The Income-tax Officer, BATALA V. M/s. St. Francis Service Society, BATALA

ITA 453/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0798 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Assessee Lawyers: PARVEEN JAIN
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS.453 & 615(ASR)/2014 ASSESSMENT YEARS:2010-11 & 2006-07 PAN: AACTSO519A INCOME TAX OFFICER, VS. ST. FRANCIS SERVICE SOCIE TY, WARD 2(4), GURU RAM DASS COLONY, BATALA. BATALA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. S.S. KANWAL, DR RESPONDENT BY: SH. PARVEEN JAIN, ADVOCATE DATE OF HEARING: 03/05/2016 DATE OF PRONOUNCEMENT: /05/2016 ORDER PER A.D. JAIN, JM: THESE ARE THE DEPARTMENTS APPEALS FOR THE ASSESSM ENT YEARS 2010-11 & 2006-07, AGAINST THE ACTION OF THE LD. CI T(A), AMRITSAR, IN ALLOWING THE BENEFIT UNDER SECTIONS 11 AND 12 OF TH E INCOME TAX ACT, 1961, TO THE ASSESSEE. THE FACTS BEING SIMILAR IN BOTH THE APPEALS, THE SAME ARE BEING TAKEN FROM ITA NO.453(ASR)/2014 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE SOCIETY APPLIED FOR REGISTRATION UN DER SECTION 12AA OF THE ACT IN FORM NO.10A, VIDE RECEIPT NO.2213 DATED 28.05.2001. THE AO, ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 2 HOWEVER, WITHOUT CONSIDERING ACKNOWLEDGMENT OF FOR M NO.10A, VIDE ORDER ISSUED UNDER SECTION 156 OF THE I.T. ACT, ASS ESSED THE ASSESSEE SOCIETY AS AOP AND RAISED DEMAND OF RS.22,05,152/- FOR THE ASSESSMENT YEAR 2010-11 AND RS.20,88,052/- FOR THE ASSESSMENT YEAR 2006-07.THE EXEMPTIONS CLAIMED UNDER SECTIONS 11 AND 12 OF THE ACT, WERE NOT ALLOWED. 3. THE LD. CIT(A) ALLOWED THE BENEFIT OF UNDER SECT IONS 11 & 12 TO THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSID ERATION. 4. THE DEPARTMENT CONTENDS THAT THE LD. CIT(A) HA S ERRED IN ALLOWING BENEFIT OF SECTION 11 & 12 OF THE ACT TO THE ASSES SEE, WHEN NO REGISTRATION WAS GRANTED UNDER SECTION 12AA OF THE ACT AND FAILED TO APPRECIATE THE FACT THAT FILING OF APPLICATION DO ES NOT AMOUNT TO DEEMED GRANTING OF REGISTRATION. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS RELIED ON THE ORDER UNDER APPEAL. RELIANCE HAS ALSO BEEN PLA CED ON THE ORDER DATED 16.02.2016, PASSED BY THE HONBLE SUPREME COU RT IN THE CASE OF CIT, KANPUR & ORS. VS. SOCIETY FOR THE PROMOTION O F EDUCATION, ALLAHABAD, (COPY PLACED ON RECORD) IN CIVIL APPEAL NO.1478 OF 2016 [S.L.P. (C) NO.9705 OF 2009]. ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 3 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, IT IS SEEN THAT THE AO, WHILE PAS SING THE ASSESSMENT ORDER OBSERVED AS FOLLOWS: FROM THE ABOVE FACTS AND THE SUBMISSIONS OF THE ASS ESSEE AND THE CASE LAWS CITED BY THE ASSESSEE, IT HAS BEEN OBSERVED THAT: 1. THE ASSESSEE HAS SUBMITTED TO THIS OFFICE A HANDWRI TTEN FORWARDING LETTER WRITTEN ON PLAIN PAPER CARRYING A STAMP IMPRESSION (AS DISCUSSED ABOVE) CLAIMED TO BE BELONGING THE OF FICE OF THE COMMISSIONER OF INCOME TAX, AMRITSAR BEARING AN ALM OST TWELVE YEAR OLD NUMBER AND DATE WHICH IN ITSELF IS DIFFICU LT TO BE VERIFIED. FROM THE ABOVE DISCUSSION, IT IS CLEARLY EVIDENT TH AT ASSESSEE HAD DELIBERATELY CONCEALED ITS INTENTION OF CLAIMING DE EMED REGISTRATION UPTO 30.11.2012 ESPECIALLY IN VIEW THE FACT THAT 31 ST OF DECEMBER REMAINED THE TIME BARRING DATE FOR COMPLETION OF AS SESSMENT FOR PREVIOUS YEARS. THE CLEAR INTENTION OF THE ASSESSEE APPEARS NOT TO GIVE THIS OFFICE TIME FOR VERIFICATION OF THE TRUE FACTS OF THE CASE. 2. THIS HAND WRITTEN FORWARDING LETTER CLAIMED TO BE AN APPLICATION FILED IN THE OFFICE OF THE COMMISSIONER OF INCOME-TAX, AMRITSAR CANNOT GIVE CONFIDENCE WHETHER THE APPLICA TION WAS IN A PRESCRIBED MANNER OR NOT. BECAUSE FILING OF APPLICA TION IN THE PRESCRIBED FORM AND PRESCRIBED MANNER IS PERQUISITE FOR REGISTRATION OF TRUST/SOCIETY U/S 12A OR 12AA AS THE CASE MAY BE . 3. IT SEEMS TO BE UNPRECEDENTED AND AN APPLICATION HAS BEEN RECEIVED IN THIS OFFICE OR HEAD OFFICE AND REMAINED UNHEARD OR UNATTENDED. 4. ONUS WAS LYING ON THE ASSESSEE TO PROVE THE GENUINE NESS OF THIS SO CALLED APPLICATION FILED IN THIS OFFICE AND HE COULD NOT DISCHARGE HIS ONUS PROPERLY. THE ASSESSEE TRUST REM AINED DORMANT OVER THE MATTER FOR LAST ELEVEN YEARS AND MADE LEAS T EFFORTS TO ENQUIRE ABOUT, THE FATE OF THIS APPLICATION EXCEPT HE MADE AN APPLICATION ON 21.12.2012 TO THE INCOME TAX OFFICER (TECH), 0/0 THE COMMISSIONER OF INCOME-TAX-1, AMRITSAR TO ENQUIRE A BOUT THE FATE OF THIS APPLICATION DATED 28.05.2001 INSPITE OF THE RE PEATED OF THIS OFFICE TO PROVE THE GENUINENESS OF ITS APPLICATION. THE ASSESSEE TRUST PRODUCED THE ORIGINAL SO CALLED RECEIPT TO THE OFFI CE OF THE COMMISSIONER OF INCOME-TAX-1, AMRITSAR ON 14.03.201 3 I.E. AT THE FAG END OF THE PERIOD BARRING BY TIME ON 31.03.2013 . NEEDLESS TO SAY THAT THE ASSESSEE TRUSTS INTENTION HAS NEVER B EEN BEYOND DOUBT ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 4 AND HAD ALWAYS BEEN ACTING IN SUCH A MANNER SO THAT PROPER ENQUIRY MAY NOT BE MADE. 5. REGARDING CASE LAWS CALLED BY THE ASSESSEE, ALL HAS BEEN VIEWED AND SEEN THE CIRCUMSTANCES OF THESE CASES AR E NOT SIMILAR TO THIS CASE BECAUSE THE FILING OF THE APPLICATION WAS NEVER DOUBTFUL IN THE CASES MENTIONED IN THE CASE LAWS BUT SAME IS NO T TRUE IN THIS CASE. HENCE THESE JUDGMENTS ARE NOT APPLICATION IN THIS CASE. FROM THE ABOVE STATED FACTS. I AM OF THE CONSIDERED VIEW, THAT ASSESSEE TRUST/SOCIETY DOES NOT ENJOY THE REGISTRAT ION U/S 12AA OF THE INCOME TAX ACT, 1961 AND IS NOT ELIGIBLE FOR TH E INCOME EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961. HENCE, WHOLE OF THE RECEIPTS I.E. RS.2,71,51,594/- OF THE ASSESSEE TRUST IS TREATED A S ITS GROSS INCOME AND EXCESS INCOME OVER THE PERMISSIBLE EXPENDITURES AMOUNTING TO RS. 55,67,368/- IS TREATED AS ITS TAXABLE INCOME. A PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 19 61 FOR FILING INACCURATE PARTICULARS AND CONCEALING THE TRUE PART ICULARS OF INCOME ARE BEING INITIATED SEPARATELY. 7. THE LD. CIT(A) OBSERVED AS FOLLOWS: 7. I DO NOT AGREE WITH THE OBSERVATION OF THE AO, W HILE DECIDING THE ISSUE THAT ASSESSEE DOES NOT ENJOY THE REGISTRA TION U/S 12AA OF THE INCOME TAX ACT 1961 AND IS NOT ELIGIBLE FOR EXE MPTION U/S 11 OF THE INCOME TAX ACT. IT WAS DUTY OF THE AO TO FIND O UT FROM OFFICE OF THE HIGHER AUTHORITY REGARDING CLAIM OF THE ASSESSE E THAT IT HAS FILED AN APPLICATION FOR REGISTRATION U/S 12A. IN-FACT AS SESSEE HAS SUBMITTED A LETTER DATED 21.12.2012 APPLYING TO INC OME TAX OFFICER (TECH) TO KNOW ABOUT ITS APPLICATION DATED 25.05.20 01 WHICH WAS RECEIVED IN THE OFFICE OF CIT, AMRITSAR ON 28.05.20 01 VIDE ACKNOWLEDGEMENT NO. 2313. THE ACT IN THIS REGARD IS VERY CLEAR THAT IF APPLICATION HAS NOT BEEN REJECTED OR ACCEPTED WI THIN 6 MONTHS OF FILING SUCH APPLICATION, THE APPLICATION WILL BE CO NSIDERED AS ACCEPTED AS PROVIDED U/S. 12AA (2). THE HONBLE ALL AHABAD HIGH COURT HAS ALSO HELD ABOUT DEEMED REGISTRATION IF NO CONTRARY VIEW IS TAKEN ON THE APPLICATION OF THE ASSESSEE, AS HELD I N THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATION ADVENTURE SU PPORT AND CONSERVATION OF ENVIRONMENT VS. CIT AND OTHERS 216 CTR 167 (ALL.). FURTHER, INCOME TAX OFFICER, KATHUA HAS ALSO GRANTE D DEEMED REGISTRATION IN CASE OF M/S. COSMIC EDUCATIONAL TRU ST FOR ASSESSMENT YEAR 2010-11, WHEN SIMILARLY A LETTER AD DRESSED TO DEPARTMENT WAS CONSIDERED AS DEEMED REGISTRATION. E VEN IN THE ASSESSMENT ORDER, THE AO HAS GIVEN BENEFITS OF SECT ION 11 & 12 TO THE ASSESSEE AS AGAINST GROSS INCOME OF RS. 2,71, 5 1,594/-, THE AO HAS ALLOWED APPLICATION OF INCOME AS EXPENSES AND H AS ONLY ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 5 ASSESSED INCOME OF RS. 55,67,368/-. THE EXPENSES CL AIMED IN INCOME AND EXPENDITURE ACCOUNT ARE NOT PERMISSIBLE EXPENSE AGAINST INCOME RECEIVED BY THE ASSESSEE AND THEY AR E MERELY APPLICATION OF INCOME, WHICH IS NORMALLY ALLOWABLE IN THE CASE OF REGISTERED CHARITABLE TRUST. AFTER CONSIDERING ASSE SSEES SUBMISSIONS AND ISSUED DISCUSSED ABOVE, I AM CONSID ERED OPINION THAT ASSESSEE TRUST HAS TO BE CONSIDERED AS REGISTE RED TRUST U/S 12AA, IN VIEW OF SECTION 12AA (2) OF THE INCOME TAX ACT. IN VIEW OF ABOVE AND NO CLEAR FINDING OF AO THAT ASSESSEE IS N OT CARRYING OUT ITS OBJECT AND NOT INVOLVED IN CHARITABLE ACTIVITIE S, THE ASSESSEE IS ALLOWED TO CLAIM BENEFIT OF SECTION 11&12 OF THE AC T. APPEAL IS ALLOWED ON THE ISSUE. 8. THUS, IT IS SEEN THAT THE FACTUM OF THE ASSESSEE HAVING MADE APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IS NOT DISPUTED. THE LD. CIT(A) HAS TAKEN DUE NOTE OF THE FACT THAT IF SUCH APPLICATION DOES NOT STAND REJECTED OR ACCEPTED WITHIN SIX MONTHS OF FIL ING THEREOF, IT SHALL BE CONSIDERED AS ACCEPTED. THE PROVISIONS OF SECTION 1 2AA (2) OF THE ACT ARE VERY CLEAR IN THIS REGARD. PROCEDURE FOR REGISTRATION. 12AA. (2) EVERY ORDER GRANTING OR REFUSING REGISTRA TION UNDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFOR E THE EXPIRY OF SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLI CATION WAS RECEIVED UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB-SEC TION (1)] OF SECTION 12A . 9. THE LD. CIT(A) HAS FOLLOWED THE DECISION IN THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATION ADVENTURE SUPPORT AND CO NSERVATION OF ENVIRONMENT VS. CIT AND OTHERS, 216 CTR 167 (ALL. ). AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE, THIS DECISION HAS BE EN UPHELD BY THE HONBLE SUPREME COURT, WHILE DISMISSING THE S.L.P. FILED BY THE DEPARTMENT. THE JUDGMENT IS REPORTED AT 67 TAXMAN .COM. 264 (SC). IN ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 6 THAT CASE, THE DATE OF APPLICATION FOR REGISTRATION WAS 24.02.2003. THE DEPARTMENT RAISED THE OBJECTION BEFORE THE HONBLE SUPREME COURT THAT THE REGISTRATION WOULD OPERATE ONLY AFTER SIX MONT HS FROM THE SAID DATE OF THE APPLICATION. THE HONBLE SUPREME COURT HELD AS FOLLOWS: 3. THE SHORT ISSUE IS WITH REGARD TO THE DEEMED RE GISTRATION OF AN APPLICATION UNDER SECTION 12AA OF THE INCOME TAX ACT. THE HIGH COURT HAS TAKEN THE VIEW THAT ONCE AN APPLICAT ION IS MADE UNDER THE SAID PROVISION AND IN CASE THE SAME IS NO T RESPONDED TO WITHIN SIX MONTHS, IT WOULD BE TAKEN THAT THE APPLI CATION IS REGISTERED UNDER THE PROVISION. 4. THE LEARNED ADDITIONAL SOLICITOR GENERAL APPEAR ING FOR THE APPELLANTS, HAS RAISED AN APPREHENSION THAT IN THE CASE OF THE RESPONDENT, SINCE THE DATE OF APPLICATION WAS OF 24 . 02.2003, AT THE WORST, THE SAME WOULD OPERATE ONLY AFTER SIX MONTHS FROM THE DATE OF THE APPLICATION. 5. WE SEE NO BASIS FOR SUCH AN APPREHENSION SINCE T HAT IS THE ONLY LOGICAL SENSE IN WHICH THE JUDGMENT COULD BE U NDERSTOOD. THEREFORE, IN ORDER TO DISABUSE ANY APPREHENSION, W E MAKE IT CLEAR THAT THE REGISTRATION OF THE APPLICATION UNDER SECT ION 12AA OF THE INCOME TAX ACT IN THE CASE OF THE RESPONDENT SHALL TAKE EFFECT FROM 24.08.2003. 6. SUBJECT TO THE ABOVE CLARIFICATION AND LEAVING A LL OTHER QUESTIONS OF LAW OPEN, THE APPEAL IS DISPOSED OF WI TH NO ORDER AS TO COSTS. 10. THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE FACT THAT THE ITO, KATHUA HAS ALSO GRANTED DEEMED REGISTRATION IN THE CASE OF M/S. COSMIC EDUCATIONAL TRUST FOR THE ASSESSMENT YEAR 2010-11, UNDER SIMILAR CIRCUMSTANCES. 11. IN VIEW OF THE ABOVE FACTS, FINDING NO MERIT TH EREIN, THE GRIEVANCE OF THE DEPARTMENT FOR BOTH THE YEARS UNDER CONSIDERATI ON IS REJECTED. THE ITA NOS. 453 & 615(ASR)/2014 A.YS. 2010-11 & 2006-07 7 ORDERS OF THE LD. CIT(A) ARE UPHELD. THE LD. CIT IS DIRECTED TO GRANT REGISTRATION TO THE ASSESSEE FORTHWITH. 12. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTME NT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 04/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:ST. FRANCIS SERVICE SOCIETY, BATALA. 2. THE ITO, WARD 2(4), BATALA 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.