DADA JETHANAND PAGRANI TRUST,NASHIK vs. CIT (EXEMPTION),, PUNE

This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Exemption), Pune dated 29.03.2021 under section 12AA(1)(b)(ii) of the Act. The Assessee has raised the following grounds of appeal: “1. The learned Commissioner of Income Tax (“CIT”) was not justified in rejecting your appellant’s application for registration under section 12AA.

The ld.Departmental Representative(ld.DR) for the Revenue had stated that Assessee file application under section 12AA on 30.12.2019. However, the assessee has amended the Trust Deed on 20.02.2020. Therefore, assessee should have filed fresh application. The ld.CIT(DR) also submitted that assessee has obtained registration from the Charity Commissioner vide order dated 02.02.2018 which is with reference to its Original Trust Deed dated 25.09.2017. It means, assessee has not obtained registration from Charity Commissioner for the amended Trust Deed. Thus, it is not a valid registered trust. The ld.CIT-DR submitted written submission, relevant submissions is reproduced here under: 2.0 The objects of the trust 2.3.1 The objects of the trust are mentioned in the Trust Deed dated 25/09/2017 in Clause 5. English version of the same is given in appellant's paper book pages 19 to 21 (internal page 7 to 9). Under clause 5 i.e. 'Purpose of the Trust' there are 10 objects (1 to 10) mentioned. It is transpired that the object of 'construction of Dharamshala' did not figure in the objects as per the original Trust Deed. In the revised Trust Deed dated 28/02/2020 the objects of the trust were amended and the phrase 'to provide Pharamshalas' was added to the object at SI. No.

However, the amendment was carried out on 28/02/2020 as per the Revised Deed. Thus, the fact that construction of Dharamshala was not one of the object in ITA No.137/PUN/2021 Dada Jethanand Pagrani Trust [A] F.Y. 2018-19 is undisputed fact. Further, in the F.Y. 2019-20 also it was amended from 28/02/2020 only. It is thus, highlighted that during the F.Y. 2018-19, the construction of Dharamshala was not the object / (one of the objects) of the appellant. It was introduced only in the amended Trust Deed dated 28/02/2020. Further, the appellant has submitted that construction of 'Dharamshala' was done at 5869, Jajuwadi, Indrakund, Panchvati, Nashik. But as per Balance Sheet as on 31/03/2019, no land was owned by the trust. The acquisition of land of Rs.11,99,600/- was shown in the subsequent F.Y. i.e. in the provisional Balance Sheet as on 31.03.2020. Thus, it is crystal clear that the land i.e. 5869, Jajuwadi, Indrakund, Panchvati, Nashik on which the construction was claimed to be carried out during the F.Y. 2018-19 to the tune of Rs. 64.16 lakhs was not owned / belonged to appellant trust. Further, no details / proof in support of the so called construction was produced before the CIT(E). 2.4 The trustees of the trust are from one family and closely related to each other The names of the trustees given in the Trust Deed are as under: Narayandas Jethanand Pagarani (i) Tikamdas Jethanand Pagarani (ii) Parshottam Jethanand Pagarani (iii) Tulsidas Jethanand Pagarani (iv) Narendra Narayandas Pagarani (v) It is seen that from SI. No. (i) to (iv) are brothers and (vi) SI. No. (v) is son of (i). 2.4.1 Further, no charitable activity has been taken up during the period of 2 Financial Years i.e. 2018-19 and 2019-20. It is seen from the Income & Expenditure Account for the F.Y. 2018-19 and 2019-20 i.e. before the finalisation of case for registration u/s 12AA, the appellant has not spent even a single penny during the above period, (copies of the Income & Expenditure Account are placed at Annexure 12 & 13 to the written submissions filed on 28/07/2022 before the Fion'ble Bench). As discussed above the, the construction of Dharamshala was not the object of the Assessee Trust and further the land i.e. 5869, Jajuwadi, Indrakund, Panchvati, Nashik on which the construction was claimed to be carried out during the F.Y. 2018-19 to the tune of Rs. 64.16 lakhs was not owned by the trust. Further, no details / proof in support of the so called construction was produced. 2.4.2 The ITAT Amritsar in the case of G D Kavita Singla Charitable Trust [ITA No. 594(Asr)/2013] has held the trust is not entitled for registration in view of the facts that "the assessee has not done anything nor produced any evidence satisfying learned Dada Jethanand Pagrani Trust [A] CIT-II, Amritsar, about the genuineness of the activities of the trust or institution for grant of registration under Section 12AA of the Act where the trust has been constituted by a family member like the assessee-trust on hand."

We have heard both the parties and perused the records. In this case, assessee had filed application for registration under section 12AA of the Act on 30.12.2019. The assessee had submitted copy of the Trust Deed dated 25.09.2017. However, subsequently, assessee has amended Trust Deed in February, 2020. We have gone through the paper book filed by the assessee and it is observed that the registration granted by the Charity Commissioner is dated 02.02.2018. Therefore, it is not clear whether assessee had filed copy of the Amended Trust Deed before the Charity Commissioner or not! In Maharashtra, registration of the Charity Commissioner is mandatory. It has been submitted by the ld.CIT-DR, assessee has not carried out any activity. However, the ld.AR submitted that in the order under section 12AA, ld.CIT(E) has not rejected the 12AA on this ground.

It is observed from the order of ld.CIT(E) that ld.CIT(E) has not verified the objects and activities carried out by the assessee. The ld.CIT(E) has also not verified whether the revised Trust Deed has been submitted before the Charity Commissioner or not!. The Hon’ble Supreme Court in the case of Ananda Social & Education Trust vs. CIT [2020] 114 taxmann.com 693 (SC) has observed as under : Dada Jethanand Pagrani Trust [A] “11. The purpose of section 12AA of the Act is to enable registration only of such trust or institution whose objects and activities are genuine. In other words, the Commissioner is bound to satisfy himself that the object of the Trust are genuine and that its activities are in furtherance of the objects of the Trust, that is equally genuine.

Since section 12AA pertains to the registration of the Trust and not to assess of what a trust has actually done, we are of the view that the term ‘activities; in the provision includes ‘proposed activities’. That is to say, a Commissioner is bound to consider whether the objects of the Trust are genuinely charitable in nature and whether the activities which the Trust proposed to carry on are genuine in the sense that they are in line with the objects of the Trust. ….. ….. ….. ….. ……. Similarly, the situation would be different where the trust has before applying for registration found to have under taken activities contrary to the objects of the Trust.”

Thus, the ld.CIT(E) has to analyse the objects and activities of the assessee, therefore, it is set-aside to ld.CIT(E) for denovo adjudication after giving opportunity to the assessee. The ld.CIT(E) shall decide the case in the light of Hon’ble Supreme Court’s decision in the case of Ahmedabad Urban Development Authority and Noble Education Trust by which the Hon’ble Supreme Court explained the entire law on charitable activities. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose. Dada Jethanand Pagrani Trust [A]

In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 19th December, 2022.