SAREEN BALAJI CHARITABLE TRUST , LUDHIANA V. COMMISSIONER OF INCOME TAX ( EXEMPTIONS) , CHANDIGARH

ITA 56/ASR/2021

AI Insights

Sareen's Balaji Charitable Trust appealed against the decision of the Commissioner of Income Tax (Exemptions), Chandigarh, which denied their application for registration under section 12AA of the Income Tax Act, 1961. The primary reason for denial was that all trustees belong to a single family, thus the Trust is considered closely held and not serving the general public. The Tribunal referenced a similar case, G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar, which supported the decision that trusts controlled by a single family do not qualify for section 12AA registration.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114644 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-05-2023
• Assessment Year: 2021-2022
• Appeal Filed On: 15-07-2021
• Other Referred Cases: G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar (ITA No 594 (ASR) 2013)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: JASBEER SAREEN
• Keywords: Charitable institution; Principle of natural justice
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 56/Asr/2021 Assessment Year: 2021-22 Sareen’s Balaji Charitable Trust, 211-B, Rani Jhansi Road, Civil Lines, Ludhiana [PAN: AAZTS 0525P] (Appellant) V. The Commissioner of Income Tax (Exemptions), Chandigarh (Respondent) Appellant by Sh. Jasbeer Sareen, Trustee Respondent by Sh. Girish Bali, CIT- DR Date of Hearing : 18.05.2023 Date of Pronouncement : 25.05.2023 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Exemptions), Chandigarh [In short “the PCIT(Exemption)]” dated 14.09.2020 in respect of Assessment Year 2020- 21. I.T.A. No. 56/Asr/2021 Sareens’s Balaji Charitable Trust v. CIT(E) 2 2. The assessee has raised the following ground of appeal: “1. That the order passed by the learned Commissioner of Income Tax - Exemptions is bad in law as well as on facts. 2. That the learned Commissioner of Income Tax - Exemptions has erred in law as well as on facts in denying to grant registration u/s 12AA on the ground that all the Trustees belong to a single family; and has wrongly concluded to reject the application based on a fact that the entire control of Trust is vested within the family itself. 3. That the learned Commissioner of Income Tax - Exemptions has erred in law as well as on facts in denying to grant registration u/s 12AA without going into the objects of the Trust Deed for which the Trust had been settled. 4. That the appellant hereby reserves right to add, alter, amend any ground of appeal.” 3. The appellant has filed an application in form No. 10A, electronically on 10.02.2020 seeking registration u/s 12AA of the Income Tax Act, 1961. The application reveals that the trust is an ongoing entity that has been in operation since 23.11.2019. The Ld. PCIT(Exemption) has rejected the application by observing as under: 5. On this date neither anybody attended nor was any request for adjournment received. In order to follow the principle of natural justice, another opportunity was accorded to the applicant on 11.06.2020 and matter was fixed for 22.06.2020. On this date also neither anybody attended nor was any request for adjournment received. In order to follow the principle of natural justice, another opportunity was accorded to the applicant on 24.06.2020 and matter was fixed for 02.07.2020. In response to letter dated 04.12.2019, the applicant has submitted the response manually on 31.01.2020. 0n this date also neither anybody attended nor was any request for adjournment received. I.T.A. No. 56/Asr/2021 Sareens’s Balaji Charitable Trust v. CIT(E) 3 In order to follow the principle of natural justice, another opportunity was accorded to the applicant on 14.08.2020 and matter was fixed for 24.08.2020. 6. In response to the fixation letter dated 13.05.2020, the applicant trust has finally submitted the reply through DAK on 28.08.2020. 0n perusal of the documents on the record, it is revealed that the trust has been constituted by Smt. Kiran Sareen Shri Sidharth Sareen, Shri Mukul Sareen only. Smt. Kiran Sareen is the wife of Sh. Jasbeer Sareen. Shri Sidharth Sareen & Shri Mukul Sareen are son of Sh. Jasbeer Sareen. In the powers and duties of the trust, it is clearly stated that all the decisions, rules, regulation and policies will be handled by board which comprises of Smt. Kiran Sareen, Shri Sidharth Sareen, Shri Mukul Sareen only. It leads one to conclude that the entire control of the trust is vested within the family itself. The fact that the trust is restricted to the family makes it closely held and not enuring to benefit to the general public. Even though the applicant in its response did try to project that the trust is a public charitable entity, the same is not borne from the facts narrated above. Further, the Hon’ble ITAT Amritsar in the case of G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar (ITA No 594 (ASR) 2013) highlighted that the benefit of registration under section 12AA of the Act, cannot be granted to a trust controlled by a single family. The composition of applicant trust being from a family clearly invites the coverage of the aforementioned decision. 7. In the instant case, given the above, the composition of the entity does not enthuse confidence that the trust comprised of and controlled by a family, enures to the benefit of general public, I have no option but to deny the registration to the applicant u/s 12AA of Income Tax Act, 1961.” 4. The ld. Counsel submitted that the learned Commissioner of Income Tax - Exemptions has erred in law as well as on facts in denying to grant registration u/s 12AA on the ground that all the Trustees belong to a single family and has wrongly concluded to reject the application based on a fact that the entire control of Trust is vested within the family itself and that he denied registration u/s 12AA without going into the objects of the Trust I.T.A. No. 56/Asr/2021 Sareens’s Balaji Charitable Trust v. CIT(E) 4 Deed for which the Trust had been settled. He has filed a synopsis referring the provision of section 12AA, although he admitted the fact that Board of Trustees is comprised of members of a single family, therefore the Trust may be said to be restricted to the family makes it closely held. However, he failed to rebut the finding of fact given by the Ld. PCIT(Exemption) that and the appellant Trust was not for enduring benefit to the general public at large. 5. Per contra, the Ld DR supported the impugned order, and contended that the appellants ground has no merits on the issue of enduring benefit to the general public at large. He submitted that the PCIT(Exemption) has passed a well-reasoned order relying on the coordinate Amritsar Bench and prayed that same may be sustained. 6. Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, Appellant Trust is a family Trust as Board of Trustees is comprised of members of a single family. In response to the fixation 4 notices/letters, the appellant responded to last notice dated 13.05.2020, by way a reply through DAK on 28.08.2020. On perusal of these documents on the record, The PCIT(Exemption) observed that the trust has been constituted by Smt. I.T.A. No. 56/Asr/2021 Sareens’s Balaji Charitable Trust v. CIT(E) 5 Kiran Sareen Shri Sidharth Sareen, Shri Mukul Sareen only. Smt. Kiran Sareen is the wife of Sh. Jasbeer Sareen. Shri Sidharth Sareen & Shri Mukul Sareen are son of Sh. Jasbeer Sareen. In the powers and duties of the trust, it is clearly stated that all the decisions, rules, regulation and policies will be handled by board which comprises of Smt. Kiran Sareen, Shri Sidharth Sareen, Shri Mukul Sareen only. In view of that matter, the PCIT(Exemption) rightly concluded that the entire control of the trust is vested within the family itself. Meaning thereby that the trust is restricted to the family that makes it closely held family trust and not for enduring to benefit to the general public at large. The Ld. AR failed to rebut the finding of the of the Ld. PCIT(Exemption) with support of any citation in the present case. 7. The Ld. counsel for the appellant did attempt to project that the trust is a public charitable entity with the support of synopsis and a paper book, but the purpose of enduring benefit to the general public at large. is not borne from the facts narrated in the documents filed either before the authorities below or before us. On similarities of facts, the PCIT(Exemption) has rightly followed the judgement delivered by the ITAT Amritsar Bench in the case of “G.D. Kavita Singla Charitable Trust Vs. CIT-II Amritsar”, wherein it has laid down the principle that the benefit of registration under I.T.A. No. 56/Asr/2021 Sareens’s Balaji Charitable Trust v. CIT(E) 6 section 12AA of the Act, cannot be granted to a trust controlled by a single family. 8. In view of that matter, the contentions of the Ld. AR are found devoid of merit and substance and hence the ground raised are liable to be rejected. Thus, we find no infirmity or perversity in the impugned order of the Ld. PCIT (Exemption). Therefore, the order of the Ld. PCIT (Exemption) rejecting the appellant application for grant of registration u/s 12AA of the Act, is sustained. 9. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 25.05.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order