Dr. Data Ram Charitable Trust, New Delhi V. CIT, Muzaffarnagar

ITA 5607/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3414 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-08-2017
• Assessment Year: misc
• Appeal Filed On: 16-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. L. P. SAHU, ACCOUNTANT MEMBER ITA NO. 5607/DEL/2014 (U/S 12AA OF IT ACT) ASSESSEE BY : SH. P.C.YADAV, ADV DEPARTMENT BY : SMT. RACHNA SINGH, CIT DR DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 22.11.2017 O R D E R PER BHAVNESH SAINI, J.M: 1. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT, MUZAFFARNAGAR, DATED 26.08.2014, REJECT ING THE APPLICATION U/S 12AA OF THE IT ACT. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST FILED APPLICATION FOR GRANTING OF REGISTRATION U/S 12AA O F THE IT ACT. THE ASSESSEE IS RUNNING A HOSPITAL AT SAHARANPUR, WITH THE OBJECT TO CATER TO THE MEDICAL NEEDS OF PEOPLE IN SOCIETY, PA RTICULARLY THE POOR AND NEEDY PERSONS. CAMPS ARE ALSO CLAIMED TO B E ORGANIZED FOR FREE AND CONCESSIONAL CONSULTANCY AND TREATMENT TO THE PEOPLE OF THE REGION. THE ASSESSEE IS A REGISTERED TRUST. LD. CIT ON PERUSAL OF THE ACCOUNT ENDING 31.03.2014 FOUND THAT AN AMOU NT OF RS. 36,00,000/- HAS BEEN DIRECTLY CARRIED TO THE BALANC E SHEET ON ACCOUNT OF DONATION/MEMBERSHIP FEE RECEIVED FROM TH E TRUSTEES. DATA RAM CHARITABLE TRUST C/O DR. RAVI GUPTA, ADVOCATE E-6A, KAILASH COLONY, NEW DELHI VS CIT MUZAFFARNAGAR GIR/PAN: AABTD7732R / (APPELLANT) /(RESPONDENT) 2 ITA NO. 5607/DEL/2014 SIMILARLY, IN THE PRECEDING YEAR, AN AMOUNT OF RS. 5,10,000/- WAS CARRIED TO THE BALANCE SHEET ON SIMILAR ACCOUNT. IT IS NOTED THAT THE ACTIVITIES OF THE TRUST IS PRIMARILY FUNDED FROM TH E AFORESAID AMOUNT CONSTITUTING THE CORPUS OF THE TRUST, APART FROM TERM LOAN RAISED FROM THE INDIAN OVERSEAS BANK, AGGREGATING T O RS. 90,65,692/-. IN ORDER TO EXAMINE THE GENUINENESS OF THE FUND UTITIZED FOR BUILDING UP THE CORPUS, THE TRUST WAS REQUIRED TO SPECIFY THE RELATIONSHIP BETWEEN THE TRUSTEES, THE NATURE OF THEIR INCOME AND CAPACITY TO CONTRIBUTE TO CORPUS FUND. T HE ASSSESSEE FILED THE DETAILS OF CONTRIBUTION MADE BY THE TRUST EES. LD. CIT NOTED THAT SUBSTANTIAL SUMS HAVE BEEN DEPOSITED IN CASH I N BANK ACCOUNT OF SH. HARNAM SINGH, CHAIRPERSON OF TRUST W ITH UNION BANK OF INDIA, SAHARANPUR FOR WHICH NO EXPLANATIONS HAVE BEEN GIVEN FOR DEPOSIT OF THE CASH. OTHER TRUSTEES ARE A GRICULTURIST AND ARE NOT INCOME TAX PAYEE. LD. CIT, THEREFORE, DOUBT ED THE CREDIBILITY OF THE STATEMENT THAT AMOUNT IS CONTRIB UTED TO THE CORPUS BY THE TRUSTEES. LD. CIT ALSO NOTED THAT ACI T, CIRCLE SAHARANPUR, HAS NOT RECOMMENDED FOR GRANT OF REGIST RATION, WHO POINTED THAT THERE WAS NO PATIENT IN THE GENERAL WA RD IN HOSPITAL WHEREAS 50% OF THE DELUXE, SEMI PRIVATE AND PRIVATE ROOMS WERE FOUND TO BE OCCUPIED AT THE TIME OF VISIT OF THE IN SPECTOR OF INCOME TAX. REGISTRATION APPLICATION U/S 12AA WAS ACCORDIN GLY REJECTED. 3. AFTER CONSIDERING THE RIVAL SUBMISSION AND PERUSAL OF MATERIAL ON RECORD, WE ARE OF THE VIEW THE MATTER R EQUIRES RECONSIDERATION AT THE LEVEL OF CIT. 4. LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE REGIS TERED TRUST DEED, COPY OF WHICH FILED IN THE PAPER BOOKS AND CO NTENDED THAT AIMS AND OF OBJECTS OF THE TRUST ARE CHARITABLE IN NATURE WHICH HAVE NOT BEEN ADVERSELY COMMENTED UP BY LD. CIT. HE HAS FURTHER 3 ITA NO. 5607/DEL/2014 SUBMITTED THAT IT IS NOT NECESSARY THAT AT THE TIME OF VISIT OF INSPECTOR, INCOME TAX, THE PATIENT IN GENERAL WARD WOULD FOUND ADMITTED. HE HAS SUBMITTED THAT THE ASSESSEE IS WIL LING TO PRODUCE THE EVIDENCE OF CHARITABLE ACTIVITIES BEFORE LD. CI T. 5. WE HAVE EXAMINED THE CONTENTION OF LD. COUNSEL FOR ASSESSEE IN THE LIGHT OF PROVISIONS OF SECTION 12AA OF THE I T ACT. AT THE TIME OF GRANT OF REGISTRATION OR REFUSAL TO GRANT REGIST RATION U/S 12AA, LD. CIT IS REQUIRED TO SATISFY HIMSELF ABOUT OBJECT S OF THE TRUST OR INSTITUTIONS AND THE GENUINENESS OF ITS ACTIVITIES. IN THE CASE OF THE ASSESSEE PRIMA FACIE, THE OBJECT OF THE ASSESSEE TR UST APPEARS TO BE CHARITABLE IN NATURE. LD. CIT DID NOT COMMENT UPON ON THE AIMS AND OBJECTS OF THE ASSESSEE TRUST IN IMPUGNED ORDER . LD. CIT HAS GONE INTO THE ISSUE OF CORPUS FUND RECEIVED BY THE ASSESSEE TRUST FROM ITS TRUSTEES AND OTHERS AND FUND UTILIZATION I N ORDER IT MAY NOT BE THE RELEVANT CRITERION TO BE CONSIDERATION A T THE TIME OF CONSIDERING THE APPLICATION U/S 12AA OF THE IT ACT. LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT AS REGARDS TH E GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE TRUST, HE WOULD P RODUCE EVIDENCES BEFORE LD. CIT FOR HIS CONSIDERATION. 6. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIE W THAT THE MATTER REQUIRES RECONSIDERATION AT THE LEVEL OF LD. CIT, MUZAFFARNAGAR. WE ACCORDINGLY SET ASIDE THE IMPUGNE D ORDER AND RESTORE THE APPEAL OF THE ASSESSEE TO THE FILE OF L D. CIT, MUZAFFARNAGAR WITH DIRECTIONS TO RE-DECIDE THE APPL ICATION U/S 12AA OF THE IT ACT, BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. THE ASSESSEE IS DIRECTED TO PRODUCE THE EVIDENCES OF ACTIVITIES OF THE ASSESSEE TRUST BEFORE LD. CIT FOR HIS CONSID ERATION. 4 ITA NO. 5607/DEL/2014 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.11.2017. SD/- SD/- (L. P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 22.11.2017 @M!T