Sh. Shiv Prasad Educational Charitable Trust, Firozabad V. C.I.T.-II, Agra

ITA 336/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0394 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 8 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-07-2013
• Assessment Year: misc
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.336 & 337/AGRA/2011 SHRI SHIV PRASAD EDUCATIONAL VS. COMMISSIONER OF INCOME TAX-II, CHARITABLE TRUST, AGRA. 2/61, MAHAVIR NAGAR, FIROZABAD (U.P. (PAN NO. AAJTS 2258 R). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ GARGH, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 08.07.2013 DATE OF PRONOUNCEMENT : 12.07.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST A C OMMON ORDER DATED 11.08.2011 PASSED BY THE LD. COMMISSIONER OF INCOME TAX-II, AGRA. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST FILED APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE INC OME TAX ACT, 1961 (THE ACT HEREINAFTER) AND APPROVAL UNDER SECTION 80G OF THE ACT ON 14.02.2011. THE CIT ITA NOS.336 & 337/AGRA/2011 2 DIRECTED THE A.O. TO SEND REPORT ON THE ACTIVITIES OF THE TRUST. THE A.O. REPORTED THAT FOR THE A.Y. 2011-12, THE ASSESSEE FILED RETUR N OF INCOME CLAIMING EXPENDITURE ON PURCHASE OF FANS, MEDICINES ETC. TOTALING TO AN AMOUNT OF RS.76,262/- AND CLAIMING THESE PURCHASE TO BE ON ACCOUNT OF CHARITA BLE ACTIVITIES. THE ASSESSEE TRUST INCURRED EXPENDITURE OF RS.20,300/- ON ACCOUN T OF STATIONERY BUT THIS AMOUNT HAS NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE TRUST. ON ENQUIRY, THE A.O. REPORTED THAT THE ASSE SSEE TRUST HAVING DONATED 10 CEILING FANS TO SHRI RAHUL SANSKRATAYANAN VIDYA MAN DIR WHICH WAS FOUND FALSE. THE PRINCIPLE OF THE SAID VIDYA MANDIR HAS CATEGORI CALLY SATED THAT NO SUCH CHARITY HAS BEEN DONE BY THE ASSESSEE TRUST. THE CIT NOTED THAT THE ASSESSEE HAS SHOWN FRAUDULENT CHARITABLE ACTIVITY. IT HAS ALSO BEEN N OTED THAT SHRI SHIV PRASAD MEMORIAL GIRLS DEGREE COLLEGE WHICH WAS BEING RUN B Y ONE OF THE FAMILY TRUSTS HAS ADVANCED A LOAN OF RS.20,00,000/- TO M/S. SHIV PRASAD PUBLIC SCHOOL WHICH IS BEING RUN BY SHRI VIJAY SHARMA, HUSBAND OF SMT. LAX MI SHARMA, A MEMBER OF SHRI SHIV PRASAD SHAISHIK UTTHAN SEWA SAMAITI. THE CIT NOTED THAT THIS AMOUNT IS CLEARLY ADVANCED IN VIOLATION OF PROVISION SECTION 13(3) OF THE ACT. IN THE LIGHT OF THESE FACTS, THE CIT REJECTED BOTH THE APPLICATIONS I.E. FOR REGISTRATION UNDER SECTION 12AA AND FOR APPROVAL UNDER SECTION 80G OF THE ACT. ITA NOS.336 & 337/AGRA/2011 3 3. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE TRUST HAS BEEN CREATED BY TRUST DEED DATED 04.1.2009 FOR THE PURPOSE OF PR OVIDING EDUCATION. THE LD. AUTHORISED REPRESENTATIVE HAS DREW OUR ATTENTION ON CLAUSE-5 OF THE TRUST DEED WHICH IS AS UNDER :- 5. THAT THE TRUSTEES AS DEFINED IN PARA 7(A)/(B) BELOW THE TRUSTEE SHALL HAVE POWERS TO UTILIZE THE INCOME OF THE TRUST FOR THE BENEFIT OF GENERAL PUBLIC, IRRESPECTIVE OF CASTE, CREED OR COMMUNITY O N A. TO SPREAD THE MESSAGE OF EDUCATION IN THE SOCIETY SO AS TO HELP THE PEOPLE IN GENERAL IN THEIR UPLIFTMENT OF WELL BEING. B. TO MAKE ARRANGEMENT FOR MEDICAL HELP AND AID IN ANY FORM AND SUBSTANCE FOR THE BENEFIT OF SOCIETY IN LARGE. C. TO MAKE AWARENESS ON HEALTH TO THE GENERAL PUBLIC AND FOR THIS PURPOSE, TO PRINT CIRCULAR AND MAGAZINES, IF ANY. D. TO MAKE ARRANGEMENT FOR THE EDUCATION BY RUNNING SCHOOLS AND COLLEGES IN GENERAL FOR THE BENEFIT OF PUBLIC. E. TO, MAKE ARRANGEMENT FOR PROVIDING THE SHELTER HOUSES FOR OLD AND NEEDY. F. TO DO ANY OTHER WORK OF CHARITABLE IN NATURE AS MAY BE DECIDED BY THE BOARD OF TRUSTEES FROM TIME TO TIME. G. TO DO ALL WORK AS MAY BE DESIRED TO BE DONE BY STATE OR CENTRAL GOVERNMENT OR BY LOCAL BODIES OR BY ITA NOS.336 & 337/AGRA/2011 4 ANY GOVERNMENT DEPARTMENTS IN THE AREA OF ENVIRONMENT, HEALTH, PLANTATION, FAMILY PLANNING, BEAUTIFICATION OF PARK, ROADS OR PUBLIC PROPERTY OR ANY OTHER AREA AS MAY BE DESIRED FROM TIME TO TIME. H. TO FULFILL THE ABOVE OBJECTIVES, THE WHOLE OF THE TRUST OR SOCIETY OR THEIR PROPERTY CAN BE ACQUIRED OR MERGED PROVIDED THE OBJECTIVE OF THE DISSOLVING TRUST OR SOCIETY IS MORE OR LESS SIMILAR TO THIS TRUST. 4. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMIT TED THAT THE ASSESSEE TRUST HAS CARRIED OUT CHARITABLE ACTIVITIES FOR THE YEAR ENDED 31.03.2011 AS UNDER :- PARTICULARS AMOUNTS FAN 17,876.00 MEDICINES 32,146.00 SEWING MACHINES 10,080.00 DHOTI TO POOR LADIES 16,160.00 TOTAL 76,262.00 5. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT HAS WRONGLY RECORDED THE FACT THAT THE PRINCIPLE OF SHRI RAHUL SANSKRATAYANAN VIDYA MANDIR HAS DENIED THE CHARITY OF 10 CEILING FANS. THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION ON PAGE NO.73 OF THE PAPER BOOK WHICH IS A COPY OF LETTER DATED ITA NOS.336 & 337/AGRA/2011 5 09.12.2010 GIVEN BY RAHUL SANSKRATAYANAN VIDYA MAND IR WHEREIN HEY HAVE EXPRESSED THANKS FOR DONATING 10 CEILING FANS. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE CIT DID NOT EXAMINE THE CASE OF THE ASSESSEE TRUST IN THE LIGHT OF SECTION 12AA OF THE ACT. HE RELIED UPON V ARIOUS JUDGEMENTS OF WHICH COMPILATION HAS BEEN FURNISHED AND THE SAME HAS BEE N PLACED ON RECORD. 6. THE LD. DEPARTMENTAL REPR4ESENTATIVE, ON THE OTH ER HAND, RELIED UPON THE ORDER OF CIT AND SUBMITTED THAT THE ASSESSEE TRUST DID NOT CARRY OUT ANY EDUCATIONAL OR CHARITABLE ACTIVITIES. THE CHARITABLE ACTIVITIE S CLAIMED BY THE ASSESSEE TRUST WERE FOND TO BE FALSE. HE SUBMITTED THAT THE CIT HAS RI GHTLY REJECTED THE ASSESSEES APPLICATION FOR REGISTRATION UNDER SECTION 12AA AND APPROVAL UNDER SECTION 80G OF THE ACT. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE NOTICE THAT THE CIT DID NOT EXAMINE THE CASE OF THE ASSESSEE TRUST IN THE LIGHT OF SECTION 12AA OF THE ACT. THE SAID SECTION 12AA PRO VIDES THAT THE CIT MAY CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS ITA NOS.336 & 337/AGRA/2011 6 BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJEC TS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, THE CIT SHALL PA SS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION OR IF HE IS NOT SO SATISFI ED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION. IN THE CASE UNDER CONSIDERATION, AS PER THE TRUST DEED, THERE ARE VARIOUS ACTIVITIES ACCORDING TO THE OBJECT CLAUSE WHICH ARE REPRODUCED HEREINABOVE IN THIS ORDER. THE CIT DID NOT EXAMINE THOSE OBJECTS OF THE TRUST IN THE LIGHT OF SECTION 12AA OF THE ACT. HE SIMPLY EXAMINED ONLY ONE EXPENDITURE OF CHARITY OF 10 CEILING FANS. IN FACT THIS TYPE OF EXAMINATION IS TO BE DONE AT THE TIME OF ASSESSMENT PROCEEDINGS. FOR TH E PURPOSE OF REGISTRATION UNDER SECTION 12AA OF THE ACT, THE CIT HAS TO EXERCISE HI S POWER IN ACCORDANCE WITH SECTION 12AA OF THE ACT. THE APPLICATION OF THE AS SESSEE TRUST IS REQUIRED TO BE EXAMINED IN THE LIGHT OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF HARDAYAL CHARITABLE & EDUCATIONAL TRUST VS. CIT IN ITA NO.107 OF 2012, JUDGEMENT DATED 15.03.2013. SINCE THE CIT DID NOT EXAMINE THE CASE OF THE ASSESSEE TRUST IN ACCORDANCE WITH SECTION 12AA OF T HE ACT AND IN THE LIGHT OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F HARDAYAL CHARITABLE & EDUCATIONAL TRUST VS. CIT (SUPRA), WE, THEREFORE, T HINK IT PROPER TO SEND BACK THE ISSUE TO THE FILE OF CIT WITH THE DIRECTION TO DECI DE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AND IN ACCORDANCE WITH THE ABOVE DISCUSSIO NS, AFTER PROVIDING REASONABLE ITA NOS.336 & 337/AGRA/2011 7 OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AP PROVAL UNDER SECTION 80G IS ALSO REQUIRED TO EXAMINE IN THE LIGHT OF ABOVE DISCUSSIO N, THEREFORE, ISSUE RELATED TO APPROVAL UNDER SECTION 80G IS ALSO SENDING BACK TO THE FILE OF CIT WITH IDENTICAL DIRECTION. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY