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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’, NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O. P. KANT
ORDER PER O.P. KANT, AM: These two appeals by the assessee are directed against a common order dated 27/04/2018 passed by the Learned Commissioner of Income Tax (Exemptions), New Delhi, rejecting the registration of the assessee trust under section 12AA of the Income Tax Act, 1961 (in short ‘the Act’) and 80G of the Act respectively.
The assessee has raised very detailed and lengthy grounds of appeal
. In grounds are running in 10. Para of legal size pages, which have been further summarised in three pages. The summarised grounds are reproduced as under: “9. To summarize, the appellant hereby raises the following grounds of objection: (i) That on the basis of facts & circumstances of the case, the erred in holding that the existence of trust in the state of Delhi is not established. As the existence of the trust at the address given in application is clearly established by the fact that all the letters sent by O/o CIT(E) are duly delivered at the given address. The O/o CIT(E) accepted the application after thorough scrutiny of documents submitted. Since, no procedure for amendment of trust, enumerated by the Indian Trust Act or the Income Tax Act, the procedure followed by trustees by way of execution of supplementary trust deed & board resolution should be treated as valid. The O/o CIT(E) Lucknow referred the said application to CIT(E), Delhi & no reply has been given by latter. The genuineness of the activities of the appellant trust cannot be regarded as doubtful merely because of any procedural lapses in shifting of its registered office. (ii) That on the basis of facts & circumstances of the case, the CIT(E) has erred in completely ignoring & overlooking the submissions made by the Trust. Most of the grounds of rejection are mere Opinion or assumptions of Hon’ble CIT(E) or in the form of allegations that the main purpose of the Trust is to establish itself as a shadow of crime investigation agency of Government, the activities undertaken by the trust are exclusively in the domain of enforcement agencies or police, the name of the trust resemble to that of any legally authorized Govt. Agency, the trust may create an impression that it is a law enforcing Authority, the applicant is trying to create an impression in general public that they are working as Govt. Agency, the logo of appellant trust resembles with the logo of Police Authorities, the designations created by trust creates a false impression that the applicant is authorized by law to function as a law enforcing authority, the potential of misuse of registration u/s 12AA, even if the same is not actually misused is also to be borne in mind. However, nowhere in the order Hon'ble CIT(E) has stated any instances where the activities carried on by trust are found to be inappropriate, fraudulent & against any law applicable for the time being in force. The Hon'ble CIT(E) grossly ignored the proofs of activities submitted by appellant which are in the form of photographs with various Government officials, appreciation letters from senior Government officials including the offices of Chief Minister & Governor, newspaper articles, bills & vouchers, etc. With utmost respect we wish to state that the activities of the trust should not be declared as not genuine, merely on the basis of assumptions or opinion or suspicion where no contradictory evidence is available on records. (iii) That on the basis of facts & circumstances of the case, the CIT(E) has erred in stating that the objects of crime investigation cannot be categorized as charitable act in the nature of General Public Utility. The intention of the trust is not to work on commercial basis which is proved from the fact that the trust has not received any consideration or reward from the Government but has actually received donation from a large number of persons from society who rely on the activities carried on by the trust. The trust's activities are not only limited to crime investigation but also organizing blood donation camps, distribution of food & clothes, raising voice against corruption & crime, organizing peaceful protest & marches, spreading awareness about the rights & duties among the citizens & creating an environment for cooperation among police officials & public to reduce crime, reporting suspicious activities, etc. All these activities are in the nature of General Public Utility & for the gross benefit of society & each and every person living in it irrespective of their age, caste, religion, color & creed. The activities of the trust are in the nature of General Public Utility & qualify for registration u/s 12AA. (iv) That on the basis of facts & circumstances of the case, the CIT(E) has erred in stating that the appellant trust has not given the true & full disclosure of the expenses incurred by it for carrying on its activities. The cost of website and other expenses incurred by trust are au y accounted for & Income & Expenditure Account & Balance Sheet are duly presented. The contention of Hon'ble CIT(E) that most of the expenses are made in cash & don't inspire confidence is not justifiable as the expenses so incurred in cash were not substantial but petty in nature & since the expenses were incurred on activities which are undertaken in different parts of the country, it is not possible for the appellant to have a bank account in each & every such state & also having regard to the amount paid, it was practically not possible to make payments by way of any mode other than cash. All the expenses which were actually incurred are accounted for & the trust has not accounted any such expense in respect of which no actual payment has been made. The basic condition of registration u/s 12AA is the genuineness of the activities & not the mode of expenses even when the proofs of actual occurrence of such activities are available on record.
(v) That on the basis of facts & circumstances of the case, the CIT(E) has erred in holding that the information given by trust in respect of payments made to Ms. Nirmala Kumari is invalid. The ground of rejection that Ms. Nirmala Kumari, a volunteer of trust to whom salary of Rs.76,594/- is paid by trust is a Director of some other company is not reasonable as nowhere in the order it is stated that the salary so paid was unreasonable or excess or there exists any material on record which contradicts the claim of the appellant trust that she works for the activities of the trust & has been paid for her out of pocket expenses only. Moreover, no opportunity of being heard was given by Hon'ble CIT(E) in respect of this ground of rejection to provide the necessary details & clarifications. Also, it is not clear as to how appointment of Ms. Nirmala Kumari as director of a company affects the genuineness of the activities of the trust. (vi) That on the basis of facts & circumstances of the case, the CIT(E) has erred in referring to the provisions of FCRA Act as grounds of rejection. The fact that the appellant trust is not registered under FCRA does not holds any ground as it is impossible for appellant trust to get money in Foreign Currency in terms of the provisions laid down by the Reserve Bank of India & FCRA Act. (vii) The appellant trust has carried on its activities genuinely for the benefit of the society & all the activities of the trust are within the scope of inclusive definition of "Charitable Purpose" as given in section 2(15) of the Income Tax Act, 1961 & since all the requirements of Section 12AA are fulfilled, the trust should be considered as eligible for registration u/s 12AA & 80G of the Income Tax Act, 1961.”
Similarly, lengthy and argumentative grounds have been raised in which are running in four legal size pages. In the grounds, the assessee is mainly aggrieved with the rejection of grant of registration under section 80G of the Act.
At the outset we may like to mention that on the last date of hearing i.e. 19/11/2019, the case was adjourned to 22/01/2020 on the request of the Learned Counsel for the assessee. Despite notifying the date of the hearing, neither anyone attended before us on behalf of the assessee, nor any application for adjournment of the hearing was filed. In the facts and circumstances, we were of the opinion that the assessee is not interested in prosecuting its appeal and therefore, we heard the appeal ex-parte qua the assessee.
5. The facts in brief of the case are that the assessee trust filed applications on 17/10/2017 before the Learned Commissioner of Income Tax (Exemption) (in short ‘the Ld. CIT(E)’) in Form No. 10A and 10G seeking registration under section 12AA and grant of registration under section 80G of the Act respectively. The Learned CIT(E) call for the details of the objects of the trust and the activities carried out by the trust. After verification of the objects and the activities, the Learned CIT(E) found that object of the trust are not charitable in nature and the activities are also found to be not genuine. The Learned CIT(E) has specifically referred to the first object of the trust as to collect offerings, gifts or donation of all kinds from Central Government, Semi government, all institutions, local bodies or industrial concern, Ltd or private locally within the Union of India or from abroad. The Learned CIT(E) has observed that the assessee has created a facade by way of its appearance to create an impression in the mind of the general public as if they are working as government agency. The Learned CIT(E) has observed various inconsistencies in the accounts maintained by the assessee trust. For example, not accounting of the rent and office expenses of various offices across the India and salary expenses to Ms. Nirmala Kumari etc.
6. Finally, the Learned CIT(E) rejected the registration under section 12AA and under section 80G of the Act observing as under: “8. As discussed in detail above, the proposed activities cannot be termed to be charitable in nature. Here it is also to be mentioned that the applicant intend to get funds from abroad but no FCRA permission has been shown. The existence of applicant on the given address is not substantiated to the satisfaction. The expenses are not found duly accounted for and the applicant failed to furnish explanation in this regard. Most of the expenses are made in cash and their Bills and Vouchers don’t inspire confidence. The so called employee of the applicant is a director of M/s NCB, News Network Pvt Ltd, a Pvt Ltd Company along with the managing Trustee of the applicant, Mr. Suresh Kumar Shukla. Therefore, neither objects of the Trust nor are activities of the trust substantiated to be charitable in nature. Accordingly, the application filed by the applicant for grant of registration u/s 12A is rejected. 9. Since the applicant is not granted registration u/s 12AA(a) of the Income Tax Act, 1961, its application if Form No.10G seeking exemption u/s 80G is also hereby rejected as charitable activities are not established.”
Before us, the assessee has filed a paper book containing pages 1 to 37, which consist of copy of applications in form No. 10A and 10G and other submissions filed before the Ld CIT(E ). The assessee has also filed an application for additional evidence having pages 1-12 consisting of a copy of the Emblems and Names (Prevention of Improper Use) Act, 1950, list of tax exempted institution registered under section 12A or 80G or both as per Income-tax website, definition of Director General as per Oxford dictionary, Cambridge English dictionary and Wikipedia, and the screenshot from appellant’s website.
We have heard submission of the Learned DR and perused the material on record. We find from the pages 3 to 24 of the paper book, which is a copy of the trust deed of the assessee trust, that it’s objects have been bifurcated in the nature of the education, relief to poors, medical relief, and object of general public utility. The first object of the assessee appearing in clause 5(a) is reproduced as under: “a. To collect offerings, gift or donations of all kinds, whether from Government, Central or Semi-Government, all institutions, local bodies or industrial concern, limited or private, locally within the Union of India or froma broad, which will form part of the funds, available to the Trust whether the bodies are located in the union of India or abroad and Anti Corruption Help govt. of India & State Govt., Electronic Media, Print Media & Social work card. Issue all Department Crime & corruption Investigation Bearou take immediately actions, against corruption, and illegal works under Indian Penal Act.”
We are agreed with the finding of the Learned CIT(E) that above object cannot be called as charitable in nature. From other objects and activities, it appears that the assessee is running a crime investigating agency parallel to the investigative agencies of the state and central government. The Learned CIT(E) has also pointed out following inconsistencies or discrepancies in the accounts and the activities of the assessee. The relevant finding of the Learned CIT(E) are reproduced as under: “4. Many of the objects including the above mentioned in the trust deed indicate that the main purpose of the Trust is to establish itself as a shadow or parallel of the crime investigation agencies by Govt and the Police of the country. These activities which are exclusively in the domain of enforcement agencies or police by virtue of powers conferred by the law or constitution of India are claimed to be carried out by the applicant where no legal authority is displayed. It is also noted that there is an uncanny resemblance of the name of the applicant to any legally authorized Govt Agency to investigate crime. To the minds of unsuspecting general public the name of the applicant may create an impression that it is a law enforcing Authority acting on behalf of the Govt. The applicant has tried its best on its part to create such a façade by way of its appearance so as to create an impression in the mind of general public a if they are working as Govt. Agency. This is apparent from the website www.ncib.in public as if they are working as Govt. Agency. This is apparent from the website www.ncib.in From the above website, it may be seen that the logo of From the above website, it may be seen that the logo of From the above website, it may be seen that the logo of the applicant has also clear resemblance with the logo of the applicant has also clear resemblance with the logo of the applicant has also clear resemblance with the logo of Police Authorities. The posts created by the applicant as Police Authorities. The posts created by the a Police Authorities. The posts created by the a shown on the website is Director General, Asst. Director shown on the website is Director General, Asst. Director shown on the website is Director General, Asst. Director General, Zonal Director, State director etc. This also creates a General, Zonal Director, State director etc. This also creates a General, Zonal Director, State director etc. This also creates a false impression that the applicant is authorized by law to false impression that the applicant is authorized by law to false impression that the applicant is authorized by law to function as a Law Enforcing Authority. It is stated that the function as a Law Enforcing Authority. It is stated that the function as a Law Enforcing Authority. It is stated that the registration of a charitable institutions is not an idle formality, egistration of a charitable institutions is not an idle formality, egistration of a charitable institutions is not an idle formality, it is necessary to come to the conclusion on the basis of it is necessary to come to the conclusion on the basis of it is necessary to come to the conclusion on the basis of documents information etc whether the institution deserves documents information etc whether the institution deserves documents information etc whether the institution deserves registration u/s 12AA of the Act. The potential of misuse, even registration u/s 12AA of the Act. The potential of misuse, even registration u/s 12AA of the Act. The potential of misuse, even if the same is not actually misused is also be borne in mind ame is not actually misused is also be borne in mind ame is not actually misused is also be borne in mind while granting registration u/s 12A of the Act. Moreover, the while granting registration u/s 12A of the Act. Moreover, the while granting registration u/s 12A of the Act. Moreover, the above objects of the applicant cannot be categorized as above objects of the applicant cannot be categorized as above objects of the applicant cannot be categorized as charitable activity within the meaning of general public utility charitable activity within the meaning of general public utility charitable activity within the meaning of general public utility as defined in section 2(15) of the Act. These types of activities as defined in sectio n 2(15) of the Act. These types of activities cannot be camouflaged as charitable activity in the nature of cannot be camouflaged as charitable activity in the nature of cannot be camouflaged as charitable activity in the nature of general public utility. general public utility.
The website of the applicant also shows that it has got 8 The website of the applicant also shows that it has got 8 The website of the applicant also shows that it has got 8 offices across the country. the name and place of its offices across the country. the name and place of its offices across the country. the name and place of its registered office and the office which it is presently claimed to registered office and the office which it is presently claimed to registered office and the office which it is presently claimed to be the registered office is not show in the website. The offices be the registered office is not show in the website. The offices be the registered office is not show in the website. The offices are located at Delhi (some other address), Gujarat, Bihar, Ahmednagar, Bangalore, Rajasthan, Jharkhand & madhya Pradesh. From photographs of some of the offices shown in the website it is seen that these are well maintained plush offices with split air conditions and glass doors baring logo of the applicant. Further there are video gallery/ photographs of various events conducted by the applicant claiming to the police-public partnership program. On 20.04.2018, the AR of the applicant, Mr Ankit Gupta was shown the website of the NCIB. It was asked that the cost of website creation, which appears to be a costly website, does not appear in the balance sheet. Further there are several plush branch offices of the applicant located across the country. Their cost, cost of events, rentals, furniture and fixtures are not found shown in the balance sheet. The AR of the applicant was asked to explain the same by 24.04.2018. However, no reply has been received from the applicant till the date of passing of this order. As such the applicant has failed to justify the source of the expenses incurred by it in establishing the offices, conducting its activities and various events. Thus not only the genuineness of the accounts submitted by the applicant during the course of the proceedings but also the genuineness of the activities of the Trust remains un-established.
In a statement of financial assistance given to volunteer as salary filed by applicant during the course of proceedings, it is seen that the applicant has made payment of Rs.76,594/- to Ms. Nirmala Kuamri. In the footnote it is mentioned that “the above amount is in the nature of financial assistance given to volunteers who belong to poor and needy family. All these persons have no source of living but as a result of atrocities which they or their family members had faced, they are self-motivated to work towards the upliftment and betterment of the society. The Trust gives them the financial assistance to cover their conveyance expenses, footing and other necessary expenses.” However on inquiry from Internet, it is found that Mr Suresh Kumar Shukla and Ms Nirmala Kumari are Directors in a Pvt Ltd company namely NCIB News Network Pvt Ltd. As such the statement made by the applicant that the payment is made to a volunteer as salary to persons who have no source of living is incorrect.”
In view of the above facts and circumstances, we do not find any merit in the grounds raised by the assessee and accordingly we uphold the rejection of applications under section 12AA and 80G of the Act.
In the result, both appeals of the assessee are dismissed.