DHARAM CHANDAN CHARITABLE TRUST, LUDHIANA V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 653/ASR/2019

AI Insights

The case involves Dharam Chandan Charitable Trust appealing against the decision of the CIT (Exemption), Chandigarh, which denied the trust's registration under section 12AA of the Income Tax Act, 1961. The CIT (E) had concerns regarding the substantiation of certain payments made by the trust, questioning their relation to charitable activities. The trust provided detailed written submissions and documentation to clarify these payments, asserting that they were for charitable purposes such as medical expenses and educational support for underprivileged children. The Tribunal, after considering the submissions and the arguments of the learned DR, decided in favor of the trust, emphasizing the need for the CIT (E) to verify the genuineness of the trust's activities and payments in a more substantiated manner.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115028 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-04-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 22-10-2019
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution
• Section: 11; 12AA

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.653/Asr/2019 Assessment Year: 2019-20 Dharam Chandan Charitable Trust 313/1, Dr. Sham Singh Road, Ludhiana. Punjab. [PAN:AACTD4708N] (Appellant) Vs. CIT (Exemption) Chandigarh. (Respondent) Appellant by None.(Written Submission) Respondent by Smt. Rajinder Kaur,CIT. DR Date of Hearing 13.04.2023 Date of Pronouncement 26.04.2023 ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Exemptions), Chandigarh,[in brevity the ‘CIT (E)’] I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 2 order passed u/s 12AA(1)(b)(ii) of the Income Tax Act 1961[in brevity the Act], order dated 29.08.2019. The assessee has taken the following grounds: “1. That the ld. CIT-Exemptions Chandigarh, has erred in law and facts of the case, while denying the registration to applicant u/s 12AA of the Income Tax Act, 1961, without appreciating the fact that such trust is engaged in activities, which are within the meaning of Charitable purpose”, as defined u/s 2(15) of the Act. 2. That the appellant craves the right to add, amend or delete any grounds of appeal before it is finally disposed off.” 2. The assessee was called for hearing, but none was present on behalf of the assessee. The assessee filed written submission and also placed the letter that the matter should be disposed of on basis of written submission. In view of the above and considering the nature of dispute, we proceed to dispose the appeal after hearing the learned DR and on the basis of material available on the record. I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 3 3. The assessee is a charitable trust, and the application was made u/s 12AA for registration. The dispute was raised by the CIT(E) related to payment to the party. As per revenue, the assessee was unable to substantiate and to recognize the payment in relation to the activities. The assessee filed a detailed submission before the revenue. The application of registration was rejected by the CIT(E). Being aggrieved assessee filed an appeal before us. 4. The ld. DR vehemently argued and fully relied on the order of the CIT(E). The ld. DR further placed that the payment made by the assessee to M/s Bharat Timber Store, amounting to Rs.22,500/-& M/s Jai Maa Enterprises & Platinum Health Care, amounting to Rs.3,68,761/- were failed to explain related to the purpose of payment, identity, and relationship with the assessee-trust. The ld. DR further argued that the payment made to M/s Shree Gau Sewa Society (Regd), and payment to Sh. Ram Pratap Yadav and to Sh. Vimal Yadav, two children for their education are also unexplained before the authority. The ld. DR prayed that the order of the CIT(E) should be uphold. I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 4 5. We heard the rival submission and considered the documents available in the record. The assessee filed a written submission which is kept in the record. The assessee made an explanation related to this payment which is reproduced as under: “1) Assessee had made certain payments through banking channels to M/S Bharat Timber Store, Sh. Anil Kumar, M/S Jai Maa Enterprises & Platinum health care, amounting to Rs.3,68,761/-. 2) Donation of Rs.62,000/- was made to Shree GauSewa Society (Regd) on 19-12-2017 & 06-02-2018 amounting to Rs.31,000 each, through Banking Channels. With respect to first alleged infirmity it is submitted that the Ld. CIT-E never asked for the details regarding these payments. In this regard it is humbly submitted that payment to Bharat Timber Store was made for purchase of furniture on 09-02-2018 to be used in dispensary. Copy of A/c & Copy of Bill is enclosed on Page no.84-85 of Paper book. Payment to Shree Anil Kumar was made for the services he rendered in capacity of a doctor. He is MBBS doctor, serving the institution since long, till date. Copy of salary A/C is enclosed herewith on page no 86 of paper book. Further, payment to Jay MAA enterprises & Platinum Healthcare is made on A/C of medical I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 5 expenses incurred to buy medicines from them. Photocopies of the bills & their copies of accounts are placed on page no.80-83 & 87-95 of paper book. Furthermore, Balance sheets & Income & Expenditure A/Cs for the period ending 31-03-2020, 31-03-2021 & 31-03-2022 along with copy of A/c of salaries and medical expenses (substantiated by invoices of medicines purchased) are enclosed on page no. 96-105 of paper book. These all documents so submitted along with documents submitted earlier with CIT-E are good enough to demonstrate that dispensary is being run for the relief of the poor, downtrodden & less privileged. Regarding Second Point of donation to Shree Gausewa Society (Regd) amounting to Rs.62000/- it is humbly submitted that a declaration from Shree GauSewa Society (Regd) are enclosed on page no.77-78 of paper book. In Both the declarations, it was mentioned that payment was made for the study of children of two less privileged persons named Vimal Yadav & Sh. Ram Partap Yadav. However the Ld. CIT- E, doubted the genuineness of the transactions for the reason that why these payments were not directly made to the parents of the Children. No material was brought on record to prove the contention. This Doubt of the Ld. CIT-E is without any basis. One should not be exercising the powers capriciously and in whimsical manner. Another point worth mentioning here is that the Ld. CIT-E has not challenged I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 6 the donation. Which means he has not doubted the payment of donation. Without prejudice to the argument of making payment to society for fees of children, it is submitted that even if it is a donation, that also qualifies for exemption as application u/s 11 of The Act, since donation to charitable institutions is also part of object clause of the trust. Following tabular chart would also help in appraisal of activities of the trust: FY/DESCRIPTION GROSS RECEIPTS SALARY TO DOCTOR MEDICAL EXPENSES 2019-20 1,13,610/- 3,29,500/- 1,24,102/- 2020-21 1,38,502/- 2,99,163/- 61,875/- 2021-22 1,15,2407- 2,12,2607- 57,693/- It is pertinent to mention here that the trustee are interested in pursuing the charitable activities at very large scale. They were somewhere discouraged because of rejection of this application of registration. Moreover, now under new law, every trust has to renew its registration after every five years. This would give opportunity to the authorities to appraise the activities of the trust. Therefore, the undersigned prays to appraise/evaluate/examine the documents submitted in response to both questionnaire of the CIT-E and I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 7 documents now being submitted to substantiate the contentions, from page no 1-125 of paper book, in substance and spirit of the Law.” 5.1 We consider the submission of the assessee and ld. DR. We find that the said payment was related to the charitable activities of the trust. For registration u/s 12AA it is clearly stipulating that the ld. CIT(E) shall satisfy himself about the objects and the genuineness of its activities. The assessee made the payments in relation to charitable activities of trust. The ld. DR had not made any strong objection related to submission of the assessee and the evidence which are filed before the bench. We set aside the order of the ld. CIT(E) and direct to allow the registration of the assessee. 6. In the result, the appeal of the assessee bearing ITA No. 653/Asr/2019is allowed. Order pronounced in the open court on 26.04.2023 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE ) Accountant Member Judicial Member I.T.A. No.653/Asr/2019 Assessment Year: 2019-20 8 AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order