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Income Tax Appellate Tribunal, DELHI BENCH: ‘C’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SH. PRASHANT MAHARISHI
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 25/08/2017 passed by CIT (Exemption).
The grounds of appeal
are as under:-
1. That having regard to the facts and circumstances of the case Ld. CIT(E) has erred in law and on facts in rejecting the registration u/s 12AA(l)(b)(ii) of the Act by observing that activities of the trust are not genuine and has further erred in observing as under:- (a) That the appellant society has not been able to produce the books of accounts for verification of object and activities of the trust. (b) That the appellant had introduced the unaccounted money into the trust income as donation. (c) That the appellant society is not carrying out any activity of charitable nature.
2. That in any view of the matter and in any case, action of Ld. CIT(E) in rejecting the registration under section 12AA(l)(b)(ii) is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing, by recording incorrect facts and findings and the appellant ought to have been granted benefit of registration under the law.”
The Indian Herbs Foundation, Saharanpur, is a Public Charitable Trust. The said charitable trust was formed through Indian Herbs specialities Pvt. Ltd. by executing a written deed dated 15/3/2016. The deed was registered on 29/3/2016. The Foundation filed an application dated 11/2/2107 in Form No. 10A on 17/2/2017 before the Principal Commissioner of Income Tax for its registration. The CIT, Lucknow issued a notice dated 5/7/2017 to the foundation. In response to the notice, Sh. P. K. Verma attended before the CIT, on 10/8/2017 and produced audited books and vouchers for Financial Year 2016-17. The Foundation also filed letters dated 10/8/2017 and 16/8/2017 along with their enclosures thereby answering the queries raised by the CIT (Exemption). The CIT(Exemption) rejected the registration under Section 12A(1) sought by the Foundation vide order dated 25/8/2017. The Foundation also filed an application dated 21/3/2017 to the PCIT for its approval u/s 80G.
Being aggrieved by the order dated 25/8/2017 passed by the CIT(Exemption), the assessee filed appeal before us.
The Ld. AR submitted that the order of the CIT(Exemptions) failed to take into account the nature of the aims and objects of the Foundation and the evidence in support of the activities undertaken in pursuance of the objects.
The Ld. AR further submitted that the CIT(Exemptions) also failed to take into account that donations have been received from identified persons and the application of income has been identified and verifiable. The Ld. AR submitted that all the aims and objects of the foundations are charitable in nature and once the objects are for charitable purposes. The number of the aims and objects becomes immaterial for purposes of Section 2(15) of the Act. The Ld. AR further submitted that in Financial year 2016-17, the Foundation received aggregate donations of Rs. 13,20,400/- the receipt of account has been placed in the paper book. We shows that for cash donations of Rs. 1,100 each were received from Sh. Sunil Kumar Aggarwal, Sh. Sudhakar Aggarwal, Sh. Gaurav Aggarwal and Sh. Vipul Aggarwal, the particulars of these donors in terms of name, address, PAN and designation in the foundation are placed on record. They are Chairman, Vice Chairman, Secretary and Treasuries of the Foundation respectively. The Ld. AR submitted that these details show that the donor company is easily identifiable and its capacity to make donations out of its profit as per the provisions of the Companies Act to promote its CSR Activities. The Ld. AR submitted that the Foundation has made the donations as per the law. Thus, the Ld. AR submitted that the finding of the CIT(Exemption) that the donors are not identifiable and donations have been used as instruments for showing unaccounted money as the receipts of the Foundations are in correct. Thus, the Ld. AR submitted that the CIT(Exemption) has totally ignored the evidence produced before them regarding the application under grant of Registration u/s 12A (1) is not justified.
The Ld. DR submitted that if there are any documents or evidences produced by the assessee, the same is not set out in the order of the CIT(Exemption). The Ld. DR relied upon the order of the CIT(Exemption).
We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the CIT(Exemption) has given a finding that no details were filed by the assessee/applicant establishing that the Foundation is for charitable purpose, but the record shows otherwise. Therefore, we are of the view that the CIT(Exemption) should take into account the cognizance of the evidence and decide the application u/s 12AA of the applicant Foundation/assessee as per law. Needless to say, the applicant be given opportunity of hearing by following principles of natural justice. Therefore, the appeal of the assessee is partly allowed for statistical purpose.