SAMSKRITA BHARATI DAKSHIN BANGA,KOLKATA vs. CIT (EXEMPTION), KOLKATA, KOLKATA

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ITA 2/KOL/2018Status: DisposedITAT Kolkata09 January 20193 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that lack of knowledge of the Act by a trustee cannot be a ground for rejecting registration under Section 12AA. The CIT(E)'s concerns about non-compliance and misuse of funds were considered mere conjectures.

What were the facts?

The assessee, a trust engaged in teaching 'Spoken Sanskrit', applied for registration under Section 12AA and approval under Section 80G. The CIT(E) rejected the applications primarily because a trustee was unaware of the provisions of Section 12AA and the potential for misuse of funds.

What were the issues?

Whether lack of awareness of tax provisions by a trustee is a valid reason to deny registration under Section 12AA and approval under Section 80G.

Which sections of the Income-tax Act were involved?

Section 12AA,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘D’ BENCH, KOLKATA

Before: Sri J. Sudhakar Reddy & Sri S.S. Viswanethra Ravi&

ITA No. 01/Kol/2018 & Sanskrita Bharati Dakshin Banga...................................…..……………….…...……..…….............Appellant C/o. V.N. Purohit & Co. Chartered Accountants Diaomond Chambers Unit-III 4th Floor Suit No. 4G 4, Chowringhee Lane Kolkata – 700 016 [PAN : AARTS 3941 H] Vs. Commissioner of Income Tax (Exemption), Kolkata......……………..………….…................Respondent Appearances by: Shri V.N. Purohit, FCA & Shri H.V. Bharadwaj, FCA, appeared on behalf of the assessee. Shri R. Shyam, CIT D/R. appearing on behalf of the Revenue. Date of concluding the hearing : November 26th , 2018 Date of pronouncing the order : January 9th , 2019 ORDER Per J. Sudhakar Reddy, AM :- Both these appeals are filed by the assessee directed against identical orders of the Learned Commissioner of Income Tax (Exemptions), Kolkata (the ‘ld. CIT(E)’), rejecting registration u/s 12AA of the Income Tax Act, 1961 (the ‘Act’) in ITA No. 01/Kol/2018 & denying approval for exemption u/s 80G of the Act in ITA No. 02/Kol/2018.

2.

There is a delay of 63 days in filing of both these appeals. After perusing the petition for condonation, we are convinced that the department was prevented by sufficient cause from filing the appeals on time. Hence the delay is condoned and appeal admitted.

3.

After hearing rival contentions, we find that the ld. CIT(E) has rejected the application of the assessee for grant of registration u/s 12AA of the Act, by holding as follows:-

2 & ITA No. 02/Kol/2018 Sanskrita Bharati Dakshin Banga “3. During the course of hearing it was seen that the Trust is engaged in the activity of teaching "Spoken Sanskrit". During the hearing dated 03-07-2017, the trustees were specifically asked why the trust needed the registration u/s 12AA and how it would help the trust in its functioning. In his reply, Shri Dutta stated that he wanted the approval u/s 80G for which also the trust had simultaneously applied. It was seen that the Trustee was not aware of the provisions of the Sec 12AA and the relevant benefits of it.

4. Without prejudice to the above, even if the registration is granted to the society, the Secretary, being unaware of the provisions of the act, will not be able to fulfil the requisite compliances required in the Act and therefore, it will lead to the misuse of the Funds, if any, available in the hands of the society.” 3.1. The Act specifies that the ld. CIT(E) shall grant registration to the trust or institution u/s 12AA of the Act, after satisfying himself about a) The objectives of the trusts or institution and b) The genuineness of the activities of the trust. 3.2. In the case on hand, both these aspects are not disputed by the ld. CIT(E). The registration is rejected only because a) The trustee is not aware of the provisions of Section 12AA of the Act and the relevant benefit of it and b) Consequently the society will not be able to fulfill the requisite compliances required under the Act and c) It will lead to misuse of funds.

4.

In our view, registration of a trust cannot be rejected u/s 12AA of the Act, for such reasons. Lack of knowledge of the Act, for one of the trustees, cannot be the reason for rejecting the registration. Professional advice can always be availed. The second and third reasons are mere conjectures. The ld. CIT(E) has not found anything wrong with the objectives of the trust or the genuineness of its activities. Hence, we direct the ld. CIT(E) to grant registration to the trust u/s 12AA of the Act. For the very same reason, he is directed to grant approval u/s 80G of the Act.

5.

In the result, both these appeals of the assessee are allowed. Kolkata, the 9th day of January, 2019. Sd/- Sd/- [S.S. Viswanethra Ravi] [J. Sudhakar Reddy] Judicial Member Accountant Member Dated : 09.01.2019 {SC SPS} Copy of the order forwarded to: 1. Sanskrita Bharati Dakshin Banga C/o. V.N. Purohit & Co. Chartered Accountants Diaomond Chambers Unit-III 4th Floor Suit No. 4G 4, Chowringhee Lane Kolkata – 700 016 2. Commissioner of Income Tax (Exemption), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), Kolkata Benches, Kolkata.

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