C.I.T.BIKANER vs. GOPI RAM GOYAL CHARITABLE TRUST

This appeal is directed against order dated 12.6.09 of Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur, whereby an appeal preferred by the assessee-Gopi Ram Goyal Charitable Trust against the order dated 17.4.08 passed by the Commissioner of Income Tax (CIT), Bikaner, rejecting the application preferred by the assessee under Section 12A of the Income Tax Act, 1961 ( for short “the Act”), has been allowed.

Learned counsel for the appellant submitted that after due consideration of the material on record, the CIT, Bikaner had arrived at a categorical finding that the objects of the assessee trust and its activities are not genuine and thus, the application preferred by the assessee seeking registration under Section 12A was rightly rejected. Learned counsel would submit that for the year ending on 3.3.03, the assessee had shown addition of Rs.11,18,251/- during the year out of which Rs.11,00,000/- have been shown as FDR with the bank but it was not clear that whether fund was deposited as per requirement of Section 11(5) of the Act. Learned counsel submitted that issue of corpus fund donation was not proved by the assessee by producing any evidence on record hence, the assessee could not have claimed that it has applied its income to the extent of 85%. Learned counsel would submit that the assessee having failed to reply the specific queries made by the CIT, the conclusion drawn that there is absence of charitable activities cannot be faulted with. Learned counsel would submit that ignoring the findings arrived at by the CIT, the ITAT while setting aside the order passed by the CIT, has seriously erred in directing to issue registration to the assessee under Section 12A.

On the other hand, the counsel appearing for the respondent assessee submitted that as per the mandate of the provisions of sub-section (2) of Section 12AA, the CIT was under an obligation to pass an order granting or refusing registration before the expiry of six months from the ends of the month in which the application was received under clause (a) of sub- section (1) of Section 12A of the Act and thus, the CIT having failed to dispose of the application within the stipulated period, the ITAT was justified in holding that failure to do so will amount to deem that the registration is granted. Learned counsel submitted that a bare perusal of the order passed by the CIT reveals that the finding arrived at regarding the objects mentioned in the trust deed being non genuine was absolutely perverse. Learned counsel submitted that while considering the application under Section 12A, the CIT entered into enquiry as if he was examining the entitlement of the assessee for exemption under Section 11 of the Act. Learned counsel submitted that the order impugned passed by the ITAT does not give rise to any substantial question of law and thus, the appeal deserves to be dismissed.

We have considered the rival submissions and perused the material on record.

As per Section 12 AA (1) (b) of the Act, the registration shall be granted by the Commissioner on being satisfied about the objects of the trust or institution and genuineness of its activities. Undoubtedly, for claiming exemption under Section 11 & 12 of the Act, the registration under Section 12A is condition precedent but, the registration under Section 12A by itself does not make a trust or institution entitled to claim exemption under Section 11 & 12 of the Act unless, the requirement for claiming exemption as envisaged under Section 11 & 12 of the Act. In the considered opinion of this court, the scope of the enquiry under Section 12A for the purpose of grant of registration as envisaged under Section 12AA by the Commissioner shall be confined with regard to the objects of the trust or institution and genuineness of its activities and therefore, it cannot travel to the extent that whether the income of the trust from the property is wholly applied for the charitable purposes or not so as to make them entitle to claim exemption under Section 11 & 12 of the Act.

A bare perusal of the order passed by the CIT makes it abundantly clear that it has transgressed its juri iction while considering the application preferred by the assessee under Section 12A of the Act. The CIT has proceeded to record the finding without any reasonable basis that it is not proved that the assessee has applied 85% of its income during the year 2002-03 towards the objects of the trust and the same have been accumulated or set apart. The ITAT has rightly observed that it was nowhere found by the CIT that the objects mentioned in the trust deed are not charitable or non genuine. It is pertinent to note that on the application of the assessee, the CIT had received a report from the Income Tax Officer concerned through Joint Commissioner of Income Tax concerned, but did not pass any order on the application of the assessee for the registration and therefore, the assessee had to approach this court for appropriate relief and after the directions being issued by this court, the application of the assessee was considered by the CIT. It is a matter of record that after perusing the report of the Income Tax Officer, documents and information filed by the assessee, the JCIT being satisfied about the genuineness of the objects and the activities of the assessee, forwarded the report to CIT, Bikaner vide letter dated 19.6.03, however, the CIT did not choose to pass any order accepting or rejecting the application for registration within the stipulated period and during the pendency of the application, a notice under Section 148 for the assessment year 2004-05 was issued to the assessee. When the assessee reminded CIT about the pendency of the application, the CIT again directed for report to JCIT vide letter dated 1.8.07, which was responded to by the JCIT vide letter dated 13.8.07 stating that the requisite report has already been sent to the office of CIT, Bikaner. The said letter was accompanied by copy of the report dated 19.6. 03. Strangely enough, while deciding the application of the assessee under Section 12A, the CIT has not even cared to take into consideration the report submitted by the JCIT as aforesaid. Thus, the ITAT has rightly arrived at the finding that the CIT was bent upon to dispose of the application of the assessee for registration without considering such report.

A bare perusal of the order passed by the ITAT reveals that entire factual and legal position has been examined by the ITAT threadbare. After due examination of material on record, having been satisfied about the genuineness of the objects and activities of the assessee trust, the ITAT has committed no error in granting the application for registration preferred by the appellant under Section 12A of the Act.

The Revenue has not raised the question regarding the deemed registration on failure on the part of the CIT in deciding the application within the stipulated period. That apart, the application of the assessee for registration having been allowed by the ITAT, after due examination on merits, the question with regard to deemed registration does not remain relevant and therefore, this court is not inclined to examine the said question, it is left open.

For the aforementioned reasons, no substantial question of law arises for consideration of this court in the present appeal and therefore, the same is hereby dismissed. (KAILASH CHANDRA SHARMA), J. (SANGEET LODHA),J. Aditya/