Rathore Chetri Sabha, Lucknow V. Commissioner of Income Tax (Exemption), Lucknow

ITA 312/LKW/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1999 (ITAT-LUCKNOW)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-08-2015
• Assessment Year: misc
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT SINGH
• Assessee Lawyers: V BHARGVA
• Keywords: Gift; Charitable institution; Opportunity of being heard
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCHES: B LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDI CIAL MEMBER ITA NO: 312/LKW/2015 AY: - RATHORE CHETRI SABHA VS. CI T (EXEMPTIONS) 532/419, ALIGANJ BAJAR, LUCKNOW ALIGANJ, LUCKNOW 226 024. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V, BHARGVA, CA RESPONDENT BY : SHRI AJIT SINGH, DR DATE OF HEARING : 20.8.2015 DATE OF PRONOUNCEMENT : 30.10.2015 O R D E R PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS ASSESSEES APPEAL HAS BEEN FILED AGAINST ORDER DATED 26.3.2015 OF THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS), LUCKNOW PA SSED U/S 12AA (1) (B)(II) OF THE INCOME TAX ACT, 1961. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD FIL ED FORM NO. 10A ON 30 TH SEPTEMBER, 2014 SEEKING GRANT OF REGISTRATION U/S 1 2AA OF THE INCOME TAX ACT, 1961. THE LD. CIT (EXEMPTIONS) WHILE DENYING THE RE GISTRATION HAS DISCUSSED THE ISSUE IN PARAS 3, 4 AND 5 OF HIS ORDER WHICH ARE BE ING REPRODUCED BELOW:- 3. I HAVE PERUSED THE SUBMISSIONS OF THE APPLIC ANT AND ALSO THE FACTS OF CASE. THE APPLICANT SOCIETY WAS CREATED ON 23.05.19 87. THE APPLICANT HAS FILED MEMORANDUM OF ASSOCIATION AND THE INCOME & EX PENDITURE ACCOUNTS AND ITA NO.312/LKW/ 2015 RATHORE CH ETRI SABHA VS. CIT (EXEMPTIONS) 2 BALANCE SHEETS AS ON 31 03 2013 AND 31.03.2014 ALON G WITH THE FORM NO. 10A. THERE ARE VARIOUS OBJECTS OF THE SOCIETY AS ME NTIONED IN THE MEMORANDUM OF ASSOCIATION. FROM PERUSAL OF INCOME & EXPENDITURE ACCOUNT AS ON 31 03.2014, IT IS NOTICED THAT THE APPLICANT HAS SHOWN RECEIPTS OF RS 2,100/- AND RS 990/- UNDER HEADS ADVERTISING INCOME & INTEREST INCOME, RESPECTIVELY. HOWEVER, IN THE BALANCE SHEET AS ON 3 1.03.2014, THE APPLICANT HAS ALSO RECEIPTS OF MARRIAGE REGISTRATION FEES. TH E APPLICANT HAS NEITHER CLAIMED THE INCOME OF RS. 3,80,000/- AS CORPUS FUND NOR MENTIONED ANY REASONS FOR THE SAME. THE INCOME OF RS. 3,80,000/- HAS NOT BEEN SHOWN AS INCOME IN THE INCOME & EXPENDITURE ACCOUNT. THE APP LICANT IS VEHEMENTLY CONTENDED THAT THE APPLICANT IS ORGANIZED THE MARRI AGE CEREMONY AS ITS CHARITABLE ACTIVITIES AND GIVING MARRIAGE GIFTS TO THE BRIDES AND BRIDEGROOMS. THIS RECEIPTS OF FEES OF RS. 3,80,000/- SHOULD HAVE BEEN SHOWN IN THE INCOME & EXPENDITURE ACCOUNT AS ON 31.03.2014. BUT, THE AP PLICANT HAS FAILED TO DO SO. DURING THE YEAR ENDING ON 31.03.2014, THE APPLI CANT HAS INCURRED FOR SOLEMNIZING THE MARRIAGES ONLY. THEREFORE THE ACTIV ITIES OF THE APPLICANT ARE NOT GENUINE. AS PER PROVISIONS OF SECTION 12AA(1) O F THE ACT TWO FACTORS NAMELY THE OBJECTS OF CHARITABLE PURPOSE AND THE GE NUINENESS OF ACTIVITIES HAVE TO BE PROVED BEFORE GRANTING THE REGISTRATION. HOWEVER, THE APPLICANT FAILED TO PROVE THE BOTH. HENCE, THE UNDERSIGNED IS NOT SATISFIED FOR GRANTING OF THE REGISTRATION. 4. ATTENTION IS DRAWN TO THE HONBLE DELHI HIGH COURTS JUDGMENT IN THE CASE OF KIRTI CHANDRA TARAWATI CHARITABLE SOCIETY V S. DIT (EXEMPTION) 232 ITR 11 IN WHICH IT WAS HELD THAT THERE IS NO OBLIGA TION ON A CIT TO GRANT REGISTRATION TO A SOCIETY MERELY BY LOOKING AT THE INSTRUMENT CREATING THE SOCIETY AND SHUTTING HIS EYES TO THE ACTUAL ACTIVIT IES CARRIED OUT BY IT. A SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS CIT 247 ITR 18 (KER.) WHEREIN IT WAS HELD THAT I F A SOCIETY PROPOSED TO CARRY OUT CHARITABLE ACTIVITIES IN FUTURE REGISTRAT ION EVEN U/S 12AA WOULD NOT BE AVAILABLE TO IT. FURTHER, IN THE CASE OF DAWN ED UCATIONAL CHARITABLE TRUST VS. COMMISSIONER OF INCOME TAX, REPORTED IN (2015) 370 ITR 724, THE HON'BLE KERALA HIGH COURT HAS HELD THAT THE COMMISS IONER IS REQUIRED TO LOOK INTO ACTUAL ACTIVITY AND MAIN ACTIVITY OF TRUST. TH E SPECIAL LEAVE PETITION FILED BY THE DAWN EDUCATIONAL CHARITABLE HAS ALSO BEEN DI SMISSED BY THE HON'BLE SUPREME COURT. IN VIEW OF THE ABOVE DECISIONS, I AM UNABLE TO ACCE PT THE APPLICANTS CLAIM. THEREFORE, I DO NOT FIND THE CASE FIT FOR GRANT OF REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961. 5. ACCORDINGLY, THE REGISTRATION SOUGHT BY THE APPL ICANT IS HEREBY REJECTED UNDER SECTION 12AA (1) (B) (II) OF THE INCOME TAX A CT, 1961. 3. LD. AR FOR THE ASSESSEE SUBMITTED THAT TH E LD. CIT(EXEMPTIONS) WAS INCORRECT IN DENYING THE GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT ITA NO.312/LKW/ 2015 RATHORE CH ETRI SABHA VS. CIT (EXEMPTIONS) 3 BECAUSE THE ASSESEES INSTITUTION EXISTS ONLY FOR T HE PURPOSE OF CHARITY AND IT DOES NOT CARRY OUT ANY ACTIVITY WHICH CAN BE CONSIDERED COMMERCIAL IN ANY SENSE OF THE MATTER. HE DREW OUR ATTENTION TO PAGE 71 OF THE PAP ER BOOK FILED BY THE ASSESSEE SOCIETY WHICH SHOWS THAT FROM THE YEAR 2004-2005 TI LL THE YEAR 2014-15, THE SOCIETY HAS SOLEMNISED MARRIAGES OF AS MANY AS 411 COUPLES ON 10 DIFFERENT OCCASIONS. HE ALSO DREW OUR ATTENTION TO THE COPIES OF PHOTOGRAPH S, INVITATION CARDS, NEWSPAPER REPORTS ETC. OF THESE MARRIAGE CEREMONIES. HE REITE RATED THAT THE ASSESSEE SOCIETY SHOULD BE GRANTED REGISTRATION U/S 12AA BECAUSE ALL ITS ACTIVITIES WERE AIMED AT IMPROVING THE LOT OF THE RATHORE CHATRIYA COMMUNITY. HE REFUTED THE ALLEGATION THAT THE ACTIVITIES OF THE ASSESSEE TRUST WERE NOT GENUI NE. 4. LD. DR ON THE OTHER HAND STRONGLY SUPPORTED THE ORDER OF LD. CIT (EXEMPTIONS). 5. WE HAVE GONE THROUGH THE FACTS OF THE CASE AND ALSO THE RIVAL SUBMISSIONS. WE FIND THAT THE LD. CIT (EXEMPTIONS) HAS DENIED TH E GRANT OF REGISTRATION U/S 12AA ON THE GROUND THAT THE FINAL ACCOUNTS OF THE ASSESS EE SOCIETY ON 31 ST MARCH 2014 SHOW THE RECEIPT OF MARRIAGE REGISTRATION FEE OF RS . 3,80,000/- IN THE BALANCE SHEET INSTEAD OF BEING SHOWN IN THE INCOME AND EXPENDITUR E ACCOUNT. HE DREW A NEGATIVE INFERENCE FROM ACCOUNTING TREATMENT AND CONCLUDED T HAT THE ACTIVITIES OF THE ASSESEE WERE NOT GENUINE. HE IS ALSO OF THE VIEW THAT THE A CTUAL ACTIVITIES OF THE SOCIETY COULD NOT BE ADJUDGED FROM THE DOCUMENTS SUBMITTED BEFORE HIM. IN OUR CONSIDERED OPINION THE ASSESSEE SHOULD BE AFFORDED AN OPPORTUN ITY TO EXPLAIN THE DISCREPANCY, IF ANY, IN THE ACCOUNTS ALREADY SUBMITTED. THE ASSESSE E ALSO DESERVES ANOTHER OPPORTUNITY TO EXPLAIN AND PROVE THE GENUINENESS OF ITS ACTIVITIES BEFORE THE LD. CIT ITA NO.312/LKW/ 2015 RATHORE CH ETRI SABHA VS. CIT (EXEMPTIONS) 4 (EXEMPTIONS) AS THE FINDINGS OF THE LD. CIT (EXEMPT IONS) ARE VERY VAGUE ON THIS ISSUE. 6. WE ACCORDINGLY RESTORE THE ISSUE OF GRANT OF REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 FILE TO THE LD. CIT (EXEMPTIONS) FOR FRESH ADJUDICATION AFTER ALLOWING THE ASSESSEE SOCIETY DUE OPPORTUNITY OF BEING HEARD . WE ALSO DIRECT THE ASSESSEE SOCIETY TO EXTEND ALL POSSIBLE COOPERATION FOR AN E ARLY DISPOSAL OF THIS MATTER. 6. ACCORDINGLY THE APPEAL OF THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. SD/- SD/- (A.K. GARODIA) (SUDHANSHU SRIVASTAVA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 30 TH OCTOBER. 2015 VEENA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER DY. REGISTRAR SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 20.10.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 20.10 .2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER ITA NO.312/LKW/ 2015 RATHORE CH ETRI SABHA VS. CIT (EXEMPTIONS) 5 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER