Noble Educational Society, Agra V. C.I.T.-II, Agra

ITA 523/AGR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0397 (ITAT-AGRA)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2013
• Assessment Year: misc
• Appeal Filed On: 12-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NITIN GOYAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 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. 506 & 523/AGRA/2012 NOBLE EDUCATIONAL SOCIETY, VS. COMMISSIONER OF 94/7, BALKESHWAR COLONY, AGRA. INCOME-TAX-II, AG RA. (PAN : AABAN 3455 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITIN GOYAL, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 26.02.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE COMMON ORDER OF LD. CIT-II, AGRA DATED 12.09.2012 REJECTING THE APP LICATIONS U/S. 12AA AND 80G OF THE IT ACT. 2. THE ASSESSEE SOCIETY APPLIED FOR GRANT OF REGIST RATION/APPROVAL U/S. 12AA AND 80G OF THE IT ACT. THE ASSESSEE WAS DIRECTED TO PRO DUCE EVIDENCE IN SUPPORT OF ITS CLAIM AND IN RESPECT OF CHARITABLE ACTIVITIES CARRI ED OUT BY THE ASSESSEE. THE LD. COMMISSIONER FOUND THAT THE ASSESSEE HAS NOT INCURR ED ANY EXPENDITURE TOWARDS CHARITABLE ACTIVITIES AS SUCH. THE ASSESSEE HAS ALS O STATED THAT EDUCATION WORK HAS NOT BEEN STARTED. THUS, THE AVAILABLE EVIDENCES IND ICATED THAT SO FAR NO CHARITABLE ITA NO. 506 & 523/AGRA/2012 2 ACTIVITIES HAD BEEN CARRIED OUT BY THE ASSESSEE SOC IETY. ACCORDINGLY, BOTH THE APPLICATIONS WERE REJECTED. 3. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED BEFORE US THE FINDING OF LD. CIT(A) THAT NO CHARITIABLE ACTIVITIES OR EDUCATIONAL ACTIV ITIES WERE CARRIED OUT AT THE TIME OF FILING OF APPLICATIONS IN QUESTION, AS ONLY THE CON STRUCTION ACTIVITIES WERE GOING ON. HE HAS, HOWEVER, SUBMITTED THAT AFTER REJECTION OF THE APPLICATION, SUBSEQUENTLY, THE ASSESSEE HAS STARTED EDUCATIONAL ACTIVITIES. THE LD . DR RELIED UPON THE IMPUGNED ORDER. 4. ON CONSIDERATION OF THE FACTS NOTED IN THE IMPUG NED ORDER AND SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE, IT IS CLEAR TH AT THE ASSESSEE HAS NOT STARTED ANY EDUCATIONAL OR CHARITABLE ACTIVITIES TILL PASSING O F THE IMPUGNED ORDERS. THEREFORE, THE ACTIVITIES COULD NOT HAVE BEEN STARTED AS PER O BJECTS OF THE ASSESSEE. THE LD. CIT(A), THEREFORE COULD NOT HAVE SATISFIED HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE SOCIETY. THE ISSUE IS SQ UARELY COVERED BY THE ORDER OF THE ITAT, AGRA BENCH IN THE CASE OF DR. HARI JOHRI AND SEEMA JOHRI IN ITA NO. 503 & 504 OF 2012 IN WHICH THE TRIBUNAL VIDE ORDER DATED 15.02.2013 DISMISSED THE APPEALS OF THE ASSESSEE IN THE SAME FACTS AND CIRCU MSTANCES BY FOLLOWING ITS EARLIER DECISION ON THE SIMILAR MATTER. THE FINDINGS OF THE TRIBUNAL ARE REPRODUCED AS UNDER : ITA NO. 506 & 523/AGRA/2012 3 5. ON CONSIDERATION OF THE FACTS OF THE CASE AND F INDING OF FACT GIVEN IN THE IMPUGNED ORDER, WE ARE OF THE VIEW THA T THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE ORDER OF ITAT, AGRA BENCH IN THE CASE OF HARDAYAL CHARITABLE AND EDUCATIONAL TRUST V S. 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 THE 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 AN D INSTITUTIONS FOR IMPARTING EDUCATION IN DIFFERENT FIELDS/SUBJECT S. IT WAS, HOWEVER, CONCEDED BY THE LD. COUNSEL FOR THE ASSESS EE THAT THE ASSESSEE HAS NOT ACTUALLY CARRIED OUT ANY CHARITABL E OR EDUCATIONAL ACTIVITIES FOR ACHIEVING THE OBJECTS OF THE ASSESSEE TRUST. THE LD. COUNSEL FOR THE ASSESSEE ALSO CONCED ED THAT THE ASSESSEE IS STILL AT THE STAGE OF RAISING CONSTRUCT ION FOR SCHOOLS AND COLLEGES AND NO EDUCATIONAL OR CHARITABLE ACTIV ITIES HAVE YET BEEN STARTED. SECTION 12AA OF THE IT ACT PROVIDES 12AA. (1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OF SECTION 12A SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE 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 O F 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, ITA NO. 506 & 523/AGRA/2012 4 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 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 PROVISI ON TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INS TITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABO UT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON AND ALSO TO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THI S BEHALF AND AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTI ON AND IF HE IS NOT SATISFIED, HE WOULD REFUSE REGISTRATION. FOR GR ANT OF APPROVAL ITA NO. 506 & 523/AGRA/2012 5 U/S. 80G(5), THE ASSESSEE IS REQUIRED TO FULFILL TH E CONDITIONS THAT SUCH INSTITUTION OR FUNDS DERIVED FROM ANY INCOME W OULD NOT BE LIABLE FOR INCLUSION IN ITS TOTAL INCOME U/S. 11 & 12 OF THE IT ACT. THE READING OF PROVISIONS OF SECTION 12AA MAKE S IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUI NENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO IN CONSONANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THUS, ON E NQUIRY, THE LD. CIT SHALL HAVE TO EXAMINE AS TO WHETHER THE ASSESSE E WHO HAS MOVED APPLICATION FOR REGISTRATION IS ACTUALLY IN T HE ACTIVITIES WHICH ARE GENUINE. GENUINENESS OF ACTIVITIES OF ASS ESSEE HAS TO BE SEEN. BOTH THE CONDITIONS SHALL HAVE TO BE SATI SFIED BEFORE GRANTING/REFUSING REGISTRATION U/S. 12AA OF THE IT ACT. HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SER VICE 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 RELIGIOUS TRUST OR INSTITUTION ON S ATISFYING CERTAIN CONDITIONS. AS PER THE NEW PROVISION, THE C HIEF COMMISSIONER OR COMMISSIONER SHALL CALL FOR DOCUMEN TS AND INFORMATION AND HOLD ENQUIRIES REGARDING THE GENUIN ENESS OF THE TRUST OR INSTITUTION. IF HE IS SATISFIED ABOUT THE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION, HE WILL PASS AN ORDER GRANTING REGISTRATION. IF HE IS NOT SATISFIED HE WILL REFUSE REGISTRATION, BUT IT IS MANDATORY THAT OPPORTUNITY OF BEING HEARD SHA LL BE GIVEN TO THE APPLICANT BEFORE THE ORDER OF REFUSAL TO GRANT REGISTRATION IS PASSED BY THE COMMISSIONER. THE APPELLANT, A CHARITABLE SOCIETY, REGISTERED UND ER 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 APPLICATION WAS REJECTED. THE ORDER WAS CHALLENGED IN A WRIT PE TITION AND A SINGLE JUDGE DISPOSED OF THE PETITION LEAVING THE S OCIETY AT LIBERTY TO FILE A FRESH APPLICATION AND DIRECTING T HE COMMISSIONER TO HEAR IT IN ACCORDANCE WITH LAW. ON APPEAL : HELD, THAT A REFERENCE TO THE BYE-LAWS OF THE SOCIE TY WOULD SHOW THAT THOUGH SEVERAL CHARITABLE ACTIVITIES WERE INCL UDED IN THE ITA NO. 506 & 523/AGRA/2012 6 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 I T HAD CARRIED ON WERE ONLY FOR THE PURPOSE OF GENERATING INCOME FOR ITS MEMBERS, THE REJECTION OF THE APPLICATION WAS J USTIFIED. THE RELIEF GRANTED BY THE SINGLE JUDGE WAS APPROPRIATE. HOWEVER, AN OPPORTUNITY WAS GIVEN TO THE SOCIETY TO FILE A FRESH APPLICATION WHEN IT STARTED CHARITABLE WORK AND THE COMMISSIONER WAS DIRECTED TO CONSIDER SUCH APPLICAT ION. 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. 1 0(23C) FOUND THAT THE ACCOUNTS NOT MAINTAINED PROPERLY AND NO EV IDENCE WAS 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 ACTUAL EDUCATIONAL OR CHARITABLE ACTIVITIES HAVE BEEN CARR IED OUT BY THE ASSESSEE. THEREFORE, THERE WAS NO QUESTION OF SATIS FYING BOTH THE CONDITIONS OF SECTION 12AA OF THE ACT IN THE CASE O F ASSESSEE. IT WOULD, THEREFORE, MAKE IT CLEAR THAT SOME CAPITAL A SSET IS CREATED IN FAVOUR OF THE ASSESSEE TRUST AT THE TIME OF FILI NG OF APPLICATION FOR REGISTRATION/APPROVAL AND EVEN SAME IS POSITION AT THE STAGE OF CONSIDERATION OF APPEAL BY THE TRIBUNAL. THE LD. COMMISSIONER ALSO FOUND THAT HUGE AMOUNT WAS SPENT ON ADVERTISEMENT OF THE INSTITUTION UPTO PASSING OF TH E IMPUGNED ORDER, THOUGH THE ASSESSEE TRUST IS STILL AT THE ST AGE OF RAISING CONSTRUCTION. NOTHING WAS EXPLAINED AS TO WHAT WAS THE PURPOSE OF SPENDING HUGE AMOUNT ON ADVERTISEMENT OF THE INS TITUTION, WHICH IS IN THE PROCESS OF ESTABLISHMENT AND HAS YE T TO COME IN PHYSICAL EXISTENCE. FURTHER, THE LD. COMMISSIONER F OUND THAT THE PROSPECTUS OF THE ASSESSEE TRUST SHOWS ONE PAGE DEV OTED TO THE OTHER INDUSTRY BEING CARRIED OUT BY THE GROUP CONCE RN, I.E., HARDAYAL MILK PRODUCT (PVT.) LIMITED HAVING ITS COM PLETE LOGO OF MILK PRODUCT OF THE COMPANY. NOTHING WAS EXPLAIN ED BEFORE THE COMMISSIONER AS TO WHAT WAS THE PURPOSE OF SHOW ING THE ITA NO. 506 & 523/AGRA/2012 7 INDUSTRY LOGO ON THE PROSPECTUS OF THE INSTITUTION, WHICH IS YET TO EXIST. THE LD. CIT, THEREFORE, RIGHTLY INFERRED THAT THE TRUST INTENDED TO PROMOTE THE BUSINESS OF FAMILY CONCERN AND AS SUCH, IT COULD HAVE A COMMERCIAL MOTIVE AND WHAT TO SAY O F CHARITABLE MOTIVE TO ESTABLISH EDUCATIONAL INSTITUTION. THE FI NDING OF FACT RECORDED BY THE LD. COMMISSIONER HAS NOT BEEN REBUT TED THROUGH ANY EXPLANATION OR MATERIAL ON RECORD. SINC E THE ASSESSEE TRUST HAD NOT COMMENCED ANY CHARITABLE OR EDUCATIONAL ACTIVITIES AND IT HAD PROMOTED THE BUSINESS OF FAMI LY CONCERN BY SHOWING THEIR LOGO ON THE PROSPECTUS OF THE ASSESSE E TRUST, WOULD CLEARLY PROVE THAT EVEN AT THE INITIAL STAGE, THE ASSESSEE TRUST HAD CARRIED OUT SUCH ACTIVITIES WHICH WERE ME ANT FOR THE PURPOSE OF GENERATING OR ENHANCING INCOME OF THE FA MILY GROUP CONCERN. IN SUCH AN EVENT, BURDEN WOULD BE VERY HEA VY UPON THE ASSESSEE TO PROVE THAT IT INTENDED TO CARRY OUT EDUCATIONAL AND CHARITABLE ACTIVITIES. IN THE ABSENCE OF ANY DE TAILS WHICH COULD REBUT THE FINDING OF THE LD. COMMISSIONER, WE ARE OF THE VIEW THAT SOLE OBJECTS OF THE ASSESSEE COULD NOT HA VE BEEN CONSIDERED AT THIS STAGE FOR THE PURPOSE OF GRANTIN G REGISTRATION/APPROVAL TO THE ASSESSEE. THE ASSESSEE SHALL HAVE TO SATISFY BOTH THE CONDITIONS BEFORE GRANT OF REGISTR ATION/APPROVAL THAT ITS OBJECTS WERE EDUCATIONAL AND CHARITABLE AN D THAT IT HAD CARRIED OUT GENUINE ACTIVITIES. NO GENUINE ACTIVITI ES HAD BEEN CARRIED OUT, ADMITTEDLY, FOR THE PURPOSE OF ACHIEVI NG THE OBJECTS OF THE ASSESSEE TRUST, I.E., EDUCATIONAL OR CHARITA BLE. THEREFORE, THE LD. COMMISSIONER WAS RIGHTLY NOT SATISFIED ABOU T THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST . THOUGH APPARENTLY ON CONSIDERATION OF OBJECTS OF THE ASSES SEE TRUST, WE FIND THAT SAME MAY BE EDUCATIONAL OR CHARITABLE IN NATURE, BUT THE FINDING OF FACT GIVEN BY THE LD. COMMISSIONER A BOUT PROMOTING THE COMMERCIAL ACTIVITIES OF THE GROUP CO NCERN HAVE NOT BEEN REFUTED BY THE ASSESSEE THROUGH ANY MATERI AL ON RECORD. 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 11.02.2 011 IN ITA NO. 1333/RJT/2010, IN WHICH IT WAS HELD THAT WH EN THERE ARE NO ACTIVITIES AT ALL, THEN THERE IS NO QUESTION OF HOLDING THAT THE ACTIVITIES WERE NOT GENUINE. ITA NO. 506 & 523/AGRA/2012 8 (II). DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL, 212 CTR (ALLD.) 394 (HC), IN WHICH IT WAS STATED THAT THE ASSESSEE SOCIETY WAS REGISTE RED ON 29.03.1982 AND IN PARA 41 OF THE JUDGMENT, IT WAS N OTED THAT THE OBJECTS OF THE ASSESSEE SOCIETY UNDISPUTEDLY ARE FO R CHARITABLE PURPOSE AND NOT AGAINST PUBLIC POLICY. THE GENUINEN ESS 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 THEREAFTER IT HAS OPENED ITS TWO MORE BRANCHES RAISING THE STANDARD OF THE SCHOOL UPTO CB SE, DELHI BOARD. THEREFORE, THE ACTIVITIES OF THE ASSESSEE CO ULD NOT HAVE BEEN DOUBTED WITHIN THE MEANING OF SECTION 12AA OF THE IT ACT. THE HONBLE HIGH COURT IN PARA 20 HELD AS UNDE R : 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, T HE CIT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CA SE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING C ARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION, OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRESUMPTIONS AND ON SURMISES THAT INCOME DE RIVED BY THE TRUST OR THE INSTITUTION IS BEING MISUSED OR TH AT THERE IS SOME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES RELATING TO ANY CHARITA BLE 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 T HE PURPOSE OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTIT LES THE ASSESSEE TO CLAIM SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN RESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MOVED THE APPLICATION FOR REGISTR ATION UNDER S. 12A, IS ACTUALLY IN THE ACTIVITIES WHICH ARE GEN UINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE I NSTITUTION HAS TO BE SEEN, KEEPING IN MIND THE OBJECTS THEREOF, WHICH NECESSARILY MEANS THAT THE CIT SHALL SATISFY HIMSELF ABOUT THE FACT THAT THE ITA NO. 506 & 523/AGRA/2012 9 ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH THE O BJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABL ISHING AND RUNNING A SCHOOL IS THE OBJECT OF THE SOCIETY, AS G IVEN IN ITS BYE- LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS E STABLISHED THE SCHOOL, WHERE EDUCATION IS BEING IMPARTED AS PER RU LES AND THE FACTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GEN UINE ACTIVITY. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CANNOT BE STRETCHED BEYOND 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 C LEARLY INDICATING THAT IT HAD CONDUCTED AN EYE RELIEF CAMP TO DISTRIBUTE THE BLANKETS TO THE PATIENTS. EVEN THOUGH THE ASSES SEE 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 GENUIN ENESS OF ACTIVITIES AND THE CHARITABLE NATURE OF THE OBJECTS OF THE ASSESSEE TRUST. THE SCOPE OF HIS POWER IS LIMITED IN THIS RE GARD TO MAKE SUCH ENQUIRIES AS HE MAY DEEM FIT TO SATISFY HIMSEL F IN RESPECT OF THESE TWO ASPECTS. THE COMMISSIONER IS NOT REQUI RED TO EXAMINE THE ASPECT OF APPLICATION OF 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 ACT IVITIES AND OBJECTS 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. 12. NONE OF THE ABOVE DECISIONS WOULD SUPPORT THE C ASE OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF DIT (EXEMPTION) VS. MEENAKSHI AMMA ENDOWMENT TRUST, 50 DTR ITA NO. 506 & 523/AGRA/2012 10 243 IN WHICH IT WAS HELD THAT THE GENUINENESS OF TH E ACTIVITIES OF THE TRUST CANNOT BE CRITERIA SINCE IT HAS YET TO CO MMENCE ITS ACTIVITIES. SOME OF THE OTHER DECISIONS OF TRIBUNAL ON THE SAME VIEW HAVE BEEN REFERRED TO IN THE PAPER BOOK. THE F INDINGS GIVEN IN THE DECISION OF JURISDICTIONAL ALLAHABAD H IGH COURT IN CASE OF RED ROSE SCHOOL (SUPRA) SHALL HAVE TO BE GI VEN 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 ON ADVERTISEMENT OF THE INSTITUTION WHICH NEVER EXISTE D AND FURTHER, PROSPECTUS OF THE ASSESSEE TRUST HAS DEVOTED SUBSTA NTIALLY ON CARRYING OUT THE BUSINESS ACTIVITIES OF GROUP CONCE RN SHOWING LOGO OF MILK PRODUCT. THESE FACTORS WERE SUFFICIENT TO HOLD THAT THE LD. CIT RIGHTLY REJECTED BOTH THE APPLICATIONS OF THE ASSESSEE, PARTICULARLY WHEN NO EDUCATIONAL OR CHARITABLE ACTI VITIES HAVE BEEN ACTUALLY CARRIED OUT AND THE ASSESSEE IN INITI AL STAGE, ASSESSEE TRUST ITSELF HAS TRIED TO PROMOTE THE BUSI NESS OF GROUP CONCERN. THEREFORE, THE DECISION OF KERALA HIGH COU RT 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, CANNOT BE GIVEN PREFERENCE AGAINST THE DECISION OF HONBLE KERALA HIGH COURT. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO ESTABLISH THAT IT HAS CARRIED OUT GENUINE ACTIVITIE S TOWARDS THE OBJECTS OF THE ASSESSEE TRUST. WHATEVER OTHER ACTIV ITIES WERE CARRIED OUT WERE FOUND FOR PROMOTING COMMERCIAL ACT IVITIES OF THE GROUP CONCERN. THEREFORE, THE ASSESSEE HAS FAIL ED TO SATISFY THE REQUIREMENTS U/S. 12AA OF THE ACT AND AS 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 IRREGULARIT Y OR ILLEGALITY IN THE IMPUGNED ORDER. THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT ITS CASE. WE, THEREF ORE, MAINTAIN THE ORDER OF THE LD. COMMISSIONER AND DISMISS BOTH THE APPEALS OF THE ASSESSEE. HOWEVER, CONSIDERING THE FACTS OF THE CASE THAT THE ASSESSEE TRUST IS STILL AT THE STAGE OF RAISING CONSTRUCTION FOR SCHOOLS AND COLLEGES AND YET TO START EDUCATIONAL A ND CHARITABLE ACTIVITIES, THE ASSESSEE IS GIVEN OPPORTUNITY TO FI LE FRESH ITA NO. 506 & 523/AGRA/2012 11 APPLICATION BEFORE THE LD. COMMISSIONER FOR GRANT O F REGISTRATION AND APPROVAL WHEN IT WOULD ACTUALLY START EDUCATION AL AND CHARITABLE ACTIVITIES AND IN THAT EVENT, THE LD. CO MMISSIONER SHALL CONSIDER FRESH APPLICATIONS OF THE ASSESSEE I N ACCORDANCE WITH LAW. WE, HOWEVER, ARE NOT INCLINED TO INTERFER E WITH THE IMPUGNED ORDER AT THIS STAGE. WITH THE ABOVE OBSERV ATIONS, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE DISMISSED. 5.1 RECENTLY, HONBLE PUNJAB & HARYANA HIGH COURT IN TH E 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. HO NBLE HIGH COURT 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 CLAIM ED TO HAVE CARRIED OUT VARIOUS ACTIVITIES DURING THE PREC EDING PERIOD SUCH AS ORGANIZING BHANDARAS, HELPING NEEDY PATIENT S, ETC., THE INCOME AND EXPENDITURE ACCOUNT DID NOT SHOW ANY EXP ENSE TOWARDS THE SAME. NO DETAIL OF ANY HELP PROVIDED BY THE ASSESSEE TO THE POOR PERSONS WAS FURNISHED. FROM A PERUSAL OF PROFIT AND LOSS STATEMENT, IT WAS EVIDENT THAT ENTI RE RECEIPTS WERE KEPT IN FIXED DEPOSITS AND INTEREST WAS BEING EARNED THEREON. DURING THE LAST THREE YEARS NO EXPENDITURE WHATSOEVER WAS INCURRED ON ANY OF THE OBJECTS OF THE TRUST. RE GISTRATION WAS REFUSED AND THIS WAS UPHELD BY THE TRIBUNAL. ON APP EAL TO THE HIGH COURT. : HELD, DISMISSING THE APPEAL, THAT IT WAS NOT DISPUT ED 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 O NLY THIS, HUGE AMOUNTS OF FIXED DEPOSITS WERE FOUND IN THE NA ME OF THE TRUSTEE WHO HAD LATER APPROACHED THE SETTLEMENT COM MISSION, OBVIOUSLY ADMITTING HIS GUILT. KEEPING IN VIEW THE TOTALITY OF CIRCUMSTANCES AND THE INTENTION AND CONDUCT OF THE ASSESSEE ITA NO. 506 & 523/AGRA/2012 12 INCLUDING THE MANAGING TRUSTEE, THE CLAIM MADE BY T HE ASSESSEE WAS NOT FOUND TO BE GENUINE. THE ASSESSEE WAS NOT E NTITLED 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 A SSESSEE HAS NOT YET STARTED ANY CHARITABLE ACTIVITIES. NO BOOKS WER E PRODUCED BEFORE THE AO. EVEN THE INSPECTOR REPORTED THAT THE ASSESS EE HAD NOT UNDERTAKEN ANY GENUINE AND CHARITABLE ACTIVITIES FO R GRANT OF REGISTRATION AND APPROVAL UNDER THE ABOVE PROVISION S. THE ASSESSEE WAS DIRECTED TO PRODUCE COMPLETE DETAILS BEFORE THE LD. CIT TO PROVE THE GENUINE ACTIVITIES BUT THE SAME WERE NOT PRODUC ED. ON THE FACE OF THE RECORD OF LD. CIT, IT IS CLEAR THAT THE ASSESSE E HAS NOT CONDUCTED ANY CHARITABLE ACTIVITIES. THEREFORE, THE ASSESSEE WOULD NOT BE ENTITLED FOR REGISTRATION AND APPROVAL FOR EXEMPTION UNDER T HE ABOVE PROVISIONS IN VIEW OF THE ABOVE JUDGMENTS. THE ASSE SSEE HAS TAKEN SEVERAL ADJOURNMENTS FOR FILING THE DOCUMENTS BEFOR E US, BUT NO PAPER BOOK OR DOCUMENTS HAVE BEEN FILED TO PRIMA FACIE PR OVE THAT THE ASSESSEE HAS CARRIED OUT ANY CHARITABLE ACTIVITIES FOR REGISTRATION. IN THE ABSENCE OF ANY EVIDENCE OR MATERIAL ON RECORD, EVEN IF THE REPORT OF THE INSPECTOR COULD BE CONFRONTED TO THE ASSESSEE, THERE WOULD NOT BE ANY CHANGE IN THE RESULT. THE ASSESSEE HAS FAILED T O PROVE THAT IT HAS CARRIED OUT ANY CHARITABLE ACTIVITIES. THEREFORE, T HE ASSESSEE WOULD NOT BE ENTITLED FOR REGISTRATION. WE, THEREFORE, DISMIS S BOTH THE APPEALS OF THE ASSESSEE. HOWEVER, THE ASSESSEE IS GIVEN AN OPP ORTUNITY TO FILE FRESH APPLICATIONS BEFORE THE 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 FRESH APPLICATIONS OF THE ASSESSEE IN ACCORDANCE WITH LAW . WE, HOWEVER, ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER A T THIS STAGE. WITH THE ABOVE OBSERVATIONS, BOTH THE APPEALS OF THE ASS ESSEE ARE DISMISSED. 5. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT O F ORDER OF THE TRIBUNAL ABOVE, THE APPEALS OF THE ASSESSEE ARE DISMISSED. HOWEVER, THE ASSESSEE IS GIVEN LIBERTY TO MOVE FRESH APPLICATIONS BEFORE THE LD. CIT ON SATIS FYING THAT EDUCATIONAL AND ITA NO. 506 & 523/AGRA/2012 13 CHARITABLE ACTIVITIES HAVE BEEN ACTUALLY CARRIED OU T BY THE ASSESSEE AND THE LD. CIT(A) ON SATISFYING WITH THE SAME, MAY CONSIDER TH E REQUEST OF ASSESSEE FOR REGISTRATION/APPROVAL OF EXEMPTION IN ACCORDANCE WI TH LAW BY GIVING REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. IN VIEW OF THE ABOVE, BOTH 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