M/s Bhutoria Memorial Trust, Kolkata V. I.T.O.Ward(Exemption)1(2), Kolkata

ITA 373/KOL/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6640 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 27-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Keywords: Charitable institution; Benefit of exemption; Cancellation of registration; Set aside
• Section: 143(3); 80G; 12A; 12AA; 148; 12; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST....................................................APPELLANT 8A, LINDSAY STREET, NEW MARKET, KOLKATA 700 087 [PAN : AAATB 5481 G] VS. INCOME TAX OFFICER, WARD(EXEMPTION)1(2), KOLKATA.....................................................RESPONDENT APPEARANCES BY: SHRI SUNIL SURANA, FCA, APPEARED ON BEHALF OF THE ASSESSEE. DR. P.K. SRIHARI ,CIT(DR). , APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 10 TH , 2019 DATE OF PRONOUNCING THE ORDER : JULY 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THESE THREE APPEALS FILED BY THE ASSESSEE IS DIRECTED AGAINST SEPARATE BUT IDENTICAL ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 25, KOLKATA, (HEREINAFTER THE LD.CIT(A)), FOR THE ASSESSMENT YEARS 2012-13, 2013-14 AND 2014-15. 2. AS THE ISSUES ARISING IN ALL THE ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 3. FACTS IN BRIEF, THE ASSESSEE IS A TRUST. IT WAS GRANTED REGISTRATION UNDER SECTION (HEREINAFTER U/S) 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) VIDE NO. T/14/W.B. VII OF 1984-85 DATED 14.05.1985 AND APPROVAL U/S 80G VIDE NO. DIT(E)/2994/8E/259/83-84 DATED 17.10.2011 BY THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATA [HEREINAFTER LD.CIT(E)/KOLKATA]. FOR THE ABOVE IMPUGNED ASSESSMENT YEARS, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL TOTAL INCOME AFTER CLAIMING EXEMPTION U/S 11 AND 12 OF THE ACT. 4. THE LD.CIT(E)/KOLKATA INVOKED ITS POWERS U/S 12AA(3) AND 12AA(4) OF THE ACT AND FOR THE VARIOUS REASONS GIVEN, HE WITHDREW AND CANCELLED THE REGISTRATION GRANTED U/S 12AA OF THE ACT TO THE ASSESSEE, W.E.F. 01.04.2011. CONSEQUENTLY, THE AO REOPENED 2 I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST THE ASSESSMENT OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13 BY ISSUING A NOTICE U/S 148 OF THE ACT DATED 29.03.2016. FOR THE ASSESSMENT YEARS 2013-14 AND 2014-15, THE RETURN OF INCOME FILED BY THE ASSESSEE TAKEN UP FOR SCRUTINY ON CASS. 5. THE ASSESSEE CARRIED THE MATTER OF WITHDRAWAL AND CANCELLATION OF REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT BY LD.CIT(E)/KOLKATA BY FILING AN APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA (HEREINAFTER ITAT/KOLKATA). THE ITAT AFTER CONSIDERING THE ARGUMENTS OF BOTH SIDES, CANCELLED THE ORDER PASSED BY THE LD.CIT(E)/KOLKATA, INVOKING THE POWER U/S 12AA(3) AND 12AA(4) OF THE ACT, WITHDRAWING AND CANCELLING THE REGISTRATION OF THE ASSESSEE U/S 12A OF THE ACT. THUS, THE REGISTRATION GRANTED ORIGINALLY TO THE ASSESSEE U/S 12A OF THE ACT IN THE YEAR 1985 WAS RESTORED. 