Swargiya Thakur Ram Kripal Singh, Jaunpur V. Commissiner of Income Tax, Faizabad

ITA 491/LKW/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3228 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-06-2013
• Assessment Year: misc
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MITRA
• Assessee Lawyers: K N SINGH
• Keywords: Charitable institution
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI. PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 491/LKW/2012 ASSESSMENT YEAR: 2001 - 12 SWARGIYA THAKUR RAM KRIPAL SINGH SMRITI SHIKSHAK EVAM SAMAJ KALYAN TRUST UMARPUR, HARIBANDHANPUR MACHHALISHAHAR ROAD, JAUNPUR V. CIT FAIZABAD PAN: AAKTS8561N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. K. N. SINGH , ADVOCATE RESPONDENT BY: SHRI. A. K. MITRA, D.R. DATE OF HEARING: 03.06.2013 DA TE OF PRONOUNCEMENT: 28.06.2013 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX, FAIZABAD DENYING REGISTRATION UNDER SECTION 12A OF THE INCOME - TAX ACT, 1961 (HEREINAF TER CALLED IN SHORT THE ACT'), INTER ALIA, ON VARIOUS GROUNDS WHICH ARE AS UNDER: - 1 . BECAUSE THE ORDER OF LEARNED C.I.T, FAIZABA D IS BAD IN LAW AND WITHOUT PROPER APPRECIATION OF FACTS OF THE CASE. 2 . BECAUSE THE TRUST APPLIED FOR REGISTRATION U/S 12A ON 18. 1.2012 FOR F.Y. 2011 - 12 ALONG WITH COPIES OF TRUST DEED B/SHEET F O R : - 2 - : EARLIER TW O YEARS. THE TRUST PURCHASED LAND FOR CONSTRUCTION ON 20.9.2011 . SHE SAID LAND WAS CONVERTED FROM AGRICULTURAL LAND TO COMMERCIAL LAND VIDE ORDER DATED 20.1.2012 BY S. D. M , KERAKAT.MAP FOR CONSTRUCTION OF BUILDING WAS PASSED ON 2.9.2011. THE TRUST APPLIED FOR GRANT OF RECOGNITION OF B. T. C . COURSES TO REGI ONAL DI RECTOR N. C. T.E . JAINPUR ( RAJASTHAN) VIDE APPLICATION DATED 23.9,2011 AND ON GRANT OF RECOGNITION THE COURSE S OF B. T. C. SHALL BE COMMENCED . 3 . THAT THE PROCESS FOR CARRY ON EDUCATIONAL ACTIV ITY WAS COMMENCED IN ABOVE MANNER AND IMPAR TING OF EDUCATION WOULD BE START AFTER THE GRANT OF RECOGNITION . 4 . BECAUSE THE LEARNED C.I.T. FAIZ ABAD WAS NOT JUSTIFIED IN HOLDING TH AT 'THE MATERIAL BROUGHT ON RECORD IS NOT SUCH THAT WOULD SUFFICE TO SHOW THAT THE APPLICANT IS ENGAGED IN CHARITABLE ACTIVITIES ELIGIBLE FOR REGISTRATION AS PER PROVISIONS OF ACT. THE ORDER OF ID. C.I.T. IS BAD IN LAW AND WITHOUT PROPER APPRECIATION OF FACTS OF CASE. 5 . BECAUSE THERE WAS ACTIVITY DURING THE PERIOD UNDER CONSI DERATION AND APPELLANT TRUST IS ENTITLED FOR REGISTRATION U/S 12AA OF I.T. ACT WHICH IS LIABLE TO BE GR ANTED. 2 . THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS ASSAILING THE ORDER OF TH E LD. COMMISSIONER OF INCOME - TAX, BUT ALL THE GROUNDS RELATE TO DENIAL OF REGISTRATION UNDER SECTION 12A OF THE ACT. 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX AND DOCUMENTS PLACED ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE, SHRI. K. N. SINGH, ADVOCATE HAS CONTENDED THAT THE LD. COMMISSIONER OF INCOME - TAX HAS DENIED REGISTRATION : - 3 - : ON THE BASIS THAT THE RECEIPT PAYMENT ACCOUNT OF THE ASSESSEE SHOWED RECEIPT OF DONATIONS AMOUNTING TO ` 15,635 AND ` 23,597 FOR THE YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY. THE OTHER GROUNDS FOR REJECTION OF REGISTRATION UNDER SECTION 12A OF THE ACT BY THE LD. COMMISSIONER OF INCOME - TAX ARE THAT THE DOCUMENTS ON RECORD DO NOT SUFFICE TO ESTABLISH THE GENUINENESS OF ACTIV ITIES AND THE REGISTRATION IS NOT A MECHANICAL PROCESS WHERE APPLICATION FILED AT ONE END WILL LEAD TO GRANT OF A CERTIFICATE AT THE OTHER. