Uttar Pradesh Trade Promotion Authority, Kanpur V. Income Tax Officer (Exemption), Kanpur

ITA 775/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4404 (ITAT-LUCKNOW)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 12-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Keywords: Gift; Depreciation; Charitable institution
• Section: 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. N .S. SAINI , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 775/LKW/2017 ASSESSMENT YEAR: 2013 - 14 UTTAR PRADESH TRADE PROMOTION AUTHORITY DIREC TORATE OF INDUSTRIES U.P. UDYOG BHAWAN, G.T. ROAD KANPUR V. INCOME TAX OFFICER (EXEMPTION) KANPUR T AN /PAN : AAAAU0736C (APP ELL A NT) (RESPONDENT) APP ELL ANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI C. K. SINGH, D.R. DATE OF HEARING: 09 10 20 1 8 DATE OF PRONOUNCEMENT: 10 10 201 8 O R D E R PER N.S. SAINI , A .M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - II, KANPUR DATED 22/9/2017. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 01. BECAUSE THE ORDER PASSED BY THE CIT(A) DISMISSING THE APPEAL EX - PARTE IS CONTRARY TO FACTS, BAD IN LAW AND BE QUASHED. 02. BECAUSE THERE BEING NO DEFAULT ON THE PART OF THE ASSESSEE IN COMPLYING WITH ANY OF THE NOTICES ISSUED, THE CIT(A) WAS NOT JUSTIFIED IN DISMISSING THE APPEAL EX - PARTE. 03. BECAUSE WITHOUT PREJUDICE, THE ORDER PASSED BY THE CIT(A) IS BEYOND THE PRESCRIBED FIFTEEN DAYS TIME AS PER CBDT'S INSTRUCTION ITA NO.775/LKW/2017 PAGE 2 OF 10 NO. 20/2003 DATED 23.12.2003, WHICH INSTRUCTION IS BINDING ON CIT(A), THE ORDER PASSED IS BAD IN LAW AND BE QUASHED . 04. BECAUSE THE CIT(A) HAS NOT PASSED A SPEAKING ORDER, HENCE, THE APPEAL ORDER PASSED DISMISSING THE APPEAL EX - PARTE IS CONTRARY TO THE PROVISIONS OF LAW AND BE QUASHED. 05. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE STATEMENT OF FACTS, WHICH ARE T HEMSELVES A COMPLETE NARRATIVE OF THE PRELIMINARY SUBMISSIONS AND FACTS, SHOULD OUGHT TO HAVE BEEN CONSIDERED WHILE DECIDING THE APPEAL EX - PARTE. 06. BECAUSE THE CIT(A) HAS FAILED TO ADJUDICATE ANY OF THE GROUNDS OF APPEAL TAKEN BEFORE HIM AND AS DETAILS B ELOW : 01. AS PER ASSESSMENT ORDER LD. ASSESSING OFFICER STATED THAT BY THE 'SALE PROMOTION OBJECTIVITY' ASSESSEE IS EARNING LARGE INCOME AND OBJECTIVITY AND 'PROFIT ENHANCING MOTIVE OF THE ASSESSEE DOES NOT COME UNDER PREVIEW OF CHARITABLE PURPOSE U/S 2 (15) OF I. T. ACT, 1961 VIDE POINT 4, PARAGRAPH NO. 1 OF PAGE 2. THAT, AS PER SECTION 2(15) OF INCOME TAX ACT, 1961, 'THE MOST IMPORTANT CONDITION FOR A TRUST TO BE FOR CHARITABLE PURPOSE IS THAT THE BENEFICIARY SHOULD BE OF THE GENERAL PUBLIC AND NONE OF THE OBJECTS OF MEMO OF ASSOCIATION SHOULD BENEFIT OF PRIVATE INDIVIDUALS.' IN THE APPELLANTS CASE THE INCOME IS ONLY USED FOR DEVELOPMENT OF POOR ARTISANS AND MADE ARRANGEMENT TO ENHANCE THEIR SKILLS. THE INCOMES HAVE NEVER BEEN USED FOR ANY INDIVIDUAL BEN EFIT. THE APPELLANT IS VARIOUS KIND OF ACTIVITIES INCLUDING ORGANIZING TRADE FAIRS AT VARIOUS PLACES IN OR OUTSIDE INDIA TO BOOST THE TRADE OF ARTISANS AND SELF CONFIDENCE OF POOR ARTISANS, SO THAT, THEY CAN LEARN SUFFICIENT EXPERIENCE AND CAN EXPLORE THEI R TALENT ACROSS THE WORLD. IN FACT THE AUTHORITY IS PROVIDING RELIEF TO POOR. 02. ARTISANS PARTICIPATE IN VARIOUS TRADE FAIRS LIKE IITF. THESES FAIR GENERATES REVENUE FOR THE AUTHORITY WHICH IS USED BY THE AUTHORITY ITA NO.775/LKW/2017 PAGE 3 OF 10 TO SUBSIDIES THE EXPENDITURE OF OTHER FA IRS AND TO SUBSIDIES OTHER ACTIVITIES. STALL TO SMALL PARTICIPANTS ARE ALLOTTED EVEN IN WITHOUT ANY CHARGES IN SEVERAL FAIRS. IN ADDITION TO ARRANGING FAIR UTTAR PRADESH TRADE PROMOTION AUTHORITY (UPTPA) IS ENGAGED IN SKILL DEVELOPMENT AMONGST HANDICRAFTS AND WEAVER SECTIONS. THE UTTAR PRADESH TRADE PROMOTION AUTHORITY (UPTPA) ORGANIZES FREE TRAINING PROGRAM AS PER GOVERNMENT DIRECTIVES IN VARIOUS CITIES OF UTTAR PRADESH, WHERE THE POOR ARTISANS ARE PROVIDED VARIOUS TECHNICAL SKILLS IN THEIR AREA AND GIVEN EDUCATION ABOUT HOW TO START A VENTURE AND HOW TO INCREASE THEIR SALES AND INCOME. USEFUL KITS ARE PROVIDED TO THE PARTICIPANTS TO DEVELOP THEIR KNOWLEDGE. IN ADDITION TO IT THE ARTISANS ARE GIVEN RS. 500/ - STIPEND AND FREE LUNCH DURING THE TRAINING PERIOD. FOR THESE ACTIVITIES NO FEES IS CHARGED FROM PARTICIPANTS. IT IS A GOVERNMENT INITIATIVE TO EMPOWER THE WEAKER SECTIONS OF THE SOCIETY. SEVERAL EXPENDITURES ARE DONE TO ORGANIZE THESE FAIRS WHICH ARE WRITTEN OFF FROM SAID INCOMES. THESE ACTIVITIES ARE SUR ELY ALIGNED WITH OBJECTIVES OF THE UPTPA. THIS IS RELIEF TO POOR AND ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IN A NUMBER OF JUDICIAL PRONOUNCEMENTS, THE WORDS ' ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY' HAVE BEEN INTERPRETED IN CIT V. GUJARAT MARITIM E BOARD [2003] 295 ITR 561 (SC), DIRECTOR OF INCOME TAX V. BHARAT DIAMOND BOURSE [2003] 259 ITR 280 (SC), CIT V. AGRICULTURAL PRODUCE AND MARKET COMMITTEE [2007] 291 ITR 419 (BOM.), CIT V. FEDERATION OF INDIA CHAMBERS & INDUSTRY (1981) 130 ITR 186 (SC). SO LONG AS THE DOMINANT OBJECT IS OF GENERAL PUBLIC UTILITY AND THERE IS NO PROFIT MOTIVE, IT CANNOT BE SAID THAT THE TRUST/INSTITUTION NOT ESTABLISHED FOR CHARITABLE PURPOSES, EVEN IF THERE IS SOME PROFIT IN THE ACTIVITY CARRIED ON BY THE TRUST/INSTITUTION. HENCE, THERE IS NO VIOLATION OF SECTION 2(15) OF THE INCOME TAX ACT 1961. 03. AS PER ASSESSMENT ORDER LD. ASSESSING OFFICER STATED THAT BY THE 'RECENTLY 5 DESERVING POOR ARTISANS WERE SPONSORED BY UPTPA TO ATTEND THE INTERNATIONAL AMBIETE FAIR AT FRAN KFURT GERMANY' VIDE POINT 4, PARAGRAPH NO. 2 OF PAGE 2. THAT, ORGANIZING TRADE ITA NO.775/LKW/2017 PAGE 4 OF 10 FAIRS AND OTHER SHOWS AT VARIOUS PLACES IN OR OUTSIDE INDIA IS BEING DONE TO BOOST THE SELF CONFIDENCE OF POOR ARTISANS, SO THAT THEY CAN LEARN SUFFICIENT EXPERIENCE. THESE ARTI SANS ARE SENT TO ABROAD TO LEARN FOREIGN CULTURAL AND SHOW CASE THEIR TALENT EVERYWHERE IN INDIA OR OUTSIDE. THE OBJECT WAS TO GAIN KNOWLEDGE OF FOREIGN CULTURAL, METHODS TO CREATE OF HANDICRAFT PRODUCTS, SALES PROMOTION TECHNIQUES, AND OTHERS. IT WAS JUST AN EFFORT OF UPTPA TO ENCOURAGE ARTISANS SO THAT THEY CAN PUT AN EXTRA EFFORT IN THEIR RESPECTIVE WORK. HENCE SENDING ARTISANS ABROAD AND INCURRING NECESSARY EXPENDITURES LIKE TRAVELLING, HOTEL, FOOD ETC WERE NECESSITY NOT LUXURY AS STATED BY LD. ASSESSIN G OFFICER. 04. IT WAS STATED IN ASSESSMENT ORDER THAT THE 'ASSESSEE IS INVOLVED IN EXPORT ACTIVITIES AND OBJECTS OF MEMORANDUM OF ASSOCIATION HAVE VIOLATED' VIDE POINT 5, OF PAGE 2. IT IS IMPORTANT TO NOTE THAT, THE ASSESSEE IS NOT ENGAGED IN ANY EXPORT ACTIVITIES. THE ASSESSING OFFICER EITHER MAY HAVE MISLEADING INFORMATION OR HIS JUDGMENT IS BASED ON UNNECESSARY GROUNDS. SEVERAL NECESSARY LEDGERS HAVE BEEN SUBMITTED BEFORE THE LD ASSESSING OFFICER WHICH DO NOT ARRIVE TO CONCLUSION THAT SOCIETY IS ENGAGE D IN ANY TYPE OF EXPORT ACTIVITY, HENCE IT IS VERY MUCH CLEAR THAT NO SUCH EXPORT ACTIVITIES IS BEING CARRIED OUT BY THE SOCIETY. THE UPTPA EXCLUSIVELY WORKS IN ALIGN WITH THE 'OBJECT CLAUSE' OF THE MEMORANDUM OF ASSOCIATION. IT HAS NEVER VIOLATED NORMS OF SOCIETY. THEREFORE ON FALSE STATEMENT HAVE EVER BEEN PRODUCED BEFORE INCOME TAX DEPARTMENT. 05. AS PER ASSESSMENT ORDER LD ASSESSING OFFICER STATED THAT 'ASSESSEE IS IN DEFAULT OF FURNISHING WRONG, MISLEADING AND INACCURATE PARTICULARS AT THE TIME OF AS SESSMENT PROCEEDING AND ACTIVITIES OF THE ASSESSEE UPTPA ARE NOT UNDER THE CHARITABLE PURPOS E U/S 2(15) OF I.T. ACT, 1961. VIDE POINT 6, OF PAGE 2. IN THIS CONNECTION IT IS PERTINENT TO NOTE THAT, THE AUTHORITY IS NOT RUNNING ANY ACTIVITY WHOSE MAIN OBJECT S IS TO EARN PROFIT. UTTAR PRADESH TRADE PROMOTION AUTHORITY (UPTPA) IS A A/ON PROFIT ITA NO.775/LKW/2017 PAGE 5 OF 10 ORGA NIZATION ESTABLISHED BY UP GOVT. WHICH WORKS FOR THE BENEFIT OF GENERAL PUBLIC AD RELIEF TO POOR. THE AUTHORITY IS NOT EARNING ANY PROFIT BUT SURPLUS IS INCIDENTAL TO ITS MAIN OBJECTIVE. DURING PRECEDING FINANCIAL YEAR 2011 - 12, THERE WAS A LOSS OF RS. 40.47 LACS. HOWEVER DURING CURRENT YEAR THERE US SURPLUS. TE AUTHORITY IS HAVING EXEMPTION U/S 12A AND HENCE ITS SURPLUS IS EXEMPTED AND HENCE IT SHOULD BE ASSESSED UNDER SECTION 12A AND IT IS NOT LIABLE FOR ANY TAX. THE AUTHORITY IS COLLECTING FUNDS FROM VARIOUS PARTICIPANTS OF FAIR TOWARDS DEVELOPMENT FEE AND THE SAME IS DEPOSITED IN BANK. THE RECEIPT AND DEPOSITION OF CASH IS DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE TOTAL RECEIPTS FROM VARIOUS FAIRS WAS RS. 2,11,93,900/ - AND RECEIPTS FROM INTEREST & GRANTS WAS RS. 59,43,624 / - . HENCE, THE TOTAL RECEIPTS OF AUTHORITY WAS RS. 2,77,37,524 / - AND EXPENDITURE WAS RS. 2,45,75,206 / - . THE SURPLUS WAS RS. 25,62,378 / - WHICH I S LESS THAN 15% OF THE TOTAL RECEIPTS, HENCE ALLOWED UNDER SECTION 12A. THERE IS NO VIOLATION OF SECTION 2(15) AS EXPLAINED ABOVE IN POINT (2) ABOVE. 06. IT WAS STATED IN ASSESSMENT ORDER THAT 'UNUTILIZED GRANTS HAVE NOT BEEN RETURNED TO U.P. GOVERNMENT AND ADVANCES TO STAFF IS STILL SUBJECTED' VIDE POINT 7, OF PAGE 3. THE OBSERVATIONS IN THE AUDIT REPORT THAT 'THE UNUTILIZED GRANTS HAVE NOT BEEN RETURNED TO U.P. GOVERNMENT 'RELATES TO EARLIER YEARS NOT TO THE YEAR TAKEN INTO CONSIDERATION. THIS OBSERVAT ION IS BASED ON THIS BASIS OF OBSERVATION IN PREVIOUS AUDIT REPORT FOR F.Y. 2011 - 12, ASSESSING OFFICER CAN NOT HELD THAT SOCIETY HAS EVADED THE TAX OR HAS HIT THE INTEREST OF THE REVENUE DEPARTMENT BY DEFINING ANY OBJECT/ACTIVITY UNDER THE MEANING OF CHARI TABLE PURPOSE. 07. AS PER ASSESSMENT ORDER LD. ASSESSING OFFICER ALSO STATED THAT ' DEPRECIATION CLAIMED BY THE ASSESSEE IS NOT ALLOWABLE EXPENDITURE' VIDE POINT 8, PARAGRAPH 3, OF PAGE 3. TOTAL RECEIPTS FROM VA RIOUS FAIRS WAS RS. 2,11,93,900/ - AN RECEIP TS FROM INTEREST & GRANTS WAS RS. 59,43,624 / - HENCE, THE TOTAL RECEIPTS OF AUTHORITY WAS RS. 25,62,378 / - WHICH IS LESS THAN 15 % OF THE TOTAL ITA NO.775/LKW/2017 PAGE 6 OF 10 RECEIPTS, HENCE ALLOWED UNDER SECTION 12A, AS REGARDS THE ALLOWABILITY OF DEPRECIATION AS EXPENSES WE WISH TO INFO RM THAT IT WAS AN ALLOWABLE EXP DURING SAID ASSESSMENT YEAR, FURTHER, THE DEPRECIATION HAS BEEN ALLOWED UP TO A.Y. 2014 - 15. THE PROVISION FOR NON ALLOWABILITY HAS BEEN INSERTED FROM AY 2015 - 16 AND ONWARDS. FURTHER IT HAS ALSO BEEN CONFIRMED IN CIT V. SETH MANIPAL RANCHHODDAS VISHRAM BHAVAN TRUST [1992], 105 CTR (GUJ.) 303. 08. IT WAS STARED IN ASSESSMENT ORDER BY THE LD. ASSESSING OFFICER THAT 'ADVERTISEMENT & PUBLICITY, HOTEL & TAXI, MISC. EXP. ARE NOT REASONABLE' VIDE POINT 9 OF PAGE 3. ADVERTISEMENT & PUBLICITY BELONGS TO THAT CATEGORY OF EXPENDITURES WHICH ARE INCURRED BY CENTRAL GOVERNMENT, STATE GOVERNMENT, NUMBER OF INDUSTRIES AND EVEN BY INCOME TAX DEPARTMENT. LUMP SUM IS INCURRED TO BOOST SALES OF ENTITY AND TO BRING AWARENESS AMONGST THE PUBLIC. SOME TIMES SMALL EXPENDITURES CONTRIBUTES TO BIG AMOUNT. THEREFORE, IT CAN NOT BE HELD THAT THESE EXPENDITURES ARE NOT GENUINE EXPENDITURES WHICH WERE DONE IN LINE WITH OBJECTS OF THE SOCIETY. THESE ARE THE EXPENDITURES DONE TO ATTAIN GENERAL OBJECTS OF TH E SOCIETY. THE LEDGERS, VOUCHERS AND BILLS HAS BEEN ALREADY PRODUCED THE LTD. ASSESSING OFFICER. MOST OF THE EXPENDITURES HAVE BEEN PAID BY THE ACCOUNT PAYEE CHEQUES AND CAN BE PRODUCED BEFORE YOUR KINDELF ALSO. BEING THE GOVT. ORGANIZATION ALL THE EXPENDI TURE RECORDS ARE AVAILABLE WITH UPTPA. 09. AS PER ASSESSMEN T ORDER LD. ASSESSING OFFICER ALSO STATED THAT ' MANDAP REPAIR EXPENSES' MEETING & BUSINESS PROMOTION EXPENSES, MDA SUBSIDY CLAIMED ARE NOT REASONABLE' VIDE POINT 10, OF PAGE 3, IT CAN NOT BE HEL D THAT THESE EXPENDITURES ARE NOT GENUINE. MANDAP REPAIR EXPENSES, AND BUSINESS PROMOTION EXPENSES ARE GENUINE EXPENDITURES WHICH ARE DONE IN LINE WITH OBJECTS OF THE SOCIETY. TOTAL MANDAP REPAIR EXPENSES WERE RS. 24,10,420/ - OUT OF WHICH RS. 24,00,000/ - HA S BEEN PAID TO UPSIC WHICH GAIN A UP GOVT . ORGANIZATION BY ACCOUNT PAYEE CHEQUES AND ITA NO.775/LKW/2017 PAGE 7 OF 10 TDS HAS BEEN DEDUCTED BY THE APPELLANT, HENCE TO CONSIDER IS EXP AS UNREASONABLE IS RELAY ASTONISHING. THE MDA AND TRANSPORT SUBSIDY IS RECEIVED FROM GOVERNMENT FOR SUBSID IZING THE RENT OF THE STALL AT FAIR AND PAYMENT OF FREIGHT WHICH ARTISAN PAYS FOR BRINGING MATERIAL FROM REMOTE PLACES TO THE PLACE OF FAIR. THIS SUBSIDY IS RECEIVED FOR VARIOUS ARTISANS AND IS BEING SPENT ACCORDINGLY. THIS IS A GOVERNMENT HELP TO POOR ART ISANS AND SMALL HANDICRAFT PERSONS. WE HAVE ALREADY SUBMITTED HEREWITH THE XEROX COPY OF FROM, BUILTY RECEIPTS AND XEROX COPY OF THE CLAIMANT CARD ON WHICH THE TRANSPORT SUBSIDY IS CLAIMED. THIS MDA EXPENDITURE INCLUDES REFUND OF STALL FEES PAID BY THEM AN D REFUND OF TRANSPORT EXPENDITURE WHICH THE INCUR FOR BRINGING MATERIAL TO THE DESTINATION VIDE ACCOUNT PAYEE CHEQUES TO VARIOUS PERSONS. ALL EXPENDITURE ARE FULLY VOUCHED AND AVAILABLE AT UPTPA. IN CASE THE SAME ARE REQUIRED TO BE VERIFIED BY THE HON'BLE CIT APPEAL THE APPELLANT CAN PRODUCE THE SAME. 10. IT WAS STATED ASSESSMENT ORDER THAT ' BUILDING REPAIR & MAINTENANCE EXPENSES CAN NOT BE CLAIMED SINCE ASSESSES DOES NOT OWN ANY BUILDING' VIDE POINT 11, OF PAGE 4. SOCIETY IS ENGAGED IN VARIOUS ACTIVITI ES OF PROMOTING POOR ARTISANS AND THEIR DEVELOPMENT. SURPRISINGLY THE LD. ASSESSING OFFICE HAS NOT READ THE INCOME EXPENDITURE STATEMENTS CAREFULLY AS THERE IS NO BUILDING REPAIR EXPENSES FOR THE SAID ASSESSMENT YEAR. IN FACT THE AMOUNT RS. 20,59,536 / - REL ATES TO PREVIOUS ASSESSMENT YEAR 2012 - 13 AND THE SAME HAS BEEN DISALLOWED DURING CURRENT AY. THE LD ASSESSING OFFICER HAS WRONGLY OBJECTED THIS EXPENSES AS THERE IS NO SUCH EXPENSES. IT APPEARS THAT LD. ASSESSING OFFICER HAS MADE IS MIND TO DISALLOW AND OB JECT ALL EXPENSES IN A ROUTINE MANNER. 11. AS PER ASSESSMENT ORDER /TO STATED THAT 'VIP EXPENSES AND GIFT TO VIP ARE ATTRACTING THE VIOLATION U/S 13 OF I.T. ACT, 1961' VIDE POINT 12, OF PAGE 4. THE UPTPA REPRESENTS FOR ORGANIZING UP PAVILION AT INDIAN IN DUSTRIAL TRADE FAIR AT NEW DELHI. DURING TRADE ITA NO.775/LKW/2017 PAGE 8 OF 10 FAIR VARIOUS STATED HEAD AND DIGNITIES VISIT UP PAVILION INCLUDING CHIEF MINISTER, SECRETARY, AND OTHER CENTRAL GOVERNMENT MINISTER AND FOR THEIR HOSPITALITY AND PROTOCOL THESE EXPENSES ARE INCURRED. THE EXPEN SE ON VIP RS. 3,05,413/ - WERE NECESSARY AS SEVERAL DIGNITARIES OF UP VISITS IN ITTF WHICH ALSO BOOSTS THE MORALE OF THE ARTISANS AND ALL THE EXPENSES ARE DULY AUTHORIZED AND VOUCHED. VIP INCLUDES THE EXPENDITURE INCURRED FOR THE PRESS MEDIA WHICH IS IN FRO M OF VARIOUS SMALL MOMENTS/GIFTS LIKE SHAWL WHICH ARE GIVEN TO THEM DURING PRESS CONFERENCE TO MEDIA PERSONALS. IT FURTHER INCLUDES EVEN LUNCH PACKETS DISTRIBUTED TO THE FAI PARTICIPANTS IN VARIOUS FAIRS. THE APPELLANT HAS ALREADY SUBMITTED THE LEDGER COPY ALONG WITH THE XEROX COPY OF BILLS, BEFORE THE LD. ASSESSING OFFICER ALL THE EXPENSES ARE DULY VOUCHED/ CHECKED AND THEREAFTER PAYMENT IS MADE THE LD ASSESSING OFFICER HAS NOT FOUND ANY DISCREPANCY IN THE PAYMENT VOUCHES EXCEPT THAT HE WAS NOT ABLE TO UND ERSTAND THE OBJECTIVE OF EXP. THEREFORE, THERE IS NO VIOLATION OF SECTION 13 OF IT. ACT, 1961 AS NON OF THE MEMBER WAS BENEFICIARY OF THE SAID EXPENSES. 1 2. IT WAS STATED IN ASSESSING ORDER THE 'ASSESSEE HAS THE VIOLATED SECTION 13 OF I.T. ACT, 1961' VI DE POINT 13 OF PAGE 4. THE AUTHORITY PROVIDES ALL THE INFRASTRUCTURE TO THE PARTICIPANTS AND ALLOTS STALL TO THE PARTICIPANTS MOSTLY ON FREE OF COST BASIS TO INCREASE THE USE OF HANDICRAFT AMONG THE CITIZENS. THIS IS THE CHARITABLE ACTIVITY COMING UNDER SE CTION 2(15) OF INCOME TAX ACT 1961, UNDER 'ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY'. IT HAS DIRECT NEXUS TO INCREASE THE EARNING CAPACITY/ LIVELIHOOD OF POOR AND DEPRIVED PEOPLES. THERE IS NO VIOLATION OF SECTION 13 AS THE MEMBER OF THE AUTHORITY ARE MD OF VARIOUS ORGANIZATION WHO HAPPENS TO BE IAS/PCS OR OTHER PUBLIC SERVANT OF CENTRAL AND STATE GOVERNMENT. APART FROM THE SALARY FROM THEIR RESPECTIVE ORGANIZATION, THEY CANNOT DRAW ANY OTHER AMOUNT FOR AUTHORITY FOR THEIR OWN BENEFIT. HENCE THERE CANNOT BE ANY VIOLATION OF SECTION ITA NO.775/LKW/2017 PAGE 9 OF 10 13 OF INCOME TAX ACT 1961 IN THIS CASE AND THEREFORE THE ASSOCIATION HAS RIGHTLY CLAIMED EXEMPTION UNDER SECTION 12A. WHILE GRANTING EXEMPTION THE THEN INCOME TAX COMMISSIONER HAS FORMED AN OPINION THAT THIS ORGANIZATION IS ENTI TLED TO CLAIM EXEMPTION UNDER SECTION 12A AND SINCE THERE IS NO VIOLATION OF SECTION 13 AND ANY CHANGE IN ACTIVITY OF AUTHORITY. THE EXEMPTION STATUS COULD BE WITHDRAWN BY THE HON'BLE COMMISSIONER EXEMPTION AFTER PROVIDING THE APPELLANT AN OPPORTUNITY OF B EARING HEARD. THE LD. ASSESSING OFFICER HAS NO AUTHORITY TO ADJUDICATE THE MATTER AND HENCE THE LD ASSESSING OFFICER HAS ABUSED HIS AUTHORITY. 13. IN ASSESSMENT ORDER, ASSESSEE IS ACCUSED FOR FURNISHING INACCURATE PARTICULARS VIDE POINT 14 OF PAGE 4. TH AT, ASSESSEE HAS NOT SUBMITTED ANY MISLEADING INFORMATION. ALL THE RELEVANT LEDGERS, BILLS, VOUCHERS WERE PROVIDED BEFORE THE LD. ASSESSING OFFICER. IN FACT THE ASSESSING OFFICER HAS MADE HIS MIND TO PASS EX - PARTE ASSESSMENT ORDER. HOWEVER WHEN THE RELEVAN T RECORDS WERE PRODUCED BEFORE LD. ASSESSING OFFICER THROUGH POINT NO. 11,12 AND 13 VIDE REPLY DATED 17 MARCH 2016. THE LD. ASSESSING OFFICER PASSED THIS ORDER DISREGARDING ALL FACTS. THAT THE CEO OF THE UPTPA PERSONALLY MET ON 14TH MARCH 2016 WITH THE LD ASSESSING OFFICER AND EXPLAINED VARIOUS DETAILS ABOUT THE APPELLANT. IN FACT ALL RECORDS AS REQUIRED IN ANY GOVT. OFFICE, ARE ALSO AVAILABLE IN UPTPA. THE VOUCHERS ARE SUPPORTED WITH ALL SUPPORTED WITH ALL SUPPORTING AND DULY PASSED. MOST OF THE PAYMENTS A RE MADE BY ACCOUNT PAYEE CHEQUES. 14. AT THE TIME OF HEARING, LD. A.R. OF THE ASSESSEE, SHRI RAKESH GARG, ADVOCATE SUBMITTED THAT LD. CIT(A) HAS NOT ADJUDICATED THE GROUNDS OF APPEAL TAKEN BEFORE HIM BY PASSING A SPEAKING ORDER AFTER CONSIDERING THE SUBMI SSIONS MADE BY THE ASSESSEE IN WRITING BEFORE THE LD. CIT(A). HENCE, HE PRAYED THAT THE MATTER SHOULD BE REMANDED BACK TO HIS FILE FOR ADJUDICATING THE APPEAL OF THE ASSESSEE AFRESH AFTER ITA NO.775/LKW/2017 PAGE 10 OF 10 ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESS EE AND BY PASSING A WELL REASONED ORDER ON THE SUBMISSIONS OF THE ASSESSEE. 15. THE LD. D.R. AGREED WITH THE SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE. 16. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE ORDER OF THE LD. CIT(A ) AND REMAND THE MATTER BACK TO HIS FILE TO ADJUDICATE THE APPEAL OF THE ASSESSEE AFRESH BY PASSING A WELL REASONED ORDER ON THE SUBMISSIONS MADE BY THE ASSESSEE AND AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. 17. IN THE RE SULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10 / 10 / 201 8 . SD/ - SD/ - [PARTHA SARATHI CHAUDHURY] [ N.S. SAINI ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 TH OCTO BER , 201 8 JJ: 0910 COPY FORWARD ED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR