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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri P.M. Jagtap & Shri Siddhartha Nautiyal
आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Exemption), Ahmedabad in Appeal no. CIT(E)/12AA/AHD/Appl. Effct/22/SF/2015-16 vide order dated 27/10/2015.
A.Y. N.A. Page No. 2 Samarpan Foundation vs. CIT(Exemption)
2. The assessee has raised the following grounds of appeal:-
“1. The Ld. Commissioner of Income-tax (Exemption) has erred both in law and on facts of the case in rejecting the application for registration of the appellant trust u/s 12AA of the Act.
The Ld. Commissioner of Income-tax (Exemptions) has erred both in law and on facts of the case in disposing of the application on the material available on record without providing proper and sufficient opportunity of hearing to the appellant trust.
3. The Ld. Commissioner of Income-tax (Exemptions) has erred both in law and on facts of the case in rejecting the evidence of the appellant trust and holding that the appellant trust's submissions are contradictory.
The Ld. Commissioner of Income-tax (Exemptions) has erred both in law and on facts of the case in holding that the transfer by resolution is illegal as the assets and liabilities of two entities are taken over without observing proper formalities and without following the provisions of the Transfer of Property Act, 1882.
5. The Ld. Commissioner of Income-tax (Exemptions) has erred both in law and on facts of the case in not granting registration on the A.Y. N.A. Page No. 3 Samarpan Foundation vs. CIT(Exemption)
count that the objects of the appellant trust and creation of the appellant trust is a fa9ade to cover and take control of assets.
The Ld. Commissioner of Income-tax (Exemptions) has erred both in law and on facts of the case in not granting registration on the count that the activities of the Appellant trust are not in conformity with the objects of the trust.
7. The Ld. Commissioner of Income-tax (Exemption) ought to have appreciated that as per the provisions of section 12AA of the Act, most important requirement while granting registration to a trust is that its objects and activities must be charitable and genuine which is very much fulfilled by the appellant.
8. The Ld. Commissioner of Income-tax (Exemption) has passed the impugned order without properly appreciating the fact and that he further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the Ld. Commissioner of Income-tax (Exemption) is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed.
The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the A.Y. N.A. Page No. 4 Samarpan Foundation vs. CIT(Exemption) hearing of the appeal.”
The brief facts of the case are that Samarpan Foundation (the assessee) was registered with Charity Commissioner on 27-08-2008. The assessee had made application for registration u/s. 12A of the Income Tax Act, 1961, vide its application dtd. 01-02-2011. This application was not found in order and the same was rejected by the CIT-III, Baroda vide order dtd. 30-08-2011. The assessee had again filed an application for registration u/s. 12A of the I.T. Act on 23-11-2011. This application was rejected by CIT-III, Baroda, vide order bearing dtd. 29-5-2012. The assessee filed another application for registration u/s. 12A of the I.T. Act, 1961 on 28-3-2013. The assessee had withdrawn this application on 30-8- 2013 as the application for registration was already rejected by CIT-III, Baroda, vide order dtd. 29-05-2012. The CIT-III, Baroda vide order dtd. 30/8/2013 accordingly rejected application for registration dtd. 28-3-2013 for statistical purposes.
4. The assessee contested the order passed by CIT-III, Baroda dtd. 29-5-2012 before the Hon'ble ITAT, Ahmedabad. The Hon'ble ITAT in dtd. 13-12-2013 set-aside the impugned order to the file of CIT(Exemptions). The Hon'ble ITAT restored back this issue with the following observations:
"8. We have heard the rival submissions and perused the material on record. From the order of CIT, it is seen that Assessee was asked to A.Y. N.A. Page No. 5 Samarpan Foundation vs. CIT(Exemption) produce the books of accounts and also give clarification with respect to the various items of the Balance Sheet. Apart from the aforesaid information, the Assessee was a/so asked to furnish other details like dissolution deed of Navchetan Education Society and copy of the return of income for A. Y. 2008-09 but the same was not furnished. Due to non submission of details, the application was rejected. However, in view of the undertaking given by the Id. A.R., before us, we are of the view that to meet the ends of justice, one more opportunity be granted to the assessee so that it can furnish the information called for by CIT. We therefore restore the issue back to the file of Id. Commissioner to examine all such details which are required for registration of Trust and thereafter decide the granting of registration as per the provisions of law. We hereby a/so direct the Assessee to suo motu appear before the Id. Commissioner within 15 days of the receipt of this order of Tribunal without waiting for any notice, from the Revenue Department and submit all the necessary information and such other documents called for by Id. Commissioner so as to enable him to pass an appropriate order. With these directions, this ground of assessee may be treated as allowed for statistical purposes."
In the remand proceedings before Ld. CIT, he again rejected the application on the ground that the assessee was given four opportunities of hearing to file details, but the assessee has not complied with the requirements of the Department, accordingly he rejected the application of the assessee with the following observations: A.Y. N.A. Page No. 6 Samarpan Foundation vs. CIT(Exemption)
Perusal of above facts reveals that the registration application filed by the assessee was rejected as the assessee has not furnished details asked by the C1T-1II, Baroda. The assessee was reluctant to furnish various details of balance-sheet entries. Before the Hon'ble IT AT, the Id. A.R. had given a specific undertaking that the details asked during registration proceedings will be furnished promptly. On the specific undertaking given by AR the Hon'ble IT AT had asked the CIT to give one more opportunity to the assessee. In compliance to the directions of the Hon'ble IT AT the opportunity of hearing was provided to the assessee during the set- aside proceedings. Perusal of records reveals that vide order sheet entry dtd. 20-8-2015 the assessee was asked to furnish details in respect^ of land transactions. The case was fixed for 27-8-2015. On 27-8-2015 the assessee had requested for adjournment. The case was adjourned till 21-9-2015. On 21-9-2015 the assessee again asked for adjournment. The case was adjourned till 01-10- 2015. On 01-10-2015 the assessee again requested for adjournment. The case was finally adjourned to 19-10-2015. The assessee vide its letter dtd. 19-10-2015 received in my tapal, again requested for adjournment for one month as the assessee's A.R. is staved to be on foreign visit. The above discussions clearly reveals that the assessee was given four opportunities of hearing to file details, but the assessee has not complied with the requirements of the Department. It appears that the assessee is in the habit of non-compliance. Although the Hon'ble IT AT had A.Y. N.A. Page No. 7 Samarpan Foundation vs. CIT(Exemption) mandated this office to give one opportunity of hearing only, this office had given four opportunities of hearing to the assessee but the assessee has not complied with. In view of the above discussions I am of the firm view that sufficient opportunity of hearing has been given to the assessee and accordingly the request for adjournment is hereby rejected. The application for registration is disposed off on the basis of material available on record.
…………
Perusal of the objects of assessee trust reveals that the assessee is having following objects in the field imparting education:
To establish and to run institutions for the educational activities such as to the level of preprimary primary, secondary, Higher Secondary or College and to instigate the beneficiaries those who are in need of such education.
2. To establish and to run School, College, Hostel within the limit of area of operations. 3. To give scholarship to needy students and to make necessary arrangements to give them required guidance."
The reading of the above objects reveals that the assessee's object is to establish and run the institutions for educational activities.
A.Y. N.A. Page No. 8 Samarpan Foundation vs. CIT(Exemption)
As discussed above, the assessee had taken over the institutions and not established the institutions. This way the activities of the assessee is not in conformity with the objects of the trusts.
The above facts clearly indicate that the immovable properties has been acquired by the assessee trust in contravention of transfer of Property Act, 1882. The activities of the assessee trust is not in conformity with the object of the assessee trust. In view of above, it is held that the assessee trust has failed to prove the genuineness of its activities and it is also failed to prove that the activities of assessee trust is in consonance with the objects of the trust. Accordingly, I am of the considered view that this is not a fit case for registration u/s. 12A(a)(l) of the Income Tax Act, 1961. The application for registration is accordingly rejected.
6. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(E). The counsel for the assessee submitted that the assessee in the remand proceedings had placed on record all the relevant information before Ld. CIT(E) for his consideration, but on the last date of hearing, the counsel of the assessee could not cause appearance because he was travelling. Accordingly, Ld. CIT(E) should have granted more time so as to enable the assessee to cause appearance before him. The counsel for the assessee drew our attention to page 1 of the paper book and submitted that pursuant to directions of ITAT, the assessee filed suo moto letter dated 20th December, 2013 to Ld. CIT(A)-III, causing appearance before him as directed by Hon’ble ITAT with the request to let the assessee know what it A.Y. N.A. Page No. 9 Samarpan Foundation vs. CIT(Exemption) is required from its side. The counsel for the assessee then drew our attention to page 2 of the paper book- notice dated to 01-04-2015 issued by CIT calling for further information from the assessee, in connection with its application. Further, the counsel for the assessee submitted that Ld. CIT did not raise any issue as to the assessee’s objects being not charitable nature. He submitted that while granting registration under section 12A of the Act, CIT needs to satisfy himself about “objects of a trust” and “genuineness of the activities of the trust”, but in the instant facts Ld. CIT has not disputed the same. Accordingly, Ld. CIT has erred in facts and in law in denying registration to the assessee under section 12A of the Act. The counsel for the assessee placed reliance on the case of State Bank of India v Chanda Govindji (2000) 8 Supreme Court Cases 532 and submitted that the assessee is only required to explain the cause of non-appearance on the last date of hearing. In the instant case, the assessee was prevented by reasonable cause for not causing appearance before Ld. Ld. CIT(E). Accordingly, CIT erred in law and in facts in dismissing the application of the assessee, without considering the fact the assessee had reasonable cause for non- appearance on the last date of hearing.
In response, DR submitted that in the first round of hearing in connection with the application of the assessee, the assessee did not submit any documents at all. The ITAT accordingly directed the assessee to file the necessary documents and proactively pursue the case. The DR submitted that letter dated 20-12-2013 at page 1 of the paper book, which was referred to by the counsel for the assessee, was filed by the by the assessee in Tapal. The assessee was well aware about all the documents which were required to A.Y. N.A. Page No. 10 Samarpan Foundation vs. CIT(Exemption) be furnished, however, he has filed the aforesaid letter just to seek further time to delay the process. DR for the submitted that even before Ld. CIT(E), the assessee against sought adjournments on four occasions. Further, in respect of the last adjournment in which the assessee has submitted that he was travelling out of the country, no evidence in respect of foreign travel has been placed on record by the assessee. Accordingly, ld. D.R. submitted that ld. CIT(A) has correctly dismissed assessee’s application in the instant facts.
We have heard the rival contentions and perused the material on record. The assessee submitted that it has a good case on merits and if provided one final opportunity, it shall promptly and diligently produce all facts/documents before Ld. CIT. Accordingly, in the interest of justice, we are restoring the matter to the file of CIT for giving one final opportunity of hearing to the assessee. We hereby also direct the Assessee to firstly, suo motu appear before the Id. Commissioner within 15 days of the receipt of this order of Tribunal without waiting for any notice, from the Department and secondly, on the date of first appearance itself submit all the necessary information and such other documents earlier called for by Id. Commissioner (also which we evident from the order of ld. CIT(A) rejecting assessee’s application) so as to enable him to pass an appropriate order. In the event, the assessee does not pursue the case diligently and does not cause appearance as per directions given over, along with the necessary documents, Ld. CIT may proceed to pass the orders on merits of the case on the basis of documents available on record. A.Y. N.A. Page No. 11 Samarpan Foundation vs. CIT(Exemption)
In the result, the appeal of the assessee is allowed with the above directions.
Order pronounced in the open court on 31-10-2022 Sd/- Sd/- (P.M. JAGTAP) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 31/10/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद