Shri. Lad Shakhiya Wani Samaj Kalyan & Shikshan Prasarak Mandal, Aurangabad V. Commissioner of Income-Tax Exemption, Pune

ITA 572/PUN/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9627 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-01-2021
• Assessment Year: misc
• Appeal Filed On: 26-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Additional evidence; Set aside
• Section: 12A; 12AA; 208; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, J UDICIAL M EMBER . / I TA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN P RASARAK MANDAL 189, ROHI T RA, SAMARTHNAGAR, AURANGABAD - 431 001 PAN : AACTS5656A ....... / APPELLANT / V/S. THE COMMISSIONER OF INCOME TAX (EXEMPTION) PUNE. / RESPONDENT A SSESSEE BY : SHRI S.N. PURANIK REVENUE BY : SHRI DEEPAK GARG / DATE OF HEARING : 05 . 01 .202 1 / DATE OF PRONOUNCEMENT : 05 . 01.2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT (EXEMPTION) PUNE DATED 2 1 .09.2020 PASSED U/S.12AA(1)(B) (II) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL 1. COMMISSIONER OF INCOME TAX (EXEMPTION) HAS ERRED IN REJECTING REGISTRATION TO TRUST U/S.12AA. APPELLA NT PRAYS FOR GRANT OF RE GISTRATION. 2. APPELLANT PRAYS TO ADD, ALTER, AMEND, TAKE ADDITIONAL GROUNDS, SUBMIT ADDITIONAL EVIDENCE AND /OR DURING OR PENDING PROCEEDING . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE TRUST MADE AN ONLINE APPLICATION IN FORM NO.10A FOR APPROVAL OF THE TRUST/I NSTITU T ION U/S.12AA OF THE ACT ON 11.11. 2019 UNDER THE CATEGORY OF CHARITABLE TRUST/INSTITUTION AS PER CBDT NOTIFICATION NO. S.O 2033 (E) DATED 24.06.2020 READ WITH PROVISIONS O F THE TAXATION AND OTHER LAWS ( RELAXATION OF CERTAIN PROVISIONS) O RDINANCE 2020, NO. 2 OF 202 0 DATED 31.03.2020 . THE ASSESSEE IS REGISTERED UNDER BOMBAY PUBLIC TRUST ACT, 1950 WITH REGISTRATION NUMBER F - 701/AU/DATED 04.10.1980. THE APPLI CATION WAS CAREFULLY PERUSED AND CONSIDERED ALONG WITH ITS ANNEXURES. THEREAFTER, A LETTER WAS ISSUED THROUGH ITBA POR TAL TO THE ASSESSEE ON 24.12.2019 REQUESTING TO UPLOAD CERTAIN OTHER INFORMATION/CLARIFICATION BY 10.0 1.2020 IN ORDER TO PROCESS THE APPLICATION. THE ASSESSEE SUBMITTED ITS COMPLIANCE ON ITBA PORTAL IN RESPONSE TO THE SAID NOTICE. 3. THE ASSESSEE TRUST WAS ESTABLISHED IN 1980 AND CLAIMS TO BE ENGAGED IN ACTIVITIES SUCH AS BLOOD DONATION CAMP, FELICITATION OF S TUDENTS, TREE PLANTATION ETC. ON PERUSAL OF FINANCIAL STATEMENTS UPLOADED ON THE ITBA PORTAL, I T WAS OBSERVED BY THE LD. CIT(EXEMPTION) THAT THE ASSESSEE HAS SHOWN ADDITION OF RS.3.82 LACS, RS.8.22 LACS AND RS.8.14 LACS UNDER THE HEAD BUILDING FUND DURING THE FINANCIAL YEAR 2016 - 17, 2017 - 18 AND 2018 - 19 RESPECT IVELY DIRECT LY CREDITED TO THE RES PECTIVE RESERVE WITHOUT ROUTING IT THROUGH THE INCOME AND EXPENDITURE ACCOUNT. SINCE THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS OF TAXES PAID ON THE SAID FUNDS, IT WA S FOUND THAT IT HAS CLAIMED THE SAME AS EXEMPT AND THE ASSESSEE ACCORDINGLY CLAIMED EXEMPT ION 3 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL U/S.11(1)(D) OF THE ACT IN THE YEARS BEFORE THE YEAR IN WHICH IT HAS APPLIED FOR GRANT OF REGISTRATION. 4. THE LD. CIT( EXEMPTION ) REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF REGISTRATION U/S.12AA(1)(B)(II) OF THE ACT BY OBSERVING AS FOLLOWS: 3.4 BEFORE THE PERIOD OF GRANT OF REGISTRATION, ALL VOLUNTARY CONTRIBUTIONS - INCLUDING THE ONE S WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS - IS INCOME OF A CHARITABLE , RELI GI OUS OR CHARITABLE CUM RELIGIOUS TRUST . HENCE , AFT E R TAKING DONATION U NDER THE HEAD BUIL DING FUND' AS INCOME , IF THE APPLICANT BECOMES LIABLE TO PAY TAX , THEN THE REGISTRATION U/S 12A A CANNOT BE GRANTED UNLESS THE TAX IS PAID . 3.5. REGISTRATION U/S 12AA OF THE IT ACT IS PRE - CONDITI ON TO CLAIM EXEMPTION U/S 11 (1 )(D) OF T HE IT ACT AS DISTINGUISHED FROM THE PRESENT CASE. THEREFORE , THE APPLICANT TRUST HAS ESC APED AMOUNT OF DONATION FROM TAXATION BY NOT SHOWING AMOUNT OF DONATION UNDER THE HEA D 'BUILDING FUND ' IN THE TOTAL INCOME FOR THE FY'S 2016 - 17, 2017 - 18 AND 2018 - 19. NO PROPER EXPLANATION TO EXPLAIN THE DISCREPANCY IS SUBMITTED . THESE FACTS OF THE CASE PRIMA FACIE INDICATE THAT THE APPLICANT TRUST INDULGE IN SUCH ACTIVITIES FROM WHICH HUGE REC EIPT HAS BEE N GENERATED AND THUS CHARITABLE/RELIGIOUS OBJECT OF TRUST IS NOT PROVED . 4. CONSIDERING THE ABOVE FACTS, I AM NOT SATISFIED ABOUT THE CHARITABLE NATURE OF OBJECTS AS WELL AS THE GENUINE NE SS OF ACTIVIT I ES OF THE TRUST/ INSTITUTION AND HENCE, THE REQUEST FOR GRANT OF REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961 CANNOT BE ACCEPTED. 5. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT LD. CIT(EXEMPTION) WAS NOT JUSTIFIED IN REJECTING THE GRANT OF REGISTRATION AND THE LD. CIT(EXEMPTION) IS ONLY EXPECTED TO EXAMI NE WHETHER THE OBJECTS OF THE TRUST ARE CHARI TABLE IN NATURE AND EXAMINE WHETHER THE ACTIV ITIES OF THE TRUST ARE GENUINE OR NOT. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS : (A) ANAND SOCIAL AND EDUCATIONAL TRUST VS. CIT, 272 TAXMAN 7 (SC) ( B ) COMMISSIONER OF INCOME TAX (EXE M PTION) VS. MANEKJI MOTA CHARITABLE TRUST, (2019) 267 TAXMAN 0016 ( BOMBAY) ( C ) KAI SHRI MAHADEBRAO NAYKUDE DNYANVIKAS PRABHODHINI TRUST VS. COMMISSIONER OF INCOME TAX (EXEMPTION ) , (2020) 208 TTJ ( PUNE) 2 96 4 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL 6. ON THE OTHER HAND, THE LD. DR PLACED STRONG RELIANCE ON THE ORDER OF THE LD. CIT(EXEMPTION). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. WE HAVE ALSO C ONSIDERED THE FINDINGS OF THE LD. CIT(EXEMPTION). THAT AS EVIDENT FR OM PARA 3.4 OF THE LD. CIT(EXEMPTION) S ORDER THAT THE SOLE REASON FOR DENIAL OF GRANT OF REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE TRUST IS BECAUSE FOR THE RE AS ON THAT WHATEV ER DONATIONS , THE ASSESSEE TRUST HAS TAKEN AS BUILDING FUND , ACCORDING TO THE LD. CIT(EXEMPTION), THE RELEVANT TAXES HAVE NOT BEEN PAID IN RELATION TO THOSE DONATIONS RECEIVED UNDER THE HEAD BUILDING FUND , AS I NCOME. THE LD. CIT(EXEMPTION) FURTHER HELD THAT UNTIL AND UNLESS, TAXES WERE PAID, REGISTRATION U/S.12AA CANNOT BE GRANTED TO THE ASSE SSEE TRUST. 8. THAT FURTHER, THE DEPARTMENT HAS NOT DISPUTED THE OBJECTS OF THE TRUST OR GENUINENESS OF ACTIVITIES CONDUCTED BY THE ASSESSEE TR UST. IN THIS SCENARIO , IT WAS OBSERVED BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF KAI SHRI MAHADEBRAO NAYKUDE DNYANVIKAS PRABHODHINI TRUST VS. COMMISSIONER OF INCOME TAX (EXEMPTION ) (SUPRA.) THAT WHEN THE OBJECTS OF THE TRUST WERE NOT DISPUTED BY THE DEPARTMENT, NOR THEY HAVE DISPUTED GENUINENESS OF ACTIVITIES OF THE ASSESSEE TRUST, THEN NON FILING OF RETURN U/S. 139(4A) OF THE ACT CANNOT BE THE GROUND TO DENY REGISTRATION U/S.12AA OF THE ACT TO THE ASSESSEE. IT IS ONLY AT THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CAN TAKE APPROPRIATE STEPS AS PER LAW REGARDING THE NON FILING OF RETURN. HOWEVER, AT THE TIM E OF GRANTING REGISTRATION, THE OBJECT OF THE A SSESSEE TRUST HAS TO BE LOOKED INTO AND GENUINENESS OF THE ACTIVITIES OF THE AS SESSEE TRUST SHOULD BE CONSIDERED . 5 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL 9. REVERTING TO THE FACTS OF THE PRESENT CASE, THE LD. CIT(EXEMPTION) HAS NOT GRANTED REG ISTRATION U/S.12AA OF THE ACT SINCE WHATEV ER DONATIONS WERE RECEIVED BY THE ASSESSEE TRUST, IN CLUDED UNDER THE HEAD BUILDING FUND , AS INCOME, THE TAXES WERE NOT PAID AND ON THIS THRESHO LD , THE REGISTRATI ON U/S.12AA CANNOT BE DENIED. IT IS LEFT ALWAYS TO THE ASSESSING OFFICER TO TAKE APPROPRIATE STEP AT THE TIME OF ASSESSMENT PROCEEDINGS. 10. THE HON BLE SUPREME COURT IN THE CASE OF ANAND SOCIAL AND EDUCATIONAL TRUST VS. CIT (SUPRA.) HAS HELD THAT EVEN IN THE ABSENCE OF ANY ACTIVITIES A TRUST CAN BE CONSIDERED FOR REGISTRATION U/S.12AA OF THE ACT AND THE TERM ACTIVITIES CONTEMPLATED U/S.12AA OF THE ACT INCLUDES PROPOSED AC TIVITIES . AT THE TIME OF GRANTING REGISTRATION, THE ONLY ISSUE TO BE EXAMINED BY THE LD. CIT(EXEMPTION) IS REGARDING THE TRUE NATURE OF THE OBJECTS OF THE TRUST I.E. WHETHER CHARITABLE OR NOT. 11. IN THE PRESENT CASE, THE OBJECTS OF THE TRUST ARE NOT DOUBTED BY THE DEPARTMENT AND THEY HAVE ALSO NOT DISPUTED THE CHARITABLE NATURE OF THE AC TIVITIES COND U CTED BY THE ASSESSEE TRUST. IN THESE TWO AREAS, IN FACT, THERE HAS BEEN NO EXAMINATION /VERIFICATION CONDUCTED BY THE LD. CIT(EXEMPTION). MEANING THEREBY, ALL THE RELEVAN T RECORDS WERE SUBMITTED BEFORE THE REVENUE AUTHORITIES AND THEY HAVE VERIFIED THE SAME AND WERE SATISFIED ON THIS ASPECT. 12. FURTHER, THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . MANEKJI MOTA CHARITABLE TRUST (SUPRA.) HAS HELD AT THE TIME OF THE REGISTRATION OF THE TRUST U/S.12A, THE QUESTION OF APPLICATION OF INCOME OF THE TRUST IS PREMATURE. THUS, WHETHER TAXES ARE DUE TO BE PAID ON ANY INCOME RECEIVED THAT ISSUE HAS TO BE LOOKED INTO ONLY AT THE TIME OF ASSESSMENT PROCEEDING. 6 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL CONSIDERING THE AFORESAID JUDICIAL PRONOUNCEMENTS , FACTS AND CIRCUMSTANCES IN THIS CAS E, WE ARE OF THE CONSIDERED VIEW THAT WHEN ALL THE REQUIREMENTS OF REGISTRATION U/S.12AA OF THE ACT HAS BEEN SATISFIED BY THE ASSESSEE TRUST, REGISTRATION T HEREIN SHOULD BE GRANTED. IN VIEW THEREOF, WE SET ASIDE THE ORDER OF THE LD. CIT(EXEMPTION) AND DIRECT THE DEPARTMENT TO GRANT REGISTRATION U/S. 12AA OF THE ACT TO THE ASSESSEE TRUST. IT WILL ALWAYS BE OPEN TO THE ASSESSING OFFICER TO DECIDE THE TAXES ISSUES OF THE INCOME OF THE ASSESSEE TRUST AT THE TIME OF ASSESSMENT PROCEEDIN GS. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 05 TH DAY OF JANUARY , 20 2 1 . SD/ - SD/ - INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 05 TH JANUARY , 202 1 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(EXEMPTION), PUNE. 4 . , , , / DR, ITAT, A BENCH, PUNE. 5 . / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO. 572 /PUN/20 20 SHRI LAD SHAKHIYA WANI SAMAJ KALYAN & SHIKSHAN PRASARAK MANDAL DATE 1 DRAFT DICTATED ON 05 . 01 .202 1 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 05 . 01 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER