Smt. Purnimaben Nitiin Shah Balsana, V. CIT-I, Nashik

ITA 631/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3158 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Keywords: Gift; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 631/PN/09 SMT. PURNIMABEN NITIN SHAH BALSANA, TAL. SAKRI DHULE PAN NO. AAATP90431 .... APPELLANT VS. CIT-I NASHIK . RESPONDENT APPELLANT BY : SHRI SUNIL GANOO RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E CIT-I, NASHIK DATED 19/03/2009 PASSED UNDER SECTION 12AA OF THE I.T. ACT , 1961. 2. DURING THE PROCEEDINGS BEFORE US LD. COUNSEL MENTI ONED THAT THE CIT DENIED THE RENEWAL OF EXEMPTION U/S. 12AA OF THE INCOME TAX ACT 1961 FOR THE REASONS MENTIONED IN PARA 4 TO 6 OF THE ORDER OF THE CIT DATED 19/03/2009. LD. COUNSEL IS OF THE OPINION THAT THE CIT ARRIVED AT THE CONCLUSION T HAT THE TRUST HAS NOT ISSUED RECEIPTS AND NOT ENTERED CERTAIN ENTRIES IN THE BOOKS E RRONEOUSLY WHEN THE IMPUGNED BOOKS WERE DULY AUDITED BY THE STATUTORY AUD ITOR. THE OTHER REASON FOR REJECTION OF RENEWAL OF REGISTRATION INCLUDES FAILURE TO EXPLAIN THE EXPENDITURE MADE ON CONSTRUCTION WORK OF DHARMASHALA AND CHARITABLE CLIN IC. FURTHER, LD COUNSEL MENTIONED THAT THE CIT IS OF THE ERRONEOUS ASSUMPTION THAT THE ASSESSEES EXPLANATION FOR THE ABOVE DISCRIMINATION IS NOT SATIS FACTORY. FURTHER, LD. COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL VIDE ITA NO . 1682/PN/2007 ORDER DATED 28 TH JULY 2010 IN THE CASE OF CHAUDHARY ATTARSING YADAV M EMORIAL EDUCATIONAL TRUST FOR THE PROPOSITION THAT ASSESSEE CANNOT BE HELD RESPO NSIBLE FOR VIOLATING ANTI CAPITATION FEE ACT WHEN HE FEE IF ANY IS RECEIVED B Y THE MIDDLEMEN AND RELIED ON PARA 19 OF THE SAID ORDER. 3. LD. COUNSEL BROUGHT TO OUR NOTICE PARA 11 OF THE AF FIDAVIT DATED 29/09/2010 WHICH IS FILED FOR THE FIRST TIME BEFORE US, SEEKING ONE MORE OPPORTUNITY BEFORE THE ITA NO. 631/PN/2009 PAGE 2 OF 4 COMMISSIONER FOR ATTENDING PERSONALLY BEFORE HIM AND TO CLEAR ALL THE DOUBTS IN THE MATTER. 4. ON THE OTHER HAND LD. DR FOR THE REVENUE MR. HARESH WAR SHARMA MENTIONED THAT THE AFFIDAVIT IS FILED FOR THE FIRST TIME AND THOUGH THE FACTS MENTIONED THEREIN HAVE TO BE ASCERTAINED BY THE COMMISSIONER OF FICE BEFORE THEY ARE TAKEN ON RECORD, OTHERWISE HE RELIED ON THE ORDER OF THE CIT AS WE LL AS THE PROVISIONS OF SEC. 12AA OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE INFO RMATION WHICH IS FILED BEFORE US. THE REASONS FOR REGISTRATION OF RENEWAL WHICH ARE MENTIONED IN PARA 4 TO 6 OF THE IMPUGNED ORDER ARE RELEVANT AND THEREFORE THEY A RE REPRODUCED AS UNDER:- 4. IN RESPONSE TO THIS OFFICE LETTER SHRI RAHUL MU NDADA, C.A. AUTHORISED REPRESENTATIVE OF THE TRUST ATTENDED AND TRIED TO E XPLAIN THE CASE. HOWEVER, HE HAS FAILED TO CLARIFY WHY THE TRUST HAD ACCEPTED HUGE CASH AMOUNTS ON VARIOUS DATE ON ACCOUNT OF BUILDING FUND, TENDER FE E ETC., BUT NOT ISSUED ANY RECEIPTS AND ALSO IN SOME CASES DONATION RECEIPTS D ID NOT APPEAR IN CASH BOOKS. THE TRUST HAD NOT DRAWN THE CASH BALANCE ON DAY TO DAY BASIS AND EXPENDITURE VOUCHERS WERE SELF MADE. THIS DISCUSSIO N SHOWS THAT THE TRUST HAS NOT PROPERLY MAINTAINED THE BOOKS OF ACCOUNTS. 5. IN VIEW OF THE ABOVE, THIS OFFICE HAS CALLED FOR REPORT ON THE QUESTION OF CONTINUANCE OF REGISTRATION IN VIEW OF THE AFORE SAID DEFECTS, FROM ITO WARD-3(3), DHULE THROUGH ADDL. CIT, RANGE-3, DHULE VIDE THIS OFFICE LETTER NO. 1295 DATED 3/807/2008. ACCORDINGLY, A.O. REPORT ED THAT THE TRUST HAD NOT EXPLAINED THE EXPENDITURE MADE ON CONSTRUCTION WORK OF DHARMASHALA AND CHARITABLE CLINIC. FURTHER, TRUST HAD NOT REMOVED I TS DEFECTS NOR SUBMITTED RELEVANT DOCUMENTS IN SUPPORT OF RECEIPTS AND EXPEN DITURE. THE A.O PROPOSED FOR CANCELLATION OF REGISTRATION. 6. IN VIEW OF THE DISCUSSION MADE ABOVE, I HAVE CON SIDERED THE RELEVANT FACTS AND I AM SATISFIED THAT THE TRUST HAS FAILED TO OFFER SATISFACTORY EXPLANATION IN RESPECT OF THE EXPENDITURE ON THE OB JECTS AND THE INVESTMENTS MADE BY IT. I AM THEREFORE, SATISFIED THAT THE TRUS T HAS VIOLATED THE CONDITIONS LAID DOWN IN SECTION 12A OF THE I.T. ACT. HENCE THE REGISTRATION GRANTED BY CIT-I, THANE VIDE NO.THANE/CIT-I/TECH/307/2004-05/2 047 DATED 19/01/2005, IS HEREBY CANCELLED. 6. FURTHER, WE HAVE ALSO GONE THROUGH THE PARA 7 TO 11 OF THE AFFIDAVIT DATED 28/09/2010 AND THEY ARE ALSO REPRODUCED AS UNDER:- 7. THAT I SUBMIT THAT THE OBSERVATIONS OF THE LEAR NED C.I.T. NASHIK VIDE PARA NO. 4 & 5 OF THE IMPUGNED ORDER ARE CONTRARY T O THE FACTS. THE TRUST HAS ISSUED PROPER RECEIPTS TO ALL THE DONORS IN RESPECT OF DONATIONS RECEIVED EXCEPT SMALL DONATIONS COLLECTED IN CHARITY BOX I.E . DAN PETI AND ALL THE DONATIONS ARE DULY ACCOUNTED FOR IN THE BOOKS OF AC COUNT OF THE TRUST. I STATE AND AFFIRM THAT THE TRUST HAS ALSO MAINTAINED PROPE R VOUCHERS IN RESPECT OF ALL THE EXPENSES INCURRED. IN THE CIRCUMSTANCES, TH IS AFFIDAVIT IS EXECUTED AS PER THE PROVISIONS OF RULE 10 OF THE INCOME-TAX [AP PELLATE TRIBUNAL RULES, ITA NO. 631/PN/2009 PAGE 3 OF 4 1963 IN REBUTTAL OF THE ALLEGED FACTS MENTIONED BY THE LEARNED C.I.T. AND INFERENCES AND CONCLUSIONS DRAWN BY THE LEARNED C.I .T. IN THE MATTER ON THE BASIS OF ERRONEOUS ASSUMPTION OF FACTS. 8. THAT ALL THE DONATIONS [EXCEPT SMALL AMOUNTS COL LECTED IN CHARITY BOX] ARE RECEIVED FROM THE TRUSTEE WHO ARE ASSESSED TO I NCOME TAX. 9. THAT DURING THE COURSE OF HEARING BEFORE THE LEA RNED C.I.T. DUE TO CONFUSION AND MISUNDERSTANDING THE AUTHORIZED REPRE SENTATIVE OF THE TRUST COULD NOT PROPERLY EXPLAIN THE BOOKS OF ACCOUNT AND PROPERLY REPLY THE QUERIES RAISED. IN THE CIRCUMSTANCES, THE LEARNED C. I.T. HAS DRAWN ADVERSE INFERENCES AGAINST THE TRUST AND HAS FINALLY CANCEL LED THE REGISTRATION GRANTED U/S. 12AA OF THE I.T. ACT 1961. 10. THAT I SUBMIT THAT THE TRUST IS BASICALLY FORME D BY MEMBERS OF SHAH FAMILY AND THE FUNDS ARE ALSO CONTRIBUTED BY TRUSTE E ONLY. THE TRUST IS FORMED AS PER DESIRE OF MY WIFE MRS. PURNIMABEN NI TIN SHAH WHO HAS BEEN GIFTED WITH CERTAIN DIVINE POWERS. 11. THAT IF ONE MORE OPPORTUNITY IS GRANTED TO THE TRUST, I CAN PERSONALLY ATTEND BEFORE THE LEARNED C.I.T NASHIK A ND CLEAR ALL HIS DOUBTS IN THE MATTER. 7. WE HAVE PERUSED THE PARA 19 OF THE ORDER OF THE TRIBU NAL AND REPRODUCED AS UNDER:- 19. NEXT ALLEGATION OF CIT THAT SHRI YADAV HAS COL LECTED SUCH MONEY AND APPROPRIATED IT FOR HIMSELF, THE CIT HIMSELF HAS GI VEN A FINDING THAT THE SHRI YADAV HAS TAKEN THE MONEY AND NATURALLY, THE TRUST SHOULD NOT BE PUNISHED. IN ANY UNIVERSITY, IF ANY VICE CHANCELLOR OR A REGI STRAR OR MANAGING COMMITTEE MEMBER CHARGES SOME MONEY FOR THE ADMISSI ON, IT IS HE WHO WOULD BE HELD GUILTY. BUT NO CHARGE SHOULD BE MADE AGAINST SAID INSTITUTION TO THE EFFECT THAT THE ACTIVITIES OF THE UNIVERSITY AR E NOT GENUINE. CIT IS NOT JUSTIFIED TO HELD THAT THE TRUST HAS VIOLATED THE A NTI CAPITATION FEE ACT. SO AS TO CANCEL REGISTRATION. 8. FURTHER WE HAVE ALSO EXAMINED THE PROVISIONS OF SUB -SECTION (3) OF SEC. 12AA OF THE ACT WHICH EMPOWERS THE CIT TO PASS AN OR DER IN WRITING CANCELING THE REGISTRATION OF CIT TRUST OR INSTITUTION AND THE PROVISI ONS READS AS FOLLOWS:- SEC. 12AA (1) . (2) . [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB SECTION (1) [OR HAS OBTAINED REGI STRATION ANY TIME UNDER SECTION 12A AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITI NG CANCELING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. ITA NO. 631/PN/2009 PAGE 4 OF 4 9. FROM THE ABOVE PROVISIONS IT IS EVIDENT THAT THE RE GISTRATION OF THE TRUST CAN BE CANCELLED IF THE COMMISSIONER IS SATISFIED THAT ( I) THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR (II) THE ACTIVITIES O F SUCH TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF TH E TRUST OR INSTITUTION. THUS, THERE ARE ONLY TWO CIRCUMSTANCES, UNDER WHICH THE REGIST RATION CAN BE CANCELLED AND NOTHING ELSE IE IMPROPER MAINTENANCE OF BOOKS OF ACCO UNTS OR FAILURE TO MAINTAIN THE VOUCHER ETC. UNLESS THESE LAPSES QUESTIONS SAID NON- GENUINENESS OF THE ACTIVITIES OF THE TRUST OR DECISIVELY THROW LIGHT THAT THE ACTIVITIE S ARE NOT CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST. SO, CONSIDERING THE DEVELO PMENTS IN THE FORM OF THE ORDER OF THE TRIBUNAL REFERRED ABOVE AND ASSERTIONS MADE BY TH E ASSESSEE IN THE FORM OF AFFIDAVIT, WHICH ARE THE NEW PIECES OF FACTUAL MATRIX , WE ARE OF THE OPINION THAT ASSESSEES REQUEST FOR ONE MORE OPPORTUNITY BEFORE THE CIT AS MENTIONED IN PARA 11 OF THE AFFIDAVIT, IS REQUIRED TO BE CONSIDERED IN FAVO UR OF THE ASSESSEE. ACCORDINGLY, THE CIT IS DIRECTED TO CONSIDER THE ABOVE NEW FACTS BY ADMITTING THEM AND DECIDE THE ISSUE AFRESH BY PASSING A SPEAKING ORDER ON HOW T HE IMPUGNED LAPSES RELATING TO VOUCHERS AND BOOKS MET THE CONDITIONS PROVIDED IN THE PROVISIONS OF SUB SEC. (3) OF THE SEC. 12AA OF THE ACT. 10. THE DECISION OF CANCELLATION OF REGISTRATION OF THE TRUST MUST BE TAKEN ONLY WHEN THERE IS PRIMARY OR DIRECT EVIDENCE TO SUPPORT THE C ONDITIONS FOR CANCELLATION SPECIFIED IN SUBSECTION 3 OF SECTION 12AA OF THE AC T AND CERTAINLY NOT ON THE BASIS OF SURMISES AND SPECULATIONS AND LONG DRAWN CONCLUSIONS . ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE SET ASIDE . 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 16 TH NOVEMBER, 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 16 TH NOVEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT-I, NASHIK 4. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE