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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. N. K. CHOUDHRY & SH. O. P. MEENA
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. K. CHOUDHRY, JUDICIAL MEMBER AND SH. O. P. MEENA ACCOUNTANT MEMBER I.T.A. No. 579/Asr/2018 Assessment Year:
Sunrise Educational Society, vs. CIT (Exemptions), Chandigarh VPO Mananhana, Garhshanker, Hoshiarpur [PAN: AANAS 8872Q] (Appellant) (Respondent)
Appellant by : Sh. Surinder Mahajan (C.A.) Respondent by: Sh. Alok Kumar CIT-DR Date of Hearing: 16.12.2019 Date of Pronouncement: 18.12.2019
ORDER Per O. P. Meena, AM: This appeal filed by the Assessee is directed against the order of learned Commissioner of Income Tax (Exemptions), Chandigarh (in short “CIT(E)”) dated 29.09.2018 passed u/s 12AA(1)(b)(ii) of the I.T. Act, 1961 (in short I.T. Act).
Ground no. 1 and 2 states that on the facts and circumstances of the case, the Ld. CIT(Exemptions) has erred in law and on facts in rejecting the application u/s 12AA(1)(b)(ii) of the Act which is wholly against the law and on facts, hence the registration should have been granted.
Succinctly facts of the case are that the assessee is a educational society with the object to provide good education to the children, to train the children with a
2 ITA No. 579/Asr/2018 (AY ) Sunrise Educational Society v. CIT(E) view of making them good citizens of the Republic of India, to develop body and mind of the children by participating in games and other co-curricular activities, to train them to make India free from caste, creed, drug and other ill-mannered customs.
The assessee trust filed an application for registration u/s 12A of the on 29.03.2018 before CIT(E) Chandigarh. The CIT(E) has referred the provisions of section 12AA and observed that there are two basic conditions for grant of registration u/s 12AA. The same include, apart from the examination of objects of the society, satisfaction of the competent authority in respect of genuineness of activities as well particularly when the applicant is an ongoing entity. Therefore CIT vide letter dated 26.07.2018 has asked the assessee to furnish various details covering from point no. (i) to (xxiv) fixing the case for hearing of 16.08.2018, however an email was received for adjournment which was granted for 06.09.2018. Further queries were raised on 22.09.2018 and sent through email to the assessee and which reply was filed on 24.09.2018. After perusal of the reply of the assessee, the CIT(E) exempt noted that the application has not provided the details asked in the additional queries. The applicant was asked to provide the details of voluntary contribution of Rs.12,85,000/-, copy of account of capital bank loan along with the copy of agreement, copy of account & copy of ITRs of the persons who have unsecured loans, salary structure along with names and qualification of the teachers but the application has not provided any details regarding the information called for. The applicant was specifically asked that whether the applicant’s case has been earlier approved/rejected u/s 10(23C)(vi) of the IT Act, 1961 but in response to which the applicant has replied “that this is the first time the assessee has applied for registration u/s 12AA”. Therefore in the absence of responses/direct clarifications, the genuineness of the activities carried
3 ITA No. 579/Asr/2018 (AY ) Sunrise Educational Society v. CIT(E) out by the applicant get impugned. Therefore CIT(E) observed that the onus lies on them to provide all relevant information but in absence of specific response to the queries raised the presumptions inherent therein the genuineness of the activities of the society cannot be ascertained. Accordingly, the application filed in Form no. 10A for registration u/s 12AA of the Act was rejected.
Being aggrieved the assessee applicant filed this appeal before the tribunal. The Ld. counsel for the assessee submitted that the assessee trust has complied the requirement by filing the details by letter dated 24.09.2018 placed at paper book page 4-5 which was sent through e-mail of which copies placed of paper book page no. 44. The assessee has filed details of constitution and rules of Sunrise Educational Society which are placed at paper book page 3 to19. The reply to first questioners was filed on 10.09.2018 which are placed at paper book page 1 to 14 with reference to additional queries. The assessee filed his replies which are placed at paper book page 44 and 45, however due to some technical error there could not be undoubted. The annexure to the reply were not attached to the e-mail dated 25.09.2018 sent by the assessee. It is pertinent to mention that while the letter specifies that the details are attached herewith, however, the same were not attached that the e-mail due to some technical error. However subsequently while e-mail dated 28.09.2018, the assessee provided bills for additions to fixed assets (PB pg. 47 and 47). However, without raising any further queries, the CIT(E) has rejected the application without informing the assessee that attachment to the e- mail dated 25.09.2018 has not been receipted. Therefore this is the only reason for rejecting of assessee’s application of non-submission of certain documents/information which are not relevant for ascertaining the genuineness of the activities of the society. It is a settled principle of law that for the purpose of grant of registration u/s 12AA, powers of Ld. CIT are limited to examination as to
4 ITA No. 579/Asr/2018 (AY ) Sunrise Educational Society v. CIT(E) whether the objects of the society are charitable in nature and examination of genuineness of the activities of the assessees are not necessary at this object and support of this submission. The Ld counsel has placed reliance on the following decisions:
“a. CIT vs. SHIRDI SAI DARBAR CHARITABLE TRUST (DHARAMSHALA) (2017) 395 ITR 0567 (P&H) b. DHARMA SANSTHAPAK SANGH (NIYAS) vs. CIT (2008) 13 DTR 0589, (2008) 118 TTJ 0823 c. GREEN ACRES EDUCATIONAL TRUST vs. DY CIT (2016) 182 TTJ 0537 (Mumbai) d. GLOBAL ACADEMY OF EMERGENCY MEDICINE vs. CIT (EXEMPTION) (2018) 31 CCH 0531 Del Trib e. LORD SHIVA EDUCATIONAL WELFARE SOCIETY vs. CIT (EXEMPTION) (2018) 72 ITD 0429 ((Amritsar-Trib)”
In view of above, the Ld counsel contended that the statutory requirement for registration u/s 12AA of the Act were submitted to Ld. CIT(E), however just because the assessee did not provided certain details since the attachment with the e-mail could not be sent, it cannot be the ground for rejection of application for which the Ld. counsel has placed relying on the decision of Hon’ble Allahabad High Court in the case of City Motessori School v. Union of India [2009] 225 CTR 188.
Per contra the learned CIT-DR supported the order of the CIT(E).
We have heard the rival submissions and perused the material available on record. We find that the Ld. CIT(E) has denied the registration u/s 12AA of the Act as the applicant trust could not furnish certain details due to non submitting attachment with the e-mail sent by the applicant on 25.09.2018. The trust was constituted by the indenting and was registered under the Societies Act. Since the
5 ITA No. 579/Asr/2018 (AY ) Sunrise Educational Society v. CIT(E) trust has not complied with certain details due to non-attachment of the details with the e-mail sent by the trust. However, in our opinion, it is premature to decide to conclude that the trust has not carried out in charitable activities. As such, it is a settled law that the denial of registration u/s 12AA of the Act is not proper on non- submissions of certain information though activities of the trust are charitable activities. The CIT(E) cannot examine the objects of the trust which is at premature stage. The Ld. counsel has placed reliance on the decision of CIT v. Shirdi Sai Darbar Charitable Trust (Dharamshala) [2017] 395 ITR 567 (P&H). Wherein the Hon’ble High Court has held that while granting registration u/s 12AA of the Act. Conditions as provided in section 14 are elsewhere are to be seen the Assessing Officer, at the time of assessment proceedings on early basis and not by the CIT(E) while granting registration u/s 12A of the Act. While granting registration u/s 12A of the Act, the only requirement as stated are with respect to the charitable nature of the object of the assessees and the genuineness of the activities. The Ld. counsel also placed reliance on various case laws as mentioned above which also supports its case. In view of these facts, we find that the registration of trust u/s 12AA does not involve enquiry into the actual activities or application of the funds etc. Therefore, at this stage the only enquiry required to be conducted was with respect to the object of the trust alone. The details called for by the CIT(E) pertained to the matters that may be examined at the stage of the assessment. At this stage, if the assessee were to be found to have actually engaged in non charitable activity. The benefit of exemption may be denied at this stage in the manner provided by the Act. In the light of above facts and circumstances, we are of the considered opinion that the matter for registration u/s 12AA should be set aside to file of the CIT(E) for examination of the basic facts and passed a fresh order. In the light of the details filed by the assessee and the ratio laid down in the aforesaid decisions of the
6 ITA No. 579/Asr/2018 (AY ) Sunrise Educational Society v. CIT(E) Hon’ble jurisdictional High Court. This appeal is therefore allowed and set aside for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on December 18, 2019
Sd/- Sd/- (N. K. Choudhry) (O. P. Meena) Judicial Member Accountant Member Date: 18.12.2019 /GP/Sr. Ps. Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals), (4) The CIT concerned (5) The Sr. DR, I.T.A.T.