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Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the assessee, trust against the order of the COMMISSIONER OF INCOME TAX, EXEMPTION, Lucknow dated 9/7/2018 passed u/s 12 AA (1) (b) (ii) of the income tax act 1961 rejecting the application dated 5/1/2018 of the assessee for registration u/s 12 A (a) of the income tax act. 2. The assessee has raised the following grounds of appeal:- “1. That on the facts and circumstances of the case and in the law, the Id CIT(Exemptions) Lucknow has grossly erred in denying registration to the Appellant society u/s.12AA of the Income Tax Act, 1961 as claimed being in gross violation to the principles of natural justice and fairness.
2. The scope and nature of enquiries at the stage of grant of registration are prescribed under section 12AA. Thus, Id. CIT(Exemptions) has no jurisdiction to conduct enquiries which fall beyond the pale of such statutory prescription.
3. That on the facts and circumstances of the case and in law, the Id CIT (Exemptions) Lucknow was not justified in refusing the registration u/s 12AA to the appellant-Society in spite of explaining all required facts / evidences and without considering the exhaustive written submissions and supportings placed before him and runs counter to the provisions of law.
4. That on the facts and circumstances of the case and in the law, the CIT has grossly erred in failing to appreciate that the appellant-Society has Page | 1 been registered essentially for the purpose of providing education which is per se a charitable purpose And also that the management had resolved to start any activity only after the Society is granted registration u/s 12AA of the Income Tax Act.
That the order u/s 12AA(1)(b)(ii) of the Act passed by Id CIT (Exemptions) rejecting the application is arbitrary, unjustified, illegal and against the facts and circumstances of the case.
6. That the order of the Id. CIT(Exemptions) be set aside and Id. CIT(Exemptions) be directed to grant registration u/s 12AA of the Act to the Appellant.”
Brief fact shows that assessee trust is a registered on 5/9/2014 under The Societies Registration Act, 1860 with the primary and predominant objective of the promotion of the cause of education by maintaining schools, educational institutes, including by takeover the management of one or more schools, educational institutions in India being run by the Society for the advancement of education or any other society, trust or a company established u/s 8 of The Companies Act, 2013 having similar objectives.
The assessee made an application on 5/1/2018 in form number 10 A for registration u/s 12 A of the income tax act. This application was rejected by the learned CIT exemption vide order dated 9/7/2018 on the ground that the applicant society failed to substantiate its claims of undertaking charitable activities in furtherance of the object set out in the memorandum. The said rejection order is challenged by the applicant society in the present appeal raising various grounds of appeal
5. At the time of hearing of the appeal, the learned authorised representative referred to the application submitted by the assessee for admission of additional evidences in terms of rule 29 of The Income Tax (Appellate Tribunal’s) Rules 1963 wherein assessee wanted to submit as an additional evidence the minutes of the meetings of the general body of society for the advancement of education held on 14/4/2018 and on 19/05/2018 approving the scheme of partial amalgamation of Rajaram Mohan Roy Academy, Dehradun with the assessee foundation and minutes of the meeting of the body of the governors of the assessee trust held on 30/05/2018 and 30/6/2018 approving the aforesaid scheme of the partial amalgamation. The assessee in the above application submitted that the aforesaid additional evidences are relevant for adjudication of the above Page | 2 appeal wherein the registration sought by the assessee u/s 12 A of the income tax act has been denied. It was further stated that the learned CIT exemption failed to appreciate the application of the assessee wherein it is clearly submitted that it shall commence charitable activities on receipt of the grant of registration u/s 12 A of the income tax act. Therefore, it was stated that in this background the applicant wants to place on record the aforesaid documents being minutes of the meeting to show that the applicant society is engaged in the educational activities. It was further stated that these documents could not be placed on record since the applicant had vide reply dated 5/7/2018 explicitly stated the reasons for not commencing the charitable activities. Further, the learned CIT exemption did not direct the applicant to place on record further documents in support of the averments made therein. Therefore, it was submitted that the above documents being relevant and crucial for adjudication of the appeal made in the interest of the equity and justice be admitted and taken into consideration for adjudication of the assessee.
The learned departmental representative vehemently objected and submitted that assessee has all the opportunity to submit these documents before the lower authorities at the time of seeking registration u/s 12 A of the income tax act and therefore these additional evidences should not be admitted now.
The learned authorised representative on the issue submitted that assessee has submitted the details before the learned Commissioner of income tax, exemption , memorandum of the Association of the assessee society and the details of the members of the assessee society. It was further stated that the confirmation of voluntary donations made to the assessee society along with the bank account and the declaration as well as the undertaking was also submitted. He submitted that the assessee was intending to acquire the management of one of the educational Institutes to pursue its objective. It was further stated that assessee in the application for registration itself had stated that on receipt of registration the assessee will carry on its activity. It was further stated that at the time of granting of the registration the learned director of income tax exemption is required to see only the objects of the assessee as well as the activities with respect to the genuineness. He otherwise submitted that the additional evidences submitted by the assessee clearly shows that assessee is carrying on educational activities and therefore is entitled to registration u/s 12 A of the income tax act. The learned authorised representative referred to several judicial precedents to support its contention that at the time of registration only objects are required to be examined by the registering authority.
On the merits of the order refusing to grant registration to the assessee, the learned departmental representative vehemently supported the order of the learned Commissioner Of Income Tax Exemption.
We have carefully considered the rival contention and perused the orders of the Commissioner Of Income Tax, Exemption, Lucknow rejecting the application of the assessee for registration u/s 12 A of the income tax act. Before us, the assessee has submitted the additional evidences in the form of notice on the minutes of the meeting wherein it is amalgamating one of the educational institutes in Dehradun with the assessee trust. In view of these additional evidences, which could not be submitted by the assessee before the Commissioner of income tax, exemption earlier, because no such question or queries were raised to the assessee, we admit the same as assessee has shown sufficient and reasonable cause for not producing it earlier. It is further stated in the application for registration u/s 12 A of the income tax act that the managing committee of the society has resolved that the activities of the society to achieve the objectives be started only after the society has been granted registration u/s 12 AA of the income tax act. Therefore, for this reasons the assessee did not commence its charitable activities. However, it was making an effort to start the educational activities as soon as the registration u/s 12 A of the act is granted to the assessee. This is evident from the fact that the minutes of the meetings shows that on 14/4/2018 and 19/05/2018 i.e. before the passing of the order by the learned CIT exemption the assessee was carrying on educational activities. Further, in the meeting dated 30/6/2018 and 30/5/2018 the amalgamation proposal was also approved by the assessee. Therefore in absence of these two evidences, Commissioner of income tax – exemption, Lucknow reached at the conclusion that assessee is not entitled to registration u/s 12 A of the income tax act. Further, in para number 10