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE LD. COMMISSIONER OF INCOME - TAX HAS NOT ASSIGNED ANY SPE CIFIC REASON FOR DENIAL OF REGISTRATION WHEREAS THE ASSESSEE HAS FILED COPIES OF THE OBJECTS OF THE ASSESSEE - TRUST FOR ITS INCORPORATION AND ALSO ACTIVITIES TOWARDS ACHIEVING ITS OBJECTS. FROM THE OBJECTS OF THE ASSESSEE - TRUST , IT IS ABUNDANTLY CLEAR THAT CREATION OF THE TRUST WAS FOR SETTING UP OF AN EDUCATIONAL INSTITUTION BESIDES OTHER CHARITABLE ACTIVITIES. IN ORDER TO ACHIEVE THE OBJECT S , THE ASSESSEE - TRUST HAS ALSO PURCHASED A LAND FOR CONSTRUCTION OF SCHOOL BUILDING. THESE FACTS WERE IGNORED BY TH E LD. COMMISSIONER OF INCOME - TAX WHILE DENYING REGISTRATION UNDER SECTION 12A OF THE ACT . THE ASSESSEE HAS ALSO APPLIED TO THE AUTHORITIES FOR GRANT OF REGISTRATION OF B.T.C. COURSE ETC. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IT IS THE S ETTLED POSITION OF LAW THAT WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT , ONLY THE OBJECTS OF THE SOCIETY/TRUST ARE TO BE SEEN. THE ACTIVITIES OF THE SOCIETY/TRUST, IN FACT, CAN BE EXAMINED WHILE FRAMING THE ASSESSMENT. 4 . THE LD. D.R., ON THE OT HER HAND, HAS SUBMITTED THAT THE LD. COMMISSIONER OF INCOME - TAX IS EMPOWERED TO EXAMINE THE NATURE OF ACTIVITIES OF THE ASSESSEE - TRUST BESIDES ITS GENUINENESS AND OBJECTS. 5 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE LD . COMMISSIONER OF INCOME - TAX AND DOCUMENTS PLACED ON RECORD, WE FIND THAT THE LD. COMMISSIONER OF INCOME - TAX WHILE DENYING REGISTRATION UNDER SECTION 12A OF THE ACT HAS PLACED HEAVY RELIANCE UPON : - 4 - : THE RECEIPT OF DONATIONS BY THE ASSESSEE - TRUST OF ` 15,635 AN D ` 23,597 FOR THE YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY. HE HAS NOT POINTED OUT ANY ACTIVITY UNDERTAKEN BY THE ASSESSEE - TRUST WHICH IS NOT OF CHARITABLE IN NATURE. T HE JURISDICTION OF THE LD. COMMISSIONER OF INCOME - TAX WHILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT HAS BEEN EXAMINED TIME AND AGAIN BY VARIOUS HIGH COURTS AND THE TRIBUNAL. THE LUCKNOW BENCH OF THE TRIBUNAL EXAMINED THIS ASPECT IN THE CASE OF NAVYUG SOCIETY VS. CIT - I, KANPUR IN ITA NO. 279/LKW/2012, IN WHICH THE TRIBUNAL HAS CONCL UDED THAT AT THE TIME OF GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX IS NOT REQUIRED TO VERIFY THE GENUINE NE SS OF THE ACTIVITIES; IT CAN BE VERIFIED ONCE THE ASSESSEE STARTS ITS ACTIVITIES AND IF THE LD. COMMISSIO NER OF INCOME - TAX IS NOT SATISFIED THAT THE ASSESSEE IS NOT ENGAGED IN THE CHARITABLE ACTIVIT I ES, HE MAY CANCEL THE REGISTRATION. BUT THE REGISTRATION CANNOT BE DENIED FOR THE REASON THAT IT IS NOT POSSIBLE TO VERIFY THE GENUINENESS OF THE ACTIVITIES CARR IED OUT BY THE SOCIETY/TRUST. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE CASE OF NAVYUG SOCIETY VS. CIT - I, KANPUR IN ITA NO. 279/LKW/2012 VIDE ORDER DATED 28.5.2013 ARE EXTRACTED HEREUNDER: - 9. NOW THE QUESTION ARISES WITH REGARD TO THE POWERS OF THE LD. COMMISSIONER OF INCOME - TAX WHILE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. AS PER PROVISIONS OF SECTION 12AA OF THE ACT WHILE GRANTING REGISTRATION THE LD. COMMISSIONER OF INCOME - TAX IS REQUIRED TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. WHILE GRANTING REGISTRATION, TH E LD. COMMISSIONER OF INCOME - TAX IS REQUIRED TO EXAMINE THE OBJECTS OF THE SOCIETY OR TRUST. HE CANNOT BECOME AN ASSESSING OFFICER WHILE : - 5 - : GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. SUB - SECTION (3) OF SECTION 12AA OF THE ACT FURTHER EMPOWERS THE LD. COMMISSIONER OF INCOME - TAX TO REVIEW HIS DECISION OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. IF THE LD. COMMISSIONER OF INCOME - TAX IS SUBSEQUENTLY NOT SATISFIED WITH THE ACTIVITIES OF THE TRUST OR INSTITUTION THAT THEY ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING SUCH REGISTRATION OF THE TRUST OR INSTITUTION. MEANING THEREBY THAT AT THE TIME OF GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX IS ONLY REQUIRED TO EXAMINE THE OBJECTS OF THE SOCIETY OR TRUST. IF IT IS CHARITABLE AND NO OTHER ACTIVITY IS NOTICED WHEREFROM AN INFERENCE CAN BE DRAWN THAT THE ASSESSEE IS ENGAGED IN AN Y OTHER ACTIVITY EXCEPT CHARITABLE, REGISTRATION UNDER SECTION 12AA OF THE ACT SHOULD NOT BE DENIED. THIS ASPECT WAS EXAMINED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. B.K.K. MEMORIAL TRUST (SUPRA) IN WHICH THEIR LORDSHIPS HAVE CAT EGORICALLY HELD THAT SECTION 12AA OF THE ACT REQUIRES SATISFACTION IN RESPECT OF GENUINENESS OF THE ACTIVITIES OF THE TRUST WHICH INCLUDES THE ACTIVITIES WHICH THE TRUST IS UNDERTAKING AT PRESENT AND ALSO WHICH IT MAY CONTEMPLATE TO UNDERTAKE. THE INSERTI ON OF SUB - SECTION (3) TO SECTION 12AA OF THE ACT, CLARIFIES THE SAID FACT, WHEN IT EMPOWERS THE LD. COMMISSIONER OF INCOME - TAX TO CANCEL THE REGISTRATION IF THE ACTIVITIES OF THE TRUST ARE NOT CARRIED OUT IN ACCORDANCE WITH SUCH OBJECTS. IT WAS FURTHER HE LD THAT THE CONTENTION THAT THE TRUST WAS NOT SET UP FOR CHARITABLE PURPOSE AND IT WAS UTILIZING ITS INCOME NOT FOR THE SAID PURPOSE CANNOT BE EXAMINED AT THIS STAGE AS ONLY OBJECTS OF THE TRUST HAD TO BE : - 6 - : CONSIDERED BY THE LD. COMMISSIONER OF INCOME - TAX WH ILE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. 10. IN THE CASE OF CIT VS. KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA), THEIR LORDSHIPS OF THE HON'BLE GUJARAT HIGH COURT HAVE HELD THAT UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX HAS TO SATISFY HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES. FOR SUCH PURPOSE, HE HAS THE POWER TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST AS HE THINK ARE NECESSARY. HOWEVER, THIS DOES NOT MEAN TH AT IF THE ACTIVITIES OF THE TRUST HAVE NOT COMMENCED, THE LD. COMMISSIONER OF INCOME - TAX HAS AUTHORITY TO REJECT ITS APPLICATION FOR REGISTRATION ON THE GROUND THAT THE TRUST FAILED TO CONVINCE HIM ABOUT THE GENUINENESS OF THE ACTIVITIES. THAT IS WHAT UNF ORTUNATELY THE LD. COMMISSIONER OF INCOME - TAX DID IN THE PRESENT CASE. THE HON'BLE HIGH COURT ACCORDINGLY APPROVED THE ORDER OF THE TRIBUNAL DIRECTING THE LD. COMMISSIONER OF INCOME - TAX TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT. 11. IN THE CASE OF CIT VS. SHRI. ADVAIT ASHRAM SOCIETY (SUPRA), THEIR LORDSHIPS OF THE HON'BLE ALLAHABAD HIGH COURT HAVE HELD THAT THE ONLY ENQUIRY WHICH THE LD. COMMISSIONER OF INCOME - TAX CAN MAKE WHILE GRANTING REGISTRATION IS REGARDING GENUINENESS OF THE TRUST AND AS T O WHETHER THE OBJECTS AS MENTIONED IN THE TRUST DEED ARE FOR CHARITABLE PURPOSE OR NOT. 12. THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF KANSARA BABULAL VS. DIRECTOR OF INCOME TAX KARSANDAS PUBLIC CHARITABLE TRUST, AHMEDABAD (SUPRA) HAD EXPRESSED THE SAME VIEW IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND HELD THAT WHILE GRANTING REGISTRATION SATISFACTION AND GENUINENESS OF ACTIVITY : - 7 - : IS NOT CONDITION PRECEDENT. THE GENUINENESS OF THE ACTIVITIES CAN BE EXAMINED BY THE LD. COMMISSIONER OF INCOME - T AX UNDER SECTION 12AA(3) OF THE ACT AND IF HE IS SATISFIED THAT THE ACTIVITIES OF THE TRUST OR SOCIETY ARE NOT GENUINE, HE CAN CANCEL THE REGISTRATION. 13. TURNING TO THE FACTS OF THE CASE IN HAND, WE FIND THAT THE ASSESSEE HAS DECLARED ALL FACTS IN ITS AP PLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ALONG WITH RELEVANT DOCUMENTS. IT HAS BEEN CATEGORICALLY STATED IN THE APPLICATION THAT FORMALITIES FOR SETTING UP EDUCATIONAL INSTITUTION ARE IN PROGRESS AND THERE HAS BEEN NO MAJOR ACTIVITIES. TH E BALANCE SHEET AND INCOME & EXPENDITURE ACCOUNT WERE ALSO FILED ALONG WITH OBJECTS OF THE ASSESSEE - SOCIETY WHEREFROM IT IS CLEAR THAT THE ASSESSEE HAS NOT UNDERTAKEN ANY MAJOR ACTIVITY FOR IMPARTING EDUCATION. IMPARTING OF EDUCATION IS NOT POSSIBLE WITHO UT A PROPER BUILDING AND THE ASSESSEE - SOCIETY WAS IN THE PROCESS OF CONSTRUCTING A BUILDING AFTER ACQUIRING LAND IN NODIA. THESE FACTS ARE SUFFICIENT TO ESTABLISH THE INTENTION OF THE ASSESSEE - SOCIETY AND THERE IS NO MATERIAL AVAILABLE WITH THE LD. COMMIS SIONER OF INCOME - TAX FOR HOLDING THAT THE ASSESSEE - SOCIETY IS NOT ENGAGED IN CHARITABLE ACTIVITIES. 14. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE LD. COMMISSIONER OF INCOME - TAX HAS WRONGLY DENIED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE - SOCIETY. AT THE TIME OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT, THE LD. COMMISSIONER OF INCOME - TAX IS NOT REQUIRED TO VERIFY THE GENUINENESS OF THE ACTIVITIES, IT CAN BE VERIFIED ONCE THE ASSESSEE STARTS ITS ACTIVIT IES AND IF THE LD. COMMISSIONER OF INCOME - TAX IS SATISFIED THAT THE ASSESSEE IS NOT ENGAGED IN THE CHARITABLE ACTIVITIES, HE MAY CANCEL THE REGISTRATION. BUT THE REGISTRATION : - 8 - : CANNOT BE DENIED FOR THE REASON THAT IT IS NOT POSSIBLE TO VERIFY THE GENUINENES S OF THE ACTIVITIES CARRIED OUT AND/OR PROPOSED TO BE CARRIED OUT BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX AND DIRECT HIM TO GRANT REGISTRATION TO THE ASSESSEE - SOCIETY UNDER SECTION 12AA OF THE ACT. 6 . TURNIN G TO THE FACTS OF THE CASE IN HAND, WE FIND THAT THE LD. COMMISSIONER OF INCOME - TAX HAS DENIED REGISTRATION WITHOUT POINTING OUT ANY ACTIVITY WHICH IS NOT OF CHARITABLE IN NATURE . W HILE GRANTING REGISTRATION UNDER SECTION 12A OF THE ACT, THE OBJECT S OF TH E SOCIETY ARE TO BE EXAMINED. ON A CAREFUL PERUSAL OF THE OBJECT S OF THE ASSESSEE - TRUST PLACED ON RECORD, IT IS EVIDENTLY CLEAR THAT THE ASSESSEE - TRUST WAS CREATED FOR CHARITABLE PURPOSES AND IN ORDER TO ACHIEVE THE OBJECTS OF THE TRUST , ASSESSEE HAS PURC HASED LAND FOR CONSTRUCTION OF SCHOOL BUILDING. THESE FACTS ARE SUFFICIENT TO HOLD THAT THE ASSESSEE - TRUST WAS ENGAGED IN THE CHARITABLE ACTIVITY. WE, THEREFORE, FIND NO MERIT IN THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX DENYING REGISTRATION UNDER SECTION 12A OF THE ACT . ACCORDINGLY, WE DIRECT THE LD. COMMISSIONER OF INCOME - TAX TO GRANT REGISTRATION TO THE ASSESSEE - TRUST UNDER SECTION 12A OF THE ACT. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.6.2013 . SD/ - SD/ - [PRAMOD KUMAR] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28.6.2013 JJ: 1906 : - 9 - : COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR