Divine Education Trust, Ahmedabad V. The CIT (Exemption), Ahmedabad

ITA 434/AHD/2020

AI Insights

The case involves Divine Education Trust, which appealed against the decision of the CIT(Exemption) Ahmedabad, denying their registration under section 12AA of the Income Tax Act, 1961. The CIT(Exemption) had rejected the application due to alleged non-submission of requisite documents and concerns about the genuineness of the trust's activities. The Tribunal found that the CIT(Exemption) had not adequately considered the documents submitted by the Trust and had not provided a fair opportunity for the Trust to present its case, thus violating principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114228 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-02-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 12-08-2020
• Other Referred Cases: Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 12; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member Divine Education Trust 1, Praijat Raw House, Opp. Karvati Park, Bapa Sitaram Chowk, New Naroda, Ahemdabad PAN: AADTD0562F (Appellant) Vs The CIT(Exemption) Ahmedabad (Respondent) Assessee Represented: Shri Akshat Vithlani, A.R. Revenue Represented:Shri Vijay Kumar Jaiswal, CIT-DR Date of hearing : 09-02-2023 Date of pronouncement : 27-04-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the assessee as against the order dated 23-01-2020 passed by Ld. Commissioner of Income Tax [Exemption], Ahmedabad {ld CIT[E]} denying registration under section 12AA[1][B][ii] of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’]. ITA No. 434/Ahd/2020 I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 2 2. The registry has noted that there is a delay of 143 days in filing the above appeal by the assessee on 13-08-2020. This period falls under COVID-Pandemic situation, thus following Hon'ble Supreme Court judgment dated 23.3.2020 in suo moto Writ Petition (Civil) No.3 of 2020, vide Hon'ble Supreme Court has extended time limit for filing appeals w.e.f. 15.3.2020. Thus, there is no delay in filing the above appeal and we take the appeal of the assessee for adjudication. 3. Brief facts of the case is that the assessee is a Public Charitable Trust registered under the Bombay Public Trust Act, 1950 having registration number from 28-06-2018, with the object to run educational institutions such as Pre-primary, Junior KG, Senior KG, Graduation and Master Degree, Old-age Coaching classes, Night coaching classes, Ashrum school and Army school. The Trust is having object which is covered as charitable as per section 2[15] of the Act. Thus the assessee Trust filed application for registration under section 12AA of the Act, in Form No. 10A along with details and documents on 18-07-2019. The ld CIT[E] is required to dispose of the above application on or before 31-01- 2020, thus the assessee received first notice on 04-12-2019 from ld. CIT[E] requesting to submit various details on or before 24-12- 2019, otherwise the above application will be rejected. 4. On 23-12-2019 the assessee submitted various documents, except to produce three documents namely [i] undertaking that there will be no infringement to the 1 st Proviso to section 2[15] of the Act; [ii] undertaking under section 11[5] of the Act and [iii] I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 3 undertaking to the effect that the trust is complying all the requirements of law as are material for the purpose of its objects as enumerated in the trust deed. The assessee received second notice dated 30-12-2019 from ld. CIT[E] fixing the case for hearing on 07- 01-2020 and directed to file all the required documents. However the assessee sought for an adjournment on 06-01-2020 requesting one more week time to file the documents. Later the assessee uploaded all above documents in the ITB online portal on 20-01- 2020 and got hash value for the attached files. 5. The ld. CIT[E] vide the impugned order dated 23-01-2020 rejected the application for registration under section 12 AA of the Income Tax Act as follows: 7. In spite of specific requisitions the applicant has not submitted the requisite details such as certified copy of registration certificate, certified copy of trust deed, an undertaking that there will be no infringement to the 1st proviso to section 2015) of the Income Tax Act, 1961,undertaking u/s 11(5) and 13(1), details of donation received/paid, an affidavit/undertaking to the effect that the trust institution is complying all the requirement of law as are material for the purpose of its objects as enumerated in the trust deed. Further it is also noticed that trust does not have any clause that the trust will not be dissolved and it is perpetual. As per the Bombay Public Trust Act and TAX DEPARTMENT settled position of law, a trust is a perpetual trust. In case the activities of the trust cannot be carried out, the same, with the sanction of Charity Commissioner and as per the procedures of the Bombay Public Trust Act, the assets etc. have to be transferred to another trust carrying on similar activities. No such clause is there hence approval cannot be given .Therefore, in the absence of complete details/documents as mentioned above, it is not possible to verify the genuineness of the activities of the above trust or the same being carried out in accordance with the objects of the trust. This clearly indicates that the applicant does not have intention even to start charitable/religious activities. Section 12AA makes it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 4 institution and also he has to verify that these activities are in consonance with the objects of the trust or institution. Reliance in this regard is placed on judgment delivered by the Hon. Supreme Court in the case of Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat Civil Appeal No. 2492 of 2014. The facts considered in para 14 of the judgment by the Hon'ble Apex Court are reproduced for sake of convenience: “Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the trust and upon reaching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the trust, he would grant registration. If he is not satisfied of the aforesaid, the request made in the application may be declined.” As discussed above, the applicant has failed to file documentary evidences to enable me to satisfy about the genuineness of its activities and to verify these activities are in consonance with its objects. 8. Looking to the above facts, I am unable to arrive at the satisfaction of the genuineness of the activities. Hence, the application filed in Form No.10A for the approval u/s. 12AA of the Income-tax Act, is rejected on account of non verification of the genuineness of the activities of the above trust or the same being carried out in accordance with the objects of the trust. 5. Aggrieved against the above order the assessee is an appeal before us rising the following Grounds of Appeal: 1. The Learned Commissioner of Income Tax (exemption) has erred in rejecting the registration on the basis that the Appellant has not submitted the requisite details such as certified copy of registration certificate, certified copy of trust deed, an undertaking that there will be no infringement to the 1st proviso to section 2(15) of the Income Tax Act, 1961,undertaking u/s 11(5) and 13(1)(c), details of donation received/paid, an affidavit/undertaking to the effect that the trust/institution is complying all the requirement of law as are material for the purpose of its objects as enumerated in the trust deed. The appellant has submitted the reply as on 23-Dec-2019 wide Document Reference ID: 100000396889166 by submitting as follows a. Certified copy of Trust Deed b. Certified copy registration certificate c. Reply regarding no donation has been received till the date I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 5 In second reply, as on 06-Jan-2020, the appellant had asked for the adjournment for further submission and as on 20-Jan-2020 the following documents had been submitted a. an undertaking that there will be no infringement to the 1st proviso to section 2(15) of the Income Tax Act, 1961 b. undertaking u/s 11(5) c. Undertaking to the effect that the trust/institution is complying all the requirement of law as are material for the purpose of its objects as enumerated in the trust deed. 2. With respect to the query raised by Hon'ble CIT (EXEMPTION) regarding the donations; the appellant in point number 4 of reply against notice has mentioned that there is no donation received to them and also submitted the ITR copies and bank details for the verification for Learned CIT. 3. The Learned Commissioner of Income Tax(exemption) has never asked the appellant to submit the undertaking/declaration u/s 13(1) © and made erred in order by putting additional point which never been asked to submit. 4. Learned Commissioner has further pointed in order that "further it is also noticed that trust does not have any clause that the trust will not be dissolved and it is perpetual. As per the Bombay Public Trust Act and settled position of law, a trust is a perpetual trust. In case the activities of the trust cannot be carried out, the same, with the sanction of Charity Commissioner and as per the procedures of the Bombay Public Trust Act, the assets etc. have to be transferred to another trust carrying on similar activities." The Learned Commissioner has failed to appreciate the clause no 18 of trust deed which is as follows— (18) Dissolution of the Trust: Under unavoidable circumstances, if necessity arises to dissolved or close the trust then the Implementation shall be as per the sections of the Bombay Public Trust Act, 1950 and under such circumstances, property of the trust will not be handover to any trustee, settler, donar or member or trust preparer but the debt of the trust shall be paid and the remaining property shall be handover to the Public Trust having such aims and objectives according to prevailing rules and regulations or can be handed over to institute working with same aims and objectives and the trust can be closed. If required proceedings can be done by obtaining permission from charity commissioner according to legal pro- visions of trust. 5. The Learned CIT has asked duplicate information which has already been uploaded while filing form 10A like Certified copy of Trust Deed, I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 6 Certified copy of Registration Certificate etc. which is drafted for all and never gone through the application form and documents submitted with the same and never applied his mind for asking for information. The notice issued is vague and irrelevant part and already submitted part while filing form 10A was not removed. 6. The Learned Commissioner of Income Tax exemption has not given opportunity of being heard before the rejecting the application and just passed the order. With reference to above submission, may I request your honor to pass necessary order /award the relief: 1. To register the trust u/s 12AA from the date of application of the registration 2. To ask to recheck all the documents submitted and pass the order 3. To consider the notice vague as irrelevant part of the notice and the documents which are already submitted while filing form 10A was not removed and provided the notice asking duplicate information. 4. To ask Learned CIT to call for any further information if required and to give appropriate opportunity of being heard by giving show cause notice before passing the order. 6. Heard both sides and perused the records and the paper book filed by the assessee. Though the grounds of appeal are exhaustive and argumentative, the short point to be decided in this appeal, is whether the assessee has filed all the relevant documents for the purpose of registration under section 12AA of the Act. It is seen from record that the assessee was provided two opportunities one on 24-12-2019 and another on 07-01-2020. The assessee partly complied by furnishing all the details on 23-12-2019. However further details were submitted on 20-01-2020, which is submitted by the assessee elaborately in its Grounds of Appeal. Further the Ld. CIT(E) held that there was no clause in the trust deed that the trust will not be dissolved and it is perpetual, whereas clause 18 of the trust deed specifically provides that incomes on dissolution of I.T.A No. 434/Ahd/2020 Page No Divine Education Trust vs. CIT(E) 7 the Trust, the remaining property shall be handed over to another Public Trust having such aims and objectives and will be continued by the other Trust. Thus the Ld. CIT(E) has passed this impugned order without verifying the documents submitted by the assessee and thereby denied exemption u/s. 12AA of the Act on the ground of non-verification of the genuineness of the activities of the above trust. 6.1. In our considered view, the Ld. CIT(E) erred in not considering the submissions, documents and details furnished by the assessee trust. Therefore to meet the ends of justice and also in the Principle of Natural Justice, we deem it fit to set aside impugned order and remit the matter back to the file of Ld. CIT(E) with a direction to reconsider the application filed by the assessee in Form No. 10A alongwith all the documents and evidences filed by the assessee trust by giving one more opportunity to the assessee to submit its case. Needless to say, the assessee should furnish any other details if being called for by Ld. CIT(E) and thereby cooperate to get the registration u/s. 12AA of the Act. Thus the grounds raised by the Assessee are hereby allowed. 7. In the result, the appeal filed by the Assessee is allowed for statistical purpose. Order pronounced in the open court on 27 -04-2023 Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 27/04/2023