SIKH EDUCATIONAL COUNCIL, HOSHIAR PUR V. COMMISSIONER OF INCOME TAX (EXEMPTION ), CHANDIGARH

ITA 580/ASR/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0529 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-12-2019
• Assessment Year: 2018-2019
• Appeal Filed On: 23-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Benefit of exemption; Set aside
• Section: 12A; 12AA; 72; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. K. CHOUDHRY, JUDICIAL MEMBER AND SH. O. P. MEENA ACCOUNTANT MEMBER I.T.A. NO. 580/ASR/2018 ASSESSMENT YEAR: SIKH EDUCATIONAL COUNCIL, VPO MAHILPUR, HOSHIARPUR [PAN: AAGAS 9970E] VS. CIT (EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SURINDER MAHAJAN (C. A.) RESPONDENT BY: SH. ALOK KUMAR CIT-DR DATE OF HEARING: 16.12.2019 DATE OF PRONOUNCEMENT: 18.12.2019 ORDER PER O. P. MEENA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH (IN SHORT CIT(E)) DATED 30.09.2018 PASSED U/S 12AA(1)(B)(II) OF THE I.T. AC T, 1961 (IN SHORT I.T. ACT). 2. GROUND NO. 1 AND 2 STATES THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(EXEMPTIONS) HAS ERRED IN LAW AND ON FACTS I N REJECTING THE APPLICATION U/S 12AA(1)(B)(II) OF THE ACT WHICH IS WHOLLY AGAINST T HE LAW AND ON FACTS, HENCE THE REGISTRATION SHOULD HAVE BEEN GRANTED. 3. THE ASSESSEE TRUST FILED AN APPLICATION FOR REGI STRATION U/S 12A OF THE ON 28.03.2018 BEFORE CIT(E) CHANDIGARH. THE CIT(E) HAS REFERRED THE PROVISIONS OF SECTION 12AA AND OBSERVED THAT THERE ARE TWO BASIC CONDITIONS FOR GRANT OF ITA NO. 580/ASR/2018 (AY) SIKH EDUCATIONAL COUNCIL V. CIT(E) 2 REGISTRATION U/S 12AA. THE SAME INCLUDE, APART FROM THE EXAMINATION OF OBJECTS OF THE SOCIETY, SATISFACTION OF THE COMPETENT AUTHORIT Y IN RESPECT OF GENUINENESS OF ACTIVITIES AS WELL PARTICULARLY WHEN THE APPLICANT IS AN ONGOING ENTITY. THEREFORE CIT VIDE LETTER DATED 26.07.2018 HAS ASKED THE ASSE SSEE TO FURNISH VARIOUS DETAILS COVERING FROM POINT NO. (I) TO (XXIV) FIXING THE CA SE FOR HEARING OF 16.08.2018, HOWEVER AN EMAIL WAS RECEIVED FOR ADJOURNMENT WHICH WAS GRANTED FOR 06.09.2018. FURTHER QUERIES WERE RAISED ON 20.09.20 18 AND SENT THROUGH EMAIL TO THE ASSESSEE AND WHICH REPLY WAS FILED ON 24.09.201 8. AFTER PERUSAL OF THE REPLY OF THE ASSESSEE, THE CIT(E) EXEMPT NOTED THAT THE APPL ICATION HAS NOT PROVIDED THE DETAILS ASKED IN THE ADDITIONAL QUERIES: 7. IN RESPONSE TO THE ADDITIONAL QUERIES THE APPLI CANT SOCIETY SUBMITTED THE REPLY THROUGH E-MAIL ON 24.09.2018. THE APPLICANT SOCIETY WITH REGARDS TO FIRST QUERY STATED THAT THE SOCIETY WAS FORMED ON 07.07.1951 AND WAS R UNNING A COLLEGE IN THE NAME AND STYLE OF SGGS KHALSA COLLEGE SINCE THEN WHICH WAS C OVERED UNDER 95% GRANT IN AID SCHEME OF DPI COLLEGES, PUNJAB. THE APPLICANT SOCIE TY ALSO STATED THAT THE HON'BLE PRIME MINISTER OF INDIA OFFERED A HENCE TO SUCH NON COMPLYING ASSESSES THROUGH INCOME DECLARATION SCHEME 2016 TO PAY CERTAIN PERCENTAGE O F TAX ALONGWITH INTEREST AND PENALTIES AND GET A RELIEF ACCORDING FROM THE INCOM E TAX DEPARTMENT FOR WHATEVER OMISSIONS OR COMMISSIONS BEING DONE FROM TIME TO TI ME. WE ACCEPTED THE SAME AND OFFERED OUR INCOME FOR ASSESSMENT YEARS 2009-10 TO 2015-16 TO TAX. ALSO, THE SURPLUS FROM RUNNING OF VARIOUS INSTITUTES IN THE PRIMARY S OURCE OF INCOME OF OUR SOCIETY EARNED FROM VARIOUS PROPERTIES BEING VESTED IN THE NAME OF THE SOCIETY. ON PERUSAL OF THE REPLY IT WAS OBSERVED THAT THE APPLICANT SOCIETY HAS NOT FIL ED ANY INCOME TAX RETURNS SINCE ITS INCEPTION. THE APPLICANT SOCIETY DECLARED ITS INCOM E THROUGH INCOME DECLARATION SCHEME 2016 TO PAY CERTAIN PERCENTAGE OF TAXES. IT IS ASSU MED THAT IF THE GOVERNMENT DOESN'T OFFER INCOME DECLARATION SCHEME, THE APPLICANT SOCI ETY MAY NOT COME OUT TO DECLARE ITS UNDISCLOSED INCOME. THE ENTITY DOESN'T CARE ABOUT T HE REGULATORY PROCESSES AND THE NEED FOR ADHERENCE TO THE TAX LAWS. IN CONTEXT TO A QUER Y REGARDING REGISTRATION AFTER A GAP OF 67 YEARS, THE APPLICANT SOCIETY REMAINED SILENT. IT IS FURTHER PERTINENT TO MENTION THAT THE ITA NO. 580/ASR/2018 (AY) SIKH EDUCATIONAL COUNCIL V. CIT(E) 3 APPLICANT SOCIETY IS SEEKING REGISTRATION AFTER A L ONG GAP OF 67 YEARS AND ONLY DETAILS OF THE PRESENT MEMBERS OF THE SOCIETY HAVE BEEN FURNIS HED. IT IS DIFFICULT TO ASCERTAIN HOW THE MANAGEMENT AND COMPOSITION OF THE GOVERNING BODY OF THE SOCIETY HAVE EVOLVED OVER 67 YEARS AND WHETH ER THE SAME ADHERE TO THE REQUIREMENTS OF THE SOCIETY'S REGISTRATION ACT . MOREOVER, THE CONTENTION OF APPLICANT FOR SEEKING REGISTRATION AFTER 67 YEARS IS NOT ACCEPTAB LE ALSO SINCE THE NORMAL MEANING ACCORDED TO THE WORD REGISTRATION IN OTHER ACTS MEA NS AT THE INITIAL STAGE OR INCIPIENT STAGE. ON PERUSAL, THE CIT(E) OBSERVED THAT IN ABSENCE OF DISSOLUTION CLAUSE, THE PRESUMPTION OF LAW IN THAT THEREFORE CIT(E) OBSERVE D THAT THE ONUS LIES ON THEM TO PROVIDE ALL RELEVANT INFORMATION BUT IN ABSENCE OF SPECIFIC RESPONSE TO THE QUERIES RAISED THE PRESUMPTIONS INHERENT THEREIN THE GENUIN ENESS OF THE ACTIVITIES OF THE SOCIETY CANNOT BE ASCERTAINED. ACCORDINGLY, THE APP LICATION FOR REGISTRATION IN FORM NO. 10A FOR REGISTRATION U/S 12AA OF THE ACT WAS RE JECTED. 4. BEING AGGRIEVED THE APPLICANT FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE MADE APPLICATIO N FOR REGISTRATION OF SOCIETY AFTER GAP OF 57 OF YEARS. THEREFORE THE FIRST REASO N FOR DENIAL OF THE REGISTRATION U/S 12AA OF THE ACT I.E. MAKING APPLICATION WAS SUBMITT ED AFTER 67 YEARS SINCE FORMATION OF THE SOCIETY. THE COUNSEL CONTENDED THA T THERE IS NO PROVISIONS IN SECTION 12AA WHICH BARS THE ASSESSEE FOR MAKING AN APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT IN ANY YEAR IN SUPPORT OF THE CONTE NTION. THE LD. COUNSEL HAS PLACED RELIANCE ON THE DECISION IS AS UNDER: A) GURU NANAK EDUCATIONAL BOARD VPO DHESIAN SANG, TEHSIL PHILLAUR VS CITITA NO. 188/ASR/2018 B) CIT VS ADVAIT SWAROOP ASHRAM SOCIETY 211 TAXMAN 311/ALL HC ITA NO. 580/ASR/2018 (AY) SIKH EDUCATIONAL COUNCIL V. CIT(E) 4 THE LD. COUNSEL FURTHER SUBMITTED THAT IT IS A SETT LED PRINCIPLE OF LAW THAT FOR THE PURPOSE OF GRANT OF REGISTRATION U/S 12AA. THE CIT( E) IS TO EXAMINE WHETHER THE OBJECTS OF THE ASSESSEE ARE CHARITABLE IN NATURE AN D EXAMINATION OF THE GENUINENESS OF THE ACTIVITIES FOR WHICH THE ASSESSEES COUNSEL H AS RELIED ON THE FOLLOWING CASE LAWS: A. CIT VS. SHIRDI SAI DARBAR CHARITABLE TRUST (DHARAMS HALA) (2017) 395 ITR 0567 (P&H) B. DHARMA SANSTHAPAK SANGH (NIYAS) VS. CIT (2008) 13 DTR 0589, (2008) 118 TTJ 0823 C. GREEN ACRES EDUCATIONAL TRUST VS. DY CIT (2016) 182 TTJ 0537 (MUMBAI) D. GLOBAL ACADEMY OF EMERGENCY MEDICINE VS. CIT (EXEMP TION) (2018) 31 CCH 0531 DEL TRIB E. LORD SHIVA EDUCATIONAL WELFARE SOCIETY VS. CIT (EXE MPTION) (2018) 72 ITD 0429 ((AMRITSAR-TRIB) IN VIEW OF ABOVE, THE LD COUNSEL CONTENDED THAT THE STATUTORY REQUIREMENT FOR REGISTRATION U/S 12AA OF THE ACT WERE SUBMITTED TO LD. CIT(E), HOWEVER JUST BECAUSE THE ASSESSEE DID NOT PROVIDED CERTAIN DETAI LS SINCE THE ATTACHMENT WITH THE E-MAIL COULD NOT BE SENT, IT CANNOT BE THE GROUND F OR REJECTION OF APPLICATION FOR WHICH THE LD. COUNSEL HAS PLACED RELYING ON THE DEC ISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CITY MOTESSORI SCHOOL V. UNION OF INDIA [2009] 225 CTR 188. THE LD COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE DECLARED AN INCOME UNDER DECLARATION SCHEME DOES NOT MEAN THAT THE ACTIVITIE S OF THE ASSESSEE ARE NOT GENUINE AND ARE NOT CHARITABLE IN NATURE. IT WAS FURTHER SU BMITTED THAT THE UTILIZATION OF FUND IN THE EVENT OF DISSOLUTION OF THE SOCIETY IS AN EV ENT WHICH ARE YET TO TAKE PLACE, HENCE, IF AT ALL ABSENCE OF DISSOLUTION CLAUSE IS C ONSIDERED AS A DEFECTS. SUCH DEFECT ITA NO. 580/ASR/2018 (AY) SIKH EDUCATIONAL COUNCIL V. CIT(E) 5 IS CURABLE ONE FOR WHICH RELIANCE WAS PLACED ON THE DECISION OF ST. KABIR EDUCATIONAL SOCIETY V. CBDT [2014] 366 ITR 378 (P&H). IT WAS FURTHER SUBMITTED THAT THE ASSESSEE IS IN PROCESS OF INCLUDING THE CL AUSES PERTAINING TO DISSOLUTION AND THE BENEFICIARIES IN THE MOA. 5. PER CONTRA THE LEARNED CIT-DR SUPPORTED THE ORDE R OF THE CIT(E). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(E) HAS DENIED THE REGISTRATION U/S 12AA OF THE ACT AS THE APPLICATION HAS BEEN MADE AFTER 67 YEARS, HO WEVER WE ARE OF THE CONSIDERED OPINION THAT THERE IS NO BAR IN SECTION 12AA FOR MA KING APPLICATION OF REGISTRATION U/S 12AA OF THE ACT IN ANY YEAR. THE TRUST WAS CONS TITUTED BY THE INDENTING AND WAS REGISTERED UNDER THE SOCIETIES ACT. THE CIT(E) CANNOT EXAMINE THE OBJECTS OF THE TRUST WHICH IS AT PREMATURE STAGE. THE LD. COUN SEL HAS PLACED RELIANCE ON THE DECISION OF CIT V. SHIRDI SAI DARBAR CHARITABLE TRUST (DHARAMSHALA) [2017] 395 ITR 567 (P&H). WHEREIN THE HONBLE HIGH COURT HAS H ELD THAT WHILE GRANTING REGISTRATION U/S 12AA OF THE ACT. CONDITIONS AS PRO VIDED IN SECTION 14 ARE ELSEWHERE ARE TO BE SEEN BY THE ASSESSING OFFICER, AT THE TIME OF ASSESSMENT PROCEEDINGS ON EARLY BASIS AND NOT BY THE CIT(E) WH ILE GRANTING REGISTRATION U/S 12A OF THE ACT. WHILE GRANTING REGISTRATION U/S 12A OF THE ACT, THE ONLY REQUIREMENT AS STATED ARE WITH RESPECT TO THE CHARI TABLE NATURE OF THE OBJECT OF THE ASSESSEES AND THE GENUINENESS OF THE ACTIVITIES. TH E LD. COUNSEL ALSO PLACED RELIANCE ON VARIOUS CASE LAWS AS MENTIONED ABOVE WH ICH ALSO SUPPORTS ITS CASE. IN VIEW OF THESE FACTS, WE FIND THAT THE REGISTRATION OF TRUST U/S 12AA DOES NOT INVOLVE ENQUIRY INTO THE ACTUAL ACTIVITIES OR APPLICATION O F THE FUNDS ETC. THEREFORE, AT THIS STAGE THE ONLY ENQUIRY REQUIRED TO BE CONDUCTED WAS WITH RESPECT TO THE OBJECT OF THE TRUST ALONE. THE DETAILS CALLED FOR BY THE CIT( E) PERTAINED TO THE MATTERS THAT MAY BE EXAMINED AT THE STAGE OF THE ASSESSMENT. AT THIS STAGE, IF THE ASSESSEE WERE ITA NO. 580/ASR/2018 (AY) SIKH EDUCATIONAL COUNCIL V. CIT(E) 6 TO BE FOUND TO HAVE ACTUALLY ENGAGED IN NON CHARITA BLE ACTIVITY. THE BENEFIT OF EXEMPTION MAY BE DENIED AT THIS STAGE IN THE MANNER PROVIDED BY THE ACT. WE FIND THAT THE ASSESSEE HAS NOW INCLUDED THE CLAUSES PERT AINING TO DISSOLUTION AND BENEFICIARIES IN THE MOA. IN THE LIGHT OF ABOVE FAC TS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER OF REGISTRAT ION U/S 12AA SHOULD BE SET ASIDE TO FILE OF THE CIT(E) FOR EXAMINATION THE BASIC FAC TS AND PASS A FRESH ORDER, IN THE LIGHT OF THE DETAILS FAILED BY THE ASSESSEE AND THE RATIO LAID DOWN IN THE AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT. THIS APPEAL IS THEREFORE ALLOWED AND SET ASIDE FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 18, 2019 SD/- SD/- (N. K. CHOUDHRY) (O. P. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 18.12.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS), (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER