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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SH. BHAVNESH SAINI & SH. L. P. SAHU
This appeal by assessee has been directed against the order of Ld. CIT, Muzaffarnagar, dated 26.08.2014, rejecting the application u/s 12AA of the IT Act.
Briefly the facts of the case are that the assessee trust filed application for granting of registration u/s 12AA of the IT Act. The assessee is running a hospital at Saharanpur, with the object to cater to the medical needs of people in society, particularly the poor and needy persons. Camps are also claimed to be organized for free and concessional consultancy and treatment to the people of the region. The assessee is a registered trust. Ld. CIT on perusal of the account ending 31.03.2014 found that an amount of Rs. 36,00,000/- has been directly carried to the balance sheet on account of donation/membership fee received from the trustees.
Similarly, in the preceding year, an amount of Rs. 5,10,000/- was carried to the balance sheet on similar account. It is noted that the activities of the trust is primarily funded from the aforesaid amount constituting the corpus of the trust, apart from term loan raised from the Indian Overseas Bank, aggregating to Rs. 90,65,692/-. In order to examine the genuineness of the fund utitized for building up the corpus, the trust was required to specify the relationship between the trustees, the nature of their income and capacity to contribute to corpus fund. The asssessee filed the details of contribution made by the trustees. Ld. CIT noted that substantial sums have been deposited in cash in bank account of Sh. Harnam Singh, Chairperson of Trust with Union Bank of India, Saharanpur for which no explanations have been given for deposit of the cash. Other trustees are agriculturist and are not Income Tax payee. Ld. CIT, therefore, doubted the credibility of the statement that amount is contributed to the corpus by the trustees. Ld. CIT also noted that ACIT, circle Saharanpur, has not recommended for grant of registration, who pointed that there was no patient in the general ward in hospital whereas 50% of the deluxe, semi private and private rooms were found to be occupied at the time of visit of the Inspector of Income Tax. Registration application u/s 12AA was accordingly rejected.
After considering the rival submission and perusal of material on record, we are of the view the matter requires reconsideration at the level of CIT.
Ld. Counsel for the assessee referred to the Registered Trust Deed, copy of which filed in the paper books and contended that aims and of objects of the trust are charitable in nature which have not been adversely commented up by Ld. CIT. He has further submitted that it is not necessary that at the time of visit of Inspector, Income Tax, the patient in general ward would found admitted. He has submitted that the assessee is willing to produce the evidence of charitable activities before Ld. CIT.
We have examined the contention of Ld. Counsel for assessee in the light of provisions of section 12AA of the IT Act. At the time of grant of registration or refusal to grant registration u/s 12AA, Ld. CIT is required to satisfy himself about objects of the trust or institutions and the genuineness of its activities. In the case of the assessee prima facie, the object of the assessee trust appears to be charitable in nature. Ld. CIT did not comment upon on the aims and objects of the assessee trust in impugned order. Ld. CIT has gone into the issue of corpus fund received by the assessee trust from its trustees and others and fund utilization in order It may not be the relevant criterion to be consideration at the time of considering the application u/s 12AA of the IT Act. Ld. Counsel for the assessee submitted before us that as regards the genuineness of the activities of the assessee trust, he would produce evidences before Ld. CIT for his consideration.
In view of the above discussion, we are of the view that the matter requires reconsideration at the level of Ld. CIT, Muzaffarnagar. We accordingly set aside the impugned order and restore the appeal of the assessee to the file of Ld. CIT, Muzaffarnagar with directions to re-decide the application u/s 12AA of the IT Act, by giving reasonable sufficient opportunity of being heard to the assessee.
The assessee is directed to produce the evidences of activities of the assessee trust before Ld. CIT for his consideration.