Atam Pargas Social Welfare council, Ludhiana V. The Commissioner of Income Tax (Exemption), Chandigarh

ITA 637/ASR/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5688 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-03-2018
• Assessment Year: misc
• Appeal Filed On: 19-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN K KUMAR LD
• Assessee Lawyers: SAURAV SOOD LD
• Keywords: Charitable institution; Principle of natural justice; Bonafide belief
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.637(ASR)/2016 ASSESSMENT YEAR: M/S ATAM PARGAS SOCIAL WELFARE COUNCIL, 99, PREET VIHAR, PAKHOWAL ROAD, VPO-DAAD, LUDHIANA (PUNJAB)-142002 PAN:AABAA4437B VS. CIT(EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SAURAV SOOD (LD. ADV.) RESPONDENT BY: SH. PAWAN K. KUMAR (LD. DR) DATE OF HEARING: 20.03.2018 DATE OF PRONOUNCEMENT:28.03.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 26.08.2016 PASSED BY THE LD. CIT(EXEMPTION), CHANDIGA RH, U/S 80G(5)(VI) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2 . THE FOLLOWING GROUNDS OF APPEAL RAISED BY THE ASSESSE E. 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER U/S 80G(5)(VI) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT 1 ) PASSED BY THE LD. COMMISSIONER OF INCOME TAX ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 2 (EXEMPTIONS), CHANDIGARH FLAGRANTLY VIOLATES THE PR INCIPALS OF NATURAL JUSTICE AND IS BAD IN LAW. 2. THAT THE LD CIT(EXEMPTIONS) FAILED TO APPRECI ATE THE SETTLED LAW THAT ONCE REGISTRATION UNDER SECTION 12AA OF ACT HA S BEEN GRANTED TO AN ASSESSEE, IT CANNOT BE DENIED APPROVAL UNDER SECTION 80(G)(5)(VI) OF THE ACT UNLESS THERE IS NON-FULFILL MENT OF CONDITIONS SPECIFIED IS SECTION 80G(5). 2.1 THAT THE LD CIT (EXEMPTIONS) ERRED IN FACTS AND IN LAW BY DENYING REGISTRATION U/S 80G OF THE ACT ON THE G ROUND THAT AT THE TIME OF GRANTING REGISTRATION IT IS TO BE EN SURED THAT THE INSTITUTION IS ESTABLISHED IN INDIA FOR CHARITABLE PURPOSE IRRESPECTIVE OF THE FACT THAT THE INSTITUTION IS AL READY REGISTERED UNDER SECTION 12AA OF THE ACT. 2.2 THAT THE LD CIT (EXEMPTIONS) ERRED IN FACTS AN D IN LAW BY DENYING REGISTRATION UNDER SECTION 80G OF THE AC T BY CONSIDERING CONDITIONS OTHER THAN THOSE MENTIONED I N SECTION 80G(5) OF THE ACT. 2.3 THAT THE LD CIT(EXEMPTIONS) ERRED IN FACTS AN D IN LAW BY DENYING REGISTRATION UNDER SECTION 80G OF THE AC T ON THE GROUND THAT THE RECEIPTS OF THE APPELLANT SOCIETY A RE PREDOMINANTLY FROM SALE OF BOOKS AND THAT SUCH SALE CANNOT BE COVERED UNDER CHARITABLE ACTIVITIES AS DEFINED UNDER SECTION 2(15) OF THE ACT. 3. THAT THE LD. CIT(EXEMPTIONS) ERRED IN FACTS AND IN LAW BY DENYING REGISTRATION U/S 80G OF THE ACT ON THE GROU ND THAT THE APPELLANT SOCIETY IS NOT CARRYING ON CHARITABLE AC TIVITIES AS PROVIDED IN SECTION 2(15) OF THE ACT. 3.1. THAT THE LD CIT(EXEMPTION) FAILED TO APPRECIATE THE FACT THAT WHERE THE PREDOMINANT OBJECT OF THE APPLICANT SOCIE TY WAS TO CARRY OUT A CHARITABLE ACTIVITY, THE SOCIETY WOULD NOT LOSE ITS CHARITABLE STATUS MERELY ON THE GROUND THAT THE SOC IETY HAS MADE SOME PROFITS FROM CARRYING OUT THESE ACTIVITIE S. 3.2. THAT THE LD CIT(EXEMPTION) HAS ERRED IN FACTS AND IN LAW BY FAILING TO APPRECIATE THE FACT THAT WHILE GRANTING REGISTRATION U/S 80G OF THE ACT, THE APPLICANT SOCIETY HAD TO BE DEEMED TO BE CARRYING ON CHARITABLE ACTIVITIES BY VIRTUE O F ITS REGISTRATION U/S 12AA OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME O F HEARING. ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 3 3. IN THE INSTANT CASE AN APPLICATION FOR REGISTRATION U/S. 80G WAS FILED BY THE APPELLANT HEREIN, VIDE APPLICATION D ATED 10.02.2016, WHICH WAS REJECTED BY THE LD. CIT(E) ON VA RIOUS GROUNDS, WHICH INCLUDES NON FILING OF REVISED/AMENDED OBJECTS OF THE SOCIETY, THEREFORE, FEELING AGGRIEVED AGAINST THE SAID ORDER IMPUGNED HEREIN, THE ASSESSEE PREFERRED THE INSTANT APPE AL. 4. AT THE OUTSET, THERE IS A DELAY OF 50 DAYS IN FILING O F APPEAL. THE LD. AR IN ORDER TO EXPLAIN THE DELAY SUB MITTED THAT THE APPELLANT HAD BONAFIDE BELIEF THAT REVISED/AMEND ED OBJECTS HAD ALREADY BEEN FILED BEFORE THE LD. CIT(E) ALONG WITH REPLY DATED 24 TH AUGUST, 2016, THEREFORE, IN ORDER TO CONFIRM THE SA ME THE APPELLANT VIDE LETTER DATED 21 ST SEP., 2016 (SUBMITTED ON 23 RD SEPTEMBER, 2016) PRAYED FOR AN OPPORTUNITY TO INSPE CT THE CASE FILE, TO ASCERTAIN THE REVISED/AMENDED OBJECTS ON RECO RD, HOWEVER, NO OPPORTUNITY WAS OFFERED BY THE LD. CIT(E ), THEREAFTER, APPELLANT AGAIN FILED AN APPLICATION ON 18 TH NOVEMBER, 2016, HOWEVER, DESPITE THE REPEATED REQUEST , YIELDED NO RESULT, THEREFORE, THE DELAY OF 50 DAYS HAVE BEEN OCCURRED IN FILING THE INSTANT APPEAL. 5. ON THE OTHER HAND, LD. DR SUBMITTED THAT IT WAS INCUMBENT UPON THE APPELLANT TO FILE THE APPEAL IF SO AGGRIEVED AGAINST THE ORDER IMPUGNED HEREIN, WITHIN THE LIMIT ATION TIME AS PRESCRIBED BY LAW, THEREAFTER, THE APPEAL OF THE ASSESSEE CAN BE ENTERTAINED UNTIL AND UNLESS THERE MUST BE SPECIFIC REASON S FOR NOT DOING SO. WE HAVE CONSIDERED THE SUBMISSIONS OF THE P ARTIES ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 4 AND REALIZED THAT IN THE INSTANT CASE, THE ORDER UNDER CHALLENGE HAS BEEN PASSED ON 26 TH AUGUST, 2016, WHICH WAS ADMITTEDLY RECEIVED BY THE APPELLANT DATED 31 TH AUGUST, 2016, THUS, THE APPELLANT WAS SUPPOSED TO FILE THE INSTANT APPEAL WITHI N 60 DAYS I.E., UP TO 29 TH OF OCTOBER, 2016, HOWEVER, THE SAME WAS FILED ONLY ON 19 TH DECEMBER, 2016. THE DELAY OF 50 DAYS HAVE BEEN OCCURRED, WHICH HAS BEEN EXPLAINED BY THE LD. AR. IN OU R CONSIDERED VIEW, GENUINE LITIGATION, CANNOT BE THROWN OUT MERELY ON THE TECHNICALITIES, THEREFORE, WE CONSIDER THE REASON ING OF LD. AR QUITE LOGICAL AND REASONABLE AND HENCE, DELAY OF 50 DAYS STANDS CONDONED. LET US TO GO TO THE MERIT OF THE CASE IN THE INSTANT CA SE, ALTHOUGH IT WAS EXTENSIVELY ARGUED BY THE LD. AR THAT THE LD. CIT(E) IS SUPPOSED TO PASS AN ORDER U/S 80G OF THE ACT ON THE PARA METERS SET OUT IN THE SEC.80G(5) OF THE ACT. THE L D. AR ALSO EMPHASIZED THAT THE APPELLANT HAS ALREADY BEEN SUB MITTED THE ORIGINAL/REVISED MEMORANDUM OF ASSOCIATION OF SOCIE TY AND COPY OF WHICH, ALSO PLACED IN THE PAPER BOOK. ALTERNATI VELY, IT WAS ARGUED BY THE LD. AR, EVEN OTHERWISE THE REVISED OF MEMORANDUM OF ASSOCIATION HAVE NOT BEEN FILED BEFORE THE LD. CIT(E), BUT STILL IN THE APPLICATION FOR REGISTRATION U/S 80G ITSELF THE OBJECTIVE OF THE INSTITUTION HAVE BEEN SHOWN AS REV ISED OBJECTIVES, THEREFORE, IT CANNOT BE SAID THAT THE LD. C IT(E) WAS NOT IN THE KNOWLEDGE OF THE REVISED OBJECTIVES. FURTH ER, THE LD. AR ALSO SUBMITTED THAT EVEN OTHERWISE THE ASSESSMENT ORDER RELEVANT TO THE ASST. YEAR:2011-12 WAS PASSED BY THE LD . ITO- ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 5 WARD-6(I) LUDHIANA BY TAKING INTO CONSIDERATION THE A MENDED OBJECTS OF THE APPELLANT TRUST. THE LD. AR ALSO SUBMITTE D THAT BY PUBLISHING AND SELLING THE BOOK FOR THE STUDENTS, THE APPELLANT IS CARRYING OUT THE CHARITABLE ACTIVITIES, WHICH IS IN SYNC W ITH THE OBJECT OF THE SOCIETY AND CANNOT BE TERMED AS COMMERCIAL A ND INTENDS TO BE PROFITABLE. THE LD. AR ALSO SUBMITTED TH AT LD. CIT(E) IS REQUIRED TO CONSIDER PARAMETERS OF SEC.80G(5) WHILE GRANTING EXEMPTION U/S 80G. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE ASSESSE E NOWHERE HAS SHOWN TO HAVE BEEN SUBMITTED THE AMENDED/REVISED OBJECTS BEFORE THE LD. CIT(E) AND EVEN OTHERWISE THE ORIGINAL MEMORANDUM OF ASSOCIATION AND AM ENDED MEMORANDUM OF ASSOCIATION FILED BEFORE THIS COURT DOES N OT SPECIFY ANY DATE FROM WHICH, THE OBJECTS HAVE BEEN REVISE D AND SPECIFICALLY IN THE MEMORANDUM OF ASSOCIATION AND THE AME NDED MEMORANDUM OF ASSOCIATION, ON WHICH THE ASSESSEE FOCUSED TH E ATTENTION IN FACT DOES NOT BEAR ANY DATE OF INCORPORA TION AND REGISTRATION IN THE OFFICE OF REGISTRAR OF THE SOCIETIES AND EVEN AMENDED WORD HAVE BEEN WRITTEN BY USING PEN WHEREAS MEMORANDUM OF ASSOCIATION HAVE BEEN TYPED BY THE TYPE WRITER WHICH GOES TO SHOW THAT THIS IS NOT A RELIABLE DOCUMENT. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES OF THE CASE, DOCUMENTS ON RECORD AND RIVAL SUBMISSIONS OF TH E PARTIES. AS THE LD. CIT(E) WHILE DECLINING EXEMPTION U/S. 80G OF ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 6 THE ACT OBSERVED THAT THE FIRST PRE REQUISITE FOR PR OCESSING AN APPLICATION U/S. 80G(5) AS PER RULE-11A IS THE SATISFACTI ON OF SEC.12AA (I)(B) OF THE ACT AND THE REGISTRATION ON BAS IS OF WHICH THE APPLICATION HAS BEEN MADE BECOMES RELEVANT. IT IS AN ADMITTED FACT THAT FOR THE GRANT OF REGISTRATION U/S. 80G, THE REGISTRATION U/S 12AA OF THE ACT IS NECESSARY AND IN THE INSTANT CASE, THE APPELLANT SOCIETY VIDE ORDER DATED 19.01.2011 GOT THE REGISTRATION ON THE BASIS OF ORIGINAL MEMORANDUM OF ASSO CIATION AND/OR ORIGINAL OBJECTS OF THE SOCIETY. THE COPY OF THE ORDER U/S 12AA OF THE ACT IS REPRODUCED HEREIN BELOW. ORDER UNDER SECTION 12AA (1)(B)(I) OF THE ACT, 19 61 M/S. ATAM PARGAS SOCIAL WELFARE COUNCIL, WHICH IS A REGISTERED SOCIETY WITH REGISTRAR OF FIRMS AND SOCIETIES, PUBJ AB, HAS MADE AN APPLICATION FOR REGISTRATION OF CHARITABLE OR RELIG IOUS TRUST OR INSTITUTION UNDER CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12A OF THE I.T. ACT ON 16/7/2010. THE AIMS AND OBJECTS OF THE SOCIETY ARE FOUND TO BE BOTH CHARITABLE AND RELIGIOUS IN NATURE . THE ITEM NO. (III) OF THE AIMS AND OBJECTS IS TO ENCOURAGE THE CULTUR E OF READING, LISTENING AND SINGING GURBANI AND TO MAKE ARRANGEME NTS TO IMPART TRAINING FOR THE PURPOSE BY ESTABLISHING UNITS IN A CADEMIC INSTITUTIONS, TOWNS AND VILLAGES OR BY ORGANIZING S EMINARS, WORKSHOPS, TRAINING CAMPS, COMPETITIONS AND OTHER F UNCTIONS. THIS OBJECT IS RELIGIOUS IN NATURE. 2. THE SOCIETY IS GRANTED REGISTRATION U/S 12AA(1) (B)(I) OF THE I.T. ACT, 1961 W.E.F., ASSESSMENT YEAR 2011-12. THE APPL ICATION HAS BEEN ENTERED AT SR. NO.254 IN THE REGISTER OF APPLI CATION U/S 12A(AA) OF THE I.T. ACT. SD/- K.K. SINHA COMMISSIONER OF INCOME TAX-III, LUDHIANA THE AIMS AND OBJECTIVES AS ENSHRINED IN ORIGINAL MEMORANDUM OF ASSOCIATION REVISED BY THE APPELLANT BY ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 7 AMENDMENT OF MEMORANDUM OF ASSOCIATION AND THE REVISED AIMS AND OBJECTS ARE REPRODUCED HEREIN BELOW. I) TO EDUCATE AND INCULCATE MORAL VALUES AMONG THE STUDENTS IN PARTICULAR AND PUBLIC IN GENERAL. THE BENEFITS OF T HE COUNCIL SHALL BE OPEN TO ALL IRRESPECTIVE OF CASTE, CREED OR RELIGIO N. II) TO DEVELOP LIBRARY AND REFERENCE CATALOGUE OF R ELIGIOUS HISTORICAL, SOCIAL AND CULTURAL PUBLICATIONS/PRODUCTIONS. III) TO ENCOURAGE THE CULTURE OF READING, LISTENING AND SINGING GURBANI OF SHRI GURU GRANTH SAHIB AND TO MAKE ARRAN GEMENTS TO IMPART TRAINING FOR THE PURPOSE BY ESTABLISHING UNI TS IN ACADEMIC INSTITUTION, TOWNS AND VILLAGES OR BY ORGANIZING SE MINARS, WORKSHOPS, TRAINING CAMPS, COMPETITIONS AND OTHER F UNCTIONS. IV) TO ESTABLISH EDUCATIONAL INSTITUTIONS. V) TO PROVIDE HEALTH SERVICE BY ESTABLISHING HOSPIT ALS/DISPENSARIES ETC. IT APPEARS FROM THE IMPUGNED ORDER, THAT THE FACT OF AMENDMENT IN THE SOCIETYS OBJECTS WAS CONFRONTED TO THE APPELLANT AND SPECIFIC QUERY WAS RAISED WITH RESPECT TO E VIDENCE OF THE SAME BEING FILED WITH THE CIT(E) I.E., PRESCRIB ED AUTHORITY FOR GRANTING REGISTRATION AND APPROVAL U/S 12AA AND 80G RESPECTIVELY. ADMITTEDLY THE SAME WAS NOT DONE BY THE APPELLANT, HOWEVER, IT WAS CLAIMED THAT THE SAME HAS B EEN FURNISHED BEFORE THE LD. AO AND REVISED OBJECTS HAVE B EEN MENTIONED BY THE AO IN HIS ASSESSMENT ORDER. WE REALIZED THAT EVEN OTHERWISE, IN THE ASSESSMENT ORDER DATED 19 TH SEPTEMBER, 2013 RELEVANT TO THE ASST. YEAR 2011-12, IT DOES NOT R EFLECT THAT THE MAIN OBJECTS OF THE TRUST HAVE BEEN SHOWN AS PER THE AMENDED MEMORANDUM OF ASSOCIATION. WE ARE IN AGREEMENT WITH THE LD. CIT(E) THAT THE AO AND THE ASSESSMENT ORDE R CANNOT REPLACE THE PRESCRIBED AUTHORITY AS ACCORDING TO SEC.12AA /80G IT ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 8 MANDATES THAT WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION U/S 12A OF THE ACT THEN SUBSEQUENTLY THE PR ESCRIBED AUTHORITY CAN CANCEL THE REGISTRATION ON THE GROUND TH AT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE. IT REFLECTS FROM THE RECORD THAT IN THE INSTANT CASE, THE APPELLANT DID NOT FILE REVISED OBJECTS EITHER BEFORE T HE PRESCRIBED AUTHORITY WHO GRANTED REGISTRATION U/S 12AA OF THE ACT OR BEFORE THE LD. CIT(E) DURING THE CONSIDERATION OF APPLICATIO N U/S 80G OF THE ACT. SIMPLY BY MENTIONING THE NEW OBJECTS IN THE A PPLICATION FOR GRANT OF REGISTRATION U/S 80G DOES NOT SERVE ANY P URPOSE UNTIL AND UNLESS THE SAME AVERMENT HAS TO BE SPECIFIC WIT H FILING OF AMENDED MEMORANDUM OF ASSOCIATION THAT THE OBJECTS W HICH WERE MENTIONED IN THE APPLICATION ARE REVISED/AMENDED HAVING BEEN APPROVED BY THE AUTHORITY, WHO GRANTED THE REG ISTRATION U/S 12A OF THE ACT. WE WONDER AS TO HOW AND WHAT PREV ENTED THE APPELLANT TO FILE THE AMENDED/REVISED OBJECTS/ME MORANDUM OF ASSOCIATION BEFORE THE LD. CIT(E) EVEN AFTER CONFRON TATION OF THE SAME. WE FIND FORCE IN THE CONTENTION OF THE LD. D R THAT EVEN THE ORIGINAL MEMORANDUM OF ASSOCIATION AND AMENDE D MEMORANDUM OF ASSOCIATION AS FILED BEFORE US DOES NOT SP ECIFY ITS REGISTRATION AND EVEN NO DATE IS REFLECTING FROM TH E AFORESAID MEMORANDUM OF ASSOCIATION OF THE APPELLANT. IN LAW, TH ERE IS SPECIFIED PROCEDURE FOR AMENDMENT OF THE OBJECTS, WHICH ITA NO.637/ASR/2016 ATAM PARGAS SOCIAL WELFARE COUNCIL VS. ITO 9 REQUIRED TO BE NOTIFIED TO THE PRESCRIBED AUTHORITY U NDER THE INCOME TAX AND WHICH THE APPELLANT HEREIN FAILED TO D O. HOWEVER, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IN HAND, AT THIS JUNCTURE WE ARE NOT GOING INTO ME RIT OF THE IMPUGNED ORDER AND FEEL IT APPROPRIATE TO REMAND TH E CASE TO THE FILE OF THE LD. CIT(E) FOR DECIDING AFRESH AFTER TAKI NG REGISTERED AMENDED OBJECTS/MEMORANDUM OF ASSOCIATION OF THE APPEL LANT SOCIETY, WHILE CONSIDERING THE PARAMETERS PRESCRIBED IN SE CTION 80G(V) OF THE ACT. THE ASSESSEE SHALL CO-OPERATE WITH THE PROCEEDING AND FILE THE APPROPRIATE DOCUMENTS WHICH AR E ESSENTIAL AND REQUIRED BY THE LD. CIT(E) FOR PROPER A DJUDICATION OF THE CASE IN HAND. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 .03.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:28.03.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S. ATAM PARGAS SOCIAL WELFARE COUNCIL, LUDHIA NA (2) THE CIT(E), CHANDIGARH (3) THE CIT(E),CHANDIGARH (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER