M/s. Gurukripa Education Trust, New Delhi V. CIT, Dehradun

ITA 5750/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97085 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-08-2015
• Assessment Year: misc
• Appeal Filed On: 28-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SAROHA
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A .NO. - 5750 /DEL/201 3 M/S GURUKRIPA EDUCATION TRUST, C/O - M/S RRA TAXINDIA, D - 28, SOUTH EXTENSION, PART - I, NEW DELHI - 110049. PAN - AABTG4339B (APPELLANT) VS CIT, DEHRADUN (RESPONDENT ) APPELLANT BY SH. TARUN, ADV. RESPONDENT BY SH.A.K.SAROHA, CIT DR ORDER PER DIVA SINGH, JM TH IS IS AN APPEAL FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE ORDER DATED 30.08.2013 OF CIT, DE HRADUN PASSED U/S 12AA(1)(B)(II) ON VARIOUS GROUNDS. HOWEVER, THE PARTIES WERE HEARD ONLY IN RESPECT TO GROUND NOS.2 & 4 WHICH READ AS UNDER: - 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE LD.CIT HAS ERRED IN LAW AND ON FACTS IN REJECTING THE APPLICATION OF APPELLANT TRUST U/S 12AA AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT CONSIDERING THE SUBMISSION AND EVIDENCES OF THE ASSESSEE AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING. 4. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ACTION OF LD.CIT IN REJECTING THE REGISTRATION UNDER SECTION 12AA WHICH IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AS THE IMPUGNED ORDER HAS BEEN PASSED WITHOUT GRANTING ADEQUATE OPPORTUNITY OF HEARING AND BY RECO RDING INCORRECT FACTS AND FINDINGS AND THE APPELLANT TRUST OUGHT TO HAVE BEEN GRANTED THE BENEFIT OF REGISTRATION UNDER THE LAW. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE MOVED AN APPLICATION DATED 12.02.2013 FOR REGISTRATION U/S 12A(A) ALONGWITH ENCLOSURES . THE LD. CIT, DEHRADUN REQUIRED THE ASSESSEE TO FILE THE FOLLOWING INFORMATION: - DATE OF HEARING 20 .0 8 .2015 DATE OF PRONOUNCEMENT 28 .0 8 .2015 I.T.A .NO. - 5750/ DEL/201 3 PAGE 2 OF 5 1. DETAILS REGARDING TRUST MEMBERS WHERE PAN IS NOT AVAILABLE, WARD/DESIGNATION OF THE ASSESSING OFFICER UNDER WHOSE JURISDICTION ASSESSEE'S ADDRESS FALLS. 2. COPY OF MINUTES OF THE LAST BOARD MEETING OF THE TRUST. 3. UPDATED C OPY OF BANK ACCOUNT OF THE TRUST FOR THE LAST 3 YEARS OR FROM THE DATE OF OPENING OF THE ACCOUNT WHERE THE ACCOUNTS ARE LESS THAN THREE YEARS OLD . 4. NAMES, ADDRESSES & PAN NOS OF THE DONORS OF RS.25, 000 / - AND ABOVE. WHERE PAN OF THE DONOR IS NOT AVAILABLE, WARD/DESIGNATION OF THE ASSESSING OFFICER HAVING TERRITORIAL JURISDICTION OVER THE CASE. 5. COPY OF PAN/I.T. RETURN OF THE SOCIETY/TRUST. 6. ORIGINAL COPY OF REGISTRATION CERTIFICATE, MEMORANDUM OF ASSOCIATION & RULE & REGULATION FOR VERIFICATION. 7. EVIDENCE TO SUBSTANTIATE THAT ANY CHARITABLE WORK HAS SO FAR BEEN DONE BY THE SOCIETY/TRUST. 8. MINUTES BOOK, BOOKS OF ACCOUNT I.E. CASH BOOK, LE DGER & VOUCHER OF EXPENSES FOR VERIFICATION FOR THE LAST THREE YEARS. 9. NOTES ON ACTIVITIES WITH THE QUANTUM OF EXPENDITURE INCURRED ON DIFF ERENT CHARITABLE ACTIVITIES. 10. C OPY OF DECLARATION U/S 13(1) (C) & 13(1) (D). 11. FURNISH COPY OF AUDITED ACCOUNTS/RECEIPT AND PAYMENT ACCOUNT FOR THE LAST THREE YEARS OR WHICHEVER IS APPLICABLE. 3. T HE COMMISSIONER TAKES NOTE OF THE FACT THAT THE ASSESSEE WAS RUNNING A POLYTECHNIC INSTITUTE IN THE NAME OF GET POLYTECHNIC HAVING 6 BRANCHES AFFILIATED TO UTTARANCHAL BOARD OF TECHNICAL EDUCATION, ROORKEE . C ONSIDERING THE CLAIM OF THE ASSESSEE THAT IT WAS STARTED WITH A CORPUS FUND OF RS.2,11,00,000/ - THE COMMISSIONER OBSERVED THAT TH E TRUST CONSISTED OF TWO TRUSTEE MEMBERS AND A C HAIRMAN WHE REIN ALL CLAIMED TO BE AGRICULTURIST AND HENCE NOT ASSESSED TO TAX. THE ASSESSEE SOCIETY WAS REQUIRED TO EXPLAIN THE SOURCE OF CORPUS FUNDS OF RS.2,11,00,000/ - . 4. IN RESPONSE THERETO THE ASSESSEE SUBMITTED THE FOLLOWING REPLY BEFORE THE COMMISSIONER : - ' WE BELONG TO A FAMILY IN WHICH THE LAND HOLDINGS THOUGH SHOWN IN LAND KHATAUNI ENCLOSED SEPARATELY ARE NOT IN FACT DIVIDED AND JOINTLY CULTIVATED BY VARIOUS FAMILY MEMBERS. THE LIST IS ENCLOSED AT 9 TO 36. THE FAMILY DECIDED TO ESTABLISH AN EDUCATION INSTI TUTE IN THE NAME OF GURU KRIPA EDUCATION TRUST AND LATE SHRI MAHINDER SINGH DHILLON BECAME THE MEMBER AND NAMED SHRI HARWANT SINGH DHILLON AND MANDEEP SINGH DHILLON BOTH OF THEM SON AND GRANDSON OF LATE SH R I MAHINDER SINGH DHILLON AS TRUSTEES. AS A MATTER OF FACT, NORMALLY THE TRUST CONSISTS OF 3 PERSONS I.E. OUR CHAIRMAN AND 2 TRUSTEES, AS SUCH ALL THE FAMILY MEMBERS WERE NOT INDUCTED INTO THE TRUST. THE FAMILY OWNS AROUND 489 ACRES OF THE LAND I.E. AROUND 2400B OF THE LANDHOLDINGS, WE GROW A VARIETY OF CROPS INCLUDING PLANTATION OF POPLAR/UCLIPTUS TREES, SUGARCANE, RICE, GRAINS, MUSTARD ETC. THE I.T.A .NO. - 5750/ DEL/201 3 PAGE 3 OF 5 CROPPING PATTERNS IN OUR AREA IS THAT, WE TAKE ATLEAST 2 CROPS AT ONE TIME E.G. IN THE CROP OF SUGARCANE WE ALSO TAKE THE CROP OF OIL SEEDS. THE LANDS ARE VERY FERTILE AND THERE IS NO NEED OF AGRICULTURE LIST AND SEPARATE OTHER THAN AGRICULTURE. THE FUNDS ARE MAINTAINED AS A COMMON POOL. SINCE THE LANDS ARE JOI NTLY USED, ALL THE FAMILY REQUIREMENTS ARE MET THROUGH COMMON FUNDS. SINCE THE AGRICULTURE INCOME IS NOT TAXABLE, IT IS NOT ROUTED THROUGH BANK ACCOUNTS.' 4 .1. THE SAID INFORMATION WAS CONSIDERED TO BE NOT VERIFIABLE ON THE BASIS OF RECORD S AND DOCUME NT PRODUCED WHEREIN THE LIST OF DONOR WERE ALSO FOUND TO BE NOT CLEAR AND IT WAS FOUND THAT THERE WAS NO MENTION OF A SINGLE BANK ACCOUNT . ACCORDINGLY ON THE BASIS OF T H E LIMITED INFORMATION MADE AVAILABLE , T HE A S SESSEE S APPLICATION WAS REJECTED. 4 .2. THE SPECIFIC FINDING UNDER CHALLENGE IS REPRODUCED HEREUNDER: - 5. THE INFORMATION GIVEN IN THE ABOVE REPLY IS NOT VERIFIABLE AS PER RECORDS AND DOCUMENTS PRODUCED. THERE IS NO CLEAR LIST OF DONORS WHOSE FUNDS CAN BE SEEN AS SOURCING THE ACTIVITIES OF THE TRU ST. THERE IS NOT A SINGLE BANK ACCOUNT MAKING IT IMPOSSIBLE TO INVESTIGATE AND VERIFY THE SOURCES OF FUNDS. THE LIMITED INFORMATION SUPPLIED BY THE APPLICANT IS OF NO HELP. THOUGH RELATED TO EDUCATION, THE VENTURE SEEMS TO BE PURELY COMMERCIAL FROM THE FAC TS AND CIRCUMSTANCES OF THE CASE. 5 . AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6 . THE LD. AR IN SUPPORT OF THE G ROUND NOS.2 & 4 SUBMITTED THAT ADEQUATE OPPORTUNITY WAS NOT PROVIDED BY THE COMMISSIONER . INVITING ATTENTION TO THE I MPUGNED ORDER IT WAS SUBMITTED THAT THE COMMISSIONER CONSIDERING THE REPLY DATED 30.08.2013 SHOULD HAVE ATLEAST INTIMATED TO THE ASSESSEE THAT THE REPLY WAS NOT SUFFICIENT AND HE WAS NOT SATISFIED WITH THE EXPLANATION OFFERED. THUS THE ASSESSEE WOULD HA VE HAD THE OPPORTUNITY TO BRING ON RECORD WHATEVER FURTHER EVIDENCES WERE REQUIRED TO SUPPORT ITS CLAIM . 6 .1. LD. CIT. DR, MR. A.K.SAROHA STATED THAT HE HAD NO OBJECTION TO THE GRANT OF OPPORTUNITY. HOWEVER IT WAS HIS SUBMISSION THAT THE ASSESSEE SHOULD NOT BE ALLOWED TO CANVASS BEFORE THE CIT THAT BEING AN AGRICULTURIST THE MAINTENANCE OF BANK ACCOUNTS ETC IS NOT REQUIRED AND THE CORPUS FUND SHOULD BE ACCEPTED ON MERE ORAL ASSERTIONS AS IT IS NOT POSSIBLE THAT FOR SUCH A HUGE CORPUS ACCUMULATION, NO DOCU MENTARY EVIDENCE CAN BE FILED. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT EVIDENTLY THE IMPUGNED ORDER WAS PASSED ON THE VERY I.T.A .NO. - 5750/ DEL/201 3 PAGE 4 OF 5 DATE THE WRITTEN REPLY DATED 30.08.2013 WAS PLACED BY THE ASSESSEE BEFORE THE L D. CIT, DEHRADUN. ACCORDINGLY IT CANNOT BE SAID THAT AN EFFECTIVE OPPORTUNITY OF BEING HEARD WAS MADE AVAILABLE TO THE ASSESSEE. IN THE CIRCUMSTANCES WHERE TH E EVIDENCE PLACED IN RELIANCE OF ITS CLAIM WAS CONSIDERED TO BE NOT SUFFICIENT OR A DEQUATE THEN THIS FACT SHOULD HAVE BEEN COMMUNICATED TO THE ASSESSEE SO AS TO ENABLE THE ASSESSEE TO FILE ANY FURTHER EVIDENCE WHICH IT W A S IN A POSITION TO FILE. THIS OPPORTUNITY IT IS SEEN HAS NOT BEEN PROVIDED. THE LD.AR IN THE COURSE OF HIS ARGUMENTS HAS STATED THAT INCASE AN OPPORTUNITY IS PROVIDED THEN THE ASSESSEE SHALL FULLY COMPLY BY PLACING ALL NECESSARY EVIDENCES IN SUPPORT OF ITS CLAIM . 8. CONSIDER ING THESE AFORE - MENTIONED PECULIAR FACTS AND CIRCUMSTANCES AND ACTING ON THIS ORAL UNDERTAKING G IVEN BY THE LD. AR, IT IS CONSIDERED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDER . WHILE SO DIRECTING, WE ALSO FIND THAT ADDRESSING THE CONCERNS EXPRESSED BY THE LD.CIT DR, MR. A.K.SAROHA, WE ALSO DEEM IT APPROPRIATE TO DIRECT THE ASSESSEE TO PLACE ON RECO RD EVIDENCES SUBSTANTIATING ITS CLAIM IN REGARD TO THE SOURCE OF THE CORPUS. THE ASSESSEE IN THE PECULIAR FACTS OF THE PRESENT CASE MAY BE WELL ADVISED AS CAUTIONED BY THE LD. CIT DR TO NOT ONLY PLACE EVIDENCE DEMONSTRATING OWNERSHIP OF LANDHOLDING S IN THE HANDS OF THE CONCERNED PERSONS BUT ALSO EVIDENCE IN THE FORM OF JAMA BANDIS AND KHASRA GIRDHAWRI ETC. GRAM AND SAMITI RECORDS DEMONSTRATING THAT THE SPECIFIC AGRICULTURAL LANDS WERE SUBJECTED TO SUFFICIENT AGRICULTURE ACTIVITIES WHICH RESULTED IN GENERATI NG LIQUID FUNDS IN THE HANDS OF THE DONORS, MEMBERS, CHAIRMAN ETC. 9 . ACCORDINGLY FOR THE DETAILED REASONS GIVEN HEREINABOVE, THE ISSUE IS RESTORED TO THE FILE OF CIT, DEHRADUN WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVI NG THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IT IS HOPED THAT THE OPPORTUNITY SO PROVIDED TO THE ASSESSEE IS GAINFULLY UTILIZED BY MAKING FULL AND PROPER COMPLIANCE BEFORE THE LD. C IT, DEHRADUN AND IS NOT ABUSED. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 8 T H OF AUGUST , 2015. S D / - S D / - (INTURI RAMA RAO) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER I.T.A .NO. - 5750/ DEL/201 3 PAGE 5 OF 5 DATED: 2 8 /08 /2015 * AMIT KUMAR * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI