Evidence India Action Foundation, New Delhi V. CIT(E), New Delhi

ITA 9136/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0189 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 26-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B (VIRTUAL HEARING), NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NOS.9135 & 9136/DEL./2019 ASSESSMENT YEAR: NIL EVIDENCE INDIA ACTION FOUNDATION, AMBIENCE TOWER, COMMERCIAL COMPEX-FF, PLOT NO. 3, SEC.-A, POCKET-II, VASANT KUNJ, NEW DELHI VS. CIT(E), PRATYAKSH KAR BHAWAN, E-2 BLOCK, 26 TH FLOOR, NEW DELHI PAN : AAFCE0077K (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST A COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME-T AX (EXEMPTION), NEW DELHI [IN SHORT THE LD. CIT(A)] REJECTING REGISTRATION OF THE ASSESSEE UNDER SECTION 12AA AND UNDER SECTION 80G OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT ) RESPECTIVELY. 2. THE GROUNDS RAISED IN THE APPEALS ARE REPRODUCED A S UNDER: APPELLANT BY SHRI ATUL NINAWAT, AR RESPONDENT BY MS. NIDHI SRIVASTAVA, CIT(DR) DATE OF HEARING 23.06.2020 DATE OF PRONOUNCEMENT 25.06.2020 2 ITA NO. 9135 & 9136/DEL./2019 GROUNDS OF APPEAL RAISED IN ITA NO. 9135/DEL./2019 1. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) [ LD. CIT(E)] HAS ERRED IN LAW AS WELL AS IN FACTS BY RE JECTING THE APPLICATION FOR EXEMPTION U/S 80G OF THE INCOME TAX ACT, 1961 (THE ACT) 2. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS IN LAW BY REJECTING THE APPLICATION SOLELY ON THE REASON THAT CHARITABLE AC TIVITIES COULD NOT BE SUBSTANTIATED. 3. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS LAW BY DISREGARDING THE CHARITABLE OBJECTS AS PER THE MEMORANDUM OF ASS OCIATION. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER, VARY, OMIT OR SUBSTITUTE THE ABOVE STATEMENT OF FACTS AT ANY TIME BEFORE OR DURING THE COURSE OF THE APPELLATE PROCEEDINGS. GROUNDS OF APPEAL RAISED IN ITA NO.9136/DEL./2019 1. THE LEARNED COMMISSIONER OF INCOME TAX (EXEMPTIO NS) [ LD. CIT(E)] HAS ERRED IN LAW AS WELL AS IN FACTS BY RE JECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S 12AA OF T HE INCOME TAX ACT, 1961 (THE ACT) 2. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS IN LAW BY STATING THAT THE ACTIVITIES OF THE APPELLANT ARE NOT CHARITABLE IN NATURE AND THE APPELLANT WAS NOT ABLE TO ESTABLISH GENUINENESS OF THE ACTIVITIES. 3. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS IN LAW BY STATING THAT THE APPELLANT ONLY INCURRED ADMINISTRATIVE EXPENDIT URE AND DID NOT SPEND ANY AMOUNT ON THE CHARITABLE ACTIVITIES O R ACTIVITIES W.R.T. ITS AIMS AND OBJECTS DESPITE SURPLUS FUNDS IN BANK ACCOUNT. 4. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS IN LAW BY STATING THAT APPELLANT HAD GIVEN FACTUALLY WRONG & MISLEADING IN FORMATION ABOUT APPLICATION OF REGISTRATION U/S 12A OF THE AC T MADE BY THE APPELLANT IN THE PAST. 5. THE LD. CIT(E) HAS ERRED IN FACTS AS WELL AS LAW BY STATING THAT THE ACTIVITY OF APPELLANT PERTAINED TO SOME THEORET ICAL AND ACADEMIC RESEARCH WITHOUT ANY EVIDENCE OF CHARITABL E ACTIVITY. 6. THE LD. CIT(E) HAS ERRED IN LAW AS WELL AS IN FA CTS BY REJECTING THE APPLICATION FOR EXEMPTION U/S 80G OF THE ACT ON THE REASON THAT CHARITABLE ACTIVITIES COULD NOT BE SUBSTANTIATED. 7. THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER, VARY, OMIT OR SUBSTITUTE THE ABOVE STATEMENT OF FACTS AT ANY TIME BEFORE OR DURING THE COURSE OF THE APPELLATE PROCEEDINGS. 3 ITA NO. 9135 & 9136/DEL./2019 3. THE BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE INITIALLY FILED APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT ON 19/06/2018, WHICH WAS DISMISSED ON 21/12/201 8 DUE TO WITHDRAWAL OF THE SAME BY THE ASSESSEE. THE PRESENT APPLICATIONS FOR REGISTRATION UNDER SECTION 12AA AND APPROVAL UN DER SECTION 80G OF THE ACT WERE FILED BY THE ASSESSEE ON 28/03/ 2019. THE ASSESSEE CLAIMED TO HAVE WORKED IN THE FIELD OF IMP ROVING THE HEALTH AND EDUCATIONAL OUTCOMES OF THE CHILDREN, YO UNG PEOPLE INCLUDING MOTHERS THROUGH PROGRAMS LIKE DEWORMING, EARLY CHILDHOOD CARE, DIARRHEA AND PNEUMONIA MANAGEMENT E TC. THE ASSESSEE CARRIED RESEARCH AND PROVIDED TECHNICAL ASSISTANCE/CONSULTANCY TO VARIOUS GOVERNMENT DEPART MENT ENGAGED IN THE FIELD OF HEALTH AND MALNUTRITION -RE LATED PROBLEMS. THE REGISTRATION UNDER SECTION 12AA WAS REJECTED BY THE LD. CIT(E) VIDE IMPUGNED ORDER DATED 30/09/2019 MAINLY ON THE GROUND THAT NO EVIDENCE OF ACTUAL ACTIVITIES WERE S UBMITTED BY THE ASSESSEE AND, THEREFORE, GENUINENESS OF THE ACTIVIT IES OF THE ASSESSEE COULD NOT BE ESTABLISHED. THE LEARNED CIT( E) ALSO MENTIONED THAT THERE WAS NO CHANGE IN THE CIRCUMSTA NCES AFTER THE REJECTION OF THE GROUND OF REGISTRATION VIDE OR DER DATED 21/12/2018 WITH REFERENCE TO EARLIER APPLICATION FO R REGISTRATION. CONSEQUENTLY, THE APPROVAL SOUGHT UNDER SECTION 80G WAS ALSO REJECTED. THE RELEVANT PART OF THE ORDER OF THE LD. CIT(E) IS REPRODUCED AS UNDER: 6. THE APPLICANT IN ITS SUBMISSION HAS SUBMITTED T HAT THE MAIN OBJECTIVES OF THE COMPANY IN THE IMMEDIATE FUTURE I S TO WORK TOWARDS IMPROVING THE HEALTH AND EDUCATIONAL OUTCOM ES OF CHILDREN, ADOLESCENTS, YOUNG PEOPLE INCLUDING MOTHERS THROUGH PROGRAMS THAT 4 ITA NO. 9135 & 9136/DEL./2019 FOCUS ON IMPROVING THEIR OVERALL WELL-BEING IN THE COUNTRY. AS SUCH PROGRAMS THAT FOCUS ON NUTRITION INCLUDING IRON SUP PLEMENTATION AND DEWORMING EARLY CHILDHOOD CARE, DIARRHEA AND PNEUMO NIA MANAGEMENT AND RELATED INTERVENTIONS WILL BE PRIORI TIES FOR THE APPLICANT. THE APPLICANT IS COMMITTED TO ADOPT TRAN SPARENCY ON PROCESS AND IMPACT WHILE WORKING WITH GOVERNMENT, P OLICY MAKERS, PRIVATE SECTOR, COMMUNITIES, INSTITUTIONS AND OTHER STAKEHOLDERS TO PLAN, DESIGN, IMPLEMENT, MONITOR, EVALUATE THESE OP ERATIONAL MODELS FOR COST EFFECTIVE AND SUSTAINABLE SOLUTIONS AND TH AT THE APPLICANTS OBJECTIVES ARE PRIMARILY IN THE NATURE OF RESEARCHI NG, PROVIDING TECHNICAL ASSISTANCE / CONSULTANCY AND RELEVANT INP UTS / RESEARCH DOCUMENTS / DATA TO VARIOUS GOVERNMENT DEPARTMENTS BATTLING HEALTH AND MALNUTRITION RELATED PROBLEMS OF THE IND IAN SOCIETY AT LARGE. THE APPLICANT IS A RESEARCH ORIENTED ENTITY WORKING WITH VARIOUS MINISTRIES (SUCH AS, MINISTRY OF WOMEN AND CHILD DEVELOPMENT, MINISTRY OF HEALTH AND FAMILY WELFARE ETC.). THOUGH, VAST & LARGE AIMS & OBJECTIVES HAVE BEEN ENUMERATED BUT THE APPLICANT COMPANY HAS NOT SUBMITTED ANY DOCUMENTARY EVIDENCE OF HAVING ENTERED INTO ANY MOU/ AGREEMENT WITH ANY SUC H CENTRAL /STATE GOVERNMENT DEPTT/MINISTRY OR ANY COMMUNICATI ON WITH THE AFORESAID DEPARTMENT WITHOUT WHICH THE CONTENTIONS OF THE APPLICANT LACKS SUBSTANCE AND BELIES ITS CONTENTIONS. 7. SINCE INCEPTION, THE APPLICANT COMPANY HAS RECEI VED 3 DONATIONS, ALL FROM THE SAME DONOR, MR. MUKUT BEHAR I LAI BHARGAVA. THE AMOUNTS RECEIVED AS DONATIONS WERE RS.L3,65,000 /-, RS.40,00,000/- AND RS.60,00,000/- RESPECTIVELY. IN THE RECEIPT, THE APPLICANT HAS MENTIONED THAT THE DONATION IS FOR UN DERTAKING TECHNICAL ASSISTANT TO GOVERNMENT OF INDIA FOR WEEK LY IRON AND FOLIC ACID SUPPLEMENTATION (WFFS) PROGRAMME. NO EVIDENCE OF ANY ACTUAL IRON AND FOLIC ACID SUPPLEMENTATION TO PATIENTS / P UBLIC HAS BEEN FURNISHED. FURTHER, HOW, WHEN AND TO WHOM SUCH TECH NICAL ASSISTANCE HAS BEEN PROVIDED HAS NOT BEEN FURNISHED . THE ACTIVITY SHOWN BY THE APPLICANT PERTAINED MERELY TO SOME THE ORETICAL AND ACADEMIC RESEARCH, WITHOUT ANY EVIDENCE OF ANV CHAR ITABLE ACTIVITY EXCEPT FOR INCURRING SOME ADMINISTRATIVE EXPENSES. 8. THE PROVISIONS OF SECTION 12AA STIPULATE THE FOL LOWING CONDITIONS FOR REGISTRATION U/S 12A OF THE I.T. ACT , 1961:- (I) THE OBJECTS OF THE SOCIETY/TRUST SHOULD BE OF C HARITABLE IN NATURE. (II) THE ACTIVITIES OF THE SOCIETY/TRUST SHOULD BE GENUINE. 9. IN LIGHT OF ABOVE FACTS THAT THE APPLICANT HAS N OT SUBMITTED TRUE EVIDENCE FOR EXPENDITURE INCURRED TOWARDS THE CHARITABLE ACTIVITY, THE GENUINENESS OF THE ACTIVITIES OF COMP ANY COULD NOT BE ESTABLISHED. THEREFORE, THE CONDITIONS FOR GRANTING REGISTRATION U/S 5 ITA NO. 9135 & 9136/DEL./2019 12AA IS NOT SATISFIED. ACCORDINGLY, THE APPLICATION FILED BY THE APPLICANT FOR GRANT OF REGISTRATION U/S 12A IS HERE BY REJECTED. 10. SINCE THE APPLICANT IS NOT REGISTERED U/S 12A(A )OF THE INCOME TAX ACT 1961, ITS APPLICATION IN FORM NO.10G SEEKIN G APPROVAL U/S 80G IS ALSO REJECTED AS CHARITABLE ACTIVITIES COULD NOT BE SUBSTANTIATED. 4. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE REF ERRED TO THE PAPER-BOOK FILED ELECTRONICALLY AND SUBMITTED HIS A RGUMENTS THROUGH VIDEO CONFERENCING. HE SUBMITTED THAT FIRST LY, THE EARLIER REGISTRATION APPLICATION WAS WITHDRAWN BY THE ASSES SEE ITSELF AND THEREFORE, CONSEQUENT DISMISSAL BY THE CIT(E) IS N OT HAVING ANY IMPACT ON THE PRESENT APPLICATION FOR REGISTRATION. FURTHER, HE SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONB LE ALLAHABAD HIGH COURT IN THE CASE OF BABURAM EDUCATION SOCIETY (2018) 96 TAXMANN.COM 606 (ALLAHABAD) FOR GRANTING REGISTRATI ON ONLY THE CHARITABLE NATURE OF THE OBJECT HAS TO BE SEEN. THE LEARNED COUNSEL REFERRED TO PAGE 26 OF THE PAPER-BOOK AND S UBMITTED THAT VARIOUS OBJECTS OF THE ASSESSEE INCLUDES ADVISING A ND CONSULTING TO GOVERNMENT ORGANIZATION IN RELATION TO HEALTH AN D EDUCATION OF WOMEN AND CHILDREN. HE SUBMITTED THAT THE ASSESSEE HAS ASSOCIATED IN HEALTH PROGRAM ACTIVITIES OF THE GOVE RNMENT LIKE DISTRIBUTION OF THE IRON/FOLIC ACID TABLETS, SUPPOR T DISTRICT LEVEL TEACHER PROGRAMS, SUPPORT STATE HEALTH AUTHORITIES IN CONDUCTING PROGRAM RELATED TO HEALTH. ACCORDINGLY, HE SUBMITTE D THAT THE OBJECT OF ASSESSEE BEING CHARITABLE IN NATURE, THE ORDER OF THE CIT(E) MIGHT BE QUASHED AND THE ASSESSEE MIGHT BE D IRECTED TO BE REGISTERED UNDER SECTION 12AA OF THE ACT. 5. THE LEARNED DR ON THE OTHER HAND SUBMITTED THAT TH E ASSESSEE HAS NOT FILED ANY EVIDENCE OF ITS ASSOCIAT ION WITH 6 ITA NO. 9135 & 9136/DEL./2019 GOVERNMENT OF INDIA OR STATE GOVERNMENTS FOR CARRYI NG OUT OR CONDUCTING ITS ACTIVITIES CLAIMED IN ITS OBJECTS. S HE ALSO SUBMITTED THAT ANOTHER ORGANIZATION, NAMELY, EVIDENCE INDIA A CTION .ORG, WHICH IS A USA BASED ORGANIZATION, IS REGISTERED ON THE SAME ADDRESS AS THAT OF THE ASSESSEE. SHE SUPPORTED THE ACTION OF THE LEARNED CIT(E) FOR REJECTION OF THE REGISTRATION IN ABSENCE OF EVIDENCES OF ACTIVITIES CARRIED OUT BY THE ASSESSEE . 6. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE THROUGH VIDEO CONFERENCING. FOR REGISTRA TION U/S 12AA OF THE ACT, THE ASSESSEE MUST FULFILL THE TWIN COND ITIONS. FIRSTLY, THE OBJECTS OF THE SOCIETY/TRUST SHOULD BE CHARITAB LE IN NATURE AND SECONDLY, THE ACTIVITIES OF THE SOCIETY/TRUST S HOULD BE GENUINE. WE MAY NOTE THAT THE HONBLE ALLAHABAD HIG H COURT IN THE CASE OF BABURAM EDUCATIONS SOCIETY (SUPRA) HELD THAT WHERE THE TRUST HAS NOT COMMENCED THE CHARITABLE ACTIVITI ES, IN SUCH CIRCUMSTANCES THE ONLY OBJECT OF THE TRUST SHOULD B E SEEN FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. BUT IN THE INSTANT CASE THE ASSESSEE HAS ALREADY RECEIVED THE DONATIONS OF 13,65,000; 40,00,000/- AND 60,00,000/- FROM ONE PERSON, NAMELY, SRI MUKUT BEHARI BARGAVA AND CLAIMED TO HAV E RECEIVED A DONATION FOR UNDERTAKING TECHNICAL ASSISTANT TO GOV ERNMENT OF INDIA FOR WEEKLY IRON AND FOLIC ACID SUPPLEMENTATIO N (WIFS) BUT NO EVIDENCE OF SUCH ACTIVITIES WERE FURNISHED BEFOR E THE LD. CIT(E) AND THEREFORE THE DECISION RELIED UPON THE ASSESSEE IS DISTINGUISHABLE. 6.1 FURTHER, THE REFERENCE BY THE LD. CIT(E) OF EARLIE R REJECTION OF THE REGISTRATION IS MISPLACED BECAUSE SAID REJECTIO N OR DISMISSAL OF REGISTRATION WAS IN VIEW OF THE WITHDRAWAL OF TH E APPLICATION BY 7 ITA NO. 9135 & 9136/DEL./2019 THE ASSESSEE AND THEREFORE THERE WAS NO DECISION ON MERIT EITHER ON THE OBJECT OR THE GENUINENESS OF THE ACTIVITY OF THE ASSESSEE. 6.2 WE FIND THAT THE LD. CIT(E ) HAS NOT DISPUTED THE CHARITABLE NATURE OF THE ACTIVITY OF THE ASSESSEE BUT THE REGI STRATION HAS BEEN REJECTED MAINLY DUE TO NON-GENUINENESS OF THE ACTIV ITY OF THE ASSESSEE CONCLUDED ON THE BASIS OF NON-SUBMISSION O F EVIDENCE BY THE ASSESSEE. BEFORE US, THE LD. COUNSEL HAS ACC EPTED THAT VARIOUS ACTIVITIES HAVE BEEN CARRIED OUT BY THE ASS ESSEE IN FURTHERANCE OF ITS OBJECTS TILL DATE. WE HAVE ALREA DY HELD THAT THE RATIO IN THE CASE OF BABURAM EDUCATION SOCIETY (SUP RA) IS NOT APPLICABLE OVER THE FACTS OF THE ASSESSEE AND IT IS IMPERATIVE TO EXAMINE THE GENUINENESS OF THE ACTIVITIES OF THE AS SESSEE DULY SUPPORTED WITH THE EVIDENCES. THE GENUINENESS OF TH E ACTIVITIES WOULD MEAN THAT THE ACTIVITIES ARE NOT BOGUS OR ART IFICIAL OR CAMOUFLAGED BY SOME MEANS AND WHETHER THE ACTIVITIE S ARE IN ACCORDANCE WITH THE OBJECT OF THE INSTITUTION. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FEEL IT APPROPRIA TE TO RESTORE THE MATTER OF REGISTRATION UNDER SECTION 12AA OF TH E ACT BACK TO THE LD. CIT(E) FOR EXAMINING THE GENUINENESS OF THE ACTIVITIES WITH THE DIRECTION TO THE ASSESSEE TO SUBMIT THE NECESSA RY DETAILS OF THE ACTIVITIES CARRIED OUT SUPPORTED BY THE EVIDENC ES. THE APPEAL OF THE ASSESSEE AGAINST REJECTION OF REGISTRATION I S ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. THE MATTER OF APPROVAL U/S 80G OF THE ACT IS AN AC TION CONSEQUENT TO THE REGISTRATION, THEREFORE, THE APPE AL FILED AGAINST REJECTION OF APPROVAL U/S 80G IS ALSO RESTORED TO L D. CIT(E ) FOR DECIDING AFRESH. 8 ITA NO. 9135 & 9136/DEL./2019 8. IN RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2020. SD/- SD/- (BHAVNESH SAINI) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH JUNE, 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI