M/S GURU RAM DASS EDUCATIONAL SOCIETY, FEROZPUR V. COMMISSIONER OF INCOME TAX, (EXAMPTIONS), CHANDIGARH

ITA 546/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3401 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-02-2019
• Assessment Year: misc
• Appeal Filed On: 21-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M P S INGH LD
• Assessee Lawyers: P N ARORA LD
• Keywords: Gift; Opportunity of being heard; Principle of natural justice
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, A MRITSAR BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.546(ASR)/2017 ASSESSMENT YEAR: GURU RAM DASS EDUCATIONAL SOCIETY, GURUDWARA GURU RAM DASS PURI, ARMANPURA, LUMBRI WALA, FEROZPUR, PUNJAB-152002 [PAN: AACAG 2472R] VS. CIT(EXEMPTIONS), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P. N. ARORA (LD. ADV.) RESPONDENT BY: SH. M.P. S INGH (LD. CIT-DR) DATE OF HEARING: 19.02.2019 DATE OF PRONOUNCEMENT: 21.02.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE APPELLA NT AGAINST THE ORDER DATED 30.06.2017 PASSED BY THE LD. CIT(EXEMPTIO NS), CHANDIGARH U/S 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961 (HEREINAFT ER CALLED AS THE ACT). 2. AN APPLICATION U/S 12A OF THE ACT WAS FILED BY THE APPE LLANT SOCIETY ON DATED 21.12.2016 BEFORE THE LD. CIT(E), CHANDIGARH BY DISCLOSING THE FACT THAT THE SOCIETY IS AN ONGOING ENTITY AND IS IN OPERAT ION SINCE 18.11.1997. THE APPELLANT ALSO DISCLOSED ITS AIMS AND OBJECTS TO ESTABL ISH, TAKEOVER AND ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 2 RUN AUTHORIZED STUDY CENTRE FROM VARIOUS RECOGNIZED UNI VERSITIES OF INDIA AND ABROAD WITH AN OBJECT TO PROVIDE SOUND HIGHER EDUCATIO N TO CANDIDATES BY SEEKING RECOGNITION/AUTHORIZATION; TO PROVIDE MEDICAL AID, STATIONERY, TRANSPORTATION, LIBRARIES, LABORATORIES, READING ROOMS, HOSTELS, PLAY GROUNDS AND OTHER FACILITIES TO THE CANDIDATES AND ALSO TO THE M EMBERS OF THE SOCIETY; TO ARRANGE AND ORGANIZE VARIOUS KINDS OF STUDENTS WEL FARE PROGRAMMES AND ACTIVITIES; TO PROMOTE EDUCATIONAL (VOCATIONAL TECHNICA L AND OTHERWISE) THE DIFFUSION OF USEFUL KNOWLEDGE, MEDICAL RELIEF AND SOC IAL WELFARE PROJECTS, IRRESPECTIVE OF RACE, CASTE, COMMUNITY OR CREED; THE SOCIETY SHALL UNDERTAKE ALL SORTS OF ECO-FRIENDLY ACTIVITIES/ PROJECTS AIMED AT IMPR OVEMENT OF THE ENVIRONMENTAL HEALTH OF THE REGION; TO ESTABLISH BUIL DINGS SUCH AS LIBRARIES, READING ROOMS AND EQUIP THEM WITH THE NECESSARY SUPPLY O F BOOKS, PAPERS, PERIODICALS FURNITURE AND AUDIO VISUAL AIDS; TO RECEIVE ANY GIFTS OR MONEY OR OTHER PROPERTIES BOTH MOVABLE AN IMMOVABLE OR ANY BE QUESTS FOR ANY ONE OR MORE OBJECTS OF THE SOCIETY; TO INVEST LAY ASIDE, DEPOSIT IN BANKS OR POST OFFICES OR OTHERWISE DEAL WITH MONEY FOR FUNDS OF THE SOCIETY NOT IMMEDIATELY REQUIRED FOR THE OBJECTS OF THE SOCIETY; TO COLLECT DONAT ION, MEMBERSHIP FEES AND OTHER CONTRIBUTION FROM MEMBERS AND OTHERS; TO OPE N, MAINTAIN BANK ACCOUNT OR ACCOUNTS AND THE SAME SHALL BE OPERATED UNDER T HE SIGNATURES OF CHAIRMAN OR AS MAY MUTUALLY BE DECIDED BY THEM; TO PRO VIDE MEANS OF THE PROMOTION AND ADVANCEMENT OF THE ABOVE MENTIONED OBJ ECTS; TO AFFILIATE AND MANAGE AND SUPPORT THE LIKEMINDED INSTITUTIONS HAVING SIMILAR OBJECTS AS THOSE OF THE SOCIETY. THE APPLICATION OF THE APPELLANT WAS TAKEN INTO CON SIDERATION BY OFFERING AN OPPORTUNITY OF PERSONAL HEARING ON DATED 05.06.20 17 AND THEREAFTER, THE APPELLANT WAS REQUESTED TO FILE/FURNISH CERTAIN DETAILS /CLARIFICATIONS ON DATED 14.06.2017 AS MENTIONED IN PARA NO.5 OF THE ORDER. IN RESPONSE TO WHICH THE REPLY WAS FILED BY THE APPELLANT THEREAFTER CERTAIN A DDITIONAL QUERIES WERE ALSO ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 3 RAISED WHICH ALSO STANDS REPLIED BY THE APPELLANT AND FI NALLY THE LD. CIT(A) REJECTED THE APPLICATION OF THE APPELLANT. RELEVANT PART OF THE ORDER IS REPRODUCED HEREIN BELOW. 8. DURING THE PROCEEDINGS, A QUERY WAS RAISED TO THE APPLICANT SOCIETY ON THE INTENTION OF SWITCHING TO SECTION 12AA FROM 10( 23C). IN RESPONSE, THE SOCIETY HAS SUBMITTED THAT THE GROSS RECEIPTS OF TH E SOCIETY HAVE INCREASED AND THE PRESCRIBED LIMIT OF RS. ONE CRORE HAS BEEN CROSSED FOR FY 2016-17. IN VIEW OF THIS, THE SOCIETY HAS DECIDED TO FILE AN APPLICATION U/S 12AA. IT IS FURTHER STATED BY THE APPLICANT SOCIETY THAT 'IT IS THE CHOICE OF THE SOCIETY THAT THEY WANT TO AVAIL EXEMPTION EITHER U/S 12AA OR 10( 23C)(VI). HERE, THE MAIN ASPECT IS THAT THE OTHER OBJECTS OF THE SOCIETY MEN TIONED IN ITS MOA CANNOT BE VERIFIED AS IT HAS CLAIMED TO BE INVOLVED ONLY IN E DUCATIONAL INSTITUTION AND ANY OF TIRE REST OF THE ACTIVITIES MENTIONED IN ITS MOA HAS NOT BEEN UNDERTAKEN EVEN ONCE. THE APPLICANT SOCIETY HAS BEE N CLAIMING EXEMPTION UNDER SECTION 10(23C)(IIIAD) FOR PAST MANY YEARS AN D HAVE OPTION OF GOING FOR EXEMPTION U/S 10(23C)(VI) IF THEY ARE RUNNING AN ED UCATIONAL INSTITUTION ONLY. IN ITS REPLY, THERE IS NO CONCRETE REASON PROVIDED BY THE APPLICANT WHICH CAN SUPPORT THE RATIONALE FOR REGISTRATION U/S 12AA. 9. DURING THE COURSE OF HEARING, A QUERY REGARD ING PROCUREMENT OF LUXURY VEHICLES BY THE APPLICANT SOCIETY WAS RAISED, IN RE SPONSE, THE APPLICANT SUBMITTED THAT 'NO LUXURY VEHICLE HAS BEEN PURCHASED USING THE FUNDS OF THE SOCIETY, ONLY SCHOOL BUSES AND VANS HAVE BEEN PURCH ASED.' THIS REPLY OF THE APPLICANT IS CLEARLY NOT BORNE BY THE BALANCE S HEET OF FINANCIAL YEAR 2016-17 WHERE PURCHASE OF 'INNOVA CAR' AT RS.1 4.91 LACS HAS BEEN SHOWN AND AMOUNTS TO MISREPRESENTATION OF FACT S. 10. IN LIGHT OF THE UNTENABLE REASONS PROVIDED BY THE APPLICANT SOCIETY FOR SWITCHING FROM SECTION 10(23C) TO SECTION 12AA AND IN ABSENCE OF ENOUGH EVIDENCES TO PROVE THE CHARITABLE NATURE OF ITS ACT IVITIES, IT WILL BE SAFE TO CONCLUDE THAT THE APPLICANT ENTITY DOES NOT QUALIFY FOR THE REGISTRATION U/S 12AA OF THE ACT. THIS FINDING, HOWEVER, DOES NOT IM PINGE ON ANY FUTURE CLAIMS OF THE ASSESSEE TO SEEK APPROVAL U/S 10(23C) (VI) OF THE I.T. ACT, 1961. THE APPLICATION FOR GRANT OF REGISTRATION U/S 12AA IS ACCORDINGLY REJECTED. 3. THE APPELLANT BEING AGGRIEVED CHALLENGED THE IMPUGN ED ORDER BEFORE US. 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE OR DER PASSED BY THE LD. CIT(E). THE LD. CIT(E) WHILE DECLINING THE REGIST RATION GIVEN THREE REASONS, FIRST RELATES TO THE APPLYING U/S 12AA OF THE A CT. IT WAS OBSERVED BY THE LD. CIT(E) THAT THE APPLICANT SOCIETY HAS BEEN CLAIM ING EXEMPTION U/S ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 4 10(23C) (IIIAD) OF THE I.T. ACT FOR PAST MANY YEARS A ND HAVE OPTION OF GOING FOR EXEMPTION U/S 10(23C)(VI) IF THEY ARE RUNNING AN EDUCATIONAL INSTITUTION ONLY. IN ITS REPLY, THERE IS NO CONCRETE REASON PROVIDED BY THE APPLICANT WHICH CAN SUPPORT THE RATIONALE FOR REGISTRATION U/S 12AA. 4.1 BEFORE US, THE APPELLANT HAS CLAIMED THAT THE GROSS RECEIPT DURING THE FINANCIAL YEAR 2016-17 EXCEEDED THE STATUTORY LIMIT O F RS.1 CRORE THEREFORE THE APPELLANT SOUGHT REGISTRATION U/S 12AA OF THE ACT. THIS TRIBUNAL IN VARIOUS CASES, WHILE DEALING WITH IDENTICAL AND SIMILAR ISSUE CLEAR LY HELD THAT UNDER PECULIAR FACTS AND CIRCUMSTANCES THERE IS NO BAR TO APPLY EXEMPTION EITHER OF THE PROVISIONS U/S 12AA AND 10(23C) OF THE ACT. IN THE CASE OF 'BHARATI VIDYAPEETH MEDICAL FOUNDATION VS. ACIT', 155 TTJ 15 2 (PUNE), IT WAS HELD THAT CHOICE SHOULD BE LEFT TO THE ASSESSEE TO SEEK EXEMPTION EIT HER U/S 10(23C) OR U/S 11 OF THE ACT, HENCE WE ARE OF THE CONSIDERED VIEW T HAT THIS REASON OF REJECTION IS NOT SUSTAINABLE IN THE EYES OF LAW. 4.2 NOW COMING TO THE SECOND GROUND OF REJECTION WHEREB Y THE LD. CIT(E) HAS OBSERVED THAT DURING THE COURSE OF HEARING, A QUERY REGARDING PROCUREMENT OF LUXURY VEHICLES BY THE APPLICANT SOCIETY W AS RAISED, IN RESPONSE, THE APPLICANT SUBMITTED THAT 'NO LUXURY VEH ICLE HAS BEEN PURCHASED USING THE FUNDS OF THE SOCIETY, ONLY SCHOOL BUSES AND VANS H AVE BEEN PURCHASED.' THIS REPLY OF THE APPLICANT IS CLEARLY NOT B ORNE BY THE BALANCE SHEET OF FINANCIAL YEAR 2016-17 WHERE PURCHASE OF 'INNO VA CAR' AT RS.14.91 LACS HAS BEEN SHOWN AND AMOUNTS TO MISREPRESENTATION OF FA CTS. IN RESPONSE TO THIS OBJECTION THE LD. AR FAILED TO SAY ANYTHING EX CEPT THAT THE SAID VEHICLE IS BEING USED FOR THE PRINCIPAL AND STAFF MEMBERS OF THE APPELLANT SCHOOL FOR CARRYING THEM FROM THEIR HOUSES TO SCHOOL. IN OUR CONSIDER ED OPINION ALTHOUGH THE CLAIM OF THE APPELLANT SEEMS TO BE GENUINE, HOWEVE R IT IS IMPERATIVE FOR ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 5 THE LITIGANTS TO BE FAIR AND APPROACH THE COURT WITH CLEAN HANDS, THEREFORE THE ASSEEEE IS REQUIRED TO ESTABLISH NEED OF VEHICLE I.E. INN OVA AND ALSO TO CLARIFY QUA WRONG SUBMISSIONS MADE BEFORE THE LD. CIT(E) WHICH THE APPELLANT FAILED TO DO SO. 4.3 THIRD GROUND RELATES TO THE ABSENCE OF ENOUGH EVID ENCES TO PROVE THE CHARITABLE NATURE AND ITS ACTIVITIES, WHICH THE APPELLAN T FAILED TO CLARIFY HOWEVER IN THE INTEREST OF JUSTICE AS THE APPELLANT SOC IETY CLAIMED TO BE EDUCATIONAL SOCIETY AND CARRYING CERTAIN ACTIVITIES RELATI NG TO EDUCATION, HOWEVER, FAILED TO ESTABLISH ENOUGH EVIDENCES BEFORE T HE LD. CIT (E) AT THE TIME OF HEARING AND DURING THE APPELLANT PROCEEDINGS BEFORE US. 5. ACCORDING TO SECTION 12AA OF THE ACT, THE PROCEDUR E FOR REGISTRATION OF A TRUST OR INSTITUTION IS AS FOLLOWS: 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) 8 [OR CLAUSE (AB)] OF SUB-SECTION (1) OF SECTION 12A , SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM T HE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATIS FY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE M AY DEEM NECESSARY IN THIS BEHALF; 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 TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORD ER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 6 AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 6. ACCORDING TO PROVISO OF CLAUSE (B) OF CLAUSE (1) OF SECTI ON 12AA OF THE ACT, BEFORE PASSING AN ORDER FOR REFUSAL OF REGISTRATION , IT IS MANDATORY TO GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPLI CANT. THE PRINCIPLE OF AUDI ALTERM PARTEM , WHICH MANDATES THAT NO ONE SHALL BE CONDEMNED UNHEARD IS PART OF THE RULES OF NATURAL JUSTICE. NATURAL JUSTICE I S A GREAT HUMANISING PRINCIPLE INTENDED TO INVEST THE LAW WITH FAIRNESS AND TO SECURE JUSTICE AND OVER THE YEARS IT HAS GROWN INTO A WIDELY PERVASIVE RU LE AFFECTING LARGE AREAS OF ADMINISTRATIVE ACTION. THE INQUIRY MUST ALWAYS BE DO NE, WHETHER A FAIR OPPORTUNITY TO BE HEARD HAS BEEN GIVEN OR NOT TO THE PERSON AFFECTED. IN THE INSTANT CASE, AFTER GETTING REPLY/CLARIFICATION FROM THE APPELLANT, THE LD. CIT(E) DID NOT PROVIDE ANY OPPORTUNITY EITHER TO SUBSTANTIAT E/CORROBORATE ITS CLAIM AND/OR CONTRADICT THE ISSUE(S) IN ANY POSED BY THE LD. CI T(E). NON- PROVIDING THE OPPORTUNITY NOT ONLY AMOUNTS TO DENIAL OF NATURA L JUSTICE BUT ALSO AMOUNTS TO VIOLATION OF RULE OF ' AUDI ALTERAM PARTEM ', HENCE CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCE AND IN ORDER TO PROVIDE REASONABLE OPPORTUNITIES OF BEING HEARD, WE FEEL IT APPROPRIATE TO REMAND BACK T HIS CASE TO THE FILE OF THE CIT(E) TO DECIDE AFRESH, WHILE AFFORDING REASONABLE OP PORTUNITY OF BEING HEARD, WITHOUT BEING INFLUENCED BY THE OBSERVATIONS MA DE ABOVE. ITA NO.546 /ASR/2017 GUR U RAM DASS EDUCATIONAL SOCIETY VS. CIT(E) 7 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:21.02.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) SH. GURU RAM DASS EDUCATIONAL SOCIETY, GURUDWARA GURU R AM DASS PURI, ARMANPURA, LUMBRI WALA, FEROZPUR, PUNJAB-152002. (2) THE CIT(EXEMPTIONS), CHANDIGARH. (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: GURU RAM DASS EDUCATIONAL SOCIETY, FEROZE PUR 546-17 DIRECTORY: D:\DOCUMENT\NKC ORDERS 2018\NS SAINI & N KC TEMPLATE: C:\USERS\ETC PARMOD\APPDATA\ROAMING\MICROSOFT\TEMPLATES\NORMAL.D OT TITLE: IN THE INCOME TAX APPELLATE TRIBU NAL SUBJECT: AUTHOR: RAHUL PRABHAKAR KEYWORDS: COMMENTS: CREATION DATE: 2/19/2019 5:12:00 PM CHANGE NUMBER: 100 LAST SAVED ON: 2/26/2019 10:53:00 AM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 141 MINUTES LAST PRINTED ON: 2/26/2019 10:53:00 AM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 8 (APPROX.) NUMBER OF WORDS: 1,917 (APPROX.) NUMBER OF CHARACTERS: 10,930 (APPROX.)