New Hope Ministries, V. THE CIT, Vijayawada

ITA 612/VIZ/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1046 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-06-2016
• Assessment Year: misc
• Appeal Filed On: 27-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M N MURTHY NAIKDR
• Assessee Lawyers: K SIVA RAMA KUMARAR
• Section: 12AA

Judgement Text

ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.612/VIZAG/2014 ( / ASSESSMENT YEAR: NA) NEW HOPE MINISTRIES CHILLAKALLU, KRISHNA DIST. VS. CIT, VIJAYAWADA [PAN: AABTN 1444J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI K. SIVA RAMA KUMAR,AR / RESPONDENT BY : SHRI M.N. MURTHY NAIK,DR / DATE OF HEARING : 25.07.201 6 / DATE OF PRONOUNCEMENT : 29.07.2016 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE CIT, VIJAYAWADA DATED 26.9.2014 REJEC TING REGISTRATION U/S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER C ALLED AS 'THE ACT'). ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A REGISTERED SOCIETY REGISTERED WITH THE REGISTRAR OF SOCIETIES VIDE REGISTRATION NO.287 OF 2007 DATED 5.7.2007 FILED ITS APPLICATION IN FOR M NO.10 REQUESTING FOR REGISTRATION U/S 12AA OF THE ACT ON 29.3.2014. THE ASSESSEE SOCIETY IS ESTABLISHED WITH THE FOLLOWING AIMS AND OBJECTIVES: 1. TO PROCLAIM GOOD NEWS IN ACCORDANCE WITH THE HOLY B IBLE AND TO DISSEMINATE KNOWLEDGE OF AND TO BEAR WITNESS TO THE EVERLASTING LOVE OF GOD. 2. TO ESTABLISH AND MAINTAIN CHURCHES, PRAYER HOUSES, TO ORGANIZE PRAYERS, CONGREGATIONS, MEETINGS, SEMINARS AND OTHE R BIBLICAL MEETINGS AND DISCOURSES. 3. TO ESTABLISH, MAINTAIN, ORGANIZE, ADMINISTER AND RE NDER FINANCE ASSISTANCE TO BIBLE SCHOOLS, COLLEGES, AND OTHER IN STITUTIONS. 4. TO PROVIDE SCHOLARSHIPS, FREE SHIPS, AND OTHER FINA NCIAL ASSISTANCE TO STUDENTS STUDYING IN BIBLE SCHOOLS, COLLEGES, AND O THER INSTITUTION. 5. TO RENDER FINANCIAL ASSISTANCE INCLUDING REMUNERATI ON TO PASTORS, PRIESTS, FATHERS, BROTHERS AND OTHER RELIGIOUS FUNC TIONARIES INVOLVED IN THE DISSEMINATION OF THE HOLY BIBLE. 6. TO RENDER FINANCIAL ASSISTANCE TO THE CONSTRUCTION AND MAINTENANCE OF CHURCHES, PRAYER HOUSES AND OTHER PLACES OF WORSHIP OF JESUS CHIRST. 7. TO DO ALL THINGS NECESSARY AND INCIDENTAL TO THE AT TAINMENT OF THE ABOVE OBJECTIVES. 8. TO TREAT THE SOCIETY AS IRREVOCABLE. 9. TO CARRY ON THE ACTIVITIES OF THE SOCIETY WITHIN IN DIA ONLY AND TO OBSERVE NON-DISCRIMINATION BY CASTE, CREED, COMMUNI TY AND REGION IN EXTENDING THE BENEFITS OF THIS SOCIETY TO THE GENER AL PUBLIC. 3. IN THE PROCEEDING BEFORE THE CIT, THE ASSESSEE H AS FURNISHED COPIES OF AIMS AND OBJECTIVES ALONG WITH RULES & RE GULATIONS OF THE SOCIETY AND FINANCIAL STATEMENTS FOR THE YEAR ENDIN G 31.3.2011, 31.3.2012 & 31.3.2013. THE CIT(A) AFTER CONSIDERIN G THE DETAILS FILED BY ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 3 THE ASSESSEE REJECTED REGISTRATION U/S 12AA OF THE ACT, FOR THE REASONS RECORDED IN HIS ORDER DATED 26.9.2014. THE CIT, DE NIED REGISTRATION ON THE GROUND THAT THE ASSESSEE COULD NOT SATISFACTORI LY EXPLAINED THE NATURE AND SOURCES OF DONATIONS. IT IS FURTHER OBSE RVED THAT THE SOCIETY CLAIMS TO HAVE MAINTAINED BOOKS OF ACCOUNTS AND GET TING THEM AUDITED FROM A CHARTERED ACCOUNTANT REGULARLY, BUT DID NOT FILE RETURNS OF INCOME SINCE INCEPTION OF THE SOCIETY, HOWEVER, FILED RETU RNS FOR THE ASSESSMENT YEAR 2013-14 & 2014-15. THE CIT, FURTHER, OBSERVED THAT THE ASSESSEE COULD NOT ESTABLISH AS TO HOW THE TRUST CONVINCED T HE SO CALLED DONORS TO DONATE THE SAME TO THEM, WHO WERE OF THE DONORS, TH E BASIS, MANNER AND METHOD IN WHICH THE SO CALLED ACTIVITIES WERE C ONSIDERED APPROPRIATE, ORGANIZED, EXECUTED, ETC. WITH THESE O BSERVATIONS, REJECTED THE APPLICATION FILED BY THE ASSESSEE U/S 12AA OF T HE ACT. AGGRIEVED BY THE CIT ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. A.R. FOR THE ASSESSEE SUBMITTED THAT THE CIT ERRED IN REJECTING REGISTRATION U/S 12AA OF THE ACT, THOUGH THE ASSESSEE PROVED THAT ITS OBJECTIVES ARE RELIGIOUS IN NATURE AND ALS O ACTIVITIES ARE GENUINE. THE A.R. FURTHER SUBMITTED THAT THE ACTION OF THE C IT IS UNJUSTIFIED AND IS CLEARLY OUTSIDE THE SCOPE OF ENQUIRY ENVISAGED UNDE R THE PROVISIONS OF SECTION 12AA OF THE ACT, WHILE GRANTING REGISTRATIO N FOR SOCIETIES OR TRUST ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 4 TO EXAMINE THE GENUINENESS OF THE DONATIONS RECEIVE D BY THE TRUST OR SOCIETY. AS PER THE PROVISIONS OF THE ACT, WHAT IS REQUIRED TO BE SEEN IS WHETHER THE OBJECTIVES ARE CHARITABLE OR RELIGIOUS IN NATURE AND THE ACTIVITIES ARE CARRIED OUT IN ACCORDANCE WITH THE A IMS AND OBJECTIVES OF THE SOCIETY. THE A.R. FURTHER SUBMITTED THAT THE A SSESSEE HAS FILED ALL THE RELEVANT DETAILS INCLUDING NAMES AND ADDRESSES OF THE DONORS ALONG WITH THEIR IDENTITY BEFORE THE COMMISSIONER. THE CO MMISSIONER WITHOUT CONSIDERING THE EVIDENCES FILED BY THE ASSESSEE SIM PLY REJECTED THE APPLICATION FILED U/S 12AA OF THE ACT. 5. THE LD. D.R. ON THE OTHER HAND STRONGLY SUPPORTE D THE ORDER OF THE CIT. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE CIT DENIED REGISTRATION U/S 12AA OF THE ACT, BY HOLDING THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE NATURE AND SOURCE OF THE RECE IPTS. THE CIT, FURTHER, OBSERVED THAT THE ASSESSEE CLAIMS TO HAVE MAINTAINE D BOOKS OF ACCOUNTS AND GETTING THEM AUDITED, BUT DID NOT FILE RETURN O F INCOME SINCE INCEPTION OF THE SOCIETY. THE CIT REJECTED APPLICAT ION FILED BY THE ASSESSEE FOR THE MAIN REASON THAT THE ASSESSEE COUL D NOT ESTABLISH, AS TO HOW THE TRUST CONVINCED THE SO CALLED DONORS TO DON ATE THE SOME TO ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 5 THEM AND ALSO THE BASIS, MANNER AND METHOD IN WHICH THE SO CALLED ACTIVITIES WERE CONSIDERED APPROPRIATE AND ORGANIZE D. IT IS THE CONTENTION OF THE ASSESSEE THAT THE SOCIETY IS EXIS TED SOLELY FOR THE PURPOSE OF CHARITABLE OR RELIGIOUS ACTIVITIES AND I TS ACTIVITIES ARE GENUINE. THE ASSESSEE FURTHER CONTENDED THAT THE CIT HAS NOT DOUBTED THE AIMS AND OBJECTIVES OF THE SOCIETY AND ALSO NOT POINTED OUT ANY IRREGULARITIES IN THE ACTIVITIES CONDUCTED BY THE SOCIETY. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THE A SSESSEE IS EXISTED SOLELY FOR THE PURPOSE OF CHARITABLE OR RELIGIOUS P URPOSE. ON PERUSAL OF THE MEMORANDUM OF ASSOCIATION FILED BY THE ASSESSEE , WE FIND THAT THE MAIN OBJECTIVE OF THE ASSESSEE IS TO PROCLAIM GOOD NEWS IN ACCORDANCE TO THE HOLY BIBLE AND TO DISSEMINATE KNOWLEDGE OF A ND BEAR WITNESS TO THE EVERLASTING LOVE OF GOD ETC,. THE MAIN OBJECTI VES OF THE SOCIETY ARE PREDOMINANTLY RELIGIOUS IN NATURE. THE ASSESSEE HAS CARRIED OUT ITS ACTIVITIES IN ACCORDANCE WITH THE OBJECTIVES. THERE FORE, WE ARE OF THE VIEW THAT THE CIT, WITHOUT POINTING OUT ANY IRREGUL ARITIES REJECTED THE REGISTRATION BY HOLDING THAT THE ASSESSEE HAS NOT E XPLAINED THE NATURE AND SOURCE OF RECEIPTS. 7. THE ONLY QUESTION THAT CAME UP FOR OUR CONSIDERA TION IS, ON FACTS AND CIRCUMSTANCES OF THE CASE, THE OBJECTIVES OF TH E SOCIETY ARE ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 6 CHARITABLE OR RELIGIOUS IN NATURE WHICH IS ELIGIBLE FOR REGISTRATION U/S 12AA OF THE ACT. SECTION 12AA OF THE ACT PRESCRIBED THE PROCEDURE FOR REGISTRATION OF ANY TRUST OR SOCIETY. AS PER SECTI ON 12AA OF THE ACT, AN APPLICATION FOR REGISTRATION OF TRUST AND INSTITUTI ON IS REQUIRED TO BE MADE WITHIN ONE YEAR FROM THE DATE OF CREATION OF T HE TRUST OR ESTABLISHED ON SUCH INSTITUTION. IN TERMS OF CLAUS E (A) OF SECTION 12AA OF THE ACT, THE COMMISSIONER HAS TO SATISFY HIMSELF AB OUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST ON SUCH ENQUIRIES AS HE MAY DEEM NECESSARY. SUB SECTION 1A AND 2 OF SECTION 12AA OF THE ACT ARE PROCEDURAL IN NATURE, WHEREAS SUB SECTION 3 OF SECT ION 12AA OF THE ACT EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATIO N OF THE TRUST OR INSTITUTION, IF HE IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT CARRIED OUT IN ACCORDANC E TO THE OBJECTIVES OF THE TRUST OR SOCIETY. THUS, WHILE GRANTING REGISTR ATION U/S 12AA OF THE ACT, WHAT THE AUTHORITIES HAVE TO SATISFY IS THE GE NUINENESS OF THE ACTIVITIES OF THE TRUST AND HOW THE INCOME DERIVED FROM THE PROPERTY IS APPLIED TO CHARITABLE OR RELIGIOUS PURPOSE AND NOT THE NATURE OF THE ACTIVITY BY WHICH THE INCOME IS DERIVED FROM THE TR UST. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE OBJECTIVES OF THE SOCIETY ARE RELIGIOUS IN NATU RE. THE SOCIETY HAS CARRIED OUT ITS ACTIVITIES IN ACCORDANCE WITH THE O BJECTIVES. THE CIT, ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 7 WITHOUT POINTING OUT ANY INGENUINE ACTIVITIES REJEC TED THE APPLICATION FOR WANT OF VERIFICATION OF DONATIONS RECEIVED BY THE T RUST. WHEN THE OBJECTIVES OF THE SOCIETY ARE RELIGIOUS IN NATURE A ND ITS ACTIVITIES ARE GENUINE, THE CIT CANNOT DENY THE REGISTRATION, BECA USE THE SOCIETY HAS NOT EXPLAINED THE DONATIONS RECEIVED TO THE SATISFA CTION OF THE CIT. IF THE ASSESSEE HAS NOT EXPLAINED THE GENUINENESS OF T HE DONATIONS, IT IS FOR THE AUTHORITIES TO INITIATE SEPARATE PROCEEDING S UNDER THE PROVISIONS OF THE ACT TO ASSESS THE INCOME OF THE SOCIETY AS P ER LAW. BUT TO GRANT REGISTRATION, THE AUTHORITIES HAVE TO LOOK INTO THE OBJECTIVES OF THE TRUST AND ITS ACTIVITIES, AS HELD BY THE HONBLE KARNATAK A HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRU ST VS. DIRECTOR OF INCOME TAX (EXEMPTIONS) (2006) 285 ITR 327. THER EFORE, WE ARE OF THE VIEW THAT THE A.O. WAS NOT CORRECT IN REJECTING REGISTRATION U/S 12AA OF THE ACT. 8. IN THE PRESENT CASE ON HAND, ADMITTEDLY, THE OBJ ECTIVES OF THE SOCIETY ARE RELIGIOUS IN NATURE. THE CIT HAS NOT DO UBTED OBJECTS OF THE SOCIETY AND ALSO NOT POINTED OUT ANY IRREGULARITIES IN THE ACTIVITIES OF THE SOCIETY. THE ONLY OBSERVATION OF THE CIT IS THAT TH E ASSESSEE HAS NOT PROVED THE DONATIONS. THE ASSESSEE FILED PAPER BOOK . ON PERUSAL OF PAPER BOOK, WE FIND THAT IT HAS FILED LIST OF DONAT IONS ALONG WITH THEIR ITA NO.612/VIZAG/2014 NEW HOPE MINISTRIES, CHILLAKALLU, KRISHNA DIST. 8 IDENTITY. THEREFORE, CONSIDERING THE FACTS AND CIRC UMSTANCES OF THE CASE, WE REMIT THE ISSUE BACK TO THE FILE OF THE CIT AND DIRECT THE CIT TO EXAMINE THE CASE IN THE LIGHT OF THE ABOVE DIRECTIO N AND PASS APPROPRIATE ORDERS AFTER AFFORDING REASONABLE OPPOR TUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH JUL16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 29.07.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT NEW HOPE MINISTRIES, 5-238, TIRU MALAGIRI ROAD, CHILLAKALLU-521 178, KRISHNA DIST. 2. / THE RESPONDENT THE CIT, VIJAYAWADA 3. + ( ) / THE CIT (A), VIJAYAWADA 4. # . , . , # / DR, ITAT, VISAKHAPATNAM 5 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM