM THE DATE OF ITS FORMATION, IT APPLIED FOR REGISTRATION U/S 12A BY FILING APPLICAT ION IN FORM NO. 10A MANUALLY AND THEREAFTER ON THE DIRECTION OF LEARNED CIT (EXEMPTIONS) THE SAME WAS FILED ELECTRONICALLY. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN REPLY TO THE QUESTIONNAIRE OF LEA RNED CIT (EXEMPTIONS), THE ASSESSEE HAD PRODUCED CONFIRMATION OF RECEIPT O F DONATION OF RS.67,300/- PAID TO THE ASSESSEE TO BE UTILIZED FOR THE OBJECTS OF THE ASSESSEE TRUST. LEARNED COUNSEL FOR THE ASSESSEE S TATED THAT THE AFORESAID EVIDENCES CLEARLY SHOW THAT SOON AFTER FORMATION OF THE TRUST, THE TRUSTEES INITIATED THE ACTIVITIES BY ARRANGING DONATION SO A S TO MEET ITS OBJECTS. IT WAS FURTHER SUBMITTED THAT IT IS NOT CORRECT ON THE PART OF LEARNED CIT (EXEMPTIONS) TO SAY THAT THE ASSESSEE MERELY SUBMIT TED THE TRUST DEED AND NO OTHER MATERIAL WAS SUBMITTED. IT WAS SUBMITTED THAT ASSESSEE HAD FURNISHED POINT-WISE REPLY TO THE QUESTIONNAIRE ISS UED BY LEARNED CIT I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 3 (EXEMPTIONS). HE FURTHER SUBMITTED THAT THE BOOKS OF ACCOUNT WERE ALSO PRODUCED FOR VERIFICATION WHICH IS APPARENT FROM TH E LETTER DATED 18/03/2019, PLACED AT PAGES 20-23 OF THE PAPER BOOK . IT WAS SUBMITTED THAT LEARNED CIT (EXEMPTIONS) DID NOT RAISE ANY OBJ ECTION REGARDING THE OBJECTS OF THE TRUST INSPITE OF THE FACT THAT THE C OPY OF TRUST DEED WAS AVAILABLE WITH HIM. 3.1 LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT AS PER THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF AN ANDA SOCIAL & EDUCATIONAL TRUST 114 TAXMANN.COM 693 (SC), IT IS N OT NECESSARY THAT ACTIVITIES SHOULD ACTUALLY HAVE BEEN STARTED AND IT IS SUFFICIENT FOR CIT (EXEMPTIONS) TO EXAMINE THE OBJECTS OF THE SOCIETY ALONG WITH THE PROPOSED ACTIVITIES OF THE ASSESSEE TO GRANT REGISTRATION. LEARNED COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE ORDER OF HON'B LE ALLAHABAD HIGH COURT IN THE CASE OF HARDAYAL CHARITABLE & EDUCATIONAL TR UST VS. CIT [2013] 335 ITR 534 (ALLD.) AND FURTHER RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. R.S. BA JAJ SOCIETY REPORTED IN [2014] 42 TAXMANN.COM 573 (ALL)\. FURTHER RELIANCE WAS PLACED ON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT (EXEMPTIONS) VS. REHAM FOUNDATION REPORTED IN [2019] 418 ITR 205 (ALL) AND SUBMITTED THAT THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IS FULLY APPLICABLE TO THE ASSESSEE AND ACCORDINGLY THE CLAIM OF REGISTRATION U/S 12A DESERVES TO BE GRANTED BY HON'BLE TRIBUNAL. AS REGARDS THE RELIAN CE PLACED BY LEARNED CIT (EXEMPTIONS) ON THE JUDGMENTS CITED BY HIM, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRST DECISION IN THE CASE OF NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATION SOCIETY [2009] 1 81 TAXMAN 205 (UK) IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES AS IN THAT CASE THERE WAS A CLEAR FINDING THAT THE DOMINANT OBJECT OF THE SOCIE TY WAS TO EARN PROFITS I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 4 UNDER THE GARB OF EDUCATION. AS REGARDS THE CASE LA WS IN THE CASE OF KIRTI CHANDRA TARAWATI CHARITABLE SOCIETY VS. DIT(E) 232 ITR 11, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS CASE R ELATES TO RENEWAL OF APPROVAL U/S 80G AND HENCE WAS NOT APPLICABLE. AS REGARDS THE DECISION OF LUCKNOW BENCH OF TRIBUNAL IN I.T.A. NO.809/LKW/2014 DATED 28/02/2015, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE THE ASSESSEE HAD WITHDRAWN THE APPEAL AND ACCORDINGLY, THE SAME WAS DISMISSED AS WITHDRAWN. IN VIEW OF THE ABOVE SUBMISSIONS, LEARN ED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LEARNED CIT (EXEMPTIONS) BE DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE U/S 12AA OF THE ACT. 4. LEARNED D. R., ON THE OTHER HAND, SUBMITTED THAT FOR GRANTING REGISTRATION U/S 12A, THE LEARNED CIT (EXEMPTIONS) HAS TO MAKE A SATISFACTION AS TO THE CHARITABLE NATURE OF OBJECTS OF THE SOCIETY/TRUST AND ALSO HAS TO MAKE A SATISFACTION REGARDING THE GENUI NENESS OF ACTIVITIES OF THE TRUST. IT WAS SUBMITTED THAT THE ASSESSEE HAD NOT CARRIED OUT ANY ACTIVITY TO ACHIEVE THE OBJECTS OF THE SOCIETY AND HAD ALSO NOT PRODUCED COMPLETE BOOKS OF ACCOUNT AND THEREFORE, THE LEARNE D CIT (EXEMPTIONS) WAS UNABLE TO RECORD A FINDING REGARDING THE OBJECT S OF THE SOCIETY AND GENUINENESS OF ITS ACTIVITIES. THE LEARNED D. R. S UBMITTED THAT RECORDING OF SATISFACTION REGARDING OBJECTS OF THE SOCIETY AND G ENUINENESS OF ITS ACTIVITIES IS THE PREROGATIVE OF CIT (EXEMPTIONS) AND THEREFOR E, AT BEST THE CASE OF THE ASSESSEE MAY BE REMITTED BACK TO LEARNED CIT (E XEMPTIONS) FOR RECORDING SUCH SATISFACTION. 5. LEARNED COUNSEL FOR THE ASSESSEE, IN HIS REJOIND ER, SUBMITTED THAT THE ASSESSEE HAD FILED COMPLETE REPLY TO THE QUERIES RA ISED BY HIM AND EVERY DOCUMENT EXHIBITING THE GENUINENESS OF ACTIVITIES A ND OBJECTS WAS BEFORE HIM AND EVEN THEN HE REJECTED THE APPLICATION OF AS SESSEE ON IRRELEVANT I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 5 CONSIDERATION IGNORING THE JUDGMENT OF HON'BLE SUPR EME COURT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HON'BLE ALL AHABAD HIGH COURT IN THE CASE OF REHAM FOUNDATION HAS CLEARLY HELD THAT HON'BLE TRIBUNAL IS EMPOWERED TO GRANT REGISTRATION IF IT WAS SATISFIED WITH THE CHARITABLE NATURE OF OBJECTS AND GENUINENESS OF ITS ACTIVITIES . 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND FROM THE COPY OF TRUST D EED, PLACED AT PAGES 5- 15 OF THE PAPER BOOK THAT THE TRUST CAME INTO EXIST ENCE ON 30/01/2018 AND THE MAIN OBJECTS OF THE TRUST, AS MENTIONED AT PAGE 4 OF THE TRUST DEED, ARE AS BELOW: I) TO MAKE THE DAILY LIVES OF GIRLS AND YOUNG WOME N/GIRLS SAFER BY EDUCATING AND EMPOWERING THEM AGAINST ALL FORMS OF SEXUAL VIOLENCE II) CHALLENGE MINDSETS ROOTED IN AGE-OLD PRACTICES AND CUSTOMS FOR A GENDER EQUAL SOCIETY. III) TO USE DIGITAL AND TRADITIONAL MEDIA, EDUCATIO NAL TOOLS, CAMPAIGNS, EVENTS AND WORKSHOPS TO RAISE AWARENESS ON THE ISSUE OF VIOLENCE AGAINST WOMENS/GIRLS. IV) TO RALLY AND ENCOURAGE CITIZENS TO ACT AND RAIS E AWARENESS ON THE ISSUE OF VIOLENCE AGAINST WOMENS/G IRLS, TAKE ACTION AND COLLECTIVELY WORK ON ADDRESSING THIS GLO BAL PROBLEM. V) TO WORK WITH MEN AND BOYS AND ENGAGE THEM IN END ING VIOLENCE AGAINST WOMENS/GIRLS THROUGH OPEN DIALOGUE S, EDUCATIONAL PROGRAMS AND ACTIONS. VI) TO HOLD THE INSTITUTIONS, ADMINISTRATIONS AND G OVERNMENTS ACCOUNTABLE FOR POLICIES, FUNDING AND ACTION RELATE D TO GIRLS AND YOUNG WOMENS/GIRLS SAFETY. THE TRUSTEES SHALL HAVE FULL POWER AND ABSOLUTE AUTHORITY TO ADD TO AND INTRODUCE OTHE R SPECIFIC PUBLIC CHARITABLE OBJECTS NOT INCONSISTENT WITH THE OBJECTS AND PURPOSES OF THESE PRESENTS AND IN THAT CASE SUCH NE WLY ADDED OBJECTS DECIDED UPON BY THE TRUSTEES SHALL BE DEEME D TO HAVE BEEN INCORPORATED IN THE OBJECTS OF THESE PRESENTS AND IN SUCH EVENT DUE INTIMATION SHALL BE GIVEN TO INCOME TAX A UTHORITIES FOR THE TIME BEING HAVING JURISDICTION OVER THE TRU ST. I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 6 6.1 THE ABOVE OBJECTS ENUMERATED IN THE TRUST DEED HAVE NOT BEEN MENTIONED IN THE DEFINITION OF CHARITABLE OBJECTS U /S 2(15) BUT THEY FALL INTO THE CATEGORY OF OBJECTS OF GENERAL PUBLIC UTILITY. THEREFORE, AS REGARDS THE CHARITABLE NATURE OF OBJECTS, WE DO NOT FIND ANY HE SITATION TO HOLD THAT THE OBJECTS OF THE SOCIETY ARE CHARITABLE IN NATURE. T HE LEARNED CIT (EXEMPTIONS) HAS NOT COMMENTED ANYTHING ADVERSE REG ARDING THE OBJECTS OF THE ASSESSEE INSPITE OF THE FACT THAT COPY OF TR UST DEED WAS AVAILABLE WITH HIM. ON RECEIPT OF APPLICATION BY LEARNED CIT (EXEMPTIONS), THE LEARNED CIT (EXEMPTIONS) ISSUED A QUESTIONNAIRE VID E LETTER DATED 21/02/2019 LISTING THEREIN 25 QUERIES TO WHICH THE ASSESSEE FILED REPLY VIDE LETTER DATED 18/03/2019, PLACED AT PAGES 20-38 OF T HE PAPER BOOK WHEREIN THE POINT-WISE REPLY TO THE QUERIES RAISED WAS SUBM ITTED. THE EXAMINATION OF QUESTIONNAIRE ALONG WITH ITS ANSWERS PROVES THAT LEARNED CIT (EXEMPTIONS) HAS GONE THROUGH THE COPY OF TRUST DEE D AND HAS ALSO GONE THROUGH THE OBJECTS CLAUSE OF THE ASSESSEE AND MUST HAVE GONE THROUGH THE REPLY TO QUESTIONNAIRE. IN FACT LEARNED CIT (EX EMPTIONS) HAS NOTED DOWN THAT THE ASSESSEE HAD FILED REPLY VIDE LETTER DATED 18/03/2019. WHILE PASSING THE ORDER, REJECTING THE APPLICATION OF THE ASSESSEE, ONE OF THE OBJECTIONS OF LEARNED CIT (EXEMPTIONS) IS THAT THE ASSESSEE HAD NOT FILED COMPLETE REPLY TO ITS QUESTIONNAIRE WHICH IS FACTUA LLY INCORRECT AS THE ASSESSEE HAS FILED POINT-WISE REPLY TO THE QUESTION NAIRE AND THE COPY OF REPLY IS PLACED AT PAGES 20-38 OF THE PAPER BOOK. THE OTHER OBJECTION OF LEARNED CIT (EXEMPTIONS) IS THAT BOOKS OF ACCOUNT W ERE NOT PRODUCED FOR EXAMINATION, WHICH FACT IS ALSO INCORRECT AS IN THE SAME REPLY DATED 18/03/2019, VIDE POINT NO. 21, THE ASSESSEE HAD SUB MITTED THAT RELEVANT PAPERS, DOCUMENTS, REGISTERS AND BOOKS OF ACCOUNT A RE BEING PRODUCED BEFORE HIM FOR HIS VERIFICATION. AS REGARDS THE OB JECTION OF LEARNED CIT (EXEMPTIONS) REGARDING NON CARRYING OUT OF ACTIVITI ES, THE HON'BLE SUPREME I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 7 COURT, IN