Shri Devlok Tirath Yatra Samiti, Rishikesh V. Income Tax Officer, Dehradun

ITA 3006/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7044 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 09-11-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 26-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Retrospective amendment; Benefit of exemption; Condonation of delay; Cancellation of registration; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 40A(3); 271(1)(b); 139; 143(3); 92; 12AA; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3006/DEL/2016 A.Y. : 2012-13 SHRI DEVLOK TIRATH YATRA SAMITI, 233, SUBHASH NAGAR, BANKHANDI, RISHIKESH, UTTARAKHAND (PAN: AAHTS4866P) VS. INCOME TAX OFFICER (EXEMPTIONS), AAYAKAR BHAWAN, DEHRADUN, (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SOMIL AGARWAL, ADV. DEPARTMENT BY : SH. ANIL KUMAR SHARMA, SR. DR ORDER ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNE D ORDER DATED 24.2.2016 PASSED BY THE LD. CIT(A), DEHRADUN ON THE FOLLOWING GROUNDS:- 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE RE TURN OF INCOME WAS FILED ON 28.9.2012 DECLARING NIL INCOME AS THE EXEMPTION U/S. 12AA WAS ALLOWED TO THE APPELLANT SO CIETY VIDE ORDER DATED 10.10.2008, THE SAID EXEMPTION WAS WITHDRAWN VIDE ORDER DATED 26.3.2014 TO DISALLOW TH E CLAIM WITH RETROSPECTIVE EFFECT IS UNJUSTIFIED AND BAD A T LAW. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, WITHD RAWAL OF EXEMPTION AFTER EXPIRY OF TWO YEARS OF THE ACCOUNTI NG PERIOD IS UNWARRANTED AND UNCALLED FOR. 2 3. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE IT O AND CIT(A) HAS NOT BROUGHT ON RECORD ANY NEW FRESH FIND ING FOR NOT ACCEPTING THE EXEMPTION U/S. 11 OF THE I.T. ACT . 4. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE AD DITION OF RS. 6,34,440/- IS UNFAIR AND ERRONEOUS. 5. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, THE SO CIETY BE GRANTED EXEMPTION U/S. 11 OF THE I.T. ACT. 6. THE DUE RELIEF IN LAW MAY PLEASE BE GRANTED AND RET URNED INCOME MAY PLEASE BE ACCEPTED. 7. THAT IN FACT AND CIRCUMSTANCE OF THE CASE, APPELLAN T BE PERMITTED TO ADD OR DELETE ANY GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE SOCIETY REGISTERED UNDER THE SOCIETY REGISTRATION ACT WITH THE REGIST RAR OF SOCIETIES, UTTARAKHAND VIDE REGISTRATION NO. 11/2008-2009 DATE D 11.3.2008 FOR A PERIOD UPTO 3.4.2013. THE ASSESSEE WAS REGISTERED U/S. 12AA WITH THE CIT, DEHRADUN VIDE ORDER DATED 10.10.2008 WHICH HAS SINCE BEEN WITHDRAWN BY THE LD. CIT, DEHRADUN VIDE HER ORDER D ATED 26.3.2013. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 WAS F ILED BY THE ASSESSEE ON 28.9.2012 DECLARING NIL INCOME. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, FROM PERUSAL OF THE SMRITIPATRA FILED BY THE ASSESSEE, THE AO OBSERVED THAT ASSESSEE DOES NOT HAVE A REMOTEST SE MBLANCE OF A CHARITABLE SOCIETY, THERE IS NO SCOPE OF SUCH ACTIV ITIES. THEREFORE, HE ASKED THE ASSESSEE TO JUSTIFY HIS CLAIM. IN REPONSE TO THE SAME, ASSESSEE SUBMITTED HIS REPLY, WHICH WAS CONSIDERED BY THE AO , BUT AO DID NOT FIND 3 THE SAME SATISFACTORY AND CONVINCING, HENCE, HE HEL D THAT THE SOCIETY IS NOT WORKING AS PER AIMS AND OBJECTS AS MENTIONED I N SMRITI PATRA AND NOT COVERED AS EXEMPTION U/S. 11 OF THE I.T. ACT AN D WAS SQUARELY HIT BY THE AMENDED PROVISIONS OF SECTION 2(15) OF THE I.T. ACT, 1961. ACCORDINGLY, AO VIDE HIS ORDER DATED 13.11.2014 PA SSED U/S. 143(3) OF THE I.T. ACT, 1961 ASSESSED THE INCOME OF THE ASSE SSEE AT RS. 6,34,440/- 3. AGAINST THE ASSESSMENT ORDER, THE ASSEESSEE PRE FERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 24.2.2016 HAS DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT THERE IS A MATERIAL CHANGE IN THE SITUATION SINCE THE PASSING OF THE APPEAL ORDER IN AY 2009-10 BY HIS PREDECESSOR WHICH HAS SUBSEQUENTL Y BEING AFFIRMED BY THE ITAT VIDE ITS ORDER DATED 29.10.2014. THIS MAT ERIAL DIFFERENCE IS THAT THE CIT, DEHRADUN VIDE HER ORDER DATED 26.3.2013 HA S WITHDRAWN THE REGISTRATION GRANTED TO THE ASSESSEE U/S. 12AA OF T HE I.T. ACT, 1961. WHILE WITHDRAWING THE REGISTRATION, THE CIT HAS REC ORDED A FINDING THAT THE ASSESSEE IS OPERATING LIKE A COMMERCIAL TOUR OP ERATOR AND THERE IS NO ELEMENT OF CHARITABLE ACTIVITY INVOLVED IN THE ASSE SSEE ACTIVITIES. ACCORDINGLY, SINCE THE REGISTRATION U/S. 12AA ISSUE D VIDE C.NO. 40/12(1)/REGISTRATION/HARIDWAR/2008-09 / TECH. 1132 1-324 DATED 8.10.2008 STANDS WITHDRAWN BY THE CIT, THE ASSESSEE CANNOT BE GRANTED THE BENEFITS OF EXEMPTION U/S. 11 OF THE I.T. ACT, 1961. IN THE CIRCUMSTANCES, THE SURPLUS IN ITS ACCOUNTS HAS TO B E TAXED AS BUSINESS PROFITS. THE ADDITION OF RS. 6,01,755/- MADE ON THI S ACCOUNT WAS THEREFORE, CONFIRMED VIDE LD. CIT(A)S ORDER DATED 24.2.2016 AND ON THE 4 ISSUE OF DISALLOWANCE OF EXPENSES ON ACCOUNT OF VAL UATION OF SECTION 40A(3) AMOUNTING TO RS. 32,685/-, LD. CIT(A) HAS OB SERVED THAT THE ASSESSEE HAS NOT FILED ANY SUBMISSION EITHER BEFORE THE AO OR BEFORE THE UNDERSIGNED TO EXPLAIN THE REASONS FOR THE INFRINGE MENT OF SECTION 40A(3), HENCE, LD. CIT(A) HAS CONFIRMED THIS ADDITION OF RS . 32685/- AND DISMISS THE GROUND. 4. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE HAS STATED THAT THE ITAT, DELHI BENCH VIDE ITS ORDER DATED 25.10.20 16 IN ASSESSEES OWN IN ITA NO. 2425/DEL/2013 HAS RESTORED THE REGISTRAT ION U/S. 12AA OF THE I.T. ACT, 1961, HENCE, THE ASSESSEE IS ELIGIBLE FOR BENEFIT OF EXEMPTION U/S. 11 OF THE I.T. ACT, 1961 AND ADDITION MADE ON THIS ACCOUNT OF RS. 6,01,755/- NEEDS TO BE DELETED. FOR READY REFERENCE HE FILED THE COPY OF THE TRIBUNALS ORDER DATED 25.10.2016. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS ESPECIALLY. FROM THE RECORDS, I FIND THAT THERE REGISTRY HAS IS SUED DEFECT NOTICE POINTING OUT THAT THE APPEAL IS PRIMA FACIE TIME BA RRED BY 12 DAYS. IN THIS BEHALF THE ASSESSEE HAS FILED THE APPLICATION DATED 23.5.2016 FOR CONDONATION OF DELAY WHICH IS PLACED ON RECORD. I HAVE PERUSED THE APPLICATION FOR CONDONATION OF DELAY AND OF THE VIE W THAT THE REASONS MENTIONED IN THE APPLICATION FOR CONDONATION OF DEL AY IS QUITE GENUINE, HENCE, THE DELAY IS CONDONED. ON MERITS, I FIND THA T ADDITION OF RS. 5 6,01,755/- IS CONFIRMED BY THE LD. CIT(A) SOLELY ON THE BASIS OF WITHDRAWAL OF REGISTRATION U/S. 12AA VIDE ORDER DAT ED 8.10.2008 PASSED BY THE CIT, DEHRADUN, AS A RESULT THE ASSESSEE CANN OT BE GRANTED THE BENEFITS OF EXEMPTION U/S. 11 OF THE I.T. ACT AND ADDITION IN DISPUTE WAS CONFIRMED. HOWEVER, ON GOING THROUGH THE COPY OF TH E ORDER OF THE TRIBUNAL DATED 25.10.2016 IN ASSESSEES OWN CASE PA SSED IN ITA NO. 2425/DEL/2013 WHEREIN, THE TRIBUNAL HAS SET ASID E THE ORDER OF THE LD. CIT AND RESTORED THE REGISTRATION U/S. 12AA OF THE I.T. ACT. THE RELEVANT PARA NO. 7 TO 8 AT PAGE NO. 7 TO 10 OF THE TRIBUNAL S ORDER DATED 25.10.2016 ARE REPRODUCED HEREUNDER:- '7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT ONLY EFFECTIVE ISSUE IN THE P RESENT APPEAL IS AGAINST THE CANCELLATION OF REGISTRATION BY THE CIT BY INVOKING THE POWERS U/S. 12AA(3) ON THE GROUND THAT ASSESSEES ACTIVITY OF ORGANIZING TOU RS TO VARIOUS RELIGIOUS PLACES WAS ON COMMERCIAL LINES. WE NOTE THAT THE REGISTRATION U/S. 12AA WAS GRANTED BY CIT ON 10.10.2008 ON THE BASIS OF THE OBJECTS REPRODUCE D AT PAGE NO. 1 OF THE IMPUGNED ORDER ACCORDING TO WHICH ASSESSEE WAS TO CONDUCT PILGRIMAGE TOURS TO ELDERLY PEOPLE FOR SPREAD OF RELIGIOUS AND CHARITABLE FEEL INGS AND TEACHINGS, RUNNING MEDICAL HOSPITAL ETC. HOWEV ER, THE ASSESSEE WAS CARRYING OUT THE ACTIVITIES AS PER THE TERMS OF THE CHARITABLE OBJECTS. IT WAS FURTHER NOT ED 6 THAT WHEN REGISTRATION WAS GRANTED U/S. 12AA TO THE ASSESSEE ON THE BASIS OF OBJECTS AND ACTIVITIES AS MENTIONED AT PAGE NO. 1 OF THE IMPUGNED ORDER AND THESE VERY OBJECTS AND ACTIVITIES ARE BEING CARRIED OUT BY THE ASSESSEE, THEREFORE, REGISTRATION CANNOT BE CANCELLED. WE FURTHER NOTE THAT THE AO IN HIS ASSESSMENT ORDER DATED 22.1.2016 RELEVANT FOR THE A Y 2013-14 PASSED U/S. 143(3) OF THE I.T. ACT, 1961 VI DE PARA NO. 1 HAS OBSERVED THAT THE ASSESSEE IS ENGAGE D IN THE ACTIVITY OF ORGANIZING TOURS TO RELIGIOUS AND HISTORICAL PLACES IN INDIA FOR SENIOR CITIZENS. THE SOCIETY IS PURELY RELIGIOUS AND WORKS FOR THE CHARITABLE PURPOSES. HE FURTHER OBSERVED THAT IF THE SOCIETY WOULD HAVE BEEN CARRYING ON THE BUSINESS ACTIVITY FOR THE MOTIVE OF PROFIT THEN IT WOULD HAVE CONDUCTED A TOU R NOT TO THE RELIGIOUS PLACE BUT TO THE PLACES OF FUN AND ENJOYMENT NOT THE RELIGIOUS TEMPLES BUT TO THE CLUB AND PUBS, NOT IN A SECOND CLASS THIRD SLEEPER BUT LUXUR Y AC COACHES WOULD HAVE BEEN HIRED AND INSTEAD OF GIVING THE KNOWLEDGE OF INCREDIBLE INDIA IT WOULD HAVE GI VEN THE LECTURES REGARDING DANCES AND BEACHES. WE FIND THAT IT IS A SETTLED LAW WHEN THE REGISTRATION WAS GRAN TED U/S. 12AA ON THE BASIS OF OBJECTS AND ACTIVITIES (MENTIONED AT PAGE NO. 1 OF THE IMPUGNED ORDER) AND 7 THESE VERY OBJECTS AND ACTIVITIES ARE BEING CARRIE D OUT BY THE ASSESSEE, REGISTRATION CANNOT BE CANCELLED AS HELD BY THE COORDINATE BENCH DECISION IN THE CASE O F SHARDA EDUCATIONAL TRUST VS. CIT (CENTRAL) 147 ITD 271, 107 DTR 201 (AGRA TRIB) DATED 24.5.2013. 7.1 WE FURTHER FIND THAT REGISTRATION CANNOT BE CA NCELLED BY RE-EXAMINATION OF THE OBJECTS ON THE BASIS OF WHI CH REGISTRATION WAS ORIGINALLY GRANTED AND CIT DOES N OT HAVE POWER OF REVIEW AS HELD IN CHATURVEDI HAR PRAS AD EDUCATIONAL SOCIETY VS. CIT 134 TTJ 781 (LUCKNOW) DATED 30.8.2010. 7.2 WE ALSO NOTE THAT UNDER SECTION 12AA(3), THE REGISTRATION CAN BE CANCELLED ONLY ON TWO GROUNDS I .E. IF THE ACTIVITIES ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS. HOWEVER, IN ASSESSEES CASE ACTIVITY OF CONDUCTING PILGRIMAGE TOURS IS IN ACCORDANCE WITH THE OBJECTS AND ACTIVITIES AR E NOT IN-GENUINE AND THEREFORE HOW COULD THE REGISTRATION BE CANCELLED AND MORE SO WHEN THERE IS NO SUCH FINDIN G AT ALL IN THE IMPUGNED ORDER TO THE ABOVE EFFECT AND O NLY OBJECTION OF THE LD. CIT WAS THAT THE ASSESSEE WAS PURSUING THE SAID OBJECTS ON COMMERCIAL LINE A GROUND WHICH IS NOT PERMISSIBLE GROUND U/S. 12AA(3) AS 8 HELD IN CIT VS. SARVODAYA ILAKKIYA PANNAI 343 ITR 3 00 (MADRAS HIGH COURT). 7.3 WE FURTHER FIND THAT LD. CIT OBSERVED THAT THE ASSESSEE IS CHARGING A FEE FOR THE TOUR AND HENCE CAME TO CONCLUSION THAT THE ASSESSEE BASICALLY A TOUR OPERA TOR. HOWEVER, IN AUGUST, 2008 WHEN THE JOURNEY WAS ORGANIZED OUT OF 294 PEOPLE WHO UNDERTOOK THE JOURNEY, 243 PEOPLE PAID AND THE REMAINING 51 WERE TAKEN FREE OF COST. HENCE, THERE IS NO PROFIT MOTI VE. 7.4. WE FURTHER FIND THAT SECOND OBJECTION OF THE LD. CIT WAS RELATING TO CHARGING OF FEE FROM THE PASSENGERS OF TIRTH YATRAS HOWEVER, ON RECEIVING OF A TOKEN A MOUNT OF RS. 1000/- ANY PERSON FROM GENERAL PUBLIC CAN EN ROLL FOR THE YATRA. THE SAID PERSON BECOMES A TEMPORARY MEMBER OF THE SOCIETY FOR THE PERIOD OF THE YATRA. THE TOTAL MONEY CHARGED FROM THE INDIVIDUALS FOR THE Y ATRA IS RS. 21,500/- FOR A PERIOD OF 31 DAYS, WHICH COME S TO LESS THAT RS. 700/- DAILY. THIS INCLUDES PROVISI ON OF TRAIN TICKETS, BUS HIRE, LODGING CHARGES, REFRESHME NTS AND THREE FRESHLY COOKED MEALS DAILY. HENCE, IT IS ESTABLISHED THAT CHARGING SUCH MINIMAL AMOUNT COULD NEVER BE COMPARED TO AN ACTIVITY RUN WITH PROFIT MO TIVE. 9 7.5 WE FURTHER NOTE THAT THE LD. CIT CANCELLED THE REGISTRATION WITHOUT GIVING THE DATE FROM WHICH CANCELLATION OF REGISTRATION WOULD TAKE PLACE AND THEREFORE IN THE ABSENCE OF ANY DATE WHICH REGISTRA TION WOULD BE CANCELLED, THUS, THE CITS IMPUGNED ORDER CANNOT BE SUSTAINED, AS HELD IN THE CASE OF SHARDA EDUCATIONAL TRUST VS. CIT (CENTRAL) 147 ITD 271 (AG RA TRIB) DATED 24.5.2013. 8. IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS A ND RESPECTFULLY FOLLOWING THE PRECEDENT, WE ARE OF TH E CONSIDERED VIEW THAT THE ORDER OF THE LD. CIT IN CANCELLING THE REGISTRATION IS NOT IN ACCORDANCE WI TH LAW. WE THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE L D. CIT AND RESTORE THE REGISTRATION U/S. 12AA OF THE I .T. ACT. 7. AFTER PERUSING THE TRIBUNALS ORDER DATED 25.10 .2016, AS AFORESAID, I AM OF THE CONSIDERED VIEW THAT SINCE THE TRIBUNA L HAS SET ASIDE THE ORDER DATED 26.3.2013 OF THE LD. CIT AND RESTORED T HE REGISTRATION U/S. 12AA OF THE I.T. ACT, 1961, HENCE, THE ADDITION IN DISPUTE IS NOT SUSTAINABLE IN THE EYES OF LAW, THEREFORE, THE ADD ITION CONFIRMED BY THE LD. CIT(A) OF RS. 6,01,755/- STANDS DELETED. 10 8. WITH REGARD TO DISALLOWANCE OF EXPENSES ON ACCOU NT OF VALUATION OF SECTION 40A(3) AMOUNTING TO RS. 32,685/- IS CONCERN ED, I FIND THAT LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY SUBMISSION EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A) TO EXPLAIN T HE REASONS FOR THE INFRINGEMENT OF SECTION 40A(3), HENCE, THE APPEAL O N THIS GROUND WAS DISMISSED. IN MY CONSIDERED OPINION, THIS GROUND N EEDS TO BE EXAMINED BY THE AO AFRESH, BECAUSE NO DOCUMENT WAS FILED BEF ORE HIM. ACCORDINGLY, THE AO IS DIRECTED TO DECIDE THE ISSUE IN DISPUTE AFRESH UNDER THE LAW, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO PRODUCE ITS SUBMIS SIONS, EVIDENCES/ DOCUMENTS IN SUPPORT OF ITS CLAIM BEFORE THE AO. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04/01/2017 . SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 04/01/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 11