M/s Pendurthy Venkata Subbaiah Chowdary and Saradamba Memorial Trust, Secunderabad V. DIT (E), Hyderabad

ITA 598/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74514 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: A V RAGHURAM
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA.NO.598/HYD/2013 M/S. PENDURTHY VENKATA SUBBAIAH CHOWDARY AND SARADAMBA MEMORIAL TRUST, HYDERABAD PANAEHPP6537Q VS. DIRECTOR OF INCOME TAX (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.V. RAGHURAM FOR RESPONDENT : SHRI D.SUDHAKAR RAO DATE OF HEARING : 28.11.2013 DATE OF PRONOUNCEMENT : 17.01.2014 ORDER PER SAKTIJIT DEY, J.M. THIS APPEAL FILED BY THE ASSESSEE TRUST AGAINST T HE ORDER OF THE DIT(E), HYDERABAD DATED 31.12.2012 IN REFUSING TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT . 2. THERE IS A DELAY OF 28 DAYS IN FILING THE APPEA L. THE ASSESSEE HAS FILED A DELAY CONDONATION PETITION ALO NG WITH AN AFFIDAVIT STATING THE REASONS FOR DELAY. AFTER CONS IDERING THE SAME, WE ARE INCLINED TO CONDONE THE DELAY AND ADMI T THE APPEAL FOR HEARING ON MERIT. 3. BRIEFLY, THE FACTS ARE, THE ASSESSEE TRUST APPL IED IN FORM NO. 10A AND 10G SEEKING REGISTRATION UNDER SEC TION 12A AND APPROVAL UNDER SECTION 80G ON 23.01.2009 BEFORE THE DIT(E). THE APPLICATIONS WERE REJECTED BY THE DIT(E ) ON THE GROUND THAT THE TRUST HAS NOT COMMENCED ITS ACTIVIT Y. AGAINST 2 ITA.NO.518/HYD/2013 M/S. PENDURTHY VENKATA SUBBAIAH CHOWDARY AND SARADAMBA MEMORIAL TRUST, HYDERABAD. THE AFORESAID ORDER OF REJECTION DATED 06.05.2009 O F THE DIT(E), THE ASSESSEE PREFERRED AN APPEAL BEFORE THE ITAT, H YDERABAD BENCHES. THE ITAT VIDE ORDER DATED 26.03.2010 PASSE D IN ITA.NO.998/HYD/2009 REMITTED THE MATTER BACK TO THE FILE OF DIT(A) TO ONLY SATISFY HIMSELF ABOUT THE GENUINENES S OF THE ACTIVITIES CARRIED ON BY THE ASSESSEE. WHILE DOING SO, THE TRIBUNAL MADE IT CLEAR THAT COMMENCEMENT OF BUSINES S BY THE TRUST IS NOT THE PREREQUISITE TO GRANT REGISTRATION UNDER SECTION 12A AND APPROVAL UNDER SECTION 80G OF THE ACT. 4. IN THE PROCEEDING TAKEN-UP IN PURSUANCE TO THE DIRECTION OF THE ITAT, THE DIT(E) CALLED UPON THE A SSESSEE TO SUBMIT A NOTE ABOUT THE SPECIFIC ACTIVITIES CARRIED OUT BY THE ASSESSEE ALONG WITH OTHER DETAILS. HE FURTHER ASKED THE ASSESSEE TO EXPLAIN AS TO HOW THE PAYMENTS AND EXPE NDITURE MADE BY THE TRUST ARE REFLECTED IN THE BANK ACCOUNT OF THE TRUST AND TO PRODUCE ITS BOOKS OF ACCOUNTS. IN RESP ONSE TO THE QUERY MADE BY THE DIT(E) THE ASSESSEE EXPLAINED THE NATURE OF ITS ACTIVITIES AND ALSO PRODUCED COMPUTERISED ACCOU NT COPIES PERTAINING TO THE FINANCIAL YEARS 2008-09 AND 2009- 10. ON EXAMINING THE ACCOUNT COPIES THE DIT(E) NOTED THAT AS PER CORPUS FUND ACCOUNT, THE OPENING BALANCE AS ON 01.0 4.2009 WAS SHOWN AT RS.10,05,004/-. IN THE FIXED DEPOSIT ACCOUNT THE OPENING BALANCE IS SHOWN AT RS.10,00,000/-. HE FURTHER NOTED THAT IN INTEREST ON FD ACCOUNT AND INTEREST O N SB ACCOUNT CLOSING BALANCE OF RS.94,421/- AND RS.2127/ - RESPECTIVELY WERE SHOWN. IN THE ACCOUNT RELATING TO SYNDICATE BANK OPENING DEBIT BALANCE OF RS.19,204/- HAS BEEN SHOWN AND CLOSING BALANCE BOTH FROM INTEREST ON FD AND IN TEREST ON SB ARE SHOWN AT RS.1,15,753/-. FROM THIS, THE DIT( E), INFERRED THAT THERE WAS NO OUTGOING/EXPENDITURE EIT HER DURING 3 ITA.NO.518/HYD/2013 M/S. PENDURTHY VENKATA SUBBAIAH CHOWDARY AND SARADAMBA MEMORIAL TRUST, HYDERABAD. THE FINANCIAL YEAR 2008-2009 OR 2009-2010. HE FURTH ER OBSERVED THAT THE CORPUS FUND OF RS. 10 LAKHS HAS N OT BEEN DEPOSITED IN THE BANK ACCOUNT OF THE TRUST. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED SEPARATE BOOKS OF ACCOUNTS. THE DIT(E) ULTIMATELY REJECTED THE APPLIC ATIONS OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT CO MMENCED ITS ACTIVITIES. 5. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE MATERIALS ON RECORD. THERE IS NO DENYIN G THE FACT THAT ON THE EARLIER OCCASION WHEN THE DIT(E) HAD RE FUSED TO GRANT REGISTRATION ON THE GROUND OF NON-COMMENCEMEN T OF ACTIVITIES THE TRIBUNAL HAS HELD THAT COMMENCEMENT OF ACTIVITIES BY THE TRUST IS NOT A PREREQUISITE TO GR ANT REGISTRATION AND APPROVAL UNDER SECTIONS 12A AND 80G OF THE ACT. THE TRIBUNAL HAD REMITTED THE MATTER BACK TO THE DIT(E) TO EXAMINE THE GENUINENESS OF THE ACTIVITIES CARRIED O N BY THE ASSESSEE. HOWEVER, AS CAN BE SEEN FROM THE IMPUGNED ORDER PASSED BY THE DIT(E), ASSESSEES APPLICATIONS FOR G RANT OF REGISTRATION UNDER SECTION 12A AND APPROVAL UNDER S ECTION 80G HAVE AGAIN BEEN REJECTED ON THE VERY SAME GROUND OF NON- COMMENCEMENT OF ACTIVITIES BY THE TRUST, THEREBY, C OMPLETELY IGNORING THE DIRECTIONS OF THE TRIBUNAL. WHEN THE A SSESSEE HAS PRODUCED ALL FACTS RELATING TO THE ACTIVITIES OF TR UST AND ALSO ITS FINANCIAL STATEMENTS AND THERE IS NO ADVERSE FINDIN G BY THE DIT(E) WITH REGARD TO THE GENUINENESS OR NATURE OF ACTIVITY OF THE TRUST, IT IS TO BE PRESUMED THAT THE DIT(E) ACC EPTS THE TRUST TO BE GENUINE. IN THESE CIRCUMSTANCES, THE RE JECTION OF ASSESSEES APPLICATION FOR GRANT OF REGISTRATION CA NNOT BE SUSTAINED. THE DIT(E)S OBSERVATION THAT THE CORPUS FUND OF RS. 10 LAKHS HAS NOT BEEN DEPOSITED IN THE BANK ACCOUNT IS ALSO 4 ITA.NO.518/HYD/2013 M/S. PENDURTHY VENKATA SUBBAIAH CHOWDARY AND SARADAMBA MEMORIAL TRUST, HYDERABAD. WITHOUT ANY BASIS AS FACTS ON RECORD CLEARLY PROVE THAT THE SAID CORPUS FUND WAS DEPOSITED IN A FD ACCOUNT WITH THE BANK. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE DIT(E) TO GRANT REGISTRATION UNDER SE CTION 12A OF THE CT TO THE ASSESSEE. WE FURTHER DIRECT THE DIT(E ) TO GRANT APPROVAL UNDER SECTION 80G TO THE ASSESSEE SUBJECT TO FULFILMENT OF CONDITIONS MENTIONED IN CLAUSES (I) T O (V) OF SECTION 80G(5) OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 17.01.2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 17 TH JANUARY, 2014 VBP/- COPY TO 1. M/S. PENDURTHY VENKATA SUBBAIAH CHOWDARY AND SARADAMBA MEMORIAL TRUST, HYDERABAD, C/O. K. VA SANT KUMAR, ADVOCATE, 610, BABUKHAN ESTATES, BASHEER BAGH, HYDERABAD 500 001. 2. DIT(E), HYDERABAD. 3. ADIT(E)-II, HYDERABAD. 4. D.R. B BENCH, ITAT, HYDERABAD.