Shree Vyapari Pragati Mandal, Pune V. Commissioner of Income-tax, (Exemptions), Pune

ITA 921/PUN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9151 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 19-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice; Set aside
• Section: 12AA; 48

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE ( THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.921/PUN/2019 SHREE VYAPARI PRAGATI MANDAL, 444, RAVIWAR PETH, PUNE 411002. PAN - AAITS2606N. . / APPELLANT V/S THE COMMISSIONER OF INCOME TAX, (EXEMPTIONS), PUNE. . / RESPONDENT ASSESSEE BY : SHRI SUHAS BORA. REVENUE BY : SHRI DEEPAK GARG. / ORDER PER SHRI PARTHA SARATHI CHAUDHURY, THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD. CIT(EXEMPTIONS), PUNE DATED 30.05.2019 U/S 12AA OF TH E ACT AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. THE LD CIT ERRED IN NOT GRANTING AN APPROPRIATE OPPORTUNITY OF HEARING WHILE REJECTING APPLICATION U/S 12AA OF THE ACT AND HAS THUS VIOLATED THE LAWS OF NATURE JUSTICE. 2. THE LEARNED CIT ERRED IN REJECTING THE APPLICATI ON FOR REGISTRATION OF THE APPELLANT ON THE GROUND THAT ACTIVITIES OF THE TRUS T ARE NOT GENUINE AND OBJECT OF THE TRUST ARE NOT CHARITABLE. 3. THE LEARNED CIT WHILE REJECTING THE APPLICATION HAS ERRED IN HOLDING THAT NO EXPENDITURE HAS BEEN INCURRED BY THE TRUST ON THE O BJECTS OF THE TRUST AND CONCLUDING THAT THE TRUST HAS NOT COMMENCED ITS ACT IVITIES. / DATE OF HEARING : 06. 0 8 .2020 / DATE OF PRONOUNCEMENT : 06 .0 8 .2020 2 4. THE LEARNED CIT WHILE REJECTING THE APPLICATION FOR REGISTRATION HAS ERRED IN NOT APPRECIATING THE FOLLOWING IMPORTANT POINTS THA T : A. THE OBJECTS OF THE TRUST MENTIONED IN THE MEMORANDU M OF ASSOCIATION ARE PURELY OF CHARITABLE NATURE. B. THE AUDITED BOOKS OF ACCOUNTS FOR THREE YEARS I.E A .Y 2015-16 TO A.Y 2017-18 WERE FURNISHED AND DETAILS ABOUT ACTIVITIES CARRIED OUT WERE ALSO FURNISHED. C. THE OBJECT OF THE TRUST IS TO WORK FOR THE ECONOMIC AND SOCIAL DEVELOPMENT OF THE BUSINESSMEN RESIDING IN PUNE, 2. THE GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO THE R EJECTION OF APPLICATION FOR REGISTRATION OF TRUST U/S 12AA OF THE ACT. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE MADE AN APPLICATION IN FORM 10A FOR REGISTRATION OF THE TRUST U/S 12AA OF THE ACT ON 29.11.20 18. THE ASSESSEE TRUST IS REGISTERED UNDER B.P.T. ACT, 1950 WITH REGISTRA TION NO.E- 1063/PUNE DATED 07.08.1986. THE CIT(E) HAD NOTED THAT THE ASSESSEES SUBMISSION IN RESPECT OF THE COPY OF TRUST DEED AND TH E COPY OF THE B.P.T. REGISTRATION ALONG WITH FORM 10A WERE UPLOADED. THE LD. C IT(E) THEREAFTER CALLED FOR VERIFICATION OF THE GENUINENESS OF THE ACTIVITIES OF T HE TRUST. THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING GENUIN E CHARITABLE ACTIVITIES OF THE TRUST TO JUSTIFY ITS PUBLIC CHARITABLE ACTIV ITIES. THE LD. CIT(E) BY CONSIDERING THE TRUST DEED HAS OBSERVED THAT THE MAIN OBJECTS OF THE TRUST IS TO WORK FOR ECONOMIC AND SOCIAL DEVELOPMENT OF THE BUSINESSMEN RESIDING IN PUNE. THE OBJECTS OF THE TRUST ARE FOR SPECIFIC COMMUNITY I.E. BUSINESSMEN RESIDING IN PUNE AND NOT FOR PUBLIC AT LARGE. THAT FURTHER AS RECORDED THE ASSESSEE TRUST HAS NOT SUBMITTED ANY EVIDENCE OF THE CHARITABLE ACTIVITY FOR THE PUBLIC AT LARGE. THE LD. CIT(E) ANALYZE D THE FACTS AND THE DOCUMENTS ON RECORD AND ARRIVED AT THE CONCLUSION THAT THE GENUINENESS OF THE CHARITABLE NATURE OF THE ACTIVITIES IS NO T ESTABLISHED. FURTHER, THE ASSESSEE TRUST HAS NOT FURNISHED REQUISITE DETAILS IN ITBA 3 PORTAL OR OTHERWISE TO PROCESS THE APPLICATION FOR REGISTR ATION U/S 12AA OF THE ACT. WITH THESE OBSERVATIONS, LD. CIT(E) REJECTED THE APPLICATION OF ASSESSEE TRUST FOR REGISTRATION U/S 12AA OF THE ACT AND BEING FURTHER AGGRIEVED, THIS APPEAL HAS BEEN PREFERRED BEFORE US BY THE ASSESSEE . 3. AT THE TIME OF HEARING, THE LEARNED AUTHORISED REPRE SENTATIVE OF THE ASSESSEE PLACED BEFORE US PAPER BOOK AND ON BASIS OF TH E SAID PAPER BOOK REFERRED TO THE PAGES 33, 34 AND 48 WHICH CONTAINS THE AMENDED TRUST DEED OF THE ASSESSEE TRUST. THE LEARNED AUTHORISED RE PRESENTATIVE BROUGHT OUR ATTENTION TO PAGE NO.33 AND SUBMITTED THAT THE NATURE OF THE TRUST AT CLAUSE (5) IS THAT THE TRUST SHALL BE A PUBLIC CH ARITABLE TRUST. ALL ITS PROPERTIES, FUNDS AND ALL ITS INCOME TO BE ACQUIRED OR DERIVED THER E FROM SHALL BE APPLIED IN INDIA, SOLELY FOR THE OBJECTS OF THE TRUS T AND NO PORTION OF IT SHALL BE UTILIZED FOR PAYMENT TO THE TRUSTEES BY WAY OF PROFITS ETC. SIMILARLY, AT CLAUSE (6) STATING REGARDING THE BENEFICIARIES OF T HE TRUST, IT IS MENTIONED THAT THE BENEFICIARIES OF THIS TRUST ARE GENUINE PUBLIC AND IT IS CLEARLY MENTIONED THAT THE BENEFITS OF THIS TRUST SHALL BE OPENED TO ALL SECTIONS OF PUBLIC WITHOUT ANY REGARD FOR CAST, CREED, RAC E, GENDER, RELIGION OR LANGUAGE. THE LEARNED AUTHORISED REPRESENTATIVE ALSO READ THE OBJECTS OF THE TRUST PLACED AT CLAUSE (7) OF THE AMENDED TRUST D EED AND VEHEMENTLY ARGUED THAT IT IS ABSOLUTELY CLEAR THAT THE TRUST HAS B EEN FORMED FOR THE CHARITABLE PURPOSES OF THE SOCIETY AT LARGE AND FOR THE B ENEFIT OF THE PUBLIC AT LARGE AND NOT OF ANY SPECIFIC GROUP AS ALLEGED BY THE DEPARTMENT. HE FURTHER REFERRED TO PAGE 48 OF THE PAPER BOOK WHEREIN T HE DISSOLUTION CLAUSE (32) IS REFERRED TO AND THEREIN IT IS SPECIFIED THAT IN CASE OF DISSOLUTION THE ASSETS OF THE TRUST SHALL BE TRANSFERRED TO ANY CHARITABLE TRUST/SOCIETY ETC. WHOSE OBJECTS ARE SIMILAR TO THAT OF THE ASSES SEE TRUST. 4 4. LEARNED AUTHORISED REPRESENTATIVE ALSO POINTED OUT REFERRING TO PAGE NOS.75 TO 77 OF PAPER BOOK THAT THEY FILED ACKNOWLEDGME NT REGARDING THEIR SUBMISSIONS MADE ON ITBA PORTAL. IN THAT ACKNOWLEDGMEN T, THE NOTICE ISSUE DATE IS 30.11.2018 AND THE DUE DATE FOR SUBMISSION IS 29.01.2019. THE DATE OF THE ORDER OF LD. CIT(E) PASSED ON IS 30.05.2019 . THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY ARGUED THAT THIS AMENDED TRUST DEED WAS NOT CONSIDERED BY THE LD. CIT(E) WHILE DEALING WITH THE APPLICATION OF THE ASSESSEE TRUST WHICH IS VERY APPARENT FROM HIS ORDE R ITSELF. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THOUGH THE LD. CIT(E) PASSED THE ORDER DATED 30.05.2019 THE AMENDED TRUST D EED WHICH WAS ALREADY SUBMITTED TO THE DEPARTMENT DATED 28.02.2019 SH OULD HAVE BEEN CONSIDERED. 5. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED THAT THE REQUIREMENT OF PROVISIONS U/S 12AA OF T HE ACT IS SPECIFIC AND THAT THE LD. CIT(E) BEFORE GRANTING OF REGISTRATION UND ER THE SAID PROVISION SHALL LOOK INTO THE NATURE OF THE ACTIVITIES OF TH E APPLICANT TRUST/ SOCIETY ETC AND THE GENUINENESS OF SUCH ACTIVITIES SO THA T THE ACTIVITIES OF THE TRUST ARE GENUINELY FOR THE BENEFIT OF THE SOCIETY AT LARGE. IN THIS CONTEXT, THE LEARNED DEPARTMENTAL REPRESENTATIVE REFERRE D TO PAGE NO.71 OF THE PAPER BOOK AND BROUGHT OUR ATTENTION TO THE FACT THAT IN THE INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31.03.2017 A T COLUMN FOR EXPENDITURE ON OBJECTS OF THE TRUST, THERE IS NIL EX PENSES. SIMILARLY, AT PAGE NO.62 OF THE PAPER BOOK, WHICH IS THE INCOME AND EX PENDITURE ACCOUNT FOR THE YEAR ENDED 31.03.2016 AT COLUMN FOR EXPE NDITURE ON OBJECTS OF THE TRUST, THERE IS NIL EXPENDITURE. IN VIE W THEREOF, THE 5 LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE REQUIREMENTS OF THE PROVISIONS WERE NOT SATISFIED BY THE ASSESSEE TRUST AS EVIDENT FROM THE ACCOUNTS SUBMITTED BEFORE THE DEPARTMENT. THERE IS NO EXPENSES INCURRED BY THE ASSESSEE ON CHARITABLE ACTIVITIES OF THE TRUST AND THAT FURTHER THEY HAVE NOT FURNISHED ANY EVIDENCE BEFORE LD. CIT(E) WHEN CA LLED FOR DEMONSTRATING THE GENUINENESS OF THE CHARITABLE ACTIVITIES DONE BY THE TRUST / SOCIETY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE CASE RECORD AND ANALYZED THE FACTS AND CIRCUMSTANCES IN THIS CASE. THE PROVISIONS OF SEC.12AA OF THE ACT IS ABSOLUTELY CLEAR THAT THE CONCERN ED AUTHORITY ON RECEIPT OF THE APPLICATION FOR REGISTRATION UNDER THIS SECTIO N SHALL CALL FOR SUCH DOCUMENTS / EVIDENCES FROM THE TRUST AS HE FEELS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIE S OF THE TRUST AND ONLY AFTER BEING SATISFIED HIMSELF ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF THE ACTIVITIES MAY PASS NECESSARY ORDERS. THEREFORE, IT IS IN THE PARAMETERS OF THE AUTHORITY OF LD. CIT(E) TO CALL FOR REQUISITE EVIDENCES REGARDING THE ACTIVITIES OF THE TRUST IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF SUCH ACTIVITIES OF ASSESSEE TRUST. IN THIS CASE, AS IT IS EVIDENT THAT ASSESSEE HAS NOT FURNISHED ANY DETAILS / E VIDENCES CALLED FOR THE SAID PURPOSE. MOREOVER, THE LEARNED DEPARTMENTAL R EPRESENTATIVE HAS BROUGHT TO OUR NOTICE THE INCOME AND EXPENDITURE ACCOU NTS PLACED IN PAPER BOOK WHICH DOES NOT SHOW ANY EXPENSES ON OBJECTS OF THE TRUST. THERE IS ANOTHER ASPECT IN THIS CASE THAT THOUGH THE LEARNED AU THORISED REPRESENTATIVE HAS POINTED OUT REGARDING THE AMENDED T RUST DEED PROVISIONS HOWEVER, WE DO NOT FIND ANY REFERENCE OF SUCH A MENDED TRUST DEED IN THE ORDER OF THE LD. CIT(E). FURTHER, AT PARA 5 OF THE LD. CIT(E) 6 ORDER WHEREIN IT IS STATED THAT THE ASSESSEE TRUST HAS NOT FURNISHED DETAILS OF ITBA PORTAL. WE FIND IN THE PAPER BOOK FURNISHED BEFORE US THERE IS AN ACKNOWLEDGMENT OF THE SUBMISSIONS PLACED BY THE ASSESSE E TRUST IN THE ITBA PORTAL. THEREFORE, THESE ISSUES NEED DETAILED FACTUAL VERIFICAT ION. 7. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES IN THIS CASE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE TRUST SHOULD SUBMIT ALL THE DETAILS / EVIDENCES AS CALLED FOR BY THE LD. CIT(E) AND THE LD. CIT(E) AFTER CONSIDERING ALL THE EVIDENCES ON RECORD AND ON BEING SATIS FIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE ASSESSEES TRUST AND ALSO AFTER CONSIDERING THE AMENDED TRUST DEED PROVISIONS REGARDING THE PUBLIC CHARITABLE NATURE OF THE TRUST SHALL PASS NECESSARY ORD ERS. IN VIEW THEREOF, WE SET ASIDE THE ORDER OF THE LD. CIT(E) AND RESTORE TH E MATTER BACK TO HIS FILE FOR ADJUDICATION WHILE COMPLYING WITH DIRECTIONS AS AFORESA ID AND ALSO ADHERING TO THE PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY , THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED ON 6 TH DAY OF AUGUST, 2020. SD/- SD/- ( R. S. SYAL ) ( PARTHA SARATHI CHAUDHURY ) VICE PRESIDENT JUDICIAL MEMBER PUNE; DATED : 6 TH AUGUST, 2020. YAMINI 7 , -./01 213/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5. 6. CIT(EXEMPTIONS), PUNE. THE ADDL/JCIT (EXEMPTIONS), PUNE. '#$ %%&',)&', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER , // TRUE COPY // -./%0&1 / SR. PRIVATE SECRETARY )&', / ITAT, PUNE.