Gyan Mahavidhyala Society, Mathura V. C.I.T.-1, Agra

ITA 468/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0629 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 7 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-05-2013
• Assessment Year: misc
• Appeal Filed On: 04-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M M AGARWAL
• Keywords: Charitable institution; Principle of natural justice; Set aside
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 467 & 468/AGRA/ 2012 GYAN MAHAVIDHYALAYA SOCIETY VS. THE CIT- 1, JAI SINGH PURA AYAKAR BHAWAN, MATHURA 281 003 SANJAY PLACE MATHURA DISTRICT (U.P.) AGRA 282002 (U.P.) (PAN AABTG1976A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.M.AGARWAL, C.A. RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 27.05.2013 DATE OF PRONOUNCEMENT : 31.05.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDERS OF LEARNED CIT-I, AGRA DATED 07.08.2012. ONE IS IN RES PECT OF REJECTION OF APPLICATION FOR GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT AND THE OTHER APPEAL IS IN RESPECT OF REJECTION OF APPLICATION FO R GRANT OF EXEMPTION UNDER SECTION 80G(5) OF THE ACT. ITA NO.467&468/AGRA/2012 2 2. THE GROUNDS RAISED IN THESE APPEALS ARE BASED ON IDENTICAL SET OF FACTS, THEREFORE, FOR THE SAKE OF CONVENIENCE, BOTH THESE APPEALS ARE DECIDED BY THIS COMMON ORDER. 3. GROUNDS RAISED IN ITA NO.467/AGRA/2012 READ AS UNDER :- 1. BECAUSE THE CIT HAS ERRED IN LAW AS WELL AS IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE APPLICAT ION FILED BY THE APPELLANT FOR REGISTRATION UNDER SECTION 12AA OF TH E ACT. 2. BECAUSE IMPUGNED ORDER PASSED IS WHOLLY VITIATED IN LAW AS THE CIT NEVER PROVIDED ANY OPPORTUNITY IS BEING HEARD BEFOR E PASSING ADVERSE ORDER AND CONFRONTING THE APPELLANT WITH INTENDED ADVERSE INFERENCE. 3. BECAUSE INFERENCE DRAWN BY CIT TO SHOW THE DIS-S ATISFACTION TO THE GENUINENESS OF ACTIVITIES OF APPELLANT ARE MISCON CEIVED AND UNTENABLE IN LAW, IRRELEVANT AND WRONG. 4. BECAUSE THE CIT HAVING, NOT CONDUCTED HEARING A ND PROCEEDINGS OF THE MATTER HIMSELF AT ANY POINT OF TIME, THE ADVERS E ORDER PASSED BY HIM WAS WHOLLY ILLEGAL AND BAD IN LAW. 5. BECAUSE THE ORDER DATED 07.08.2012 PASSED BY THE CIT IS WRONG, ILLEGAL, AGAINST PRINCIPAL OF NATURAL JUSTICE AND B AD IN LAW. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SOCIETY MOVED AN APPLICATION DATED 01.08.2011 IN FORM NOS.10A & 10G FOR REGISTRATION UNDER SECTION 12AA AND GRANT OF APPROVAL UNDER SECTION 80 G OF THE ACT, RECEIVED TO THE OFFICE ON 08.02.2012. THE LD. CIT REJECTED BOTH THE APPLICATIONS VIDE ORDER DATED 07.08.2012. BOTH THE ORDERS PASSED BY THE LD. CIT ARE WITHIN SIX MONTHS. ITA NO.467&468/AGRA/2012 3 THE LD. CIT OBSERVED THAT ALL THE NAME OF CERTAIN S TUDENTS ( 8 NOS.) TO WHOM FEE CONCESSION IS CLAIMED TO HAVE BEEN ALLOWED, BUT THE ASSESSEE SOCIETY DID NOT FURNISH THE EVIDENCE. IN THIS REGARD, EXPLANATION R EGARDING CRITERIA GOVERNING SUCH CONCESSION WAS ALSO NOT FURNISHED. THE LD. CIT FURT HER NOTICED THAT THE SCHOLARSHIP WAS NOT BEING SET ASIDE THE ASSESSEE OU T OF ITS OWN INCOME, BUT THAT THE SAME IS BEING PROVIDED TO IT BY THE SOCIAL WELF ARE DEPARTMENT OF THE GOVERNMENT. ON PERUSAL OF LEDGER ACCOUNT, LD. CIT N OTICED THAT THE SCHOLARSHIP APPEARS TO HAVE NOT BEEN DISTRIBUTED AT ALL. THE A SSESSEE WAS ASKED TO EXPLAIN HOW THIS AMOUNT HAD BEEN ADJUSTED, BUT ASSESSEE FAI LED TO EXPLAIN IN THIS REGARD. ON PERUSAL OF ACCOUNT, THE LD. CIT OBSERVED THAT TH E ASSESSEE IS CHARGING SUBSTANTIAL FEES FROM THE STUDENTS TO WHOM IT IMPAR TS EDUCATION AND AFTER MEETING OUT THE ADMINISTRATIVE EXPENDITURE ON RUNNING OF CO LLEGE, STAFF SALARY, ESTABLISHMENT ETC. THE ASSESSEE SOCIETY EARNED SURP LUS PROFIT EVERY YEARS. THE CIT NOTED THAT THE SURPLUS PROFIT IN DIFFERENT YEARS AR E AS UNDER :- SL.NO. FINANCIAL YEAR AMOUNT 1. 2007-08 RS.44,35,371/- 2. 2008-09 RS.34,12,060/- 3. 2009-10 RS.31,64,052/- 4. 2010-11 RS.62,45,060/- ITA NO.467&468/AGRA/2012 4 5. ON THE BASIS OF SURPLUS AND OTHER DOCUMENTS, THE LD. CIT NOTED THAT EDUCATION PER SE, IS NOT A CHARITABLE ACTIVITY AND ALL EDUCATIONAL INSTITUTIONS DO NOT AUTOMATICALLY QUALIFY AS CHARITABLE INSTITUTION. HE NOTED THAT ONLY EDUCATION IMBUED WITH AN ELEMENT OF CHARITY CAN BE CALLED, A CHARITABLE ACTIVITY AND AN EDUCATIONAL INSTITUTION CAN BE CATEGORIZED AS CHARI TABLE ONLY IF IT IS ACTUALLY MEETING OUT CHARITY WHILE IMPARTING EDUCATION. THE LD. CIT RELIED UPON THE ORDER OF ITAT CHENNAI BENCH IN THE CASE OF M/S. RAJAH SIR ANNAMALAI CHETTIR FOUNDATION VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIO NS), ITA NO.1817/MDS/2010 ORDER DATED 20.06.2011. THE LD. CI T HELD THAT THE ASSESSEE SOCIETY IS RUNNING THE EDUCATIONAL INSTITUTION ON P URELY COMMERCIAL BASIS. IT IS CHARGING FEES FOR THE IMPARTING OF EDUCATION AND EA RNING EDUCATIONAL SUBSTANTIAL SURPLUS/PROFITS THERE FROM. IT IS NOT CARRYING OUT ANY CHARITABLE WORK AS SUCH. THE CIT FURTHER NOTICED THAT AS PER OBJECT CLAUSE OF TH E ASSESSEE, THE ASSESSEE WAS TO CARRY OUT CHARITABLE ACTIVITIES SUCH AS ORGANIZING OF BLOOD DONATION CAMPS, PLANTATION, MEDICAL RELIEF CAMPS, POLLUTION AWARENE SS PROGRAMMES ETC. BUT THE ASSESSEE SOCIETY DID NOT PROVIDED SUCH ACTIVITIES. IN THE LIGHT OF THE DISCUSSION MADE BY THE LD. CIT IN HIS ORDER, HE HAS REJECTED B OTH THE APPLICATIONS FOR REGISTRATION UNDER SECTION 12AA AND SECTION 80G(5) OF THE I.T. ACT ON THE ITA NO.467&468/AGRA/2012 5 GROUND THAT THE ASSESSEE FAILED TO SATISFY ABOUT TH E GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE SOCIETY. 6. LEARNED A.R. DREW OUR ATTENTION ON PAGE NOS. 74 TO 78 AND SUBMITTED THAT THE LD. CIT DID NOT PROVIDE REASONABLE OPPORTUNITY OF HEARING WHICH IS EVIDENT FROM COPY OF ORDER-SHEETS PLACED AT PAGE 75 TO 78 O F ASSESSEES PAPER BOOKS. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E LD. CIT PASSED THE REJECTION ORDER AT CAMP, LUCKNOW. ON QUERY FROM THE BENCH, LE ARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE REJECTION ORDERS OF LEARNED CIT WERE PASSED WITHIN SIX MONTHS FROM THE DATE OF FILING OF APPLIC ATION. HE FURTHER ADMITTED THAT DRAFT ORDERS HAVE NOT BEEN PUT UP BY ITO (TECH.) BE FORE LD. CIT. HOWEVER, THE LEARNED AUTHORIZED REPRESENTATIVE RELIED UPON THE O RDER OF ITAT AGRA BENCH IN THE CASE OF GYAN DEEP PUBLIC SCHOOL VS. COMMISSIONE R OF INCOME TAX-II, AGRA IN ITA NO. 445/AGRA/2012 ORDER DATED 15.02.2013 WHE REIN ANOTHER ORDER OF THE AGRA BENCH IN THE CASE OF SHIKSHA SOCIETY VS. CIT I N ITA NO.418/AGRA/2010 ORDER DATED 18.05.2012 FOLLOWED AND REGISTRATION WA S GRANTED. THE LD. AUTHORIZED REPRESENTATIVE HAS ALSO ARGUED ON MERIT AND SUBMITT ED THAT THE ASSESSEE SOCIETYS OBJECTS ARE EDUCATION. THE LEARNED AUTHORIZED REPRE SENTATIVE RELIED UPON THE CERTAIN DECISIONS OF WHICH COPIES HAVE BEEN FILED I N THE PAPER BOOK. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT LD. CIT DI D NOT DOUBT ABOUT THE OBJECT ITA NO.467&468/AGRA/2012 6 OF THE SOCIETY AND HE HAS ALSO DID NOT DOUBT ABOUT THE DONATION OBJECT OF THE SOCIETY. THE CIT ALSO DID NOT DOUBT ABOUT THE GENUI NENESS OF THE ACTIVITIES OF THE ASSESSEE. SINCE THE CIT DID NOT DOUBT ABOUT THE OBJ ECT AND GENUINENESS OF THE ACTIVITIES, THEREFORE, THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AND APPROVAL OF THE EXEMPTION UNDER SECT ION 80G(5) OF THE ACT. 7. THE LD. D.R. ON THE OTHER HAND, SUBMITTED THAT L D. CIT ALLOWED REASONABLE OPPORTUNITY OF HEARING. HE FURTHER SUBMITTED THAT T HOUGH THE DETAILS WERE CALLED THROUGH ITO (TECH.), BUT THE CIT HIMSELF HAS EXAMIN ED THOSE DETAILS WHICH WERE FURNISHED BY THE ITO(TECH.). THE LD. DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT THE ASSESSEE SOCIETY IS TO ESTABLISH THE CONCEPT OF EDUCATIONAL ACTIVITIES AND IN THAT ACTIVITY, SURPLUS MAY BE THERE, BUT IN THE CASE UND ER CONSIDERATION ASSESSEE SOCIETY IS EARNING HUGE SURPLUS IN DIFFERENT YEARS. THEREFORE, SOCIETY CARRIES BUSINESS ACTIVITIES AND NOT THE EDUCATION ACTIVITIE S. 8. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. ON PERUSAL OF ORDER SHEET, COPY HAS BEEN PLACED IN THE PAPER BOOK, WE NOTICE THAT LD. CIT DID NOT PROVIDE REASONABLE OPPORTUNITY OF HEARI NG IN THIS REGARD. THE ITO (TECH.) HAS CALLED THE DETAILS FROM THE ASSESSEE. T HE CIT EXAMINED THESE DETAILS ONLY ON 07.08.2012 AND THE ORDER PASSED AT KANPUR W HICH ITSELF APPEARS THAT THE ITA NO.467&468/AGRA/2012 7 ASSESSEE WAS NOT PROVIDED SUFFICIENT OPPORTUNITY OF HEARING. THE PROVISO OF SECTION 12AA(1) PROVIDES THAT NO ORDER SHALL BE PAS SED UNLESS THE SOCIETY HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF HEARING. 9. AS REGARDS THE ORDER OF THE ITAT AGRA BENCH IN T HE CASE OF GYAN DEEP PUBLIC SCHOOL (SUPRA) RELIED BY THE LEARNED AUTHORI ZED REPRESENTATIVE DOES NOT HELP TO ASSESSEE AS THE FACTS ARE DIFFERENT IN THAT CASE THAN THE CASE UNDER CONSIDERATION. IN THAT CASE THE ITO (TECH.) PUT UP THE DRAFT ORDER BEFORE LD. CIT AND CIT WITHOUT EXAMINING APPROVED THE DRAFT ORDER. IN THAT CASE, THE ORDER WAS PASSED BEYOND SIX MONTHS. THEREFORE, THE ORDERS CIT IED BY LD. AUTHORIZED REPRESENTATIVE IN THE CASE OF GYAN DEEP PUBLIC SCHO OL (SUPRA) IS DISTINGUISHABLE ON FACTS. 10. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE LIGHT OF THE ABOVE DISCUSSION, AS NOTED ABOVE, THE ASSESSEE DID NOT GET REASONABLE OPPORTUNITY OF HEARING. WE, THEREFORE, THINK IT PROPER TO SEND BACK THE ISSUE BEFORE LD. CIT TO DECIDE DENOVO, IN ACCORDANCE WITH LAW, AFTER PROVID ING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.467&468/AGRA/2012 8 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY