Sulthanpet Diocese Educational Trust, Palakkad V. The CIT (Exemptions), Cochin

ITA 445/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96725 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUM
• Assessee Lawyers: K V VENKITARAMAN
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 12A; 12AA

Judgement Text

ITA NO . 445/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 445/COCH/2015 (ASST YEAR 2014 - 15 ) SULTHANPET DIOCESE EDUCATIONAL T RUST ST SEBASTIAN S CHETHEDRAL SU LTHAN P E T PALAKKAD678 001 VS THE COMMR OF INCOME TAX (E XEMPTION) C R BUILDING, I S PRESS ROAD KOCHI 682 018 ( APPELLANT) (RESPONDENT) PAN NO. AAO TS8080J ASSESSEE BY SH K V VENKITARAMAN REVENUE BY SH K P GOPAKUM AR, SR DR DATE OF HEARING 12 TH OCT 2015 DATE OF PRONOUNC EMENT 13 TH OCT 2015 OR D ER PER GEORGE GEORGE. K. J M: THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 26.6.2015 OF THE CIT(EXEMPTION) PASSED U/S 12AA OF THE I T ACT 1961. THE RELEVANT ASSESSMENT YEAR IS 2014 - 15. 2 TH E SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE CIT(EXEMPTION) IS JUSTIFIED IN REFUSING TO GRANT REGISTRATION U/S 12AA OF THE ACT. 3 THE BRIEF FACTS OR THE CASE ARE AS FOLLOWS: ITA NO . 445/C/2015 2 THE ASSESSEE IS A CHARITABLE TRUST CREATED AS PER TRUST D EED DATED 16.10.2014. THE ASSESSEE HAD FILED APPLICATION IN FORM 10A OF THE ACT ON 29.12.2014 REQUESTING FOR REGISTRATION U/S 12A OF THE ACT 1961. THE CIT(EXEMPTION ), BASED ON THE FIELD ENQUIRIES , CAME TO THE CONCLUSION THAT THE TRUST EXITS ONLY ON PAPER AND HAS NOT UNDER T AKEN ANY ACTIVITIES SO FAR. THE CIT(EXEMPTION) CONCLUDED THAT THERE WAS NO ACTIVITIES AND GENUINENESS OF THE TRUST COULD NOT BE ESTABLISHED. FOR THE ABOVE REASONS , THE APPLICATION FOR REGISTRATION U/S 12A WAS REJECTED BY THE CIT(EXEMPTION ). THE RELEVANT FINDING OF THE CIT(EXEMPTION) READ AS FOLLOWS: 3. AS PER THE TRUST D EED, T HE MAIN OBJECT OF THE TRUST IS TO TAKE OVER AND MANAGE THE EDUCATIONAL INSTITUTIONS OF LATIN CATHOLIC DI OCESE OF SULTA NPET. HOWEVER, IT IS NOTICED THAT THE TRUST HAS EXISTED FOR LESS THAN A YEAR. FIELD ENQUIRIES REVEALED THAT THE TR UST EXISTS ONLY ON PAPER AND HAS NOT UNDERTAKEN ANY ACTIVITIES SO FAR. THEREFORE, THE ACTIVITIES AND GENUINENESS OF THE TRUST COULD NOT BE ESTABLISHED. I, THEREFORE, REFUSE TO REGISTER THE TRUST U/S 12AA OF THE INCOME TAX ACT AND THE APPLICAT ION FILED IN FORM NO.10A ON 29.12.2014 IS REJECTED. 4 THE ASSESSEE TRUST BEING AGGRIEVED IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS: I) THE O RDER OF THE COMMISSIONER OF INCOME T A X (EXEMPTION) IS AGAINST LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. THE ORDER, IF ALLOWED TO STAND, WOULD OCCASION A TRAVESTY OF JUSTICE AND CAUSE IRREPARABLE LOSS AND HARDSHIP TO THE APPLICANT. II) THE COMMISSIONER OF INCOME T A X (EXEMPTION) ERRED IN REJ ECTING THE APPLICATIONS IN FORM 10A FILED BY THE APPELLANT WITHOUT PROPERLY CONSIDERING THE FACTS OF THE CASE. THE COMMISSIONER OF INCOME T A X (EXEMPTION) OUGHT TO HAVE FOUND THAT THE TRUST WAS CREATED ONLY ON 16.10.2014 AND IN THE SHORT PERIOD OF 5 MONTHS, THE TRUST HAS CARRIED OUT ACTIVITIES AND HAD GIVEN FINANCIAL AID TO THE EXTENT OF RS. 40,400/ - TO THE BENEFICIARIES. THE REFORE, THE FINDING OF THE ITA NO . 445/C/2015 3 COMMISSIONER OF INCOME TAX (EXEMPTION) THAT THE TRUST HAS NOT COMMENCED ACTIVITIES IS AGAINST THE FACTS OF THE CASE. III ) THE COMMISSIONER OF INCOME T A X (EXEMPTION) ERRED IN REJECTING THE APPLICATIONS FOR REGISTRATION U/S 12A ON THE GROUND THAT THE APPELLANT HAS NOT COMMENCED THEIR ACTIVITIES IS NOT IN ACCORDANCE WITH LAW AND I S THEREFORE, LIABLE TO BE SET ASIDE . 5 THE LD COUNSEL FOR THE ASSESSEE TRUST SUBMITTED THAT THE FIELD ENQUIRIES WHICH WERE CONDUCTED B Y THE CIT(EXEMPTION) W ERE NOT MADE KNOWN TO THE ASSESSEE TRUST AND THEREFORE , THE O RDER OF THE CIT (EXEMPTION) IS VIO LATION OF PRINCIPLES OF NATURAL JUSTICE. THE LD DR PRESENT WAS DULY HEARD. 6 WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF THE ORDER U/S 12AA OF THE ACT, IT IS EVIDENT THAT ONLY ONE HEARING WAS GRANTED TO THE ASSESSEE TRUST BEFORE REJECTING IT APPLICATION FOR REGISTRATION . THE CIT(EXEMPTION) CALLED FOR FIELD ENQUIRIES A N D B ASED ON THE FIELD ENQUIRIES, THE CIT(EXEMPTION) CONCLUDED THAT THE TRUST EXITS ONLY ON PAPER AND NO ACTIVITIES WERE UNDERTAKEN BY IT SO FAR . THE FIELD ENQUIRIES CONDUCTED ON BEHALF OF THE CIT(EXEMPTION) WAS NEVER MADE KNOWN TO THE ASSESSEE TRUST . THE FIELD ENQUIRIES BEING THE BASIS ON WHICH THE APPLICATION FOR REGISTRATION WAS REJECTED, NECESSARILY THE CIT ( EXEMPTION) OUGHT TO HAVE BROUGHT THE SAME TO THE NOTICE OF THE ASSESSEE TRUST AND CALLED FOR ASSESSEE TRUST S OBJECTION. HAVING FAILED TO DO SO; WE ARE OF THE OPINION THAT THERE IS VIOLATION OF PRINCIPLES O F NATURAL JUSTICE . HENCE, WE SET ASIDE THE ORDER OF THE CIT(EXEMPTION). THE CIT(EXEMPTION) IS DIRECTED TO CALL FOR THE ASSESSEE TRUST S OBJECTION WITH REFERENCE TO THE FIELD ITA NO . 445/C/2015 4 ENQUIRIES CONDUCTED AND PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FRESH ORDER IS PASSED U/S 12AA OF THE ACT. IT IS ORDERED ACCORDINGLY. 7 IN THE RESULT, THE AP PEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCT 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 1 3 TH O CT 2015 RAJ* ITA NO . 445/C/2015 5 COPY TO: 1 . APPELLA NT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN