SPARSH SANSTHAN PUSHKAR vs. CIT(EXEMPTIONS), JAIPUR

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ITA 987/JPR/2016Status: DisposedITAT Jaipur16 May 20186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee should be granted one more opportunity to produce the original record, books of accounts, and vouchers before the Commissioner of Income-tax (Exemptions). The Tribunal noted that the CIT(E) had not raised any objection regarding the charitable nature of the assessee's objects. The rejection was based on the inability to verify the genuineness of the activities due to the non-production of original documents. The Tribunal found that the assessee could not avail the opportunity to produce original records because a notice was not received in time. Therefore, the impugned order under Section 12AA was set aside, and the matter was remitted to the CIT(E) for fresh adjudication after providing one more opportunity to the assessee. Consequently, the order under Section 80G, being consequential, was also set aside and remanded on similar terms. The ratio decidendi is that a reasonable opportunity must be provided for verification of genuineness of activities, and if a procedural lapse prevents compliance, a further opportunity may be granted.

What were the facts?

The assessee, M/s. Sparsh Institution, filed applications for registration under Section 12AA and approval under Section 80G of the Income Tax Act, 1961. The Commissioner of Income-tax (Exemptions), Jaipur, rejected both applications by separate orders dated 7 September 2016. The assessee appealed these orders. The primary reason for rejection was the failure to produce original documents and books of accounts for verification, despite the CIT(E) issuing notices. The assessee contended that one notice was not received in time, preventing them from producing the required documents. They requested one more opportunity to comply. The revenue argued that two opportunities had already been provided, and the assessee failed to produce the material.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemptions) erred in rejecting the assessee's application for registration under Section 12AA of the Income Tax Act, 1961, when the trust was formed for wholly charitable purposes as specified under Section 2(15), and the assessee was not afforded sufficient opportunity to produce original documents for verification. Assessee's Contention: The assessee argued that the rejection was erroneous as the trust's objects are charitable. They claimed that a notice from the CIT(E) was not received in time, preventing them from producing original documents and books of accounts. They requested one more opportunity to comply with the CIT(E)'s directions. Revenue's Contention: The revenue contended that the CIT(E) had already granted two opportunities for the production of requisite details and documents, but the assessee failed to produce the necessary material. They relied on the impugned order of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AA,Section 80G,Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES, JAIPUR

Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM

For Appellant: Shri S.C. Jain (CA)
For Respondent: Smt. Rolly Agarwal (CIT)
Hearing: 15.05.2018Pronounced: 16/05/2018

PER BENCH :

These two appeals by the assessee are directed against two separate orders of ld. CIT (Exemptions), Jaipur both dated 7th September, 2016 passed under

section 12AA(1)(b) and under section 80G(5)(vi) of the IT Act, rejecting the

application of the assessee for registration under section 12AA as well as the

approval of exemption under section 80G of the IT Act respectively. First, we take

up the appeal against the order passed under section 12AA(1)(b) of the Act wherein

the assessee has raised the following grounds :-

“ 1. That the ld. Commissioner of Income Tax (Exemptions), Jaipur has erred in law and the facts in rejection the Registration under

2 ITA Nos. 986 & 987/JP/2016 M/s. Sparsh Institution, Ajmer.

section 12AA and the registration to be granted as the trust has been formed as per Certificate of Registration issued by the Registrar of Societies, Ajmer dated 17.03.2015 for wholly charitable purposes in F.Y. 2014-15 specified u/s 2(15) of the Act.

2.

That the ld. Commissioner of Income Tax (Exemptions), Jaipur was provided with all the details and papers, but for the reason of non verification from the originals, Registration was rejected by allowing only one opportunity.

3.

The Appellant craves to add, alter or amend all or any of the grounds of appeal on or before the hearing.”

2.

The ld. A/R of the assessee has submitted that the ld. CIT (Exemptions) has

rejected the application on the ground that the assessee has not produced the

details/documents in support of its claim for registration under section 12AA of the

IT Act. He has pointed out that the CIT (Exemptions) has asked the assessee vide

letter dated 11.8.2016 to produce the original documents for verification and books

of accounts along with vouchers. However, the said notice was not received by the

assessee in time and, therefore, the assessee could not produce the requisite

documents before the impugned order was passed by the ld. CIT (Exemptions). The

ld. A/R has further pointed out that all the requisite documents in original are ready

with the assessee and the assessee undertakes to file the same if one more

opportunity is granted. Thus the ld. A/R has prayed that the assessee may be given

one more opportunity to comply with the directions of the ld. CIT (E) for production

of the relevant documents/details and books of accounts.

2.1 On the other hand, the ld. D/R has objected to the prayer of the assessee and

submitted that the ld. CIT (E) has already afforded two opportunities to the assessee

3 ITA Nos. 986 & 987/JP/2016 M/s. Sparsh Institution, Ajmer.

for production of requisite details/documents and books of accounts along with

vouchers. However, the assessee has failed to produce the requisite material. She

has relied upon the impugned order of the ld. CIT (E).

3.

Having considered the rival submissions as well as the relevant material on

record, we find that the assessee filed an application in Form No. 10A seeking

registration under section 12AA of the IT Act on 16.03.2016. The ld. CIT (E) issued a notice dated 28th July, 2016 requiring the assessee to submit certain documents/explanations by 8th August, 2016. In response to the said notice, the ld.

A/R of the assessee filed the written reply. The ld. CIT (E) then issued another notice dated 11th September, 2016 and asked the assessee to produce original

documents for verification and books of accounts along with vouchers. Thus it is

clear that the second notice issued by the ld. CIT (E) to verify the records filed by

the assessee from the original documents and books of accounts along with

vouchers. Since the assessee could not produce the requisite document/details,

therefore, the application of the assessee was rejected by the ld. CIT (E) on the

ground that despite the opportunities provided to the assessee/applicant to produce

the details/documents in support of its claim, the assessee has failed to do so. There

is no quarrel that at the time of granting the registration, the Competent Authority

has to examine the objects of the Trust/Institution whether they are charitable in

nature or not, and secondly, the genuineness of the activities of the trust/institution

in the context whether the activities carried out by the assessee are for achieving

the objects which are charitable in nature. As far as the first requirement of

charitable nature of the objects of the assessee society is concerned, the ld. CIT (E)

4 ITA Nos. 986 & 987/JP/2016 M/s. Sparsh Institution, Ajmer.

has not raised any objection. However, in order to verify the genuineness of the

activities of the assessee, the ld. CIT (E) wanted to examine the original documents,

books of accounts and vouchers. It is not the case of the CIT (E) that the assessee

has not produced the documents/records along with the application, but the original

record was asked to verify the same. Therefore, we find that when only one

opportunity was given to the assessee to produce the original record and which

could not be availed by the assessee due to the reason of not receiving the notice

well in time, hence we are of the considered view that the assessee be given one

more opportunity to comply with the directions of the ld. CIT (E) to produce the

original record, books of account and vouchers. Accordingly, we set aside the

impugned order and remit the matter to the record of the ld. CIT (E) for

consideration and adjudication of the same afresh after giving one more opportunity

to the assessee for production of the requisite original documents/books of accounts

and vouchers. The ld. A/R of the assessee has also undertaken to produce all the

requisite record/documents and books of accounts before the ld. CIT (E). Needless

to say the assessee be given an opportunity of hearing before passing the order

afresh.

ITA NO. 987/JP/2016 :

4.

This appeal is against the order passed under section 80G(5)(vi)of the Act.

Since this order is consequential to the order passed under section 12AA of the IT

Act, accordingly in view of our finding in the appeal against the order passed under

5 ITA Nos. 986 & 987/JP/2016 M/s. Sparsh Institution, Ajmer.

section 12AA, the impugned order is set aside and the matter is remanded to the

record of the ld. CIT (Exemptions) on similar terms.

5.

In the result, appeals of the assessee are allowed for statistical purposes.

Order is pronounced in the open court on 16/05/2018.

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Jaipur Dated:- 16/05/2018. Das/

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1.

The Appellant- M/s. Sparsh Institution, Pushkar, Ajmer. 2. The Respondent – The CIT (Exemptions), Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No. 986 & 987/JP/2016) vkns'kkuqlkj@ By order,

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

6 ITA Nos. 986 & 987/JP/2016 M/s. Sparsh Institution, Ajmer.

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