6. THE AO IN ALL THE THREE ASSESSMENT ORDERS, FOR ALL THE THREE ASSESSMENT YEARS BEFORE US, I.E. ASSESSMENT YEARS 2012-13, 2013-14 AND 2014-15 RECORDS THAT THIS ORDER OF THE ITAT, B BENCH DATED 09.11.2016 WAS BROUGHT TO HIS NOTICE. HE WAS OF THE VIEW THAT CONSEQUENT TO THE ORDER OF THE ITAT, B BENCH, THE LD.CIT(E)/KOLKATA HAS TO PASS AN ORDER AND THEN ONLY HE WOULD TAKE COGNISANCE OF THE SAME. CONSEQUENTLY, HE COMPLETED THE ASSESSMENT BY HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT AS THE LD.CIT(E)/KOLKATA HAS NOT PASSED A CONSEQUENTIAL ORDER TO THE ORDER OF THE ITAT. HE HELD AS UNDER: IT IS PERTINENT TO MENTION THE OBSERVATIONS MADE BY THE LD. CIT (EXEMPTIONS), KOLKATA IN THE ORDER U/S 12AA(3) & 12AA(4) OF THE IT ACT, 1961 DATED 29.02.2016. THE OBSERVATIONS WERE - I) ASSESSEE TRUST HAS PAID A SUM OF RS.20,00,000/- AS BOGUS DONATION TO M/S BATANAGAR EDUCATION & RESEARCH TRUST AND RECEIVED IN CASH II) TRUSTEE OF THE TRUST HAVE BEEN BENEFITED OUT OF THE CASH SO RECEIVED. III) THEY HAVE VIOLATED THE OBJECTS OF THE TRUST AS CONVERTING CHEQUE PAID THROUGH DONATION AND RECEIVED IN CASH. IV) CHARITY DONE THROUGH PAID DONATION IS NOT VOLUNTARY, MERELY AN ACCOMMODATION ENTRY AND FICTITIOUS. V) MOREOVER, TRUST WAS FOUND TO BE DOING BUSINESS IN SHARES, MFS, BONDS. MAIN SOURCE OF THEIR INCOME IS SHORT TERM / LONG TERM CAPITAL GAIN, DIVIDEND, INTEREST INCOME ETC. IT IS PRETENDING TO BE INVOLVED IN ACTIVITIES LIKE INVESTMENT / FINANCE BUSINESS BEYOND ITS OBJECTS. VI) CORPUS FUND RECEIVED U/S LL(L)(D) WERE NEVER UTILISED FOR THE PURPOSE THEY WERE RECEIVED BUT USED AS TRADING ACTIVITY IN SHARES, MFS, BONDS ETC. VII) IN SPITE OF FACTS THAT TRUST IS PUBLIC CHARITABLE TRUST RECEIVING CORPUS DONATIONS FROM PUBLIC AT LARGE BUT ACTUALLY IT HAS BEEN USED BY TRUSTEES AS 3 I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST PRIVATE TRUST. ASSETS BEING INVESTMENT, EXPENDITURE AS DONATION HAVE BEEN MANAGED ACCORDING TO THE NEED OF THE TRUSTEES. VIII) SOCIETY / TRUST HAS GROSSLY MISUSED THE PROVISIONS OF SECTION 12AA AND 80G950(VI). IX) ACTIVITIES OF THE TRUST ARE NOT GENUINE AS WELL AS NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS DECLARED OBJECTS. ASSESSOR'S CASE IS COVERED WITHIN THE BOTH LIMB OF SECTION 12AA(3). X) EVEN INGENUINE AND ILLEGAL ACTIVITIES CARRIED ON BY ASSESSEE THROUGH MONEY LAUNDERING DO NOT COME WITHIN THE CONCEPTUAL FRAMEWORK OF CHARITY VIS-A-VIS ACTIVITY OF GENERAL PUBLIC UTILITY ENVISAGED BY THE INCOME TAX ACT AS LAID DOWN IN SECTION - 2(15). THE INCOME OF THE ASSESSEE IS COMPUTED AS BELOW AFTER CONSIDERING THE DETAILS AND DOCUMENTS FURNISHED BY IT WITHOUT GIVING COGNIZANCE TO THE SECTION 11 TO 13 OF THE INCOME TAX ACT, 1961.: - THE INCOME OF THE ASSESSEE IS COMPUTED AS BELOW AFTER CONSIDERING THE DETAILS AND DOCUMENTS FURNISHED BY IT: - INCOME FROM OTHER SOURCES INTEREST RECEIVED RS. 24,27,289/- PROFIT ON SALE OF INVESTMENT RS. 15,30,799/- ADD: CORPUS DONATION FOR A.Y. 2012-13 RS. 1,48,11,000/- TOTAL INCOME RS. 1,87,69,088/- ROUNDED OFF RS. 1,87,69,090/- 7. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). IN THE MEANWHILE THE LD.CIT(E)/KOLKATA PASSED AN ORDER DATED 20.12.2017 IN ACCORDANCE WITH AND AS A CORRESPONDENCE TO THE ORDER OF THE ITAT, C BENCH, KOLKATA. THE ORDER OF CANCELLING THE REGISTRATION U/S 12A OF THE ACT TO THE ASSESSEE WAS WITHDRAWN/REVERSED. HENCE, REGISTRATION GRANTED U/S 12A OF THE ACT TO THE ASSESSEE GOT RESTORED. 8. IN VIEW OF THIS ORDER OF THE LD.CIT(E), THE AO PASSED ORDERS U/S 154 OF THE ACT ON 02.04.2018 FOR THE ASSESSMENT YEARS 2012-13, 2013-14 AND 2014-15 WHEREIN HE CONFERRED THE BENEFIT OF EXEMPTION U/S 11 AND 12 OF THE ACT TO THE ASSESSEE. THUS, THE DEMAND RAISED ON THE ASSESSEE BY THE ORDER PASSED BY THE AO U/S 143(3) OF THE ACT ORIGINALLY GOT NULLIFIED BY THIS ORDER U/S 154 OF THE ACT FOR ALL THE THREE ASSESSMENT YEARS. 9. BEFORE THE LD.CIT(A), THE ASSESSEE SOUGHT TO WITHDRAW THE APPEALS. THE LD.CIT(A) AT PARA 4.3(A) AT PAGE-9 OF HIS ORDER, FOR THE ASSESSMENT YEAR 2013-14 REJECTED IS PLEA OF THE ASSESSEE FOR WITHDRAWAL OF APPEAL. THEREAFTER, FOR VARIOUS REASONS GIVEN IN HIS ORDER 4 I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST HE HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION U/S 11 AND U/S 213 OF THE ACT. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, LD.CIT(E)/KOLKATA HAD WITHDRAWN AND CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12A OF THE ACT FOR THE VARIOUS REASONS MENTIONED IN THAT ORDER AND THAT ON APPEAL, THE HONBLE ITAT, C BENCH, KOLKATA HAD DEALT WITH ALL THESE ISSUES IN ITS ORDER DATED 20.12.20178 AND SET ASIDE THE ORDER OF THE LD.CIT(E)/KOLKATA. WHILE SO, THE LD.CIT(A) HARPING OF THE SAME REASONS AS GIVEN BY THE LD.CIT(E)/KOLKATA WHILE CANCELLING / WITHDRAWING THE REGISTRATION GRANTED U/S 12A OF THE ACT CAME TO A WRONG CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 11 AND 12 OF THE ACT. HE SUBMITTED THAT THIS IS NOT PERMISSIBLE AND THAT THE AO HAS IN HIS ORDER U/S 154 OF THE ACT, FOR ALL THE THREE ASSESSMENT YEARS GRANTED EXEMPTION U/S 11 AND 12 OF THE ACT TO THE ASSESSEE AND WITHDREW THE ADDITIONS MADE. HE RELIED THE ORDER OF ITAT AND SUBMITTED THAT THE LD.CIT(A) WAS WRONG IN TAKING A CONTRARY VIEW. HE, FURTHER, SUBMITTED THAT THE LD.CIT(A) WAS WRONG IN CONCLUDING THAT THE ASSESSEE IS NOT ENGAGED IN CHARITABLE ACTIVITIES AND THAT THE VOLUNTARY CONTRIBUTIONS WERE NOT UTILIZED BY THE TRUST FOR CHARITABLE PURPOSES. HE FILED A CHART REBUTTING POINT WISE, THE FINDING OF THE LD.CIT(A).HE PRAYED FOR RELIEF. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE (HEREINAFTER LD.DR) ON THE OTHER HAND SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT, MERE GRANT OF REGISTRATION U/S 12A OF THE ACT DOES NOT AUTOMATICALLY ENTITLE THE ASSESSEE FOR GRANT OF EXEMPTION U/S 11 OF THE ACT. HE RELIED ON THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT, THE ASSESSEE WAS ENGAGED IN NON-CHARITABLE ACTIVITIES AND THAT THE SURPLUS THAT AROSE TO THE ASSESSEE WAS NOT ON ACCOUNT OF ACTIVITIES DONE BY HIMSELF AND THAT THE VOLUNTARY CONTRIBUTIONS WERE NOT UTILIZED BY THE TRUST BY ITSELF BUT WAS DONATED TO ANOTHER TRUST AND HENCE, THE EXEMPTION U/S 11 OF THE ACT CANNOT BE GRANTED. 12. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD AND CASE LAWS CITED, WE HOLD AS FOLLOWS. 13. THE AO IN THIS CASE DENIED EXEMPTION TO THE ASSESSEE U/S 11 OF THE ACT, ONLY ON THE GROUND THAT THE LD.CIT(E)/KOLKATA HAS NOT PASSED A CONSEQUENTIAL ORDER RESTORING THE REGISTRATION GRANTED U/S 12A OF THE ACT TO THE ASSESSEE, AFTER THAT ITAT, C BENCH, 5 I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST KOLKATA PASSED AN ORDER DATED 26.04.2017. THE REASONS FOR WHICH LD.CIT(E)/KOLKATA ORIGINALLY WITHDREW THE REGISTRATION HAVE BEEN BROUGHT OUT BY THE AO IN HIS ORDER. ALL THESE REASONS STATED BY THE LD.CIT(E) WERE FOUND TO BE FACTUAL INCORRECT OR ERRONEOUS AND HENCE NOT MAINTAINABLE IN LAW BY THE ITAT IN ITA NO. 834/KOL/2016 ORDER DATED 26.04.2017. WHILE SO, THE LD.CIT(A) RELIES ON THESE VERY REASONS DISCUSSED BY THE LD.CIT(E)/KOLKATA FOR COMING TO A CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 11 OF THE ACT. THE ITAT IN ITS ORDER AT PARA 5 PAGE-6 CONSIDERED ALL THESE OBSERVATIONS MADE BY THE LD.CIT(E) AND AT PATE 10 TO 12 OF THE ORDER IT DEALT WITH THE SAME. A CLEAR FINDING WAS GIVEN THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE WITHIN THE PROVISION OF SECTION 11(B) OF THE ACT. IT ALSO HELD THAT THE TRUST WAS NOT CARRYING ON ANY BUSINESS ACTIVITY AND THAT THE DONATIONS GIVEN BY THE ASSESSEE WERE FOR CHARITABLE ACTIVITIES. IT HAS GIVEN A FINDING THAT THE ASSESSEE IS NOW ENGAGED IN PROVIDING BOGUS DONATIONS. THE LD.CIT(A) RELIED ON THESE REJECTED REASONS GIVEN BY THE LD.CIT(E) IN DENYING THE EXEMPTION U/S 11 OF THE ACT TO THE ASSESSEE. THUS, THIS ORDER OF THE LD.CIT(A) CANNOT BE UPHELD. THE REASONS GIVEN BY THE LD.CIT(A) IN HIS ORDER FOR DENYING THE EXEMPTION TO THE ASSESSEE U/S 11 OF THE ACT WERE CONTRARY TO THE FINDING OF THE TRIBUNAL IN ITS ORDER DATED 09.11.2016. HENCE, WE ALLOW ALL THE APPEALS OF THE ASSESSEE BY SETTING ASIDE THE ORDER OF THE LD.CIT(A) FOR ALL THE ASSESSMENT YEARS. THE ORDER OF THE LD.CIT(A) FOR AY 2012-13, 2013-14 AND FOR AY 2014-15 IS HEREBY REVERSED AND THE AO IS DIRECTED TO GRANT EXEMPTION TO THE ASSESSEE U/S 11 OF THE ACT. 14. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 31 ST JULY, 2019. SD/- SD/- [S.S. VISWANETHRA RAVI] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.07.2019 BIDHAN 6 I.T.A. NOS. 373, 374 & 375/KOL/2019 ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15 M/S BHUTORIA MEMORIAL TRUST COPY OF THE ORDER FORWARDED TO: 1. M/S BHUTORIA MEMORIAL TRUST 8A, LINDSAY STREET, NEW MARKET, KOLKATA 700 087 2. INCOME TAX OFFICER, WARD(EXEMPTION)1(2), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES