M/S DERA BABA BHAI GURDAS JI, MANSA V. COMMISSIONER OF INCOME TAX, (EXAMPTION), CHANDIGARH

ITA 547/ASR/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3406 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-02-2019
• Assessment Year: 2017-2018
• 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: Depreciation; Opportunity of being heard; Principle of natural justice; Capital expenditure
• Section: 12A; 12AA; 12

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.547(ASR)/2017 ASSESSMENT YEAR:201 7-18 M/S DERA BHAI GURDAS JI UDASIN TRUST WARD NO.21, BABA BHAI GURDAS ROAD, MANSA. [PAN:AABTD 9345A] VS. COMMISSIONER OF INCOME TAX (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: 20.02.2019 DATE OF PRONOUNCEMENT: 22.02.2019 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/AP PELLANT AGAINST THE ORDER DATED 30.06.2017 PASSED BY THE LD. CIT(EXEMPTIONS), CHANDIGARH U/S 12AA(1)(II) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE APPELLANT HAS RAISED THE FOLLOWING GROUNDS OF APPE AL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION FILED FOR REGISTRATION UN DER SECTION 12AA OF THE INCOME TAX ACT WHEREAS AS PER EXPLANATION AND MATER IAL PLACED ON RECORD, ASSESSEE APPELLANT TRUST FULFILLS ALL THE CONDITION S REQUIRED FOR GRANTING REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION FILED FOR REGISTRATION UNDER SECTION 12 AA OF THE INCOME TAX ACT ON THE GROUND THAT ASSESSEE APPELLANT FAILED TO PROVE THAT THE ACTIVITIES ITA NO.547 /ASR/2017 (A.Y.2017-18) M/S DERA BABA B HAI GURDAS JI VS. CIT(E) 2 UNDERTAKEN BY IT ARE OF CHARITABLE NATURE WHEREAS A IL THE ACTIVITIES UNDERTAKEN BY THE TRUST ARE IN ACCORDANCE WITH THE OBJECTS OF THE TRUST WHICH ARE CHARITABLE AND DULY COVERED BY THE DEFINITION A S PER SECTION 2(15) OF THE INCOME TAX ACT. AS SUCH, REGISTRATION REJECTED ON T HIS GROUND IS UNJUSTIFIED, ILLEGAL AND UNCALLED FOR. THE SAME BE ALLOWED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION FILED FOR REGISTRATION UNDER SECTION 12 AA OF THE INCOME TAX ACT ON THE GROUND THAT THE LAND OWNED BY THE TRUST HAS NOT BEEN MENTIONED IN THE TRUST DEED AND HAS NOT MADE PART OF THE FIXED ASSET S OF THE TRUST WITHOUT APPRECIATING THAT THE LAND IN QUESTION HAS BEEN ACQ UIRED BY THE GOVERNMENT OF PUNJAB AND COMPENSATION HAS BEEN GIVEN TO THE TR UST BY THE GOVERNMENT AND THE SAME HAS BEEN MADE PART OF THE CAPITAL FUND OF THE TRUST. AS SUCH, REGISTRATION REJECTED ON THIS GROUND IS UNJUSTIFIED , ILLEGAL AND UNCALLED FOR. THE SAME BE ALLOWED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION FILED FOR REGISTRATION UN DER SECTION 12AA OF THE INCOME TAX ACT ON THE GROUND THAT ASSESSEE TRUST AD VANCED A SUM OF RS.31 LACS TO GAUSHALA SEWA SAMITI WHICH IS NOT A REGISTE RED TRUST WITHOUT APPRECIATING THAT THE AMOUNT HAS BEEN SPENT/GIVEN A S PER OBJECTS OF THE TRUST OUT OF THE CAPITAL FUND OF THE TRUST. AS SUCH , REGISTRATION REJECTED ON THIS GROUND IS UNJUSTIFIED, ILLEGAL AND UNCALLED FOR. TH E SAME BE ALLOWED. 3. AN APPLICATION FOR REGISTRATION U/S 12A OF THE ACT WAS F ILED BY THE APPELLANT ON DATED 21.12.2016 BY DISCLOSING THE FACT TH AT THE ASSESSEE SOCIETY IS AN ONGOING ENTITY AND IS IN OPERATION SINCE 23 RD SEP. 2013. THE APPELLANT ALSO DISCLOSED THE AIMS AND OBJECT OF THE TRUST ARE TO THAT THE TRUST WILL BE DOING SUCH RELIGIOUS AND SOCIAL WORKS FOR THE FUL FILLMENT OF THE MOTIVES OF UDASIN SECT BY WHICH WOULD SPREAD THE RELIGION AND UD ASIN SECT WOULD BE DEVELOPED AND COMMUNITY WOULD BE GROW; THIS TRUST WILL DO WORK FOR THE BETTER OF DERA BABA BHAI GURDASS JI UDASIN; THAT THIS T RUST WILL MAKE THE SCHEMES TIME TO TIME FOR ASSISTANCE OF POOR STUDENTS AND HEL P THEM, SO THAT SOCIAL WELFARE CAN BE DONE. BESIDE THIS TRUST WILL HELP FOR PROVIDING THE SCHOLARSHIP, GRANT AND PLAY GROUNDS TO THE MERITORIOUS STUDENTS/PLAYERS; THIS TRUST WILL HELP FOR RUN THE COWHIDES AT ITS OWN LEVEL A ND WILL HELP FOR GRASS TO THE ALREADY ESTABLISHED COWHIDES AS FOR AS ITS OWN POWER; THIS DUST WILL WORK ITA NO.547 /ASR/2017 (A.Y.2017-18) M/S DERA BABA B HAI GURDAS JI VS. CIT(E) 3 FOR ARRANGING THE BHANDARAS ON THE DIFFERENT RELIGIO US DAYS; THAT THIS TRUST WILL PROVIDE THE HELP FOR STUDY, MARRIAGE AND SUBSISTE NCE OF THE POOR AND REEDY GIRLS AND WIDOWS; THIS TRUST WILL DO THOSE WORKS TH E TRUSTEES UNDERSTAND THE NECESSARY TIME TO TIME; THIS TRUST PROVID E HELP FOR RUNNING THE CULTURAL ORGANIZATION . 4. THE APPLICATION OF THE APPELLANT WAS TAKEN INTO CONSID ERATION AND IN ORDER TO ACCORD AN OPPORTUNITY, THE DATE WAS FIXED FOR HEARING ON 2 ND JUNE, 2017 AND CERTAIN DOCUMENTS/CLARIFICATIONS WERE SOUGHT BY 12.06.2017 BY THE LD. CIT(E) AS APPEARS IN PARA NO.5 OF THE ORDER. IN R ESPONSE TO WHICH THE APPELLANT FILED THE REPLY THEREAFTER THE REPLY OF T HE ASSESSEE WAS CONSIDERED AND FINALLY THE LD. CIT(E) WHILE GIVING REASONS, REJE CTED THE REGISTRATION U/S 12AA OF THE ACT. THE RELEVANT PART OF THE ORDER IS R EPRODUCED HEREIN BELOW FOR THE SAKE OF BREVITY AND COMPLETENESS. 6. THE REPLY SUBMITTED BY THE APPLICANT 'DORA BABA BHAI GURDAS JI UDASIN TRUST' HAS SEEN EXAMINED. THE EXAMINATION OF THE SU BMISSIONS REVEALS TH.IT THE APPLICANT TRUST APPLIED FOR 12A REGISTRATION IN 201 4 ALSO BUT LATER ON IT WAS WITHDRAWN BY THE SAID TRUST. THE REASON FOR THE SAM E HAS NOT BEEN EXPLAINED IN ITS SUBMISSIONS. DURING FY 2013-14, THE TRUST RECEI VED RS.15,40,67,304/- ON ACCOUNT OF ACQUISITION OF LAND BY THE GOVERNMENT AN D THIS WAS UTILIZED BY THE TRUST IN ACQUIRING AGRICULTURAL LAND. THE TRUST HOL DS AGRICULTURAL LAND WORTH RS. 10,68,33,500/-. TIRE FINANCIAL STATEMENTS OF THE TR UST HAVE BEEN PLACED ON RECORD, THE SUMMARY OF WHICH IS TABULATED BELOW:- F.Y. GROSS RECEIPTS (RS.) NET SURPLUS (RS.) (%) FIXED ASSETS (RS.) CASH & BANK (RS.) 2013-14 4,92,207/- 73,386/-(15%) 10,80,18,223/- 4,30,88,467/- 2014-15 65,68,491/- 30,41,323/-(46%) 1,51,35,764/- 14,00,676/- 2015-16 8,75,278/- 16,22,815/-(42%) 11,64,07,732/- 17,60,879/- 2016-17 50,84,427/- (-)6,41,228/-(-VE) 11,75,98,685/- 7,50,208/- THE INCOME & EXPENDITURE ACCOUNT SHOWS THAT THE RE CEIPTS OF THE TRUST ARE MAINLY THROUGH BANK INTERESTS, INTEREST ON FDR AND DONATIONS. THE DONATIONS RECEIVED BY THE TRUST ARE STATED TO BE 'G OLAK DONATIONS' AND 'DONATIONS ON MELA', HOWEVER, NO EVIDENCE IN SUPPOR T OF SOURCES OF DONATIONS HAS BEEN PRODUCED. EXPENDITURES HAVE BEEN INCURRED MAINLY UNDER THE HEAD 'DEPRECIATION, SALARY, FOOD TO EMPLOYEES, DIESEL, E LECTRICITY, GARDENING ETC.' ITA NO.547 /ASR/2017 (A.Y.2017-18) M/S DERA BABA B HAI GURDAS JI VS. CIT(E) 4 CLEARLY THE MAIN FOCUS OF THE APPLICANT TRUST IS ON CAPITAL EXPENDITURE AND ACQUISITION OF ASSETS WHICH LACKS THE ESSENCE OF CH ARITY. 7. FURTHER, FROM THE DOCUMENTARY EVIDENCES OF POSS ESSION OF AGRICULTURAL LAND, IT HAS BEEN NOTICED THAT THE LAND WAS POSSESS ED BY DERA CHADITAMAN THROUGH MAHANT AMRIT MUNI IN JUNE 2011. THE APPLICA NT TRUST WAS ESTABLISHED IN SEPTEMBER 2013 AND MAHANT AMRIT MUNI IS TRUSTEE OF THE APPLICANT TRUST. THERE IS NO MENTION OF THIS LAND IN THE TRUST DEED OF THE APPLICANT TRUST. THERE SHOULD HAVE BEEN ADDITION OF LAND IN THE FIXED ASSE TS WHEN THE TRUST WAS CREATED IN FY 2013-14 IF THE LAND IN POSSESSION OF 'DERA CHADITAMAN' HAD BEEN TRANSFERRED TO THE PRESENT APPLICANT. IN THE ABSENC E OF ANY SUCH EVIDENCE THE DEPARTMENT IS FREE TO ASSUME THAT PROCEEDS FROM LAN D (OWNED BY ANOTHER ENTITY) THAT WENT ON TO FINANCE PURCHASE OF ANOTHER PIECE O F LAND WORTH 10.68 CRORES IS CLEARLY NOT THE SOCIETY'S. THIS CLEARLY DEPICTS NON -DISCLOSURE OF COMPLETE ACTIVITIES ON THE PART OF THE APPLICANT AND IN SUCH CASE, THE CLAIMS OF CHARITABLE ACTIVITIES PERFORMED BY THE APPLICANT TRUST CANNOT BE RELIED UPON. ALSO, TH E APPLICANT TRUST HAS SHOWN ADVANCES OF 31 LACS TO 'G AUSHALA SEWA SAMITI 1 WHICH IS NOT A REGISTERED ENTITY UNDER SECTION 12AA OF THE I.T. ACT, 1961. 8. IN VIEW OF ALL THE ABOVE, IT IS SAFE TO CONCLUD E THAT THERE IS NO OTHER ACTIVITY OF THE APPLICANT TRUST OTHER THAN CAPITAL EXPENDITURE AND ACQUISITION OF ASSETS THE SOURCE OF WHICH IS EVIDEN TLY DOUBTFUL (PARA 7). THE APPLICANT HAS FAILED TO PROVE THAT THE ACTIVITI ES UNDERTAKEN BY IT ARE OF CHARITABLE NATURE AND HENCE CANNOT BE TERMED TO FALL UNDER THE CATEGORY OF 'CHARITABLE PURPOSE' AS ENVISAGED IN SE CTION 2(15) OF THE I.T. ACT, 1961. IN LIGHT OF THE ABOVE, I HAVE NO OPTION BUT TO PROCEED ON MERITS AND DENY THE REGISTRATION TO THE APPLICANT U/S 12AA OF INCOME TAX ACT, 1961. 5. ACCORDING TO SECTION 12AA OF THE ACT, THE PROCEDURE FOR R EGISTRATION 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 SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE ITA NO.547 /ASR/2017 (A.Y.2017-18) M/S DERA BABA B HAI GURDAS JI VS. CIT(E) 5 (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, AND A COPY OF SUCH ORDER SHALL BE SENT TO T HE APPLICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD. 6. ACCORDING TO PROVISO OF CLAUSE (B) OF CLAUSE (1) OF SECTIO N 12AA OF THE ACT, BEFORE PASSING AN ORDER FOR REFUSAL OF REGISTRATI ON, IT IS MANDATORY TO GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPLICANT. THE PRINCIPLE OF AUDI ALTERM PARTEM , WHICH MANDATES THAT NO ONE SHALL BE CONDEMNED UNHEARD IS PART OF THE RULES OF NATURAL JUSTICE. NATUR AL JUSTICE IS 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 P ERVASIVE RULE AFFECTING LARGE AREAS OF ADMINISTRATIVE ACTION. THE INQUIRY MUST ALWAYS BE DONE, WHETHER A FAIR OPPORTUNITY TO BE HEARD HAS BEEN GIVE N OR NOT TO THE PERSON AFFECTED. IN THE INSTANT CASE, AFTER GETTING REPLY/CLAR IFICATION FROM THE APPELLANT, THE LD. CIT(E) DID NOT PROVIDE ANY OPPOR TUNITY EITHER TO SUBSTANTIATE/CORROBORATE ITS CLAIM AND/OR CONTRADICT THE ISSUE(S) IN ANY POSED BY THE LD. CIT(E). NON- PROVIDING THE OPPORTUN ITY NOT ONLY AMOUNTS TO DENIAL OF NATURAL JUSTICE BUT ALSO AMOUNTS TO VIOLATIO N OF RULE OF ' AUDI ALTERAM PARTEM ', HENCE CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCE AND IN ORDER TO PROVIDE REASONABLE OPPORTUNITIES OF BEING HEARD, W E FEEL IT APPROPRIATE TO REMAND BACK THIS CASE TO THE FILE OF THE CIT(E) TO DECID E AFRESH, WHILE AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD, WIT HOUT BEING INFLUENCED BY THE OBSERVATIONS MADE ABOVE. ITA NO.547 /ASR/2017 (A.Y.2017-18) M/S DERA BABA B HAI GURDAS JI VS. CIT(E) 6 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.02.2019. SD/- SD/- (N.S.SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED: 22.02.2019 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S DERA BHAI GURDAS JI, UDASIN TRUST WARD NO.21, BABA BHAI GURDAS ROAD, MANSA. (2) THE CIT(EXEMPTIONS), CHANDIGARH (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER FILENAME: DERA BABA BHAI GURDAS JI, 547-17 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: 2/21/2019 11:42:00 AM CHANGE NUMBER: 61 LAST SAVED ON: 2/26/2019 12:20:00 PM LAST SAVED BY: ETC PARMOD TOTAL EDITING TIME: 78 MINUTES LAST PRINTED ON: 2/26/2019 1:28:00 PM AS OF LAST COMPLETE PRINTING NUMBER OF PAGES: 7 (APPROX.) NUMBER OF WORDS: 1,908 (APPROX.) NUMBER OF CHARACTERS: 10,882 (APPROX.)