Sai Hari Krishna Trust, Roorkee V. C.I.T. (Exemption), Lucknow

ITA 397/LKW/2020

AI Insights

The case involves Sai Hari Krishna Trust appealing against the order of the CIT (Exemptions), Lucknow, which rejected their application for registration under section 12AA of the Income Tax Act, 1961. The appeal was based on the grounds that the CIT (Exemptions) did not adequately consider the written submissions made by the trust and that the decision was made hastily without proper examination of the details provided. The ITAT found that the CIT (Exemptions) had not commented on the objects of the trust and the genuineness of its activities, which are crucial for registration under section 12AA. The ITAT decided to set aside the CIT (Exemptions)'s order and remand the matter for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113257 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-07-2023
• Assessment Year: misc
• Appeal Filed On: 03-12-2020
• Other Referred Cases: Commissioner of Income-tax (Exemptions, UP vs. Reham Foundation Lucknow [2019] 418 ITR 205 (Allahabad), Commissioner of Income-tax vs. Red Rose School [2007] 163 Taxman 19 (All), T.R. Gupta Public Charitable Trust Jammu vs. CIT (Exemptions), Chandigarh in I.T.A. No.148/Asr/2020 dated 20/09/2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA
• Keywords: Charitable institution; Set aside
• Section: 12AA; 10B; 205

Judgement Text

I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.397/Lkw/2020 Sai Hari Krishna Trust, C/o Hemant Arora & Co. LLP, 354-B, 30 Civil Lines, Roorkee. PAN:AAWTS5271P Vs. CIT (Exemptions), Lucknow. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) The appeal in I.T.A. No.397/Lkw/2020 has been filed by the assessee, against the impugned order dated 30/09/2020 passed by learned CIT (Exemptions), Lucknow u/s 12AA(3) of the IT Act. The grounds of appeal are as under: “1.1 That Learned CIT(E) has erred on law & facts for not considering the written submissions filled for obtaining the registration u/s 12AA and that the appellant had categorically submitted through the written submission which was not considered. Appellant by Shri P. K. Kapoor, C. A. Learned Authorised Representative (“learned AR" for short) Respondent by Smt. Sheela Chopra, CIT (D.R.) Date of hearing 20/07/2023 Date of pronouncement 21/08/2023 I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 2 1.2 On the facts and circumstances of the case and in law, the Learned CIT(E) has erred by not considering that appellant was afforded one opportunity only and the CIT (Exemptions), after no apparent action for more than 6 months from the date of the appellant's application for registration under section 12AA, dated 19.10.2019; in less than two months the Ld.CIT(E) proceeded to call for details, examine them and reject the appellant's application vide order dated 30.09.2020. It was held the apparent reason for this hurried disposal of appellant's application by CIT (Exemptions) with undue haste was because as per section 12AA(2) of the act, order for grant or rejection of registration was to be passed before the expiry of 6 months from the end of the month in which the application for registration was received; i.e., in the case on hand the CIT (Exemptions) was bound to pass the order on or before 30.09.2020 (keeping in view the Coid-19 Pandemic).” (A.1) The assessee’s application dated 19/11/2019, seeking registration u/s 12AA of the Income Tax Act, 1961 (“IT Act” for short), was rejected by learned Commissioner of Income Tax (Exemptions) [(“CIT(E)” for short] vide impugned order dated 30/09/2020. The appeal has been filed by the assessee against the aforesaid impugned order dated 30/09/2020 of learned CIT(E). In Form-36, date of service of communication of the aforesaid impugned order of learned CIT(E) has been stated by the appellant assessee as 22/10/2020 and the appeal in Form-36 was filed by the assessee on 04/12/2020. Date of filing of this appeal (04/12/2020) is within time prescribed u/s 253(3) of the IT Act; if date on which impugned order (against which this appeal has been filed) was communicated to the assessee is reckoned to be aforesaid 22/10/2020. It is noteworthy to mention here, that an affidavit signed by trustee of the appellant trust, verified on 02/12/2020, has been filed from the assessee’s side, stating as under: “1. That the application u/s 12AA of the Income Tax Act 1961 filed by the Appellant before the Commissioner of Income Tax I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 3 (Exemptions) was disposed of by order dated 30.09.2020 passed by CIT(E). 2. That the time for filing of the appeal before the Tribunal was to expire on 29.11.2020. 3. That Sh. Hari Bhajan Bhasin, Chief Trustee of the Trust passed away on 11.09.2020 and that the trustees were not aware that the order passed by the CIT(E) for the trust was passed on 30.09.2020 as the trustees did not receive through email which was not accessible to them and later received the order on 22/10/2020, a copy of the death certificate is also enclosed.” (A.1.1) During the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT” for short), no objection has been taken against the appellant assessee from Revenue’s side by way of Cross Objection u/s 253(4) or appeal u/s 253(2) of the IT Act, on grounds of limitation in filing of this appeal. Further, as per noting of the registry dated 22/12/2020, the appeal filed by the assessee is in order. In view of the foregoing, and as there is no objection to admission of appeal on grounds of being barred by limitation, we admit the appeal for decision on merits. (A.2) During the course of appellate proceedings before the ITAT, a paper book containing the following particulars was filed from the assessee’s side: S.No. Particulars 1. Copy of notice of hearing dated 12.05.2020 issued by CIT (Exemptions), fixing containing various queries, fixing for compliance on 29.05.2020 2. Copy of written submission filed by the assessee before the CIT(Exemption) in response to notice of hearing dated 12.05.2020, alongwith following annexures: Copy of Pan Card and acknowledgment of ITR for A.Y. 2019-20 Copy of original trust deed dated 20.08.2018 Copy of supplementary trust deed dated 20.11.2018 Copy of audited balance sheet, income & expenditure account and receipts I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 4 & payment account for the period 20.08.2018 to 31.03.2019 Copy of declaration with regard to Section 13(1)(c)/13(1)(d) Copy of note on objects of the trust Copy of no objection certificate from the owner of the premises together with evidence of ownership of the premises Copy of audit report in Form 10B together with copy of ack. Of ITR for assessment year 2019-20, copy of balance sheet, income and expenditure account, and receipt and payment account for the period 20/08/2018 to 31/03/2019 Certified copy of amended trust deed dated 09.06.2020 Copy of proof of identity of the main trustee Copy of list of trustees with name, address, PAN & telephone number Note on activities carried out since inception upto 31.03.2019 Details of corpus donation of Rs. 22,60,000/received by the trust from the main trustee Copy of confirmation of donations and copy of confirmation of loans Proof of investment Copy of statement of bank account maintained in Andhra Bank Copy of undertaking with regard to no infringement of the First Proviso to Section 2(15) Details & Evidence of charitable activities Copy of exparte order dated 20.07.2019 passed earlier u/s 12AA(1)(b)(ii) rejecting claim of registration Details of bank account and copies of bank statements Copy of day book, bank statement & ledger accounts Copy of bills/vouchers Copy of application in Form 10A e-filed on 19.10.2019 Moreover, copies of the following decisions were also filed from the assessee’s side: (i) Commissioner of Income-tax (Exemptions, UP vs. Reham Foundation Lucknow [2019] 418 ITR 205 (Allahabad) (ii) Commissioner of Income-tax vs. Red Rose School [2007] 163 Taxman 19 (All) (iii) Copy of order of ITAT Amritsar Bench in the case of T.R. Gupta Public Charitable Trust Jammu vs. CIT (Exemptions), Chandigarh in I.T.A. No.148/Asr/2020 dated 20/09/2022 (B) At the time of hearing before us, learned Counsel for the assessee drew our attention to grounds of appeal and strongly contended that the impugned order rejecting assessee’s application for registration u/s 12AA of I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 5 the IT Act was passed by learned CIT(E) without giving adequate opportunity to the assessee and also without due consideration of written submissions filed by the assessee. In view of the foregoing, the learned CIT (D.R.) submitted that the issue regarding registration u/s 12AA of the IT Act may be set aside to the file of learned CIT(E) for fresh order in accordance with law after providing reasonable opportunity to the assessee and after due consideration of the assessee’s submissions. However, the learned Counsel for the assessee drew our attention to order of Hon'ble Allahabad High Court in the case of Commissioner of Income-tax (Exemptions, UP vs. Reham Foundation Lucknow [2019] 418 ITR 205 (Alld) and urged us to consider whether the materials on record were sufficient for the ITAT to direct registration of the assessee u/s 12AA of the IT Act without remanding the matter to the learned CIT(E). We have heard both sides. We have perused materials on record. (B.1) It is well settled that there are two conjunctive tests to be considered at the time of registration u/s 12AA of ITAT. Firstly, it is to be examined whether the stated objects of the applicant are charitable in nature. Secondly, genuineness of the charitable activities is to be established in reality. The applicant has to pass these two tests cumulatively, and not alternatively. Charity is the core issue for registration u/s 12AA of IT Act. Charity is its soul. Mere declaration of charitable objects is not adequate. Establishing the genuineness of charitable activities is an essential requirement for registration u/s 12AA of IT Act. Even in the case of Reham Foundation Lucknow (supra) on which the learned A.R. for assessee has placed reliance, it has been clearly enunciated in paragraph 10 of the order, that registration is subject to satisfaction over genuineness of the activities of the trust and over objects of the trust. Even in the case of CIT vs. Red Rose School (supra) another decision on which Learned A. R. for assessee I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 6 placed reliance, it is inferred from paragraph 23 of the order of Hon'ble Allahabad High Court, that satisfaction about objects of the trust or institution, and about genuineness of its activities, are necessary requirements for registration u/s 12AA of IT Act. In this background, on perusal of the impugned order of learned CIT(E), we find that she has not commented on objects of the assessee trust and on the genuineness of the activities. Further, on perusal of the materials brought for consideration by way of the paper book filed from the side of the assessee trust [referred to in foregoing paragraph (A.2) of this order], we are of the view that these materials are not sufficient for us, to reach a definite conclusion on genuineness or otherwise of the activities of the assessee trust. (B.2) In a recent order dated 27/07/2023 passed by us, which was authored by the Judicial Member in the case of Boondein in I.T.A. No.21/Lkw/2023, we have remitted the matter regarding registration u/s 12AA of the IT Act to file of learned CIT(E), taking the following view: “...............The ld. Authorized Representative has relied upon the judgment of the Jurisdictional High Court in the case of CIT vs. Reham Foundation, Lucknow (Supra) and has argued that the powers of the Tribunal are co-extensive to that of the Commissioner u/s. 12AA of the Act and, thus, it can direct for registration of the trust or institution. However, this power, in our considered view, comes with a caveat i.e. the order of registration can be issued only after recording satisfaction with regard to the genuineness of the activities of the trust as provided u/s. 12AA of the Act. In this Full Bench judgment, the Hon'ble High Court has further held that where the Commissioner has refused to accept application for registration of trust u/s. 12AA of the Act after recording his finding on the basis of material on record before him holding that the activities and objects of the trust were not genuine, the Tribunal, on the basis of same material on record, can come to the conclusion that the order of the Commissioner was perverse. In such a situation, the Tribunal can direct the registration of trust without remanding the matter to the Commissioner. However, the evidences furnished before us in the form of paper book [which were also submitted before the ld. CIT(E)], are unfortunately not I.T.A. No.397/Lkw/2020 Assessment Year:N.A. 7 sufficient evidence to enable us to satisfy ourselves that the objects of the trust are indeed genuine......................” (B.2.1) In view of the foregoing discussions, and following our aforesaid order dated 27/07/2023 in the case of Boondein (supra), we set aside the aforesaid impugned order dated 30/09/2020 of learned CIT(E) and direct the learned CIT(E) to pass a denovo order in accordance with law after providing reasonable opportunity to the assessee and after giving due consideration to the submissions made by the assessee. We specifically direct the learned CIT(E) to give findings on charitable objects of the assessee trust and on genuineness of the charitable activities of the assessee, as claimed by the assessee, in the denovo order to be passed in pursuance of our aforesaid direction. All grounds of appeal of the assessee are treated as disposed off in accordance with the aforesaid directions. (C) In the result, the appeal is partly allowed for statistical purposes. (Order pronounced in the open court on 21/08/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:21/08/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., Assistant Registrar