M/s NIILM UNIVERSITY, Kaithal V. CIT, Karnal

ITA 406/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8526 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: misc
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVI DUTT SHARMA
• Keywords: Opportunity of being heard
• Section: 80G; 12AA; 10B; 12

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 406/CHD/2014 U/S 80G (5)(VI) NIILM UNIVERSITY, VS. THE CIT, KAILTHAL KARNAL PAN NO. AAAJN0849A (APPELLANT) (RESPONDENT) APPELLANT BY : SH RAVI DUTT SHARMA RESPONDENT BY : SH. MANOJ MISHRA DATE OF HEARING : 28.12.2015 DATE OF PRONOUNCEMENT : 11.02.2016 . ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT, KARNAL DATED 24.2.2014 IN REFUSING TO GRANT RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AN D THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A), KARNAL HAS ERRED IN LAW AND IS NOT JUSTIFIED IN REJECTING THE APPLICATION MADE BY THE APPELLANT U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 READ WIT H RULES THEREUNDER & THAT THE IMPUGNED ORDER IS CONTRARY TO THE PROVISIONS OF LAW & SO, IT IS PRAYED THAT THE SAME BE QUASHED. 2. THAT THE LD. CIT, KARNAL HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE ON EXTRANEOUS A ND IRRELEVANT GROUNDS. THE APPELLANT PRAYS THAT THE OR DER 2 PASSED BY LD. CIT, KARNAL U/S 80G(5)(VI) OF THE ACT BE QUASHED. 2. IN THIS CASE THE ASSESSEE SUBMITTED AN APPLICATI ON FOR GRANT OF EXEMPTION U/S 80G(5)(VI) OF THE ACT DATED. 30.8.2013. IN ORDE R TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE TRUST, THE CIT CALLED FOR A R EPORT FROM THE ASSESSING OFFICER CONCERNED. IN ITS REPORT, THE ASSESSING OFF ICER SUBMITTED THAT THE SOCIETY WAS REGISTERED U/S 12AA OF THE ACT ON 9.11.2011. TH E ASSESSING OFFICER ALSO MENTIONED THAT THE MAIN OBJECT OF THE UNIVERSITY IS TO IMPART ACADEMIC, TECHNICAL / PROFESSIONAL EDUCATION ETC. TO ALL COMM ON PEOPLE OF INDIA IRRESPECTIVE OF CASTE, CREED, RELIGION OR SEX. TH E ASSESSING OFFICER FURTHER STATED THAT PROVIDING EDUCATION AND ADVANCEMENT OF EDUCATION IS A CHARITABLE ACTIVITY AS IT HAS BEEN COVERED UNDER CHARITABLE P URPOSE AS DEFINED IN SECTION 2(15) OF THE ACT. THE LD. CIT REFUSED TO GRANT RENE WAL OF APPROVAL U/S 80G (5)(VI) OF THE ACT, OBSERVING AS UNDER;- 4. THIS OFFICE AFFORDED AN OPPORTUNITY OF BEING HEARD TO THE APPELLANT. FROM THE DOCUMENTS FILED IN THIS OFF ICE ON 14.2.2014, IT IS NOTICED THAT THE ASSESSEE HAS NOT FILED ANY PROOF OF FILING THE INCOME TAX RETURN ALONG WITH TH E APPLICATION. IT IS FURTHER, NOTICE THAT :- I) BOOKS OF ACCOUNT FOR THE YEAR ENDING 31.03.2013 ARE NOT AUDITED BY THE AUDITORS AND ALSO AUDITORS REPO RT IN FORM NO. 10B HAS NOT BEEN FILED. II) NO DOCUMENTARY EVIDENCE OF ANY OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THE LAST TWO YEA RS OF SINCE ITS INCEPTION HAS BEEN FILED BY THE ASSESSEE. III) THE ASSESSEE HAS FAILED TO FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THAT THE ASSESSEE FULFILLS ALL TH E CONDITIONS AS LAID DOWN IN CLAUSES (I) TO (V) OF TH E SUB- SECTION (5) OF SECTION 80-G OF THE INCOME-TAX ACT, 1961. 3 IN VIEW OF THE ABOVE, THE REQUEST OF THE SOCIETY FO R GRANT OF EXEMPTION U/S 80G OF THE I.T. ACT IS NOT ACCEPTED A ND ITS APPLICATION IS HEREBY REJECTED . 3. AGGRIEVED WITH THE ORDER OF CIT, KARNAL, THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI RAVI D UTT SHARMA, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE OBSERVATIONS MA DE BY THE LD. CIT ARE WRONG AND INCORRECT. SHRI RAVI DUTT SHARMA, LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT VIDE LETTER DATED 14.2.2014, THE ASSESSEE SUBM ITTED THE FOLLOWING DETAILS / EVIDENCES FOR RENEWAL OF APPROVAL U/S 80G(5) OF THE ACT. 1. COPY OF REGISTRATION CERTIFICATE GRANTED U/S 12 AA IS ENCLOSED. 2. NOTE OF ACTIVITIES OF UNIVERSITY IS ENCLOSED. 3. WE HAVE ALREADY FILED COPIES OF AUDITED ACCOUNT OF THE UNIVERSITY SINCE ITS INCEPTION ALONGWITH INCOME TAX RETURNS & COMPUTATION. 4. IT IS SUBMITTED THAT, NO BUSINESS ACTIVITY IS CA RRIED OUT BY THE UNIVERSITY, HENCE, NO QUESTION OF MAINTAININ G SEPARATE BOOKS OF ACCOUNT. 5 NO BUSINESS ACTIVITY IS CARRIED OUT BY THE UNIVER SITY. 6. THERE IS NO PROVISION FOR TRANSFER OR APPLICATIO N OF ANY PART OF INCOME OR ASSETS FOR PURPOSE OTHER THAN CHA RITABLE PURPOSE. 7. NO, THE UNIVERSITY IS NOT EXPRESSED TO BE FOR TH E BENEFIT OF ANY PARTICULAR RELIGIOUS, COMMUNITY OR CASTE. 8. YES, THE UNIVERSITY IS MAINTAINING REGULAR ACCO UNTS OF RECEIPTS & EXPENDITURE. 9. BOOKS OF ACCOUNTS ALONG WITH VOUCHERS WILL BE PRODUCED DURING THE HEARING. 4 10. WE HAVE ALREADY GIVEN ALL DETAILS OF DONATIONS RECEIVED DURING THE FINANCIAL YEAR 2012-2013. 11. THE UNIVERSITY IS CONSTITUTED UNDER THE HARYANA PRIVATE UNIVERSITIES ACT, 2006. COPY OF THE SAME HA S ALREADY BEEN SUBMITTED. 12. POWER OF ATTORNEY EXECUTED IN THE NAME OF MR. N IKHIL BANSAL, CHARTERED ACCOUNTANT IS ENCLOSED. 5. IN PARA 4 OF THE IMPUGNED ORDER, THE LD. CIT HAS OBSERVED THAT FROM THE DOCUMENTS FILED IN THE OFFICE ON 14.2.2014, IT IS N OTICED THAT THE ASSESSEE HAS NOT FILED ANY PROOF OF FILING THE INCOME TAX RETURN ALO NG WITH APPLICATION. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT HAS REJECTED THE APPLICATION OF THE ASSESSEE IN AN ARBITRARY MANNER WITHOUT SPECIF YING WHICH CONDITIONS SET OUT IN SECTION 80G(5) ((IV) TO (V) OF THE ACT IS NOT PR OVED. IN PARA 3 OF THE IMPUGNED ORDER, THE LD. CIT HAS OBSERVED THAT JCIT KURUKSHETRA RANG, KURUKSHETRA HAS NOT RECOMMENDED THE GRANT OF EXEMP TION U/ S 80G(5) OF THE ACT. IT APPEARS THAT THE REPORT OF THE JOINT COMMIS SIONER OF INCOME TAX WAS NEVER CONFRONTED TO THE ASSESSEE. THEREFORE, THE L D. COMMISSIONER WAS NOT JUSTIFIED IN RELYING UPON THE REPORT OF THE JOINT C OMMISSIONER OF INCOME TAX WHICH WAS OBTAINED BEHIND THE BACK OF THE ASSESSEE. AFTER PERUSING THE IMPUGNED ORDER, WE OBSERVE THAT LD. CIT HAS NOT GIV EN DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE POWERS OF THE COMMISSION ER ACCORDING TO RULE 11AA OF THE I.T. RULES, 1962 ARE TO SATISFY HIMSELF ABOU T THE GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION / UNIVERSITY AND GIVE OPPORTUNITY OF BEING HEARD TO THE INSTITUTION CANNOT BE DELEGATED TO THE ASSESSIN G OFFICER AND JT. COMMISSIONER OF INCOME TAX. IT APPEARS THAT CIT HAS PASSED THE ORDER IN A HURRY OBSERVING THAT THE ASSESSEE FAILED TO PRODUCE THE DOCUMENTARY EVIDENCE. ON THE CONTRARY, THE ASSESSEE HAS FURNISHED DOCUMEN TARY EVIDENCE VIDE ITS LETTER DATED 14.2.2014 AND THE SAID LETTER ITSELF IS SELF- EXPLANATORY. IN OUR OPINION, FOR GRANT OF APPROVAL U/S 80G(5) OR CONTINUATION THERE OF, IT IS ONLY TO BE SEEN 5 WHETHER THE CONDITIONS LAID DOWN UNDER CLAUSE (I) T O (V) OF SECTION 80G(5) ARE FULFILLED OR NOT. IN THE CASE OF SONEPAT HINDU EDUC ATIONAL AND CHARITABLE SOCIETY VS. CIT (2005) 278 ITR 262 (P&H), THE HON'B LE JURISDICTIONAL HIGH COURT HELD THAT WHILE DEALING WITH THE APPLICATION U/S 80G(5) OF THE ACT, THE SCOPE OF ENQUIRY BY THE CIT EXTENDS TO ELIGIBILITY OF THE APPLICANT TO EXEMPTION UNDER VARIOUS PROVISIONS REFERRED TO IN THAT SUB-SE CTION, BUT NOT TO ACTUAL COMPUTATION OF INCOME UNDER THE ACT; REGISTRATION O F AN INSTITUTION UNDER SECTION 12A(A) OF THE ACT BY ITSELF IS A SUFFICIENT PROOF O F THE FACT THAT THE TRUST OR THE INSTITUTION CONCERNED IS CREATED OR ESTABLISHED FOR CHARITABLE OR RELIGIOUS PURPOSES. 6. IN VIEW OF THE OBSERVATIONS MADE HEREIN ABOVE, W E HOLD THAT THE CIT HAS PASSED THE IMPUGNED ORDER IN A HURRY. IN FACT THE C IT HAS NOT AFFORDED PROPER OPPORTUNITY OF BEING HEARD TO THE INSTITUTION BEFOR E REJECTING ITS APPLICATION FOR RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT.. FU RTHER THE PROVISO TO RULE 11AA (5) PROVIDES THAT NO ORDER OF REJECTION OF AN APPLICATION U/S 80G(5) SHALL BE PASSED WITHOUT GIVING THE INSTITUTION OR FIRM AN OPPORTUNITY OF BEING HEARD. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE, WE THINK IT APPROPRIATE TO SET ASIDE THE ORDER OF CIT IN TOTO AND REMAND THE MATTER TO CIT WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING DUE AND REASONABLE OP OF BEING HEARD TO T HE ASSESSEE. 7. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2016 SD/- SD- (ANNAPURNA MEHROTRA) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED 11 TH FEBRUARY, 2016 RKK 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR