MORBI PLOT JAIN TAPGACHH SANGH V. THE COMMISSIONER OF INCOME TAX

SCA/16039/2019

AI Insights

The case involves the Morbi Plot Jain Tapgachh Sangh, a charitable trust, which sought judicial intervention to obtain recognition of its registration under Section 12A of the Income Tax Act, 1961, for the assessment years 2013-14 to 2016-17. The Trust argued that due to a devastating flood in 1978, all its records, including the registration certificate, were destroyed, and despite this, the Income Tax Department denied them the benefits of exemption under Section 11 of the Act for the specified years. The department contended that the Trust failed to provide proof of registration and insisted on the registration number for e-filing purposes, which the Trust could not furnish due to the loss of records.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 762174 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 25-03-2021
• Assessment Year: misc
• Other Referred Cases: ITA No.876 to 881/AHD/2010
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: MAUNA BHATT; KARAN SANGHANI
• Assessee Lawyers: MANISH SHAH
• Keywords: Charitable Trust; E-filing; Exemption under section 11; Flood Damage; Registration certificate; Record destruction
• Section: 143(3); 143(1); 11; 12AA; 12A

Judgement Text

"C/SCA/16039/2019 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 16039 of 2019 ========================================================== MORBI PLOT JAIN TAPGACHH SANGH Versus THE COMMISSIONER OF INCOME TAX ========================================================== Appearance: MR MANISH J SHAH(1320) for the Petitioner(s) No. 1 MRS MAUNA M BHATT(174) WITH MR KARAN SANGHANI, ADVOCATE for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA Date : 25/03/2021 ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 By this writ application under Article 226 of the Constitution of India, the writ applicant (charitable Trust – assessee) has prayed for the following reliefs; “A) This Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of mandamus or any other approprite writ, order or direction asking the respondent to furnish the copy of registration certificate from the records of the Department to the petitioner Trust. B) Failing which, the Hon'ble Court be pleased to please to grant the fresh registration applicable from the inception of the petitoner trust or at least from AY 2013­14 onwards. C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay the demands which have arisen by passing of intimation u/s. 143(1) and raising demand on online portal for Asst. year 2013­14 to 2016­17 and be pleased to stay the requisitions asked for by a letter dated 05.08.2019 at Annexure Q received from the Page 1 of 7 C/SCA/16039/2019 ORDER office of the Commissioner of Income Tax (Exemption), Ahmedabad. D) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Court deems just and proper in the interest of justice, and E) This Hon'ble Court be pleased to allow this application with cost against the respondent.” 2 The controversy involved in the present litigation is in a very narrow compass. The matter is one of its kind. The writ applicant is a charitable Trust registered with the Charity Commissioner, Rajkot bearing registration number A­846. The Trust was established on 11th June 1967. The Trust was, thereafter, registered under Section 12A of the Income Tax Act, 1961 (for short, “the Act, 1961”). 3 The scrutiny assessment of the Trust under Section 143(3) of the Act was undertaken for the first time in the A. Y. 1977­78 vide order dated 30th July 1979 accepting the return of income as the assessed income under the provisions applicable to a registered Trust drawing the benefits of registration under Section 12A of the Act. 4 It is the case of the writ applicant that the devastating flood in the year 1978 hit the Morbi district to such an extent that the entire records of the Trust including the books of accounts, registration certificate and other documents related to Trust got destroyed. 5 It is not in dispute that the Trust continued to draw the benefit of exemption under Section 11 of the Act as a registered Trust till the assessment year 2012­13. From the assessment year 2013­14, the Trust was required to upload Form No.7 (return of income) on the website of the Income Tax Department. In the return of income in “General Information”, the details as regards the registration of Trust under Section 12A / 12AA of the Act are to be furnished. If the registration Page 2 of 7 C/SCA/16039/2019 ORDER number is not mentioned, the utility would show or indicate an error and the Trust would not be in a position to upload the return of income. The problem for the Trust cropped up since the time the E­filing was introduced by the Revenue department. 6 It is the case of the Trust that they do not have the copy of the registration certificate and the department is insisting for such copy for the purpose of granting benefit under Section 11 of the Act. It appears that the Trust has been granted a fresh certificate from 2017­18 onwards. However, the department is not ready and willing to grant the benefits of the exemption for the period between 2013­14 and 2016­17 in the absence of the registration certificate and the number of registration. Unfortunately, the Trust has also lost its entire record and the department says that the record of the Trust is not available with the concerned office. 7 In such circumstances referred to above, the writ applicant is here before this Court substantially with the prayer that the benefit of exemption may be granted to the Trust for the assessment years 2013­14 to 2016­17 in the absence of the registration certificate which was issued in favour of the Trust way back in the year 1977. 8 We have heard Mr. Manish Shah, the learned counsel appearing for the writ applicant and Mr. M. R. Bhatt, the learned Senior Counsel appearing for the Revenue. 9 Mr. Bhatt would submit that the Trust has not been able to adduce any proof or evidence of registration under Section 12A. According to Mr. Bhatt, the Trust availed the benefit of Section 12A without providing the copy of certificate or without providing the registration number. Page 3 of 7 C/SCA/16039/2019 ORDER From A. Y. 2013­14 onwards, the return of income was to be filed online compulsorily. The Trust was obliged to quote the registration number. It failed to quote the same and in such circumstances, the benefits of Section 12A were denied by the CPC, Bengaluru. Mr. Bhatt pointed out that even the demand has been raised by the CPC, Bengaluru. According to Mr. Bhatt, if the Trust had been, in fact, granted the registration and records got destroyed during the flood, then it was expected of the Trust to atleast quote the registration number so that the department could get the same verified from the records of its office. 10 Mr. Bhatt would submit that the past records of the assessee are not available with the concerned office. The exemption charge has been created from the year 2014. The office could not verify the fact / details as furnished by the assessee relating to the period before the year 2014. It is in such circumstances that the registration under Section 12AA of the Act came to be granted from A. Y. 2019­20 vide order dated 20th September 2019. Such certificate has been granted on the basis of the audited accounts for the financial year 2016 to 2017­18 submitted by the Trust after processing the application filed by the assessee in Form 10A for registration under Section 12A(1) of the Act. 11 In rejoinder to the aforesaid submissions of Mr. Bhatt; Mr. Shah, the learned counsel appearing for the Trust submitted that the Trust, in the Assessment Year 1977­78 to 1982­83 had claimed the benefit of exemption available under Section 11 and the same was allowed by the then Assessing Officer by passing scrutiny assessment order under Section 143(3) of the Act. He pointed out that from the assessment year 1986­87 to the assessment year 2012­13, the benefit of exemption claim under Section 11 of the Act was accepted by the department as the return came to be accepted under Section 143(1) of the Act and no Page 4 of 7 C/SCA/16039/2019 ORDER notice for scrutiny assessment was issued for the aforesaid years. 12 Mr. Shah would submit that the stance of the department that the benefit of exemption under Section 11 cannot be granted in the absence of quoting the registration number in the income tax return from assessment year 2013­14 is not tenable in law. According to him, the department is not providing the copy of the registration certificate to his client and on the other hand, the department is declining to grant the legitimate benefit available to the Trust under Section 11 of the Act. 13 In the last, Mr. Shah relied upon an order dated 10th May 2013 passed by the Income Tax Appellate Tribunal, 'A' Branch, Ahmedabad in the ITA No.876 to 881/AHD/2010 to fortify his submission that the onus is upon the Revenue to establish that the Trust was not registered at any point of time and no registration certificate under Section 12A was issued by the department. Mr. Shah seeks to rely upon the following observations made by the Tribunal: “10. We find that when the assessee has claimed that it was granted registration u/s. 12A/12AA by the Department and the Department has framed assessment granting the exemption the onus is on the department to prove that the assessee was not granted registration u/s. 12A/12AA of the Act. in the present case the assessee has claimed that it was granted registration u/s. 12A and the assessments have been framed accordingly in the past. There is nothing on record brought by the Department to contradict the submission of the Assessee that it was not granted registration after assessment year 1983­84 or the certificate granted to the Assessee has been withdrawn. The onus cast on Revenue to prove that the trust was not registered cannot be said to be discharged by merely stating that the records of registration are not available with it and the assessee should prove that it was registered. The Registration granted u/s 12A/12AA is permanent in nature and needs no renewal from time to time accordingly the Department is expected to maintain the register records registration of trust etc u/s 12A/ 12AA at all points of time the Registrar in which the registration of the trust etc are entered is an important and permanent document which should have been pressured by Department. The Assessee could not be penalized for the failure of the department in maintaining the necessary record with it. ln our considered Page 5 of 7 C/SCA/16039/2019 ORDER view in a case of charitable trust where assessment has been framed and exemption provided under the act has been allowed to the Assessee, the presumption is that the Assessee trust was registered u/s 12A 12AA of the act till the same is rebutted by the Department by adducing documentary evidence to the contrary. The Revenue could not bring any evidence on record to prove that the assessee was not granted registration u/s. 12A of the Act. We are therefore of the view that a mere statement that the relevant registers are not available with the Department could not be considered against the assessee. Considering the totality of the facts, we of the view that the assessee should be considered to be having registration u/s. 12A in all the assessment years under appeal and therefore all these appeals are allowed.” 14 Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that the dispute between the parties should have been resolved amicably. We are at one with Mr. Bhatt, the learned Senior Counsel appearing for the Revenue that in the absence of the registration number, to be mentioned in the course of E­filing of the return, the benefit of exemption under Section 11 of the Act cannot be granted, but, at the same time, we find it difficult to accept the stance of the department that as the record is not available with the Trust as well as with the department, it should be presumed that at no point of time, the certificate of registration under Section 12A of the Act was granted. 15 We take notice of the fact that there is contemporaneous record available with the Trust, which should be looked into minutely by the department so as to satisfy itself that the Trust had been issued a registration certificate under Section 12A and had been availing the benefit of exemption over a period of time under Section 11 of the Act. The department is expected to undertake some homework in this regard seriously. The Trust should not be denied the benefit of exemption under Section 11 of the Act only on account of its disability to produce the necessary records, which got destroyed during the floods of 1978. We do not find anything doubtful or fishy as regards the Trust. Page 6 of 7 C/SCA/16039/2019 ORDER 16 In such circumstances, we are of the view that whatever record is available with the Trust, as on date, should be produced before the department and the department should look into the records minutely and also give an opportunity of hearing to the Trust or its legal representative and take an appropriate decision in accordance with law. 17 We dispose of this writ application with a direction that the writ applicant – Trust shall produce the entire record available with it as on date before the department and the department shall look into the entire record closely and threadbare and ascertain whether the Trust being a registered charitable Trust had been issued the registration certificate under Section 12A of the Act, 1961. A practical way needs to be found out in such type of litigation. Let this entire exercise be undertaken at the earliest and be completed within a period of four weeks from the date of receipt of the order by the department. 18 Till the appropriate decision is not taken by the department, pursuant to the directions issued by this Court, the interim order passed by this Court dated 30th September 2019 shall continue. 19 We hope and trust that the controversy is resolved by the parties amicably and the Trust may not have to come back to this Court. (J. B. PARDIWALA, J) (ILESH J. VORA,J) CHANDRESH Page 7 of 7 "