THE CASE OF ANANDA SOCIAL & EDUCATIONAL T RUST (SUPRA), HAS CLEARLY HELD THAT THE TERM ACTIVITIES IN THE PROVISION IN CLUDES PROPOSED ACTIVITIES. HON'BLE COURT FURTHER WENT TO HOLD THAT WHILE CONSI DERING THE APPLICATION FOR REGISTRATION U/S 12A OF THE ACT, THE COMMISSIONER I S BOUND TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHAR ITABLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST IS PROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE OBJECTS OF THE TRUST. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PART OF THE ORDER OF HON 'BLE SUPREME COURT IS REPRODUCED BELOW: THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT -D IRECTOR OF INCOME-TAX AGAINST THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE DELHI HIGH COURT HOLDING THAT A NEWLY REGIST ERED TRUST IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (FOR SHORT, THE 'ACT') ON THE BASIS OF IT S OBJECTS, WITHOUT ANY ACTIVITY HAVING BEEN UNDERTAKEN. SECTIO N 12AA OF THE ACT READS AS FOLLOWS : '12AA. PROCEDURE FOR REGISTRATION.-(1) THE [PRINCI PAL COMMISSIONER OR] COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OR CLAUSE (AB) OF S UB- SECTION (1) OF SECTION 12A, SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM T HE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDE R TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRI ES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIE S, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING TH E TRUST OR INSTITUTION; (IF) SHALL, IF HE IS NOT SO SATISFIED, PASS AN OR DER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTI ON, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT: I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 8 PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE [PRINCIP AL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER ON WHICH NO ORD ER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEF ORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER AND THE [P RINCIPAL COMMISSIONER OR] COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE E XPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED UNDER CLAUSE (A) OR CLAUSE (AD) OR CLAUSE (AB) OF SUB- SECTION (1) OF SECTION 12A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUBSECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT S TOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1 996)] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSIONER OR] COMMIS SIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATIO N OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD. [(4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (3), WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED RE GISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE I TS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1 996)] AND SUBSEQUENTLY IT IS NOTICED THAT THE ACTIVITIES OF T HE TRUST OR THE INSTITUTION ARE BEING CARRIED OUT IN A MANNER THAT THE PROVISIONS OF SECTIONS 11 AND 12 DO NOT APPLY TO EXCLUDE EITHE R WHOLE OR ANY PART OF THE INCOME OF SUCH TRUST OR INSTITUTION DUE TO OPERATION OF SUB-SECTION (1) OF SECTION 13, THEN, T HE PRINCIPAL COMMISSIONER OR THE COMMISSIONER MAY BY AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTIO N: I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 9 PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELL ED UNDER THIS SUB-SECTION, IF THE TRUST OR INSTITUTION PROVES THA T THERE WAS A REASONABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED O UT IN THE SAID MANNER.] THE ABOVE SECTION PROVIDES FOR REGISTRATION OF A TR UST. SUCH REGISTRATION CAN BE APPLIED FOR BY A TRUST WHICH HA S BEEN IN EXISTENCE FOR SOME TIME AND ALSO BY A NEWLY REGISTE RED TRUST. THERE IS NO STIPULATION THAT THE TRUST SHOULD HAVE ALREADY BEEN IN EXISTENCE AND SHOULD HAVE UNDERTAKEN ANY ACTIVIT IES BEFORE MAKING THE APPLICATION FOR REGISTRATION. IN BRIEF, SECTION 12AA OF THE ACT EMPOWERS THE PRIN CIPAL COMMISSIONER OR THE COMMISSIONER OF THE INCOME-TAX ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST TO CALL FOR SUCH DOCUMENTS AS MAY BE NECESSARY TO SATISFY HIMSE LF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTI TUTION AND MAKE INQUIRIES IN THAT BEHALF; IT EMPOWERS THE COMMISSIO NER TO THEREUPON REGISTER THE TRUST IF HE IS SATISFIED ABO UT THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF ITS ACTIVITIES. IN THE PRESENT CASE, THE TRUST WAS FORMED AS A SOCI ETY ON 30-5- 2008 AND IT APPLIED FOR REGISTRATION ON 10-7-2008 I .E. WITHIN A PERIOD OF ABOUT TWO MONTHS. NO ACTIVITIES HAD BEEN UNDERTAKEN BY THE RESPONDENT TRUST BEFORE THE APPLICATION WAS MADE. THE COMMISSIONER R EJECTED THE APPLICATION ON THE SOLE GROUND THAT SINCE NO AC TIVITIES HAVE BEEN UNDERTAKEN BY THE TRUST, IT WAS NOT POSSIBLE T O REGISTER IT, PRESUMABLY BECAUSE IT WAS NOT POSSIBLE TO BE SATISF IED ABOUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE. TH E INCOME-TAX APPELLATE TRIBUNAL, DELHI (FOR SHORT, THE TRIBUNAL' ) REVERSED THE ORDERS OF THE COMMISSIONER. THE REVENUE DEPARTMENT APPROACHED THE HIGH COURT BY WAY OF FILING AN APPEA L. THE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL AND CAME TO THE CONCLUSION THAT IN CASE OF A NEWLY REGISTERED TRUST EVEN THOUGH THERE WAS NO ACTIVITIES, IT WAS POSSIBLE TO CONSIDE R WHETHER THE TRUST CAN BE REGISTERED UNDER SECTION 12AA OF THE A CT. THIS JUDGMENT IS ASSAILED BEFORE US. I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 10 SECTION 12AA UNDOUBTEDLY REQUIRES THE COMMISSIONER TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTI ON AND GENUINENESS OF ITS ACTIVITIES AND GRANT A REGISTRAT ION ONLY IF HE IS SO SATISFIED. THE SAID SECTION REQUIRES THE COMMISS IONER TO BE SO SATISFIED IN ORDER TO ENSURE THAT THE OBJECT OF THE TRUST AND ITS ACTIVITIES ARE CHARITABLE SINCE THE CONSEQUENCE OF SUCH REGISTRATION IS THAT THE TRUST IS ENTITLED TO CLAIM BENEFITS UNDER SECTIONS 11 AND 12 OF THE ACT. IN OTHER WORDS, IF I T APPEARS THAT THE OBJECTS OF THE TRUST AND ITS ACTIVITIES ARE NOT GENUINE THAT IS TO SAY NOT CHARITABLE THE COMMISSIONER IS ENTITLED TO REFUSE AND IN FACT, BOUND TO REFUSE SUCH REGISTRATION. IT WAS ARGUED BEFORE US THAT THE COMMISSIONER IS RE QUIRED TO BE SATISFIED ABOUT TWO THINGS - FIRSTLY THAT THE OB JECTS OF THE TRUST AND SECONDLY, ITS ACTIVITIES ARE GENUINE. IF THERE HAVE BEEN NO ACTIVITIES UNDERTAKEN BY THE TRUST THEN THE COMM ISSIONER CANNOT ASSESS WHETHER SUCH ACTIVITIES ARE GENUINE A ND THEREFORE, THE COMMISSIONER IS BOUND TO REFUSE THE REGISTRATION OF SUCH A TRUST. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE ABOV E SUBMISSIONS MADE BY MS. AISHWARYA BHATI, LEARNED SE NIOR COUNSEL APPEARING FOR THE APPELLANT - DIRECTOR OF I NCOME-TAX AND FIND THAT IT IS NOT POSSIBLE TO AGREE WITH THE SAME. THE PURPOSE OF SECTION 12AA OF THE ACT IS TO ENABLE REG ISTRATION ONLY OF SUCH TRUST OR INSTITUTION WHOSE OBJECTS AND ACTI VITIES ARE GENUINE. IN OTHER WORDS, THE COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE OBJECT OF THE TRUST ARE GENUINE AN D THAT ITS ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS OF THE TRUST, THAT IS EQUALLY GENUINE. 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 IN CLUDES PROPOSED ACTIVITIES'. THAT IS TO SAY, A COMMISSIONER IS BOUN D TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHAR ITABLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST P ROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE OBJECTS OF THE TRUST. IN CONTRAST, THE POSITION WO ULD BE DIFFERENT WHERE THE COMMISSIONER PROPOSES TO CANCEL THE REGISTRATION OF A TRUST UNDER SUB-SECTION (3) OF SE CTION 12AA OF THE ACT. THERE THE COMMISSIONER WOULD BE BOUND TO R ECORD THE I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 11 FINDING THAT AN ACTIVITY OR ACTIVITIES ACTUALLY CAR RIED ON BY THE TRUST ARE NOT GENUINE BEING NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. SIMILARLY, THE SITUATION WOULD BE DIF FERENT WHERE THE TRUST HAS BEFORE APPLYING FOR REGISTRATION FOUN D TO HAVE UNDERTAKEN ACTIVITIES CONTRARY TO THE OBJECTS OF TH E TRUST. WE THEREFORE FIND THAT THE VIEW OF THE DELHI HIGH C OURT IN THE IMPUGNED JUDGMENT IS CORRECT AND LIABLE TO BE UPHEL D. MS. BHATI, LEARNED SENIOR COUNSEL FOR THE APPELLANT , FAIRLY DREW OUR ATTENTION TO A JUDGMENT OF THE ALLAHABAD HIGH C OURT IN IT APPEAL NO. 36 OF 2013 TITLED AS 'COMMISSIONER OF IN COME TAX-II VS. R.S. BAJAJ SOCIETY' WHICH HAS TAKEN THE SAME VI EW AS THAT OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT. T HE ALLAHABAD HIGH COURT HAS ALSO REFERRED TO A SIMILAR VIEW TAKEN BY THE HIGH COURTS OF KARNATAKA AND PUNJAB & HARYAN A. APPARENTLY, A CONTRARY VIEW HAS BEEN TAKEN BY THE K ERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V. COMMISSIONER OF INCOME-TAX - [2001] VOL.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 AP PLICANT FOR REGISTRATION AS A TRUST HAD UNDERTAKEN ACTIVITI ES WHICH WERE CONTRARY TO THE OBJECTS OF THE TRUST. IN THE RESULT, WE FIND THAT THERE IS NO REASON TO I NTERFERE WITH THE IMPUGNED JUDGMENT OF THE HIGH COURT OF DELHI. T HE APPEAL IS, ACCORDINGLY, DISMISSED. 