Sri Manjunatheshwara Medical and Charitable Trust, Bangalore V. DIT, Bangalore

ITA 967/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0656 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 09-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SWATHI S PATIL
• Assessee Lawyers: G MANJUNATHA
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS. 966 & 967/BANG/2009 ASSESSMENT YEAR : N.A. SRI MANJUNATHESHWARA MEDICAL & CHARITABLE TRUST, NO.11, JEEVAN BUILDING, KUMARA PARK EAST, BANGALORE 560 001. : APPELLANT VS. THE DIRECTOR OF INCOME TAX (EXEMPTIONS), BANGALORE. : RESPONDENT APPELLANT BY : SHRI G. MANJUNATHA RESPONDENT BY : SMT. SWATHI S. PATIL O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE TWO APPEALS OF THE ASSESSEE - TRUST ARE DIREC TED AGAINST THE ORDERS OF THE LD. DIT(E) IN REJECTING THE REQUEST O F THE ASSESSEE FOR (I) REGISTRATION U/S 12A OF THE ACT AND (II) RECOGNITIO N U/S 80-G OF THE ACT RESPECTIVELY. ITA NO: 966: 2. IN THIS APPEAL THE GROUNDS RAISED BY THE ASS ESSEE TRUST ARE AS UNDER: ITA NOS. 966 & 967/B/09 PAGE 2 OF 7 (I) THE LD. DIT(E) WAS ERRED IN REJECTING THE REGISTRAT ION U/S 12A WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD; (II) THE NOTICE OF HEARING ALLEGED TO HAVE BEEN ISSUED O N 8/9/09 THOUGH NOT SERVED, THE IMPUGNED ORDER WAS PASSED ON 10/9/0 9 WITHOUT GIVING A REASONABLE TIME TO PRESENT ITS CASE; (III) THE DIT(E) WAS ERRED IN NOT EXAMINING THE ISSUE ON MERIT IN PROPER PERSPECTIVE THOUGH THE ACTIVITIES OF THE TRU ST WAS IN CONFORMITY WITH THE PROVISIONS OF S. 2(15) OF THE A CT; & (IV) MAY AWARD SUITABLE COST IN THE INTEREST OF JUSTICE. ITA NO: 967: 3. THE GROUNDS RAISED ARE AS UNDER: (I) THE LD. DIT(E) WAS ERRED IN REJECTING THE RECOGNITI ON U/S 80-G WITHOUT AFFORDING AN OPPORTUNITY OF BEING HEARD; (II) THE NOTICE OF HEARING ALLEGED TO HAVE BEEN ISSUED O N 8/9/09 THOUGH NOT SERVED, THE IMPUGNED ORDER WAS PASSED ON 10/9/0 9 WITHOUT GIVING A REASONABLE TIME TO PRESENT ITS CASE; (III) THE DIT(E) WAS ERRED IN NOT PASSING A SPEAKING ORDE R FOR REJECTION OF RECOGNITION U/S 80G OF THE ACT; & (IV) MAY AWARD SUITABLE COST IN THE INTEREST OF JUSTICE. 4. AS THE ISSUES RAISED IN THESE APPEA LS ARE SIMILAR, FOR THE SAKE OF CONVENIENCE, BOTH THE APPEALS ARE CLUBBED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. 5. THE ASSESSEE-TRUST HAD FURNISHED I TS APPLICATION ON 12/3/2009 SEEKING REGISTRATION U/S 12A OF THE ACT. ON SCRUTI NIZING THE DOCUMENTS FURNISHED, THE LD.DIT(E) FOUND CERTAIN DEFICIENCIES AND THE ASSESSEE-TRUST WAS ASKED, VIDE HIS LETTER DATED 6/5/2009, TO FURNI SH THE REQUIRED DETAILS SET-OUT IN THE SAID LETTER. ACCORDING TO THE DIT(E ), AS THERE WAS NO COMPLIANCE FROM THE ASSESSEE-TRUST, IT WAS REMINDED BY ANOTHER LETTER ITA NOS. 966 & 967/B/09 PAGE 3 OF 7 DATED 31/8/2009 REQUIRING THE ASSESSEE TO FURNISH I TS REPLY BY 8/9/2009. PERHAPS, THIS SAID COMMUNICATION WAS RETURNED BY TH E POSTAL AUTHORITIES WITH A REMARK NO SUCH FIRM IN THIS ADDRESS. ARME D WITH NON-RESPONSE ATTITUDE OF THE ASSESSEE-TRUST, THE LD. DIT(E) WENT AHEAD WITH THE REJECTION OF THE ASSESSEE-TRUSTS APPLICATION WITH THE OBSERV ATION THAT (ON PAGE 2) DURING THE PROCEEDING FOR REGISTRATION NO SATISFACTORY EVIDENCE HAS BEEN ADDUCED IN SUPPORT OF ITS ACTIVIT Y, IF ANY. HENCE, IN THE ABSENCE OF ANY ACTIVITIES, IT IS NOT POSSIBLE T O VERIFY THE GENUINENESS OF THE OBJECTS OF THE TRUST AND IS ACTIVITIES, AS H ELD BY THE HONBLE KERALA HIGH COURT IN THE CASE OF SELF EMPLOYERS SER VICE SOCIETY V. CIT (247 ITR 18). IT IS PERTINENT TO HIGHLIGHT HERE TH AT ON SIMILAR ISSUES WHEREIN THE ASSESSEE WAS NOT ABLE TO CO-RELATE THE OBJECTS BY ANY DOCUMENTARY EVIDENCE WHICH THE TRUST PROPOSED TO UN DERTAKE, IN THE CASE OF DBA FOUNDATION IN NO.667(BNG)/08 DATED: 27/ 1/2009, THE HONBLE ITAT, BANGALORE HAS HELD THAT THE DIT(E) WA S WITHIN HIS JURISDICTION TO CONSIDER THE APPLICATION OF THE ASS ESSEE-TRUST FOR GRANT OF REGISTRATION UNDER SECTION 12A SINCE THE APPLICA NT-TRUST COULD NOT SUBSTANTIATE ITS CLAIM BY BRINGING OUT THE CARRYING ON OF CHARITABLE ACTIVITY AND PROCEEDED TO UPHOLD THE ORDER OF THE DIT(E) IN REJECTING THE APPLICATION U/S.12A. 6. DURING THE COURSE OF HEARING BEFORE US, THE LD. A.R HAD CONCEDED THAT ON THE DATE OF HEARING ON 25/5/2009, THE ASSES SEE-TRUST COULD NOT REPRESENT BEFORE THE DIT(E) AS ITS ACCOUNTANT WHO REPRESENTS THE CASE WAS OUT OF STATION. THE SUBSEQUENT LETTER OF THE D IT(E) CALLING FOR THE REQUIRED DETAILS WAS NOT RECEIVED BY THE ASSESSEE - TRUST. IT WAS, THEREFORE, PLEADED THAT THE DIT(E) WAS NOT JUSTIFIED IN REJECT ING THE ASSESSEES APPLICATION WITHOUT AFFORDING A REASONABLE OPPORTUN ITY. DURING THE COURSE OF HEARING, THE LD. A.R HAD FURNISHED A WRITTEN SUB MISSION WHEREIN HE HAD PLACED RELIANCE ON THE FINDING OF THE HIGHEST JUDIC IARY OF THE LAND IN THE CASE OF JAIPUR MINERAL DEVELOPMENT SYNDICATE V. CIT REPO RTED IN (1977) 106 ITR 653 (SC) AND THE FINDING OF THE HONBLE TRIBUNAL IN ST.GEORGE EDUCATIONAL ITA NOS. 966 & 967/B/09 PAGE 4 OF 7 TRUST V. DIT(E) REPORTED IN (2006) 9 SOT 636 (BANG) TO DRIVE HOME HIS POINT. 6.1. ON THE OTHER HAND, THE LD. D.R PRE SENT DURING THE COURSE HEARING WAS HEARD. 7. WE HAVE DULY CONSIDERED THE RIV AL SUBMISSIONS AND ALSO PERUSED THE RELEVANT RECORDS AND THE WRITTEN SUBMIS SION OF THE LD.A.R. AT THE OUTSET, WE WOULD LIKE TO POINT OUT THAT IT IS T HE PRIMARY DUTY OF THE ASSESSEE TO ENSURE THE ATTENDANCE OF THE ASSESSEES REPRESENTATIVE BEFORE THE LD. DIT(E) ON THE GIVEN DATE OR AT LEAST SEEK A DJOURNMENT CITING PROPER REASON WHICH IS LACKING IN THE INSTANT CASE. 7.1. TURNING TO THE ISSUE ON HAND, THE SUBSEQUENT LETTER OF THE DIT(E) WAS NOT SERVED ON THE ASSESSEE AS ACKNOWLEDG ED BY THE DEPARTMENT ITSELF ( THE POSTAL AUTHORITIES HAVE RET URNED THE SAME UN- SERVED). IT IS EVIDENT FROM THE ABOVE SEQUENCE TH AT THE ASSESSEE-TRUST HAD NO REASONABLE OPPORTUNITY TO PUT-FORTH ITS ARGUMENT BEFORE THE LD.DIT(E). 7.2. WITH DUE RESPECTS, WE HAVE PERU SED THE CASE LAWS ON WHICH THE LD. DIT(E) HAD PLACED STRONG RELIANCE IN REJECT ING THE ASSESSEE-TRUSTS REQUEST. (I) IN THE CASE REPORTED IN 247 ITR 18 (REFERRED SUPRA) , THE HONBLE KERALA HIGH COURT, HAD, IN ITS WISDOM, DECI DED THE ISSUE IN FAVOUR OF THE REVENUE AS THE TRUST HAD FA ILED TO ADDUCE ANY SATISFACTORY EVIDENCE IN SUPPORT OF ITS ACTIVIT Y WHEREAS THE PRESENT ASSESSEE-TRUST WAS PREVENTED BY A REASONAB LE CAUSE TO PRESENT ITS SIDE OF THE VIEW BEFORE THE DIT(E). ITA NOS. 966 & 967/B/09 PAGE 5 OF 7 (II) IN THE CASE OF DBA FOUNDATION REFERRED SUPRA, THE H ONBLE TRIBUNAL WAS MAGNANIMOUS IN ITS VIEW THAT DIT(E) WA S WITHIN HIS JURISDICTION TO CONSIDER THE APPLICATION OF THE ASSESSEE-TRUST FOR GRANT OF REGISTRATION U/S 12A SINCE THE TRUST COULD NOT SUBSTANTIATE ITS CLAIM BY BRINGING OUT THE CARRYING ON OF CHARITABLE ACTIVITY. HOWEVER, IN THE PRESENT CASE, THE ASSESSEE TRUST YE T TO AVAIL AN OPPORTUNITY TO PRODUCE EVIDENCE(S) AT ITS POSSESSIO N TO SUBSTANTIATE ITS ACTIVITY. 7.3. WE ARE THEREFORE OF THE CONSIDERED VIEW THAT WITHOUT HEARING THE ASSESSEE-TRUSTS VERSION, THE REJECTION OF ITS APP LICATION FOR REGISTRATION U/S 12A OF THE ACT, ON THE SOLE GROUND OF NON-COMPLIAN CE IS CONTRARY TO THE PRINCIPLES OF NATURAL JUSTICE AND FAIR PLAY. HOWE VER, ON THE SAME BREATH, WE WOULD LIKE TO MAKE IT CRYSTAL CLEAR THAT AFTER A FFORDING A REASONABLE OPPORTUNITY TO THE ASSESSEE-TRUST TO PRESENT ITS CA SE, THE LD. DIT(E) SHALL BE AT LIBERTY TO TAKE APPROPRIATE ACTION IN ACCORDA NCE WITH LAW. 7.4. IN VIEW OF THE FORE-GOING DELIB ERATIONS AND IN THE PRINCIPLE OF NATURAL JUSTICE AND EQUITY, WE ARE OF THE UNANIMOUS VIEW THAT THE ASSESSEE- TRUST SHOULD BE GIVEN AN OPPORTUNITY TO PUT-FORTH I TS STAND AND, ACCORDINGLY, THE ISSUE SHOULD BE REMITTED BACK ON THE FILE OF T HE LD.DIT(E) FOR FRESH CONSIDERATION WITH A DIRECTION TO AFFORD AN OPPORTU NITY TO THE ASSESSEE-TRUST OF BEING HEARD. ON THE OTHER HAND, THE ASSESSEE-TR UST, THROUGH ITS A.R, IS ADVISED TO APPROACH THE DIT (E) WITH ALL RELEVANT D OCUMENTS/EVIDENCE(S) AT ITS POSSESSION WHICH WOULD FACILITATE THE DIT(E) TO FINALIZE ITS APPLICATION EXPEDITIOUSLY. IT IS ORDERED ACCORDINGLY. 8. THE OTHER GROUND OF AWARDING SUITAB LE COST IS CONSIDERED AND WE DO NOT FIND ANY MERIT ON THIS PLEA AS THE ASSESSEE HAS ALSO NOT CO-OPERATED ITA NOS. 966 & 967/B/09 PAGE 6 OF 7 WITH THE PROCEEDINGS BEFORE THE LD.DIT(E). THEREFOR E THIS GROUND IS DISMISSED. ITA NO: 967: 9. THE LD.DIT(E) HAD MENTIONED IN THE IMPUGN ED ORDER U/S 80G(5)(VI) OF THE ACT THAT THE APPLICATION OF THE TRUST FOR REGISTRATION U/S 12A HAS BEEN REJECTED, THE APPLICANT TRUST IS INELIGIBLE FOR GRA NT OF RECOGNITION U/S 80G(5)(VI) OF THE ACT AS IT DOES NOT SATISFY THE CO NDITIONS SPECIFIED IN THE SAID SECTION. 9.1. WE HAVE SINCE REMITTED BACK THE IS SUE OF GRANTING REGISTRATION U/S 12A OF THE ACT FOR FRESH CONSIDERATION OF THE D IT(E) FOR THE REASONS SET- OUT IN THE FORE-GOING PARAGRAPHS, OUR FINDING REFER RED SUPRA HOLDS GOOD IN RESPECT OF GRANT OF RECOGNITION U/S 80G OF THE ACT TOO. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE ASSESSEES APPEALS IN ITA NOS:966 AND 967/09 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF NOVEMBER, 2009. SD/- SD/- ( SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 9 TH NOVEMBER, 2009. DS/- ITA NOS. 966 & 967/B/09 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.