KURKAL KEERABETTU CHARITABLE TRUST, MUMBAI V. CIT (E), MUMBAI

ITA 2881/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6993 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: misc
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: VIRAL DOSHI
• Keywords: Charitable institution; Principle of natural justice
• Section: 12AA; 12

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH , MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER . / ITA NO. 2881 /MUM/201 7 ( / ASSESSMENT YEAR : ) KURKAL KEERABETTU CHARITABLE TRUST, 13, KRISHNA KUNJ, 143 - S.B.MARG, NEAR RUPAREL COLLEGE, OPP. MATUNGA ROAD, MUMBAI - 400016 VS. CIT(E), MUMBAI - 400012 ./ PAN NO. : A A CTK 1431 H ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI B. SRINIVAS , CIT DR /AS SESSEE BY : SHRI VIRAL DOSHI , AR / DATE OF HEARING : 02 / 01 /201 9 / DATE OF PRONOUNCEMENT / 01 /201 9 / O R D E R PER SHRI RAJESH KUMAR , A M : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(EXEMPTIONS), MUMBAI, U/S.12AA(1)(B)(II) R.W.S.12A OF THE ACT, WHEREBY REJECTING THE APPLICATION OF THE ASSESSEE - TRUST FOR GRANT OF REGISTRATION U/S.12A OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. SECTION 12 AA [3], IS NOT AT ALL APPLICABLE, DURING THE REGISTRATION PROCESS. IT CLEARLY AND SPECIFICALLY SAYS IT IS APPLICABLE TO REGISTERED TRUSTS U/S.12A ONLY. 2. CIT(E) IN THIS CASE ERRED IN LAW AND WRONG LY EXTRAPOLATED SECTION 12AA(3) TO DENY REGISTRATION OF TRUST, WHICH IS ITS RIGHT. IF ANY ANOMALIES ARE FOUND IN THE APPLICATION. IT IS THE DUTY OF THE CIT ( E ) JO GIVE OPPORTUNITY TO THE TRUST TO SET IT RIGHT. 3. DENIAL OF THE OPPORTUNITY TO EXPLAIN AND CLARIFY THE ISSUES IS TANTAMOUNT TO DENIAL OF ITA NO . 2881/17 2 JUSTICE. NO SHOW CAUSE NOTICE IS ISSUED AS TO WHY OUR APPLICATION SHOULD NOT BE REJECTED BY ATTRACTING SECTION 12AA [ 3 ] . 4. CIT [ E ] WAS NOT AT ALL FAIR.HONEST AND RATIONAL AND DRAWN ADVERSE INFERENCE. JUST T O DENY REGISTRATION U/S 12. THIS ACTION OF CIT [E] PUT THE TRUST INTO JEOPARDY. DISCRETION, IF ANY SHOULD BE EXERCISED JUDICIOUSLY SO AS TO FURTHER THE CAUSE OF JUSTICE AND NOT ARBITRARILY. RELIEF SOUGHT: IN VIEW OF THE FACTS MENTIONED ABOVE. I HUMBLY REQ UEST THAT THE TRUST BEING GENUINE AND ACTIVITIES BEING LEGAL AND AS PER THE LAW OF LAND AND FULFILLS ALL THE TERMS AND CONDITIONS AS LAID DOWN IN THE ACT. TRUST SHOULD BE GRANTED REGISTRATION U/S 12A.OF THE INCOME TAX ACT 1961. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE - TRUST FILED AN APPLICATION FOR REGISTRATION U/S.12A OF THE ACT IN THE PRESCRIBED FORM NO. 10A ON 25.08.2016. THEREAFTER THE CIT( E ) REQUIRED THE ASSESSEE - TRUST TO FURNISH VARIOUS DETAILS SUCH AS PAN CARDS OF TRUSTEES AND SETTLER, COP IES OF B ANK ACCOUNTS, NOC IN RESPECT OF ITS OFFICE PREMISES, CERTIFICATE OF REGISTRATION ISSUED BY THE CHARITY COMMISSIONER, COPIES OF AUDITED ACCOUNTS AND NOTE ON ACTIVITIES UNDER TAKEN BY IT DULY SUBSTANTIATED WITH DOCUMENTARY EVIDENCE S . ACCORDINGLY, THE ASSESSE E - TRUST SUBMITTED THE DETAILS AND DOCUMENTS AS DESIRED BY THE AO . THE CIT( E ) FOUND THAT THE AMOUNT SPENT BY THE ASSESSEE IS IN CONTRAVENTION OF SECTION 12AA(3) OF THE ACT AS THE AMOUNT HAS BEEN APPLIED ON THE ACTIVITIES OTHER THAN AS MENTIONED IN THE OBJE CT S OF THE TRUST. THE CIT( E ) FURTHER OBSERVED THAT THE AMOUNT ALREADY SPENT OR GOING TO BE UTILIZED FOR THE PURPOSE OF RENOVATION OF TEMPLE ONLY IS NOT AS PER THE OBJECTS OF THE TRUST . ULTIMATELY THE ITA NO . 2881/17 3 REGISTRATION WAS DENIED U/S.12AA OF THE ACT BY REJECT I NG THE APPLICATION OF THE ASSESSEE. 4. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE CIT(E) CHALLENGING THE NON GRANTING OF THE REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE - TRUST. 5. LD. AR BEFORE US SUBMITTED THAT THE TRUST IS INTER ALIA INTO THE ACTIVITIES OF EDUCATION, MEDICAL AND RELIEF TO POOR ETC. AND IS NOT A RELIGIOUS TRUST A S OBSERVED BY THE CIT(E) . LD. AR FURTHER SUBMITTED THAT THE CORPUS DONATIONS RECEIVED BY THE ASSESSEE TRUST ARE NOT TAXABLE AND THE ACCOUNT S AS ON 31.12.2016 ARE PROVISIONAL. IT WAS ALSO THE SUBMISSION S OF LD. AR THAT THE CIT(E) HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSEE BEFORE DENYING THE REGISTRATION THEREBY VIOLATING THE PRINCIPLE OF NATURAL JUSTICE. F IN ALLY, THE LD.AR SUBMITTED BEF ORE US THAT ONE MORE OPPORTUNITY MAY KINDLY BE PROVIDED TO ASSESSEE TO ITS REPRE SENT ITS CASE BEFORE THE CIT(E) BY SETTING THE ASIDE THE ORDER OF CIT(E) . 6. LD.DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(E) AND SUBMITTED THAT ACTIVITIES OF THE ASSESS EE - TRUST ARE NOT IN ACCORDANCE WITH THE TRUST DEED. THE LD DR SUBMITTED THAT EVEN THE RENOVATION OF THE TRUST BUILDING IN NOT STATED IN THE TRUST DEED . THE DR ALSO POINTED OUT THE ASSESSEE HAS CHANGED THE TRUST DEED WHICH WAS NOT REGISTERED WITH THE CHAR ITY COMMISSIONER AS THE DATE OF MOVING APPLICATION FOR REGISTRATION WHEREAS WHEN THE FACT WAS CONFRONTED TO THE ASSESSEE , A BELATED APPLICATION WAS MOVED THAT TOO AFTER A YEARS OF DELAY. T HEREFORE, THE CIT(E) HAS RIGHTLY REJECTED THE APPLICATION OF THE ASS ESSEE. ITA NO . 2881/17 4 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE CIT(E) REJECTED THE APPLICATION OF THE ASSESSEE - SOCIETY FOR REGISTRATION U/S.12AA OF THE ACT BY OBSERVING THAT THE ACTIVITIES OF THE SOCIETY ARE NOT IN ACCO RDANCE OF OBJECTS OF THE TRUST AS ENSHRINED ON THE TRUST DEED AND ARE NOT GENUINE. IN OUR V IEW , THE REGISTRATION TO THE TRUST CANNOT BE DENIED ON THE GROUND THAT THE ACTIVITIES OF THE TRUST ARE NOT BEING PURSUED BY THE TRUST. IN THE CASE OF CIT, ( VARANASI ) VS VARANASI WELFARE TRUST IN ITA NO.2 2 OF 2014 ORDER DATED 2.11.2014, IT WAS HELD THAT THE PREPONDERANCE OF THE JUDICIAL OPINION S OF ALL THE HIGH COURTS INCLUDING THIS COURT IS THAT AT THE TIME OF REGISTRATION U/S.12AA OF THE ACT, WHICH IS NECESSARY FOR CL AIMING EXEMPTION U/S.11 & 12 OF THE ACT THAT THE CIT IS NOT REQUIRED TO LO OK INTO THE ACTIVITIES UNDERTAKEN , WHERE SUCH ACTIVITIES HAVE NOT OR ARE IN THE PROCESS OF IN ITS INITIATION S . WHERE A TRUST , SET UP TO ACHIEVE ITS OBJECTIVES OF ENABLING EDUCATI ONAL INSTITUTION, IS IN THE PROCESS OF ESTABLISHING SUCH INSTITUTION AND RECEIVES DONATIONS, THE REGISTRATION U/S.12A CANNOT BE REFUSED ON THE GROUND THAT THE TRUST HAS NOT YET COMMENCED THE CHARITABLE OR RELIGIOUS ACTIVITIES. ANY ENQUIRY OF THE NATURE WOULD AMOUNT TO PUTTING THE CART BEFORE THE HORSE. AT THIS STAGE, ONLY THE GENUINENESS OF THE OBJECTS HAS TO BE TESTED AND NOT THE ACTIVITIES WHICH HAVE NOT YET CO MMENCED. THE ENQUIRY BY THE CIT (E) AT SUCH PRELIMINARY STAGE SHOULD BE RESTRICTED TO GENUI NENESS OF THE OBJECTS AND NOT OF THE ACTIVITIES UNLESS SUCH ACTIVITIES HAVE COMMENCED. THE RUST OR SOCIETY CANNOT CLAIM EXEMPTION, UNLESS IT IS REGISTERED U/S.12AA OF THE ACT ITA NO . 2881/17 5 AND AT THAT SUCH INITIAL STAGE, THE TEST OF GENUINENESS OF THE ACTIVITIES CANNOT BE A GROUND ON WHICH THE REGISTRATION MAY BE REFUSED. 8 . THE HONBLE MADRAS HIGH COURT IN THE CASE OF DIT(E) VS. SEERVI SAMAJ TAMBARAM TRUST, [2014] 43 TAXMANN.COM 142 (MADRAS) HAS HELD AS UNDER: - IT IS NOT DENIED BY THE ASSESSEE THAT ON THE DATE OF THE APPLICATION UNDER SECTION 12AA, IT WAS YET TO COMMENCE ITS OPERATION. BUT NEVERTHELESS THE GENUINENESS OF THE OBJECTS OF THE TRUST WERE NOT QUESTIONED BY THE COMMISSIONER. CONSIDERING THE FACT THAT THE CONTINUANCE OF REGISTRATION IS FURTHER A SUBJECT MATT ER OF SCRUTINY BY THE COMMISSIONER AS CONTEMPLATED UNDER SECTION 12AA(3), THE REVENUE WOULD NOT BE JUSTIFIED IN REFUSING THE REGISTRATION AT THE THRESHOLD. [PARA 9] 9 . IN THE INSTANT CASE, WE FIND THAT THE CIT(E) HAS REFUSED REGISTRATION ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THAT ACTIVITIES OF THE ASSESSEE ARE GENUINE AND AS PER THE TRUST DEED , WHEREAS THE CIT(E) HAS NOT RAISED ANY DOUBT OR OBJECTION ABOUT THE CHARITABLE OBJECTS OF THE ASSESSEE SOCIETY, THEREFORE, REGISTRATION U/S. 12AA OF THE ACT CANNOT BE DENIED ON THE GROUND THAT THE GENUINENESS OF THE CHARITABLE ACTIVITIES CANNOT BE HELD TO BE ESTABLISHED IN ABSENCE OF ANY GENUINE CHARITABLE ACTIVITY. AS THE LD. AR BEFORE US PRAYED FOR ONE MORE OPPORTUNITY BEFORE THE CIT(E) . UNDER THE PRESENT FACTS AND CIRCUMSTANCES , WE EARNESTLY FEEL THAT THE ENDS OF JUSTICE OR SUBSTANTIAL JUSTICE WOULD BE MET , IF THE CASE IS RESTORE D TO THE FILE OF THE CIT(E) TO DECIDE THE ISSUE DE NOV O AFTER GIVING FAIR AND ADEQUATE OPPORTUNITY TO THE AS SESSEE. ACCORDINGLY WE RESTORE T HE ISSUE TO THE FILE OF CIT(E) FOR FRESH ADJUDICATION . ITA NO . 2881/17 6 1 0 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON / 01 /201 9 . ( RAM LAL NEGI ) (RAJESH KUM AR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED / 01 /201 9 . . / PRAKASH KUMAR MISHRA , S R.PS. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSISTANT REGISTRAR ) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATI ON 1 DRAFT DICTATED ON 0 3 .01.18 SR.PS /PS 2 DRAFT PLACED BEFORE AUTHOR 0 3 .01.18 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.P S/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH OF ORDER 11 DRAFT DICTATION SHEETS IS ENCLOSED YES 1. / THE APPELLANT - 2. / THE RESPONDENT - 3. ( ) / THE CIT(A), MUMBAI 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//