People Cause Foundation, Lucknow V. Commissioner of Income Tax (Exemption), Lucknow

ITA 60/LKW/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 8891 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 23-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S MINHAS
• Assessee Lawyers: A K AGARWAL
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 60/LKW/2018 ASSESSMENT YEAR: N.A. PEOPLE CAUSE FOUNDATION 504/3, TAGORE MARG DALIG ANJ LUCKNOW V. CIT (EXEMPTION) LUCKNOW T AN /PAN : AAICP4789J (APP LICA NT) (RESPONDENT) APP LIC ANT BY: SHRI A. K. AGARWAL, ADVOCATE RESPONDENT BY: SHRI J.S. MINHAS, CIT (DR) DATE OF HEARING: 27 0 9 201 8 DATE OF PRONOUNCEMENT: 28 0 9 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : T HIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (EXEMPTIONS), LUCKNOW DATED 13/12/2017 AS PER FOLLOWING GROUNDS OF APPEAL: - THAT SINCE THE ORDER NO: ITBA/EXM/S/EXM2/2017 - 18/ 1 007951708(1) PASSED BY THE RESPONDENT IN REJECTING THE APPLICATION NO: CIT EXEMPTION, LUCKNOW/2017 - 18/80G/10187 FILED ON 20.06.2017 BY THE APPELLANT SEEKING THE REGISTRATION UNDER SECTION 80G(5) OF THE INCOME TAX ACT, 1961 IS NOT ONLY AGAINST LAW AND FACTS ON RECORDS BUT ALSO TOTALLY ARBITRARY, UNJUST, UNFAIR, AGAINST THE JUDICIAL PRECEDENTS, CONTRARY AND PERVERSE TO THE MATERIAL ON RECORD BESIDES FLOUTING THE PROVISIONS OF STATUTORY LAWS, THE APPELLANT IS PREFERRING APPEAL UNDER SECTION 253 (1) (C) OF THE INCOME TAX ACT, 1961 BEFORE THE HON'BLE INCOME - TAX ITA NO.60/LKW/2018 PAGE 2 OF 8 APPELLATE TRIBUNAL, LUCKNOW ON THE FOLLOWING AMONGST OTHER GROUNDS : 1. THAT THE APPELLANT 'PEOPLE CAUSE FOUNDATION' IS A CHARITABLE COMPANY LIMITED BY SHARES INCORPORATED UNDER SECTION 8 OF THE 'COM PANIES ACT, 2013'. THE CERTIFICATE OF INCORPORATION (CIN) OF THE APPELLANT BEARING NUMBER 'U74900UP2016NPL076496' DATED 12/02/2016 AND SECTION 8 LICENCE NUMBER : 106343 DATED 27/01/2016 ARE GRANTED TO THE APPELLANT BY THE REGISTRAR OF COMPANIES (ROC), KANP UR UNDER THE AEGIS OF GOVERNMENT OF INDIA - MINISTRY OF CORPORATE AFFAIRS. 2. THAT THE REGISTRATION UNDER SECTION 12A OF THE INCOME TAX ACT, 1961 HAS ALREADY BEEN ACCORDED TO THE APPELLANT ON 07.09.2016 VIDE REGISTRATION NO. (U.R.N.)255/1485/2016 - 17. FOR THIS PURPOSE THE APPELLANT APPLIED ON THE PRESCRIBED FORM 10A ON 21.03.2016 AND FILED ADDENDUM OF 47 PAGES ON 07.09.2016 THEREFOR AS MANDATED. 3. THAT AFTER HAVING CONSIDERED THE VOUCHER OF EXPENDITURE OF RS.2,260/ - (RUPEES TWO THOUSAND TWO HUNDR ED SIXTY ONLY) INCURRED ON THE CHARITABLE ACTIVITY AND HAVING BEEN SATISFIED WITH THE GENUINENESS OF IT AND OTHER DOCUMENTS AND PHOTOGRAPHS OF THE CHARITABLE ACTIVITY, THE C.I.T. (EXEMP.) LUCKNOW ACCORDED TO THE APPLICANT/APPELLANT THE REGISTRATION UNDER S ECTION 12A OF THE I.T. ACT. NOW IN THE INSTANT PROCEEDINGS OF ACCORDING REGISTRATION U/S 80(G) OF THE I.T. ACT, 1961, THE FACTUM OF CHARITABLE ACTIVITY EXECUTED IN THE PAST AND THE EXPENDITURE INCURRED ON IT, ALREADY ACCEPTED AND ADJUDICATED UPON CANNOT BE DENIED OR DENOUNCED. 4. THAT THE CHARITABLE ACTIVITIES EXECUTED SO FAR AND THE EXPENDITURE INCURRED ON IT INTER ALIA HAVE NOT BEEN CONSIDERED AS PER THE LAW, PROCEDURE, PRACTICE AND PRECEDENTS BY THE RESPONDENT AND THE PERVERSE FINDINGS HAVE BEEN MA DE IN THE REJECTION ORDER OF THE PROCEEDINGS OF REGISTRATION U/S 80(G) OF THE I.T. ACT, 1961. ITA NO.60/LKW/2018 PAGE 3 OF 8 5. THAT AFTER HAVING APPLIED FOR REGISTRATION UNDER SECTION 80G(5)(VI) UNDER THE I.T. ACT, 1961 ON 20.06.2017, THE APPELLANT WAS MANDATED THROUGH THE CIT (E XEMPTIONS) LUCKNOW COMMUNIQUE BEARING 'F. NO. CIT (EXEMP.)/LKO/80G/310/2017 - 18/6723' DATED 31.10.2017 TO FURNISH DETAILS/INFORMATION ON 07.12.2017. IN COMPLIANCE OF THE ABOVE, THE APPELLANT SUBMITTED DOCUMENTS CONTAINING ALL THE REQUIRED INFORMATION, DETAI LS, VOUCHERS, PHOTOGRAPHS ETC. SPREADING OVER 72 PAGES AS MANDATED. THE APPELLANT ALSO SUBSTANTIATED THE DOCUMENTARY EVIDENCE. 6. THAT VARIOUS CHARITABLE ACTIVITIES IN CONSONANCE OF THE PROVISIONS OF SECTION 2 (15) OF THE INCOME TAX ACT, 1961 AND PUR SUANT TO THE 'MEMORANDUM OF ASSOCIATION' OF THE APPELLANT HAVE BEEN EXECUTED SO FAR BY THE APPELLANT, OUT OF WHICH THE DESCRIPTION AND EVIDENCE OF FEW OF THEM ARE ON THE RECORD OF THE APPLICATION DATED 20.06.2017 AND ITS ADDENDUM DATED 07.12.2017 SUBMITTED WITH THE CIT (EXEMPTIONS), LUCKNOW FOR THE REGISTRATION UNDER SECTION 80G OF THE INCOME TAX ACT. PERTINENTLY ENOUGH TO MENTION HERE, THAT CHARITABLE ACTIVITIES ARE ACTIVITIES CARRIED OUT TO FULFILL A CHARITABLE PURPOSE ENSHRINED U/S 2(15) OF THE I.T. ACT AND PURSUANT TO 'MEMORANDUM OF ASSOCIATION' (MOA) OF THE CHARITABLE ORGANISATION SEEKING REGISTRATION U/S 80G OF THE I.T. ACT. THE QUANTUM OF MONEY SPENT ON AN ACTIVITY DO NOT RENDER IT TO QUALIFY FOR BECOMING A CHARITABLE ACTIVITY. NEEDLESS HOWEVER TO EMP HASIZE HERE, THAT THE MOA OF THE APPELLANT HAD BEEN CONSIDERED AND REASONABLY FOUND ACCORDING TO LEGAL REQUIREMENTS BY THE AUTHORITIES CONCERNED AT THE TIME OF GRANTING 'CERIFICATE OF INCORPORATION' (CIN) AND 'LICENCE' UNDER SECTION 8 OF THE 'COMPANIES ACT , 2013' AND ACCORDING REGISTRATION UNDER SECTION 12A OF THE 'I.T. ACT'. ITA NO.60/LKW/2018 PAGE 4 OF 8 7. THAT THE CHARITABLE ACTIVITIES DONE SO FAR ARE FOR THE WELFARE OF THE PEOPLE AT LARGE AND FOR COMMON GOOD ONLY WITHOUT ANY INTENTION AND/OR EFFORT TO MAKE PROFITS ON COMMERCIA L LINES FOR ANY PRIVATE INDIVIDUAL AS PER THE AVAILABLE DOCUMENTS AND EVIDENCE ON RECORD OF THE APPELLANT. 8. THAT THE EXTENT AND NATURE OF ACTIVITIES CANNOT BE EXAMINED AT THE STAGE OF REGISTRATION U/S 80G (5) OF THE I.T. ACT. MORE SO, WHEN THE REGI STRATION U/S 12A OF THE I.T. ACT HAS BEEN ACCORDED TO THE APPELLANT. 9. THAT AFTER HAVING ACCORDED THE REGISTRATION UNDER SECTION 12A OF THE I.T. ACT, THE OBJECTIVES AND/OR IDEALS INCORPORATED IN THE 'MEMORANDUM OF ASSOCIATION' OF THE APPELLANT CANNO T BE REVISITED. MORE SO, WHEN THE CHARITABLE ORGANISATION 'PEOPLE CAUSE FOUNDATION' OF THE APPELLANT HAS BEEN INCORPORATED UNDER SECTION 8 OF THE 'COMPANIES ACT, 2013'. 10. THAT NOT EVEN A SINGLE PENNY IS RECEIVED AS DONATION DURING THE FINANCIAL YEAR 2015 - 16 BY THE APPELLANT. THE FINANCIAL RECORDS OF THE F.Y. 2015 - 16 OF THE APPELLANT'S CHARITABLE COMPANY ALSO VINDICATE THE SAID FACTUM. THE CONTRARY FINDING OF THE LEARNED CIT (EXEMPTIONS), LUCKNOW IS PERVERSE ON THIS ISSUE. 11. THAT THE DONATIONS RECEIV ED BY THE APPELLANT FROM THE DAY OF ITS INCEPTION ON 12.02.2016 TILL DATE ARE OF RS.37,000/ - (RUPEES THIRTY SEVEN THOUSAND ONLY). THE STATED DONATIONS WERE RECEIVED DURING THE FINANCIAL YEAR 2016 - 17. THE DESCRIPTION OF THE SAID DONATIONS OF RS.37,000/ - IS SHOWN WITH THE AUDIT REPORT FOR THE YEAR ENDING 31ST MARCH, 2017 ANNEXED WITH THE APPLICATION AND ADDENDUM SEEKING REGISTRATION U/S 80G (5). FULL DETAILS INCLUDING THE IDENTITY OF THE DONORS OF RS.37,000/ - (RUPEES THIRTY SEVEN THOUSAND ONLY) IS DESCRIBED I N THE PARAGRAPH NO. 9 AT PAGE NO 2 OF THE ADDENDUM FILED ON 07.12.2017 BEFORE THE LEARNED C.I.T. (EXEMPTIONS), LUCKNOW IN THE PROCEEDINGS OF SEEKING REGISTRATION UNDER SECTION 80G (5) OF THE 'INCOME TAX ACT, 1961'. ITA NO.60/LKW/2018 PAGE 5 OF 8 NOTWITHSTANDING DOING ALL THIS, THE ALLEG ATION OF HAVING 'RECEIVED SUBSTANTIAL SUM THROUGH DONATIONS IN THE F.Y. 2015 - 16', THE ALLEGATION OF 'OBSCURING THE REAL IDENTITY OF THE DONORS', THE ALLEGATION OF 'MALA FIDE ATTEMPT TO INTRODUCE THE UNACCOUNTED MONEY INTO THE TRUST INCOME AS DONATIONS' ETC . LEVELLED AGAINST THE APPLICANT/APPELLANT ARE NOT ONLY PERVERSE FINDINGS MADE BY THE C.I.T. (EXEMPTIONS) LUCKNOW BUT ALSO THE SHEER MISCARRIAGE OF JUSTICE IMPARTED TO THE APPLICANT/APPELLANT. 12. THAT THE 'CASE LAW OF THE HON'BLE ITAT LUCKNOW BENCH BE ARING ORDER ITA NO. 809/LKW/2014 DATED 26.02.2015' CITED IN THE IMPUGNED ORDER DATED 13.12.2017 PASSED BY THE C.I.T. (EXEMPTIONS), LUCKNOW IS NOT RELATED TO THE FACTS OF THE INSTANT MATTER AND THEREFORE DISTINGUISHABLE. IN FACT, THE CITED CASE LAW WAS CONN ECTED WITH ANOTHER APPEAL BEARING ITA NO. 815/LKW/2014. BOTH THESE APPEALS WERE DECIDED EX - PARTE QUA THE ASSESSEE/APPELLANT. MOREOVER, IN THE MATTER OF CITED CASE LAW, EVEN THE REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 WAS NOT ACCORDED TO THE ASSESS E/APPELLANT. 13. THAT THE IMPUGNED ORDER DATED 13.12.2017 PASSED BY THE C.I.T. (EXEMPTIONS), LUCKNOW IS AGAINST VARIOUS JUDICIAL PRONOUNCEMENTS ON THE SUBJECT MATTER. THE CASE LAW AND THE JUDICIAL PRONOUNCEMENTS IN THE ISSUES INVOLVED MAY BE TAKEN AT T HE TIME OF HEARING OF THE INSTANT APPEAL WITH LEAVE OF THE HON'BLE COURT. 2 . THE ASSESSEE HAS TAKEN MULTIPLE GROUNDS OF APPEAL, HOWEVER, FROM THE RECORDS IT EVIDENT THAT THE CRUX OF THE GRIEVANCE IN THIS CASE IS THE REJECTION OF APPLICATION FOR EXEMPTION UNDE R SECTION 80G OF THE ACT BY THE LD. COMMISSIONER OF INCOME - TAX (EXEMPTIONS). 3 . THE FACTS IN THIS CASE ARE THAT THE ASSESSEE - SOCIETY HAD FILED AN APPLICATION FOR REGISTRATION UNDER SECTION 80G(5) OF THE ACT ON 20/6/2017 WITH CIT (EXEMPTIONS), LUCKNOW. SUBSEQ UENTLY, THE ASSESSEE - SOCIETY ITA NO.60/LKW/2018 PAGE 6 OF 8 WAS ACCORDED AN OPPORTUNITY OF BEING HEARD VIDE THIS OFFICE LETTER DATED 31.10.2017 SENT TO THE ASSESSEE ON THE ADDRESS PROVIDED BY IT IN FORM NO. 10A VIA SPEED POST CALLING FOR SPECIFIC QUERIES REGARDING ITS APPLICATION FOR RE GISTRATION UNDER SECTION 12A FOR COMPLIANCE ON 07.12.2017. ON THAT DATE I.E. 07.12.20J 7 LD. A.R. OF THE ASSESSEE APPEARED AND FILED A LETTER WITH ANNEXURE S. NO ACTIV IT Y COULD BE SEEN FROM THE INCOME AND EXPENDITURE ACCOUNT PROVIDED BY THE APPLICANT - ASSESS EE . THE CIT (EXEMPTIONS), LUCKNOW HAS THEREAFTER REJECTED THE APPLICATION FOR EXEMPTION UNDER SECTION 80G FILED BY THE ASSESSEE FOR THE REASONS AND GROUNDS MENTIONED IN HIS ORDER , WHICH IS ALREADY ON RECORD. 4 . THE LD. A.R. OF THE ASSESSEE APPRISED THE BENCH THAT A DETAILED QUESTIONNAIRE WAS ISSUED BY CIT (EXEMPTIONS), LUCKNOW , WHICH IS PLACED AT PAGES 54 AND 55 OF THE PAPER BOOK AND THE DETAILED REPLY DATED 7/12/2017 FILED BY THE ASSESSEE IS PLACED AT PAGES 56 & 57 OF THE PAPER BOOK. LD. A.R. OF THE ASSESSE E SUBMITTED THAT THOUGH ALL THE DOCUMENTARY EVIDENCES , WHICH ARE REQUIRED IN ORDER TO GRANT EXEMPTION UNDER SECTION 80G , WERE PROVIDED TO THE DEPARTMENT, BUT CIT (EXEMPTIONS), LUCKNOW HAS NOT CONSIDERED THEM AT ALL AND SUMMARILY REJECTED THE APPLICATION OF THE ASSESSEE. 5 . THE LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDER OF CIT (EXEMPTIONS), LUCKNOW AND SUBMITTED THAT FROM THE ORDER OF CIT (EXEMPTIONS), LUCKNOW IT IS CLEARLY EVIDENT THAT ASSESSEE - SOCIETY WAS ASKED TO PROVIDE VOUCHERS/DOCUMENTARY EVIDENCE T O LOOK INTO THE CHARITABLE ACTIVITIES BEIN G C ARRIED OUT BY THE ASSESSEE - SOCIETY, BUT THE APPLICANT - ASSESSEE HAS NOT PROVIDED THE SAME WHICH CLEARLY INDICATES THAT THE ACTIVITIES OF THE ASSESSEE - SOCIETY , AS CLAIMED TO BE CARRIED OUT, ARE NOT GENUINE AND ASS ESSEE FAILED TO PASS THE TEST MANDATED BY THE ITA NO.60/LKW/2018 PAGE 7 OF 8 LAW FOR FORMATION OF SATISFACTION FOR ACCORDING EXEMPTION . LD. D.R. FURTHER STATED THAT ASSESSEE HAS NEITHER BEEN ABLE TO PRODUCE THE BOOKS OF ACCOUNT NOR ANY GENUINE VOUCHER REGARDING THE CLAIMED EXPENSES. T HEREFORE, THE ORDER OF CIT (EXEMPTIONS), LUCKNOW REJECT ING THE APPLICATION FOR EXEMPTION UNDER SECTION 80G SHOULD BE UPHELD. 6 . WE HAVE PERUSED THE CASE RECORD , HEARD THE RIVAL CONTENTIONS AND ANALYSED THE FACTS AND CIRCUMSTANCES OF THE CASE. AS THE RE CO RDS DEMONSTRATES, ON THE DATE OF HEARING I.E. ON 7/12/2017 ASSESSEE HAS FILED DETAILED INFORMATION BEFORE CIT (EXEMPTIONS), LUCKNOW IN ACCORDANCE TO THE QUESTIONNAIRE ISSUED TO IT , WHICH IS PLACED IN THE PAPER BOOK FILED BEFORE US APPEARING AT PAGES 54 TO 58. WE NOTICE THAT THEREAFTER ORDER WAS PASSED BY CIT (EXEMPTIONS), LUCKNOW ON 13/12/2017. IT IS EVIDENT THAT WITHIN A VERY SHORT SPAN OF TIME , CIT (EXEMPTIONS), LUCKNOW HAS PASSED THE ORDER ON 13/12/2017 AND IT IS QUITE POSSIBLE THAT ENTIRE DOCUMENTS , WHICH WERE PLACED BEFORE HIM , MIGHT NOT HAVE BEEN LOOKED INTO PROPERLY. THESE ARE MATTERS WHICH REQUIRE DETAILED FACTUAL VERIFICATION AND CIT (EXEMPTIONS), LUCKNOW HAS REQUISITE MACHINERY TO UNDERTAKE SUCH AN EXERCISE. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT (EXEMPTIONS), LUCKNOW AND RESTORE THE MATTER BACK TO HIS FILE TO DECIDE THE ISSUE AFRESH AFTER VERIFYING THE FACTS OF THE CASE IN ACCORDANCE WITH THE DOCUMENTS SUBMITTED BY THE ASSE SSEE AND SPECIFICALLY TO DETERMINE TH E GENUINENESS OF THOSE DOCUMENT S AND TO COME OUT WITH A SPEAKING ORDER . SUCH AN EXERCISE WILL ALSO COVER THE ARGUMENTS OF THE LD. D.R. WH O HAS RAISED DOUBTS ABOUT THE ACTIVITIES OF THE ASSESSEE - SOCIETY. THE CIT (EXEMP TIONS), LUCKNOW SHALL ENQUIRE INTO EACH AND EVERY ASPECT AND GIVE REASONING ON THE DOCUMENTS FILED BY THE ASSESSEE AND TAKE A DECISION AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WITH THESE OBSERVATIONS, WE SET ASIDE THE ITA NO.60/LKW/2018 PAGE 8 OF 8 ORDER OF CI T (EXEMPTIONS), LUCKNOW AND RESTORE THE MATTER BACK TO HIS FILE. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 / 0 9 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTAN T MEMBER JUDICIAL MEMBER DATED: 28 TH SEPTEMBER , 201 8 JJ: 2709 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR