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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 1058/JPR/2024
ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal filed by the assessee is directed against order of the ld. CIT(E), Jaipur dated 19-06-2024 raising therein following grounds of appeal. ‘’1. The order passed by Ld. CIT(E) on 30.05.2024 (correct date is 19.06.2024) in pursuance to the direction of Hon’ble ITAT order dt. 06.03.2019 is illegal & bad in law as barred by limitation.
2. The Ld. CIT(E) has erred on facts and in law in rejecting the application filed by the assessee u/s 12A(a) in Form No.10A seeking registration u/s 12AA of IT Act, 1961 without providing reasonable opportunity of hearing in as much as the show cause notice dt. 30.05.2024 has not come to the notice of assessee since it was not communicated either on e-mail or mobile of the trustees mentioned in the e-portal.
SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR 3. The Ld. CIT(E) has erred on facts and in law in rejecting the application on the ground that genuineness of activities has not been proved ignoring that similar activities were carried out in earlier years where the income of assessee has been assessed by allowing exemption u/s 11 and the application for registration was filed only because the registration certificate granted u/s 12A of the Act on 14.10.1974 was misplaced and the department has also expressed its inability to provide the certified copy of the same.
2.1 Brief facts of the case are that the assessee trust was constituted on 23.10.1933 (PB 43-56) by Sh. Sukh Lal Rathi, Suraj Mal, Chand Mal and Kesar Mal whereby they donated a land near to their residential house for construction of a mandir and dharmshala to the trust. The trustees also donated a property named Sukh Bhawan at Ajmeri Gate with the direction that out of the rental income of this property, the temple/ dharmshala would be constructed and maintained. The trust was registered with Devasthan Vibhag in the year 1988 and a revised certificate was issued on 09.05.2017. It is further noted that the assessee trust was registered u/s 12A of the Act on 14.10.1974. However, the registration certificate was misplaced and therefore, the assessee requested the department to provide certified copy of such certificate. The department expressed its inability to provide the same by stating that the office of CIT(E) was not in a position to provide the same. As the assessee trust was not having the copy of registration certificate u/s 12AA, it was advised to file a fresh application for registration u/s 12AA. Accordingly, an application in Form No.10A along with the necessary documents was filed on SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR 19.09.2017. The Ld. CIT(E) refused the registration on the ground that (i) the assessee has not submitted the original documents regarding the establishment of trust (ii) there is no dissolution clause in the trust deed (iii) there is mismatch of the name mentioned in Form 10A/ registration certificate issued by Devasthan Vibhag with that mentioned in the PAN and (iv) the assessee has not produced final accounts for AY 2017-18. Further it is noted that against the order of Ld. CIT(E) assessee filed an appeal before ITAT, Jaipur who after considering the submission of assessee observed that the first three objections raised by the Ld. CIT(E) has been satisfied by the assessee. In respect of fourth objection, the ITAT, Jaipur Bench observed that assessee vide letter dt. 12.03.2018 has produced the copy of final accounts for FY 2016-17, however, since the impugned order was passed on the same day, therefore the Ld. CIT(E) could not consider these accounts produced by the assessee. Accordingly, the ITAT, Jaipur Bench set aside the order of Ld. CIT(E) and remitted the matter back to Ld. CIT(E) with the direction to examine the final accounts for the FY 2016-17 (PB 1-16). 2.2 In set aside proceedings, the assessee in response to notice dt. 05.08.2019 (PB 18), 25.5.2022 (PB 35) & 07.12.2022 (PB 38) filed the reply on 02.09.2019 (PB 19), 02.06.222 (PB 36-37) & 14.12.2022 (PB 39). Thereafter after more than 1.5 years of the last date of hearing, Ld. CIT(E) issued show cause notice dt. 30.05.2024 (PB 40-42) which could not be complied with as it did not come to the SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR notice of assessee. Accordingly the Ld. CIT(E) held that since no submission has been furnished by the assessee, the genuineness of activities cannot be proved and thus rejected the application filed by the assessee seeking registration u/s 12AA of the Act by giving the following findings:- i. The assessee has shown major portion of receipts from rental income but did not furnished the proof of ownership, thus giving benefit to the land owners. ii. No details from where rent is received is furnished by the assessee, thus it could not be verified whether assessee is doing business or charity. iii. No photographs of property is furnished, thus it is not clear whether pertains to trust or others. iv. Three buildings are shown in the Balance Sheet, two Dharamshala and one Sukh Bhawan building but here too proof of ownership of property is not furnished. v. Assessee has not furnished any details which show that whether activities done from such property is as per objects or not. vi. No details of rate charged from these properties, whether at nominal rate or higher rate is furnished. vii. The surplus during the year is Rs.14,05,004/- against total receipts of Rs.33,03,336/- which further confirm that charges are too high and not come under ambit of charity. viii. Assessee has not furnished the details of charitable activities done, thus expenses claimed other than administrative are not verified. ix. In absence of activities, salary given of Rs.1,65,676/- is also not verified.
SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR 2.3 During the course of hearing, the ld.AR of the assesee filed the following submission with the prayer to direct the ld. CIT(E) to grant registration to the assessee u/s 12AA of the Act ‘’1. Second proviso to section 153(5) provides that where an order u/s 254 requires verification of any issue by way of submission of any document by the assessee or any other person or where an opportunity of being heard is to be provided to the assessee, the order giving effect to the said order u/s 254 shall be made within the time specified in sub-section (3). Section 153(3) provides the time limit of twelve months from the end of the financial year in which the order u/s 254 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. In the present case, Hon’ble ITAT vide order dt. 06.03.2019 set aside the order of Ld. CIT(E) and remit the matter back to Ld. CIT(E). The assessee vide letter dt. 28.03.2019 (PB 17) requested the CIT(E) to provide the appeal effect of ITAT order. Thereafter in pursuance to the order of ITAT, Ld. CIT(E) issued notice dt. 05.08.2019 (PB 18) requiring the assessee to appear to discuss the case. Thus if it is assumed that the Ld. CIT(E) has received the ITAT order after 31.03.2019, then the time limit for passing the fresh assessment order in pursuance to the direction of Hon’ble ITAT order dt. 06.03.2019 expired on 31.03.2021. Hence the order passed by Ld. CIT(E) on 19.06.2024 is illegal & bad in law as barred by limitation and therefore the Ld. CIT(E) be directed to allow registration to the assessee.
The Ld. CIT(E) observed that assessee has not complied with the show cause notice dt. 30.05.2024 and thus genuineness of activities is not proved. In this connection it is submitted that the Ld. CIT(E) has earlier issued notices on 05.08.2019, 25.05.2022 & 07.12.2022 which was duly replied by the assessee. Thereafter after 1.5 years Ld. CIT(E) issued show cause notice on 30.05.2024. This notice did not come to the knowledge of assessee as the notice was issued at the e-mail id madangopalrathi@yahoo.com. Sh. Madan Gopal Rathi expired on 24.08.2022 and thereafter on the e-portal the e-mail id was changed to rathigovind@hotmail.com. Though Ld. CIT(E) in its order has mentioned that the said show cause was given through online as well as through speed post but it was never received by the assessee. Thus the Ld. CIT(E) has erred in rejecting the application filed by the assessee seeking registration u/s 12AA of IT Act, 1961 without providing reasonable opportunity of hearing.
So far as genuineness of activity is concerned, it is submitted that assessee is carrying out the same object as it was carrying out since its inception. On the SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR basis of these objects, assessee trust was registered u/s 12A of the Act on 14.10.1974 and in earlier years the income of assessee has been assessed by allowing exemption u/s 11 (PB 28-34). The new application for registration was filed only because the registration certificate granted u/s 12A of the Act on 14.10.1974 was misplaced and the department has also expressed its inability to provide the certified copy of the same. Thus when there is no change in the activities of trust and in earlier years income has been assessed by allowing exemption u/s 11, then rejecting the application filed by the assessee on the ground that genuineness of activity is not proved is incorrect. From the Income & Expenditure A/c of Goverdhan Nath Jai Mandir and Rathi Dharamshala (PB 24), it can be noted that there is loss of Rs.6,19,557/- and Rs.1,64,381/- respectively which is transferred to the Income & Expenditure A/c of the assesse trust. In the assessee trust there is income from FDR interest and rent receipt. The rent is received from 13 shops which are at the mandir premises and from 6 tenants of Sukh Bhawan at Ajmeri Gate. The information which is required by Ld. CIT(E) may be relevant for the assessment proceedings but without conducting any independent enquiry by visiting the places where the activities are carried out, it cannot be presumed that activities are not genuine more particularly when in earlier AY 2014-15 (PB 32-33), on similar activities carried out by the assessee, exemption u/s 11 was allowed. In view of above, Ld. CIT(E) be directed to grant registration u/s 12AA of the Act to the assessee.’’ On the other hand, the ld. DR supported the order of the ld. CIT(E) 2.4 2.5 We have heard both the parties and perused the material available on record. We note that ITAT Jaipur Bench vide its order dt. 06.03.2019 set aside the order of Ld. CIT(E) in refusing the registration. In the fresh proceedings the Ld. CIT(E) again refused registration on the ground that assessee failed to prove the genuineness of activities by citing various reasons as mentioned at Pg 5-6 of his order. The ld. AR of the assessee has claimed that the order passed by ld.CIT(E) on 19.06.2024 is barred by limitation. However, keeping this issue open, we note that assessee was registered u/s 12A of the Act on 14.10.1974 and for AY 1974-75, SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR 1981-82 & 2014-15 (PB 28-34) the AO has allowed exemption u/s 11 to the assessee by holding that assessee is registered u/s 12AA of IT Act, 1961 vide letter no.118 dt. 14.10.1974. However, since the registration certificate was not available with the assessee, it has applied for registration afresh but the order refusing the registration was set aside by the ITAT, Jaipur Bench to examine the final accounts for FY 2016-17. We note from the order of the ld. CIT(E) that major receipt of the assessee is rental income from shops. These shops are the property of trust as per order dt. 28.09.1988 passed by Assistant Commissioner (Devasthan), Jaipur under Rajasthan Public Trust Act, 1959. We also note that various observations made by Ld. CIT(E) for refusing the registration is without conducting any verification more particularly when similar activity was carried out in earlier years and the exemption was allowed to the assessee in those years. For grant of registration u/s 12AA when the application was filed on 19.09.2017, the requirement was to call for such document or information in order to satisfy about the genuineness of activities and to make such enquiries as deemed necessary. Therefore, considering all the facts, we direct the ld. CIT(E) to give one more opportunity to the assessee to furnish the details and if required, to make independent verification of the genuineness of activities carried by the assessee. Hence the appeal of assessee is allowed for statistical purpose.
SUKH LAL RATHI CHARITABLE TRUST VS CIT (E), JAIPUR 3.5 Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by ld. CIT(E) independently in accordance with law. 4.0 In the result, the appeal of the assesee is allowed for statistical purposes Order pronounced in the open court on 01/01/2025.
Sd/- Sd/- ¼jkBksM deys'kt;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 01/01/2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Sukh Lal Rathi Charitable Trust, Jaipur 1. 2. izR;FkhZ@ The Respondent- The ld. CIT(E), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File (ITA No. 1058/JPR/2024) vkns'kkuqlkj@ By order,
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