M/S ANWAR SULTAN EDUCATIONAL TRUST, SRINAGAR V. COMMISSIONER OF INCOME TAX, "(EXAMPTION), CHANDIGARH

ITA 682/ASR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5758 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2018
• Assessment Year: misc
• Appeal Filed On: 30-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M A MIR COST ACCOUNTANT
• Keywords: Charitable institution; Opportunity of being heard; Competent authority
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A NOS. 682&683(ASR)/2017 ASSESSMENT YEARS: PAN: AAFTA 2878M M/S. ANWAR SULTAN EDUCATIONAL TRUST, SRINAGAR. VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. M. A. MIR (COST ACCOUNTANT) RESPONDENT BY: SMT. BALWINDER KAUR (D.R.) DATE OF HEARING : 31.01.2018 DATE OF PRONOUNCEMENT: 08.02.20 18 ORDER PER SANJAY ARORA, A.M. THIS IS A SET OF TWO APPEALS BY THE ASSESSEE-APPLIC ANT, A TRUST FORMED VIDE TRUST DEED DATED 28.05.2016, CONTESTING THE DENIAL OF REGISTRATION U/S. 12AA AS WELL AS APPROVAL U/S. 80G(5) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) BY THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH (CIT(E) FOR SHORT) VIDE HIS SEPARATE ORDERS OF EVEN DATE, I.E., 28.08.2017. 2. AT THE OUTSET, IT WAS OBSERVED BY THE BENCH THAT A DELAY OF THREE DAYS ATTENDS THE FILING OF THE INSTANT APPEALS. THE SAME IS EXPL AINED AS OCCASIONED DUE TO CIRCUMSTANCES BEYOND THE CONTROL OF THE APPELLANT-T RUST. THE DELAY BEING NOMINAL AND REASONABLY EXPLAINED IS CONDONED, AND THE HEARI NG OF THE MATTER WAS PROCEEDED WITH. 3. AS A PERUSAL OF THE ORDER U/S. 12AA(1)(B)(II) SH OWS, THE DENIAL OF REGISTRATION BY THE LD. CIT(E) IS DUE TO NON-COMPLIANCE BEFORE H IM BY THE ASSESSEE AS WELL AS ITA NOS.682&683(ASR)/2017(A.Y.) ANWAR SULTAN EDUCATIONAL TRUST V. CIT 2 THE REPORT DATED 14.08.2017 OF THE INCOME TAX OFFIC ER (EXEMPTIONS), JAMMU (ITO (E), FOR SHORT) CALLED FOR BY THE LD. CIT(E). VIDE THE SAID REPORT, THE ITO(E); THE ASSESSEE CLARIFYING BEFORE HIM THAT ITS ACTIVITIES HAD NOT YET COMMENCED, OPINED THAT THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA AS WELL AS FOR APPROVAL U/S. 80G, WAS PREMATURE. WE ARE UNABLE TO AGREE WITH THE SAME, AND WHICH CLEARLY WEIGHED WITH THE LD. CIT (E) IN DENYING THE REGISTR ATION (REFER PARA 9 OF THE IMPUGNED ORDER). THE REASON IS SIMPLE. THE REGISTRA TION WOULD BE, WHERE SO, GRANTED LATEST FROM THE DATE OF THE APPLICATION THE REFOR. ANY INCOME OR EVEN VOLUNTARY CONTRIBUTION RECEIVED BY THE APPLICANT, W HICH IS UNCERTAIN AS TO ITS TIME, WOULD, WHERE NOT COVERD BY THE PERIOD OF REGISTRATI ON, NOT QUALIFY FOR EXEMPTION U/S. 11. HOW COULD THEN THE APPLICATION BE REGARDED AS PREMA TURE ? NO DOUBT, THE COMPETENT AUTHORITY HAS TO BE SATISFI ED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEE-TRUST. HOWEVER, H OW COULD THEY BE REGARDED AS NOT GENUINE WHEN THE ACTIVITIES HAD NOT EVEN COMMENCED? IT IS ONLY WHEN THEY ARE THAT THE ASSESSEE COULD POSSIBLY SUPPLY THE DETAILS THER EOF. IN FACT, NO INFERENCE EITHER WAY COULD BE DRAWN IN THE ABSENCE OF ANY ACTIVITY, SO THAT THERE IS NO SCOPE FOR DRAWING ANY ADVERSE INFERENCE, PARTICULARLY CONSIDE RING THAT THE ASSESSEE, FORMED WITH THE OBJECT OF PROMOTION OF EDUCATION, HAD EXPL AINED THAT THE BUILDING IN WHICH THE ACTIVITIES OF THE TRUST ARE TO START IS UNDER C ONSTRUCTION (REFER PARA 7 OF THE IMPUGNED ORDER). THE BUILDING IS THUS BEING CONSTRU CTED, STATED TO BE BY THE TRUSTEES, WITH A TACIT UNDERSTANDING THAT IT SHALL BE USED (ON ITS COMPLETION) BY THE ASSESSEE-TRUST FOR ITS PURPOSES. IF THE SAME RESULT S IN ATTRACTION OF SECTION 13, AND A DENIAL OF REGISTRATION ON THAT BASIS (S. 12AA(4)), THE SAME COULD ONLY BE AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE IN ITS RESPECT. THE SAME WOULD IN FACT ALSO CAUSE DENIAL OF THE CLAIM FOR EXEMPTIO N U/S. 11 IN ASSESSMENT. THAT APART, CONSIDERED BROADLY, IT CANNOT, IN VIEW OF TH E CONSTRUCTION UNDERWAY WITH THE STATED PURPOSE TO COMMENCE THE APPLICANTS ACTIVITI ES, BE SAID THAT NO ACTIVITY HAD ITA NOS.682&683(ASR)/2017(A.Y.) ANWAR SULTAN EDUCATIONAL TRUST V. CIT 3 COMMENCED OR, MORE IMPORTANTLY, IS NOT LIKELY TO BE . RATHER, THE VERY FACT THAT REGISTRATION IS SOUGHT IMPLIES THAT ACTIVITIES ARE CONTEMPLATED OR PLANNED, THOUGH MAY TAKE TIME TO FRUCTIFY. WE, THEREFORE, REGARD TH IS OBJECTION AS NOT VALID. SURELY, THE LD. CIT(E) IS TO BE, EQUALLY, SATISFIE D ABOUT THE OBJECTS OF THE TRUST AS WELL, EVEN AS NOTED BY HIM AT PARA 4 OF HIS ORDE R, SO THAT HIS NON SATISFACTION IN ITS RESPECT WOULD EVEN INDEPENDENTLY DISQUALIFY AN APPLICATION FOR REGISTRATION, MAKING HIS ORDER SUSTAINABLE IN LAW. THIS SATISFACT ION, AS WE UNDERSTAND, IS AS TO THE OBJECTS CONSTITUTING A CHARITABLE PURPOSE WITHIN THE MEANING OF THE TERM U/S. 2(15) OF THE ACT, SO THAT, WHEN PURSUED, THE ASSESS EES ACTIVITY/S CONSTITUTES A CHARITABLE ACTIVITY/S. AND, WITHOUT DOUBT, REGISTRA TION COULD VALIDLY BE DENIED WHERE IT IS NOT SO. THE LD. CIT(E) WAS IN OUR OPINI ON THEREFORE REQUIRED TO ISSUE A FINDING WITH RESPECT TO THE OBJECTS OF THE TRUST, I .E., THAT THEY DO NOT CONSTITUTE A CHARITABLE PURPOSE UNDER THE ACT. HIS ORDER IS SANS ANY SUCH FINDING. APART FROM A MENTION THAT THE OBJECTS ARE GENERAL IN NATURE WITHOUT SPECIFYING THOSE OBJECTS, AT PARA 2 OF HIS ORDER, THERE IS NOTHING TO EXHIBIT A PROPER CONSIDERATION OF, AND ADJUDICATION (FROM THE STAND-POINT OF SATISFACTION AS CONTEMPLATED U/S. 12AA), QUA THE ASSESSEES OBJECTS. WHY COULDNT, WE WONDER, THE OBJECTS BE CAST IN GEN ERAL TERMS ? THAT THEY MUST THOUGH GUIDE AND INFORM THE TRUSTE ES, AND BE CAPABLE OF EXECUTION, GOES WITHOUT SAYING. THE IMPUGNED ORDER CAN, AT BEST, BE REGARDED AS INCHOATE IN THE MATTER. WE NEXT VISIT THE ASPECT OF NON-COMPLIANCE BY THE ASSESSEE. THE SAME CANNOT, WITHOUT DOUBT AND, AT ANY RATE, BE COUNTENA NCED, EVEN AS MADE ABUNDANTLY CLEAR TO THE LD. AUTHORIZED REPRESENTATIVE (AR), TH E ASSESSEES COUNSEL, DURING HEARING, WHO PROMISED FULL COOPERATION BY THE ASSES SEE IF THE MATTER TO BE SET ASIDE FOR FRESH CONSIDERATION BY THE LD. CIT(E). IN FACT, MOST OF THE REQUISITIONS LISTED AT PARA 5 OF THE IMPUGNED ORDER ARE RENDERED INAPPLICA BLE (OR NIL) IN VIEW OF THE NON- RECEIPT OF ANY VOLUNTARY CONTRIBUTION - FOR CORPUS OR OTHERWISE; RATHER, NON ITA NOS.682&683(ASR)/2017(A.Y.) ANWAR SULTAN EDUCATIONAL TRUST V. CIT 4 MAINTAINING OF ANY BANK ACCOUNT, EVEN AS STATED IN THE REPORT BY ITO(E). WE WOULD NOT HAVE BEEN THEREFORE, UNDER THE CIRCUMSTANCES, A S MUCH DEPRECIATIVE OF THE ASSESSEES CONDUCT, HAD IT PRODUCED THE ORIGINAL TR UST DEED AND REGISTRATION CERTIFICATE, AS REQUIRED BY THE COMPETENT AUTHORITY , BEFORE THE ITO(E) FOR VERIFICATION. BE THAT AS IT MAY, AS AFORE-STATED, THE IMPUGNED O RDER IS GUIDED BY IRRELEVANT CONSIDERATIONS AND INCHOATE. WE ARE ALSO UNABLE TO COMPREHEND AS TO HOW COULD THE ASSESSEE BE SHOW CAUSED ON 11.08.2017, BY WHICH DATE THE REPORT OF THE ITO(E), CALLED FOR BY THE LD. CIT(E), HAD NOT BEEN SUBMITTED TO HIM? DOES IT MEAN THAT THE SHOW CAUSE WAS ISSUED IN ANTICIPATION? A S HOW CAUSE IS NOT AN EMPTY FORMALITY, BUT AN ESSENTIAL INGREDIENT IN THE JUDIC IAL DETERMINATION PROCESS, BEING IN FACT SPECIFICALLY MANDATED BY SECTION 12AA(1)(B)(II ), REPRODUCED AS UNDER: PROCEDURE FOR REGISTRATION 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) OR CLAUSE (AA) OF SUB SECTION (1) OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRU ST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GEN UINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE T RUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUS T OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLI CANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. THE HEARING BEFORE THE ITO(E), WHICH WAS FOR THE LI MITED PURPOSE OF SEEKING THE RELEVANT INFORMATION FROM THE APPLICANT, WOULD NOT MEET THE REQUIREMENT OF SEC. 12AA(B)(II) (REFER CIT V. AMELIORATING INDIA [2017] 399 ITR 196 (P&H)), WHICH IS TO BE PRIOR TO THE REFUSAL OF REGISTRATION, I.E., U PON APPROPRIATELY SHOW CAUSING THE ITA NOS.682&683(ASR)/2017(A.Y.) ANWAR SULTAN EDUCATIONAL TRUST V. CIT 5 APPLICANT. WE ARE CONSCIOUS THAT AN APPLICANT CAN O NLY BE GRANTED OPPORTUNITY FOR HEARING, WHICH HAS BEEN AFFORDED IN ABUNDANCE BY TH E LD. CIT(E). A SHOW CAUSE BY THE COMPETENT AUTHORITY TO THE APPLICANT MUST HOWEV ER REFLECT THE CONSIDERATION OF THE LATTERS REPLY, ABSENT IN THE INSTANT CASE. THA T IS, THE SHOW CAUSE DATED 11/8/2017 GETS VITIATED BY THE NON-CONSIDERATION OF THE APPELLANTS REPLY FURNISHED BEFORE THE ITO(E). 4. THE IMPUGNED ORDER, FOR THE REASONS AFORE-SAID, IS THUS NOT SUSTAINABLE IN LAW. WE, ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER U/S. 12AA(1)(B)(II), AND DIRECT THE LD. CIT(E) TO CONSIDER THE ASSESSEES APPLICATI ON FOR REGISTRATION AFRESH ON MERITS, IN ACCORDANCE WITH LAW. THE ASSESSEE-APPELL ANT SHALL EXTEND FULL COOPERATION IN THE MATTER, EVEN AS ASSURED BY THE L D. AR, FURNISHING ALL THE DETAILS AND INFORMATION AS MAY BE CALLED FOR. THE APPROVAL U/S. 80G IS LARGELY CONSEQUENTIAL, A S ALSO APPARENT FROM THE IMPUGNED ORDER DENYING THE SAME. IN ANY CASE, THE S AME WOULD REQUIRE RECONSIDERATION IN VIEW OF THE ASSESSEES APPLICATI ON FOR REGISTRATION BEING, IN CONSEQUENCE TO THIS ORDER, BEING REQUIRED TO BE ADJ UDICATED AFRESH. THE ORDER DENYING APPROVAL U/S. 80G IS ACCORDINGLY ALSO SET A SIDE ON THE SAME TERMS. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEE'S APPEALS ARE ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 08, 2018 SD/- SD/- (N.K.CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATE: 08.02.2018 /GP/SR.PS COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE M/S. ANWAR SULTAN EDUCATIONAL TRUST (2) THE CIT (EXEMPTIONS), CHANDIGARH ITA NOS.682&683(ASR)/2017(A.Y.) ANWAR SULTAN EDUCATIONAL TRUST V. CIT 6 (3) THE CIT(E), CHANDIGARH. (4) THE CIT CONCERNED. (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER