SHRI SUKH LAL RATHI CHARITABLE TRUST,JAIPUR vs. COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh jes'k lh 'kekZ] ys[kk lnL; ,oa Jh fot; iky jko] U;kf;d lnL; ds le{k BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA No. 504/JP/2018 fu/kZkj.k o"kZ@Assessment Year :............. cuke Shri Sukh Lal Rathi Charitable Trust, C.I.T. (Exemptions), Vs. Rathi Dharamshala, Near Dhula Jaipur. House, Bapu Bazaar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATS 3416 N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA) jktLo dh vksj ls@ Revenue by : Shri Varinder Mehta (JCIT) lquokbZ dh rkjh[k@ Date of Hearing : 19/02/2019 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 06/03/2019 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the assessee is directed against the order dated

12/3/2018 of Ld. CIT(Exemptions), Jaipur, whereby the application of the

assessee in Form No. 10A for seeking registration U/s 12A of the Income

Tax Act, 1961 (in short the Act) was rejected. The assessee has raised

following grounds: “1. The ld. CIT(A) has erred on facts and in law in rejecting the application of assessee for grant of registration U/s 12AA of Income Tax Act, 1961. 2. The assessee craves to amend, alter and modify any of the grounds of appeal.

ITA 504/JP/2018_ 2 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

Religious Public Trust constituted on 23/10/1933 by Shri Sukh Lal Rathi,

Suraj Mal, Chand Mal and Kesar Mal. The assessee Trust was granted

registration U/s 12A of the Act on 14/10/1974. However, the registration

certificate dated 14/10/1974 was got misplaced and therefore, the

assessee requested the department to provide a certified copy of the said

certificate. The department has expressed its inability to provide the

certified copy by citing the reasons that the office of the CIT(E) was not in

a position to provide the same, as communicated vide letter dated

11/04/2013. Therefore, the assessee was left with no option but to apply

for registration by filing the application dated 19/09/2017 before the ld.

CIT(E). The ld AR has pointed out that since beginning the assessee was

granted benefit of Sections 11 and 12 of the Act and even for the A.Y.

1977-78, the matter was taken up to this Tribunal and vide order dated

26/8/1981, the Tribunal held that the assessee is a Public Religious Trust

entitled for exemption U/s 11 of the Act. Thus, the assessee was

considered to be a Public Religious Trust and eligible for benefit of

Sections 11 and 12 of the Act. The ld AR has pointed out that the ld.

CIT(E) has refused to grant of registration U/s 12A of the Act on four

points comprising non-furnishing of the original document of creation of

ITA 504/JP/2018_ 3 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

the assessee Trust, absence of dissolution clause in the Trust document,

the difference of name in Form No. 10A and PAN details of the assessee

Trust and non-submitting of the financial accounts for the F.Y. 2016-17.

The ld AR has submitted that as far as the original document is concerned,

the assessee is having the original document and ready to produce before

the Bench for verification, though a copy of the said document was already

produced before the ld. CIT(E). It is a registered document and therefore,

there is no scope to doubt the genuineness of the document when the

assessee was already granted registration U/s 12A of the Act vide order

dated 14/10/1974. The ld AR has produced the original Trust Deed before

the Bench and a translated copy alongwith copy of the original deed in the

paper book. As regards the second objection of the ld. CIT(E) regarding

absence of dissolution clause in the Trust Deed, the ld AR has submitted

that at the time of registration what is required to be considered by the ld.

CIT(E) is the objective of the Trust and genuineness of the activity. Once

the genuineness of the activities are not in doubt then merely because

there is no specific dissolution clause, the registration cannot be refused.

In support of his contention, he has relied upon the decision of Hon’ble

Gujarat High Court in the case of CIT Vs. Tapagachha Sangh Mota 232

Taxman 715 and submitted that the Hon’ble High Court has categorically

held that even in absence of any provisions in the Trust with respect to the

ITA 504/JP/2018_ 4 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

dissolution clause if on facts, the Trust is found to be genuine or a

genuineness of the Trust is established, the Trust is entitled for

registration U/s 12AA of the Act subject to fulfillment of the other

conditions U/s 12AA of the Act. He has also relied upon the decision of the

Coordinate Bench of the Tribunal in the case of Sidha Sthan Shri

Kapaleshwar Mahadev Sanyas Ashram Trust Vs. CIT(E) 191 TTJ 131 and

submitted that the Tribunal has also considered an identical issue and held

that the refusal of registration on the ground of absence of dissolution

clause is not justified and the ld. AR has submitted that even if there is no

special clause in the Trust Deed there are other clauses taking care of the

situation and providing sufficient safeguard against the misuse of the

property of the Trust. He has referred various clauses of the Trust Deed

and submitted that as per clause ‘(Kha)’ of the Trust Deed, there is a

restriction of sale, mortgaged or donation of any property of the Trust by

the Trustees or any other person. Further as per clause ‘(Tha)’, the

Trustee cannot use any property of the Trust for their own purpose or can

take any economic profit from the Trust even for the services rendered. In

case of closure of the activity of the Trust or Trustees are not interested to

carry out the activities of the Trust, the provisions of Indian Trust Act as

well as Rajasthan Public Trust Act, 1959 take care of the situation. Thus,

ITA 504/JP/2018_ 5 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

the ld AR has submitted that absence of specific dissolution clause in the

Trust Deed cannot be a ground for rejection of registration.

2.1 The next objection of the ld. CIT(E) is regarding discrepancy in the

name of the Trust as appearing in the Form No. 10A and the PAN details,

in this regard, the ld AR has submitted that the assessee has subsequently

got the PAN details rectified and now the name of the assessee Trust in

the PAN is in accordance with the name of the assessee Trust in the

registration certificate issued by the Devsthan Vibhag, Jaipur. The ld AR

has pointed out in the PAN prefixed ‘Shri’ was not before the name of the

Trust which is subsequently corrected and a copy of the new rectified PAN

details has been filed. Therefore, when the assessee is in existence since

1933 and also granted registration in the year 1974 then such a minor

mistake of not prefixing ‘Shri’ in the name of the assessee Trust in the PAN

card cannot be taken as a serious lapse. As regards the non-production of

final accounts for the F.Y. 2016-17, the ld AR has referred to the letter

dated 12/3/2018 and submitted that the assessee produced the final

accounts, however, on the same date, the ld. CIT(E) passed the impugned

order and therefore, these accounts were not considered. Hence, the ld AR

has submitted that the impugned order is not sustainable when none of

the objections raised by the ld. CIT(E) is not relevant or so significant to

refuse the registration.

ITA 504/JP/2018_ 6 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

discrepancies in the name appearing in the PAN in comparison to the

name of the assessee in the registration certificate issued by Devsthan

Vibhag, Jaipur. Further despite specific request made by the ld. CIT(E), the

assessee failed to produce original deed, final accounts for the F.Y. 2016-

17 as well as a proper clarification regarding the discrepancy in the name

of the assessee Trust. Therefore, the assessee has not made the requisite

documents available before the ld. CIT(E) to arrive at the decision that the

objects of the assessee Trust are charitable in nature and the activity of

the assessee Trust are genuine. He has relied upon the impugned order of

the ld. CIT(E),

material on record. The revenue has not disputed that the assessee was

earlier granted registration U/s 12A of the Act in the year 1974 and further

the assessee was also availing the benefit of Sections 11 and 12 of the

Act. The assessee has produced certain assessment orders as well as the

order of this Tribunal for the A.Y. 1977-78 wherein the Tribunal has held

that the assessee is a Public Religious Trust and eligible for exemption U/s

11 and 12 of the Act. Therefore, it is clear that the assessee’s status was

accepted as a Public Religious Trust as well as eligible for the benefit of

Sections 11 and 12 of the Act. However, since the assessee could not

ITA 504/JP/2018_ 7 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

produce the certificate of registration claimed to have been granted on

14/10/1974, hence, the assessee applied for fresh registration vide

application dated 19/9/2017. The ld. CIT(E) vide letter dated 01/7/2018

has asked the assessee to produce various documents and thereafter it

was observed by the ld. CIT(E) that the assessee has failed to submit the

original document and also to clarify the discrepancy in the name of the

assessee. The relevant part of the ld. CIT(E)’s order in paras 4 to 6 is as

under:

“4. Under such powers vested in CIT (E), the applicant was asked to file details/ information/documents etc vide letter No. 4527, dated 28/29.09.2017. In response to Shri Jagdish Somani, CA/AR filed written reply. However, no complete compliance was made by the applicant. Keeping in view of nature justice one more opportunity was provided vide this office letter No. 8018, dated 01/07.02.2018. The applicant trust was requested to produce/ file the following:-

• Produce Original PAN/RC/Trust Deed for verification.

• File clarifications regarding difference in name of Trust between PAN Card and Application Form 10A/RC/Deed of the Trust.

• Produce final account for F. Y. 2016-17.

• File ID proof of the Settler/Members.

• On perusal of the MO A of Trust, it is noticed that no dissolution clause is provided. Therefore, you are requested to explain why the application filed by you should not be rejected.

ITA 504/JP/2018_ 8 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

* The applicant did not submit original documents regarding establishment of the trust/society as well as evidences in support of his claim. Under Rule 17A of Income Tax Rules, 1962 the applicant is required to produce original document regarding establishing of the trust/society for verification but the same has net Le done by the applicant.

* On perusal of Vidhan of the applicant trust/society, it is noticed that no dissolution clause is provided. It is not clear that on dissolution how the property of the trust/society will be protected and used for the charitable purposes. There has to be check that the balance funds on dissolution do not go to the office bearers of the trust/society.

* Name of trust as mentioned on Form No. 10A and registration certificate issued by the Devsthan Vibhag, Jaipur Division, Jaipur did not match with the name mentioned on PAN.

* Applicant has not produced the final accounts for financial year 2016-17 as required by this office. It needs special attention that one of the basic conditions stipulated in section 12AA is the genuineness of the activities. In the present case the applicant failed to provide the complete details as required which in turn causes doubt about proper maintenance of accounts and genuineness of the activities. The onus lies on the applicant to file complete details but it failed to discharge the same. Rule 17A specifically requires submission of

ITA 504/JP/2018_ 9 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

accounts. In the absence of books of account & vouchers, entries in the accounts itself are not verifiable.

Therefore, the registration was refused on four reasons which will discuss

one by one as under:

(i) The first ground cited by the ld. CIT(E) is non-production of

the original Trust Deed, we find that the assessee produced copy of the

Trust Deed before the ld. CIT(E) alongwith the certificate issued by

Devsthan Vibhag, Jaipur dated 09/5/2017. As per the said certificate, the

assessee charitable Trust was stated to have been registered as a Public

Charitable Trust in the year 1988. The ld AR of the assessee has produced

the original Trust Deed before us for verification and we find that the

original Trust Deed was duly registered with Devsthan Vibhag, Jaipur and

copy of the said registered deed has been filed by the assessee. Once the

assessee has filed the copy of the registered Trust Deed then there was no

scope of doubt on the genuineness of the Trust Deed. The assessee also

produced translated copy in Hindi of the Trust Deed. Even otherwise the

ld. CIT(E) has also discussed the objects and clauses of the Trust Deed,

ITA 504/JP/2018_ 10 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

therefore, it was not the case that the ld. CIT(E) has not gone through the

Trust Deed but only a technical objection was raised by the ld. CIT(E) for

non-production of original Trust Deed. After going through the documents

produced by the assessee as well as original Trust Deed by the ld. AR

before us, we find that the assessee has filed a true copy of the Trust

Deed. Therefore, the first objection of the ld. CIT(E) has been satisfied by

the assessee by producing the original Trust Deed before us.

(ii) The second objection of the ld. CIT(E) is regarding absence of

dissolution clause in the Trust Deed. Though, the ld. CIT(E) has not raised

any doubt about the charitable nature of objects but due to non-

production of the original document and the absence of dissolution clause

in the Trust Deed, the registration was denied without even holding that

the activity of the assessee Trust are not genuine. The ld AR of the

assessee has relied upon the decisions on the point and we find that the

Hon’ble Gujarat High Court in the case of CIT Vs. Tapagachha Sangh Mota

(surpa) have considered this issue in paras 9 to 12 as under: “9. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that the First Authority-Commissioner refused the registration certificate under Section 12AA of the Act solely on the ground that in the trust deed there is no "dissolution clause" and / or any provision in the event of dissolution and / or closure of the Trust. Meaning thereby, the First Authority-Commissioner doubted the genuineness and/or bona fide of the trust and therefore, denied the registration certificate under Section 12 AA of the Act. That on an appeal, learned Tribunal has allowed the appeals preferred by the assessee and has directed the Commissioner to issue the registration certificate under

ITA 504/JP/2018_ 11 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

Section 12 AA of the Act to the assessee trust solely relying upon the decision of the Coordinate Bench in the case of Chargam Dasha Porwad Mahamandal (supra). That the decision of the Tribunal in the case of Chargam Dasha Porwad Mahamandal(supra), however has been confirmed by the Division Bench of this Court. However, it is required to be noted that in the case of Chargam Dasha Porwad Mahamandal (supra) in fact there was a dissolution clause. Therefore, as such on facts, learned Tribunal has materially erred in relying upon the decision of the Coordinate Bench in the case of Chargam Dasha Porwad Mahamandal (supra). 10. It is true that while considering the issue of registration certificate under Section 12 AA of the Act, the Commissioner is required to be satisfied himself about the objects of the trust or institution and the genuineness of its activities and after satisfying himself about the objects of the trust or institution and the genuineness of its activities may pass an order in writing registering the trust or institution and grant the registration certificate under Section 12 AA of the Act. 11. As observed herein above, the Commissioner had refused the registration certificate under Section 12 AA of the Act to the assessee trust solely on the ground that trust deed do not provide any "dissolution clause" and / or any provision for distribution of the properties in the event of closure / dissolution of the trust and thereby doubting the bona fides and genuineness of the trust. However, it is the case on behalf of assessee trusts that the Trust are in existence / prior to 1965 and in fact was regularly filing his return of income since, many year even claiming exemption under Section 12 AA of the Act and same has been considered by the AO and at no point of time they have doubted genuineness and / or bona fide of the assessee trust. Therefore, it is the case on behalf of the assessee trust that they are entitled to registration certificate under Section 12 AA of the Act. 12. From the orders passed by the Commissioner refusing to grant registration certificate under Section 12 AA of the Act and even from the order passed by the learned Tribunal, it appears that none of the authorities belows have considered the above material and relevant aspect with respect to the satisfaction of the Commissioner with respect to genuineness of the trust. In a given case even in absence of any provision in the trust with respect to "dissolution clause" if on facts the trust is found to be genuine and/or genuineness of the trust is established, the trust may be entitled to registration under Section 12 AA of the Act, however subject to fulfillment of conditions under Section 12 AA of the Act i.e. when the Commissioner is satisfied about the genuineness of the activities of the trust or the institution. As observed herein above, both the Commissioner as well as learned Tribunal have not addressed themselves on the aforesaid relevant aspect, we are of the opinion that matters are required to be remitted back to the file of the Commissioner and remanded to the learned Commissioner to consider the issue /grant of registration certificate under

ITA 504/JP/2018_ 12 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

Section 12 AA of the Act afresh in accordance with law and on merits and to consider the genuineness of the trust / institution / genuineness of the activities of the trust after giving an opportunity to the trust to make submissions and / or produce on record any material in respect of their case that there is no reason to doubt the genuineness of the activities of the trust. Therefore, if the other conditions as provided U/s 12AA of the Act are

satisfied then the registration cannot be denied merely because of absence

of the dissolution clause in the Trust Deed because there are adequate

safeguards of the Trust property even in case of closure of the activity of

the Trust as per the provisions of Indian Trust Act as well as Rajasthan

Public Trust Act, 1959. Other than the dissolution clause we find that the

Trust Deed provides irrevocable nature of the Trust and therefore, in the

event of dissolution or closure of the activity, the provisions of the Indian

Trust Act and Rajasthan Public Trust Act, 1959 will take care of the

situation. The Coordinate Bench of the Tribunal in the case of Sidha Sthan

Shri Kapaleshwar Mahadev Sanyas Ashram Trust Vs. CIT(E) (supra) has

also considered this issue in para 12 to 14 as under:

“12. We have heard the rival contentions and perused the material available on record. Firstly, the tests which are germane and are to be satisfied before the grant of registration u/s 12AA of the Act are the objects of the trust whether charitable or not and secondly, the genuineness of activities of the assessee trust. The Id CIT(E) has not recorded any adverse finding or dissatisfaction about the objects and the genuineness of activities of the assessee trust. Hence, there is no dispute regarding the objects and the genuineness of activities of the assessee trust.

ITA 504/JP/2018_ 13 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

ITA 504/JP/2018_ 14 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E)

the trust is a irrevocable trust or not, and whether the assessee trust is registered with the Devsthan Vibhag and the consequences on its dissolution as contented by the Id AR. We are accordingly setting aside the matter to file of the Id. CIT(E) to examine the above said contentions of the Id AR and where the same is found to be correct, grant the necessary registration u/s 12AA of the Act.”

Therefore, absence of the dissolution clauses in the Trust Deed alone

cannot be a ground for rejection if the other conditions as provided U/s

12AA of the Act are satisfied.

(iii) The next objection is regarding the discrepancy in the name

of the assessee as per the Form No. 10A and registration certificate issued

by the Devsthan Vibhag, Jaipur which did not match with the name

mentioned in the PAN of the assessee. We find that the assessee has

subsequently got the name corrected in the PAN and the copy of the PAN

reissued by the department has been filed before us. As in the reissued

PAN, the name of the assessee Trust is now matching with the name given

in the registration document, therefore, this objection of the ld. CIT(E)

stand satisfied.

(iv) The next objection is regarding non-production of final

accounts for the F.Y. 2016-17. The assessee has brought to our notice a

letter dated 12/3/2018 whereby the assessee produced the copy of the

final accounts for the F.Y. 2016-17, however, since the impugned order

ITA 504/JP/2018_ 15 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E) was passed on the same day, therefore, the ld. CIT(E) could not consider

these accounts produced by the assessee. Hence, we find that now the

assessee has made compliance of the queries raised by the ld. CIT(E).

Since the final accounts for the F.Y. 2016-17 were not examined by the ld.

CIT(E) before passing the impugned order and all other objections raised

by the ld. CIT(E) are also now complied with/satisfied by the assessee,

therefore, the matter requires to be reconsidered in the light of the above

observation as well as the decisions relied upon by the ld AR of the

assessee. Accordingly, we set aside the impugned order of the ld. CIT(E)

and remit the matter back to the record of the ld. CIT(E) for deciding the

application for registration U/s 12AA of the Act in the light of the above

observation as well as after considering the final accounts for the F.Y.

2016-17. Needless to say the assessee be given reasonable opportunity of

hearing.

purposes only.

Order pronounced in the open court on 06th March, 2019.

Sd/- Sd/- ¼jes'k lh 'kekZ½ ¼fot; iky jko½ (RAMESH C SHARMA) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 06th March, 2019

ITA 504/JP/2018_ 16 Shri Sukh Lal Rathi Charitable Trust Vs. CIT(E) *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Sukh Lal Rathi Charitable Trust, Jaipur. 1. izR;FkhZ@ The Respondent- The CIT(E), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 504/JP/2018) 6. vkns'kkuqlkj@ By order,

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