Suvid Foundation, Kanpur V. C.I.T. (Exemption), Lucknow

ITA 399/LKW/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7139 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-08-2021
• Assessment Year: misc
• Appeal Filed On: 07-12-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Reasonable cause; Capital expenditure
• Section: 12A; 12AA

Judgement Text

I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NO.399/LKW/2020 ASSESSMENT YEARS:N.A. SUVID FOUNDATION, G-14, SHANTI NAGAR, CANTT. KANPUR. PAN:ABFAS8380N VS. CIT (EXEMPTIONS), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT (EXEMPTIONS) LUCKNOW DATED 28/10/2020. 2. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS OF APPEAL AND ARE ARGUMENTATIVE IN NATURE BUT THE CRUX OF GROUNDS OF APPEAL IS THE ACTION OF LEARNED CIT (EXEMPTIONS) BY WHICH HE HAS REJECTED T HE APPLICATION FILED BY THE ASSESSEE U/S 12A OF THE ACT. APPELLANT BY SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY SMT. ABHA KALA CHANDA, CIT (D.R.) DATE OF HEARING 12 / 08 /20 21 DATE OF PRONOUNCEMENT 26 / 08 /20 21 I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 2 3. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ONLY GROUND ON WHICH LEARNED CIT (EXEMPTIONS) DID N OT APPROVE THE ELIGIBILITY OF THE INSTANT ASSESSEE U/S 12A OF THE ACT IS THAT THE ASSESSEE HAS NOT PERFORMED ANY ACTIVITY IN PURSUANCE OF ITS OBJE CTS AND THEREFORE, THE REGISTRATION COULD NOT BE GRANTED AND IN THIS RESPE CT OUR ATTENTION WAS INVITED TO THE OBSERVATIONS OF LEARNED CIT (EXEMPTI ONS). LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT (EX EMPTIONS) HAS ALSO RECORDED AN INCORRECT AND ERRONEOUS OBSERVATION THA T THE ASSESSEE DID NOT SUBMIT ANY ACCOUNT FOR ANY FINANCIAL YEAR. IT WAS SUBMITTED THAT VIDE ANNEXURE-6 TO THE ON-LINE SUBMISSIONS DATED 01/06/2 020, THE ABOVE NOTED DOCUMENT WAS DULY SUBMITTED BEFORE THE AUTHORITY AN D THEREFORE, THE IMPUGNED ORDER IS LIABLE TO BE QUASHED AND REGISTRA TION BE GRANTED TO THE ASSESSEE. REGARDING THE OBSERVATION OF LEARNED CIT (EXEMPTIONS) IN RESPECT OF WITHDRAWALS FROM THE BANK, LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT AMOUNTS SPENT BY THE ASSESSEE IS TOW ARDS SETTING UP AND CREATING INFRASTRUCTURE FACILITY WHICH IS IN THE NA TURE OF CAPITAL EXPENDITURE AND WHICH IS REVEALED ON A BARE PERUSAL OF THE FINA NCIAL STATEMENT AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO THE COPY OF BANK ACCOUNT PLACED AT PAGES 49 TO 51 OF THE PAPER BOOK. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HUGE WITHDRAWALS FROM BANK WERE NOT IN CASH AND RATHER THESE WERE PAID THROUGH BANKING CHANNELS FOR ACQUISITION OF LAND FOR ACHIEVEMENT OF OBJECTS OF THE ASSESSEE AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPY OF LAND LEDGER ACCOUNT, COPY OF PURCHASE DEED OF LAND AND ALSO TO THE COPY OF BALANCE SHEET PLACED AT PAG E 18 OF THE PAPER BOOK. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT LEA RNED CIT (EXEMPTIONS) DID NOT RAISE ANY OBJECTION REGARDING OBJECTS OF TH E ASSESSEE WHICH NECESSARILY ARE CHARITABLE IN NATURE AND AS REGARDS THE OBSERVATION OF LEARNED CIT (EXEMPTIONS) THAT ASSESSEE HAD NOT CARR IED OUT ANY ACTIVITY, IT I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 3 WAS SUBMITTED THAT ACQUISITION OF LAND IS AN ACTIVI TY TOWARDS FULFILLMENT OF OBJECTS OF THE SOCIETY AND HON'BLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT HAS CATEGORICA LLY HELD THAT THE TERM ACTIVITY IN THE PROVISION INCLUDES PROPOSED ACTIVIT Y ALSO AND THEREFORE, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, IT WAS P RAYED THAT THE ASSESSEE BE GRANTED REGISTRATION U/S 12A OF THE ACT. 4. LEARNED D. R., ON THE OTHER HAND, SUBMITTED THAT THE LEARNED CIT (EXEMPTIONS) HAS CLEARLY HELD THAT THE ASSESSEE DID NOT FILE ANY EVIDENCE OF ANY ACTIVITY AND MOREOVER HE HAS HELD THAT THE ASSE SSEE HAS WITHDRAWN SUBSTANTIAL AMOUNTS FROM THE BANK AND THEREFORE, SH E HAS RIGHTLY HELD THAT RECITAL OF CONDUCTING SOME CHARITABLE ACTIVITY WITH OUT ANY DOCUMENTS/EVIDENCE CANNOT BE CONSTRUED AS ACTIVITY BEING CARRIED OUT BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE MADE C OMPLIANCE OF SHOW CAUSE NOTICE DATED 13/05/2020, ON 01/06/2020 AND TH E COPY OF SHOW CAUSE NOTICE AS WELL AS ITS REPLY IS PLACED AT PAGES 1 TO 10 OF THE PAPER BOOK. IN THE REPLY FILED BEFORE LEARNED CIT (EXEMPTIONS) TH E ASSESSEE PROVIDED INFORMATION AND DOCUMENTS WITH RESPECT TO ALL QUERI ES. THE LEARNED CIT (EXEMPTIONS) DID NOT RAISE ANY OBJECTION WITH RESPE CT TO OBJECTS OF THE ASSESSEE. THE ONLY OBJECTION RAISED BY LEARNED CIT (EXEMPTIONS), AS RECORDED BY HIM IN HIS ORDER, ARE REPRODUCED BELOW: 3. ON EXAMINATION OF THE DOCUMENTS SUBMITTED ONLIN E BY THE APPLICANT, FOLLOWING HAVE OBSERVED: THAT THE SOCIETY HAS BEEN REGISTERED SINCE 29-07-20 19 AND REGISTRATION IS VALID TILL 28-07-2024. I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 4 4. THAT THE APPLICANT HAS FILED THE BANK STATEMENT FOR A PERIOD FROM 01-08-2019 TO 06-03-2020. ON PERUSAL OF THE SAME IT IS NOTICED THAT THE APPLICANT RECEIVED RS.2 ,95,11,000/- AND MADE SUBSTANTIAL WITHDRAWAL / TRANSFER DURING T HIS PERIOD. 5. IT IS SEEN FROM THE BANK STATEMENT OF THE APPLI CANT THAT IT HAS RECEIVED HUGE AMOUNT OF FUNDS AND MADE MANY SUBSTANTIAL WITHDRAWAL/ TRANSFER, BUT DID NOT SUBMI T ANY ANNUAL ACCOUNTS FOR ANY FINANCIAL YEAR EVEN THOUGH IT HAS BEEN IN EXISTENCE FOR THE F.Y. 2019-20. 6. IT IS FURTHER NOTED THAT THE APPLICANT HAS NOT S UBMITTED ANY DOCUMENT / EVIDENCE TO THE ACTIVITIES MENTIONED IN ITS NOTE ON ACTIVITY OF THE SOCIETY. HENCE, ONLY RECITA L OF SOME CHARITABLE ACTIVITY WITHOUT ANY DOCUMENTS/EVIDENCE CANNOT BE CONSTRUED AS BEING CARRIED OUT BY THE APPLICANT. 7. IN VIEW OF THE ABOVE DISCUSSION, IT IS CLEARLY E VIDENT THAT THE TRUST FAILED TO PROVIDE INFORMATION / DOCUMENT TO ENABLE THE UNDERSIGNED TO FORM THE SATISFACTION FOR GRANTI NG REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT 1961. 8. ACCORDINGLY, APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF INCOME TAX ACT IS REJECTED. 5.1 VIDE PARA 4, THE LEARNED CIT (EXEMPTIONS) HAS O BSERVED THAT ASSESSEE HAD RECEIVED RS.2,95,11,000/- AND HAS MADE SUBSTANTIAL WITHDRAWAL/TRANSFER DURING THIS PERIOD. VIDE PARA 10 OF ITS REPLY, THE ASSESSEE HAD SUBMITTED AS UNDER: 10. THE SOCIETY HAS NOT RECEIVED ANY DONATIONS/COR PUS FUND / MEMBER FEE/GRANT. THE SOCIETY HAS TAKEN A LOAN O F RS.2,00,00,000/- TO START THE ACTIVITIES. THIS LOA N IS INTEREST BEARING @9%. CONFIRMATION OF UNSECURED LOAN RECEIV ED IS BEING ENCLOSED HEREWITH MARKED AS ANNEXURE-10. AS PART OF ANNEXURE-10, THE ASSESSEE HAD FILED CONF IRMED COPY OF ACCOUNT OF THE LENDER, A COPY OF WHICH IS PLACED AT PAGE 45 OF PAPER BOOK WHEREIN THE ABA ACADEMY LLP HAS CONFIRMED THAT IT HAS PAID A LOAN OF I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 5 RS.2,00,00,000/- TO THE ASSESSEE. WE FURTHER FIND THAT THE ASSESSEE HAD FILED COPY OF BANK ACCOUNT ALSO, A COPY OF WHICH IS PLACED AT PAGES 49-51 OF THE PAPER BOOK WHEREIN THE ENTRIES FOR RECEIPT OF U NSECURED LOAN AS WELL AS FOR MAKING PAYMENTS FOR PURCHASE OF LAND ARE REFLEC TED. AS PART OF REPLY, THE ASSESSEE HAD ALSO FURNISHED COPY OF PURCHASE DE ED OF LAND AND COPY OF BANK STATEMENT WHICH IS APPARENT FROM REPLY TO POIN T 11 WHICH INCLUDED ANNEXURE-11. THEREFORE, THE FIRST OBSERVATION OF L EARNED CIT (EXEMPTIONS) THAT ASSESSEE HAD RECEIVED HUGE SUMS AND MADE SUBST ANTIAL WITHDRAWALS WERE DULY EXPLAINABLE FROM THE DOCUMENTS WHICH SHE HAD IN HER POSSESSION. THEREFORE, THE FIRST OBSERVATION FOR R EFUSAL TO GRANT REGISTRATION IS NOT SUSTAINABLE. 5.2 ONE OF THE OBSERVATIONS OF LEARNED CIT (EXEMPTI ONS) IS THAT ASSESSEE DID NOT FILE ANY FINAL ACCOUNTS WHEREAS THE FACT IS CONTRARY AS PAPER BOOK PAGE 18 IS THE COPY OF BALANCE SHEET AND INCOME & E XPENDITURE ACCOUNT FOR THE YEAR ENDING 31/03/2020. 5.3 AS REGARDS HER SECOND OBSERVATION THAT THE ASSE SSEE DID NOT FILE ANY DOCUMENTS/EVIDENCES TO SUPPORT THE ACTIVITIES MENTI ONED IN ITS NOTE ON ACTIVITY OF THE SOCIETY, IT IS SEEN THAT ADMITTEDLY THE ASSESSEES OBJECTS ARE CHARITABLE IN NATURE AS IS APPARENT FROM THE COPY O F MEMORANDUM OF ASSOCIATION PLACED AT PAGES 20 TO 44 OF THE PAPER B OOK WHEREIN THE MAIN OBJECTS OF THE ASSESSEE ARE TO IMPART EDUCATION AND MOREOVER LEARNED CIT (EXEMPTIONS) HAD NO OBJECTION REGARDING THE CHARITA BLE NATURE OF OBJECTS. HER ONLY OBJECTION IS THAT ASSESSEE HAD NOT CARRIED OUT ANY ACTIVITY IN PURSUANCE OF ITS OBJECTS. IN THIS RESPECT WE FIND FROM THE COPY OF BALANCE SHEET, BANK STATEMENT AND LEDGER ACCOUNT THAT ASSES SEE STARTED CARRYING ACTIVITIES IN PURSUANCE OF ITS OBJECTS BY PURCHASIN G THE LAND AND THEREFORE, THIS OBSERVATION IS ALSO FACTUALLY INCORRECT. I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 6 5.3 THE HON'BLE SUPREME COURT IN THE CASE OF ANANDA SOCIAL AND EDUCATIONAL TRUST VS. CIT IN CIVIL APPEAL NO. 4702 OF 2014 HAS ELABORATED THAT THE COMMISSIONER IS BOUND TO SATISFY HIMSELF T HAT THE OBJECT OF THE TRUST ARE GENUINE AND THAT ITS ACTIVITIES ARE IN FU RTHERANCE OF THE OBJECTS OF THE TRUST AND HAS FURTHER HELD THAT THE TERM 'ACTIV ITIES' IN THE PROVISION INCLUDES PROPOSED ACTIVITIES ALSO. THE HON'BLE COU RT FURTHER HELD THAT COMMISSIONER IS BOUND TO CONSIDER WHETHER THE OBJEC TS OF THE TRUST ARE GENUINELY CHARITABLE IN NATURE AND WHETHER THE ACTI VITIES WHICH THE TRUST PROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE OBJECTS OF THE TRUST. THE RELEVANT FINDINGS OF HON 'BLE SUPREME COURT ARE REPRODUCED BELOW: THIS APPEAL HAS BEEN PREFERRED BY THE APPELLANT -D IRECTOR OF INCOME-TAX AGAINST THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE DELHI HIGH COURT HOLDING THAT A NEWLY REGIST ERED TRUST IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 (FOR SHORT, THE 'ACT') ON THE BASIS OF IT S OBJECTS, WITHOUT ANY ACTIVITY HAVING BEEN UNDERTAKEN. SECTIO N 12AA OF THE ACT READS AS FOLLOWS : '12AA. PROCEDURE FOR REGISTRATION.