M/S SNATAN DHARAM SABHA (SDSES) SD SARVHITKARI VIDYA MANDIR, HOSHIARPUR V. COMMISSIONER OF INCOME TAX(EXAMPTION), CHANDIGARH

ITA 693/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1310 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-04-2019
• Assessment Year: misc
• Appeal Filed On: 09-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN K KUMAR LD
• Assessee Lawyers: TEJ MOHAN SINGH LD
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside; Audi alteram partem
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.693(ASR)/2017 ASSESSMENT YEAR: 2018-1 9 M/S. SNATAN DHARAM SABHA (SDSES), SD SARVHITKARI VIDYA MANDIR, TALVARA MUKERIA, DIST:- HOSHIARPUR. [PAN:AANAS 3147A] VS. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TEJ MOHAN SINGH (LD. A DV.) RESPONDENT BY: SH. PAWAN K. KUMAR (LD. CIT- DR) DATE OF HEARING: 24.04.2019 DATE OF PRONOUNCEMENT: 14.06.2019 ORDER PER N.K.CHOUDHRY, JM: THE ASSESSEE SOCIETY HAS FILED THIS APPEAL CHALLENGING TH E ORDER DATED 26/09/2017 IMPUGNED HEREIN PASSED BY THE LD. CI T(EXEMPTION), CHANDIGARH WHEREBY THE APPLICATION FOR REGISTRATION U /S 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) HAS BEEN REJECTED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED TO BE AN ONGOING ENTITY IN OPERATION SINCE 19/12/2012 AND HAD FILED AN APPLICATION ON DATED 09/03/2017 SEEKING REGISTRATION U /S 12A OF THE ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 2 ACT WHICH WAS TAKEN INTO CONSIDERATION BY THE LD. CIT(E XEMPTION) BY FIXING THE DATE FOR OF HEARING ON 02/08/2017 AND T HE APPELLANT WAS REQUESTED TO FILE CERTAIN DETAILS AND CLARIFICATION ON OR BEFORE 16/08/2017 AS MENTIONED IN PARA NO.5 OF THE ORDER. T HE SAID QUERIES HAVE BEEN REPLIED BY THE APPELLANT VIDE LETTERS DATE D 22/09/2017 AND 26/09/2017. THEREAFTER ON CONSIDERATION OF THE REPLIE S, THE APPLICATION FILED BY THE ASSESSEE SOCIETY WAS REJECTED BASICALLY ON THE FOLLOWING GROUNDS: (I) NO PROOF OF AFFILIATION OF THE SCHOOL HAS BEEN PROVIDED EITHER. (II) NO FINANCIAL STATEMENT HAS BEEN SUBMITTED IN R ESPECT OF APPELLANT SOCIETY. (II) NO DETAILS RELATED TO EXPENDITURE INCURRED FOR CONSIDERATION OF THE STRUCTURE FOR THE SCHOOL HAS BEEN PROVIDED B Y THE APPLICANT SOCIETY. (IV) DETAILS OF LAND AND BUILDING HAS NOT BEEN PROV IDED BY THE APPLICANT SOCIETY. THE GENERATION AND THE SUBSEQUEN T INTRODUCTION AS CASH DEPOSITS REMAINS TO BE IN DOUB T. THE AIMS AND OBJECTS OF THE SOCIETY REMAINS ONLY OSTENSIBLE IN ABSENCE OF ANY FINANCIAL STATEMENT SI NCE ITS CREATION AND THE CLAIMED ACTIVITIES OF THE SOCIETY CANNOT BE TERMED TO FALL UNDER THE CATEGORY OF CHARITABLE PU RPOSE BUT PURELY ON COMMERCIAL PRINCIPLES HAVING PROFIT MOTIV ES (HAVING RECEIPT OF RS.2,83,60,283/- & 44% OF EXCESS OF INCO ME OVER EXPENDITURE DURING THE FIRST YEAR OF OPERATION OF T HE SCHOOL.) THE APPLICATION HAS NOT DISCLOSED THE EXPENDITURE INCURRED IN SETTING UP THE SCHOOL AND CREATING THE BUILDING COUPLED OF THE FACT OF INTRODUCTION OF LARGE AMOUNT S OF CASH IN THE BEGINNING BOTH LEAD TO A SAFE CONCLUSION THAT T HE GENUINENESS OF ACTIVITIES ARE NOT CORROBORATED . 3. AGGRIEVED AGAINST THE ORDER IMPUGNED HEREIN, THE A SSESSEE PREFERRED THE INSTANT APPEAL. ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 3 4. HAVING HEARD THE PARTIES AND PERUSED THE MATERIAL AVA ILABLE ON RECORD. LET US TO PERUSE THE RELEVANT PROVISIONS OF LAW , WHICH DEALS WITH THE CONSIDERATION OF APPLICATION FOR REG ISTRATION U/S 12A OF THE ACT. SECTION 12AA (1) THE CHIEF COMMISSIONER OR COMMISSIONER, ON RECEIPT O F AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTI ON MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHALL (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS 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 TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE - (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TR UST 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 APPLICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD . FROM THE PROVISIONS, IT IS CLEAR THAT BEFORE DECIDI NG THE APPLICATION U/S 12A OF THE ACT, THE COMMISSIONER IS AT LIBERTY TO CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE SOCIETY OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE SOCI ETY OR INSTITUTION AND MAY ALSO MADE SUCH ENQUIRIES AS HE MAY ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 4 DEEM NECESSARY IN THIS BEHALF. FURTHER BEFORE PASSI NG AN ORDER, THE LD. CIT(E) IS EMPOWERED TO SATISFY HIMS ELF ABOUT THE AIMS AND OBJECTS OF THE SOCIETY OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES. 4.1 IN THE INSTANT CASE, THE LD. AR OF THE ASSESSEE SOCIETY SPECIFICALLY SUBMITTED THAT NO ENQUIRY WAS EVER RAISED Q UA PROOF OF AFFILIATION OF THE SCHOOL AND IN RESPECT OF LAND AND BU ILDING. THE LD. AR ALSO DRAWN OUR ATTENTION TO THE AFFILIATION CERTIFICAT ION (PAGE NO.33 OF THE PB) WHEREIN THE AFFILIATION HAS BEEN GIVEN BY TH E CBSC, DELHI VIDE AFFILIATION NO. 1630813/EX-02324-1617/2016. 4.2 WITH REGARD TO THE OBJECTION QUA LAND AND BUILDING OF THE SCHOOL THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE LEASE DEED EX ECUTED BY BHARKRA BYAAS MANAGEMENT BOARD, CHANDIGARH FOR A PE RIOD OF 99 YEARS WHEREIN ANNEXURE-II WHICH IS A SCHEDULE IN WHICH TH E AREA OF LAND HAS BEEN SPECIFIED AS 1,13,233 SQ. FT. AND RATE HAS BEEN SPECIFIED @ 8.00 RS. PER 100 SQ. FT AND TOTAL AMOUNT OF LEASE MO NEY FOR THE YEAR 01/04/2010 TO 31/03/2011= RS.9,059/- SECURITY EQU ALLY TO FOUR YEARS LEASE MONEY=36,236/- (ALREADY DEPOSITED), ARREAR , IF ANY RS.2,09,867/- (ALREADY DEPOSITED). IT WAS CONTENDED BY THE ASSESSEE THAT IN CLAUSE-IV IT CLEARLY REFLECTS THAT THE AMOUNT O F RS.2,09,867/- IS TREATED ON ACCOUNT OF RENT AGAINST LUXMI NARAYAN MAND IR TO RELIGIOUS BODY/INSTITUTION (SCHOOL) SECTOR-02, TALWARA (BEING LE ASED OUT). WE HAVE INDEPENDENTLY PERUSED THE LEASE DEED WHEREIN CLAUSE- 2, THE DETAILS OF THE LAND MEASURING 1,13,233 SQ. FT I N SECTOR-02, TALWARA HAS BEEN PARTICULARLY DESCRIBED AND THE SCHEDULE/ PLAN OF THE SITE ATTACHED AS ANNEXURE-1 TO THE DEED, HOWEVER THE SA ME IS NOT ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 5 ATTACHED HEREWITH IN PB BY THE ASSESSEE/SOCIETY. THEREFORE , WE ARE UNABLE TO GIVE A DEFINITE FINDING QUA LAND AND BUIL DING. 4.3 WITH REGARD TO THE NON-PROVIDING THE FINANCIAL STATE MENTS OF THE SOCIETY IT WAS CONTENDED THAT SOCIETY HAS NOT BEEN MAINTAI NED ANY FINANCIAL STATEMENTS QUA SOCIETY TILL DATE SINCE ITS CREAT ION I.E., 19 TH DEC. 2012. IT WAS ALSO CONTENDED THAT THE ASSESSEE SOCIETY IS RUNNING ONLY ONE SCHOOL AND IS MAINTAINING FINANCIAL ACCOUNTS SINCE IT OPERATIONS WHICH HAVE DULY BEEN SUBMITTED BEFORE THE L D. CIT(A). 4.4 NO DOUBT THE LD. CIT(EXEMPTION) IS AT LIBERTY TO EX AMINE THE AIMS AND OBJECTS AND GENUINENESS OF ACTIVITY OF THE SOCIETY OR TRUST , WHICH ARE PARAMOUNT CONSIDERATION FOR ADJUDICATING THE APPLICATION U/S 12A OF THE ACT, WHICH IN THE INSTANT CASE THE LD. CIT(E) HAS NOT RAISED ANY DOUBT QUA AIMS AND OBJECTS OF THE SOCIETY. 4.5 FROM THE ORDER IT ALSO REFLECTS THAT THE LD. CIT(E) SOUGHT CERTAIN EXPLANATIONS/DOCUMENTS, WHICH HAVE BEEN SPECIFICALLY CLARI FIED AND REPLIED BY THE APPLICANT BY FILLING THE RELEVANT INF ORMATION AND DOCUMENTS. THEREAFTER, NO OPPORTUNITY WAS PROVIDED TO THE APPLICANT TRUST EITHER FOR CORROBORATION/CONFRONTATION AND/OR FO R ESTABLISHING ITS CASE FOR GRANT OF REGISTRATION ON THE BASIS OF THE REPL Y ITSELF, THE REGISTRATION APPLICATION WAS REJECTED. 4.6 IT IS TRITE TO SAY THAT EVERY PERSON HAS THE RIGHT TO SPEAK AND BE HEARD WHEN ALLEGATIONS ARE BEING PUT TOWARDS HIM O R HER . IF NO OPPORTUNITY HAS BEEN GIVEN TO THE PARTY EFFECTED, THE N IT SHALL AMOUNT TO VIOLATIONS OF THE PRINCIPLES OF NATURAL JUSTICE, WHIC H EMBEDDED IN LATIN WORDS AUDI ALTERAM PARTEM WHICH MEANS HEAR T HE OTHER SIDE, OR NO MAN SHOULD BE CONDEMNED UN-HEARD OR BOTH TH E SIDES MUST BE HEARD BEFORE PASSING ANY ORDER. THE PRINCIPLE OF AUDI ALTERAM PARTEM ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 6 IS THE BASIC CONCEPT OF THE PRINCIPLE OF NATURAL JUSTICE AN D HAS NOT EVOLVED FROM THE CONSTITUTION BUT EVOLVED THROUGH CIV ILIZATION AND MANKIND AND IS THE CONCEPT OF COMMON LAW, WHICH IMPLIES F AIRNESS, REASONABLENESS, EQUALITY AND EQUITY. IN INDIA, THE PRI NCIPLES OF NATURAL JUSTICE ARE THE GROUNDS OF ARTICLE 14 AND 21 OF THE CON STITUTION. ARTICLE 14 ENSHRINES THAT EVERY PERSON SHOULD BE TREATED EQUALL Y. IN THE LANDMARK CASE OF MANEKA GANDHI VS. THE UNION OF INDIA (1978 AIR 597) , IT HAS BEEN HELD BY CONSTITUTION BENCH OF THE APEX COU RT THAT THE LAW AND PROCEDURE MUST BE OF A FAIR, JUST AND REASONABLE KI ND. THE DOCTRINE ENSURES A FAIR HEARING AND FAIR JUSTICE TO BOTH THE PARTIES. UNDER THIS DOCTRINE, BOTH THE PARTIES HAVE THE RIGHT TO SPEAK. THE AIM OF THIS PRINCIPLE IS TO GIVE AN OPPORTUNITY TO THE P ARTIES TO DEFEND THEMSELVES. BEFORE THE COURT, BOTH THE PARTIES ARE EQUAL AND AR E ENTITLEMENT OF EQUAL OPPORTUNITY TO REPRESENT THEM. I F THE ORDER IS PASSED BY THE AUTHORITY WITHOUT PROVIDING THE REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE PERSON AFFECTED BY IT ADVERSELY WILL BE INVALID AND SHA LL BE LIABLE TO BE SET ASIDE. 4.7 AS PER THE PROVISIONS OF SECTION 12AA OF THE ACT, BEFOR E PASSING THE ORDER FOR REFUSING TO REGISTER THE TRUST OR INSTITUTION, A REASONABLE OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE GIVEN, FOR THE SAKE OF BREVITY AND READY REFERENCE THE PROVISIONS ARE REPRODU CED HEREIN BELOW: SECTION 12AA OF THE INCOME TAX ACT READS AS FOLLOWS: '12AA. PROCEDURE FOR REGISTRATION.--(1) THE COMMISS IONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UND ER CLAUSE (A) OR CLAUSE (AA) OF SUB- SECTION (1)OF SECTION 12A , SHALL-- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST 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 T HE TRUST OR INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 7 HE -- (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 4.8 COMING TO THE INSTANT CASE, ADMITTEDLY BEFORE DECLINI NG THE REGISTRATION U/S 12 OF THE ACT, NO REASONABLE OPPORTUNI TY WAS PROVIDED TO THE APPLICANT, WHICH IS MANDATORY, HENCE ON THIS GRO UND AS WELL, THE ORDER UNDER CHALLENGE IS LIABLE TO BE SET ASIDE. 4.9 IN CUMULATIVE EFFECT, TO MEET THE SUBSTANTIAL JUSTICE, IN OUR CONSIDERED VIEW, APPROPRIATE COURSE WOULD BE TO SET ASID E THE ORDER IMPUGNED AND REMAND BACK THE CASE TO THE FILE OF THE L D. CIT(E) FOR DECISION AFRESH. THE APPLICANT SOCIETY SHALL BE UNDER OBLI GATION TO DEMONSTRATE THE RELEVANT DETAILS/DOCUMENTS TO THE SATIS FACTION OF THE LD. CIT(E) QUA LAND AND BUILDING BEING USED FOR RUNN ING THE SCHOOL BY THE SOCIETY AND ALSO TO SUBMIT THE AFFILIATION WITH TH E CBSE, DELHI, FAILING WHICH THE LD. CIT(EXEMPTIONS) SHALL BE AT LIBE RTY TO DRAW THE ADVERSE INTERFERENCE IF ANY. THE LD. CIT(E) SHALL BE AT LIBERTY TO CONSIDER ALL ISSUES ALREADY RAISED OR TO BE RAISED FURTHER AND OTHERWISE FEEL, FIT AND APPROPRIATE FOR CONSIDERATION FOR PROPE R ADJUDICATION OF APPLICATION FOR REGISTRATION U/S 12AA OF THE ACT. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.06.2019. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:14.06.2019 /PK/ PS. ITA NO.693/ASR/2017 M/S SANATAN DHARAM SA BHA (SDSES) V. CIT(E) 8 COPY OF THE ORDER FORWARDED TO: (1) M/S. SNATAN DHARAM SABHA (SDSES), SD SARVHITKARI VI DYA MANDIR, TALVARA MUKERIA, DIST:- HOSHIARPUR (2) THE COMMISSIONER OF INCOME TAX (EXEMPTION), CH ANDIGARH (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER