SHRI SIDDIVINAYAK EDUCATIONAL AND CHARITABLE TRUST, MUMBAI V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), Mumbai

ITA 4918/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1632 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Appeal Filed On: 23-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAXMI VARA PRASAD GUDE
• Assessee Lawyers: VIPUL JOSHI A R SHRI S M BANDI
• Keywords: Charitable institution; Cancellation of registration; Set aside
• Section: 12A; 12AA; 13; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.4918/M/2018 ASSESSMENT YEAR: 2017-18 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST, C/O M.L. SHARMA & CO., 107, CHARTERED HOUSE, 297/299, DR. C.H. STREET, MARINE LINES, MUMBAI 400 002 PAN: AASTS0720R VS. CIT (EXEMPTIONS), 6 TH FLOOR, PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIPUL JOSHI, A.R. SHRI S.M. BANDI, C.A. REVENUE BY : SHRI LAXMI VARA PRASAD GUDE, D.R. DATE OF HEARING : 17.07.2019 DATE OF PRONOUNCEMENT : 13.09.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 27.02.2018 OF THE COMMISSIO NER OF INCOME TAX (EXEMPTIONS) [HEREINAFTER REFERRED TO AS THE CIT(E)] DATED RELEVANT TO ASSESSMENT YEAR 2017-18. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT ERRED IN REJECTING THE APPLICAT ION DATED 02ND AUGUST 2017 FOR REGISTRATION OF THE TRUST UNDER SECTION 12AA OF THE ACT. 2. THE LEARNED CIT EXCEEDED HIS JURISDICTION CONFER RED UNDER SECTION 12AA[1] OF THE ACT FOR THE PURPOSE OF GRANT OF REGISTRATION BY CON SIDERING THE ISSUES NOT RELEVANT FOR THE APPROVAL OF THE TRUST UNDER THE SAID SECTIO N. ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 2 THE APPELLANT, THEREFORE, PRAYS FOR THE FOLLOWING R ELIEFS: I). THE IMPUGNED ORDER DATED 27TH FEBRUARY 2018 PASSED BY THE CIT BE QUASHED AND SET ASIDE AS BAD IN LAW. II). THE CIT BE DIRECTED TO GRANT REGISTRATION TO THE APPELLANT UNDER SECTION 12AA OF THE ACT. III). ANY OTHER RELIEF WHICH THE HONOURABLE TRIB UNAL DEEMS FIT. 3. THE ISSUE RAISED IN 1 ST GROUND OF APPEAL IS AGAINST THE ORDER OF LD. CIT(E) REJECTING THE APPLICATION DATED 02.08 .2017 FOR REGISTRATION OF TRUST UNDER SECTION 12AA OF THE ACT . 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE TRUST W AS CONSTITUTED ON 11.05.2005 VIDE DEED OF TRUST DATED 11.05.2005. MAIN OBJECTS OF THE TRUST INTER ALIA ARE TO CONSTRU CT BUILDING FOR RUNNING OF EDUCATIONAL INSTITUTIONS LIKE SCHOOL, HO SPITAL AND ORPHANAGE. THE SAID TRUST WAS GRANTED REGISTRATION UNDER BOMBAY PUBLIC TRUST ACT, 1950 ON 27.04.2006. THE S AID TRUST WAS BASICALLY SET UP TO HELP POOR AND DESERVING STU DENTS. THE TRUST IN ORDER TO PURSUE ITS OBJECTIVES ACQUIRED A PLOT OF LAND AT VILLAGE KAVESAR, TALUK AND DISTRICT THANE IN THE YEAR 2008. THE PROJECT COULD NOT TAKE OFF DUE TO VARIOUS IMPED IMENTS AND OBSTACLES AND THE TRUST HAS TO FIGHT A VERY PROLONG ED BATTLE TO REMOVE THE ENCROACHMENTS FROM THE SAID LAND. THERE AFTER, THE TRUST OBTAINED PERMISSION FROM MUNICIPAL CORPORATIO N FOR CONSTRUCTION OF SCHOOL BUILDING AND GOT THE APPLICA TION APPROVED FROM THE CONCERNED AUTHORITIES. THE TRUST COMMENCE D THE CONSTRUCTION OF SCHOOL IN 2016 BY INVITING THE TEND ERS AND QUOTATIONS FROM THREE PARTIES. THE CONTRACT WAS AW ARDED TO M/S. V.B. INFRA PROJECTS (INDIA) P. LTD. DURING FI NANCIAL YEAR 2016-17 THE CONTRACTOR M/S. V.B. INFRA PROJECTS (IND IA) P. LTD. CONSTRUCTED BOUNDARY WALLS AND EXECUTED OTHER CIVIL WORKS FOR WHICH AN INVOICE OF RS.46 LAKHS + SERVICE TAX WAS R AISED WHICH ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 3 WAS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. H OWEVER, NO PAYMENT WAS MADE TILL DATE AS THERE WAS NO INFLOW O F FUNDS IN THE TRUST. THE BALANCE SHEET AS AT 31.3.21017 FOR THE FINANCIAL YEAR 2016-17 AS CERTIFIED BY THE C.A. CONTAINED SEV ERAL APPARENT MISTAKES WHICH WERE LATER ON RECTIFIED AND A CORREC T AUDITED BALANCE SHEET WAS DRAWN OUT AFTER RECTIFYING ALL TH E APPARENT MISTAKES. THE TRUST APPLIED FOR THE REGISTRATION U NDER SECTION 12A OF THE ACT IN THE PRESCRIBED FORM NO.10A ON 02. 08.2017. THE LD. CIT(E) ISSUED NOTICES FROM TIME TO TIME CAL LING UPON THE ASSESSEE TO FURNISH THE VARIOUS INFORMATION/DETAILS FOR VERIFICATION OF OBJECTIVE AND THEIR GENUINENESS . THE LD. CIT(E) UPON PERUSAL OF THE DETAILS FILED, OBSERVED THAT AS SESSEE HAS DRAWN UP TWO BALANCE SHEETS FOR SAME YEAR I.E. FINA NCIAL YEAR 2016-17 WHICH WERE APPARENTLY NOT AGREEING WITH EAC H OTHER AND ACCORDINGLY A SHOW CAUSE NOTICE WAS ISSUED TO T HE ASSESSEE ON 12.02.2018. THE LD. CIT(E) ALSO POINTED OUT THE DISCREPANCIES BETWEEN THE TWO BALANCE SHEETS AND AS SESSEE WAS REQUESTED TO EXPLAIN AS TO HOW THESE DIFFERENT BALA NCE SHEETS WERE PREPARED FOR THE SAME PERIOD WITH THE SAME DAT E OF SIGNING BY THE TRUST AND THE AUDITORS. FROM PARA 6 TO 12 O F THE LD. CIT(E)S ORDER THE VARIOUS REASONS WERE ASSIGNED FO R NOT TREATING THE ACTIVITIES OF THE TRUST AS GENUINE AND FINALLY THE REGISTRATION WAS DENIED FOR THE REASONS AS CONTAINED IN PARAS 7 , 8 & 9 OF THE ORDER PASSED UNDER SECTION 12AA(I)(B)(II) READ WITH SECTION 12A OF THE ACT WHICH ARE REPRODUCED AS UNDER: 7. AS PER THE PROVISIONS OF SECTION 12AA(1)(B), A TRUST IS TO BE GRANTED REGISTRATION IF THE COMMISSIONER IS SATISFIED ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES. BOTH THESE REQUIREMENTS ARE CUMU LATIVE AND NOT ALTERNATIVE. THE SATISFACTION OF THE REGISTERING AUTHORITY CANNOT BE A SUBJECTIVE SATISFACTION BASED ON WHIM OR CAPRICE. IT HAS TO BE A BONA FIDE AND OBJE CTIVE SATISFACTION, BASED ON DUE APPLICATION OF MIND TO A CERTAIN SET OF FACTS OR MA TERIALS BEFORE HIM. THE SATISFACTION OF THE REGISTERING AUTHORITY IS NOT A PRESENCE OR A N EMPTY FORMALITY BUT IS THE ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 4 FOUNDATION OF GRANT OR REFUSAL OF REGISTRATION. IN OTHER WORDS, SUCH SATISFACTION IS THE CRUX OR ESSENCE OF THE REGISTRATION PROCEEDINGS. FROM THE DISCUSSION MADE IN PARA 6 ABOVE, IT IS CLE AR THAT THE ASSESSEE TRUST COMMITTED GROSS IRREGULARITIES AND ILLEGALITIES IN AWARDING THE CONTRACT, TAKING LOANS AND CONDUCTING ITS AFFAIRS. UNDER THESE CIRCU MSTANCES, I CANNOT BE SATISFIED WITH THE GENUINENESS OF THE ACTIVITIES OF THE TRUST . WITH PREJUDICE TO THIS, I AM NOT SATISFIED EVEN WIT H THE REASONABLENESS OF THE PAYMENTS MADE TO M/S. V.B. INFRA PROJECTS (I) LTD., WHICH IS A PERSON COVERED U/S. 13(3(. SUCH VIOLATION CAN NOW RESULT INTO DENIAL OF EXEMPTION U/S. 11 AND AS PER THE AMENDED PROVISIONS OF SECTION 12AA(4) OF THE AC T, SINCE THIS ITSELF NOW CAN BE A REASON FOR CANCELLATION OF REGISTRATION EVEN IF S UCH TRUST WAS EARLIER REGISTERED U/S. 12AA OF THE I.T. ACT. 8. WITHOUT PREJUDICE TO THE FINDINGS GIVEN IN PARA 6 AND 7 ABOVE, IT IS ALSO A MATTER OF RECORD THAT ASSESSEE HAS MERELY ACQUIRED LAND AN D AFTER ACQUIRING ITS POSSESSION, HAS BUILT A BOUNDARY WALL, IN ITS ALMOST 13 YEARS O F EXISTENCE. EVEN AFTER TAKING CERTIFICATE FROM CHARITY COMMISSIONS ON 27/04/2006, FOR MORE THAN 11 YEARS, IT HAD NOT EVEN APPLIED FOR A CERTIFICATE U/S. 12A OF THE I.T. ACT. THE TRUST HAS MAIN OBJECT OF PROMOTION AND WELL BEING OF THE RESIDENTS OF ADJ OINING AREA BY PROVIDING THEM BETTER LIVING ENVIRONMENT AND MEDICAL FACILITIES. T HE TRUST AIMED AT CHARITABLE OBJECT AND OTHER OBJECTS FOR GENERAL PUBLIC UTILITY . WITHOUT PREJUDICE TO THE GENERALITY OF ABOVE AIMS, IT HAS 27 SPECIFIC OBJECT S, BUT NOT A SINGLE ACTIVITY TO FULFILL ANY OF ITS OBJECTIVES WAS CONDUCTED IN THE 13 YEARS OF US EXISTENCE. THIS SITUATION ALSO DOES NOT HELP THE ASSESSEE IN P ROVING ITS GENUINENESS AND STICKING TOWARDS ITS OBJECTIVES, WITHOUT PREJUDICE TO THE IRREGULARITIES AND ILLEGALITIES HIGHLIGHTED ABOVE, ON THE BASIS OF WHICH IT IS NOT POSSIBLE TO ACCEPT THE GENUINENESS OF THE TRUST. 9. THUS, IT IS VERY EVIDENT THAT THE APPLICANT TRUS T HAS NOT BEEN ABLE TO ESTABLISH THE GENUINENESS OF EXPENDITURE INCURRED T OWARDS THE OBJECTS OF THE TRUST AS WELL AS THE GENUINENESS OF ITS ACTIVITIES, ON TH E BASIS OF ITS SUBMISSIONS. THERE IS ENOUGH MATERIAL BEFORE ME TO HAVE DOUBTS ON THE GEN UINENESS OF THE TRUST AND ITS ACTIVITIES AND ALSO TOWARDS ITS REAL OBJECTIVES. AS THE APPLICANT TRUST HAS FAILED TO FULFILL THE MANDATORY REQUIREMENTS PRESCRIBED U/S.1 2AA READ WITH RULE 17A TO SATISFY ABOUT THE GENUINENESS OF ITS ACTIVITIES AND OBJECTIVES, ITS APPLICATION FOR GRANT OF REGISTRATION IS REJECTED. 5. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THAT THE TRUST WAS FORMED ON 11.05.2005 BY DEED OF TRUST DATED 11. 05.2005 WITH THE MAIN OBJECTIVE TO CONSTRUCT BUILDING FOR R UNNING EDUCATIONAL INSTITUTIONS LIKE SCHOOL, HOSPITAL AND ORPHANAGE WHICH WAS DULY REGISTERED WITH THE CHARITY COMMISSI ONER BOMBAY PUBLIC TRUST ACT, 1950 ON 27.04.2006. THE S AID TRUST ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 5 WAS CONSTITUTED TO HELP THE POOR AND DESERVING STUD ENTS AND THE LAND WAS ACQUIRED AT VILLAGE KAVESAR, TALUK AND DIS TRICT THANE. THE ASSESSEE TRUST COULD NOT FURTHER DEVELOP THE SA ID PLOT OF LAND DUE TO UNAUTHORIZED ENCROACHMENTS AND VARIOUS LEGAL AND OTHER IMPEDIMENTS AND FINALLY THE CONSTRUCTION OF THE SCH OOL WAS STARTED IN 2016 FOR WHICH THE CONTRACT WAS AWARDED TO CONTRACTORS M/S. V.B. INFRA PROJECTS (INDIA) P. LTD. IN 2016-17. THE SAID CONTRACTOR HAS CONSTRUCTED THE BOUNDARY AN D EXECUTED THE OTHER CIVIL WORKS FOR WHICH THE BILL WAS RAISE D OF RS.45 LAKHS WHICH WAS EVEN OUTSTANDING AS ON DATE, AS THE TRUS T WAS NOT HAVING ANY FUNDS TO DISCHARGE ITS LIABILITY. THE CO NTRACT WAS AWARDED TO THE SAID FIRM BECAUSE IT HAS QUOTED THE LOWEST PRICE FOR EXECUTING THE WORK. THE LD. A.R. SUBMITTED THA T THE ASSESSEE APPLIED FOR THE REGISTRATION UNDER SECTION 12A VIDE APPLICATION DATED 24.07.2017 BY FILING THE NECESSAR Y DOCUMENTS SUCH AS COPY OF TRUST, CERTIFICATE OF REGISTRATION UNDER BOMBAY PUBLIC TRUST ACT, 1950, LIST OF TRUSTEES WITH THEIR PAN AND ADDRESSES ETC., BANK PASS BOOKS, STATEMENTS, PAN CA RD OF THE TRUST AND TRUSTEES ALONG WITH AUDITED ACCOUNTS AND RETURN OF INCOME FOR THE FINANCIAL YEAR 2014-15 AND 2016-17. THE LD. A.R. SUBMITTED THAT THE LD. CIT(E) REJECTED THE REG ISTRATION TO THE TRUST FOR VARIOUS REASONS SUCH AS TWO DIFFERENT BAL ANCE SHEETS FOR THE SAME PERIOD, DIFFERENCE IN LOANS FROM TRUST EES AND OTHERS, ALLEGED IRREGULARITIES IN OBTAINING LOAN UN DER BOMBAY PUBLIC TRUST ACT, 1950, AWARDING PROJECT TO THE CON TRACTOR M/S. V.B. INFRA PROJECTS (INDIA) P. LTD., CONTRAVENTION O F SECTION 13(3) R.W. AMENDED PROVISION OF THE SECTION 12AA(4) AND N ON CARRYING ON OF ACTIVITIES FOR 13 YEARS. THE LD. A.R. SUBMIT TED BEFORE US THAT ALL THESE ADVERSE OBSERVATIONS OF THE CIT(E) W ERE EXPLAINED ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 6 WITH REASONS AND PROPER EXPLANATIONS HOWEVER THE L D. CIT(E) HAS FAILED TO APPRECIATE THE FACTS IN CORRECT PERSP ECTIVE. THE LD. A.R. SUBMITTED THAT THE DIFFERENCE IN BALANCE SHEET S AS POINTED OUT BY THE LD. CIT(E) WAS EXPLAINED AND THERE WAS N O MANIPULATION AS ALLEGED BY THE LD. CIT(E) BY REFERR ING TO THE BALANCE SHEETS AND EXPLAINING THE ENTRIES WHICH HAD CONTRIBUTED TO THE DIFFERENCE IN THE TWO BALANCE SHEETS. THE L D. A.R. SUBMITTED THAT THERE WERE ONLY THE WRONG ENTRIES WE RE PASSED BY THE C.A. OF THE ASSESSEE AND EVEN A RECONCILIATION WAS DULY FILED BEFORE THE LD. CIT(E), A COPY OF WHICH IS ALSO PLAC ED BEFORE US DURING HEARING. SIMILARLY, THE DIFFERENCE IN LOANS FROM TRUSTEES AND OTHERS WERE ALSO EXPLAINED WITH NECESSARY EVID ENCES. THE LD. A.R. SUBMITTED THAT THERE EXISTED NO IRREGULARITY/WRONGDOINGS AS IS APPARENT FROM THE F INDINGS TO THIS EFFECT RENDERED BY THE CONCERNED AUTHORITY UND ER THE BOMBAY PUBLIC TRUST ACT, 1950. SO FAR AS THE AWARD ING OF CONTRACT TO M/S. V.B. INFRA PROJECTS (INDIA) P. LTD . UNDER BOMBAY PUBLIC TRUST ACT, 1950 ARE CONCERNED, THE ASSESSEE EXPLAINED THAT DUE PROCESS WAS FOLLOWED BY INVITING TENDER FR OM 3 PARTIES AND THE LOWEST ONE WAS GRANTED THE CONTRACT THOUGH CONNECTED TO THE ONE OF THE TRUSTEE AND THEREFORE THE LD. CIT (E) HAS NO JURISDICTION TO QUESTION THE AWARDING OF CONTRACT A S IT WOULD BE PREMATURE AT THIS STAGE AND CAN NOT BE CONSIDERED W HILE GRANTING THE REGISTRATION TO THE ASSESSEE U/S 12A O F THE ACT. THE LD. A.R. VEHEMENTLY SUBMITTED THAT EVEN AS ON DATE, THE PAYMENT IS OUTSTANDING TO THE SAID CONTRACTOR AND NOTHING HAS BEEN PAID AS THE TRUST DOES NOT HAVE ANY INFLOW OF FUNDS. THE LD. A.R. SUBMITTED THAT SUCH ALLEGED IRREGULARITIES AS PER THE LD. CIT(E) HAS NO BEARING ON THE FINANCES ON THE TRUST OR UNDER THE ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 7 PROVISIONS OF SECTION 11 READ WITH SECTION 13 OF TH E ACT. THE LD. A.R. FURTHER POINTED OUT THAT PERCENTAGE OF HOLDING OF THE TWO TRUSTEES IN M/S. V.B. INFRA PROJECTS (INDIA) P. LTD. IS NOT 100% AS OBSERVED BY THE LD. CIT(E) BUT ONLY ABOUT 17%. THE REFORE, THE OBJECTION RAISED BY THE LD. CIT(E) IS WITHOUT ANY B ASIS AND DESERVED TO BE REJECTED. THE LD. A.R. FURTHER SUBM ITTED THAT THE PROVISIONS OF SECTION 13(3) OF THE ACT READ WITH AM ENDED PROVISIONS OF SECTION 12AA(4) ARE NOT APPLICABLE TO THE TRUST AS THE SAID PROVISIONS WOULD APPLY ONLY WHERE THE TRUS T IS ALSO GRANTED THE REGISTRATION UNDER THE ACT AND SAME IS SOUGHT TO BE CANCELLED. BUT IN THE PRESENT CASE, THE TRUST HAS APPLIED FOR THE GRANT OF INITIAL REGISTRATION U/S 12A OF THE ACT. AS REGARDS NON CARRYING ON THE ACTIVITIES BY THE ASSESSEE TRUST IS CONCERNED ,THE LD. A.R. SUBMITTED THAT THE ASSESSEE TRUST HAS ACQU IRED PLOT IN 2008 TO PURSUE ITS OBJECTIVES BUT THE SAME COULD NO T BE DEVELOPED FURTHER DUE TO UNAUTHORIZED ENCROACHMENTS AND VARIOUS LEGAL IMPEDIMENTS/HURDLES WHICH WERE FINALL Y RESOLVED IN 2016 WHEN THE MAPS OF THE SCHOOL BUILDING WERE F INALLY APPROVED AND CONSTRUCTION WAS COMMENCED. THE LD. A .R. WHILE SUMMING UP HIS CONTENTIONS AND ARGUMENTS SUBMITTED THAT AT THE TIME OF GRANTING REGISTRATION THE LD. CIT(E) HA S TO SEE THE OBJECTIVES OF THE TRUST, GENUINENESS OF THE CHARITA BLE ACTIVITIES PROPOSED TO BE CARRIED ON BY THE TRUST AND THEREFOR E THE OBJECTIONS RAISED BY THE LD. CIT(E) ARE PREMATURE W HICH WOULD ONLY BE EXAMINED ONLY AFTER THE TRUST HAS CARRIED O N HIS ACTIVITIES IN THE ASSESSMENT STAGES. THE LD. A.R. IN DEFENCE OF HIS ARGUMENT RELIED ON THE FOLLOWING DECISIONS: 1. CIT V/S. VIJAY VARGIYA VANI CHARITABLE TRUST - [(20 14) 369 ITR 360 (RAJ)] 2. DIT (E) V/S. PANNA LALBHAI FOUNDATION - [(2013) 35 TAXMANN.COM 104 (GUJ) 3. DIT V/S. FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE -[(2012) 355 ITR 361 (DEL) ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 8 4. MATRU VANDANA TRUST V/S. DIT (E) - |(2015) 39 IT R (T) 30 (MUM - TRIB) 5. RIGHT TO HEALTH V/S. DIT (E) - [(2014) 35 ITR (T ) 267 (HYD - TRIB) 6. SOHAM FOR KIDS EDUCATION SOCIETY CENTRE V/S. DIT (EXEMPTION) - ((2014) 31 ITR(T) 170(DEL-TRIB) 7. JASODA DEVI CHARITABLE TRUST V/S. CIT - [(2010) 4 ITR (T) 547 (JAIPUR) 8. DHARMA SANSTHAPAK SANGH (NIYAS) V/S. CIT - [(200 8) 118 TTJ 823 (DEL - TRIB) 9. SARDARI LAL OBERAI MEMORIAL CHARITABLE TRUST V/S . ITO - |(200S) 3 SOT 229 (DELHI-TRIB) 10. M/S. ORGANISATION FOR AUTISTIC INDIVIDUALS (OAI ) V/S. DIT (EXEMPTION) - JI.T.A. NO. 1935 / M / 13, ORDER DATED 30.03.2013] 11. HARDAYAL CHARITABLE & EDUCATIONAL TRUST V/S. CIT - II - [I.T. APPEAL NO. 107 OF 2012, ORDER DATED 15,03.2013, ALLAHABAD HIGH COUR T] 6. THE LD. D.R., ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF LD. CIT(E) AND SUBMITTED THAT THE REGISTRATION W AS REJECTED BY THE LD. CIT(E) UNDER SECTION 12A FOR VARIOUS REASON S AS THE TRUST HAS COMPLETELY FAILED IN PURSUING ITS OBJECTIVES AN D THERE WERE ALSO SO MANY IRREGULARITIES IN THE FUNCTIONING FOR 13 YEARS AND THUS HEAVILY RELIED ON THE ORDER OF LD. CIT(E) AND PRAYED BEFORE THE BENCH THAT THE APPEAL OF THE ASSESSEE MAY KINDL Y BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, T HE ASSESSEE HAS APPLIED FOR THE REGISTRATION UNDER SECTION 12A AND ALL THE NECESSARY DOCUMENTS WHICH ARE REQUIRED TO BE FILED WITH THE LD. CIT(E) HAVE BEEN FILED. THE LD. CIT(E) HAS REJECTE D THE REGISTRATION UNDER SECTION 12A BY CITING VARIOUS RE ASONS AS HAS BEEN DISCUSSED IN DETAIL HEREINABOVE. THE LD. CIT( E) STATED IN THE ORDER THAT TWO BALANCE SHEETS WERE PREPARED FOR THE SAME PERIOD WITH CONFLICTING AMOUNTS, DIFFERENCE IN LOAN S FROM TRUSTEE AND OTHERS, ALLEGED IRREGULARITIES IN OBTAINING LOA N UNDER BOMBAY PUBLIC TRUST ACT, 1950, ALLEGED IRREGULARITI ES IN AWARDING THE CONTRACT TO M/S. V.B. INFRA PROJECTS (I NDIA) P. LTD. AND NON CARRYING ON THE CHARITABLE ACTIVITIES FOR 1 3 YEARS ETC AND ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 9 THE REJECTION OF REGISTRATION UNDER SECTION 12A WER E FOR THE SAID REASONS. IN OUR OPINION, THE LD. CIT(E) HAS TO C ONFINE HIMSELF TO THE GENUINENESS OF THE OBJECTIVES OF THE TRUST A ND NOT TO THE ACTIVITIES CARRIED ON AND THE MANNER IN WHICH THEY WERE CARRIED AS THE SAME WOULD BE PREMATURE AT THE STAGE OF EXAM INATION OF APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATI ON UNDER SECTION 12A OF THE ACT. THE ONE MORE REASON, THE LD. CIT(E ) HAS REFERRED TO IS CONTRAVENTION OF SECTION 12AA(4). IN THIS CA SE ALSO THESE ISSUES ARE TO BE EXAMINED ONLY AFTER THE REGISTRATI ON IS GRANTED AND NOT AT THE TIME OF REGISTRATION. THE CASE OF T HE ASSESSEE SQUARELY COVERED BY THE CASE LAWS AS REFERRED TO AB OVE IN THE CASE OF CIT V/S. VIJAY VARGIYA VANI CHARITABLE TRUST ( SUPRA). THE HONBLE HIGH COURT HAS HELD THAT THE COMMISSION ER WAS UNJUSTIFIED IN REJECTING THE APPLICATION OF THE ASS ESSEE BASED ON NON CHARITABLE ACTIVITY AT THE STAGE OF MOVING APPL ICATION WHERE THE OBJECTIVES INCORPORATED IN THE TRUST DEED WERE FOUND TO BE GENUINE FOR CARRYING OUT CHARITABLE ACTIVITIES. SI MILARLY, IN THE CASE OF DIT (E) V/S. PANNA LALBHAI FOUNDATION (SUPR A) IT WAS HELD BY THE HONBLE GUJARAT HIGH COURT THAT WHERE T HE TRUST HAS NOT COMMENCED ITS ACTIVITIES, THE COMMISSIONER WOUL D NOT HAVE AUTHORITY TO IPSO FACTO REJECT THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA. IN THE CASE OF DIT V/S. FOUNDA TION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE (S UPRA) THE HONBLE DELHI HIGH COURT HAS HELD THAT REGISTRATION IS NOT DEPENDENT ON COMMENCEMENT OF CHARITABLE ACTIVITIES AND THEREFORE NON COMMENCEMENT OF CHARITABLE ACTIVITIES CAN NOT BE A GROUND FOR REJECTION OF APPLICATION UNDER SECTION 12AA. IN THE CASE OF DHARMA SANSTHAPAK SANGH (NIYAS) V/S. CIT (S UPRA) THE HONBLE DELHI HIGH COURT HAS HELD THAT WHILE GRANTI NG ITA NO.4918/M/2018 SHRI SIDDIVINAYAK EDUCATIONAL & CHARITABLE TRUST 10 REGISTRATION TO A CHARITABLE INSTITUTION OF TRUST, IF IT IS AT COMMENCEMENT STAGE, POWERS OF THE COMMISSIONER WITH WHOM THE APPLICATION IS FILED BY SUCH TRUST/INSTITUTION ARE LIMITED TO THE ASPECT OF EXAMINING WHETHER OR NOT OBJECTIVES O F TRUST ARE CHARITABLE IN NATURE. THE HONBLE DELHI HIGH COUR T HAS HELD THAT CARRYING ON OF CHARITABLE ACTIVITIES AT THE ST AGE OF COMMENCEMENT OF INSTITUTION IS NOT RELEVANT TO DECI DE WHETHER THE TRUST IS ENTITLED FOR REGISTRATION OR NOT. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND THE RATIO LAID DOWN BY VARIOUS JUDICIAL FORUMS, WE ARE INCLINED TO SET ASIDE THE O RDER OF LD. CIT(E) AND DIRECT THE LD. CIT(E) TO GRANT REGISTRAT ION TO THE ASSESSEE TRUST. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2019. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.09.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.