Bhukhandas Chhotalal Jariwala Charitable Turat, Surat V. CIT (Exemption), Ahmedabad

ITA 741/SRT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 4219 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2024
• Assessment Year: 2022-2023
• Appeal Filed On: 29-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH K. KABARA
• Keywords: Charitable institution; Set aside
• Section: 12AA; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.741/SRT/2023 Assessment Year: (2022-23) (Physical Hearing) Bhukhandas Chhotalal Jariwala Charitable Trust, C-1209, River Heights, Nr. Param Row House, Adajan, Surat – 395009. Vs. The CIT (Exemption), Ahmedabad èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAETB5829Q (Appellant) (Respondent) Appellant by Shri Suresh K. Kabara, CA Respondent by Shri Ravinder Sindhu, CIT(DR) Date of Hearing 11/01/2024 Date of Pronouncement 22/01/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2022-23, is directed against the order passed by the Learned Commissioner of Income Tax (Exemption), [in short “the ld. CIT(E)”], Ahmedabad, in Appeal No.CIT (Exemption), AHMEDABAD/2023- 24/12AA/10705, dated 23.08.2023, wherein ld. CIT(E) has rejected assessee’s application, filed in form No.10AB u/s 12A(1)(ac)(iii) of the Act, as the assessee failed to prove the genuineness of the activities of the trust. 2. The grounds of appeal raised by the assessee are as follows: “1. The ld. CIT(E) was not just and proper on the facts of the case and in law in rejecting the application of the Trust for registration u/s 12AB.” 2 ITA No.741/SRT/2023/AY.2022-23 Bhukandas Chotalal Jariwala Charitable Trust 3. Brief facts qua the issue are that the applicant has filed Form 10AB u/s 12A(1)(ac)(iii) of the Act on 18.02.2023. The applicant had been granted order for provisional approval in Form No.10AC issued on 03.08.2022 under section 12A(1)(ac)(vi) for the period commencing from AY 2023-24 to 2025-26. In reference to the application filed by the applicant in Form 10AB, the applicant was requested to submit certain details/documents vide notice of ld. CIT(E) dated 11.07.2023. The applicant had submitted part details on 02.08.2023. Accordingly, one more opportunity vide notice dated 11.08.2023 was given to the applicant to submit pending details, which were as follows: “1. Copy of Ledger Accounts of all the expenditure made towards charitable and religious object in last 3 year including current year. 2. Copy of annual Accounts of last 3 years including current years. 3. From the bank statement of bank account no. 624605068242 held with ICICI bank, it is noticed that it have been credited with amounts of Rs.16,00,000 and Rs.51,38,939/- during the F.Y.2021-22 and 2022-23 respectively. Please explain the credit and debit entries of said bank account and also furnish copy of bank book.” 4. However, assessee-trust did not file the above details before ld. CIT(E). The ld. CIT(E) noted that section 12AB makes, it very clear that before granting registration under this section, the Commissioner has to satisfy himself about the genuineness of the activities of the trust or institution and also he has to verify that these activities are in consonance with the objects of the trust or institution. Further, assessee has to ensure that other laws material for the purpose of achieving objects are complied with. Reliance in this regard was also placed by the ld. CIT(E) on the judgment delivered by the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Ujjain Vs Dawoodi Bohara Jamat in Civil Appeal No. 2492 of 2014, wherein the Hon'ble Apex Court while adjudicating similar provisions u/s. 12AA of the Act has held as under: 3 ITA No.741/SRT/2023/AY.2022-23 Bhukandas Chotalal Jariwala Charitable Trust “Section 12AA lays down the procedure to be followed by the Commissioner for grant or refusal of application for registration made under Section 12A. According to procedure so laid down, the Commissioner shall call for documents and information and conduct an enquiry to satisfy himself of the genuineness of the institution and upon reaching satisfaction of the charitable or religious nature of the objects and the authenticity of the activities of the institution, he would grant the registration. If he is not satisfied of the aforesaid, the request made in the application may be declined.” 5. Further, while adjudicating similar provisions u/s 10(23C) of the Act, the Hon'ble Supreme Court in the case of M/s New Noble Educational Society in Civil Appeal No. 3795 of 2014 has held as under: “While considering applications for approval under Section 10(23C), the Commissioner or the concerned authority as the case may be under the second proviso is not bound to examine only the objects of the institution. To ascertain the genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, institution or institution genuinely seeks to achieve the objects which it professes. The observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, instructions etc. the proviso under Section 10(23C) is not confined to newly set up institutions – it also applies to existing ones. The Commissioner or other authority is not in any manner constrained form examining accounts and other related documents to see the pattern of income and expenditure.” 6. Based on the above facts and circumstances, the ld. CIT(E) held that assessee has failed to file documentary evidences to enable him to satisfy about: (i) genuineness of the activities of the trust or institution, (ii) these activities are in consonance with the objects of the trust or institution (iii)that other laws material for the purpose of achieving objects are complied with. Therefore, the application filed by the assessee-trust in Form No.10AB u/s 12A(1)(ac)(iii) of the Act was rejected by ld. CIT(E). 4 ITA No.741/SRT/2023/AY.2022-23 Bhukandas Chotalal Jariwala Charitable Trust 7. Aggrieved by the order of ld.CIT(E), the assessee is in appeal before us. 8. Shri Suresh K. Kabra, Ld. Counsel for the assessee argued that during proceedings before the ld. CIT(E), the assessee could not file the required documents and evidences as they were not readily available at that point of time, when the proceedings before the ld. CIT(E) were going on. Now, the documents and details relating to activities and objects of the trust are available with the assessee, therefore the matter may be remitted back to the file of ld. CIT(E) to adjudicate the issue afresh. 9. On the other hand, Learned Commissioner of Income Tax – Departmental Representative [ld. CIT-DR) for the Revenue submitted that assessee has failed to file the details and documents before the ld. CIT(E) and assessee has also failed to prove the genuineness of its activities and objects of the trust, therefore assessee’s appeal may be dismissed. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(E) and other material brought on record. We note that assessee could not file the required details and documents when the proceedings before the ld. CIT(E) was going on, as these documents and evidences were not available, when proceedings before ld. CIT(E) was going on. However, now, the Ld. Counsel for the assessee undertakes to file the required details and documents before the ld. CIT(E). Therefore, we are of the view that in the interest of justice, one more opportunity should be 5 ITA No.741/SRT/2023/AY.2022-23 Bhukandas Chotalal Jariwala Charitable Trust granted to the assessee to plead his case before the ld. CIT(E) and to file required details and documents. We also note that ld. CIT(E) has passed the ex parte order, and the entire documents and details were not submitted by the assessee before ld CIT(E ), therefore, in the interest of justice one more opportunity should be granted to the assessee to plead his case before the ld. CIT(E), hence we set aside the order of ld. CIT(E) and remit the matter back to the file of ld CIT(E ) for fresh adjudication in accordance with law. We also direct the assessee to file the required details and documents before the ld. CIT(E), as and when required by the ld. CIT(E). For statistical purposes, the appeal of the assessee is allowed. 11. In the result, appeal of the assessee is allowed for statistical purposes, in above terms. Order is pronounced on 22/01/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 22/01/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat