Handicraft Development Association, Moradabad V. CIT (Exemptions), Lucknow

ITA 577/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9411 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 04-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12A; 12AA

Judgement Text

1 ITA NO. 577/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 577/DEL/2016 (A.Y - N.A.) HANDICRAFT DEVELOPMENT ASSOCIATION, H-48, BEHIND SAI MANDIR, RAM GANGA VIHAR, PHASE I, KANTH ROAD, MORADABAD -244001 (PAN : AABAH 1979 D) (APPELLANT) VS CIT(EXEMPTION), 5, ASHOK MARG, LUCKNOW - 226001 ( RESPONDENT) APPELLANT BY -NONE- RESPONDENT BY SHRI J. K. MISHRA, CIT-D.R. ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX [EXEMPTION]-LUCKNOW DATED 02.11.2015 UNDER SECTION 12AA(1)(B)(II) OF THE INCOME TAX ACT, 1961. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW THE CIT (EXEMPTIONS) HAS GROSSLY ERRED IN DENYING REGISTRATION TO THE ASSESSEE SOCIETY U/S 12A(A) OF THE INCOME TAX ACT, 1961 (THE ACT) AS CLAIMED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW THE CIT (EXEMPTIONS) HAS GROSSLY ERRED IN DENYING REGISTRATION TO THE ASSESSEE SOCIETY U/S 12A(A) OF THE INCOME TAX ACT, 1961 (THE ACT) AS CLAIMED IN GROSS VIOLATION TO THE SETTLED PRINCIPLES OF LAW. DATE OF HEARING 07.01.2020 DATE OF PRONOUNCEMENT 09.01.2020 2 ITA NO. 577/DEL/2016 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW THE APPELLANTS OBJECTIVES BEING CHARITABLE IN NATURE IS CLEARLY ENTITLED FOR SEEKING REGISTRATION U/S 12A & APPELLANTS CLAIM IS SUPPORTED FROM THE DECISION OF SUPREME COURT IN THE CASE OF QUEENS EDUCATIONAL SOCIETY VS CIT (2015) 372 ITR 699 (SC) & OTHER DECISIONS. THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND / OR AMEND, MODIFY OR WITHDRAW THE GROUNDS OUTLINED ABOVE BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. THE APPLICANT SOCIETY HAS FILED AN APPLICATION FOR REGISTRATION U/S 12A(A) OF THE INCOME TAX ACT, 1961 ON 14.05.2015 WITH THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), LUCKNOW. SUBSEQUENTLY, THE APPLICANT SOCIETY WAS GIVEN AN OPPORTUNITY OF BEING HEARD VIDE LETTER DATED 24.08.2015 CALLING FOR SPECIFIC QUERIES REGARDING ITS APPLICATION FOR REGISTRATION U/S 12A FOR 20.10.2015. HOWEVER, ON 20.10.2015, THE ASSESSEES REPRESENTATIVE SOUGHT AN ADJOURNMENT FOR 02.11.2015. ON 02.11.2015 THE AUTHORIZED REPRESENTATIVE OF THE SOCIETY APPEARED AND THE CASE WAS DISCUSSED WITH HIM. THE COMMISSIONER OF INCOME TAX (EXEMPTION) HAS REQUESTED THE APPLICANT TO PRODUCE SOME EVIDENCE TO SUBSTANTIATE ITS CLAIM AS REGARDS TO WHETHER IT IS ENGAGED IN SOME CHARITABLE ACTIVITIES. HOWEVER, THE APPLICANT FAILED TO PRODUCE ANY SUCH EVIDENCE. THE APPLICANT SOCIETY WAS FORMED APPARENTLY TO TRAIN THE WORKERS OF HANDICRAFT MANUFACTURERS. ACCORDING TO THE PROJECT REPORT FILED BY THE APPLICANT, INCOME FROM TRAINING AND DEVELOPMENT HAS BEEN ESTIMATED AT RS.200.82 LAKHS IN THE FIRST YEAR WITH AN INCREASE OF 35% PER ANNUM. ACCORDINGLY NET INCOME DURING THE FIRST YEAR WAS SHOWN AT RS. 94.30 LAKHS. ACCORDINGLY, IN THE 5 TH YEAR OF OPERATION NET INCOME OF RS.743.52 LAKHS HAS BEEN PROJECTED FROM GROSS RECEIPTS FROM TRAINING FOR RS.885.62 LAKHS. THIS APPARENTLY SHOWS THAT THIS ASSOCIATION HAS BEEN FORMED WITH THE SOLE OBJECTIVE OF EARNING PROFIT AND NOT FOR ANY CHARITABLE PURPOSE AS HELD BY COMMISSIONER OF INCOME TAX (EXEMPTION) AND THUS REJECTED THE REGISTRATION SOUGHT BY THE APPLICANT. 4. BEING AGGRIEVED BY THE ORDER U/S 12AA(1)(B)(II) OF THE ACT, THE ASSESSEE FILED PRESENT APPEAL BEFORE US. 3 ITA NO. 577/DEL/2016 5. AT THE TIME OF HEARING NONE APPEARED DESPITE GIVING SEVERAL NOTICES AND WHICH WERE DULY SERVED TO THE APPLICANT SOCIETY. THEREFORE, WE ARE PROCEEDING ON THE BASIS OF THE ORDER DATED 02.11.2015 AND THE GROUNDS OF APPEAL. THE LD. DR RELIED UPON THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTION). 6. WE HAVE HEARD THE LD. DR AS WELL AS PERUSED THE ORDER U/S 12AA(1)(B)(II) DATED 02.11.2015 AND FOUND THAT APPLICANT SOCIETY HAS FAILED TO PRODUCE ANY EVIDENCE AS TO THE CLAIM OF THE OBJECTS OF ASSESSEE THAT THE ACTIVITIES OF THE SOCIETIES ARE CHARITABLE IN NATURE. THE APPLICANT SOCIETY RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF QUEENS EDUCATIONAL SOCIETY VS. CIT (2015) 372 ITR 699 (SC), BUT THE SAME DECISION WILL BE APPLICABLE WHEN THERE WAS NO OPPORTUNITY WAS GIVEN TO THE APPLICANT SOCIETY THEREIN TO PRODUCE THE EVIDENCE AND DEFEND THE CASE OF THE SOCIETY. IN THE PRESENT CASE, THE APPLICANT SOCIETY WAS GIVEN PROPER OPPORTUNITY DESPITE THAT THE APPLICANT SOCIETY FAILED TO PRODUCE EVIDENCES IN ACCORDANCE TO ESTABLISH ITS OBJECTS OF CHARITABLE ACTIVITIES AND ALSO NOT PRODUCED THE BOOKS OF ACCOUNTS WHICH ARE NECESSARY IN DETERMINING WHETHER THE APPLICANT SOCIETY IS ALLOWED FOR REGISTRATION U/S 12AA OR NOT. IN LIGHT OF THIS THE DECISION OF THE HONBLE SUPREME COURT WILL NOT BE APPLICABLE. THUS, THE COMMISSIONER OF INCOME TAX (EXEMPTION) IS RIGHT IN REJECTING THE APPLICATION OF THE APPLICANT SOCIETY. HENCE, APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH DAY OF JANUARY, 2020 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/01/2020 PRITI YADAV, SR. PS * 4 ITA NO. 577/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 0 7 . 01 .20 20 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 0 8 .01.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 0 9 .01.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 0 9 .01.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 0 9 .01.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 0 9 .01.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 0 9 .01.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 9 .01.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK