India Herbs Foundation, Saharanpur V. CIT(E), Lucknow

ITA 6420/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3626 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 23-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Charitable institution; Principle of natural justice
• Section: 12A; 12AA; 13

Judgement Text

1 ITA NO. 6420/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL ME MBER AND SH. PRASHANT MAHARISHI, ACCOUN TANT MEMBER I.T.A. NO. 6420/DEL/2017 (THROUGH VIDEO CON FERENCING) INDIA HERBS FOUNDATION C/O. M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1, NEW DELHI AABT13091E (APPELLANT) VS CIT (EXEMPTION) LUCKNOW (UTTAR PRADESH) (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER DATED 25/08/2017 PASSED BY CIT (EXEMPTION). 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE LD. CIT(E) HAS ERRED IN LAW AND ON FACTS IN REJECTING THE REGI STRATION U/S 12AA(L)(B)(II) OF THE ACT BY OBSERVING THAT ACTIVITIES OF THE TRUST A RE NOT GENUINE AND HAS FURTHER ERRED IN OBSERVING AS UNDER:- (A) THAT THE APPELLANT SOCIETY HAS NOT BEEN ABLE TO PR ODUCE THE BOOKS OF ACCOUNTS FOR VERIFICATION OF OBJECT AND ACTIVITIES OF THE TRUST. (B) THAT THE APPELLANT HAD INTRODUCED THE UNACCOUNT ED MONEY INTO THE TRUST APPELLANT BY SH. RAKESH GUPTA, ADV & SH. SOMIL AGGARWAL, ADV RESPONDENT BY MS. SUNITA SINGH, CIT DR DATE OF HEARING 07.10.2021 DATE OF PRONOUNCEMENT 13.10.2021 2 ITA NO. 6420/DEL/2017 INCOME AS DONATION. (C) THAT THE APPELLANT SOCIETY IS NOT CARRYING OUT ANY ACTIVITY OF CHARITABLE NATURE. 2. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, ACTION OF LD. CIT(E) IN REJECTING THE REGISTRATION UNDER SECTION 12AA(L)(B) (II) IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND IS CONT RARY TO THE PRINCIPLES OF NATURAL JUSTICE AS THE IMPUGNED ORDER HAS BEEN PASS ED WITHOUT GRANTING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCOR RECT FACTS AND FINDINGS AND THE APPELLANT OUGHT TO HAVE BEEN GRANTED BENEFIT OF REGISTRATION UNDER THE LAW. 3. THE INDIAN HERBS FOUNDATION, SAHARANPUR, IS A PU BLIC CHARITABLE TRUST. THE SAID CHARITABLE TRUST WAS FORMED THROUGH INDIAN HERBS SPECIALITIES PVT. LTD. BY EXECUTING A WRITTEN DEED DATED 15/3/2016. THE DEED WAS REGISTERED ON 29/3/2016. THE FOUNDATION FILED AN APPLICATION DAT ED 11/2/2107 IN FORM NO. 10A ON 17/2/2017 BEFORE THE PRINCIPAL COMMISSIONER OF INCOME TAX FOR ITS REGISTRATION. THE CIT, LUCKNOW ISSUED A NOTICE DAT ED 5/7/2017 TO THE FOUNDATION. IN RESPONSE TO THE NOTICE, SH. P. K. V ERMA ATTENDED BEFORE THE CIT, ON 10/8/2017 AND PRODUCED AUDITED BOOKS AND VOUCHER S FOR FINANCIAL YEAR 2016-17. THE FOUNDATION ALSO FILED LETTERS DATED 1 0/8/2017 AND 16/8/2017 ALONG WITH THEIR ENCLOSURES THEREBY ANSWERING THE Q UERIES RAISED BY THE CIT (EXEMPTION). THE CIT(EXEMPTION) REJECTED THE REGIS TRATION UNDER SECTION 12A(1) SOUGHT BY THE FOUNDATION VIDE ORDER DATED 25 /8/2017. THE FOUNDATION ALSO FILED AN APPLICATION DATED 21/3/2017 TO THE PC IT FOR ITS APPROVAL U/S 80G. 4. BEING AGGRIEVED BY THE ORDER DATED 25/8/2017 PAS SED BY THE CIT(EXEMPTION), THE ASSESSEE FILED APPEAL BEFORE US . 5. THE LD. AR SUBMITTED THAT THE ORDER OF THE CIT(E XEMPTIONS) FAILED TO TAKE INTO ACCOUNT THE NATURE OF THE AIMS AND OBJECTS OF THE FOUNDATION AND THE EVIDENCE IN SUPPORT OF THE ACTIVITIES UNDERTAKEN IN PURSUANCE OF THE OBJECTS. 3 ITA NO. 6420/DEL/2017 THE LD. AR FURTHER SUBMITTED THAT THE CIT(EXEMPTION S) ALSO FAILED TO TAKE INTO ACCOUNT THAT DONATIONS HAVE BEEN RECEIVED FROM IDEN TIFIED PERSONS AND THE APPLICATION OF INCOME HAS BEEN IDENTIFIED AND VERIF IABLE. THE LD. AR SUBMITTED THAT ALL THE AIMS AND OBJECTS OF THE FOUNDATIONS AR E CHARITABLE IN NATURE AND ONCE THE OBJECTS ARE FOR CHARITABLE PURPOSES. THE NUMBER OF THE AIMS AND OBJECTS BECOMES IMMATERIAL FOR PURPOSES OF SECTION 2(15) OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT IN FINANCIAL YEAR 2016-17 , THE FOUNDATION RECEIVED AGGREGATE DONATIONS OF RS. 13,20,400/- THE RECEIPT OF ACCOUNT HAS BEEN PLACED IN THE PAPER BOOK. WE SHOWS THAT FOR CASH DONATIONS OF RS. 1,100 EACH WERE RECEIVED FROM SH. SUNIL KUMAR AGGARWAL, SH. SUDHAKA R AGGARWAL, SH. GAURAV AGGARWAL AND SH. VIPUL AGGARWAL, THE PARTICULARS OF THESE DONORS IN TERMS OF NAME, ADDRESS, PAN AND DESIGNATION IN THE FOUNDATIO N ARE PLACED ON RECORD. THEY ARE CHAIRMAN, VICE CHAIRMAN, SECRETARY AND TRE ASURIES OF THE FOUNDATION RESPECTIVELY. THE LD. AR SUBMITTED THAT THESE DETAILS SHOW THAT THE DONOR COMPANY IS EASILY IDENTIFIABLE AND ITS CA PACITY TO MAKE DONATIONS OUT OF ITS PROFIT AS PER THE PROVISIONS OF THE COMPANIE S ACT TO PROMOTE ITS CSR ACTIVITIES. THE LD. AR SUBMITTED THAT THE FOUNDATIO N HAS MADE THE DONATIONS AS PER THE LAW. THUS, THE LD. AR SUBMITTED THAT TH E FINDING OF THE CIT(EXEMPTION) THAT THE DONORS ARE NOT IDENTIFIABLE AND DONATIONS HAVE BEEN USED AS INSTRUMENTS FOR SHOWING UNACCOUNTED MONEY A S THE RECEIPTS OF THE FOUNDATIONS ARE IN CORRECT. THUS, THE LD. AR SUBMI TTED THAT THE CIT(EXEMPTION) HAS TOTALLY IGNORED THE EVIDENCE PRO DUCED BEFORE THEM REGARDING THE APPLICATION UNDER GRANT OF REGISTRATI ON U/S 12A (1) IS NOT JUSTIFIED. 6. THE LD. DR SUBMITTED THAT IF THERE ARE ANY DOCUM ENTS OR EVIDENCES PRODUCED BY THE ASSESSEE, THE SAME IS NOT SET OUT I N THE ORDER OF THE CIT(EXEMPTION). THE LD. DR RELIED UPON THE ORDER O F THE CIT(EXEMPTION). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE CIT(EXEMPTION) HAS GIVEN A 4 ITA NO. 6420/DEL/2017 FINDING THAT NO DETAILS WERE FILED BY THE ASSESSEE/ APPLICANT ESTABLISHING THAT THE FOUNDATION IS FOR CHARITABLE PURPOSE, BUT THE R ECORD SHOWS OTHERWISE. THEREFORE, WE ARE OF THE VIEW THAT THE CIT(EXEMPTIO N) SHOULD TAKE INTO ACCOUNT THE COGNIZANCE OF THE EVIDENCE AND DECIDE THE APPLI CATION U/S 12AA OF THE APPLICANT FOUNDATION/ASSESSEE AS PER LAW. NEEDLESS TO SAY, THE APPLICANT BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. THEREFORE, THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF OCTOBER, 2021 SD/- SD/- (PRASHANT MAHARISHI) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 13/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 6420/DEL/2017