Sh. Hanuman Sewa Samiti, Bathinda V. The Commissioner of Income Tax (Exemptions), Chandigarh

ITA 322/ASR/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3752 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-10-2016
• Assessment Year: misc
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 322(ASR)/2015 ASSESSMENT YEAR: .......... SRI HANUMAN SEWA SAMITY, #30151/1 GURUKUL ROAD, PARAS RAM NAGAR, BATHINDA. PAN:AALAS2656L VS. CIT(EXEMPTION) CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA (ADV.) RESPONDENT BY: SH. RAHUL DHAWAN (DR) DATE OF HEARING: 25.10.2016 DATE OF PRONOU NCEMENT: 21.12.2016 ORDER PER N. K. CHOUDHRY (JM): THE INSTANT APPEAL HAS BEEN FILED BY THE ASSESSEE F EELING AGGRIEVED AGAINST THE ORDER DATED 27 TH APRIL, 2015 PASSED BY THE LD. CIT(EXEMPTION) WHILE REFUSING REGISTRATION U/S. 12AA OF THE ACT OF THE INCOME TAX ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. (I) THAT THE LEARNED COMMISSIONER OF INCOME TAX (E XEMPTIONS), CHANDIGARH ERRED ON FACTS AND LAW IN PASSING ORDER U/S 12AA REJECTING THE APPLICATION FOR REGISTRATION WITHOUT GIVING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BECAUSE THE APPLICATION FOR REGISTRATION WAS FILED ONAND THE FIRST NOTICE FOR H EARING FIXED FOR 24.03.2015 WAS ISSUED BY DEPUTY DIRECTOR (SYSTEMS) AND BY THE ITO (EXEMPTIONS) ON 24/30.03.2015. THE ORDER REFUSI NG THE GRANT OF REGISTRATION HAS BEEN PASSED ON 27.04.2015 DESPITE THE FACT THAT THE INFORMATION AS REQUIRED ALONGWITH APPLICATION W AS DULY FILED. (II) THAT THE LD. COMMISSIONER OF INCOME TAX (EXEMP TIONS), CHANDIGARH ERRED ON FACTS AND LAW IN REJECTING THE APPLICATION OF REGISTRATION U/S 12A BY RECORDING THE FINDING THAT THE HEARING OF THE CASE WAS FIXED FOR 24.03/30.03.2015 BUT NOBODY ATTE NDED ON THE DATE OF HEARING. BUT THIS NOTICE DID NOT MENTION TH AT ANY INFORMATION WAS REQUIRED FROM THE ASSESSEE. THE FACT IS THAT TH E CASE WAS FIXED FOR HEARING BY THE DEPUTY DIRECTOR (SYSTEMS) CHANDI GARH AND THE ITO (EXEMPTIONS) ALSO ISSUED LETTER DATED 24.03/30. 03.2015 TO FILE THE INFORMATION AND THE SAME WAS FILED ON 27.04.201 5. NO DATE OF COMPLIANCE WAS MENTIONED IN THE LETTER ISSUED BY TH E ITO I TA NO.322(ASR)/2015 2 (EXEMPTIONS). THUS THE ASSESSEE WAS BEING ASKED BY TWO DIFFERENT AUTHORITIES AT AMRITSAR AND CHANDIGARH TO APPEAR BE FORE THEM WHICH RESULTED IN CONFUSION AND THE REASON FOR NON ATTENDANCE BEFORE THE DEPUTY DIRECTOR (SYSTEMS). (III.) THAT THE LD. COMMISSIONER OF INCOME TAX (EXE MPTIONS), CHANDIGARH ERRED ON FACTS AND LAW IN REJECTING THE APPLICATION OF REGISTRATION U/S 12A BY RECORDING THE FINDING THAT THE APPLICATION FOR REGISTRATION U/S 12AA HAS BEEN REJECTED BECAUSE ACC ORDING TO THE CIT (EXEMPTIONS) THE ITO (EXEMPTIONS) HAS NOT RECOM MENDED THE GRANT OF REGISTRATION WHICH PROVES THAT THE CIT (EX EMPTIONS) HAS NOT SATISFIED HIMSELF BEFORE REFUSING REGISTRATION ABOU T THE OBJECTS OF THE INSTITUTIONS AND GENUINENESS OF ITS ACTIVITIES AND THE SATISFACTION HAS BEEN BORROWED FROM ITO (EXEMPTIONS). SECTION 12 AA(1)(B) PROVIDES THAT THE CIT SHALL PASS THE ORDER IN WRITI NG REFUSING TO REGISTER THE INSTITUTION IF HE IS NOT SATISFIED ABO UT THE OBJECTS OF THE INSTITUTION AND GENUINENESS OF ITS ACTIVITIES BUT I N THE PRESENT CASE THE SATISFACTION HAS BEEN BORROWED BY THE CIT FROM THE ITO WHICH IS AGAINST THE PROVISIONS OF LAW. (IV) THAT THE LD. COMMISSIONER OF INCOME TAX (EXEMP TIONS), CHANDIGARH ERRED ON FACTS AND LAW IN REJECTING THE APPLICATION OF REGISTRATION U/S 12A BY RECORDING THE FINDING THAT THERE IS NO DISSOLUTION CLAUSE IN THE MEMORANDUM OF TRUST. THE ABSENCE OF DISSOLUTION CLAUSE IN THE MEMORANDUM OF THE INSTITU TION IS ONLY A DEFECT WHICH COULD BE CURED RECTIFIED FOR WHICH NO OPPORTUNITY WAS PROVIDED TO THE ASSESSEE. HENCE THE ORDER PASSED U/S 12AA REFUSING REGISTRAT ION DATED 27.04.2015 IS LIABLE TO BE QUASHED AND THE CIT MAY KINDLY BE DIRECTED TO ALLOW REGISTRATION U/S 12A. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE HAS FILED AN APPLICATION U/S 12A OF THE ACT FOR REGISTRATION OF THE SOCIETY UNDER THE INCOME TAX ACT. THE ASSESSEE HAS ALSO FILED MEMORAN DUM/ARTICLE OF ASSOCIATION AND AUDIT REPORTS. ON CONSIDERATION OF THE APPLICATION A REPORT OF ACTIVITIES OF THE TRUST WAS ALSO CALLED F OR FROM THE ITO (EXEMPTION), AMRITSAR, WHO DID NOT RECOMMEND THE CA SE OF THE ASSESSEE FOR REGISTRATION U/S 12AA OF THE ACT. THE ASSESSEE ALSO DID NOT ATTEND THE DATE OF HEARING I.E., 24 TH MARCH, 2015 IN THE OFFICE OF THE LD. CIT(EXEMPTION) AND THEREFORE, HAVING NO OPTION, THE LD. CIT(EXEMPTION) I TA NO.322(ASR)/2015 3 PROCEEDED IN THE MATTER IN THE ABSENCE OF THE ASSES SEE ON THE BASIS OF INFORMATION AVAILABLE ON THE RECORDS ONLY. THE LD. CIT(A) DENIED THE REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE TRU ST ON THE GROUND THAT NO DETAILS OF CHARITY ACTIVITY AVAILABLE ON RECORD FOR THE ASST. YEAR: 2012- 13, 2013-14 AND 2014-15 WHICH CAN PROVE THAT ANY CH ARITABLE ACTIVITY U/S 2(15) HAS BEEN CARRIED OUT BY THE TRUST DURING THE LAST THREE YEARS. EVEN OTHERWISE, THE LD. CIT(A) DO NOT FIND ANY DISS OLUTION CLAUSE IN THE MEMORANDUM OF THE TRUST AND DECLINING THE REGISTRAT ION ALSO RELIED UPON THE REPORT OF THE ITO (EXEMPTION), AMRITSAR. CRUX O F THE ORDER PASSED BY THE LD. CIT(EXEMPTION) IS REPRODUCED HEREIN BELOW F OR THE SAKE OF CONVENIENCE AND BREVITY. ORDER U/S 12AA OF THE I.T.ACT, 1961 AN APPLICATION U/S 12A WAS FILED BY THE APPLICANT ON 29.10.2014 BEFORE THE COMMISSIONER OF INCOME TAX, BATHINDA WHI CH WAS TRANSFERRED TO THIS OFFICE DUE TO CHANGE IN JURISDI CTION. 2. IN ORDER TO ACCORD AN OPPORTUNITY OF PERSONA L HEARING, THE DATE WAS FIXED FOR 24.03.2015 IN THIS OFFICE. NONE ATTEN DED ON THE SAID DATE AND AT THE APPOINTED TIME. IT APPEARS THAT THE ASSESSEE IS NO MORE INTERESTED TO PURSUE THE MATTER. I HAVE THUS B EEN LEFT WITH NO OPTION BUT TO PROCEED IN THE MATTER ON THE BASIS, O F INFORMATION AVAILABLE ON RECORDS. 3. THERE IS NO ACTIVITY LIST AVAILABLE ON THE RECOR D FOR-AY-2012- 13, 2013-14 AND 2014-15 WHICH CAN PROVE THAT ANY CH ARITABLE ACTIVITY U/S 2(15) HAS BEEN CARRIED OUT BY THE TRUS T DURING THE LAST THREE YEARS. A REPORT ON ACTIVITIES OF THE TRUST WA S ALSO CALLED FOR FROM THE ITO(EXEMPTIONS), AMRITSAR WHO IN TURN HAS ALSO NOT RECOMMENDED THE CASE FOR GRANT OF REGISTRATION U/S 12 AA OF THE I. T. ACT, 1961. 4. THERE IS NO DISSOLUTION CLAUSE IN THE MEMORAN DUM OF THE TRUST. AFTER GOING THROUGH ALL THE FACTS CITED ABOVE, I AM OF THE FIRM VIEW THAT THE TRUST IS NOT INVOLVED IN ANY CHARITABLE AC TIVITY, THE REGISTRATION U/S 12AA OF THE ACT IS THUS DENIED TO THE TRUST. I TA NO.322(ASR)/2015 4 4. FEELING AGGRIEVED BY THE SAID ORDER PASSED BY THE LD. CIT(EXEMPTION), THE ASSESSEE PREFERRED THE INSTANT APPEAL ON THE GR OUNDS MENTIONED IN PARA NO.2 OF THE APPEAL. THE ASSESSEE ALSO PREFERR ED TO FILE WRITTEN SUBMISSIONS AND DURING THE COURSE OF HEARING SUBMIT TED THAT THE SOCIETY WAS CREATED ON 31.01.2007 BUT STARTED ITS ACTIVITIE S RELATING TO MEDICAL ASSISTANT, CHARITY & OTHER PUBLIC WELFARE ACTIVITIE S DURING THE YEAR 2014- 15. INITIALLY SOCIETY WAS STARTED BY SOME MEMBERS & BY VERY LESS NUMBER OF VOLUNTEERS, BUT WITH THE PASSAGE OF TIME NUMBER OF VOLUNTEERS JOINING WITH SOCIETY INCREASED IN NUMBER OF TIME. THAT DONA TION OF SOCIETY ALSO STARTS INCREASING AND LOTS OF PEOPLE STARTED JOININ G THE SOCIETY DURING THIS PERIOD. HENCE, INCREASING IN DONATION OF SOCIETY LE ADS TO FILLING APPLICATION U/S 12AA OF THE INCOME TAX ACT, 1961. I N VIEW OF ABOVE SUBMISSIONS IT IS HUMBLY REQUESTED TO YOUR GOOD SEL F TO KINDLY CONDONE THE DELAY IN SUBMITTING APPLICATION. COPIES OF ITR-V FOR THE A.Y. 2013-14 & A.Y. 2014-15 ARE ATTACHED. DETAIL OF MEMBERS HAVING PAN CARD WITH THEIR RESPEC TIVE DESIGNATION IN SOCIETY IS MENTIONED BELOW:- SUBHASH CHAND S/O SH. HARI CHAND VICE PRESID ENT AJWPC6882B SOHAN LAI S/O BANARSI DASS PRE SIDENT ABJPL2242C SUKHWINDER SINGH S/O SH. KISHAN SINGH JOINT SEE CNWPS9383R TARSEM KUMAR S/O SH. MADAN LAL MEMBER APPPK8468L RAMAN KUMAR S/O SH. NAND KISHORE MEMBER AHFPK4769E DETAIL OF ALL MOVABLE & IMMOVABLE FIXED ASSETS IS PART OF BALANCE SHEET. THERE ARE NO OTHER MOVABLE OR IMMOVABLE ASSE TS APART FROM ASSETS INCORPORATE IN BALANCE SHEET. I TA NO.322(ASR)/2015 5 SOCIETY IS HAVING ITS OFFICE IN THE PREMISES SH. SOHAN MAHESHWARY. JUST ONE ROOM IS USED BY SOCIETY AS ITS OFFICE & NO C FROM LANDLORD IS ATTACHED. COMPLETE COPY OF RELEVANT AUDIT REPORT FOR THE F.Y. 2013-14 IS ATTACHED. THAT MAJOR PORTION OF DONATION IS RECEIVED BY SOCIE TY COLLECTED BY ITS VOLUNTEERS FROM PEOPLE AROUND BY GOING DOOR TO DOOR CAMPAIGN. THAT MEMBERS COLLECTION RELATES TO SUCH DONATION & DETA IL OF SAME IS ATTACHED. SOCIETY HAD GIVEN AMBULANCE SERVICES TO POOR & NEED Y PEOPLE, HAD GIVEN DONATION TO POOR GIRLS FOR MARRIAGE, MEDICAL AID TO NEEDED PEOPLE, TAKEN POOR PEOPLE TO HOLY PILGRIMS, PROVIDED DEAD B ODY FRIDGE, WATER IN SUMMER AT PUBLIC PLACES, SHOE RACKS IN HOLY FUNCTIO NS, CREMATED UNCLAIMED DEAD BODIES AND ALSO PROVIDED BLANKETS TO POOR IN WINTER. DOCUMENTARY EVIDENCE OF THE ACTIVITIES WITH PHOTOGR APHS ARE PROVIDED FOR YOUR KIND VERIFICATION. IT WAS ALSO ARGUED BY THE LD. AR THAT AT THE TIME O F REGISTRATION U/S 12A OF THE ACT, THE CONCERNED AUTHORITY HAS TO TAKE UNDER CONSIDERATION THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GEN UINENESS OF ITS ACTIVITY AND TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITY TRUST OR INSTITUTION, CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AND MAY ALSO MADE SUCH ENQUIRY AS HE TH INKS NECESSARY IN THIS BEHALF. FROM THE ORDER PASSED BY THE LD. CIT(E XEMPTION) IT REFLECTS THAT THE CIT(EXEMPTION) HAS PASSED THE ORDER ON THE BORROWED I TA NO.322(ASR)/2015 6 SATISFACTION OF THE ITO(EXEMPTION) AND EVEN OTHERWI SE, SEC.14 OF THE SOCIETY REGISTRATION ACT, SPEAKS ABOUT THE CONSEQUE NCES OF THE DISSOLUTION U/S. 14. FURTHER, IT WAS SUBMITTED BY T HE LD. AR THAT DISSOLUTION CLAUSE IS NOT MANDATORY AND ITS CURABLE DEFECTS ONLY WHICH COULD HAVE BEEN CURED AFTER REGISTRATION ITSELF. 5. ON THE OTHER HAND, LD. DR OPPOSED SUBMISSION OF THE LD. AR AND SUBMITTED THAT THE LD. CIT(EXEMPTION) HAD GIVEN PRO PER OPPORTUNITY TO THE ASSESSEE SOCIETY BEFORE REJECTING THE APPLICATI ON AND ASSESSEE FAILED TO APPEAR AND TO PARTICIPATE IN THE PROCEEDINGS BEF ORE LD. CIT(EXEMPTION) WITHOUT ANY REASON AND EVEN OTHERWISE FROM THE LETT ER DATED 12.02.2015 ISSUED BY INCOME TAX OFFICER(EXEMPTION), IT CLEARLY REFLECTS THAT THE ASSESSEE WAS SUPPOSED TO APPEAR ON 12.02.2015 AT AM RITSAR AND FROM NOTICE DATED 12.03.2015, THE ASSESSEE WAS SUPPOSED TO APPEAR AT CHANDIGARH ON 24 TH MARCH, 2015 AND THERE IS NO CLASH OF DATES. EVEN OTHERWISE IT IS AN UNDISPUTED FACT THERE IS NO DISS OLUTION CLAUSE IS INCORPORATED IN THE MEMORANDUM OF ASSOCIATION. IT W AS FURTHER SUBMITTED THAT EVEN TILL TODAY, THE ASSESSEE HAS FA ILED TO RECTIFY ITS MISTAKE BY ADDING THE DISSOLUTION CLAUSE IN THE MEM ORANDUM/ARTICLE OF ASSOCIATION AND FAILED TO FILE ANY DOCUMENT BY WHIC H IT CAN BE PROVED THAT ANY SOCIAL, RELIGIOUS, OR EDUCATIONAL ACTIVITI ES HAVE BEEN CARRIED OUT BY THE ASSESSEE. THEREFORE, THE LD. CIT(EXEMPTION) WAS CORRECT IN DECLINING THE REGISTRATION TO THE ASSESSEE SOCIETY. I TA NO.322(ASR)/2015 7 6. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANC ES OF THE CASE ALSO CONSIDERED THE DOCUMENT AS WELL AS RIVAL SUBMISSION S OF THE PARTIES. IT IS AN UNDISPUTED FACT AND NOT DENIED BY THE LD. AR THA T THERE IS NO DISSOLUTION CLAUSE IN THE MEMORANDUM /ARTICLE OF AS SOCIATION. FROM THE DOCUMENTS, IT IS NOT CLARIFIED AS WHAT ACTIVITIES H AVE BEEN CARRIED OUT BY THE ASSESSEE SOCIETY AND EVEN OTHERWISE NO PLAUSIBL E REASON HAS BEEN GIVEN FOR NON APPEARANCE BEFORE THE LD. CIT(EXEMPTI ON) AND IN THE ABSENCE OF PROPER DOCUMENTS, THE LD. CIT(EXEMPTION) WAS CONSTRAINED TO DECIDE THE APPLICATION ON THE BASIS OF MATERIAL AVA ILABLE IN THE FILE AS WELL AS REPORT OF THE ITO(EXEMPTION). HOWEVER, CONSIDERI NG THE WELL SETTLED LAW OF THE HIGHER COURTS AS THE REVENUE AUTHORITIES ARE SUPPOSED TO CONSIDER THE OBJECTS AND GENUINENESS OF THE ACTIVIT IES OF THE TRUST WHILE DECIDING THE APPLICATION U/S 12AA OF THE ACT. AS IN THE INSTANT CASE, THE LD. CIT(EXEMPTION) TRIED TO SATISFY HIMSELF ABOUT T HE GENUINENESS OF THE ACTIVITIES OF THE TRUST AND ALSO MADE ENQUIRIES, HO WEVER, IN THE ABSENCE OF THE ASSESSEE FAILED TO DO SO AND PASSED THE ORDER EX PARTE . ALTHOUGH, THE ASSESSEE HAS FAILED TO GIVE ANY PLAU SIBLE REASON FOR NON APPEARANCE BEFORE THE LD. CIT(EXEMPTION), HOWEV ER, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND OBJECTS OF THE TRUST, WE FEEL IT APPROPRIATE TO REMAND BACK THE CASE TO THE FILE OF LD. CIT(EXEMPTION) TO DECIDE AFRESH AFTER AFFORDING A REASONABLE OPPORTUN ITY OF BEING HEARD TO THE PARTIES CONCERN. THE ASSESSEE SOCIETY IS DIRECT ED TO AMEND THE MEMORANDUM/ARTICLE OF ASSOCIATION AND TO FILE RELEV ANT DOCUMENTS QUA ACTIVITIES CARRIED OUT BY THE SOCIETY FOR THE LAST THREE YEARS IN ORDER TO I TA NO.322(ASR)/2015 8 SATISFY THE GENUINENESS OF ACTIVITIES AND ALSO TO C O-OPERATE WITH THE PROCEEDINGS. IN THE ABOVE DIRECTIONS AND OBSERVATIONS, THE CASE IS REMANDED BACK TO FILE OF LD. CIT(EXEMPTION) FOR DECIDING AFR ESH. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2016. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED:21.12.2016. /PK/PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER