Shanti Gopal Memorial Trust, Cuttack V. CIT, Cuttack

ITA 77/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4371 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-06-2011
• Assessment Year: misc
• Appeal Filed On: 14-02-2011
• Court: TRIBUNAL
• Department Lawyers: A K PATRA
• Assessee Lawyers: S ACHARYA
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 12AA

Judgement Text

IN THE INCME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER, AND HONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER. ITA NO. 77/CTK/2011 SHANTI GOP[AL MEMORIAL TRUST, PATNAIK COLONY, THORIA SAHI, CUTTA CK 753 001 PAN: AAITS 4394 K VERSUS COMMISSIONER OF INCOME - TAX,CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI S.ACHARYA, AR FOR THE RESPONDENT SHRI A.K.PATRA, DR ORDER SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE AS SESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX DT.30.12.2010 REJECTING THE APPLICATION SEEKING REGISTRATION U/S.12AA OF THE INCOME - TAX ACT,1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. FOR THAT THE ORDER PASSED B Y THE FORUM BELOW IS EX - FACIE ILLEGAL HIGHLY ARBITRARY AND PASSED WITHOUT APPLICATION OF JUDICIAL MIND AND AS SUCH LIABLE TO BE QUASHED IN LIMINE. 2. FOR THAT THE IMPUGNED REJECTION ORDER PASSED BY THE LD. CIT. CUTTACK CHARGE, CUTTACK, ON 30.12.2010, IS A FTER THE EXPIRY OF SIX MONTHS FROM THE DATE OF APPLICATION BEING 29.03.2010, WHICH ACTION IS IN PATENT VIOLATION OF PROVISION AS LAID DOWN UNDER SUB - SECTION (2) OF SECTION 12AA OF THE IT ACT, 1961, AND THUS, ON THIS GROUND ALONE DESERVES TO BE SET ASIDE BE ING NON EST. 3. FOR THAT SINCE THE APPLICATION FOR REGISTRATION U/S. 12A(A) WAS MADE ON 29.03.2010, THE TRUST IS DEEMED TO HAVE BEEN REGISTERED W.E.F. 29.09.2010 IN VIEW OF THE PROVISION AS LAID DOWN UNDER SUB - SECTION (2) OF SECTION 12AA OF THE IT ACT, 19 61, AND THUS, BY VIRTUE OF THE SAME, THE PRESENT IMPUGNED ORDER OF REJECTION DESERVES TO BE SET ASIDE BEING REDUCED TO A NULLITY. 4. FOR THAT THE PURPORTED BUSINESS ACTIVITIES AS HAS BEEN ALLEGED BY THE LD. FORUM BELOW IS ANCILLARY TO ACHIEVE THE MAIN OBJ ECTS OF FREE SUPPLY OF MEDICINES TO NEEDY AND POOR PEOPLE ITA NO.77/CTK/2011 2 PARTICULARLY THE MOST VULNERABLE SECTION OF THE SOCIETY AND MORE THAN 85% OF INCOME GENERATED THEREOF IS BEING SPENT EXCLUSIVELY FOR CHARITABLE PURPOSES FOR WHICH THE TRUST IS ENTITLED TO RECEIVE RE GISTRATION U/S 1 2A OF THE L.T. ACT. 5. FOR THAT BEFORE REJECTING THE APPLICATION THE LD. FORUM BELOW HAS FAILED IN AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD IN GROSS VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND THUS, THE ORDER PASSED BY THE FORUM BE LOW IS LIABLE TO BE SET ASIDE. 6. FOR THAT THE APPELLANT CRAVES LEAVE TO SUBMIT FURTHER GROUNDS OF APPEAL, OR AMEND THE PRESENT GROUNDS, AT THE TIME OF HEARING. 3. BOTH PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND THEIR LEGAL IMPLI CATION. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL, IT IS FOUND THAT UNDISPUTEDLY THE ASSESSEE IS A CHARITABLE TRUST REGISTERED BY VIRTUE OF TRUST DEED EXECUTED ON 1.4.2009 AND WAS REGISTERED WITH THE DISTRICT SUB - REGISTRAR, CUTTACK UNDER THE SOCIETIES REGISTRATION ACT . THE TRUST WAS ESTABLISHED FOR IMPARTING FOR IMPARTING AND ASSISTING IN HAVING A GOOD HOSPITAL AND DO RESEARCH WORK IN DIFFERENT FIELDS WHICH WILL HELP MANKIND AND NEEDY PERSON. THE TRUST WILL OPEN A SEPARATE R ETAIL DRUG SHOP WHICH WILL ASSIST IN AVAILING MEDICINE AT A MINIMUM COST. THE TRUST WILL BE HOLDING HEALTH CAMP, AT DIFFERENT LOCATIONS FOR ASSISTING NEEDY PERSONS. THE TRUST WILL UNDERTAKE FOR THE DEVELOPMENTS OF HEALTH ORIENTED PROGRAMS SUCH AS DRAMA, DA NCE, STREET PLAY, AUDIO - VISUAL POSTER EXHIBITION, TV & RADIO PROGRAM, VIDEO FILMS SONS ETC. THE TRUST WILL IMPLEMENT TO CONTINUE WITH RESEARCH ON CULTURAL MEDIA FOR SOCIAL AWARENESS TO CREATE WOMEN AND CHILD CULTURAL MOVEMENTS TO PROMOTE EDUCATIONAL VIDE O ACTION PROGRAMME FOR RURAL MASS. THE ASSESSEE TRUST HASD APPLIED FOR REGISTRATION AS A CHARITABLE TRUST ON 29.3.2010 IN FORM 10A READ WITH RULE 17A OF THE I.T.RULES ENCLOSING ITA NO.77/CTK/2011 3 THEREWITH ALL THE REQUISITE DOCUMENTS AS REQUIRED UNDER THE STATUTE. THE LEARNE D CIT, CUTTACK IN COURSE OF PROCESSING OF THE APPLICATION FOR REGISTRATION, AFTER EXAMINING THE ACCOUNTS OF THE TRUST FOR THE PERIOD FROM 1.4.2009 TO 28.2.2010, CAME TO THE CONCLUSION THAT PROVISIONAL INCOME AND EXPENDITURE ACCOUNT FOR THE PERIOD FROM 1.4. 2009 TO 28.2.2010 ENCLOSED WITH THE APPLICATION CLEARLY ESTABLISHES THE FACT THAT THE INSTITUTION HAS UNDERTAKEN BUSINESS ACTIVITIES IN A SYSTEMATIC MANNER SO AS TO EARN SUBSTANTIAL PROFIT. THEREFORE, HE REJECTED THE APPLICATION FOR REGISTRATION APPLIED FO R BY THE ASSESSEE. 5. DURING THE COURSE OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS VEHEMENTLY ARGUED CONTENDING THAT THE ASSESSEE HAS FILED ORIGINALLY THE APPLICATION SEEKING REGISTRATION U/S.12A ON 29.3.2010. BUT THIS APPLICATION WAS MISPLACED BY THE DEPARTMENT AND AFTER CONSIDERABLE TIME DIRECTED THE ASSESSEE TO FILE A COPY OF THE APPLICATION AND ACCORDINGLY THE ASSESSEE SUBMITTED PHOTO COPY OF THE ORIGINAL APPLICATION ON 24.6.2010. BUT THE LEARNED CIT HAS TAKEN THE FILING OF THE COPY OF THE ORIGINAL APPLICATION AS 24.6.2010 AND PASSED THE IMPUGNED ORDER EVEN WITHOUT AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE, WHICH IS REQUIRED TO BE FOLLOWED BY A QUASI JUDICIAL AUTHORITY LIKE COMMISSIONER OF INCOME - TAX UNDER THE INCOME - TAX ACT. ON THIS COUNT ITSELF THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. FURTHERMORE HE SUBMITTED THAT THE LEARNED CIT HAS NOT BEEN ABLE TO MAKE ANY MATERIAL ON RECORD TO SHOW THAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE WERE NOT CHARITABLE IN NATURE AND THEY ARE NOT COMIN G UNDER THE ACTIVITIES AS MENTIONED IN THE TRUST DEED. HENCE, IN VIEW OF THIS MATTER ALSO, THE IMPUGNED ORDER OF THE LEARNED CIT IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. ITA NO.77/CTK/2011 4 6. CONTRARY TO THIS, THE LEARNED DR HAS VEHEMENTLY ARGUED SUPPORTING THE ORDER OF THE LE ARNED CIT AND SOUGHT FOR DISMISSAL OF THE APPEAL OF THE ASSESSEE. 7. ON CAREFUL ANALYSIS OF THE ORDER PASSED BY THE LEARNED CIT IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT NOWHERE IN THE IMPUGNED ORDER THE LEARNED CIT HAS MADE OUT ANY MATERIAL TO THE EFFECT THAT THE ASSESSEES OBJECTS ARE NOT CHARITABLE NATURE OR THE ASSESSEE HAS NOT IMPLEMENTED THOSE OBJECTS AS MENTIONED IN THE TRUST DEED. IT WAS ALSO NOT MADE OUT BY THE LEARNED CIT THAT THE ASSESSEE IS NOT GENUINE. WHILE CONSIDERING THE APPLICATION FOR REGISTRATION, THE LEARNED CIT HAS TO LOOK INTO THE ABOVE SAID INGREDIENTS AND NOTHING ELSE. SECTION 12AA(1) OF THE I.T.ACT ENVISAGES THAT UNLESS AND UNTIL THE CIT FINDS THE OBJECTIVES OF THE INSTITUTION ARE NOT CHARITABLE AND THEY ARE N OT GENUINE REGISTRATION OF THE TRUST OR INSTITUTION CANNOT BE REFUSED. IT WAS FURTHER PROVIDED IN THE SAID PROVISION THAT NO ORDER UNDER SUB - CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD . AS CAN BE SEEN FROM THE IMPUGNED ORDER, THERE IS NO SUCH OPPORTUNITY AFFORDED TO THE ASSESSEE BY THE LEARNED CIT. THEREFORE, ON THAT COUNT ALSO THE IMPUGNED ORDER IS NOT SUSTAINABLE FOR LEGAL SCRUTINY. IN THE CASE OF DIT(EXEM.) V. MANAKHI AMMA ENDOWMENT TRUST, REPO RTED IN 50 TTR 243 (KAR), HONBLE KARNATAKA HIGH COURT HAS HELD THAT THE REGISTRATION U/S.12A CANNOT BE DENIED TO A TRUST WHICH IS NEWLY FORMED ON THE GROUND THAT IT HAD NOT COMMENCED ANY ACTIVITY. IT WAS FURTHER HELD THAT WHILE GRANTING REGISTRATION U/S.1 2A ONLY OBJECTIVES OF THE TRUST ARE TO BE EXAMINED TO ASCERTAIN THE GENUINENESS OF THE TRUST. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT STATED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED CIT IN REFUSING ITA NO.77/CTK/2011 5 REGISTRATION TO THE ASSESSEE IS FOUND UNSUSTAINABLE FOR LEGAL SCRUTINY AND HENCE, THE SAME IS HEREBY SET ASIDE BY ALLOWING THE APPEAL OF THE ASSESSEE FINDING THAT THE ASSESSEE IS ENTITLED FOR REGISTRATION U/S.12A OF THE I.T. ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN OPEN COURT ON DT. 30 TH JUNE, 2011 SD/ - SD/ - (K.K.GUPTA) ACCOUNTANT MEMBER (K.S.S.PRASAD RAO) JUDI CIAL MEMBER DATE: 30 TH JUNE, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: SHANTI GOP[AL MEMORIAL TRUST, PATNAIK COLONY, THORIA SAHI, CUTTACK 753 001 2. THE RESPONDENT: COMMISSIONER O F INCOME - TAX,CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.