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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. 580/Asr/2018 Assessment Year:
Sikh Educational Council, vs. CIT (Exemptions), Chandigarh VPO Mahilpur, Hoshiarpur [PAN: AAGAS 9970E] (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 30.09.2018 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.
The assessee trust filed an application for registration u/s 12A of the on 28.03.2018 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
2 ITA No. 580/Asr/2018 (AY) Sikh Educational Council v. CIT(E) 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 20.09.2018 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:
“7. In response to the additional queries the applicant society submitted the reply through e-mail on 24.09.2018. The applicant society with regards to first query stated that the society was formed on 07.07.1951 and was running a college in the name and style of SGGS Khalsa College since then which was covered under 95% Grant in Aid Scheme of DPI Colleges, Punjab. The applicant society also stated that the Hon'ble Prime Minister of India offered a hence to such non complying assesses through Income Declaration Scheme 2016 to pay certain percentage of tax alongwith interest and penalties and get a relief according from the Income Tax Department for whatever omissions or commissions being done from time to time. We accepted the same and offered our income for assessment years 2009-10 to 2015-16 to tax. Also, the surplus from running of various institutes in the primary source of income of our society earned from various properties being vested in the name of the society. On perusal of the reply it was observed that the applicant society has not filed any Income Tax Returns since its inception. The applicant society declared its income through Income Declaration Scheme 2016 to pay certain percentage of taxes. It is assumed that if the Government doesn't offer Income Declaration Scheme, the applicant society may not come out to declare its undisclosed income. The entity doesn't care about the regulatory processes and the need for adherence to the tax laws. In context to a query regarding registration after a gap of 67 years, the applicant society remained silent. It is further pertinent to mention that the
3 ITA No. 580/Asr/2018 (AY) Sikh Educational Council v. CIT(E) applicant society is seeking registration after a long gap of 67 years and only details of the present members of the society have been furnished. It is difficult to ascertain how the management and composition of the governing body of the society have evolved over 67 years and whether the same adhere to the requirements of the Society's Registration Act. Moreover, the contention of applicant for seeking registration after 67 years is not acceptable also since the normal meaning accorded to the word registration in other Acts means at the initial stage or incipient stage.”
On perusal, the CIT(E) observed that in absence of dissolution clause, the presumption of law in that 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 for registration in Form no. 10A for registration u/s 12AA of the Act was rejected.
Being aggrieved the applicant filed this appeal before this tribunal. The Ld. counsel submitted that the assessee made application for registration of society after gap of 57 of years. Therefore the first reason for denial of the registration u/s 12AA of the Act i.e. making application was submitted after 67 years since formation of the society. The counsel contended that there is no provisions in section 12AA which bars the assessee for making an application for registration u/s 12AA of the Act in any year in support of the contention. The Ld. counsel has placed reliance on the decision is as under:
“a) GURU NANAK EDUCATIONAL BOARD VPO DHESIAN SANG, TEHSIL PHILLAUR VS CITITA NO. 188/ASR/2018
b) CIT VS ADVAIT SWAROOP ASHRAM SOCIETY 211 TAXMAN 311/ALL HC”
4 ITA No. 580/Asr/2018 (AY) Sikh Educational Council v. CIT(E) The Ld. Counsel further submitted that it is a settled principle of law that for the purpose of grant of registration u/s 12AA. The CIT(E) is to examine whether the objects of the assessee are charitable in nature and examination of the genuineness of the activities for which the assessees counsel has relied on the following case laws:
“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.
The Ld counsel further submitted that the assessee declared an income under declaration scheme does not mean that the activities of the assessee are not genuine and are not charitable in nature. It was further submitted that the utilization of fund in the event of dissolution of the society is an event which are yet to take place, hence, if at all absence of dissolution clause is considered as a defects. Such defect
5 ITA No. 580/Asr/2018 (AY) Sikh Educational Council v. CIT(E) is curable one for which reliance was placed on the decision of St. Kabir Educational Society v. CBDT [2014] 366 ITR 378 (P&H). It was further submitted that the assessee is in process of including the clauses pertaining to dissolution and the beneficiaries in the MOA.
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 application has been made after 67 years, however we are of the considered opinion that there is no bar in section 12AA for making application of registration u/s 12AA of the Act in any year. The trust was constituted by the indenting and was registered under the Societies Act. 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 by 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
6 ITA No. 580/Asr/2018 (AY) Sikh Educational Council v. CIT(E) 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. We find that the assessee has now included the clauses pertaining to dissolution and beneficiaries in the MOA. In the light of above facts and circumstances, we are of the considered opinion that the matter of registration u/s 12AA should be set aside to file of the CIT(E) for examination the basic facts and pass a fresh order, in the light of the details failed by the assessee and the ratio laid down in the aforesaid decisions of the 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.