6.2 THE ABOVE JUDGMENT OF HON'BLE SUPREME COURT CLE ARLY SUGGEST THAT COMMISSIONER, AT THE TIME OF CONSIDERING THE APPLIC ATION FOR REGISTRATION, HAS TO SATISFY HIMSELF THAT THE OBJECTS OF THE TRUS T ARE GENUINE AND ITS ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS OF THE TRUST. THE JUDGMENT ALSO ELABORATES THAT THE WORD ACTIVITIES IN SUCH PROVI SION INCLUDES PROPOSED ACTIVITIES ALSO WHICH MEANS THAT WHERE THE ASSESSEE HAS NOT UNDERTAKEN ANY ACTIVITY, THE PROPOSED ACTIVITY, AS ENUMERATED IN THE TRUST DEED, HAS TO BE EXAMINED SO AS TO SEE AS TO WHETHER SUCH PROPOSE D ACTIVITIES ARE IN I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 12 FURTHERANCE OF THE ACHIEVEMENT OF OBJECTS OF THE SO CIETY OR NOT. IN THE PRESENT CASE, WE FIND THAT LEARNED CIT (EXEMPTIONS) HAS NOT MADE ANY ADVERSE FINDING ON THE OBJECTS OF THE ASSESSEE WHIC H, IN OUR OPINION, APPARENTLY FALLS UNDER THE CATEGORY OF OBJECTS OF G ENERAL PUBLIC UTILITY WHICH IS INCLUDED IN THE DEFINITION OF CHARITABLE PURPOSE AS DEFINED U/S 2(15) OF THE ACT. THE ASSESSEE HAS THOUGH NOT UNDERTAKEN AN Y ACTIVITY BUT THE PROPOSED ACTIVITIES TO BE UNDERTAKEN BY THE ASSESSE E IS THE ACHIEVEMENT OF ITS OBJECTS WHICH WE HAVE ALREADY HELD TO BE CHARIT ABLE IN NATURE. THE ARGUMENT OF LEARNED D. R. THAT ONLY CIT (EXEMPTIONS ) IS EMPOWERED TO RECORD A SATISFACTION REGARDING CHARITABLE NATURE O F OBJECTS AND GENUINENESS OF ACTIVITIES HAS NO FORCE IN VIEW OF T HE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF REHAM FOUNDATIO N, WHERE THE HON'BLE COURT HAS HELD THAT POWERS OF THE TRIBUNAL ARE COEX TENSIVE WITH THE POWER OF COMMISSIONER U/S 12AA OF THE ACT AND TRIBUNAL IS EMPOWERED TO GRANT REGISTRATION U/S 12A OF THE ACT PROVIDED THE TRIBUN AL IS SATISFIED REGARDING CHARITABLE NATURE OF OBJECTS OF THE SOCIETY AND IS ALSO SATISFIED WITH THE GENUINENESS OF ITS ACTIVITIES. IN THE CASE BEFORE US, WE HAVE ALREADY HELD THE OBJECTS OF THE ASSESSEE TO BE CHARITABLE FALLIN G UNDER THE HEAD OBJECTS OF GENERAL PUBLIC UTILITY. WE FIND THAT ASSESSEE H AD NOT CARRIED OUT ANY SUBSTANTIAL ACTIVITY BUT THAT IS NOT RELEVANT AT TH E TIME OF GRANTING REGISTRATION AS PER THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL & EDUCATIONAL TRUST 114 TAXMANN.COM 6 93 (SC). FURTHER WE FIND THAT ASSESSEE HAD FURNISHED COMPLETE POINT- WISE REPLY TO THE QUESTIONNAIRE ISSUED BY LEARNED CIT (EXEMPTIONS). THE OBSERVATION OF LEARNED CIT (EXEMPTIONS) THAT REPLY WAS INCOMPLETE, ARE NOT CORRECT AS ALL REPLIES WERE FILED AND BOOKS OF ACCOUNT WERE ALSO A VAILABLE FOR INSPECTION BY LEARNED CIT (EXEMPTIONS). I.T.A. NO.285/LKW/2019 ASSESSMENT YEAR:N.A. 13 7. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN VIEW OF JUDICIAL PRECEDENTS, THE LEARNED CIT (EXEMP TIONS) IS DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2020 I N ACCORDANCE WITH RULE 34(4) OF THE I.T.A.T. RUL ES) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:16/12/2020 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW