Principal Commissioner Of Income Tax 1 vs. Essarjee Education Society

ITA-175-2016 (1) THE HIGH COURT OF MADHYA PRADESH: JABALPUR (Division Bench) ITA No. 175/2016 Principal Commissioner of Income Tax-1 …..............Appellant Bhopal Vs. Essarjee Education Society …........ Respondent ------------------------------------------------------------------------------------------- Coram: Hon’ble Shri Justice Ajay Kumar Mittal, Chief Justice Hon’ble Shri Justice Vijay Kumar Shukla, Judge ------------------------------------------------------------------------------------------- Appearance: Shri Kunal Dube, Advocate appears for Shri Sanjay Lal, Advocate for the appellant/Department. None appears for the respondent though served. ------------------------------------------------------------------------------------------- JUDGMENT (Oral) [08.01.2020] Per: Ajay Kumar Mittal, CJ This appeal has been filed by the Revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 19.5.2016 (Annexure A-2) passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in ITA No.594/Ind/2014 (Assessment Year 2014-15), whereby the appeal filed by the respondent-assessee against the order of the Commissioner of Income Tax (for brevity “the CIT”) was allowed and the assessee was held to be entitled to registration under Section 12AA of the Act. 2. The appeal was admitted on 21.06.2017 for determination of the following substantial question of law:- ITA-175-2016 (2) “Whether the ITAT was justified in issuing a direction to the Commissioner Income Tax to issue a registration certificate contemplated under Section 12AA of the Income Tax Act?” 3. Briefly stated, the facts necessary for adjudication of the instant appeal, as narrated in the memo of appeal, are that the assessee moved an application before the appellant on 15.1.2014 seeking registration under Section 12AA of the Act, which was rejected vide order dated 24.7.2014 (Annexure A-1) for the reason that the assessee had failed to produce the details and evidence regarding the nature and genuineness of its activities. Feeling aggrieved, the assessee filed an appeal before the Tribunal. The learned Tribunal vide order impugned herein, allowed the appeal and directed the appellant to grant registration under Section 12AA of the Act. Hence, the present appeal. 4. Learned counsel for the appellant-Revenue submitted that the Tribunal while passing the impugned order has grossly erred in relying upon the order dated 10.12.2010 passed by the Assessing Officer under Section 143(3) of the Act which pertains to returned income of the assessee for the assessment year 2008-09 whereas while verifying the genuineness of the objects and activities of the assessee on receipt of the application from the assessee, the Assessing Officer was not satisfied and had submitted its report to the contrary. Thereafter, due opportunity was given to the assessee but he could not submit sufficient proof/documents of charitable activities, therefore, rightly the registration was denied by the CIT. Under the provisions of Section 12AA of the Act satisfaction of the CIT is must as also the genuineness of the activities of the institution is necessary to be verified while considering the application for registration. Further, the Tribunal has ITA-175-2016 (3) erred in law in entertaining the application filed by the assessee for registration rather the matter was to be remanded to the CIT for reconsideration. It is, therefore, prayed that this appeal may be allowed and the order passed by the Tribunal be set aside. 5. We have heard learned counsel for the appellant and perused the impugned order. 6. The learned Tribunal while dealing with the objections taken by the appellant-CIT has noticed that the assessee-Society is running an educational institution formed for the educational purposes. The object of the assessee is to provide educational and other help to the poor children. It is already registered with the Registrar of Societies under the M.P. Society Registration Act, 1973 and engaged in the activities of promoting education and to establish educational institutions. The Tribunal has held that the appellant while considering the application for registration under Section 12AA of the Act was only required to see that the objects of the assessee were charitable in nature and its activities were genuine at the time of granting registration. The findings recorded by the Tribunal read thus:- “6. We have heard both the sides. The assessee is a registered society. The Assessing Officer himself has noted in the order u/s 143(3) of the Act for the assessment year 2008-09 dated 10.2.2010 that the society is running an educational institution established solely for education purposes. The assessee submitted relevant documents before the authorities below. The learned Commissioner of Income tax has not found any defect in the same and simply rejected them without any basis. The aims and objects were not found uncharitable and non-genuine. The assessee has also duly submitted all the required information before the Assessing Officer during the course of assessment proceedings u/s 143(3) of the Act. The Assessing Officer has mentioned in his order that the assessee ITA-175-2016 (4) society is registered with the Registrar of Societies vide Certificate No.8944 dated 28.2.2001. The society is running an educational institution established solely for the purpose of education. The main object of the society is distribution of educational books and toys to poor children as also distribution of tri-cycles to handicapped children. We also find that during the course of assessment proceedings the Assessing Officer asked the assessee to produce cash book and ledger along with bills and vouchers of certain expenses claimed in income and expenditure account which was duly submitted by the assessee. In the registration proceedings also, the assessee submitted all the relevant books of accounts and information. The Addl. CIT's report against the assessee's registration is without any specific charge. The assessee society is genuinely registered for education purposes. These facts are sufficient to hold that the assessee is entitled to registration u/s 12A of the Act. We, therefore, direct the learned Commissioner of Income Tax to grant registration u/s 12A of the Act.” 7. We find no reason to differ with the findings recorded by the learned Tribunal. There was material before the learned Tribunal to hold the entitlement of the assessee to grant of registration under Section 12AA of the Act. There is no dispute that the assessee is registered under the Societies Act and is engaged in imparting education, which is undoubtedly a charitable activity. It is not the case of the appellant that the previous order dated 10.12.2010 of the Assessing Officer whereby on being satisfied with the aims and objects of the assessee the returned income of the assessee was accepted under Section 143(3) of the Act was illegal in any manner and therefore, could not have been relied upon. So far as the contention of the learned counsel that instead of directing for grant of registration under Section 12AA of the Act, the matter should have been remanded to the CIT for fresh consideration, is only in the realm of submission. In our considered view, once the assessee was found to be entitled to grant of registration ITA-175-2016 (5) under Section 12AA of the Act, the learned Tribunal has not committed any error in directing the CIT to grant registration. Thus, the order passed by the learned Tribunal is in accordance with law. 8. No illegality or perversity has been pointed out by learned counsel for the Revenue in the aforesaid findings recorded by the Tribunal which may warrant interference by this Court. In view of the above, the substantial question of law is answered in favour of the assessee and against the Revenue. Consequently, finding no merit in the appeal, the same is hereby dismissed. (Ajay Kumar Mittal) (Vijay Kumar Shukla)

Chief Justice Judge S/ Digitally signed by SACHIN CHAUDHARY Date: 2020.02.11 16:23:40 +05'30'