Shree Dewan Shiksha Samiti, Jind V. CIT(E), Chandigarh

ITA 8406/DEL/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7463 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-04-2024
• Assessment Year: misc
• Appeal Filed On: 23-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DHARM VEER SINGH
• Section: 80G; 12AA

Judgement Text

1 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH’ G’: NEW DELHI BEFORE, SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No.8406/Del/2019 (ASSESSMENT YEAR) Shree Dewan Shiksha Samiti Nirwana, Jind Haryana PAN-AALAS5556R Vs. CIT(E) C. R. Building, 5 t h Floor, Sector-17E, Chandigarh (Appellant) (Respondent) Appellant by None Respondent by Sh. Dharm Veer Singh CIT DR Date of Hearing 30/04/2024 Date of Pronouncement 30/04/2024 ORDER PER YOGESH KUMAR U.S.JM: The assessee filed the present Appeal by challenging the order dated 25/09/2019 passed by Office of the Commissioner of Income Tax (Exemptions)-(‘CIT(E)’ for short)Chandigarh. The Assessee raised the following grounds:- 2 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) “1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax CIT (Exemption) is bad both in the eye of law and on facts 2. On the facts and circumstances of the case, the learned CIT (E) has erred both on facts and in law in rejecting the application of the assessee for grant of registration under section 80G of the Income Tax Act, 1961. 3. On the facts and circumstances of the case, the CIT(E) has erred both on facts and in law in holding that the appellant's activities have a profit motive and rejecting the application in an arbitrary manner ignoring the evidences and explanation furnished by the appellant in its support. 4. On the facts and circumstances of the case, the learned CIT(E) has erred both on facts and in law in rejecting the application for recognition under Section 80G of the Act despite the fact that Trust was duly registered and having charitable objects and there was nothing adverse on record about the genuineness of the activities of the Trust. 5. That the appellant craves leave to add, amend or alter any of the grounds of appeal.” 2. When the matter is called neither the assessee nor the representative of the assessee appeared before us. Considering the fact that the assessee has been continuously absent, we find it appropriate to hear the Ld. Departmental Representative and decide the Appeal on verifying the material available on record. 3 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) 3. The grievance of the assessee in the present Appeal is against the order of the Ld. CIT(E) in rejecting the application of the assessee for grant of registration u/s 80G of the Income Tax Act, 1961 (‘Act’ for short). An application in Form No. 10G was filed by the assessee on 06/03/2019 for approval u/s 80G of the Act, the registration u/s 12AA of IT Act, has been granted on 25/11/2016. The Ld. CIT(E) issued a letter requesting the assessee to file certain documents and also to provide certain clarifications. The assessee submitted reply to Ld. CIT(E) on 20/08/2019 and once again one more letter dated 12/09/2019 has been sent to the assessee and the assessee filed its reply on 19/09/2009. After perusal of the reply submitted by the assessee, the Ld. CIT(E) was of the opinion that there is no option but to deny the approval to the application u/s 80G of the Act. The findings of the Ld. CIT(E) are as under:- “4. Perusal of the collective reply submitted by the applicant reveals the following issues: 4.1 The assessee was asked to submit the details of the land on which the schools are being run along with the proof of its ownership vide a specific query. The applicant, in response, submitted that the school is being run by the trust on lease and submitted the lease deed which shows that a lease agreement has been made between 'National Fertilizers Limited, New Delhi (the Lessor)' and 'Shree 4 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) Dewan Shiksha Samiti, Narwana, Distt. Jind, Haryana (the Lessee)'. The perusal of the lease deed reveals that the Lessor handed over the school premises at NFL Township Panipat to the Lessee for a period of 30 years w.e.f. 01.01.2017 at a monthly lease rent of Rs. 3,11,000/- which will be renewed from 01.04.2020. The rented school is in a plot area of 12,416.41 square mtrs. consisting of 68 and a built up area of 5,459.4 sq. mtrs. It is observed that the society is running a school at Narwana and the details of land and building of the school at Narwana have not been provided. Rather, the applicant has plainly submitted that the school is being run on premises taken on lease. However, it is the school at Panipat which has been taken on lease as evident from record. The details of the building shown by the society in the details of fixed assets are as under:- F.Y Building opening balance Addition during the year Building under construction (opening balance) Addition in Building under construction 2015-16 75,52,253/- 17,99729 - - 2016-17 84,16,784/- - - 43,09,604/- 2017-18 75,75,106/- 43,09,604/- 43,09,604/- 1,95,30,601/- 2018-19 1,06,96,239/- 2,00,26,026/- 1,95,30,601 17,98,167/- The building under construction is shown at the school premises of the society at Panipat. This fact raises a few questions as to when the school is being run on a lease premises (lease deed for 30 years submitted) and rent to the tune of Rs. 51 lacs is being paid in a year then why the building is being constructed with an expenditure of more than Rs. 2.5 crores. Also, even if the building is being constructed why the applicant is not submitting the details in its submission despite the same have been asked for specifically. 5 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) Clearly, the applicant society has failed to justify its expansion of fixed assets and to prove the genuineness of its claims in view of the fact that the rented school premises and the building construction are being shown at the same time and no details of the building and the land have been provided. 4.2. The perusal of financial statement submitted on record further reveals that the society has been generating surplus every year, it has substantial cash & cash equivalents in its possession and has accumulated large fixed assets in previous years. The details showing the surplus, cash and fixed assets are tabulated hereunder:- Financial Year Surplus Cash & Cash equivalents Fixed assets 2015-16 20,60,683/- 3,54,984/- 1,33,10,905/- 2016-17 8,97,142/- 49,48,127/- 1,64,80,714/- 2017-18 40,92,069/- 24,54,151/- 4,16,32,910/- 2018-19 47,83,024/- 19,55,591/- 4,29,08,469/- One interesting point to note here is that the society was granted registration u/s 12AA of the Act in financial year 2016-17 when the fixed assets of the society were standing at Rs. 1.64 crores and just after the registration, the fixed assets shoot up to the tune of Rs. 4.29 crores. The majority of addition has been done by the society in its school building and the details of such additions were not brought on record by the applicant and, as such, the exponential increase in the fixed assets of the society remained unjustified. The applicant society is continuously having surplus year after year and is involved in increasing its fixed assets every year. The purpose of legislature to include this section in the Act is to promote and encourage people for making donations to the societies/trusts which otherwise lacks funds for performing charitable activities. On the contrary, the trust has been having continuous surplus and is engaged in creation of fixed assets. 4.3 The society was asked a specific query regarding the details of the cash deposits made in the bank accounts of the society during demonetization period along with substantiating documentary evidence. In response, the applicant submitted that "Reply regarding 6 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) cash deposits tunde in all the bank accounts of the trust during demonetization is already submitted to the concerned department. Clearly, the applicant has chosen to avoid the answer the details and source of the cash deposits made by it during demonetization. The society, in its account bearing Account ID-0361000401142893, deposited cash amounting to Rs. 21,00,000/- from 10.11.2016 to 13.11.2016. Clearly, the society keeps large cash in hand which is not even justified by the applicant in its submissions. 44 Further, the applicant has submitted the fee structure of PIET Sanskriti Sr. Sec. School, Panipat which is run under the aegis of the applicant society. The particulars of the same, as submitted by the applicant, are tabulated as under for F.Y. 2018-19- Particulars Amount in Rs. Registration Charges (One Time) 200/- Admission Charges (One time) 20,000/- Class I-II 5,150/- Class III-IV 5,680/- Class IV-VIII 5,845/- Class IX 6,600/- Apart from the fees collected through the institutions run by the applicant, the society is in receipt of donations amounting to Rs. 21 lacs in F.Y. 2017-18 and Rs. 72.9 lacs in F.Y. 2018-19. The fee structure of the school suggest that a handsome amount is being charged as fee from the students and other than that the society is receiving good amounts in donations as well. There is no rationale justifying as to why the society requires donations when the fee structure is already high and the donations are being received already. 4.5 Apart from the above, the applicant avoided its reply to the specific query raised regarding the expense amounting to Rs. 14,49,046/- shown under the head "Contract Basis during F.Y. 7 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) 2017-18. The society further avoided its replies in respect of queries regarding (1) addition made in school building, (ii) details of Misc. income, (iii) approval of local authority for building construction, and (iv) documentary evidences of unsecured loans with bank statement. Clearly, the applicant does not have justifying answers to the queries raised by the department and has avoided to provide its response to the multiple queries. 5. The case of the applicant has not been assessed under scrutiny till date since the grant of 12. A registration and now when the examination has been done during the proceedings of the present application, the activities of the applicant are not found to be falling in line with the stated alms and objects as per society's Memorandum of Association, based on which the applicent was granted 12AA registration. The thorough examination, as discussed above, has revealed that the applicant has completely failed to satisfy the requirements for approval under section 80G of the Act which have been provided under Rule 11AA of the Income Tax Rules, 1962. The details of the present case will be sent to the jurisdictional Assessing Officer actual detailed report in the case will be called for. Accordingly, after receipt of and a the detailed report in the case, the proceedings for withdrawal of registration granted u/s 12AA of the Act to the applicant society will be initiated, If needed. 6. In light of the above discussion, I have no option but to deny the approval to the applicant u/s 60G of Income Tax Act, 1961. 4. It is found from the record that, the Ld. CIT(E) asked specific queries and sought for certain documents for the Appellant but, which have not been provided by the assessee to substantiate its claim for grant of approval u/s 80G of the Act. The Ld. CIT(E) has also dealt the issue point by point and found that the assessee has as not been assessed under scrutiny till date since the grant of 8 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) 12AA registration and when the examination has been done during the proceedings of the application, the activities of the applicant are not found to be falling in line with the stated aims and objects as per society's Memorandum of Association, based on which the applicant was granted 12AA registration. The Ld. CIT(A) done thorough examination and found that the appellant has completely failed to satisfy the requirements for approval under section 80G of the Act which have been provided under Rule 11AA of the Income Tax Rules, 1962. There is no material brought or submission made brought before us to contradict the findings and conclusion of the Ld. CIT(E), therefore, we find no reason to interfere with the impugned order of the Ld. CIT(E), accordingly, we find no merit in the Grounds of Appeal of the assessee. 5. In the result, the Appeal filed by the assessee is dismissed. Order pronounced in open Court on 30 th April, 2024 Sd/- Sd/- (S. RIFAUR RAHMAN (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30/04/2024 R.N, Sr.ps 9 ITA No. 8406/Del/2019 Shree Dwean Shiksha Samiti Vs. CIT(E) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI