Dr. Hari Johri and Seema Johri, Gwalior V. C.I.T., Gwalior

ITA 504/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0231 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-02-2013
• Assessment Year: misc
• Appeal Filed On: 29-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Charitable institution; Opportunity of being heard
• Section: 12A; 12AA; 12; 11

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. 503 & 504/AGRA/2012 DR. HARI JOHRI & SEEMA JOHRI VS. COMMISSIONER OF CHARITABLE TRUST, GANESH COLONY, INCOME-TAX, GWA LIOR NAY BAZAR, LASHKAR, GWALIOR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 14.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 15.02.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST DIFFERENT ORDERS OF THE LD. CIT, GWALIOR DATED 28.08.2012 REJECTING THE APP LICATIONS U/S. 12AA OF THE IT ACT AND APPROVAL 80G(5)(VI) OF THE IT ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED APPLICATIONS U/S. 12AA AND 80G(5)(VI) OF THE IT ACT FOR GRANT OF REGI STRATION AND APPROVAL FOR EXEMPTION. THE AO WAS DIRECTED TO VERIFY THE GENUIN ENESS OF THE ACTIVITIES OF THE ASSESSEE. THE ACIT, CIRCLE-1, GWALIOR HAS SUBMITTED THE REPORT THROUGH JCIT, RANGE-I, GWALIOR AND DID NOT RECOMMEND FOR GRANT OF REGISTRATION TO THE ASSESSEE. THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE AO. THE OBJECTS OF THE ITA NO. 503 & 504/AGRA/2012 2 ASSESSEE WERE NOT FOUND TO BE GENUINE AND CHARITABL E IN NATURE. THE ASSESSEE WAS ACCORDINGLY PROVIDED OPPORTUNITY OF HEARING ON 22.0 8.2012 REQUIRING TO PRODUCE THE BOOKS OF ACCOUNT, AUDIT REPORT AND TO SUBMIT TH E DOCUMENTS FOR LAST THREE YEARS AND THE NOTES ON ACTIVITIES. THE ASSESSEES COUNSEL FILED A LETTER DATED 22.08.2012 AND CASE WAS ADJOURNED TO 28.08.2012. THE REPORT FR OM THE AO WAS CALLED FOR ON THE LETTER OF THE ASSESSEES COUNSEL. THE AO AGAIN SUBMITTED THE REPORT. THE INSPECTOR WAS ALSO DEPUTED BY THE ACIT, CIRCLE-I, G WALIOR TO VISIT THE REGISTERED OFFICE OF THE TRUST AND SUBMIT THE REPORT REGARDING CHARITABLE ACTIVITIES OF THE TRUST. THE INSPECTOR SUBMITTED THAT NO CHARITABLE A CTIVITIES WERE CARRIED OUT BY THE TRUST AND IN THE REPORT OF THE AO IT WAS RECOMMENDE D THAT NO REGISTRATION SHOULD BE GRANTED. ON THE DATE OF HEARING ON 28.08.2012, N OBODY APPEARED AND NO SUBMISSIONS HAVE BEEN MADE AND ACCORDINGLY, THE LD. CIT FOUND THAT THE ASSESSEE IS NOT ENTITLED FOR REGISTRATION / EXEMPTION, AS THE A IMS AND ACTIVITIES OF THE TRUST ARE NOT GENUINE AND CHARITABLE IN NATURE. 3. THE APPEAL WAS TAKEN UP FOR HEARING ON 27.12.201 2 AND THE ASSESSEES COUNSEL SUBMITTED THAT APPEAL COULD NOT BE PREPARED BECAUSE LOCAL COUNSEL COULD NOT ASSIST HIM. ON HIS REQUEST, THE APPEAL WAS ADJO URNED TO 07.01.2013. AGAIN ON 07.01.2013, THE LD. COUNSEL FOR THE ASSESSEE SEEKS TIME TO FURNISH PAPER BOOK. ON HIS REQUEST, THE APPEAL WAS ADJOURNED TO 14.02.2013 . ON 14.02.2013 AGAIN, THE LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR ADJOURNMENT BECAUSE THE ASSESSEE WANTED TO ITA NO. 503 & 504/AGRA/2012 3 FILE SOME DOCUMENTS IN CONNECTION WITH THE GROUNDS OF APPEAL, WHICH ARE YET TO BE COLLECTED. THE REQUEST FOR ADJOURNMENT WAS CONSIDER ED UNNECESSARY AND WAS ACCORDINGLY REJECTED. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REPORT OF THE INSPECTOR WAS NOT CONFRONTED TO THE ASSESSEE. THEREFORE, THE MATTER MAY BE REMANDED TO THE LD. CIT FOR RECONSIDERATION OF THE ISSUE. ON THE OT HER HAND, THE LD. DR RELIED UPON THE IMPUGNED ORDER. 5. ON CONSIDERATION OF THE FACTS OF THE CASE AND FI NDING OF FACT GIVEN IN THE IMPUGNED ORDER, WE ARE OF THE VIEW THAT THE ISSUE I S COVERED AGAINST THE ASSESSEE BY THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF HAR DAYAL CHARITABLE AND EDUCATIONAL TRUST VS. CIT, 138 ITD 179 DATED 07.03. 2012, IN WHICH IN PARA 6 TO 14, THE TRIBUNAL RECORDED FOLLOWING FINDING, WHICH IS REPRODUCED AS UNDER : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE MATERIAL ON RECORD. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE OBJECTS OF THE ASSESSEE TRUST, ACCORDING TO WHICH THE ASSESSEE IS ESTABLISHED FOR THE PURPOSE OF MAINTAINING SCHOOLS, COLLEGES AND INSTIT UTIONS FOR IMPARTING EDUCATION IN DIFFERENT FIELDS/SUBJECTS. IT WAS, HOW EVER, CONCEDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS NOT ACTUALLY CARRIED OUT ANY CHARITABLE OR EDUCATIONAL ACTIVITIE S FOR ACHIEVING THE OBJECTS OF THE ASSESSEE TRUST. THE LD. COUNSEL FOR THE ASSESSEE ALSO CONCEDED THAT THE ASSESSEE IS STILL AT THE STAGE OF RAISING CONSTRUCTION FOR SCHOOLS AND COLLEGES AND NO EDUCATIONAL OR CHAR ITABLE ACTIVITIES HAVE YET BEEN STARTED. SECTION 12AA OF THE IT ACT P ROVIDES ITA NO. 503 & 504/AGRA/2012 4 12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) OF SECTION 12A SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEH ALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPL ICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSE D UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNI TY OF BEING HEARD. (1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF COM MISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANS FERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED W ITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY. (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB-SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY O F SIX MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS R ECEIVED UNDER CLAUSE (A) SECTION 12A. (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTE D REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST ITA NO. 503 & 504/AGRA/2012 5 OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS A N ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSE D UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONAB LE OPPORTUNITY OF BEING HEARD. 8. SECTION 12AA OF THE IT ACT CONFERS POWER ON THE COMMISSIONER WHILE CONSIDERING THE APPLICATION FOR REGISTRATION OF TRUST OR INSTITUTION MADE UNDER THE SAME PROVISION TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUT ION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF AND AFTER SATI SFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND T HE GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING REGIS TERING THE TRUST OR INSTITUTION AND IF HE IS NOT SATISFIED, HE WOULD RE FUSE REGISTRATION. FOR GRANT OF APPROVAL U/S. 80G(5), THE ASSESSEE IS REQU IRED TO FULFILL THE CONDITIONS THAT SUCH INSTITUTION OR FUNDS DERIVED F ROM ANY INCOME WOULD NOT BE LIABLE FOR INCLUSION IN ITS TOTAL INCO ME U/S. 11 & 12 OF THE IT ACT. THE READING OF PROVISIONS OF SECTION 12AA M AKES IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUINENES S OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THUS, ON ENQUIRY, THE LD. CIT SHALL HAVE TO EXAMINE AS TO WHETHER THE ASSESSEE WHO HAS MOVED AP PLICATION FOR REGISTRATION IS ACTUALLY IN THE ACTIVITIES WHICH AR E GENUINE. GENUINENESS OF ACTIVITIES OF ASSESSEE HAS TO BE SEE N. BOTH THE CONDITIONS SHALL HAVE TO BE SATISFIED BEFORE GRANTI NG/REFUSING REGISTRATION U/S. 12AA OF THE IT ACT. HONBLE KERAL A HIGH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT, 247 ITR 18 (KER.) HELD AS UNDER : SECTION 12AA OF THE INCOME-TAX ACT, 1961 WAS INSER TED WITH EFFECT FROM APRIL 1, 1997. THE PROVISION PROVIDES F OR A PROCEDURE TO BE FOLLOWED FOR GRANT OF REGISTRATION TO A TRUST OR INSTITUTION. EARLIER, THERE WAS NO PROVISION IN THE ACT FOR PROCESSING AN APPLICATION FOR EXEMPTION IN RESPECT OF INCOME OF A CHARITABLE OR R ELIGIOUS TRUST OR INSTITUTION ON SATISFYING CERTAIN CONDITIONS. AS PE R THE NEW PROVISION, THE CHIEF COMMISSIONER OR COMMISSIONER SHALL CALL F OR DOCUMENTS AND INFORMATION AND HOLD ENQUIRIES REGARDING THE GE NUINENESS OF THE TRUST OR INSTITUTION. IF HE IS SATISFIED ABOUT THE CHARITABLE OR RELIGIOUS ITA NO. 503 & 504/AGRA/2012 6 NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR INSTITUTION, HE WILL PASS AN ORDER GRANTING REGISTR ATION. IF HE IS NOT SATISFIED HE WILL REFUSE REGISTRATION, BUT IT IS MA NDATORY THAT OPPORTUNITY OF BEING HEARD SHALL BE GIVEN TO THE AP PLICANT BEFORE THE ORDER OF REFUSAL TO GRANT REGISTRATION IS PASSED BY THE COMMISSIONER. THE APPELLANT, A CHARITABLE SOCIETY, REGISTERED UN DER THE TRAVANCORE-COCHIN LITERARY SCIENTIFIC AND CHARITABL E SOCIETIES REGISTRATION ACT, 1955, MADE AN APPLICATION FOR REG ISTRATION UNDER SECTION 12A OF THE INCOME-TAX ACT, 1961. THE APPLIC ATION WAS REJECTED. THE ORDER WAS CHALLENGED IN A WRIT PETITI ON AND A SINGLE JUDGE DISPOSED OF THE PETITION LEAVING THE SOCIETY AT LIBERTY TO FILE A FRESH APPLICATION AND DIRECTING THE COMMISSIONER TO HEAR IT IN ACCORDANCE WITH LAW. ON APPEAL : HELD, THAT A REFERENCE TO THE BYE-LAWS OF THE SOCI ETY WOULD SHOW THAT THOUGH SEVERAL CHARITABLE ACTIVITIES WERE INCL UDED IN THE OBJECTS OF THE SOCIETY, THE SOCIETY WAS NOT ABLE TO DO ANY OF THE CHARITABLE ACTIVITIES DURING THE FIRST YEAR OF ITS FUNCTIONING . THE PROPOSAL TO START A TECHNICAL EDUCATIONAL INTUITION ITSELF WAS TAKEN ONLY ON JUNE 14, 1999, AFTER THE REJECTION OF THE APPLICATION BY THE COMMISSIONER. SINCE THE SOCIETY HAD NOT DONE ANY CHARITABLE WORK AND THE ACTIVITIES WHICH IT HAD CARRIED ON WERE ONLY FOR THE PURPOSE O F GENERATING INCOME FOR ITS MEMBERS, THE REJECTION OF THE APPLIC ATION WAS JUSTIFIED. THE RELIEF GRANTED BY THE SINGLE JUDGE WAS APPROPRI ATE. HOWEVER, AN OPPORTUNITY WAS GIVEN TO THE SOCIETY T O FILE A FRESH APPLICATION WHEN IT STARTED CHARITABLE WORK AND THE COMMISSIONER WAS DIRECTED TO CONSIDER SUCH APPLICATION. 9. HONBLE DELHI HIGH COURT IN THE CASE OF ALL INDI A J.D. EDUCATIONAL SOCIETY VS. DIRECTOR GENERAL OF INCOME- TAX, 338 218 (DEL.) WHILE CONSIDERING THE APPLICATION U/S. 10(23 C) FOUND THAT THE ACCOUNTS NOT MAINTAINED PROPERLY AND NO EVIDENCE WA S FILED REGARDING ACTIVITIES. THEREFORE, REJECTION OF APPLICATION WAS HELD TO BE JUSTIFIED. 10. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED BEFOR E US THAT ONLY CONSTRUCTION ACTIVITIES HAVE BEEN GOING ON AND NO A CTUAL EDUCATIONAL OR CHARITABLE ACTIVITIES HAVE BEEN CARRIED OUT BY T HE ASSESSEE. THEREFORE, THERE WAS NO QUESTION OF SATISFYING BOTH THE CONDITIONS OF SECTION 12AA OF THE ACT IN THE CASE OF ASSESSEE. IT WOULD, THEREFORE, MAKE IT CLEAR THAT SOME CAPITAL ASSET IS CREATED IN FAVOUR OF THE ASSESSEE TRUST AT THE TIME OF FILING OF APPLICATION FOR REGISTRATION/APPROVAL AND EVEN SAME IS POSITION AT THE STAGE OF ITA NO. 503 & 504/AGRA/2012 7 CONSIDERATION OF APPEAL BY THE TRIBUNAL. THE LD. CO MMISSIONER ALSO FOUND THAT HUGE AMOUNT WAS SPENT ON ADVERTISEMENT O F THE INSTITUTION UPTO PASSING OF THE IMPUGNED ORDER, THOUGH THE ASSE SSEE TRUST IS STILL AT THE STAGE OF RAISING CONSTRUCTION. NOTHING WAS EXPL AINED AS TO WHAT WAS THE PURPOSE OF SPENDING HUGE AMOUNT ON ADVERTIS EMENT OF THE INSTITUTION, WHICH IS IN THE PROCESS OF ESTABLISHME NT AND HAS YET TO COME IN PHYSICAL EXISTENCE. FURTHER, THE LD. COMMIS SIONER FOUND THAT THE PROSPECTUS OF THE ASSESSEE TRUST SHOWS ONE PAGE DEVOTED TO THE OTHER INDUSTRY BEING CARRIED OUT BY THE GROUP CONCE RN, I.E., HARDAYAL MILK PRODUCT (PVT.) LIMITED HAVING ITS COMPLETE LOG O OF MILK PRODUCT OF THE COMPANY. NOTHING WAS EXPLAINED BEFORE THE CO MMISSIONER AS TO WHAT WAS THE PURPOSE OF SHOWING THE INDUSTRY LOG O ON THE PROSPECTUS OF THE INSTITUTION, WHICH IS YET TO EXIS T. THE LD. CIT, THEREFORE, RIGHTLY INFERRED THAT THE TRUST INTENDED TO PROMOTE THE BUSINESS OF FAMILY CONCERN AND AS SUCH, IT COULD HA VE A COMMERCIAL MOTIVE AND WHAT TO SAY OF CHARITABLE MOTIVE TO ESTA BLISH EDUCATIONAL INSTITUTION. THE FINDING OF FACT RECORDED BY THE LD . COMMISSIONER HAS NOT BEEN REBUTTED THROUGH ANY EXPLANATION OR MATERI AL ON RECORD. SINCE THE ASSESSEE TRUST HAD NOT COMMENCED ANY CHAR ITABLE OR EDUCATIONAL ACTIVITIES AND IT HAD PROMOTED THE BUSI NESS OF FAMILY CONCERN BY SHOWING THEIR LOGO ON THE PROSPECTUS OF THE ASSESSEE TRUST, WOULD CLEARLY PROVE THAT EVEN AT THE INITIAL STAGE, THE ASSESSEE TRUST HAD CARRIED OUT SUCH ACTIVITIES WHICH WERE MEANT FOR TH E PURPOSE OF GENERATING OR ENHANCING INCOME OF THE FAMILY GROUP CONCERN. IN SUCH AN EVENT, BURDEN WOULD BE VERY HEAVY UPON THE ASSES SEE TO PROVE THAT IT INTENDED TO CARRY OUT EDUCATIONAL AND CHARITABLE ACTIVITIES. IN THE ABSENCE OF ANY DETAILS WHICH COULD REBUT THE FINDIN G OF THE LD. COMMISSIONER, WE ARE OF THE VIEW THAT SOLE OBJECTS OF THE ASSESSEE COULD NOT HAVE BEEN CONSIDERED AT THIS STAGE FOR TH E PURPOSE OF GRANTING REGISTRATION/APPROVAL TO THE ASSESSEE. THE ASSESSEE SHALL HAVE TO SATISFY BOTH THE CONDITIONS BEFORE GRANT OF REGI STRATION/APPROVAL THAT ITS OBJECTS WERE EDUCATIONAL AND CHARITABLE AND THA T IT HAD CARRIED OUT GENUINE ACTIVITIES. NO GENUINE ACTIVITIES HAD BEEN CARRIED OUT, ADMITTEDLY, FOR THE PURPOSE OF ACHIEVING THE OBJECT S OF THE ASSESSEE TRUST, I.E., EDUCATIONAL OR CHARITABLE. THEREFORE, THE LD. COMMISSIONER WAS RIGHTLY NOT SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST. THOUGH APPARENTLY ON CONSIDERATION OF OBJECTS OF THE ASSESSEE TRUST, WE FIND THAT SAME MAY BE EDUCATIONA L OR CHARITABLE IN NATURE, BUT THE FINDING OF FACT GIVEN BY THE LD. CO MMISSIONER ABOUT PROMOTING THE COMMERCIAL ACTIVITIES OF THE GROUP CO NCERN HAVE NOT BEEN REFUTED BY THE ASSESSEE THROUGH ANY MATERIAL O N RECORD. ITA NO. 503 & 504/AGRA/2012 8 11. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPO N THE FOLLOWING DECISIONS : (I). ORDER OF ITAT, RAJKOT (SMC) BENCH, RAJKOT IN T HE CASE OF SURAJBEN HARAKHCHAND MEHTA VS. CIT DATED 11.02.2011 IN ITA NO. 1333/RJT/2010, IN WHICH IT WAS HELD THAT WHEN THERE ARE NO ACTIVITIES AT ALL, THEN THERE IS NO QUESTION OF HOLDING THAT T HE ACTIVITIES WERE NOT GENUINE. (II). DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL, 212 CTR (ALLD.) 394 (HC), IN W HICH IT WAS STATED THAT THE ASSESSEE SOCIETY WAS REGISTERED ON 29.03.1982 AND IN PARA 41 OF THE JUDGMENT, IT WAS NOTED THAT THE OBJE CTS OF THE ASSESSEE SOCIETY UNDISPUTEDLY ARE FOR CHARITABLE PURPOSE AND NOT AGAINST PUBLIC POLICY. THE GENUINENESS OF ITS ACTIVITIES IS PROVED BY THE AFORESAID FACTS, WHICH CONCLUSIVELY SHOW THAT THE SOCIETY HAS ESTABLISHED A SCHOOL FOR THE CHILDREN IN THE YEAR 1982 AND THEREA FTER IT HAS OPENED ITS TWO MORE BRANCHES RAISING THE STANDARD OF THE SCHOO L UPTO CBSE, DELHI BOARD. THEREFORE, THE ACTIVITIES OF THE ASSES SEE COULD NOT HAVE BEEN DOUBTED WITHIN THE MEANING OF SECTION 12AA OF THE IT ACT. THE HONBLE HIGH COURT IN PARA 20 HELD AS UNDER : IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRARY TO P UBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, THE C IT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CA SE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION , OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRES UMPTIONS AND ON SURMISES THAT INCOME DERIVED BY THE TRUST OR THE IN STITUTION IS BEING MISUSED OR THAT THERE IS SOME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES R ELATING TO ANY CHARITABLE PURPOSE, REJECTION CANNOT BE MADE. HONBLE HIGH COURT FURTHER IN PARA 28 OF THE JUDG MENT HELD AS UNDER : IT IS SIGNIFICANT TO MENTION THAT REGISTRATION UND ER S. 12AA, DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO GET TH E INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOS E OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF ITA NO. 503 & 504/AGRA/2012 9 REGISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN R ESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MO VED THE APPLICATION FOR REGISTRATION UNDER S. 12A, IS ACTUA LLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION HAS TO BE SEEN, KEEPING IN MIND THE OBJ ECTS THEREOF, WHICH NECESSARILY MEANS THAT THE CIT SHALL SATISFY HIMSEL F ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH T HE OBJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABL ISHING AND RUNNING A SCHOOL IS THE OBJECT OF THE SOCIETY, AS GIVEN IN IT S BYE-LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHO OL, WHERE EDUCATION IS BEING IMPARTED AS PER RULES AND THE FACTUM OF ES TABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIVITY. THE ENQUIRY R EGARDING GENUINENESS OF THE ACTIVITIES CANNOT BE STRETCHED B EYOND THIS. (III). ORDER OF ITAT, LUCKNOW BENCH IN THE CASE OF BAIJ NATH CHARITABLE & EDUCATIONAL TRUST VS. CIT, 125 TTJ (LU CKNOW) 255, IN WHICH THE ASSESSEE HAD WRITTEN TO THE CIT CLEARLY I NDICATING THAT IT HAD CONDUCTED AN EYE RELIEF CAMP TO DISTRIBUTE THE BLAN KETS TO THE PATIENTS. EVEN THOUGH THE ASSESSEE TRUST WAS ONLY FOUR MONTHS OLD, THE REGISTRATION WAS GRANTED. (IV). ORDER OF ITAT DELHI BENCH IN THE CASE OF SHRE E KRISHNA EDUCATION & WELFARE TRUST VS. CIT, 27 SOT (DELHI) 3 31, IN WHICH IT WAS HELD THAT FOR GRANT OF REGISTRATION U/S. 12AA, THE CIT IS REQUIRED TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVIT IES AND THE CHARITABLE NATURE OF THE OBJECTS OF THE ASSESSEE TRUST. THE SC OPE OF HIS POWER IS LIMITED IN THIS REGARD TO MAKE SUCH ENQUIRIES AS HE MAY DEEM FIT TO SATISFY HIMSELF IN RESPECT OF THESE TWO ASPECTS. TH E COMMISSIONER IS NOT REQUIRED TO EXAMINE THE ASPECT OF APPLICATION O F INCOME. (V). ORDER OF ITAT DELHI BENCH IN THE CASE OF AGRAW AL MITRA MANDAL TRUST VS. DIT (EXEMPTION, 109 TTJ (DELHI) 12 8, IN WHICH IT WAS HELD THAT POWERS U/S. 12AA ARE LIMITED TO MAKE ENQUIRIES WITH REGARD TO THE GENUINENESS OF THE ACTIVITIES AND OBJ ECTS OF THE TRUST. (VI). DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT VS. GARDEN CITY EDUCATIONAL TRUST, 28 DTR (KAR) 139, IN WHICH, ADMITTEDLY THE ASSESSEE TRUST WAS FOUND IMPARTING E DUCATION. ITA NO. 503 & 504/AGRA/2012 10 12. NONE OF THE ABOVE DECISIONS WOULD SUPPORT THE C ASE OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO REL IED UPON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTI ON) VS. MEENAKSHI AMMA ENDOWMENT TRUST, 50 DTR 243 IN WHICH IT WAS HELD THAT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST CANNOT BE CRITERIA SINCE IT HAS YET TO COMMENCE ITS ACTIVITIES. SOME O F THE OTHER DECISIONS OF TRIBUNAL ON THE SAME VIEW HAVE BEEN REFERRED TO IN THE PAPER BOOK. THE FINDINGS GIVEN IN THE DECISION OF JURISDICTIONA L ALLAHABAD HIGH COURT IN CASE OF RED ROSE SCHOOL (SUPRA) SHALL HAVE TO BE GIVEN PREFERENCE AS AGAINST THESE DECISIONS. 13. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE WAS N OT ABLE TO CONTRADICT THE FINDINGS OF THE LD. COMMISSIONER GIV EN IN THE IMPUGNED ORDER THAT THE ASSESSEE SPENT CONSIDERABLE AMOUNT O N ADVERTISEMENT OF THE INSTITUTION WHICH NEVER EXISTED AND FURTHER, PR OSPECTUS OF THE ASSESSEE TRUST HAS DEVOTED SUBSTANTIALLY ON CARRYIN G OUT THE BUSINESS ACTIVITIES OF GROUP CONCERN SHOWING LOGO OF MILK PR ODUCT. THESE FACTORS WERE SUFFICIENT TO HOLD THAT THE LD. CIT RI GHTLY REJECTED BOTH THE APPLICATIONS OF THE ASSESSEE, PARTICULARLY WHEN NO EDUCATIONAL OR CHARITABLE ACTIVITIES HAVE BEEN ACTUALLY CARRIED OU T AND THE ASSESSEE IN INITIAL STAGE, ASSESSEE TRUST ITSELF HAS TRIED TO P ROMOTE THE BUSINESS OF GROUP CONCERN. THEREFORE, THE DECISION OF KERALA HI GH COURT IN THE CASE OF SELF EMPLOYERS SERVICE SOCIETY VS. CIT (SUP RA) WOULD SQUARELY APPLY TO THE ASSESSEES CASE. THE ORDERS O F DIFFERENT BENCHES OF THE TRIBUNAL AND OF RAJKOT (SMC) BENCH, THUS, CA NNOT BE GIVEN PREFERENCE AGAINST THE DECISION OF HONBLE KERALA H IGH COURT. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO ESTABLISH THAT IT HAS CARRIED OUT GENUINE ACTIVITIES TOWARDS THE OBJECTS OF THE ASSESSEE TRUS T. WHATEVER OTHER ACTIVITIES WERE CARRIED OUT WERE FOUND FOR PROMOTIN G COMMERCIAL ACTIVITIES OF THE GROUP CONCERN. THEREFORE, THE ASS ESSEE HAS FAILED TO SATISFY THE REQUIREMENTS U/S. 12AA OF THE ACT AND A S SUCH, THE LD. COMMISSIONER WAS JUSTIFIED IN REFUSING TO GRANT REG ISTRATION AND APPROVAL UNDER THE ABOVE PROVISIONS OF THE IT ACT. WE ARE, THEREFORE, OF THE VIEW THAT THERE IS NO IRREGULARITY OR ILLEGA LITY IN THE IMPUGNED ORDER. THE DECISIONS CITED BY THE LD. COUNSEL FOR T HE ASSESSEE WOULD NOT SUPPORT ITS CASE. WE, THEREFORE, MAINTAIN THE O RDER OF THE LD. COMMISSIONER AND DISMISS BOTH THE APPEALS OF THE AS SESSEE. HOWEVER, CONSIDERING THE FACTS OF THE CASE THAT THE ASSESSEE TRUST IS STILL AT THE STAGE OF RAISING CONSTRUCTION FOR SCHOOLS AND COLLE GES AND YET TO START EDUCATIONAL AND CHARITABLE ACTIVITIES, THE ASSESSEE IS GIVEN OPPORTUNITY ITA NO. 503 & 504/AGRA/2012 11 TO FILE FRESH APPLICATION BEFORE THE LD. COMMISSION ER FOR GRANT OF REGISTRATION AND APPROVAL WHEN IT WOULD ACTUALLY ST ART EDUCATIONAL AND CHARITABLE ACTIVITIES AND IN THAT EVENT, THE LD. CO MMISSIONER SHALL CONSIDER FRESH APPLICATIONS OF THE ASSESSEE IN ACCO RDANCE WITH LAW. WE, HOWEVER, ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER AT THIS STAGE. WITH THE ABOVE OBSERVATIONS, BOTH THE A PPEALS OF THE ASSESSEE ARE DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. 5.1 RECENTLY, HONBLE PUNJAB & HARYANA HIGH COURT I N THE CASE OF AMAN SHIV MANDIR TRUST (REGD) VS. CIT, 296 ITR 415, DISMISSED THE APPEAL OF THE ASSESSEE BECAUSE THERE WAS FINDING OF FACT RECORDED THAT NO CHARITABLE ACTIVITIES HAD BEEN UNDERTAKEN FOR PAST THREE YEARS. THEREFORE, THE ASS ESSEE WAS NOT ENTITLED TO REGISTRATION U/S. 12A OF THE IT ACT. HONBLE HIGH C OURT HELD AS UNDER : THE ASSESSEE APPLIED FOR REGISTRATION UNDER SECTIO N 12A OF THE INCOME-TAX ACT, 1961, AND EXEMPTION UNDER SECTION 8 0G OF THE ACT ON DECEMBER 21, 1999. THOUGH THE ASSESSEE CLAIMED TO H AVE CARRIED OUT VARIOUS ACTIVITIES DURING THE PRECEDING PERIOD SUCH AS ORGANIZING BHANDARAS, HELPING NEEDY PATIENTS, ETC., THE INCOME AND EXPENDITURE ACCOUNT DID NOT SHOW ANY EXPENSE TOWARDS THE SAME. NO DETAIL OF ANY HELP PROVIDED BY THE ASSESSEE TO THE POOR PERSONS W AS FURNISHED. FROM A PERUSAL OF PROFIT AND LOSS STATEMENT, IT WAS EVIDENT THAT ENTIRE RECEIPTS WERE KEPT IN FIXED DEPOSITS AND INTEREST W AS BEING EARNED THEREON. DURING THE LAST THREE YEARS NO EXPENDITURE WHATSOEVER WAS INCURRED ON ANY OF THE OBJECTS OF THE TRUST. REGIST RATION WAS REFUSED AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO T HE HIGH COURT. : HELD, DISMISSING THE APPEAL, THAT IT WAS NOT DISPU TED THAT NOTHING WAS SPENT DURING THE LAST FIVE YEARS ON ANY CHARITABLE PURPOSE. IT WAS ALSO FUND THAT THE APPLICATION FILE D BY THE ASSESSEE WAS DELAYED BY MORE THAN FOUR YEARS. NOT ONLY THIS, HUGE AMOUNTS OF FIXED DEPOSITS WERE FOUND IN THE NAME OF THE TRUSTE E WHO HAD LATER APPROACHED THE SETTLEMENT COMMISSION, OBVIOUSLY ADM ITTING HIS GUILT. KEEPING IN VIEW THE TOTALITY OF CIRCUMSTANCES AND T HE INTENTION AND ITA NO. 503 & 504/AGRA/2012 12 CONDUCT OF THE ASSESSEE INCLUDING THE MANAGING TRUS TEE, THE CLAIM MADE BY THE ASSESSEE WAS NOT FOUND TO BE GENUINE. T HE ASSESSEE WAS NOT ENTITLED TO REGISTRATION UNDER SECTION 12A. 5.2 IN THE ABOVE CASE, THE LD. CIT CALLED FOR THE R EPORT FROM THE AO TO VERIFY THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE, WHO HAS NOT RECOMMENDED FOR GRANT OF REGISTRATION BECAUSE THE ASSESSEE HAS NOT YET ST ARTED ANY CHARITABLE ACTIVITIES. NO BOOKS WERE PRODUCED BEFORE THE AO. EVEN THE INSPECT OR REPORTED THAT THE ASSESSEE HAD NOT UNDERTAKEN ANY GENUINE AND CHARITABLE ACTIV ITIES FOR GRANT OF REGISTRATION AND APPROVAL UNDER THE ABOVE PROVISIONS. THE ASSESS EE WAS DIRECTED TO PRODUCE COMPLETE DETAILS BEFORE THE LD. CIT TO PROVE THE GE NUINE ACTIVITIES BUT THE SAME WERE NOT PRODUCED. ON THE FACE OF THE RECORD OF LD. CIT, IT IS CLEAR THAT THE ASSESSEE HAS NOT CONDUCTED ANY CHARITABLE ACTIVITIES. THEREF ORE, THE ASSESSEE WOULD NOT BE ENTITLED FOR REGISTRATION AND APPROVAL FOR EXEMPTIO N UNDER THE ABOVE PROVISIONS IN VIEW OF THE ABOVE JUDGMENTS. THE ASSESSEE HAS TAKEN SEVERAL ADJOURNMENTS FOR FILING THE DOCUMENTS BEFORE US, BUT NO PAPER BOOK O R DOCUMENTS HAVE BEEN FILED TO PRIMA FACIE PROVE THAT THE ASSESSEE HAS CARRIED OUT ANY CHARITABLE ACTIVITIES FOR REGISTRATION. IN THE ABSENCE OF ANY EVIDENCE OR MAT ERIAL ON RECORD, EVEN IF THE REPORT OF THE INSPECTOR COULD BE CONFRONTED TO THE ASSESSE E, THERE WOULD NOT BE ANY CHANGE IN THE RESULT. THE ASSESSEE HAS FAILED TO PROVE THA T IT HAS CARRIED OUT ANY CHARITABLE ACTIVITIES. THEREFORE, THE ASSESSEE WOULD NOT BE EN TITLED FOR REGISTRATION. WE, THEREFORE, DISMISS BOTH THE APPEALS OF THE ASSESSEE . HOWEVER, THE ASSESSEE IS GIVEN ITA NO. 503 & 504/AGRA/2012 13 AN OPPORTUNITY TO FILE FRESH APPLICATIONS BEFORE TH E LD. COMMISSIONER FOR GRANT OF REGISTRATION AND APPROVAL WHEN IT WOULD ACTUALLY ST ART CHARITABLE ACTIVITIES AND IN THAT EVENT, THE LD. COMMISSIONER SHALL CONSIDER FRE SH APPLICATIONS OF THE ASSESSEE IN ACCORDANCE WITH LAW. WE, HOWEVER, ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER AT THIS STAGE. WITH THE ABOVE OBSERVATIONS, B OTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY