SHRIJAN CHARITY, SITAMARHI V. CIT (EXEMPTION, PATNA

ITA 5/PAT/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6759 (ITAT-PATNA)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 18-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 12AA; 22

Judgement Text

ITA No. 05/PAT/2021 A.Y. 2018-2019 Shrijan Charity, Sitamarhi 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA-PATNA ‘E-COURT’, KOLKATA [Virtual Court Hearing] Before Shri P.M. Jagtap, Vice-President & Shri A.T. Varkey, Judicial Member I.T.A. No. 05/PAT/2021 Assessment Year: 2018-2019 Shrijan Charity, .........................................................................Appellant C/o. Ram Ekbal Chaudhary, Barari, Behata Choraut, Sitamarhi-843319, Bihar [PAN:AARTS9449Q] -Vs.- Commissioner of Income Tax (Exemption),..............................Respondent Patna, Income Tax Building, Sikandarpur, Muzaffarpur Appearances by: Shri A.K. Rastogi, A.R., appeared on behalf of the assessee Shri Rupesh Agrawal, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing : November 10, 2021 Date of pronouncing the order : December 08, 2021 O R D E R Per Shri P.M. Jagtap, Vice-President (KZ):- This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Exemption), Patna dated 27.02.2019, whereby he rejected the application of the assessee for grant of registration under section 12AA of the Income Tax Act, 1961. 2. At the outset, it is noted that there is a delay of 22 months and 20 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay on the following ground:- ITA No. 05/PAT/2021 A.Y. 2018-2019 Shrijan Charity, Sitamarhi 2 “The petitioner is filling the appeal against order u/s 12AA(1)(b)(ii) of the I.T. Act dated 27.02.2019 passed by CIT (Exemption), Patna. The petitioner has handed over the impugned order to one of the tax consultant at Patna namely Narendra Prasad (Adv.) for taking appropriate remedy under the law. Recently the appellant has received notice of demand of Rs.7,55,300/- for AY 2018- 19, and thereafter it has contacted the said tax consultant and came to know that no legal remedy against the impugned order has been taken. After collecting all the papers, the appellant is filing this appeal which is belated by more than 21 months”. 3. Keeping in view the averments made by the assessee in the condonation petition as above, we are satisfied that there was a sufficient cause for the delay of 22 months and 20 days on the part of the assessee in filing this appeal before the Tribunal. Even the ld. D.R. has not raised any objection in this regard. The said delay is accordingly condoned and this appeal of the assessee is being disposed of after hearing the arguments of both the sides on merit. 4. The assessee in the present case is a Trust, which filed an application on 31.10.2018 in the prescribed Form No. 10A of the Income Tax Rules, 1962 for grant of registration under section 12AA of the Income Tax Act, 1961. Although there was no compliance on the part of the assessee initially to the notice issued by the ld. CIT (Exemption), Patna fixing the said appeal for hearing, Shri Ram Ekbal Chaudhary, Trustee of the assessee-Trust finally appeared on the last date given on 07.01.2019 and filed some documents. On examination of the said documents, the ld. CIT (Exemption) was not satisfied about the genuineness of the activities of the assessee-Trust and consequently rejected the application of the assessee for registration under section 12AA of the Act for the following reasons given in his order dated 27.02.2019:- “Keeping into consideration of the full adherence to the norms delineated in the above section of the Act, the materials available on record have been perused to ITA No. 05/PAT/2021 A.Y. 2018-2019 Shrijan Charity, Sitamarhi 3 examine the application on both the prescribed grounds i.e. (i) objects of Trust/Society and (ii) the genuineness of activities claimed. During the course of examination of documents filed and discussion held during the course of hearing, it is found that the applicant is engaged in running of private hospital with an intention of profit making”. Aggrieved by the order of the ld. CIT(Exemption) rejecting the application for grant of registration under section 12AA, the assessee-Trust is in appeal before the Tribunal. 5. We have heard the arguments of both the sides and also perused the relevant material available on record. The ld. Counsel for the assessee has submitted that the earning of profit alone cannot be the criteria to doubt the genuineness of the activities of the Trust or otherwise there would not have been the concept of surplus or accumulated surplus as contemplated in the Income Tax Act, 1961 and provided for in the Statute. He has also invited our attention to the Income and Expenditure Account of the Trust for the year ended on 31 st March, 2017 (copy placed at page no. 3 of the paper book) to point out that the net profit of Rs.12.05 lakhs as reflected therein was because of the initial corpus donation of Rs.15,00,000/- received by the assessee-Trust. He has contended that the said corpus donation was wrongly credited by the assessee-Trust to the Income & Expenditure Account instead of taking the same directly to the balance-sheet, but in the absence sufficient opportunity of being heard given to the assessee-Trust by the ld. CIT(Exemption), this mistake could not be brought to his notice. He has also invited our attention to the Income & Expenditure Account of the assessee-Trust for the year ended on 31 st March, 2018 to point out that the surplus earned in the said year as reflected therein was only Rs.16,000/-. He has contended that the assessee-Trust thus is not carrying on its activities with an intention of profit making as alleged by the ld. CIT(Exemption) and urged that an opportunity may be given to the assessee-Trust to support and ITA No. 05/PAT/2021 A.Y. 2018-2019 Shrijan Charity, Sitamarhi 4 substantiate its case on this aspect of the matter by remanding the matter back to the ld. CIT (Exemption) for fresh consideration. Having regard to all the facts and circumstances of the case as narrated by the ld. Counsel for the assessee, we are inclined to accept the request of the assessee and since the ld. D.R. has also not raised any objection for sending the matter back to the ld. CIT(Exemption) for fresh consideration, we set aside the impugned order passed by the ld. CIT(Exemption) and remit the matter back to him for deciding the same afresh after giving proper and sufficient opportunity of being heard to the assessee. As undertaken by the ld. Counsel for the assessee, the assessee shall make due compliance before the ld. CIT(Exemption) and shall extend all the possible cooperation in order to enable the ld. CIT(Exemption) to dispose of the application of the assessee for grant of registration under section 12AA of the Act afresh expeditiously. 6. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on December 08, 2021. Sd/- Sd/- (A.T. Varkey) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 8 th day of December, 2021 Copies to : (1) Shrijan Charity, Sitamarhi, C/o. Ram Ekbal Chaudhary, Barari, Behata Choraut, Sitamarhi-843319, Bihar (2) Commissioner of Income Tax (Exemption), Patna, Income Tax Building, Sikandarpur, Muzaffarpur (3) Commissioner of Income Tax, Patna (4) Commissioner of Income Tax , (5) The Departmental Representative (6) Guard File By order Senior Private Secretary/DDO, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.