SHRI SULTANMAL SANJABAI CHARITABLE TRUST, BALOD,BALOD V. COMMISSIONER OF INCOME TAX (E), BHOPAL, BHOPAL

ITA 372/RPR/2024

AI Insights

The case involves Shri Sultanmal Sajnabai Charitable Trust appealing against the decision of the Commissioner of Income-tax (Exemption), Bhopal, which rejected their applications for registration under sections 12AB and 80G(5) of the Income Tax Act, 1961. The primary issues revolved around the alleged lack of charitable activities and the non-verifiability of the trust's sources of funds. The tribunal found that the CIT(E) had not adequately considered the trust's objectives and activities nor provided a specific finding on how these did not meet the charitable purposes as required under the Act. The tribunal referenced a similar case, CIT vs. Chhattisgarh Urology Society, to emphasize the need for a thorough examination of the trust's activities and objectives.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472223 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 07-10-2024
• Assessment Year: misc
• Appeal Filed On: 09-08-2024
• Other Referred Cases: CIT vs. Chhattisgarh Urology Society (2018) (2) TMI 1156, TAXC No. 159 of 2017, dated 17 January, 2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S.L.ANURAGI
• Assessee Lawyers: S.R. RAO
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Source of fund; Charitable institution
• Section: 12A

Judgement Text

" आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM (ITA No. 372 & 373/RPR/2024) (Assessment Year: NA) आदेश / O R D E R Per Arun Khodpia, AM: The aforesaid appeals are filed by the same assessee i.e. Shri Sultanmal Sajnabai Charitable Trust, against the common order of Commissioner of Income Tax (Exemption), Bhopal (for short, “the CIT(E)”), dated 13.06.2024, rejecting the application of the assessee submitted in Form No.10AB for grant of registration u/s 12AB and 80G(5) of the Income Tax Act, 1961 (in short, ‘the Act’). Shri Sultanmal Sajnabai Charitable Trust, Village Umaradah, Dist. Balod 491226 Chhattisgarh V S The Commissioner of Income-tax –(Exemption) Room No.201, II Floor, Metro Walk Building, REAC, Bhopal (M.P.) 462016. PAN: ABCTS9213Q (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से / Assessee by : Shri S.R. Rao, Advocate. राजˢ की ओर से / Revenue by : Shri S.L. Anuragi, CIT-DR सुनवाई की तारीख / Date of Hearing : 07.10.2024 घोषणा की तारीख / Date of Pronouncement : 09.10.2024 ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 2 2. Since both the captioned appeals belong to the same assessee having interconnected issues, arising from the impugned order, therefore, the same are taken up together for adjudication under this common order. 3. The grounds of appeal raised by the assessee in both the appeals are also common, therefore, the same are extracted as under: “1. In the facts and circumstances of the case and in law the ld. Commissioner of income-tax (Exemption) has erred in rejecting the application for registration u/s 12AB of the Income-tax Act, 1961 and also erred in cancelling the provisional registration granted u/s 12AB of the Act by CPC. 2. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Exemption) has erred in observing that (a) the figures of income and expenditure are zero hence it implies there are no charitable expenses and (b) the donation in the name of Building fund of Rs.62,69,302/- (Rs.39,97,101/- received during the year) shown in the Balance Sheet for F.Y. 2022-23 was not offered as income in ITR for A.Y. 2023-24 and accordingly erred in rejecting the application. 3. In the facts and circumstances of the case and in law, the ld. Commissioner of Income-tax (Exemption) has erred in passing common order, mechanically and without application of mind, for rejecting the applications filed for grant of Registration u/s 12AA of the Act and grant of Approval u/s 80G(5) of the Act without scoring out the inapplicable parts. 4. The impugned order is bad in law and on facts. 5. The appellant reserves the right to add, alter or omit all or any of the grounds of appeal in the interest of justice.” 4. At the outset, learned Authorized Representative, Shri S.R. Rao, Advocate (in short, ld. AR) for the assessee had submitted their written synopsis, stating the summary of facts of the case and reasons for rejection ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 3 of the assessee’s application by the CIT(E), Bhopal. The synopsis so submitted is extracted as under: “ ” ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 4 5. Backed by the aforesaid submissions, it was the prayer by the ld. AR that the application of the assessee had been rejected by the ld. CIT(E) without considering the response a/w documents sumitted by the assessee. The facts emanating from the various documents furnished are not looked into and properly appreciated by the ld. CIT(E) to arrive at the conclusion that the assessee was unable to prove having carrying any charitable activities, also the ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 5 source of fund of the assessee was alleged to be not verifiable. It was submitted that all the necessary documents regarding activities of the trust, financial of the trust and budgets of the trust were dully submitted before the CIT(E), however, the application for granting registration u/s 12AB and 80G(5) are summarily rejected by the ld. CIT(E), without issuing show cause to the assessee, as to how the undertakings of the assessee are not fall within the ambit of charitable activities. Ld. AR drew our attention to the paper book submitted before us showing various documents submitted before the Ld. CIT(E), stating reasons for zero income and expenditure during the relevant year in assessee’s books which has been taken up as the cause for rejection of the assessee’s request by the CIT(E), it is clarified that donation has been received by the assessee for the construction of building, thus the amount received are not routed though the income of the assessee but are duly recorded in the balance sheet of the assessee. Ld. AR drew our attention to Page Nos. 56 to 59 of the assessee’s paper book showing certain activities by the assessee trust which is not a profit- making establishment, working for the benefit of deaf and dumb children and for their education. Ld. AR further placed his reliance on the order of the Hon’ble jurisdictional High Court in the following case: CIT vs. Chhattisgarh Urology Society (2018) (2) TMI 1156, TAXC No. 159 of 2017, dated 17 January, 2018. the relevant findings of Hon’ble jurisdictional High court reads as under: ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 6 6. It is argued that even if the books of accounts or income is not to be seen at this stage, the real intent of the registration of the trust itself may be a relevant factor for determining as to whether the application is genuinely filed or the object of the trust is infact charitable or not, therefore, the Tribunal has not appreciated the issue vis-a-vis the requirement under Section 12A of the Act, 1961. 10. The provision contained under Section 12A nowhere empowers the CIT to assess the objects vis-a-vis the books of accounts. Even otherwise, it is not to be seen at this stage as to whether the fulfillment of the charitable trust would eventually benefit the members of the society. If the constituent of the trust engage in some genuine charitable activity which may benefit them in some other aspect of their personality which may include their vocation in life, it would not affect the genuineness of the objects of the trust. A person does not engage in charity for not doing anything in the other walks of life. A charity for one particular object is not for destroying the career for an individual which he is otherwise entitled to profess. If this ground is considered to be affecting the genuineness of the trust, people successful in different walks of life would never engage in charitable activity. 6. On the basis of aforesaid submission, it was the prayer by the ld. AR that at this stage when the assessee is requested for grant of registration u/s 12AB, it was incumbent upon the ld. CIT(E) to look into the objectives and activities of the assessee trust or to conduct necessary inquiry, if ld. CIT(E) is not satisfied with the submissions made, however, ld. CIT(E) had not made any specific ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 7 comment about the establishment of the assessee’s society, as to how the same is not setup for charitable purpose. It was the prayer that the matter shall be restored back to the file of the CIT(E) to re-visit the applications of the assessee, wherein the assessee shall be provided with reasonable opportunities of being heard, to substantiate and to respond to any of the queries, so as to satisfy that the institution of assessee’s society was established and carrying on for public charitable activities. 7. Contradicting the aforesaid contentions of the ld. AR, Shri S.L. Anuragi, learned CIT-DR has vehemently supported the order of ld. CIT(E). 8. We have considered the rival submissions, perused the materials available on record and the case law relied upon by ld. AR. 9. Admittedly, in present case, as required by the ld. CIT(E), necessary details were furnished by the assessee, however, those were not considered to be satisfactory, therefore, the application for registration u/s 12AB of the Act was rejected. We may herein note, at this stage, that it was essential for the Ld. CIT(E) to look into the activities and objectives of the trust, that the subject trust is established for public charitable activities and such activities are genuine in nature. The CIT(E), however eventually have powers to examine, inquire and verify the records of the assessee, so as to record his specific finding / ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 8 satisfaction qua the assessee’s eligibility for grant of registration. In present case, we note that the ld. CIT(E) had not come up with any clarity in his order as to how the activities of the assessee trust does not fall within the scope of charitable purpose. Further, as per the facts borne from record, the allegation that assessee could not prove any charitable activity or the source of funds are not verifiable was not confronted to the assessee, whereas the assessee should have been afforded with the opportunity to place its submissions / evidence / contentions to rebut to such perceptions. Such action was against the principle of natural justice. 10. Under such facts and circumstances, respectfully following the judicial pronouncement by the Hon’ble Jurisdictional High Court of Chhattisgarh in the case of Chhattisgarh Urology Society (supra), we observe that the Ld. CIT(E) was under the abounded duty to look into, for his satisfaction about the Objects of the trust, the genuineness of the activities and compliances under any other law and to pass an appropriate speaking order. 11. In view of aforesaid observations, we, are of the considered opinion that the aforesaid appeals assailing the issue therein has to be restored back to the file of the CIT(E) to reconsidering the applications of the assessee in form 10AB for grant of registration u/s 12AB and 80G(5) of the Act. Needless to say, the assessee ITA No.372 & 373/RPR/2024 Shri Sultanmal Sajnabai Charitable Trust 9 shall be afforded with reasonable opportunity of being heard in the set aside proceedings. 12. Resultantly, the aforesaid two appeals of the assessee are allowed for statistical purpose. in terms of our aforesaid observations. Order pronounced in the open court on 09/10/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 09/10/2024 Hem आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, //True copy// (Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- 2. ŮȑथŎ / The Respondent- 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT -1, Raipur, (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. "