J AND A MEMORIAL CHARITABLE SOCIETY,BAREILLY vs COMMISSIONER OF INCOME TAX (E), LUCKNOW

Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW

Before: SHRI. VIJAY PAL RAO & SHRI RAMIT KOCHAR

For Respondent: Smt. Sheela Chopra, CIT (DR)

PER VIJAY PAL RAO, J.M.:

These two appeals by the assessee are directed against the two separate orders of the CIT (Exemption), both dated 26.7.2019, passed under section 12AA(a)(b)(ii) of the Income Tax Act, 1961 and under section 80G(5)(vi) of the I.T. Act, respectively. 2. None has appeared on behalf of the assessee when these appeals were called for hearing. An application for adjournment has been filed by the ld. Counsel for the assessee, however, we find that the impugned orders have been passed by the CIT (Exemption) without considering the relevant facts and record. Accordingly, we propose to hear and dispose of these appeals ex- parte.

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There is a delay of about 51 days in filing these appeals. The assessee has filed an application for condonation of delay, which is also supported by an affidavit of the Secretary of the Assessee-Trust. The relevant contents of the affidavit are as under: “Before the Hon'ble Members Income Tax Appellate Tribunal Lucknow. In the matter of M/s J AND A MEMORIAL CHARITABLE SOCIETY, BAHERI, BAREILLY(U.P) REQUEST FOR CONDONATION OF DELAY It is most respectfully submitted as under- 1. That the order appealed against before the Hon'ble Bench Income Tax Appellate Tribunal Lucknow was passed by the Ld. CIT EXEMPTION, LUCKNOW on 25/07/2019 and received by the assessee on 25/07/2019; 2. The appeal against the said order should have been filed by the assessee by 24/09/2019 (within a period of 60 days). 3. Since the mother of the counsel, Shri Gurbachan Singh Chawla has not been keeping well and is undergoing treatment for cancer at Max Super Speciality Hospital, Saket New Delhi, the appeal could not be filed in time and is being filed now at a delay of 51 Days. Apart from treatment for cancer, she also suffered a respiratory failure. 4. In view of these facts, the appeal could not be filed before your Lordships in time. 5. It is thus prayed that the delay may kindly be condoned as the counsel was prevented by a reasonable and sufficient cause in filing the appeal in time. 6. The above statement made is true to the best of my knowledge and belief.” 4. On the other hand, the ld. D.R. has objected to the condonation of delay.

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On a careful perusal of the affidavit filed by the Secretary of the Assessee-Trust and the reasons explained therein, we find that the Mother of the Counsel of the assessee was hospitalized and was undergoing treatment for cancer, due to which the Counsel could not file the appeals within the period of limitation. Accordingly, we are satisfied that the assessee was having reasonable/sufficient cause for the delay of 51 days in filing these appeals. Hence, the delay of 51 days in filing these appeals is condoned. 6. The appeal in ITA No.661/LKW/2019 against the order passed under section 12AA (1)(b)(ii) of the I.T. Act, the assessee has raised the following ground: 1. The ld. CIT (Exemptions), Lucknow has erred in rejecting the grant of registration under section 12A of the Income Tax Act, 1961 to the assessee with total disregard to the facts and circumstances of the case.

The Assessee-Trust filed an application for registration under section 12A(a) on 8.1.2019. During the course of hearing, the CIT(Exemption) issued a notice dated 10.7.2019 asking the assessee to carry out necessary amendment in the Trust Deed/Memorandum of Association regarding the revocability clause as well as the other clauses to be incorporated, relating beneficiaries and provisions for transfer of the funds/assets of the Trust in case of dissolution. Though the assessee filed reply, however, the CIT (Exemption) did not find the certified copies of the amended Trust Deed as required under the notice dated 10.7.2019. Consequently, the application under section 12A(a) of the I.T. Act of the assessee was rejected.

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We have carefully gone through the impugned order of the CIT (Exemption) and also heard the arguments of the ld. D.R., who has supported the impugned order of the CIT(Exemption) and submitted that when the assessee has not complied with necessary amendment to the Trust Deed/Memorandum of Association, the CIT (Exemption) was having no option, but to reject the application. 9. Having considered the submissions of the ld. D.R. as well as the impugned order of the CIT (Exemption), we find that the CIT (exemption) has issued notice dated 10.7.2019, vide para 3, as under: “3. As per the notice/letter dated 10.07.2019, the following requirements had been made: 15. Your Trust Deed/Memorandum of Association does not have irrevocability clause. Please include this clause in your Trust Deed/Memorandum of Association and file a certified copy of the amended Trust Deed/Memorandum of Association. 16. Your Trust Deed/Memorandum of Association does not have a clause that the beneficiaries are a section of the public and not specific individuals. Please include this clause in your Trust Deed/Memorandum of Association and file a certified copy of the amended Trust Deed/Memorandum of Association, 17. Your Trust Deed/Memorandum of Association does not have any clause providing that in the event of dissolution of trust/society/non profit company, the fund/assets of the trust/society non profit company will be transferred only to some other trust/society MFP/non profit company having similar objectives. Please include this clause in your trust deed/memorandum of association and file certified copy of the amended trust deed/memorandum of association. 18. Your Trust Deed/Memorandum of Association does not have any clause providing that the funds/property of the

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trust will be used only for th& objectives of the trust/society/non profit company. Please include this clause in your Trust Deed/Memorandum of Association and fi/e a certified copy of the amended Trust Deed/Memorandum of Association.” 10. Thereafter the CIT exemption has given his finding in para 4 of the impugned order, as under: “4. From a perusal of the documents filed in the written submission, it is noticed that it is mentioned that the bylaws of society have been amended with irrevocability clause, and about a clause regarding beneficiaries, and a clause about the dissolution and a clause about funds/property, as per pages 4-9 of the submission. However, pages 4-9 of the submission is the registration certificate/memorandum as registered by the Registrar of Society, vide certificate, digitally signed, dated 25.07.2018. Therefore, it is pertinent to mention here that since the society was registered on 25.07.2018. There are no amended byelaws of the society of record. Prima facie the applicant has failed to comply with the requirements of the notice/letter regarding irrevocability, and utilization of funds/properties of the society only for charitable purposes.” 11. It is manifest from para 4 of the impugned order reproduced above that the assessee filed written submissions and documents in response to the notice issued by the CIT (Exemption) and also stated that the bylaws of the Society/Trust have been amended with revocability clause as well as clause regarding beneficiary and utilisation/transfer of funds in the event of dissolution. However, the CIT (Exemption) further noted that the assessee has not filed the amended bylaws of the Society/Trust on record. It appears that it was a time barring case and, therefore, the CIT (Exemption), without further seeking clarification from the assessee on this point, has passed the impugned order. Accordingly, in the facts and circumstances of

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the case, when the assessee has stated in the submissions that necessary amendments have been made in the bylaws of the Society/Trust and the CIT (Exemption) has rejected the application on the ground that certificate in this regard has not been produced without giving further opportunity to the assessee to clarify on this fact whether there was a communication gap due to filing of the documents digitally or bona-fide mistake on the part of the assessee for not filing the amended bylaws of the Assessee-Trust. Hence, in the facts and circumstances of the case and in the interest of justice, we set aside the impugned order of the CIT (Exemption) and restore the matter to the record of the CIT (Exemption) for deciding the same afresh after giving one more opportunity of hearing to the assessee. 12. In the appeal in ITA No.662/LKW/2019, the assessee has challenged the order passed under section 80G(5)(vi) of the I.T. Act by raising the following ground:

The ld. CIT (Exemption), Lucknow has erred in rejecting the grant of registration under section 80G of the Income Tax Act, 1961 to the assessee with total disregard to the facts and circumstances of the case.

13.

Since the impugned order was passed by the CIT (Exemption) consequent to the rejection of the application for registration under section 12AA of the Act and the said order has been set aside for re-adjudication, therefore, the impugned order passed by the CIT (Exemption) under section 80G(5)(vi) of the I.T. Act is also set aside and the matter is remitted to the record of the CIT (Extension) for deciding the application for grant of

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approval under section 80G(5)(vi) of the I.T. Act afresh after giving one more opportunity of hearing to the assessee. 14. In the result, both the appeals are allowed for statistical purposes. Order is pronounced in the open Court on conclusion of the hearing on 20/10/2022 and reduced in writing unsigned on the date given below.

Sd/- Sd/- [RAMIT KOCHAR] [VIJAY PAL RAO] ACCOUNTANT MEMBER JUDICIAL MEMBER

DATED:21/10/2022 JJ:

J AND A MEMORIAL CHARITABLE SOCIETY,BAREILLY vs. COMMISSIONER OF INCOME TAX (E), LUCKNOW