NARAYAN DASJI MAHARAJ GAUSHALA, Jaipur V. CIT, Alwar

ITA 337/JPR/2011

• Counselvise Citation: 33723114 RSA 2011
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-11-2011
• Assessment Year: misc
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: MADHUKAR GARG
• Keywords: Gift; Charitable institution; Source of fund; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NOS.337 & 338/JP/2011 UNDER SECTION 80G/12AA SHRI NARAYAN DASJI MAHARAJ GAUSHALA, VS. COMMISSI ONER OF GHASIPURA, SHAHPURA, INCOME TAX, DISTT. JAIPUR. ALWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MADHUKAR GARG RESPONDENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING: 17.11.2011 DATE OF PRONOUNCEMENT: 22.11.2011 ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED APPEALS AGAINST ORDER OF LD. CIT (ALWAR) VIDE WHICH THE LD. C.I.T. HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR REGISTERATION U/S 12A AND HAS NOT APPROVED THE SOCIETY FOR THE PURPOSES OF SECTION 80 G OF THE ACT. 2. FIRST WE WILL TAKE UP APPEAL AGAINST ORDER OF LD . CIT VIDE WHICH THE SOCIETY HAS NOT BEEN ALLOWED REGISTERATION U/S 12AA OF THE I.T. ACT. THE GROUNDS OF APPEAL RAISED ARE AS UNDER: 2 THAT THE LEARNED CIT HAS ERRED IN MENTIONING THE IN STITUTION AS A TRUST IN HIS ORDER U/S 12AA OF THE ACT. APPLICATION FOR REGI STRATION IN THIS CASE WAS FILED BY THE INSTITUTION WHICH HAS BEEN REGISTERED AS A SOCIETY AND THE FINDING OF THE CIT BY MENTIONING TRUST IN THE ORDER IS ILLEGAL AND UNJUSTIFIED. THAT THE LEARNED CIT HAS ERRED IN HOLDING THAT THE TRUST HAS NOT SUBMITTED REGULAR COPIES OF ACCOUNT DESPITE GIVING SEVERAL OP PORTUNITIES. THE SAID FINDING AS ILLEGAL AND UNJUSTIFIED. ALL DETAILS CAL LED FOR WERE DULY FURNISHED TO THE LEARNED CIT. THAT THE LEARNED CIT HAS ERRED IN HOLDING THAT THE TRUST HAS SHOWN A NON- COOPERATIVE ATTITUDE BY MEANS OF NOT VERIFYING THE DETAILS AS SOUGHT BY THIS OFFICE DURING THE COURSE OF HEARING. THE SAID FINDI NG IS ILLEGAL AND UNJUSTIFIED AND THE TRUST HAS DULY FURNISHED ALL DE TAILS CALLED FOR AND THERE WAS NO QUESTION OF ANY NON-COOPERATION. THAT THE LEARNED CIT HAS ERRED IN HOLDING THAT THE TRUST WAS NOT ABLE TO GET VERIFIED THE GENUINENESS OF THE DONATIONS RECEIVED. THE SAID FINDING IS ILLEGAL AND UNJUSTIFIED. THAT THE LEARNED CIT HAS ERRED IN HOLDING THAT THE TRUST HAS NOT BEEN ABLE TO BRING ANY EVIDENCE ON RECORD TO ESTABLISH THAT I TS ACTIVITIES TILL NOW WERE GENUINELY FOR ANY CHARITABLE PURPOSE AS IT IS NOT O PEN TO PROPER VERIFICATION. THE SAID FINDING IS ILLEGAL AND UNJUS TIFIED. THAT THE LEARNED CIT HAS ERRED IN REJECTING ASSESSE ES APPLICATION FOR REGISTRATION AS A TRUST U/S 12AA OF THE IT ACT, 196 1. THE SAID ACTION IS ILLEGAL AND UNJUSTIFIED. THE INSTITUTION WAS CLEARL Y ENTITLED TO REGISTRATION U/S 12AA OF THE I.T. ACT, 1961. 3. THE LD. CIT HAS REFERRED TO THE RULE 17A AND 17B OF I.T. RULES AND THESE HAVE BEEN REPRODUCED IN THE ORDER AS UNDER: AN APPLICATION UNDER [CLAUSE (AA) OF SUB-SECTION(1) ] OF SECTION 12A FOR REGISTRATION OF A CHARITABLE OR RELIGIOUS TRUST OR INSTITUTION SHALL BE MADE IN DUPLICATE IN FORM NO.10A AND SHALL BE ACCOMPANIE D BY THE FOLLOWING DOCUMENTS, NAMELY:- (A) WHERE THE TRUST IS CREATED, OR THE INSTITUTION IS ESTABLISHED, UNDER AN INSTRUMENT, THE INSTRUMENT IN ORIGINAL, TOGETHER WITH ONE COPY THEREOF; AND WHERE THE TRUST IS CREATED, OR THE INS TITUTION IS 3 ESTABLISHED, OTHERWISE THAN UNDER AN INSTRUMENT, TH E DOCUMENT EVIDENCING THE CREATION OF THE TRUST OR THE ESTABLI SHMENT OF THE INSTITUTION, TOGETHER WITH ONE COPY THEREOF: PROVIDED THAT IF THE INSTRUMENT OR DOCUMENT IN ORIG INAL CANNOT CONVENIENTLY BE PRODUCED, IT SHALL BE OPEN TO THE C OMMISSIONER TO ACCEPT A CERTIFIED COPY IN LIEU OF THE ORIGINAL; (B) WHERE THE TRUST OR INSTITUTION HAS BEEN IN EXIS TENCE DURING ANY YEAR OR YEARS, PRIOR TO THE FINANCIAL YEAR IN WHICH THE APPLICATION FOR REGISTRATION IS MADE, TWO COPIES OF THE ACCOUNTS OF THE TRUST OR INSTITUTION RELATING TO SUCH PRIOR YEAR OR YEARS (N OT BEING MORE THAN THREE YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH THE SAID APPLICATION IS MADE) FOR WHICH SUCH ACCOUNTS HAVE B EEN MADE UP. THE REPORT OF AUDIT OF THE ACCOUNTS OF A TRUST OR I NSTITUTION WHICH IS REQUIRED TO BE FURNISHED UNDER CLAUSE (B) OF SECTIO N 12A, SHALL BE IN FORM NO.10B. 4. THE ASSESSEE DID NOT SUBMIT THE COPIES OF ACCOUN TS TILL DATE OR THE AUDIT REPORT IN FORM 10B. THE ASSESSEE TRUST WAS REQUESTED TO SUBMI T THE AUDIT REPORT IN FORM 10B, COPIES OF ACCOUNTS, RETURN OF INCOME, DETAILS OF INFRASTRU CTURE, EVIDENCE OF CHARITABLE ACTIVITIES CARRIED BY THE TRUST ETC. IN COMPLIANCE, SHRI JAGDI SH SONI. SECRETARY OF THE TRUST APPEARED AND WAS REQUESTED TO SUBMIT THE AFORESAID DETAILS. AS PER THE INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD FROM 01.05.2010 TO 31.10.201 0 SUBMITTED AT THE TIME OF HEARING, THE TRUST HAS RECEIVED RS. 994,386/- AS DONATIONS. SH. JAGDISH SONI, SECRETARY OF THE TRUST WAS REQUESTED TO SUBMIT THE DETAILS OF NAME, COMPLE TE ADDRESS, AMOUNT OF DONATION, MODE OF PAYMENT I.E CASH OR CHEQUE, PAN NO ETC. THE CASE OF THE TRUST WAS ADJOURNED TO 15.03.2011. ON THE GIVEN DATE OF HEARING, SH. JAGDI SH SONI APPEARED BEFORE THE UNDERSIGNED BUT THE COMPLETE DETAILS WERE NOT SUBMI TTED BY HIM. HE REQUESTED TO FURTHER ADJOURN (HE CASE TO 22.03.2011 TO SUBMIT THE REQUIS ITE DETAILS SOUGHT DURING THE PREVIOUS HEARING. IN THE MEANWHILE THE INCOME TAX OFFICER, W ARD-BEHROR WAS REQUESTED TO CARRY 4 OUT VERIFICATION OF THE GENUINENESS OF DONATIONS OF THE TRUST. THE GENUINENESS OF THE DONATIONS RECEIVED BY THE TRUST, MUST BE VERIFIABLE BY MEANS OF THE NAMES, COMPLETE ADDRESS OF THE DONORS WHICH MUST BE SUBMITTED BY TH E TRUST AT THE TIME OF HEARING. 5. THE INSPECTOR VISITED THE PREMISES OF THE TRUST FOR VERIFICATION OF DONATIONS RECEIVED IN EXCESS OF RS.11,000/-. THE INSPECTOR SU BMITTED: THE INSPECTOR SUBMITTED THROUGH HIS REPORT THAT HE REQUESTED TO VERIFY 14 D ONORS AS PER THE LIST SUBMITTED BY THE TRUST. OUT OF THESE. ONLY SEVEN DONORS SUBMITTED TH EIR PAN NO. HOWEVER, NONE PRODUCED ITS ITR, BANK PASS BOOK ETC. FURTHER, THE MAIN DONO R SH. RAMCSHWAR BAJAJ WHO HAS SUBMITTED RS. 6,50,000/- WAS CONTACTED AND WAS REQU ESTED TO VERIFY THE ENTRY OF THE SAID DONATION THROUGH HIS CASH BOOK AS HE IS A BUSINESSM AN AND MAINTAINS THE REGULAR BOOKS OF ACCOUNTS AND FILES ITS RETURN OF INCOME REGULARL Y. THE DONATIONS RECEIVED BY THE TRUST MUST BE VERIFIABLE SO AS TO CHECK THE GENUINENESS O F DONATIONS. HOWEVER, THE TRUST WAS UNABLE TO DO SO. 6. THE SECRETARY OF TRUST WAS ASKED TO PRODUCE EVID ENCE TO VERIFY THE GENUINENESS OF DONATIONS AND EVIDENCE TO SHOW ALLOTMENT OF LAND. I T WAS ADMITTED BY SECRETARY THAT THERE IS NO DOCUMENT RELATING TO LAND ALLOTMENT. TH E SECRETARY SUBMITTED THE LIST DONORS AND THAT IS AVAILABLE AT PAGE 3 OF ORDER OF C.I.T. 7. THE SECRETARY SUBMITTED THE LIST OF CONSOLIDATED EXPENSES. ELABORATE DETAILS WERE NOT FILED. THE LD. CIT REJECTED THE REGISTERATION A FTER OBSERVING AS UNDER: FURTHER, THE TRUST HAS RECEIVED DONATIONS FROM 3000 PEOPLE. IT DID NOT HAVE ANY CORPUS FUND AS PER LIST COPIES OF ACCOUNTS SUBM ITTED DURING THE COURSE OF HEARING. 5 IN THIS REGARD, THE DECISION OF THE THIRD MEMBER OF HON'BLE ITAT, KOLKATA IN THE CASE OF SHRI SUSHIL KUMAR MOHANI IN ITA NO. 115 /J/207 DATED 01.06.2010 HAS HELD THAT : 'GENUINENESS OF GIFT CANNOT BE ACCEPTED IN CASE, IN TER-ALIA, DONORS BELONG TO VERY LOW FINANCIAL STRATA & DONE IS A MAN OF MEANS HAVING MULTIPLE SOURCES OF INCOME. IN THE ABSENCE OF REGULAR FORMAT OF ACCOUNT, THESE EXPENSES CANNOT BE VERIFIED AS THE TRUST HAS NOT SUBMITTED ITS REGULAR COPIES O F ACCOUNT TILL THE DECEMBER 2010, DESPITE OF BEING GIVEN SEVERAL OPPORTUNITIES. FURTHER, THE SECRETARY/ A.R. OF THE TRUST HAS SHOWN A NON-COOPERATIVE ATTIT UDE BY MEANS OF NOT VERIFYING THE DETAILS AS SOUGHT BY THIS OFFICE DURI NG THE COURSE OF HEARING. THE TRUST WAS NOT ABLE TO PRODUCE ANY EVIDENCE REGARDIN G THE CARRYING OF CHARITABLE ACTIVITIES TILL DATE. HAVING REGARD TO THE FACTS OF THE CASE IT IS APPARE NT THAT THE TRUST HAS NOT BEEN ABLE TO BRING ANY EVIDENCE ON RECORD TO ESTABL ISH THAT ITS ACTIVITIES TILL NOW WERE GENUINELY TAKEN FOR ANY CHARITABLE PURPOSE , AS IT IS NOT OPEN TO PROPER VERIFICATION. IN VIEW OF ABOVE FACTS, THE AP PLICATION FOR REGISTRATION IS HEREBY REJECTED. 8. THE LD. A/R HAS FILED THE FOLLOWING SUBMISSIONS. THE MAIN OBJECTION OF THE LEARNED CIT FOR NOT GRANT ING REGISTRATION TO THE SOCIETY IS THAT THE EXPENSES INCURRED BY THE SOCIET Y CANNOT BE VERIFIED AND HE HAS ALSO MENTIONED THAT THE SOCIETY WAS ALSO NOT ABLE TO PRODUCE ANY EVIDENCE OF CARRYING ON CHARITABLE ACTIVITIES TILL DATE. THE LEARNED CIT RELYING ON RULE 17A OF THE IT RULES HAS MENTIONED O N PAGE 2 OF THE ORDER THAT IN ORDER TO DETERMINE THE AIMS AND OBJECTIVES AND ACTUAL ACTIVITIES BEING CARRIED OUT BY THE TRUST IT IS ESSENTIAL THAT THE SOURCES OF FUNDS AND THEIR UTILIZATION FOR THE OBJECTIVE SHOULD BE VERIF IABLE FROM THE AUDITED ACCOUNTS. HE HAS ALSO MENTIONED THAT THE GENUINENES S OF THE DONATIONS RECEIVED BY THE TRUST MUST ALSO BE VERIFIABLE BY ME ANS OF THE NAMES, COMPLETE ADDRESS OF THE DONORS WHICH MUST BE SUBMIT TED BY THE TRUST AT THE TIME OF HEARING. HE HAS ALSO MENTIONED THAT THE INSPECTOR HAS SUBMIT TED HIS REPORT AND OUT OF THE 14 DONORS ONLY 7 DONORS SUBMITTED THEIR PAN ETC. AND NONE PRODUCED ITS ITR, BANK PASSBOOK ETC. FURTHER, THE M AIN DONOR SHRI RAMESHWAR BAJAJ WHO HAS DONATED RS.6,50,000/- WAS R EQUESTED TO VERIFY THE ENTRY THROUGH HIS CASH BOOK. 6 HOWEVER, THE TRUST WAS UNABLE TO PRODUCE THE CASH B OOK OF SHRI RAMESHWAR BAJAJ. AFTER REPRODUCING THE LIST OF DONA TIONS RECEIVED IT HAS BEEN MENTIONED BY THE LEARNED CIT THAT ELABORATE DE TAILS REGARDING EXPENSES WERE NOT SUBMITTED AND HENCE, IN THE ABSEN CE OF REGULAR FORMAT OF ACCOUNT THE EXPENSES CANNOT BE VERIFIED. THE LEA RNED CIT HAS ALSO MENTIONED THAT THE SECRETARY / A.R. OF THE TRUST HA S SHOWN A NON- COOPERATIVE ATTITUDE BY MEANS OF NOT VERIFYING THE DETAILS AND THE TRUST WAS NOT ABLE TO PRODUCE ANY EVIDENCE REGARDING CARR YING ON THE CHARITABLE ACTIVITIES TILL DATE. ON THE BASIS OF TH IS FINDING IT HAS BEEN HELD BY THE LEARNED CIT THAT THE TRUST HAS NOT BEEN ABLE TO BEING ANY EVIDENCE ON RECORD TO ESTABLISH THAT ITS ACTIVITIES WERE GEN UINELY TAKEN FOR ANY CHARTABLE PURPOSES AND HE, HAS THEREFORE, REJECTED THE APPLICATION. IN THIS CONNECTION, WE HAVE TO SUBMIT THAT NEITHER FACTUAL POSITION HAS BEEN CORRECTLY APPRECIATED BY THE CIT NOR HE HAS CO RRECTLY APPRECIATED LEGAL PROVISIONS. IN THE ENTIRE ORDER THE LEARNED CIT HAS MENTIONED T HE ASSESSEE AS A TRUST WHEREAS THE ASSESSEE IS NOT A TRUST BUT A SOCIETY. DURING THE COURSE OF HEARING BEFORE THE LEARNED CIT AS WELL AS THE ASSES SING OFFICER VARIOUS DETAILS WERE FURNISHED ALONG WITH EVIDENCE TO SHOW THAT THE SOCIETY WAS DULY CARRYING OUT CHARITABLE ACTIVITIES AND WAS ENT ITLED TO REGISTRATION. VIDE LETTER DATED 24.09.2010 ( PBP 18 ) IT WAS BROU GHT TO THE KNOWLEDGE OF THE LEARNED CIT, ALWAR THAT THE GOSHALA WAS A TOT ALLY CHARITABLE INSTITUTION AND THE SOCIETY WAS REGISTERED WITH THE RAJASTHAN GOVERNMENT AND ANIMAL HUSBANDRY DEPARTMENT OF THE GOVERNMENT O F RAJASTHAN. THE SOCIETY WAS ESTABLISHED TO PROVIDE SHELTER AND LOOK AFTER DESTITUTE, ILL AND HANDICAPPED COWS. NO COMMERCIAL ACTIVITIES WERE BEI NG CARRIED OUT BY THE GOSHALA AND ALL EXPENSES OF GOSHALA WERE BEING MET FROM THE DONATIONS, SUBSCRIPTIONS ETC. RECEIVED FROM THE GENERAL PUBLIC . ATTENTION IS ALSO INVITED TO LETTER DATED 23.3.2011 FILED BEFORE THE CIT, ALWAR ( PBP NO.9-11). IN THE SAID LETTER IT HAS BEE N MENTIONED THAT THE NOTING IN THE ORDER SHEET REGARDING NON-PRESENTATIO N OF DOCUMENT REGARDING LAND OF THE GOSHALA IS INCORRECT AND IT W AS ALSO POINTED OUT THAT ALL DOCUMENTS RELATING TO THE OWNERSHIP OF THE LAND WERE DULY PRESENTED AND THE SAME WERE AGAIN BEING PRESENTED. COPY OF CE RTIFICATE ISSUED BY THE OFFICE OF GRAM PANCHYAT, GHASIPURA, PANCHAYAT SAMIT I, SHAHPURA WAS ALSO FURNISHED ALONG WITH THE SAID LETTER IN WHICH IT WAS CERTIFIED THAT RESOLUTION FOR ALLOTMENT OF LAND MEASURING 4 BIGHAS TO THE GOSHALA HAS BEEN PASSED IN THE GRAM PANCHAYAT AND THE SAME HAS BEEN PRESENTED TO THE COLLECTOR ALONG WITH RECOMMENDATION OF LOCAL RE VENUE AUTHORITIES FOR CONFIRMING THE SAME. IN THE CERTIFICATE IT WAS ALSO MENTIONED THAT THE GOSHALA HAS BEEN STARTED WITH TEMPORARY STRUCTURE A ND CONSTRUCTION OF PERMANENT STRUCTURE WAS IN PROGRESS AND A HAND PUMP HAS ALSO BEEN INSTALLED ON THE SAID LAND FOR WHICH ELECTRIC CONNE CTION HAS ALSO BEEN 7 TAKEN. IT WAS ALSO CERTIFIED THAT IN THE SAID GOSHA LA COWS WERE BEING LOOKED AFTER AND THE GOSHALA WAS VERY HELPFUL IN SA VING COWS FROM DEATHS. WITH REGARD TO OBSERVATION OF THE INSPECTOR THAT TH E MAIN DONOR SHRI RAMESHWAR PRASAD BAJAJ HAS NOT PRODUCED THE CASH BO OK IT WAS CLARIFIED THAT SHRI RAMESHWAR PRASAD BAJAJ WAS AGED ABOUT 85 YEARS AND WAS NOT DOING ANY BUSINESS. THE AMOUNT OF DONATION HAS BEEN GIVEN THROUGH CHEQUE AND HE IS REGULARLY ASSESSED TO TAX AND PHOT OSTAT COPY OF HIS BANK PASSBOOK AND PAN WERE ALSO FURNISHED. IT WAS ALSO C LARIFIED THAT WHEN HE IS NOT DOING ANY BUSINESS THERE IS NO QUESTION OF M AINTENANCE OF ANY BOOKS OF ACCOUNTS. WITH REGARD TO THE OBJECTION OF THE CIT REGARDING N ON-FURNISHING OF ACCOUNTS ATTENTION IS INVITED TO RULE 17A OF THE IT RULES WHEREIN IT HAS BEEN MENTIONED THAT WHERE TRUST OR INSTITUTION HA S BEEN IN EXISTENCE DURING ANY YEAR OR YEARS, PRIOR TO FINANCIAL YEAR I N WHICH THE APPLICATION FOR REGISTRATION IS MADE, TWO COPIES OF THE ACCOUNT S OF THE TRUST OR INSTITUTION RELATING TO SUCH PRIOR YEAR OR YEARS FOR WHICH SUCH ACCOUNTS HAVE BEEN MADE UP. THUS, IT IS VERY CLEAR THAT THE PROVISION OF RULE 17A WILL COME INTO APPLICATION ONLY WHERE THE TRUST OR INSTITUTION HAS BEEN IN EXISTENCE DURING ANY YEAR OR YEARS PRIOR TO THE FINANCIAL YEAR IN WHICH APPLICATION FOR REGISTRATION IS MADE. IN THI S CASE, THE SOCIETY WAS FORMED ON 01.05.2010 AND FIRST ACCOUNTING YEAR ENDE D ON 31.03.2011 AND AT THE TIME OF HEARING FOR APPLICATION OF REGISTRAT ION BOOKS OF ACCOUNTS WERE NOT CLOSED AS THE ORDER ITSELF HAS BEEN PASSED BY THE LEARNED CIT ON 25.3.2011. THUS, THE LEARNED CIT HAS WRONGLY RELIED ON THE PROVISIONS OF RULE 17A FOR INSISTING THAT THE AUDITED ACCOUNTS SH OULD HAVE BEEN FILED. FURTHER, THE OBSERVATION OF THE CIT THAT IN ORDER T O DETERMINE THE MEANS AND OBJECTS OF THE TRUST IT IS ESSENTIAL THAT SOURC ES OF FUNDS AND THEIR UTILIZATION SHOULD BE VERIFIABLE FROM THE AUDITED A CCOUNTS AND THE GENUINENESS OF DONATIONS RECEIVED MUST ALSO BE VERI FIABLE IS NOT RELEVANT FOR THE PURPOSE OF GRANT OF REGISTRATION U/S 12AA O F THE IT ACT. IN THIS CONNECTION, WE HAVE TO SUBMIT THAT THERE WA S NO JUSTIFICATION TO REFUSE REGISTRATION TO THE SOCIETY. THE MAIN AIMS A ND OBJECTS OF THE SOCIETY WAS TO PROVIDE ADEQUATE SECURITY AND TO LOOK AFTER DESTITUTE, ILL, HANDICAPPED AND VAGABOND COWS AND FOR THIS PURPOSE TO MAKE CONSTRUCTION AND PROVIDE ADEQUATE SHELTER TO SUCH C OWS. DURING THE COURSE OF PROCEEDINGS BEFORE THE LEARNED CIT IT WAS POINTED OUT TO HIM THAT TO PROVIDE SHELTER TO THE COWS FROM RAINS AND COLD WEATHER A SHED MEASURING 270 X 32 HAS BEEN CONSTRUCTED AND FURTH ER BOUNDARY WALL HAS BEEN CONSTRUCTED ON 2 ACRES LAND SO THAT COWS CAN BE KEPT WITHIN THE BOUNDARY. IT WAS ALSO MENTIONED THAT TO PROVIDE DRI NKING WATER TO COWS CEMENT TANKS HAVE BEEN PURCHASED AND TO PROVIDE FOD DER TO THE COWS, PLANTATION HAS BEEN DONE. LOCAL MLA, SHAHPURA HAS A LSO CONTRIBUTED A SUM OF RS.1.50,000/- FROM HIS FUND FOR CONSTRUCTION OF BOREWELL AND 5 HP 8 ELECTRIC MOTOR AND GOSHALA HAS ALSO OBTAINED TRANSF ORMER OF 5 KVA. 4 BIGHA LAND HAD BEEN PROVIDED BY THE GRAM SABHA, GHA SIPURA FOR PROVIDING SHELTER ETC. TO THE COWS. IT WAS BROUGHT TO THE KNOWLEDGE OF THE CIT THAT THE GOSHALA WAS LOOKING AFTER 126 COWS AND PROVIDING ANIMAL FEED AS WELL AS FODDER TO THESE COWS ON DAY TO DAY BASIS AND NUMBER OF COWS WERE DULY CERTIFIED BY SR. VETERINARY MEDICAL OFFICER, SHAHPURA. THUS, THE ENTIRE WORK WHICH HAD BEEN DONE BY THE GO SHALA WAS OF CHARITABLE NATURE AND THE LEARNED CIT HAS WRONGLY M ENTIONED THAT DETAILS OF ACTIVITIES WERE NOT GIVEN WHEREAS SUCH DETAILS W ERE DULY GIVEN TO THE CIT BY MEANS OF VARIOUS LETTERS PLACED AT PBP NO.9- 18. THE LEARNED CIT HAS ALSO WRONGLY MENTIONED THAT DET AILS OF EXPENSES WERE NOT GIVEN AND ATTENTION IN THIS REGARD IS INVITED T O LETTER DATED 24.2.2011 (PBP NO.15-16) WHEREIN IN PARA 2 & 3 IT HAS DULY BE EN MENTIONED THAT THE RECEIPT BOOKS AS WELL AS ALL BILLS AND VOUCHERS OF EXPENSES UPTO JANUARY, 2011 ARE BEING PRODUCED. THE INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD 01.05.2010 TO 31.10.2010 WAS ALSO FILED BEFO RE THE CIT. IT IS SUBMITTED THAT WHILE CONSIDERING APPLICATION FOR GRANT OF REGISTRATION U/S 12AA THE CIT NEEDS ONLY TO SATISFY HIMSELF ABOU T THE GENUINENESS OF THE ACTIVITIES AND CHARITABLE NATURE OF OBJECTS OF THE TRUST AND CANNOT ENTER INTO ARENA OF APPLICATION OF INCOME. AT THE STATE O F CONSIDERATION OF ISSUE OF REGISTRATION U/S 12AA IT IS NOT A SINE QUA NON T O EXAMINE THE ASPECT OF THE APPLICATION OF INCOME. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF ITAT, JODHPUR BENCH IN THE CASE OF MODE RN DEFENCE SHIKSHA SANSTHAN VS. CIT REPORTED IN 108 TTJ (JD) 732. IN T HE SAID CASE IT HAS BEEN HELD THAT THE ASPECT OF APPLICATION OF INCOME SHOULD NOT BE EXAMINED AT THE STAGE OF CONSIDERATION OF ISSUE OF REGISTRAT ION U/S 12AA AND WHERE THE CIT HAS NOT DOUBTED THE AIMS AND OBJECTS OF THE APPLICANT SOCIETY, REGISTRATION COULD NOT BE DENIED MERELY ON THE GROU ND THAT IT HAS HIRED A BUILDING OWNED BY A CLOSE RELATIVE OF ONE OF THE TR USTEES. RELIANCE IS ALSO PLACED ON THE DECISION OF ITAT, JO DHPUR BENCH IN CASE OF MANSUKHI DEVI BIHANI JANHITHKARI TRUST VS. CIT REPO RTED IN 94 ITD PAGE 1. IN THE SAID CASE IT HAS BEEN HELD THAT AT THE TI ME OF REGISTRATION OF THE TRUST THE CIT WAS REQUIRED TO SEE AS TO WHETHER THE OBJECTS OF THE TRUST WERE CHARITABLE OR NOT AND HE WAS FURTHER REQUIRED TO SEE AS TO WHETHER APPLICATION WAS MADE IN ACCORDANCE WITH THE REQUIRE MENT OF SECTION 12A OF THE IT ACT READ WITH RULE 17 OF THE IT RULES. HE WAS NOT REQUIRED TO EXAMINE APPLICATION OF INCOME. THE ITAT, JAIPUR BENCH IN CASE OF TAGORE CHILDRENS ACADEMY VS. CIT REPORTED IN XXXXII TAX WORLD PAGE 6 HAS HELD THAT A T THE TIME OF CONSIDERATION OF APPLICATION U/S 12A OF THE IT ACT THE COMMISSIONER HAS TO SATISFY HIMSELF ABOUT THE OBJECT OF THE INSTITUTIO N AND GENUINENESS OF ITS ACTIVITIES AS PRESCRIBED U/S 12AA. THE CIT CANNOT E XAMINE THE 9 APPLICABILITY OF THE PROVISIONS OF SECTION 13 RELAT ING TO APPLICATION OF INCOME AS THE APPLICATION U/S 12AA IS FOR REGISTRAT ION AND NOT FOR ASSESSMENT. THE ITAT, JAIPUR BENCH IN CASE OF SHRI SHYAM MANDIR COMMITTEE VS. CIT REPORTED IN XXXXIII TAX WORLD 128 HAS HELD THAT THE CIT IS ONLY TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITY AND A IMS AND OBJECTS OF THE TRUST AT THE TIME OF GRANTING OF REGISTRATION TO TH E TRUST U/S 12AA AND THE CIT IS NOT REQUIRED TO EXAMINE APPLICATION OF INCOM E OF THE TRUST AT THE TIME OF GRANT OF REGISTRATION. IN CASE OF DREAMLAND EDUCATION TRUST VS. CIT 109 TT J (ASR) 850 IT HAS BEEN HELD THAT FOR GRANT OF REGISTRATION U/S 12AA T HE ONLY RELEVANT CONSIDERATION IS SATISFACTION OF THE COMMISSIONER R EGARDING OBJECTS OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES. THE M.P. HIGH COURT IN THE CASE OF CIT VS. DPR CHAR ITABLE TRUST REPORTED IN 61 DTR (MP) 410 HAS HELD THAT WHILE CON SIDERING APPLICATION U/S 12A, CIT IS NOT REQUIRED TO EXAMINE WHETHER TH E INCOME DERIVED BY THE TRUST IS BEING SPENT FOR CHARITABLE PURPOSES OR THE TRUST IS EARNING PROFIT WHILE GRANTING REGISTRATION. WHERE THE ASSES SEE TRUST WAS ESTABLISHED FOR EDUCATIONAL PURPOSE THE TRUST WAS E NTITLED TO REGISTRATION. IN THE CASE OF CIT VS. SURYA EDUCATIONAL AND CHARIT ABLE TRUST 15 TAXMAN.COM 123(P&H) IT HAS BEEN HELD THAT THE OBJEC T OF SECTION 12AA IS TO EXAMINE THE GENUINENESS OF THE OBJECTS OF THE TR UST BUT NOT APPLICATION OF INCOME OF TRUST FOR CHARITABLE OR RELIGIOUS PURP OSES. THE QUANTUM OF ACTIVITIES UNDERTAKEN BY THE TRUST AFTER ITS CREATI ON CANNOT BE BASIS FOR EXAMINING REGISTRATION APPLICATION U/S 12AA. RELIANCE IN THIS REGARD IS ALSO PLACED ON THE DECIS ION OF JASODA DEVI CHARITABLE TRUST VS. CIT REPORTED IN 4 ITR(TRIB) 54 7 (JAIPUR). THE ITAT, DELHI BENCH IN CASE OF GURU HARIKISHAN ME DICAL TRUST VS. DIT(EXEMPTIONS) REPORTED IN 11 ITR (TRIB) 361 (DEL HI) HAS HELD THAT AT THE TIME OF REGISTRATION OF THE TRUST THE AUTHORITI ES ARE TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST BUT NOT NATURE OF ACTIVITY BY WHICH THE INCOME IS DERIVED B Y THE TRUST. THE HONBLE ITAT, DELHI BENCH HAS RELIED ON THE JUDGMENT OF KAR NATAKA HIGH COURT IN CASE OF SANJEEVAMMA HANUMANTHA GOWDA CHARITABLE TRU ST VS. DIT (EXEMPTIONS ) 285 ITR 327 WHEREIN IT HAS BEEN HELD THAT WHILE EXAMINING OF APPLICATION OF SOCIETY FILED U/S 12A OF THE ACT THE AUTHORITY HAS TO SATISFY REGARDING THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND HOW INCOME DERIVED FROM TRUST PROPERTY IS OFFERED F OR CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF ACTIVITY BY WHICH INCOME IS DERIVED 10 BY THE TRUST AS THERE ARE SUFFICIENT SAFEGUARDS UND ER THE ACT FOR CANCELLATION OF REGISTRATION IF THE PROVISIONS ARE MISUSED. RELIANCE IS ALSO PLACED ON THE DECISION OF ITAT, CH ENNAI BENCH IN CASE OF PRAYER FOR INDIA VS. ITO REPORTED IN 7 ITR (TRIB) 2 01 (CHENNAI). IN THE SAID CASE IT HAS BEEN HELD THAT THE COMMISSIONER WA S REQUIRED TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST IN ACCORDANCE WITH THE NORMS SPECIFIED U/S 12AA OF THE ACT AND NO T ABOUT THE CREDENTIALS, CAPACITY, QUALIFICATION OF THE TRUSTEES. IT IS SUBMITTED THAT IN THE PRESENT CASE THE COMMIS SIONER HAS NOT DOUBTED THAT THE OBJECTS OF THE SOCIETY ARE FOR CHARITABLE PURPOSE AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY HIM IN THIS REGARD. THE CIT HAS RELIED ON THE IRRELEVANT CONSIDERATION FOR NOT GRANTING THE REGIS TRATION TO THE SOCIETY AND IN VIEW OF THE FACTS AND LEGAL POSITION MENTION ED ABOVE, THE SOCIETY WAS CLEARLY ENTITLED TO REGISTRATION U/S 12AA OF TH E IT ACT, 1961. 9. ON THE OTHER HAND THE LD. D/R SUBMITTED AS UNDER : (I) IN THIS REGARD, IT IS SUBMITTED THAT IT DOES NOT MA KE A DIFFERENCE WHETHER THE ASSESSEE IS REGISTERED AS A TRUST OR SO CIETY. PROVISIONS OF SECTION 12AA OF INCOME TAX ACT 1961 ARE THE SAME FOR A SOCIETY OR TRUST. THEREFORE, THIS GROUND NO.1 MAY BE DISMIS SED. (II) IT IS SUBMITTED THAT THE FACTS HAVE NOT BEEN S TATED CORRECTLY. THE CIT HAS ALLOWED OPPORTUNITIES TO THE ASSESSEE TO MA KE COMPLIANCE ON 11.02.2011, 15.03.2011 AND 22.03.2011. THERE IS SPECIFIC MENTION IN SECOND PARA ON PAGE-2 OF THE ORDER THAT THE SECRETARY OF THE SOCIETY DID NOT FILE DESIRED DETAILS OF THE ACCOUNTS. THUS IT IS NOT CORRECT TO SAY THAT DETAILS CALLED FOR BY THE C IT WERE FILED. EVEN THE STATUTORY REPORT IN FORM NO.10-B WAS NOT F URNISHED. IT HAS BEEN FURTHER HELD BY THE CIT THAT THE ASSESSEE FAILED TO FILE COMPLETE DETAILS OF DONORS INCLUDING IDENTIFICATION AND GENUINENESS OF DONATIONS RECEIVED. FURTHER IT HAS A LSO BEEN OBSERVED THAT THE ASSESSEE TRUST ALSO FAILED TO FIL E AND SUBSTANTIATE DETAILS OF EXPENSES INCURRED IN CONNECTION WITH THE CHARITABLE ACTIVITIES OF THE TRUST. THUS BOTH THE ASPECTS OF C HARITABLE ACTIVITY AND ITS GENUINENESS AND REASONABLENESS I.E. (A) REC EIPT OF DONATIONS AND (B) EXPENDITURE CLAIMED TO BE INCURRE D OUT OF SUCH RECEIPTS HAVE NOT BEEN SUBSTANTIATED. (III) IT IS SUBMITTED THAT NO MATERIAL WAS PLACED B EFORE THE CIT TO BELIEVE THAT THE ASSESSEE TRUST HAD GENUINELY CARRI ED OUT THE CHARITABLE ACTIVITIES AS ENVISAGED IN THE TRUST DEE D, DESPITE THREE 11 OPPORTUNITIES OVER 40 DAYS. THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE OF CHARITABLE ACTIVITIES AND DID NOT CO-OP ERATE IN THE PROCESS OF VERIFICATION OF VARIOUS DETAILS FILED TO SOLICIT REGISTRATION UNDER SECTION 12AA OF INCOME TAX ACT 1961 FROM THE CIT, ALWAR. NOT FILING DETAILS TO SUBSTANTIATE GENUINENESS OF C ARRYING OUT CHARITABLE ACTIVITIES IN ACCORDANCE WITH THE OBJECT S OF THE SOCIETY TENT AMOUNTS TO NON-COOPERATION. (IV) IT IS SUBMITTED THAT THE CIT HAS REPRODUCED TH E LIST OF DONATIONS AS PER ITS RECEIPT BOOK WHEREBY THE ASSESSEE HAS SHOWN DONATIONS OF RS.10,15,435/-. IT IS ALSO MENTIONED ON PAGE-4 OF T HE ORDER THAT RECEIPTS BOOK FROM SERIAL NO.926-950 IS LOST AND CE RTAIN DONATIONS IN RESPECT OF CERTAIN RECEIPTS ARE YET TO BE RECEIV ED. THESE INSTANCES CLEARLY MANIFEST THE LACUNAE IN THE MAINT AINING TRANSPARENCY IN CARRYING OUT THE ACTIVITIES. THE AS SESSEE HAS FAILED TO SUBSTANTIATE CORRECTNESS AND COMPLETENESS OF THE RECORD OF DONATIONS. (V) IT IS SUBMITTED THAT THE GENUINENESS OF THE ACT IVITIES OF THE TRUST HAS FOLLOWING ESSENTIAL INGREDIENTS:- (A) GENUINENESS OF THE DONORS, (B) GENUINENESS AND REASONABLENESS OF THE EXPENSES INCURRED IN FURTHERANCE OF THE OBJECTS OF THE TRUST, (C) PROOF OF CARRYING OUT OF CHARITABLE ACTIVITIES AS DEFINED UNDER SECTION 2(15) OF INCOME TAX ACT 1961. THE ASSESSEE TRUST COULD NOT SUBSTANTIATE ANY OF TH E ABOVE INGREDIENTS. IT IS NOT SUFFICIENT THAT THE CHARITABLE ACTIVITY S HOULD MANIFEST ITSELF FROM THE TRUST DEED OR ITS CHARTER. IT SHOULD BE VE RY CONSPICUOUS FROM ITS PRESENCE IN THE SOCIETY. WHEN THE ASSESSEE TRUST HAS FAILED TO FILE ANY DETAILS OF EXPENSES, THE GENUINENESS OF THE ACTIVITIES CANNOT BE SUBSTANTIATED. IN SUCH CIRCUMSTANCES, THE CIT HAS RIGHTLY REFUSED THE REGISTRATION UNDER SECTION 12AA OF INCO ME TAX ACT 1961. (VI) IT IS HUMBLY SUBMITTED THAT THE CIT IS EMPOWER ED TO GRANT THE REGISTRATION TO THE TRUST UNDER SECTION 12AA(1) OF INCOME TAX ACT 1961 IF HE IS SATISFIED ABOUT GENUINENESS OF THE AC TIVITIES OF THE TRUST AND MAY REFUSE IT IF HE IS NOT SO SATISFIED. SUCH POWERS HAVE ALSO BEEN EXTENDED BY INCORPORATION OF SUB SECTION (3) TO SECTION 12AA OF INCOME TAX ACT 1961 WHEREBY HE CAN CANCEL T HE 12 REGISTRATION IF THE ACTIVITIES OF THE INSTITUTION/T RUST ARE NOT FOUND GENUINE OR THE ACTIVITIES OF THE TRUST ARE NOT BEIN G CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. THUS IT CAN BE SEEN TH AT THE CRUX OR GRANTING OR REFUSING OR SUBSEQUENT CANCELLATION OF THE REGISTRATION IS THE SATISFACTION OF THE CIT ABOUT THE GENUINENES S OF THE ACTIVITIES OF THE SOCIETY, WHICH IS FAILED TO SUBSTANTIATE. ST ATUTORY POWERS HAVE BEEN CONFERRED ON THE CIT TO GRANT REGISTRATIO N UNDER SECTION 12AA OF INCOME TAX ACT 1961 AND THE CIT IS DUTY-BOU ND TO SATISFY HIMSELF ABOUT GENUINENESS OF THE ACTIVITIES, WHICH THE ASSESSEE TRUST FAILED TO FACILITATE. 10. WE HAVE HEARD BOTH THE PARTIES. AT THE TIME OF REGISTERATION, THE LD. CIT HAS TO CONSIDER THE OBJECTIVES OF THE SOCIETY. DURING FIRS T YEAR OF OPERATION, THE SOCIETY IS NOT REQUIRED TO FILED THE AUDITED ACCOUNTS AS APPLICATI ON IS TO BE FILED JUST AFTER CREATIVE OF THE SOCIETY. THE SOCIETY HAS REFERRED TO THE INSPECTOR VISIT IN LETTER DATED 23.03.2011. THE LD. CIT HAS NOT CONSIDERED THE FACTUAL POSITION AS CONT AINED IN THAT LETTER. THE SOCIETY IS GETTING DONATIONS AND EVEN THE LOCAL M.L.A. GIVE TH E DONATION FROM ITS DISCRETION ON ANY FINED FOR CONSTRUCTION OF BOREWELL. NUMBER OF COWS WERE CERTIFIED BY VETERINARY MEDICAL OFFICE SHAHPURA. AFTER PERUSING THE WRITTEN SUBMISS IONS AND LETTERS PLACED IN PAPER BOOK, WE FEEL THAT SOCIETY IS ENGAGED IN CHARITABLE ACTIV ITY. EXPENSES HAVE NOT BEEN NOTICED TO HAVE BEEN INCURRED FOR THE BENEFIT OF PERSONS COVER ED U/S 13 OF I.T.ACT. THE LD. CIT HAS REFERRED THAT ELABORATE DETAILS OF EXPENSES HAVE NO T BEEN FILED BUT NO REFERENCE MADE TO SPECIFIC EXPENSES WHICH CAN BE STATED TO BE INCURRE D NOT FOR THE PURPOSES OF THE CHARITABLE WORK. IT IS NOT THE CASE OF THE LD. CIT THAT PERSON S IN WHOSE NAMES DONATIONS HAVE BEEN SHOWN TO HAVE STATED THAT THEY HAVE NOT PAID THE AM OUNT. AT THE TIME OF REGISTERATION, ONE HAS TO CONSIDER THE OBJECTS AND TO SEE THE GENUINES S OF THE EXPENSES. LOOKING TO THE FACTS AS OBSERVED FROM THE RECORD, WE FEEL THAT THE ASSES SEE IS ENTITLED FOR REGISTERATION AND BE GIVEN RECOGNITION U/S 80G. 13 HENCE BOTH THE APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN OPEN COURT ON 22.11.201 1 SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22.11.2011 *S.KUMAR* COPY FORWARDED TO:- 1. SHRI NARAINDASJI MAHARAJ GOSHALA, SHAHPURA, DIST RICT, JAIPUR. 2. THE COMMISSIONER OF INCOME TAX, ALWAR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NOS.337 & 338/JP/2011 BY ORDER A.R., I.T.A.T., JAIPUR