-(1) THE [PRINCI PAL COMMISSIONER OR] COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) OR CLAUSE (AB) OF S UB- SECTION (1) OF SECTION 12A, SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM T HE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDE R TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRI ES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIE S, HE- (I) SHALL PASS AN ORDER IN WRITING REGISTERING TH E TRUST OR INSTITUTION; I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 7 (IF) SHALL, IF HE IS NOT SO SATISFIED, PASS AN OR DER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTI ON, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE [PRINCIP AL CHIEF COMMISSIONER OR] CHIEF COMMISSIONER ON WHICH NO ORD ER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEF ORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANSFERRED ON THAT DAY TO THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER AND THE [P RINCIPAL COMMISSIONER OR] COMMISSIONER MAY PROCEED WITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE E XPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED UNDER CLAUSE (A) OR CLAUSE (AD) OR CLAUSE (AB) OF SUB- SECTION (1) OF SECTION 12A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUBSECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT S TOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1 996)] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSIONER OR] COMMIS SIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MA Y BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATIO N OF SUCH TRUST OR INSTITUTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD. [(4) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (3), WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED RE GISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE I TS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1 996)] AND SUBSEQUENTLY IT IS NOTICED THAT THE ACTIVITIES OF T HE TRUST OR THE INSTITUTION ARE BEING CARRIED OUT IN A MANNER THAT THE PROVISIONS I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 8 OF SECTIONS 11 AND 12 DO NOT APPLY TO EXCLUDE EITHE R WHOLE OR ANY PART OF THE INCOME OF SUCH TRUST OR INSTITUTION DUE TO OPERATION OF SUB-SECTION (1) OF SECTION 13, THEN, T HE PRINCIPAL COMMISSIONER OR THE COMMISSIONER MAY BY AN ORDER IN WRITING CANCEL THE REGISTRATION OF SUCH TRUST OR INSTITUTIO N: PROVIDED THAT THE REGISTRATION SHALL NOT BE CANCELL ED UNDER THIS SUB-SECTION, IF THE TRUST OR INSTITUTION PROVES THA T THERE WAS A REASONABLE CAUSE FOR THE ACTIVITIES TO BE CARRIED O UT IN THE SAID MANNER.] THE ABOVE SECTION PROVIDES FOR REGISTRATION OF A TR UST. SUCH REGISTRATION CAN BE APPLIED FOR BY A TRUST WHICH HA S BEEN IN EXISTENCE FOR SOME TIME AND ALSO BY A NEWLY REGISTE RED TRUST. THERE IS NO STIPULATION THAT THE TRUST SHOULD HAVE ALREADY BEEN IN EXISTENCE AND SHOULD HAVE UNDERTAKEN ANY ACTIVIT IES BEFORE MAKING THE APPLICATION FOR REGISTRATION. IN BRIEF, SECTION 12AA OF THE ACT EMPOWERS THE PRIN CIPAL COMMISSIONER OR THE COMMISSIONER OF THE INCOME-TAX ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST TO CALL FOR SUCH DOCUMENTS AS MAY BE NECESSARY TO SATISFY HIMSE LF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTI TUTION AND MAKE INQUIRIES IN THAT BEHALF; IT EMPOWERS THE COMMISSIO NER TO THEREUPON REGISTER THE TRUST IF HE IS SATISFIED ABO UT THE OBJECTS OF THE TRUST OR INSTITUTION AND GENUINENESS OF ITS ACTIVITIES. IN THE PRESENT CASE, THE TRUST WAS FORMED AS A SOCI ETY ON 30-5- 2008 AND IT APPLIED FOR REGISTRATION ON 10-7-2008 I .E. WITHIN A PERIOD OF ABOUT TWO MONTHS. NO ACTIVITIES HAD BEEN UNDERTAKEN BY THE RESPONDENT TRUST BEFORE THE APPLICATION WAS MADE. THE COMMISSIONER R EJECTED THE APPLICATION ON THE SOLE GROUND THAT SINCE NO AC TIVITIES HAVE BEEN UNDERTAKEN BY THE TRUST, IT WAS NOT POSSIBLE T O REGISTER IT, PRESUMABLY BECAUSE IT WAS NOT POSSIBLE TO BE SATISF IED ABOUT WHETHER THE ACTIVITIES OF THE TRUST ARE GENUINE. TH E INCOME-TAX APPELLATE TRIBUNAL, DELHI (FOR SHORT, THE TRIBUNAL' ) REVERSED THE ORDERS OF THE COMMISSIONER. THE REVENUE DEPARTMENT APPROACHED THE HIGH COURT BY WAY OF FILING AN APPEA L. THE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL AND CAME TO THE CONCLUSION THAT IN CASE OF A NEWLY REGISTERED TRUST EVEN THOUGH I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 9 THERE WAS NO ACTIVITIES, IT WAS POSSIBLE TO CONSIDE R WHETHER THE TRUST CAN BE REGISTERED UNDER SECTION 12AA OF THE A CT. THIS JUDGMENT IS ASSAILED BEFORE US. SECTION 12AA UNDOUBTEDLY REQUIRES THE COMMISSIONER TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTI ON AND GENUINENESS OF ITS ACTIVITIES AND GRANT A REGISTRAT ION ONLY IF HE IS SO SATISFIED. THE SAID SECTION REQUIRES THE COMMISS IONER TO BE SO SATISFIED IN ORDER TO ENSURE THAT THE OBJECT OF THE TRUST AND ITS ACTIVITIES ARE CHARITABLE SINCE THE CONSEQUENCE OF SUCH REGISTRATION IS THAT THE TRUST IS ENTITLED TO CLAIM BENEFITS UNDER SECTIONS 11 AND 12 OF THE ACT. IN OTHER WORDS, IF I T APPEARS THAT THE OBJECTS OF THE TRUST AND ITS ACTIVITIES ARE NOT GENUINE THAT IS TO SAY NOT CHARITABLE THE COMMISSIONER IS ENTITLED TO REFUSE AND IN FACT, BOUND TO REFUSE SUCH REGISTRATION. IT WAS ARGUED BEFORE US THAT THE COMMISSIONER IS RE QUIRED TO BE SATISFIED ABOUT TWO THINGS - FIRSTLY THAT THE OB JECTS OF THE TRUST AND SECONDLY, ITS ACTIVITIES ARE GENUINE. IF THERE HAVE BEEN NO ACTIVITIES UNDERTAKEN BY THE TRUST THEN THE COMM ISSIONER CANNOT ASSESS WHETHER SUCH ACTIVITIES ARE GENUINE A ND THEREFORE, THE COMMISSIONER IS BOUND TO REFUSE THE REGISTRATION OF SUCH A TRUST. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE ABOV E SUBMISSIONS MADE BY MS. AISHWARYA BHATI, LEARNED SE NIOR COUNSEL APPEARING FOR THE APPELLANT - DIRECTOR OF I NCOME-TAX AND FIND THAT IT IS NOT POSSIBLE TO AGREE WITH THE SAME. THE PURPOSE OF SECTION 12AA OF THE ACT IS TO ENABLE REG ISTRATION ONLY OF SUCH TRUST OR INSTITUTION WHOSE OBJECTS AND ACTI VITIES ARE GENUINE. IN OTHER WORDS, THE COMMISSIONER IS BOUND TO SATISFY HIMSELF THAT THE OBJECT OF THE TRUST ARE GENUINE AN D THAT ITS ACTIVITIES ARE IN FURTHERANCE OF THE OBJECTS OF THE TRUST, THAT IS EQUALLY GENUINE. SINCE SECTION 12AA PERTAINS TO THE REGISTRATION OF THE TRUST AND NOT TO ASSESS OF WHAT A TRUST HAS ACTUALLY DONE, WE ARE OF THE VIEW THAT THE TERM 'ACTIVITIES' IN THE PROVISION IN CLUDES PROPOSED ACTIVITIES'. THAT IS TO SAY, A COMMISSIONER IS BOUN D TO CONSIDER WHETHER THE OBJECTS OF THE TRUST ARE GENUINELY CHAR ITABLE IN NATURE AND WHETHER THE ACTIVITIES WHICH THE TRUST P ROPOSED TO CARRY ON ARE GENUINE IN THE SENSE THAT THEY ARE IN LINE WITH THE I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 10 OBJECTS OF THE TRUST. IN CONTRAST, THE POSITION WO ULD BE DIFFERENT WHERE THE COMMISSIONER PROPOSES TO CANCEL THE REGISTRATION OF A TRUST UNDER SUB-SECTION (3) OF SE CTION 12AA OF THE ACT. THERE THE COMMISSIONER WOULD BE BOUND TO R ECORD THE FINDING THAT AN ACTIVITY OR ACTIVITIES ACTUALLY CAR RIED ON BY THE TRUST ARE NOT GENUINE BEING NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. SIMILARLY, THE SITUATION WOULD BE DIF FERENT WHERE THE TRUST HAS BEFORE APPLYING FOR REGISTRATION FOUN D TO HAVE UNDERTAKEN ACTIVITIES CONTRARY TO THE OBJECTS OF TH E TRUST. WE THEREFORE FIND THAT THE VIEW OF THE DELHI HIGH C OURT IN THE IMPUGNED JUDGMENT IS CORRECT AND LIABLE TO BE UPHEL D. MS. BHATI, LEARNED SENIOR COUNSEL FOR THE APPELLANT , FAIRLY DREW OUR ATTENTION TO A JUDGMENT OF THE ALLAHABAD HIGH C OURT IN IT APPEAL NO. 36 OF 2013 TITLED AS 'COMMISSIONER OF IN COME TAX-II VS. R.S. BAJAJ SOCIETY' WHICH HAS TAKEN THE SAME VI EW AS THAT OF THE DELHI HIGH COURT IN THE IMPUGNED JUDGMENT. T HE ALLAHABAD HIGH COURT HAS ALSO REFERRED TO A SIMILAR VIEW TAKEN BY THE HIGH COURTS OF KARNATAKA AND PUNJAB & HARYAN A. APPARENTLY, A CONTRARY VIEW HAS BEEN TAKEN BY THE K ERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY V. COMMISSIONER OF INCOME-TAX - [2001] VOL.247 ITR 18. THAT VIEW HOWEVER DOES NOT COMMEND ITSELF. HOWEVER, THE FACTS IN SELF EMPLOYERS SERVICE SOCIETY (SUPRA) SUGGEST THAT THE COMMISSIONER OF INCOME-TAX HAD OBSERVED THAT THE AP PLICANT FOR REGISTRATION AS A TRUST HAD UNDERTAKEN ACTIVITI ES WHICH WERE CONTRARY TO THE OBJECTS OF THE TRUST. IN THE RESULT, WE FIND THAT THERE IS NO REASON TO I NTERFERE WITH THE IMPUGNED JUDGMENT OF THE HIGH COURT OF DELHI. T HE APPEAL IS, ACCORDINGLY, DISMISSED. 5.4 IN VIEW OF THE ABOVE JUDGMENT OF HON'BLE SUPREM E COURT, THE SECOND OBSERVATION MADE BY LEARNED CIT (EXEMPTIONS) ALSO F AILS. WE HAVE ALREADY HELD THAT LEARNED CIT (EXEMPTIONS) HAD NO OBJECTION TO THE OBJECTS OF THE ASSESSEE WHICH NECESSARILY ARE CHARITABLE IN NATURE AND REGARDING THE TRANSACTIONS IN THE BANK ACCOUNT, THE SAME ARE EXPL AINABLE AND THESE I.T.A. NO.399/LKW/2020 ASSESSMENT YEAR:N.A. 11 DOCUMENTS WERE AVAILABLE WITH HER. IN VIEW OF THE ABOVE FACTS WE ARE SATISFIED THAT THE ACTIVITIES OF THE ASSESSEE ARE G ENUINE AND THEREFORE, WE DIRECT THE CIT (EXEMPTIONS) TO GRANT REGISTRATION U /S 12A OF THE ACT FORTHWITH. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 26/08/2021) SD/. SD/. ( A. D. JAIN ) ( T. S. KAPOOR ) VICE PRESIDENT ACCOUNTANT MEMBER DATED:26/08/2021 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW