Shree Pragpar Aathkoti Nani Paksh Sthanakwashi Jain Sangh, V. The Commissioner of Income Tax-I, RAJKOT-GUJARAT

ITA 635/RJT/2012

• Counselvise Citation: 63524914 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-11-2013
• Assessment Year: misc
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M L MEENA
• Assessee Lawyers: VIMAL DESAI
• Keywords: Charitable institution; Opportunity of being heard
• Section: 12; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBULAL, SMC BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM ITA NO. 635/RJT/2012 SHREE PRAGPAR AATHKOTI NANI PAKSH STHANAKWASHI JAIN SANGH VILLAGE PRAGPAR, TAL. MUNDRA, KUTCH PAN : AALTS 2754 C ( / APPELLANT) THE COMMISSIONER OF INCOME-TAX-I RAJKOT / RESPONDENT / ASSESSEE BY SHRI VIMAL DESAI, CA / REVENUE BY DR M L MEENA, DR / DATE OF HEARING 28.11.2013 !'# / DATE OF PRONOUNCEMENT 31.01.2014 / ORDER THIS APPEAL BY THE ASSESSEE-TRUST IS AGAINST THE OR DER DATED 28.09.2012 OF COMMISSIONER OF INCOME-TAX, RAJKOT-I, RAJKOT U/S 12 AA(1)(B)(II) OF THE INCOME-TAX ACT REJECTING THE APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE-TRUST NAMELY SHREE PRAGPAR AATHKOTHI NANI PAKSH STHANAKVASHI JAIN SANGH MADE AN APPLICAT ION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961 ON 19.03.2012 IN FORM NO.1 0A. THIS APPLICATION WAS ACCOMPANIED WITH THE XEROX COPY OF THE P.T. ENTRY R ECORD AND REGISTRATION CERTIFICATE UNDER THE BPT ACT DATED 10.03.1965. THE AFORESAID APPLICATION WAS REJECTED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I VIDE HIS OR DER DATED 28.09.2012 PASSED U/S 12AA(1)(B)(II) OF THE INCOME-TAX ACT. THE DETAILED REASON GIVEN BY LD. CIT FOR REJECTING THE APPLICATION OF ASSESSEE-TRUST FOR REG ISTRATION U/S 12A OF THE INCOME-TAX ACT IS CONTAINED IN PARAGRAPH NOS. 3 AND 4 OF THE I MPUGNED ORDER, WHICH READ AS UNDER:- 3. THE ASSESSEE HAS NOT FILED ANY DETAILS CALLED B Y THE JURISDICTION ASSESSING OFFICER AT GANDHIDHAM. EVEN IN RESPONSE T O THE FINAL REMINDER ISSUED BY THIS OFFICE, ONLY A WRITTEN REPLY ENLISTI NG THE OBJECTS HAVE BEEN FILED. NO EVIDENCES HAVE BEEN SHOWN TO SHOW THAT ANY SUCH ACTIVITIES ARE BEING PURSUED. IN FACT ONE OF THE OBJECTS MENTIONED IS T O CARRY OUT ACTIVITIES FOR WELFARE OF THE MEMBER OF THE TRUST. THE PROFIT AND LOSS ACCOUNT ALSO SHOWS GENERATION OF CONSIDERABLE SURPLUS. AS PER THE SUBM ISSION MAJOR INCOME IS RECEIVED AND UTILIZED IN MUMBAI AND SURPLUS IS DEPO SITED IN BANK AT MUMBAI. IN SUCH CIRCUMSTANCES, IT IS NOT POSSIBLE TO SAY AS TO WHETHER ACTIVITIES IN ACCORDANCE WITH THE OBJECT ARE BEING CARRIED OUT OR NOT. I AM THEREFORE NOT SATISFIED WITH THE GENUINENESS OF THE TRUST OR ITS OBJECT. 4. AS PER THE PROVISIONS OF THE I.T. ACT, 1961, THE COMMISSIONER SHALL SATISFY HIMSELF WITH REGARD TO: 2 635-RJT-2012 - SHREE PRAGPAR AATHKOTI NANI PAKSH STHANKWASHI JAIN SANGH (SMC) I) OBJECTS OF THE TRUST/INSTITUTION AND II) GENUINENESS OF ITS ACTIVITIES THERE ARE NO MATERIALS FURNISHED ALONGWITH THE APPL ICATION BEFORE ME OR BEFORE THE AO TO SATISFY ABOUT THE GENUINENESS OF THE ACTI VITIES OF THE TRUST. THUS, THE TRUST IS NOT FULFILLING THE CONDITIONS LAID DOWN FO R REGISTRATION AS LAID DOWN U/S 12AA OF THE I.T. ACT, 1961 AND RULE 17A OF THE I.T. RULES, 1962. I THEREFORE, REJECT THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE IT ACT. AGGRIEVED WITH THE ORDER OF LD COMMISSIONER OF INC OME-TAX, RAJKOT-I, THE ASSESSEE-TRUST IS NOW IN APPEAL BEFORE THIS TRIBUNA L ON THE FOLLOWING GROUNDS:- 1. THE ORDER U/S 12AA(1)(B)(II) IS BAD IN LAW. 2. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS ON FACTS IN REJECTING THE APPLICATION FOR REGISTRATION OF THE A PPELLANT TRUST U/S 12A 3. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT PROVIDING ADEQUATE OPPORTUNITIES TO TH E APPELLANT TRUST TO JUSTIFY ITS ACTIVITIES. 4. THE LD. COMMISSIONER OF INCOME TAX HAS ERRED IN LAW AS WELL AS ON FACTS IN NOT APPRECIATING THE CHARITABLE OBJECTS OF THE TRUST AND SIMPLY REJECTED THE APPLICATION FOR REGISTRATION U/S 12A ON IRRELEV ANT GROUNDS. 3. BEFORE THE TRIBUNAL, ON BEHALF OF THE ASSESSEE-T RUST, SHRI VIMAL DESAI, CA, APPEARED AND FILED A PAPER-BOOK CONTAINING 59 PAGES , WHICH CONTAINS FOLLOWING DOCUMENTS:- SR. NO. PARTICULARS PAGE NOS. 1 WRITTEN SUBMISSIONS 2 COPY OF APPLICATION FOR REGISTRATION U/S 12A(A) O F IT ACT DATED 16.03.2012 ALONGWITH FORM 10A AND DETAILS REGARDING MINUTES 1-13 3 COPY OF THE NAME OF TRUSTEES 14 4 COPY OF ACTIVITIES OF TRUST 15-18 5 COPY OF AUDITED INCOME & EXPENDITURE A/C & BALANC E SHEET FOR THE YEAR ENDING ON 31.03.2009 TO 31.03.2011 19-25 6 COPY OF PAN CARD 26 7 COPY OF ASSESSEES LETTER DATED 12.09.2012 27-28 8 COPY OF BANK STATEMENTS AND VOUCHERS OF DONATIONS RECEIVED 29-34 9 COPY OF SHOW-CAUSE NOTICE DATED 24.09.2012 FROM COMMISSIONER OF INCOME-TAX, RAJKOT-I 35 10 COPY OF REPLY TO SHOW-CAUSE NOTICE DATED 25.09.2 012 36-38 11 COPY OF GUJARAT HIGH COURT DECISION IN CASE OF K UTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST TAX APPEAL NO.918/ 2011 39-46 12 COPY OF DECISION OF COCHIN TRIBUNAL IN CASE OF M AHATMA GANDHI CHARITABLE SOCIETY V. CIT (2013) 33 TAXMANN .COM 142 47-51 13 COPY OF DECISION OF ALLAHABAD HIGH COURT IN CASE OF HARDAYAL CHARITABLE & EDUCATION TRUST, 32 TAXMANN.COM 341 52-59 THE LD COUNSEL OF THE ASSESSEE, SUBMITTED THAT THE OBJECTS OF THE TRUST ARE TO PROVIDE ACCOMMODATION FACILITIES TO SADHUJIS IN STH ANAK AND TO UNDERTAKE RELIGIOUS ACTIVITIES. FOR ESTABLISHING ITS GENUINENESS, THE A SSESSEE-TRUST HAS FURNISHED AUDITED 3 635-RJT-2012 - SHREE PRAGPAR AATHKOTI NANI PAKSH STHANKWASHI JAIN SANGH (SMC) INCOME & EXPENDITURE A/C AND BALANCE SHEET FOR THE YEARS ENDING ON 31.03.2009 TO 31.03.2011 BEFORE THE TRIBUNAL. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE-TRUST, IT IS EVIDENT THAT VARIOUS EXPENSES FOR MAINTENANCE OF SUCH STANAKS AND ALL THE ACTIVITIES FOR PROPAGATION AND EXPANSION OF JAINISM HAVE BEEN INCURRED BY THE ASSESSEE-TRUST IN LAST THREE YEARS. WITH REGARD TO THE LD. CITS OBJECTION THAT NO EVIDENCES IN SUPPOR T OF ITS ACTIVITIES HAD BEEN PROVIDED BY THE ASSESSEE-TRUST, THE LD. COUNSEL OF THE ASSES SEE RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, WHEREIN IT IS OBSERVED BY THE COURT THAT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRAT ION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIES; REGISTRAT ION FOR TRUST CANNOT BE DINED ON THE SOLE GROUND OF NON-COMMENCEMENT OF ACTIVITY AND SUC H ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER TO INFER ABSENCE OF GENUINENES S. A COPY OF THE SAID JUDGMENT IS PLACED ON RECORD. WITH REGARD TO THE C ONTENTION RAISED BY THE CIT IN RESPECT OF THE TRUST GENERATED CONSIDERABLE SURPLUS AND THE MAJOR INCOME RECEIVED AND UTILIZED IN MUMBAI, THE LD. COUNSEL OF THE ASSE SSEE SUBMITTED THAT JUSTIFICATION HAD ALREADY BEEN SUBMITTED IN THIS MATTER VIDE LETT ER DATED 12.09.2012 AND COPY OF THE SAME IS PLACED ON RECORD AT PAPER BOOK PAGE NO. 27-28. IN RESPECT OF THE OBJECTION OF LD. CIT REGARDING ASSESSEE-TRUSTS ONE OF THE OBJECTS WAS TO CARRY OUT ACTIVITIES FOR WELFARE OF THE MEMBER, THE LD. COUNS EL OF THE ASSESSEE CONTENDED THAT THE TRUST HAS BEEN SERVING PUBLIC IRRESPECTIVE OF C AST, CREED AND RELIGION BY PERFORMING WELFARE ACTIVITIES OF ACCOMMODATION, REL IEF TO POOR, JIVDAYA ETC.; THEREFORE IT IS NOT JUSTIFIED IN FORMING AN OPINION THAT OBJE CTS OF APPELLANT TRUST ARE FOR ONLY MEMBERS. 4. CONTINUING HIS ARGUMENTS, LD. COUNSEL OF THE ASS ESSEE SUBMITTED THAT REGISTERING AUTHORITY MUST BE SATISFIED BY THE (I) CHARITABLE CHARACTER; AND (II) THE GENUINENESS OF ITS ACTIVITIES. AT THE TIME OF REGI STRATION, LD. CIT NEED NOT RESORT TO SECTION 13 WHICH IS TO BE APPLIED AT THE TIME OF AS SESSMENT. IN OTHER WORDS, UTILITY OF INCOME TO A PARTICULAR CLASS HAS TO BE EXAMINED AT THE TIME OF THE ASSESSMENT AND NOT DURING THE REGISTRATION. IN THIS CONNECTION, T HE LD. COUNSEL OF THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS:- 4 635-RJT-2012 - SHREE PRAGPAR AATHKOTI NANI PAKSH STHANKWASHI JAIN SANGH (SMC) A) COCHIN TRIBUNAL IN THE CASE OF MAHATMA GANDHI CH ARITABLE SOCIETY V. CIT (2013) 33 TAXMANN.COM 142. B) ALLAHABAD HIGH COURT IN CASE OF HARDAYAL CHARITA BLE & EDUCATION TRUST, 32 TAXMANN.COM 341 THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE-TRUSTS ACTIVITIES FALL UNDER THE DEFINITION OF CHARITABLE PURPOSE G IVEN IN SECTION 2(15) OF THE INCOME- TAX ACT BEING WELFARE ACTIVITIES OF EDUCATIONAL, ME DICAL AND SOCIAL. FINALLY, HE ALSO SUBMITTED THAT THE ASSESSEE-TRUST WAS NOT PROVIDED WITH ENOUGH OPPORTUNITY FOR SUSTAINING ITS STAND AS IT IS EVIDENT FROM THE SHOW CAUSE NOTICE WHICH WAS DATED 24.09.2012 FIXING THE HEARING FOR 25.09.2012; THERE FORE, IN THE INTEREST OF JUSTICE, THE IMPUGNED ORDER OF LD. COMMISSIONER OF INCOME-TAX BE SET ASIDE AND HE MAY BE DIRECTED TO PASS A FRESH ORDER U/S 12AA OF THE INCO ME-TAX ACT, 1961. 5. AS AGAINST THE SUBMISSION OF LD. COUNSEL OF THE ASSESSEE, DR. M.L. MEENA, DR APPEARED ON BEHALF OF THE REVENUE VEHEMENTLY SUPPOR TED THE ORDER OF LD. CIT. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE-TRUST HAD NOT FILED ANY DETAILS AS CALLED FOR BY THE JURISDICTIONAL ASSESSI NG OFFICER AND IN RESPONSE TO THE FINAL NOTICE ISSUED BY THE LD. CIT, RAJKOT-I, IT HAD FILE D ONLY A WRITTEN REPLY ENLISTING ITS OBJECTS AND NO EVIDENCES WHATSOEVER HAD BEEN FURNIS HED TO SUBSTANTIATE THE ACTIVITIES WERE BEING PURSUED BY THE ASSESSEE-TRUST . HE ALSO SUBMITTED THAT ONE OF THE OBJECTS MENTIONED BY THE ASSESSEE-TRUST WAS TO CARRY OUT ACTIVITIES FOR WELFARE OF THE MEMBER OF THE TRUST, AND HE ALSO POINTED OUT TH AT THE PROFIT AND LOSS ACCOUNT ALSO SHOWS GENERATION OF CONSIDERABLE SURPLUS; THEREFORE , IT IS EVIDENT THAT THE OBJECTS OF THE TRUST AND GENUINENESS OF ITS ACTIVATES COULD NO T BE ESTABLISHED BY THE ASSESSEE- TRUST SATISFACTORILY EITHER BEFORE THE ASSESSING OF FICER OR LD. CIT, RAJKOT-I. THEREFORE, VIEW TAKEN BY THE LD. CIT IN REJECTING THE ASSESSEE -TRUSTS APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME-TAX ACT BE UPHELD. 6. HAVING HEARD BOTH SIDES, I HAVE CAREFULLY GONE T HROUGH THE IMPUGNED ORDER OF LD COMMISSIONER OF INCOME-TAX, RAJKOT-I, THE DECISI ONS CITED AND THE DOCUMENTS AVAILABLE ON RECORDS INCLUDING PAPER-BOOK FILED BY THE ASSESSEE-TRUST. IT SEEMS THAT THE ASSESSEE-TRUST HAD NOT RESPONDED TO THE JURISDI CTIONAL ASSESSING OFFICER AT GANDHIDHAM REGARDING THE DETAILS AS CALLED FOR BY T HE ASSESSING OFFICER. HOWEVER, IT IS PERTINENT TO NOTE THAT THE ASSESSEE-TRUST RESPON DED TO THE FINAL REMINDER ISSUED BY 5 635-RJT-2012 - SHREE PRAGPAR AATHKOTI NANI PAKSH STHANKWASHI JAIN SANGH (SMC) THE LD. CIT, RAJKOT-I IN A REPLY ENLISTING THE OBJE CTS OF THE ASSESSEE-TRUST WITHOUT PROVIDING ANY EVIDENCE TO SUBSTANTIATE ITS ACTIVITI ES BEING PURSUED. THE MAIN GROUND RAISED BY THE LD. CIT IN REJECTING ASSESSEE-TRUSTS APPLICATION FOR REGISTRATION U/S 12A IS THAT NO EVIDENCES HAD BEEN PRODUCED BY THE ASSES SEE-TRUST BEFORE THE LD. CIT REGARDING THE ACTIVITIES THEY WERE BEING PURSUED. THE OBSERVATION MADE BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KUTCHI DAS A OSWAL MOTO PARIWAR AMBAMA TRUST, [2013] 29 TAXMANN.COM 228, IS RELEVANT IN TH IS REGARD, WHEREIN THE GUJARAT HIGH COURT HELD THAT AT ABSENCE OF ANY ACTIVITY OF A TRUST AT THE TIME OF REGISTRATION IS NOT A GROUND TO QUESTION GENUINENESS OF OBJECTIVES AND ACTIVITIES; REGISTRATION FOR TRUST CANNOT BE DENIED ON THE SOLE GROUND OF NON-CO MMENCEMENT OF ACTIVITY AND SUCH ABSENCE OF ACTIVITY DOES NOT EMPOWER COMMISSIONER T O INFER ABSENCE OF GENUINENESS. THE OTHER OBJECTION RAISED BY THE L D. CIT REGARDING THE SURPLUS GENERATED BY THE ASSESSEE-TRUST AND THE MAJOR INCOM E RECEIVED & UTILIZED IN MUMBAI; IN MY VIEW, THE ASSESSEE-TRUST HAS GIVEN SATISFACTO RY EXPLANATION VIDE ITS LETTER DATED 12.09.2012. IT IS ALSO PERTINENT TO NOTE THAT THE A SSESSEE-TRUST WAS NOT PROVIDED WITH ENOUGH AND REASONABLE OPPORTUNITY TO SUBSTANTIATE I TS STAND AS IT IS EVIDENT FROM THE SHOW-CAUSE NOTICE ISSUED BY THE LD. CIT, RAJKOT-I W HICH WAS DATED 24.09.2012 FIXING HEARING FOR 25.09.2012. CONSIDERING THESE CONSPICU OUS FACTS OF THE CASE, I SET ASIDE THE IMPUGNED ORDER DATED 28.09.2012 PASSED BY THE LD COMMISSIONER OF INCOME-TAX, RAJKOT-I U/S 12AA(1)(B)(II) AND DIRECT HIM TO RECONSIDER THE APPLICATION OF ASSESSEE-TRUST FOR REGISTRATION UNDER SECTION 12A O F THE INCOME-TAX ACT AFRESH KEEPING IN VIEW THE RATIO OF JUDGMENT OF HONBLE GU JARAT HIGH COURT IN THE CASE OF KUTCHI DASA OSWAL MOTO PARIWAR AMBAMA TRUST (SUPRA) , AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- ( $.. &' / T. K. SHARMA) ( ) /JUDICIAL MEMBER *)& +) ,/ ORDER DATE: 31.01.2014 !$ /RAJKOT *BT 6 635-RJT-2012 - SHREE PRAGPAR AATHKOTI NANI PAKSH STHANKWASHI JAIN SANGH (SMC) / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT- SHREE PRAGPAR AATHKOTI NANI PAKSH STH ANAKWASHI JAIN SANGH, VILLAGE PRAGPAR, TAL. MUNDRA, KUTCH 2. / RESPONDENT- THE COMMISSIONER OF INCOME-TAX-I, RA JKOT 3. ,0,1 * * 2 / CONCERNED CIT, GANDHIGHAM 4 . 345 1, * 1#, !$ / DR, ITAT, RAJKOT 5 . 57 89 / GUARD FILE *)& / BY ORDER TRUE COPY PRIVATE SECRETARY, ITAT, RAJKOT