M/S SWAMI GANGA GIRIJANTA GIRLS COLLAGE, LUDHIANA V. THE COMMISSIONER OF INCOME TAX, (EXAMPTION), CHANDIGARH

ITA 701/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3619 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2018
• Assessment Year: 2016-2017
• Appeal Filed On: 15-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHOJ OT KAUR LD
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 12A; 12AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.701(ASR)/2017 ASSESSMENT YEAR:201 6-17 M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE, LUDHIANA ROAD, RAIKOT, DISTT. LUDHIANA. PAN:AABTS 2185H VS. CIT(EXEMPTIONS), CHANDIGARH (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUDHIR SEHGAL RESPONDENT BY: SMT. PRABHOJ OT KAUR (LD. DR) DATE OF HEARING: 03.07.2018 DATE OF PRONOUNCEMENT: 17 .08.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/AP PELLANT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 27.09.201 7 PASSED BY THE LD. CIT(EXEMPTION), CHANDIGARH, U/S 10(23C)(VI) OF THE I .T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2 . THE FOLLOWING GROUNDS OF APPEAL RAISED BY THE ASSESSE E. 1. THAT THE LD. COMMISSIONER OF INCOME TAX (EXEM PTIONS) HAS ERRED IN NOT GRANTING EXEMPTION U/S 10 (23C) (VI) OF THE INCOME TAX ACT T O THE ASSESSEE SOCIETY, WHICH HAVE BEEN EXISTING SOLELY FOR EDUCATIONAL PURPOSES. 2. A). THAT THE LD. CIT (EXEMPTIONS) HAS ERRED IN MENTIONING IN PARA 6 OF THE ORDER THAT MEMORANDUM & ARTICLE OF ASSOCIATION AND BY LAWS OF TH E SOCIETY HAVE NOT BEEN FILED AND IT IS NOT A CORRECT OBSERVATION, AS MADE BY THE LD. CIT (EXEMPTIONS) IN PARA-6 OF THE ORDER. ALL SUCH DOCUMENTS HAD BEEN FILED. B). THAT THE LD. CIT (EXEMPTIONS) HAS ALSO ERRED I N MENTIONING THAT EVIDENCE OF AFFILIATION OF BOTH THE COLLEGES AND SCHOOL WAS NOT PROVIDED AN D RATHER EVIDENCES IN RESPECT OF BOTH THE AFFILIATION OF COLLEGE AND SCHOOL HAD BEEN PROV IDED. ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 2 3. THAT EARLIER THE EXEMPTION WAS BEING CLAIMED U NDER SUB-CLAUSE (IIIAB) OF SECTION 10(23C) OF THE INCOME TAX ACT AND, AS SUCH, THE CIT (EXEMPTION) IS NOT CORRECT TO OBSERVE THAT, EARLIER THE DEDUCTION WAS WRONGLY BEING CLAIM ED. 4. THAT, WHATEVER, INFORMATION WAS DESIRED BY THE LD. CIT (EXEMPTIONS), THE SAME WAS FILED TO HIM AND THE FINDING OF THE CIT (EXEMPTIONS ) IN VARIOUS PARAGRAPHS FOR NOT GRANTING THE APPROVAL, IS ON INCORRECT FACTS AND WRONG APPRE CIATION OF EVIDENCES AS PROVIDED. 5. THAT THE REFUSAL TO GRANT REGISTRATION U/S 10( 23C)(VI) OF THE INCOME TAX ACT IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE APPELLANT SOCIETY HAS APPLIED FOR GRANT OF EXEM PTION U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER CALLED AS THE ACT) ON 08.09.2016 BEFORE LD. CIT(E), CHANDIGARH BY STATING AIMS AND OBJECTS OF THE TRUST ARE TO INCULCATE THE SPRIT OF HIGHER EDUCATION AMO NGST THE GIRLS OF THIS BACKWARD AREA AND TO ERADICATE IGNORANCE, ILLITERACY AN D SUPERSTITION. IT WAS ALSO REVEALED THAT THE APPELLANT SOCIETY IS A SOCIETY UND ER THE SOCIETY REGISTRATION ACT (XXI OF 1860) ON 20 TH APRIL, 1963. THE LD. CIT(E) , VIDE LETTER DATED 17.08.2017 BY FI XING THE CASE OF HEARING ON 4 TH SEP. 2017, PROVIDED THE OPPORTUNITY TO THE APPELLA NT AND THE APPELLANT WAS ALSO ASKED TO SUBMIT VARIOUS DOCUMENTS/DETA ILS AS MENTIONED IN PARA NO.5 OF THE ORDER TO SUBSTANTIATE NATURE AND GENUINENESS OF ITS ACTIVITIES. ON 04.09.2017, THE LD. AR OF THE APPELLA NT SOCIETY ATTENDED THE HEARING AND FILED REPLY IN RESPONSE TO THE SHOW CAUSE L ETTER DATED 17.08.2017, THEREAFTER, THE REPLY OF THE ASSESSEE WAS PE RUSED AND THE APPLICATION U/S.10(23C)(VI) FOR GRANT OF EXEMPTION WA S REJECTED ON VARIOUS REASONS WHICH ARE SPECIFICALLY REPLIED BY THE APPELLANT S OCIETY BY FILING BRIEF SYNOPSIS, WHICH FOR THE SAKE OF BREVITY AND READY REFER ENCE REPRODUCED HEREIN BELOW. S. NO OBSERVATION OF THE CIT(EXEMPTIONS) (PG-3-4 OF THE ORDER) OUR COMMENTS/SUBMISSIONS ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 3 1 THE ASSESSEE HAS NOT FILED MOA AND BYE LAWS OF THE SOCIETY. IT IS SUBMITTED THAT THE MOA AND BYE LAWS HAVE BEEN SUBMITTED ALONG WITH FORM 56D FILED FOR CLAIMING EXEMPTION U/S 10(23C)(VI) AND THE SAME IS ALSO FORMING PART OF THE PAPER BOOK AT PG NO. 59 TO 63. FURTHER, THE ABOVE DOCUMENTS HAVE BEEN DULY STAMPED BY THE DEPARTMENT WHEN FILED ALONG WITH THE FORM 56D. 2 HOW A COLLEGE REGISTERED AS A SOCIETY IS ALSO RUNNING A SCHOOL AND HE ALSO POINTED OUT THAT THE EVIDENCE OF AFFILIATION OF BOTH THE SCHOOL AND COLLEGE WERE NOT PROVIDED BY THE APPELLANT . IT IS SUBMITTED THAT IT IS NO WHERE WRITTEN IN THE LAW THAT A SOCIETY CANNOT RUN A SCHOOL AND A COLLEGE SIMULTANEOUSLY, THEREFORE, THE WORTHY CIT(EXEMPTION) IS NOT CORRECT IN RAISING THE ABOVE POINT AS THE SAME IS LEGALLY PERMISSIBLE. FURTHER, WITH REGARD TO THE EVIDENCE OF AFFILIATION OF BOTH THE SCHOOL AND COLLEGE, IT IS SUBMITTED THAT THE SAME HAVE BEEN FILED ALONG WITH REPLY DATED 04.09.2017 TO NOTICE DATED 17.08.2017 AND THE REPLY ALONG WITH THE ANNEXURES ARE ALSO FORMING PART OF THE PAPER BOOK AT PG. NO. 64 TO 78. 3 THE WORTHY COMMISSIONER OF INCOME TAX (EXEMPTION) IN THE ORDER HAS WRONGLY OBSERVED THAT THE ASSESSEE WAS CLAIMING EXEMPTION U/S 10(23C)(IIIAD) AND HAS NOT FURNISHED THE AUDIT REPORT IN FORM 10BB FOR THE F.Y 2013-14 AND F.Y 2014- 15 AND THE ASSESSEE WAS WRONGLY CLAIMING THE SAID EXEMPTION AS THE PAST RECEIPTS OF THE ASSESSEE WERE EXCEEDING RS.1 CRORE IN EVERY YEAR. THE ASSESSEE HAD BEEN AVAILING EXEMPTION U/S 10(23C)(IIAB) AS THE SOCIETY IS SUBSTANTIALLY FINANCED BY THE GOVERNMENT AND THE SAME HAVE NEVER BEEN QUESTIONED IN ANY OF THE PREVIOUS YEARS. MOREOVER, AS PER THE PROVISIONS OF THE LAW, THE ASSESSEE TRUST IS NOT REQUIRED TO FILE FORM 10BB IF IT IS CLAIMING EXEMPTION U/S 10(23C)(IIIAB). THE ASSESSMENT IN THE CASE OF THE ASSESSEE HAS BEEN COMPLETED U/SEC 143(3) OF THE ACT FOR THE AY 2013-14 (PB-PG-54-56) AND NO ADVERSE VIEW HAS BEEN TAKEN BY THE AO REGARDING THE SAME . 4. THE ASSESSEE HAS NOT FILED CONSOLIDATED RECEIPTS & PAYMENTS FOR THE PAST MANY YEARS DESPITE BEING CALLED AND THEREFORE, IN THE ABSENCE OF THE SAME, THE WORTHY CIT(EXEMPTION) PROCLAIMED THAT THE CUMULATIVE RECEIPTS WERE NOT ASCERTAINABLE. IT IS SUBMITTED THAT THE ASSESSEE HAS FILED A UTILIZATION CHART AS PART OF THE BALANCE SHEET WHICH CLEARLY SHOWS THE CUMULATIVE RECEIPTS OF THE ASSESSEE TRUST FOR THE PAST YEARS AND THE SAME IS FORMING PART OF THE PAPER BOOK AT PG. NO. 5 TO 53 (UTILIZATION CHARTS ON PG NO. 19 FOR F.Y 2013-14,PG. NO.35 FOR F.Y 2014-15 AND PG NO.53 FOR F.Y 2015-16). THEREFORE, THE WORTHY COMMISSIONER WAS WRONG IN ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 4 REJECTING THE APPLICATION ON ACCOUNT OF NON FILING OF CONSOLIDATED RECEIPTS & PAYMENTS. 5 THE SOURCES OF FUNDS AND RECEIPTS ARE LARGELY ON ACCOUNT OF MANAGEMENT FUND AND OTHER HEADS THAT FAR OUTWEIGHS THE RECEIPTS FROM TUITION FEES AND ADMISSION FEES. IT IS SUBMITTED THAT THE COLLEGE IS AFFILIATED TO PUNJAB UNIVERSITY AND RECOGNIZED BY THE UNIVERSITY GRANTS COMMISSION, AND ACCORDING TO THE NORMS OF THE UNIVERSITY GRANTS COMMISSION, AND ACCORDING TO THE NORMS OF THE UNIVERSITY, THE FEES IS TO BE BIFURCATED UNDER THE VARIOUS HEADS LIKE 95% DEFICIT GRANT, PRINCIPAL A/C, UGC A/C, AMALGAMATED FUND ETC. MOREOVER, ALL THE RECEIPTS OF THE ASSESSEE TRUST HAVE BEEN UTILIZED FOR THE PURPOSE OF THE COLLEGE. HENCE, THE ALLEGATION OF THE WORTHY COMMISSIONER OF INCOME TAX (EXEMPTION) IS INCORRECT AND STANDS TO BE DELETED. THE ASSESSMENT IN THE CASE OF THE ASSESSEE HAS BEEN COMPLETED U/SEC 143(3) OF THE ACT FOR THE AY 2013-14 (PB-PG-54-56) AND NO ADVERSE VIEW HAS BEEN TAKEN BY THE AO REGARDING THE SAME. 6 THE ASSESSEE TRUST IS GENERATING LARGE SCALE FDRS ON A CONSISTENT BASIS AND GARNERING ADDITIONAL RESOURCES UNDER HEADS OTHER THAN FEES. IT IS SUBMITTED THAT THE SOCIETY HAS BEEN ESTABLISHED SINCE 1973 AND IT HAS ACCUMULATED FUNDS (AS ALLOWED BY THE PROVISIONS OF LAW) SINCE ITS YEAR OF FORMATION, IN THE FORM OF FDRS. FURTHER, THE ASSESSEE HAS ALSO MADE A HUGE EXPENDITURE ON BUILDING IN THE SUCCEEDING YEAR ONLY, WHICH CLEARLY DEPICTS THAT THE ASSESSEE TRUST IS UTILIZING PORTIONS OF THE ACCUMULATED FUNDS WITH REGARD TO AIMS & OBJECTIVES OF THE TRUST AS AND WHEN THE REQUIREMENT ARISES. 4. AT THE TIME OF HEARING, THE LD. AR SPECIFICALLY EMPHA SIZED THAT AFTER RECEIVING REPLY FROM THE APPELLANT SOCIETY, NO OPPORTU NITY WAS ACCORDED TO THE APPELLANT SOCIETY EITHER TO SUBSTANTIATE THE CLAIM/ DOCUMENTS OR OTHER POSED QUESTION(S) IF ANY ON WHICH THE LD. CIT(E) HAS TAK EN ADVERSE VIEW . 5. ACCORDING TO SECTION 12AA OF THE ACT, THE PROCEDUR E FOR REGISTRATION OF A TRUST OR INSTITUTION IS AS FOLLOWS: 12AA. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION MADE UNDER CLAUSE (A) OR CLAUSE (AA) 8 [OR CLAUSE (AB)] OF SUB-SECTION (1) OF SECTION 12A , SHALL ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 5 (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM T HE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NEC ESSARY 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 TH E TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORD ER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO T HE APPLICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD. 6. ACCORDING TO PROVISO OF CLAUSE (B) OF CLAUSE (1) OF SECTIO N 12AA OF THE ACT, BEFORE PASSING AN ORDER FOR REFUSAL OF REGISTRATI ON, IT IS MANDATORY TO GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPLICANT. THE PRINCIPLE OF AUDI ALTERM PARTEM , WHICH MANDATES THAT NO ONE SHALL BE CONDEMNED UNHEARD IS PART OF THE RULES OF NATURAL JUSTICE. NATUR AL JUSTICE IS A GREAT HUMANISING PRINCIPLE INTENDED TO INVEST THE LAW WITH FAIRNESS AND TO SECURE JUSTICE AND OVER THE YEARS IT HAS GROWN INTO A WIDELY P ERVASIVE RULE AFFECTING LARGE AREAS OF ADMINISTRATIVE ACTION. THE INQUIRY MUST ALWAYS BE DONE, WHETHER A FAIR OPPORTUNITY TO BE HEARD HAS BEEN GIVE N OR NOT TO THE PERSON AFFECTED. IN THE INSTANT CASE, BEFORE DECLINING REGISTRA TION, NO OPPORTUNITY WAS GIVEN WHICH NOT ONLY AMOUNTS TO DENIAL OF NATURAL JUSTICE BUT ALSO AMOUNTS TO VIOLATION OF RULE OF ' AUDI ALTERAM PARTEM ' HENCE ON THIS GROUND ALONE, THE ORDER UNDER CHALLENGE CAN NOT SURVIVE. 7. EVEN FROM PARA NO.6 IT IS APPARENTLY CLEAR THAT THE LD. CIT(E) HAS SIDELINED THE MOA/BYE LAWS OF THE SOCIETY BY OBSERVING THAT THE PAPERS SUBMITTED ALONG WITH APPLICATION AND EVEN SUBSEQUENT LE TTER REVEALED THAT ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 6 MOA AND BYE LAWS OF THE SOCIETY HAVE NOT BEEN FILED. FURTHER, IT IS ALSO OBSERVED THAT NOT-WITHSTANDING THE ABOVE DEFICIENCY, T HE ISSUE HOW A COLLEGE REGISTERED AS A SOCIETY IS ALSO RUNNING SCHOOL IS CONFOUNDED . IT IS ALSO PERTINENT THAT EVIDENCE OF AFFILIATION OF BOTH THE CO LLEGE AND THE SCHOOL WERE NOT PROVIDED. 8. OUR ATTENTION WAS DRAWN TO THE PAGES 59 TO 63 OF THE PB WHICH ARE THE COPY OF CERTIFICATE OF REGISTRATION OF SOCIETY ISSUED BY T HE REGISTRAR OF FIRMS OF SOCIETY AND COPY OF MOA OF TRUST, IN WHICH AIMS AND OBJECTS OF ACTIVITIES OF THE SOCIETY HAVE CLEARLY BEEN MENTIONED. 9. WITH REGARD TO THE SECOND OBJECTION, QUA NON-PROVIDIN G OF AFFILIATION OF BOTH THE SCHOOL AND COLLEGE, PAGE NO.77 TO 78 OF THE PB CONTAINED THE CERTIFICATES OF AFFILIATION BY PUNJAB UNIVERSITY, CHAND IGARH AND PUNJAB SCHOOL BOARD, WHICH HAVE DULY BEEN FILED, HOWEVER THE SAME W ERE ALSO SIDE LINED BY THE LD. CIT(E). 10. AS THE PROPER AND REASONABLE OPPORTUNITY WAS NOT PROV IDED BY THE LD. CIT(E) WHILE DECIDING THE APPLICATION OF THE APPELLAN T SOCIETY AND EVEN MATERIAL DOCUMENTS WHICH WERE ESSENTIAL TO SUBSTANTIATE THE CLAIM OF THE APPELLANT SOCIETY TO MEET THE REQUIREMENTS AS PRESCRIBED U/S.10(23C)(VI) OF THE ACT SIDELINED OR MAY BE OVER SIGHTED BY THE LD. CI T(E), THEREFORE, IN OUR CONSIDERED OPINION, THE ORDER UNDER CHALLENGE CAN NOT SU STAIN AND RESULTANTLY THE SAME IS SET ASIDE. THE LD. CIT(E) IS DIRE CTED TO TAKE INTO CONSIDERATIONS, THE COMMENTS AND SUBMISSIONS (REPRODUCED I N PARA NO. 3 OF THIS ORDER) OF THE APPLICANT SOCIETY IN RESPONSE TO THE REASONS FOR DECLINING THE APPROVAL AND PASS A SPEAKING ORDER AFRESH WITHIN 04 MONTHS FROM THE DATE OF THIS ORDER, WHILE OFFERING REASONABLE OPPORTU NITIES OF HEARING TO THE APPLICANT SOCIETY. ITA NO.701/ASR/2017 (A.Y.2016-17) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE VS. ITO 7 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.08.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDI CIAL MEMBER DATED:17.08.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) M/S SWAMI GANGA GIRIJANTA GIRLS COLLEGE, LUDHIANA ROAD, RAJKOT, DISTT. LUDHIANA (2) CIT(EXEMPTION), CHANDIGARH (3) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER