KRISHNA CONSIOUSNESS & WELFARE TRUST (REGD), LUDHIANA V. COMMISSIONER OF INCOME TAX (EXEMPTION) , CHANDIGARH

ITA 647/ASR/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2661 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEET SING H
• Keywords: Set aside
• Section: 11; 12A; 12AA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 647/Asr/2019 Assessment Year: 2019-20 Krishna Consciousness & Welfare Trust (Regd.), SCO-12, Basement Swani Motors, Feroze Gandhi, Market, Ludhiana, Punjab - 141001 [PAN: AADTK 2239E] Vs. Commissioner of Income Tax (Exemptions), C. R. Building, 5 th Floor, Sector 17-E, Chandigarh- 160017 (Appellant) (Respondent) Appellant by : Sh. Gaurav Sharma, CA Respondent by: Sh. Sanjeet Singh, CIT-DR Date of Hearing: 23.02.2022 Date of Pronouncement: 10.05.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal was filed by the assessee against the order of Commissioner of Income Tax (Exemption),Chandigarh [in brevity CIT(E)] bearing order number ITBA/EXM/S/EXM1/2019-20/1017681509(1), date of order 30/08/2019 under section 12AA(1)(b)(ii) of the Income Tax Act, 1961(in brevity the Act). 2. The fact of the case is that the trust is registered on dated 06.07.2017. An application was made before the learned CIT(E) on dated 12.04.2019 seeking ITA No. 647/Asr/2019 Krishna Consciousness & Welfare Trust v. CIT 2 registration under section 12A of the Act. The application for registration was cancelled by the authority on the following reasons. The extract of the order of the learned CIT(E) is reproduced here as under: “7. In response to additional queries raised, the applicant society has requested for adjournment and after considering the adjournment request, the case was finally fixed for 09.08.2019. The reply was finally submitted on 14.08.2019 in response to the additional queries sent to the applicant. On perusal of the submissions of the applicant, it is noticed that Shri Harvinder Singh is an employee of the trust and the applicant has made payments of Rs. 1,80,000/- (Rs. I 90,000/- each on 09.08.2017 & 10.08.20.17) to Shri Harvinder Singh but on perusal of Income & "Expenditure Account for F.Y. 2017-18, it is noted that there are no expenses shown as payments given to Shri Harvinder Singh for any specified /purpose which indicates that the applicant is not maintaining the books of accounts in a fair manner . The total receipts during the F.Y. 2017-18 _ was Rs. 4,29,939/- and applicant has made payments of Rs. 1,80,000/- to Shri Harvinder Singh which is appr. 41.86% of its total receipts and hence makes a substantial amount out of total receipts. The applicant has failed to explain the purpose of payment, identity of above concerns/persons and their relationship with trust. The applicant has also not explained how above payments would justify the objectives of trust which concludes that the applicant has failed to prove the genuineness of the activities carried by it. 8. In view of the above regarding the non-maintenance of proper books of accounts& non-establishment of genuineness of activities of the trust, the present application for grant of registration u/s 12AA is hereby rejected.” 3. Aggrieved assessee trust filed appeal before us for a further adjudication. 4. The learned counsel of the assessee filed a written submission with a brief note. He explained that the application of registration was cancelled without giving a proper opportunity to the assessee. The application of registration was cancelled for withdrawal of cash amount of Rs.1,80,000/– by Sri Harvinder Singh who is the employee of the assessee trust. But the revenue authority considered the withdrawn ITA No. 647/Asr/2019 Krishna Consciousness & Welfare Trust v. CIT 3 of cash from bank as payment to party. As per the ld. CIT(E), the reflection of payment is not in the Income & Expenditure account related financial year. Due to improper financial statement the application is rejected. 5. The ld Counsel has submitted the cash book before the bench where it reveals that the amount of Rs. 180,000 was withdrawn from Bank by two parts on dated 09/08/2017 and 10/08/2017 amount of Rs. 90,000 each. 6. The case laws being relied upon by the assessee including the decision in the case of, CIT (E) Chandigarh v. Shri Shirdi Sai Darbar Charitable Trust (Dharamshala), [2017] 81 taxmann.com 49 (Punjab & Haryana). The observation of lord ship is as follows:- “8. Sections 13 comes into play at the time of granting exemption under Section 11 of the Act and not at the time of granting registration under Section 12A of the Act. The only two requirements as stated hereinabove while granting registration under Section 12A of the Act, are with respect to the charitable nature of the objects of the assessee and genuineness of the activities. Since we observe that no adverse remarks have been made by the Commissioner of Income Tax (Exemptions) with regard to the objects contained in Memorandum and as stated hereinabove that the observations of the Commissioner of Income Tax (Exemptions) do not lead to the conclusion that the activities of the assessee are not genuine, we hereby direct the Commissioner of Income Tax (Exemptions) to grant registration under Section 12A of the Act to the assessee." 7. The learned CIT DR relied on the order of the learned CIT’s. In his argument it is crystal-clear that the assessee trust unable to produce books of accounts before the authority to prove the transactions related to cash withdrawn from Bank and utilization the amount in the trust activity. 8. We considered the rival submission with available records. The assessee trust was denied for registration under section 12A of the Act, for non-production of books of accounts and not able to explain the financial entries before the ITA No. 647/Asr/2019 Krishna Consciousness & Welfare Trust v. CIT 4 authority. On the other hand the reasonable opportunity was denied to explain same before the ld. CIT(E). With respectful observation of the jurisdictional High Court, supra, there is two limbs for considering the registration application under section 12A of the Act. First one is the genuinity of the trust and 2 nd one is the activity of the trust in relation to main object. In the order of the ld. CIT(E), none of the point was considered. Accordingly, the impugned order is set aside and the matter is restored back to ld. CIT(A) for denovo adjudication after considering the assessee’s evidences. The assessee, in turn, is directed to substantiate its case. Needless to add that adequate opportunity of hearing shall be granted to the assessee. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 10.05.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member Date: 10.05.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order