Gram Utthan, Kendrapada V. CIT, Cuttack

ITA 396/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4348 (ITAT-CUTTACK)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: misc
• Appeal Filed On: 04-11-2010
• Court: TRIBUNAL
• Department Lawyers: A K PATRA
• Keywords: Charitable institution
• Section: 12AA

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 396/CTK/2010 GRAM UTTHAN, AT/P.O. PIMPURI, RAJKANIKA, DIST. KENDRAPARA PAN: AAATU 1223 A VERSUS COMMISSIONER OF INCOME - TAX, CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI SUNIL MISHRA, AR FOR THE RESPONDENT SHRI A.K.PATRA, DR ORDER SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE HAVI NG BEEN AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX DT.14.7.2010 REVOKING THE REGISTRATION GRANTED U/S.12AA OF THE I.T.ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. FOR THAT THE IMPUGNED ORDER PASSED UNDER 12AA (3) OF THE INCOME TAX ACT,1961 BY THE LEARNED COMMISSIONER OF INCOME TAX, WHEREIN THE LEARNED COMMISSIONER HAS REVOKED THE REGISTRATION GRANTED IN FAVOUR OF THE ASSESSEE U/S. 12(A) OF THE IT ACT IS NOT SUSTAINABLE IN THE EYES OF LAW PARTICULARLY WHEN THE L EARNED COMMISSIONER HAS FOUND OUT THAT THE APPELLANT IS A GENUINE CHARITABLE INSTITUTION AND IS CARRIED OUT ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECT OF THE SOCIETY AS SUCH THE LEARNED COMMISSIONER HAS USURPED ITS JURISDICTION WHILE REVOKING THE REGISTR ATION GRANTED IN FAVOUR OF THE ASSESSEE. 2. FOR THAT THE LEARNED COMMISSIONER WHILE PASSING THE IMPUGNED ORDER HAS EVIDENTLY MISDIRECTED ITSELF IN CONSTRUING THE AMENDMENT OF SECTION 2(15) CAME INTO FORCE WITH EFFECT FROM 1.4.2009 PARTICULARLY THE PROVISO WHICH ELABORATES THE PHRASE GENERAL PUBLIC UTILITY AND APPLIED THE SAME IN THE INSTANT CASE OF THE APPELLANT WHEN THE APPELLANT IS CARRYING OUT OTHER CHARITABLE PURPOSE INCLUDING IMPARTING EDUCATION, TRAINING FOR SKILLED DEVELOPMENT AND MEDICAL RELIEF T O THE POOR WHICH VERY MUCH ENTAILS THE ASSESSEE THE OBTAIN THE REGISTRATION U/S. 12 - A OF THE ITA NO.396/CTK/2010 2 ACT AS SUCH THE ORDER SUFFERS FROM ERROR APPARENT ON THE FACE OF RECORD AND IS LIABLE TO BE INTERFERED WITH. 3. FOR THAT BEFORE PASSING THE IMPUGNED ORDER REVOKIN G THE REGISTRATION GRANTED IN FAVOUR OF THE APPELLANT UNDER THE INCOME TAX ACT IT IS IMPERATIVE ON THE PART OF THE LEARNED COMMISSIONER TO REACH AT A CONCLUSIVE FINDING THAT THE ASSESSEE IS NOT GENUINE OR THE ASSESSEE IS ACTING BEYOND THE OBJECTIVES AS STA TED IN THE MEMORANDUM OF THE SOCIETY HAVING NOT DONE SO THE IMPUGNED ORDER IS BEREFT OF ANY SUBSTANTIVE REASONS. 4. FOR THAT, THE CANCELLATION OF THE REGISTRATION IS ILLEGAL AND ARBITRARY SINCE THE APPELLANT FULFILLED THE BASIS TWO CRITERIA I.E. THE PURPO SE OF THE TRUST MUST BE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY AND (II) THE PURPOSE MUST NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT, RATHER IT UTILIZED ALL ITS PROFIT FOR THE ADVANCEMENT OF GENERAL PUBLIC UTILITY. 5. FOR THAT, THE ORDER OF REJECTION PASSED BY THE COMMISSIONER OF INCOME TAX IS ILLEGAL AND ARBITRARY AS THE SAME HAS BEEN PASSED WITHOUT AFFORDING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ESTABLISH THE GENUINENESS OF THE ACTIVITIES OF THE APPELLANT ORGANIZATION. 6. FO R THAT, ANY OTHER GROUNDS INCIDENTAL TO THE GROUNDS OF APPEAL MAY KINDLY BE PERMITTED TO URGE AT THE TIME OF HEARING OF THE CASE. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSE AND THEIR LEGAL IMPLICATIONS. 4. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT UNDISPUTEDLY THE ASSESSEE WAS GRANTED REGISTRATION U/S.12A OF THE I.T.ACT W.E.F. 19.11.2004. THE ASSESSEE - SOCIETY IS A CHARITABLE ORGANIZATION REGISTERED UNDER THE SOCIETY REGISTRATION ACT, 1860 W.E.F. 9.4.1990. THE ASSESSEE IS CARRYING OUT THE ACTIVITIES TO PROVIDE EDUCATION TO POOR, TRAINING FOR SKILL DEVELOPMENT IN THE RURAL AREA, PROVIDE MICRO FINANCE TO SELF HELP GROUP AND POOR PEOPLE AND MANY OTHER OBJECTS WHICH ARE CHARITABLE ITA NO.396/CTK/2010 3 IN NATURE . THE CIT ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE PROPOSING TO WITHDRAW THE REGISTRATION EARLIER ALLOWED TO THE ASSESSEE U/S.12A. AFTER HEARING THE ASSESSEE AND CONSIDERING THE MATERIAL PLACED BEFORE HIM, THE LEARNED CIT HAS PASSED THE ORDER DT.14.7.2010 TREATING THE ASSESSEE AS NOT A CHARITABLE INSTITUTION AND THEREBY DISENTITLED FOR REGISTRATION U/S.12A OF THE ACT W.E.F. 1.4.2009. THE ORDER PASSED BY THE LEARNED CIT IS NOT IN CONFORMITY WITH THE JUDICIAL PRONOUNCEMENTS OF VARIOUS JUDICIAL FOR U MS ON THIS ASPECT. THEREFORE, THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS NOT SUSTAINABLE FOR LEGAL SCRUTINY AND LIABLE TO BE QUASHED. 5. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT. 6. ON CAREFUL ANALYSIS OF THE IMPUGNED ORDER PASSED BY THE LEARNED CIT IN THE LIGHT OF RIVAL SUBMISSIONS OF BOTH THE PARTIES AND THE CITATIONS RELIED ON BY THE LEARNED AR OF THE ASSESSEE, ( 1 ) BHARAT JYOTI VRS. CIT - 1, ITA NO .723(LKW)/2010 REPORTED IN MANU/ LU/0075 / 2011 , (2) CHATUR VEDI HAR PRASAD EDUCATIONAL SOCIETY V. CIT (2010) 46 DTR (LUC) (TRIB.) 121 , (3) K.M. SCIENTIFIC RESEARCH CENTRE VRS. LAKSHMAN PRASAD AND ORS. 229 ITR 23(ALLHABAD) AND (4) PATEL NARSHI THAKERSHI AND ORS. VS. SHRI PRADYUMANSHIRIGJI ARJUNSINGHJI, AIR 1970 SC 127 AND THE ORDER OF THIS TRIBUNAL IN THE CASE OF BHARAT INTEGRATED SOCIAL WELFARE AGENCY V. CIT IN ITA NO.115/CTK/2011 DT.27.5.2011 , IT IS FOUND THAT THE ISSUE IN THE PRESENT CASE IN HAND IS SIMILAR TO THAT IN THE CASE OF BHARAT INTEGRATED SOCIAL WELFARE AGENCY (SUPRA). IN THE SAID CASE, THIS TRIBUNAL HAS CONSIDERED THE ISSUE AT LENGTH IN THE LIGHT OF THE DECISIONS OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST V. DIT (285 ITR 327) AND THE DECISION OF ITAT, BA NGALORE BENCH IN THE CASE OF ASST.DIT(EXEMPTION) V. BHARATHA SWAMUKHI SAMSTHE, REPORTED IN (2009) 028 ITA NO.396/CTK/2010 4 DTR 0113 AND ITAT, DELHI BENCH IN THE CASE OF DISHA INDIA MICRO CREDIT V. CIT IN ITA NO.1374/DEL/2010 DT.28.1.2011 AND THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST V. DIT (285 ITR 327), HAS COME TO THE CONCLUSION THAT SIMPLY BECAUSE THE ASSESSEE TRUST IS CARRYING ON FINANCIAL ACTIVITIES AND AS A RESULT GAINS SOME FINANCIAL ADVANTAGE WHICH WAS HEL PFUL IN CREATING FUNDS TO CARRY OUT THE MAIN CHARITABLE ACTIVITIES OF THE ASSESSEE CANNOT BE A GROUND FOR REVOKING THE REGISTRATION ALREADY GRANTED TO THE TRUST. IN THE PRESENT CASE IN HAND ALSO THE LEARNED CIT IS OF THE VIEW THAT AS THE ASSESSEE SEEMS TO HAVE INVOLVED IN MONEY LENDING AT THE RATE HIGHER THAN THE BANK AND OTHER ORGANIZATIONS, CANNOT BE A GROUND FOR INVOKING THE REGISTRATION GRANTED TO THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE RULE OF PRECEDENCE, WE FIND THAT THE IMPUGNED ORDER PA SSED BY THE LEARNED CIT IS NOT AT ALL SUSTAINABLE FOR LEGAL SCRUTINY AND HENCE, WE SET ASIDE THE SAME BEING UNJUSTIFIED IN THE CIRCUMSTANCES OF THE CASE AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNC ED IN OPEN COURT ON DT. 30 TH JUNE, 2011 S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDICIAL MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. T HE APPELLANT: GRAM UTTHAN, AT/P.O. PIMPURI, RAJKANIKA, DIST. KENDRAPARA 2. THE RESPONDENT: COMMISSIONER OF INCOME - TAX, CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.