Chatur Bhuj Mittal Janhit Trust, Jalandhar V. The Commissioner of Income Tax (E), Chandigarh

ITA 355/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0640 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: J S BHASIN
• Keywords: Charitable institution; Principle of natural justice
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.355(ASR)/2015 PAN: AANTS8652F CHATUR BHUJ MITTAL JANHIT TRUST, VS. COMMISSIONER O F INCOME TAX B-13/52, MITTAL UDYOG BUILDING, (EXEMPTION), CHAND IGARH. LADOWALI ROAD, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.J.S. BHASIN, ADVOCATE RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 22/06/2016 DATE OF PRONOUNCEMENT: 27/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL AGAINST THE ACTION OF THE LD. CIT (EXEMPTION), CHANDIGARH, REJECTING THE ASSESSEES APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT (IN SHORT, THE ACT), 1961. 2. WHILE REJECTING THE ASSESSEES APPLICATION, THE LD. CIT(EXEMPTION) HAS OBSERVED AS FOLLOWS: AN APPLICATION U/S 12A WAS FILED BY THE APPLICANT ON 23.12.2014. IN ORDER TO ACCORD AN OPPORTUNITY OF PERSONAL HEARING TO THE APPLICANT, THE CASE WAS FIXED FOR 13.05.2015. SHRI. BRIJ AGGARWAL, CA ATTENDED ON BEHALF OF THE APPLICANT TRUST AND DISCUSSED THE CASE. 2 ITA NO.355(ASR)/20 15 2. THE INCOME AND EXPENDITURE STATEMENT FILED UPTO 31.03.2015 OF THE TRUST SHOWS THE FOLLOWING ENTRIES: EXPENDITURE INCOME TO DONATIONS RS.15000.00 BY INTEREST RS.6961.00 TO STATIONERY RS. 200.00 BY DONATIONS RS.65000. 00 TO BANK CHARGES RS. 1853.00 TO SURPLUS RS.54907.06 AS PER THE ABOVE STATEMENT AS WELL AS NOTE ON ITS ACTIVITIES SUBMITTED BY THE TRUST, THE TRUST HAS RECEIVED DONA TIONS OF RS.65,000/- FROM THE FAMILY FUNDS AND DONATED RS.15,000/- TO OT HER TRUSTS. APART FROM THIS THE APPLICANT TRUST HAS NOT CARRIED OUT ANY AC TIVITY TO MEET ITS AIMS AND OBJECTIVES OR ANY ACTIVITY WHICH CAN BE TERMED AS CHARITABLE U/S 2(15) OF THE ACT. THEREFORE, THERE WERE NO MATERIALS BEFO RE ME TO BE SATISFIED OF THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR I NSTITUTION. THE REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 IS THUS, DENIED TO THE TRUST. 3. CHALLENGING THE IMPUGNED ORDER, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT HAS MISDIRECTED HIMSELF IN LAW AND ON FACTS IN ARBITRARILY REJECTING THE ASSESSEES APPLICATION FO R GRANT OF REGISTRATION U/S 12AA OF THE ACT. IT WAS STATED THAT THE ASSESSEE TR UST HAVING BEEN CREATED ONLY ON 12.03.2014 WITH ITS CHARITABLE OBJECTS, THE LD. CIT WAS NOT JUSTIFIED IN DENYING THE REGISTRATION SIMPLY BECAUSE THE ACTIVIT IES HAD NOT BEEN CARRIED OUT. THE LD. COUNSEL ARGUED THAT THE IMPUGNED ORDER IS N OT SUSTAINABLE INASMUCH AS IT WAS PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE WHEN THE INFERENCES DRAWN WERE NEITHER CONFRONTED NOR DISCU SSED WITH REPRESENTATIVE OF THE ASSESSEE TRUST. 4. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF THE CIT (EXEMPTION). 5. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT (E) HAS REJECTE D THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT, ONLY FOR THE REAS ON THAT THE ASSESSEE TRUST 3 ITA NO.355(ASR)/20 15 HAD NOT CARRIED OUT ANY ACTIVITY TO MEET ITS AIMS A ND OBJECTIVES OR ANY ACTIVITY WHICH COULD BE TERMED AS CHARITABLE U/S 2(15) OF TH E ACT; AND THAT THEREFORE, THERE WAS NO MATERIAL BEFORE THE LD. CIT(E) TO BE S ATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST. 6. IN THIS REGARD, IT IS SEEN THAT IN CIT VS. SURY A EDUCATIONAL & CHARITABLE TRUST, 355 ITR 280 (P&H), THE HONBLE HIGH COURT H AS OBSERVED AS FOLLOWS: CHARITABLE TRUST- REGISTRATION U/S 12A-SCOPE OF EN QUIRY BY CIT U/S 12AA U/S 12AA, THE CIT IS ONLY TO EXAMINE THE GEN UINENESS OF THE OBJECTS OF THE TRUST AND NOT THE APPLICATION OF INC OME FOR CHARITABLE PURPOSES WHICH CAN BE EXAMINED AT THE STAGE WHEN TH E TRUST FILES ITS RETURN THIS IS EVIDENT FROM SUB.S(3) OF S. 12AA W HICH EMPOWERS THE CIT TO CANCEL THE REGISTRATION OF THE TRUST OR INST ITUTION, IF HE IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION AR E NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION. 7. IN CIT VS. BABA KARTAR SINGH DUKKI EDUCATIONAL TRUST, 221 TAXMAN 493 (P&H), IT HAS BEEN HELD AS UNDER: CHARITABLE TRUST- REGISTRATION ITAT SET ASIDE ORDE R PASSED BY CIT AND DIRECTED REGISTRATION OF ASSESSEE AS CHARITABLE TRU ST. HELD, OBJECT OF SECTION 12AA IS TO EXAMINE GENUINENESS OF OBJECTS O F THE TRUST. WHILE EXAMINING GENUINENESS, INCOME AS WELL AS RESOURCES OF TRUST HAD TO BE TAKEN INTO CONSIDERATION. BUT ANY SUSPICION AS TO THOSE FACTS COULD NOT BE SOLE CRITERIA FOR REJECTING APPLICATION U/S 1 2A. THERE WAS MISCONCEPTION AMONGST OFFICERS EXERCISING POWER U/S 12AA IF TRUSTEE IS LIFELONG MEMBER OF TRUST, IT AUTOMATICALLY RAISES I NFERENCE THAT TRUST IS NOT CHARITABLE. FACT THAT TRUSTEE WAS LIFE MEMBER, MAY BE RELEVANT BUT COULD NOT BY ITSELF LEAD TO FINDING THAT TRUST WAS NOT CHARITABLE. THUS, IN ABSENCE OF ANY LEGAL INFIRMITY, ORDER PASSED BY TRI BUNAL AFFIRMED. REVENUES APPEAL DISMISSED. 4 ITA NO.355(ASR)/20 15 8. IN CIT VS. B.K.K. MEMORIAL TRUST, 256 CTR 424 (P&H), IT HAS BEEN HELD AS UNDER: CHARITABLE TRUST- CHARITABLE PURPOSE REGISTRATIO N U/S 12AA PRECONDITION- ASSESSEE-TRUST WAS DENIED REGISTRATIO N U/S 12AA ON GROUND THAT NO ACTIVITY HAD BEEN CARRIED OUT IN RELATION T O AIMS AND OBJECTIS OF TRUST DURING 2008-09 AND TRUST WAS SUSCEPTIBLE TO U SE FOR PURPOSES OTHER THAN CHARITABLE ONES, SINCE CONTROL OVER AFFAIRS OF TRUST WAS IN HANDS OF SIX TRUSTEES, THREE OF WHICH BELONGED TO SAME FAMIL Y TRIBUNAL DIRECTED REGISTRATION U/S 12AA SATISFACTION REGARDING GENU INENESS OF ACTIVITIES OF TRUST WAS TO BE SEEN ASSESSEE TRUST WAS IN NASCE NT STAGE AND WAS YET TO WORK TOWARDS ITS OBJECTS ISSUE THAT TRUST WAS NOT SET UP FOR CHARITABLE PURPOSES AND IT WAS UTILIZING ITS INCOM E NOT FOR SAID PURPOSE COULD NOT BE EXAMINED AT STAGE OF REGISTRATION U/ S 12AA APPLICATION FOR REGISTRATION WAS MADE WITHIN ONE YEAR OF CREATI ON OF TRUST NO REQUIREMENT THAT TRUST OR INSTITUTION SHOULD HAVE S TARTED ALL ITS ENVISAGED ACTIVITIES IN FIRST YEAR ITSELF REVENUE S APPEAL DISMISSED. 9. FROM THE ABOVE, IT IS EVIDENT THAT AT THE TIME O F REGISTRATION U/S 12AA OF THE ACT, THE LD. CIT (E) IS REQUIRED ONLY TO EXAMIN E THE AIMS AND OBJECTS OF THE TRUST. ONLY THE GENUINENESS OF THE TRUST AND ITS AC TIVITIES ARE TO BE GONE INTO AND THE ACTUAL FUNCTIONING OF THE TRUST IS NOT A RE LEVANT CONSIDERATION AT THAT STAGE. NO DECISION SUPPORTING THE ACTION OF THE LD. CIT(E) HAS EITHER BEEN CITED IN THE IMPUGNED ORDER, OR QUOTED BEFORE US. 10. MOREOVER, AS RIGHTLY CONTENDED, BEFORE ARRIVING AT THE CONCLUSION AS DONE BY THE LD. CIT(E), OPPORTUNITY OUGHT TO HAVE BEEN GRANTED TO THE ASSESSEE, WHICH THE IMPUGNED ORDER DOES NOT EVINCE AS HAVING BEEN DONE. 11. IN VIEW OF THE ABOVE, THE GRIEVANCE OF THE ASSE SSEE IS FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH AND THE LD. CIT(E) IS DIREC TED TO GRANT REGISTRATION TO 5 ITA NO.355(ASR)/20 15 THE ASSESSEE IN ACCORDANCE WITH THE REQUIREMENT OF THE SECTION 12AA OF THE ACT, I.E., EXAMINING THE GENUINENESS OF THE TRUST AND IT S ACTIVITIES. 12. IN RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/06/2016. /SKR/ COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE:CHATUR BHUJ MITTAL JANHIT TRUS T, JALANDHAR. (4) THE CIT(E, CHANDIGARH. (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.