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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD
Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” : HYDERABAD (THROUGH VIDEO CONFERENCE)
BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
I.T.A. No. 787/HYD/2019 Sri Manikya Varadaraja CIT(Exemptions), Swamy Temple, Vs HYDERABAD Punganur [PAN: AANAS2065B] (Appellant) (Respondent)
For Assessee : Shri E.Phalgunakumar, AR For Revenue : Smt. Amisha Gupt, DR
Date of Hearing : 18-05-2021 Date of Pronouncement : 12-07-2021
O R D E R PER S.S.GODARA, J.M. :
This assessee’s appeal arises from the CIT(Exemptions)- Hyderabad’s order dated 27-03-2019 passed in F.No.CIT(E)/Hyd/106(09)/12A/2018-19, in proceedings u/s.12AA(1)(b)(ii) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.
Both the learned representatives taken us to the CIT(E)’s detailed discussion declining Section 12AA registration to the assessee as under:
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“The assessee filed application in Form No.10A seeking registration u/s.12A of the Income Tax Act, 1961 ('the Act' in short) on 30.09.2018. 2. Thus, a notice dated 07.02.2019 was issued to the applicant, to the address mentioned in Form 10A, to appear and produce its original Memorandum of Association (MoA)/trust Deed for verification and to furnish a detailed reply on specific points on or before 21.02.2019. In response thereto, the assessee, vide letter dated 20.03.2019 has furnished certain information. 3. Non filing of Income Tax Returns: The assessee temple is being managed by the Endowments Department of State Government of Andhra Pradesh. The assessee trust was created on 14.10.2015. The assessee was asked to furnish the Income Tax Returns for the AYs 2016-17, 2017-18 and 2018-19, vide this office letter dated 07.02.2019. However, the assessee has not filed the same. Hence, a notice was issued to the assessee to show cause as to why the application in Form 10A shall not be rejected in view of non-filing of Income Tax Returns. In response thereto, Sri E.Chaitanya, FCA, being the Authorized Representative of the assessee appeared for the hearing on 25.03.2019. 3.1 Return u/s. 139(4A) is required to be filed by every person in receipt 01 income derived from property held under trust or other legal obligation wholly for charitable or religious purpose. As seen from the Income & Expenditure account filed for various years, the assessee's gross receipts exceed the maximum amount which is not chargeable to Income is in contravention of the provisions of the Income Tax Act. In the absence of filing of returns, the genuineness of the activities cannot be verified. A person violating Income Tax Act cannot be eligible for beneficial provision like 12A One arm of the law cannot be used to defeat the purpose of another arm of the law. Not filing return of income is an offence u/s. 276CC of the Act. Hence, an entity committing offence cannot be eligible for exemption. 3.2 Also, the assessee trust has sold properties vide sale Deed No. 3513/2015 dated 14.10.2015 for a sale consideration of Rs. 1,75,80,000/- and Sale Deed No. 979/2016 dated 22.03.2016 for a sale consideration of Rs. 85,90,260/-, respectively. However, the assessee failed to furnish the Income Tax Returns and taxes were not paid on the capital gains. It is offence as per Sec. 276C of the Act, for which punishment is rigorous imprisonment of three months to seven years with fine, depending upon the amount of tax sought to be evaded. Any entity committing offence cannot be eligible for beneficial provisions like exemption. One arm of the Law cannot be used to defeat the purpose of another arm of the law. In this connection, reliance is placed on the Hon'ble High Court decision in the case of CIT Vs. Jolly Polymers.
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In view of all the above facts, I am of the view that the applicant is not fit for grant of registration u/s.12AA of the Act. Hence, the application in Form No.10A filed by the above applicant is hereby rejected”. 3. It is sufficiently clear from a perusal of the CIT(E)’s order under challenge that he has nowhere considered the assessee’s objects in its trust deed as to under which limb they fall u/s.2(15) of the Act. Faced with this situation, we deem it appropriate to restore the impugned sole issue back to the CIT(E) to be adjudicated afresh in light of hon'ble apex court’s decision in M/s.Ananda Social and Educational Trust Vs. CIT, Civil Appeal No(s).5437- 5438/2012, dt.19-02-2020 that commencement of charitable activity by the assessee concerned is nowhere a mandatory pre-condition for the purpose of granting Section 12AA registration.
The assessee or its authorised representative shall appear before the CIT(E) on or before 31-10-2021 with all relevant details; at its own risk and responsibility to be followed by three effective opportunities.
This assessee’s appeal is treated as allowed for statistical purposes in above terms.
Order pronounced in the open court on 12th July, 2021
Sd/- Sd/- (LAXMI PRASAD SAHU) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 12-07-2021 TNMM
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Copy to : 1.Sri Manikya Varadaraja Swamy Temple, Palace Street, Punganur (Rural), Chittoor District. 2.The CIT(Exemptions), Hyderabad. 3.The Addl.CIT(Exemptions)-Vijayawada. 4.D.R. ITAT, Hyderabad. 5.Guard File.