SHRI MAIDH KSHTRIYA SABHA, Jaipur V. CIT, Jaipur

ITA 731/JPR/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1543 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 17-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K KHANDELWAL
• Keywords: Cancellation of registration
• Section: 80G; 12AA

Judgement Text

1 ITA 731(2)-12 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH : A JAIPUR. BEFORE SHRI B.R. MITTAL AND SHRI B.R. JAIN ITA NOS. 731 & 732/JP/2012 SHRI MAIDH KSHTRIYA SABHA, VS. THE CIT-III, SWARNKAR BHAWAN, JAIPUR. AJMEED CIRCLE, (POLO GROUND) SIKAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATISH GUPTA RESPONDENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 21.01.2013. DATE OF PRONOUNCEMENT : 23.01.2013. ORDER PER B.R. JAIN, A.M. THESE TWO APPEALS BY ASSESSEE ARE AGAINST THE ORDE RS DATED 16.07.2012 OF LD. CIT-III, JAIPUR AGAINST CANCELLATION OF REGISTRATIO N UNDER SECTION12AA OF THE ACT AND WITHDRAWAL OF APPROVAL UNDER SECTION 80G(5) OF THE ACT. 2. BRIEFLY THE FACTS ARE THAT THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION UNDER SECTION 12AA OF THE IT ACT ON 9.12.1998 AND APPROVA L UNDER SECTION 80G OF THE ACT ON 1.12.2005. THE ASSESSEES APPROVAL UNDER SECTION 8 0G OF THE ACT FURTHER STOOD RENEWED VIDE ORDER DATED 13.4.2011. LATER ON THE LD. CIT R ECEIVED COMPLAINTS THAT ONE OF THE TRUSTEES SHRI SHANKAR LAL SONI, AN EMPLOYEE OF THE STATE FOREST DEPARTMENT HAS BEEN DIRECTED TO RESIGN FROM THE MEMBERSHIP OF THE SOCIE TY BY DY. CONSERVATION FOREST, SIKAR. 2 THE COMPLAINT, HOWEVER, REVEALED THAT SAID SHRI SHA NKAR LAL SONI HAS NOT RESIGNED FROM THE MEMBERSHIP OF THE SOCIETY. IN REPLY TO THE SHO W CAUSE NOTICE ISSUED BY LD. CIT, IT WAS INFORMED THAT THE EX-PRESIDENT SHRI SHIV BHAGWA N HAD BEEN REMOVED FROM THE PRIMARY MEMBERSHIP OF THE SOCIETY FOR HIS ANTI SOCI AL ACTIVITIES AND WRIT PETITION HAS BEEN FILED BEFORE THE HON'BLE RAJASTHAN HIGH COURT WHERE IN ALLEGATIONS FOR EMBEZZLEMENT OF FUNDS OF THE SOCIETY HAS BEEN LEVIED. THE COMPLAIN ANT ALSO ASSERTED THAT SHRI SHANKAR LAL SONIS CONTINUATION AS SECRETARY OF THE SOCIETY WAS ILLEGAL. HE HAS ALSO MISAPPROPRIATED FUNDS BY INFLATING EXPENSES AND COMPLAINTS BEFORE P OLICE HAS BEEN LODGED AGAINST HIM. THE LD. CIT AFTER MAKING NECESSARY ENQUIRY OBSERVED THAT THE FUNCTIONING OF THE SOCIETY IS AFFECTED BY THE DISPUTE BETWEEN RIVAL FACTIONS H EADED BY THE EX-PRESIDENT OF THE SOCIETY AND THE PRESENT OFFICE BEARERS. ALLEGATIONS HAVE BE EN LEVELED AGAINST EACH OTHER. THE MATTER HAS BEEN MOVED BEFORE THE CIVIL COURT AND AL SO IN THE HON'BLE HIGH COURT BY THESE WARRING FACTIONS. THE ALLEGATION WHICH IS COM MON TO BOTH IS THAT BOTH THE FACTIONS HAD INDULGED IN THE EMBEZZLEMENT OF FUNDS ON A WIDE SCALE OVER A LONG PERIOD OF TIME. 2.1. THE LD. CIT FURTHER OBSERVED THAT THE FUNDS RE CEIVED BY THE SOCIETY BY WAY OF STATED DONATIONS/INTEREST ETC. HAVE NOT BEEN UTILIZ ED FOR /TOWARDS THE OBJECTIVES OF THE SOCIETY. THE ACTIVITIES OF THE SOCIETY CAN NO LONGE R BE CONSIDERED AS GENUINE AND SOLELY FOR THE PURPOSE OF THE OBJECTIVES OF THE SOCIETY. M OREOVER, THE MIS-USE OF FUNDS FOR PERSONAL PURPOSES IS NOT CONFINED TO THE EMPLOYEES OF THE SOCIETY BUT IS RELATED TO THE PRESENT/PAST OFFICE BEARERS. BOTH THE RIVAL FACTION S HAVE LEVELED SERIOUS CHARGES OF MIS- APPROPRIATION OF FUNDS OF THE SOCIETY, PARTICULARLY OBTAINED ON THE STRENGTH OF ITS EXEMPTION UNDER SECTION 80G OF THE IT ACT. THUS, TH E ACTIVITIES OF THE SAMITI IS NOT GENUINE AND NOT BEING CARRIED OUT IN ACCORDANCE WIT H THE OBJECTS OF THE SAMITI. 3 ACCORDINGLY THE REGISTRATION GRANTED UNDER SECTION 12AA TO THE SOCIETY WITH EFFECT FROM 1.4.1997 VIDE REGISTRATION NO. 63/5 CIRCULATED VIDE NO. 902 DATED 09.12.1998 STOOD WITHDRAWN WITH IMMEDIATE EFFECT VIDE ORDER DATED 16 .07.2012. CONSEQUENT APPROVAL UNDER SECTION 80G(5) HAS ALSO BEEN WITHDRAWN BY THE ORDER OF EVEN DATE. 3. ASSESSEES COUNSEL SHRI SATISH GUPTA ASSAILING T HE IMPUGNED ORDER CONTENDS THAT THE LD. CIT HAS EXCEEDED THE POWERS AND ACTED CONTR ARY TO LAW IN CANCELING THE REGISTRATION UNDER SECTION 12AA AS WELL AS APPROVAL GRANTED UNDER SECTION 80G(5) OF THE ACT. THE LD. CIT HAS NOT AT ALL RECORDED HIS SATIS FACTION AS TO WHAT ACTIVITY OF THE APPELLANT SOCIETY IS NOT GENUINE OR WHAT ACTIVITY W AS NOT BEING CARRIED IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS IS ENVIS AGED UNDER SECTION 12AA(3) OF THE ACT. THE LD. CIT MERELY ON THE BALD ALLEGATIONS AND WITH OUT APPLYING HIS MIND TO THE FACTS ON RECORD THAT THE ASSESSEE IS CARRYING GENUINE ACTIVI TY IN ACCORDANCE WITH ITS OBJECTS, AND PROCEEDED TO CANCEL THE REGISTRATION ON FRIVOLOUS R EASONINGS. THE ASSESSEE HAD ORGANIZED MEDICAL CAMP AS WELL AS CHARITABLE ACTIVITIES OF DI STRIBUTING BLANKETS, INNERS AND CAPS TO THE NEEDY PERSONS AND THE SUPPORTING MATERIAL WAS A LSO LAID ON ITS RECORD. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE DULY AUDITED. IF THE TW O FACTIONS OF THE SOCIETY WERE FIGHTING FOR CONTROLLING THE AFFAIRS OF THE SOCIETY, THAT CO ULD NOT BE A REASON FOR CANCELLATION OF REGISTRATION. THE LD. CIT DID NOT MENTION EVEN A S INGLE INSTANCE OF ANY MIS-UTILIZATION OF FUNDS OR CARRYING ON ACTIVITIES CONTRARY TO OBJECTS OF THE SOCIETY. HIS ORDER IS BASED MERELY ON ASSUMPTION, PRESUMPTION, SURMISES AND CON JECTURES AND BALD ALLEGATIONS LEVIED BY SOME PERSONS. THE 15 YEAR OLD REGISTRATION HAS BEEN CANCELLED WITHOUT BRINGING ANY MATERIAL ON RECORD. IT HAS ALSO NOT BEEN PROVED TH AT HOW THE CONDITIONS OF GRANTING REGISTRATION HAVE BEEN BREACHED. THERE BEING NO CHA NGE IN FACTS AND CIRCUMSTANCES 4 GRANTING OF REGISTRATION AND ACCORD RENEWAL OF APPR OVAL UNDER SECTION 80G OF THE ACT ON 13.4.2011, THE ORDERS SO PASSED IS BEING ARBITRARY, NEEDS TO BE SET ASIDE. RELIANCE HAS BEEN PLACED ON THE JUDGMENT BY HON'BLE RAJASTHAN HI GH COURT IN THE CASE OF DCIT VS. COSMOPOLITAN EDUCATIONAL SOCIETY, 244 ITR 494 (RAJ. ) AND ALSO ON THE APPELLATE TRIBUNAL JUDGMENT BY AMRITSAR BENCH IN THE CASE OF GURUGOBIND SINGH EDUCATIONAL SOCIETY VS. CIT, 121 TTJ 685 (AMRITSAR). 4. ON THE OTHER HAND, THE LD. CIT D/R SUPPORTED THE DECISION REACHED BY LD. CIT- III, JAIPUR AS THE FUNDS OF THE SOCIETY HAVE BEEN E MBEZZLED AND THIS FACT IS EVIDENT FROM THE WRIT PETITION PENDING DISPOSAL BEFORE THE HON'B LE HIGH COURT AND ALSO BY THE POLICE COMPLAINT ON RECORD. IT, THEREFORE, CANNOT BE SAID THAT THE LD. CIT HAS ACTED ARBITRARY OR CONTRARY TO POWERS VESTED IN HIM. 5. WE HAVE HEARD PARTIES WITH REFERENCE TO MATERIAL ON RECORD AND CASE LAWS BROUGHT TO OUR NOTICE. SECTION 12AA(3) OF THE ACT MANDATES CANCELLATION OF REGISTRATION BY THE COMMISSIONER UNDER THE CIRCUMSTANCE OF HIS SATISFAC TION THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE. IN THE PRESENT CASE IN APPEAL, THE LD. CIT- III, JAIPUR HAS NOT SET OUT AS TO WHICH ACTIVITY OF THE SOCIETY IS NOT GENUINE OR IS NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE S OCIETY. HE HAS RESTED HIS DECISION FOR CANCELING THE REGISTRATION UNDER SECTION 12AA GRANT ED TO ASSESSEE ON 9.12.1998 ON THE BASIS OF ALLEGATIONS AND COUNTER ALLEGATIONS AGAINS T SOME OF THE OFFICIALS COMMANDING POSITION IN THE MANAGEMENT OF THE SOCIETY. THE ALL EGATIONS ARE NOT SHOWN TO HAVE BEEN PROVED. ANY OF THE FUNDS BELONGING TO THE TRUST IS NOT SHOWN TO HAVE BEEN MISAPPROPRIATED OR MIS-UTILIZED BY THE APPELLANT. IF THERE WAS ANY MISAPPROPRIATION OR 5 MIS-MANAGEMENT BY THE OFFICE BEARERS, ACTION CAN B E TAKEN AGAINST ERRING MEMBERS OF THE SOCIETY. FROM RECORDS AND FACTS, WHEN IT WAS NOT PO SSIBLE TO SAY WITH CIRCUMSPECTION AS TO WHICH AMOUNT OR FUND OF THE SOCIETY WAS NOT UTILIZE D FOR THE PURPOSE OF MEETING THE OBJECTS OF THE SOCIETY OR WAS MIS-UTILIZED, THE REG ISTRATION UNDER SECTION 12AA OF THE ACT COULD NOT BE CANCELLED. WE, THEREFORE, IN THE LIGH T OF AFORESAID FINDINGS AND HAVING REGARD TO THE JUDGMENT BY HON'BLE RAJASTHAN HIGH CO URT IN THE CASE OF DCIT VS. COSMOPOLITAN EDUCATION SOCIETY (SUPRA), SET ASIDE T HE ORDER DATED 16.07.2012 CANCELING REGISTRATION UNDER SECTION12AA(3) OF THE ACT AND CO NSEQUENT TO THIS WITHDRAWAL OF APPROVAL UNDER SECTION 80G(5) ALSO STANDS VACATED. 6. IN THE RESULT, BOTH THE APPEALS STAND ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23.1. 13. SD/- SD/- ( B.R. MITTAL ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 23/01/2013. D/- COPY FORWARDED TO :- SHRI MAIDH KSHATRIYA SABHA, SIKAR. THE CIT-III, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 731(2)/JP/2012) BY ORDER, AR ITAT JAIPUR.