URMILA DEVI CHARITABLE SOCIETY,GHAZIABAD vs. ITO, EXEMPTION WARD, GHAZIABAD

Brief facts of the case as could be culled out from record and the arguments are that the assessee is a Charitable Trust. Registration of the Trust was granted under section 12AA of the Income Tax Act, 1961 (for short “the Act”) by order dated 08.10.2010 by the Commissioner of Income Tax, Gaziabad. Subsequently the said registration was cancelled w.e.f. 1/4/2010 vide order No. F-No CIT (exemptions)/Lko/12 AA/2015- 16/769 dated 22/4/2016. In view of this cancellation of the registration under section 12AA of the Act, learned Assessing Officer issued notice under section 148 of the Act on 28/3/2017. Assessee pleaded before the Assessing Officer that the cancellation of registration under section 12AA of the Act was challenged before the Tribunal and the said appeal was pending. Assessee further contended that the corpus donation was received from the genuine parties and any development after a gap of several years cannot be a basis to refuse the exemption and to bring the donations to tax as income of the society and further submitted that the corpus donation to the tune of Rs. 2,19,06,000/-was utilised in a fixed asset. Learned Assessing Officer, however, did not agree with the assessee and because the registration under section 12AA of the Act was cancelled, the claim of the assessee in respect of application in fixed assets was not allowable. Learned Assessing Officer held that in view of the decision of the Hon’ble Apex Court in the case of UP Forest Corporation vs. DCIT in Civil Appeal No. 9433 of 2003 and batch of cases decided on 27/11/2007, registration under section 12A is a condition precedent to avail the benefit under section 11 and 12 of the Act and since such a registration was cancelled, surplus as per the income and expenditure account is taxable income of the assessee. He, therefore, concluded the assessment under section 143(3)/147 of the Act of the Act by order dated 1/12/2017 by adding the entire donations received during the financial year 2010-11 to the tune of Rs. 2,20,16,720/-.

Aggrieved by such an addition, assessee preferred an appeal before Ld. CIT(A) and took all the pleas that were taken before the learned Assessing Officer. Ld. CIT(A) however, dismissed the appeal on the ground that as on such date the trust was not registered in section 12AA of the Act and, therefore, the assessee cannot be given the benefit of provisions under section 11(1)(d) of the Act.

It is the submission of the Ld. AR that the cancellation of registration was challenged before the Tribunal and a coordinate Bench of this Tribunal quashed the order of cancellation passed on 22/4/2016 under section 12AA (3) of the Act cancelling the registration w.e.f. 1/4/2010. He produced the copy of order dated 13/6/2019 in /Del/ 2017 in support of such submission. He further submitted that such a decision of the coordinate Bench was followed in ITA number 6909/Del/ 2018 in assessee’s own case for the assessment year 2015-16 by order dated 10/7/2019.

Ld. DR placed reliance on the orders of the authorities below and submitted that the authorities below are justified in concluding that basing on the documentary evidences such as statement of donors, banking channel and FIR report etc suggesting that the donors were bogus, the registration was cancelled and the said material was confronted to the assessee during the proceedings under section 147 of the Act. He, therefore, submits that there are no grounds to interfere with the impugned order.

We have gone through the record in the light of the submissions made on either side. For the assessment year 2011-12 the assessee has filed the return of income on 30/9/2011 showing nil income. Such a return of income of the assessee was processed under section 143(1) of the Act. Subsequently, the registration granted to the assessee by order dated 8/10/2010 under section 12AA of the Act was cancelled by the Commissioner of Income Tax (Exemption) Lucknow under section 12AA (3) of the Act by order dated 22/4/2016 w.e.f. 1/4/2010. In view of this cancellation of registration under section 12AA of the Act, learned Assessing Officer proposed to reopen the assessment by issuance of notice dated 28/3/2017 under section 148 of the Act. Learned Assessing Officer noted that during the year the assessee has received donation from Harbicure Healthcare Bio Herbal Research Foundation to the tune of Rs. 85 Lacs, from Society for Welfare of Handicapped Persons to the tune of Rs. 15 Lacs., and in view of the information received from the Commissioner of Income Tax (Exemption), and also in view of the cancellation of registration held that the entire donation of Rs.2,19,06,000/-which includes the donation of rupees one crore being bogus donation in lieu of cash (Rs. 15 lakhs from M/s Society for Welfare of the Handicapped Person plus Rs. 85 Lacs from M/s Hebicure Healthcare Bio Herbal Research Foundation) was taxable income of the assessee and added the entire amount to the income of the assessee.

On a reading of the order dated 13/6/2019 in /Del/ 2017 for assessment year 2011-12, we find that the order of cancellation of registration under section 12AA of the Act was set aside by a coordinate Bench of this Tribunal and the registration under section 12AA of the Act was granted. Ld. DR submitted that in view of this development, the matter may be remanded to the file of the learned Assessing Officer to take a view after considering the contentions of the assessee. Ld. AR reports no objection for remanding the matter to the file of the learned Assessing Officer. Considering the submissions, we set aside the impugned order and remand the matter to the file of the learned Assessing Officer to take into consideration the observations made by the coordinate Bench of this Tribunal in ITA No. 4136 /Del/ 2017 by order dated 13/6/2019 and decide the issue afresh.

Appeal of the assessee is, accordingly, allowed for statistical purpose.