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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI. A. D. JAIN & SHRI T. S. KAPOOR
PER A.D. JAIN, V.P.: This is assessee’s appeal against the order of the ld. CIT (Exemption), Lucknow, dated 15.1.2018, rejecting the application for registration under section 12AA(1)(b)(ii) of the Income Tax Act, 1961. 2. The facts of the case are that the assessee filed an application for registration under section 12A(a) of the Income- tax Act, 1961 on 11.7.2017 with the CIT (Exemptions), Lucknow. The ld. CIT (Exemptions) issued a letter, dated 13.1.2017, to the assessee raising specific queries regarding the application for registration u/s 12A of the Act, for compliance on 14.12.2017. On this date, i.e., 14.12.2017, the ld. Counsel for the assessee attended and filed power of attorney and part reply. The ld. Counsel for the assessee sought an adjournment for 15.1.2018 for filing the remaining reply and also to furnish the books of account & vouchers.
The ld. CIT (Exemption) rejected the application moved by the assessee, observing that Applicant-Society had not been able to produce the books of account, Bank statement and vouchers in respect of expenses claimed by the applicant for verification of objects and activities of the trust; that on perusal of material available on record, it was seen that the Applicant- Society was not carrying out any activities of charitable nature; that in light of the fact that the applicant society could not produce the books of account and vouchers, the genuineness of activities could not be verified; that as per provisions of section 12AA(i)(b) of the Act, two factors, namely, the objects of charitable purpose and the genuineness of the activities have to be proved before granting the registration; that however, the applicant failed to prove the same; and that hence, the Applicant- Society had not made out a case for granting the registration under section 12AA(1)(b) of the I.T. Act.
Before us, the ld. Counsel for the assessee filed a copy of the written submission, dated 12.12.2017, i.e., the reply filed by the assessee in response to the query letter (supra) dated 13.11.2017 of the ld. CIT (E), wherein, the assessee had furnished detailed/point-wise replies to each and every query raised by the ld. CIT (E). For the sake of ready reference, we reproduce hereunder verbatim the said written submission, dated 12.12.2017 of the assessee: “Dated: 12.12.2017 The Commissioner of Income Tax (Exemption) 5th Floor, South Block, T.C./46V, U.P.S.C.I.D.C. Limited Vibhuti Khand, Gomti Nagar, Lucknow-2260 10 PAN NO. AABTH6898Q REG: APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT IN THE MATTER OF HART KRISHAN SOMANI CHARITBALE TRUST Respected Sir, We thankfully acknowledge receipt of notice/letter No. CIT(E)/lko/1 2A/3 88/17-18/7099 dated 13.11.2017 in which we were required by your goodself to furnish details/informations as required therein. In compliance, we wish to submit as under for your kind and judicious consideration:
1. 1. In reply to point no. 1 of the notice under reply we are submitting photocopy of PAN Card for your kind verification and record marked Annexure 'A' (page 1). We wish to inform your honour that the date of presentation/execution of the Trust namely M/s Hari Krishan Somani Charitable Trust was 28.04.2017 i.e. f.y. 2017-18 relevant to Asstt. Year 2018-19 and therefore, the question of filing of Income Tax Return for the last 3 years does not arise.
2. Apropos of point covered by Si. No. 2 it is put on record that the question of utilization of Trust income in the past does not arise since the applicant trust came into existence w.e.f. 28.04.20 17 - a fact evidenced by the deed of Trust sent alongwith the application dated 28.06.20 17 on Form 1 O already on record.
3. In reply to point no. 3 of the notice under reply the activities of the Trust shall be according to the objects of the Trust as laid down in the Trust Deed already on record.
4. In reply to point no. 4 of the notice under reply it is to inform your honour that the item covered by Si. No. 4 is not applicable since no premises are occupied or owned by the Trust.
In reply to point no. 5 of the notice under reply it is to inform your honour that our Trust M/s Hari Krishan Somani Charitable Trust was executed on 28.04.2017 i.e. in F.Y. 2017-18 and therefore, requirement of Audit Report in Form 1OB is not applicable in our case.
6. In reply to point no. 6 of the notice under reply we are submitting herewith, certified copy of the Trust Deed marked Annexure ‘B’ (page 2 to 20) and original copy of the Trust Deed is being produced for your kind verification. 7. In reply to point no. 7 of the notice under reply we are enclosing herewith photocopy of the proof of identity i.e. PAN Card and Aadhar Card of Shri Krishan Kumar Somani, Managing Trustee/Settlor of the Trust marked Annexure 'C' (page 21 to 22). As required by your honour we are giving details of other member of the Trust as under: S. NAME ADDRESS PAN NO. MOB. NO. N. 1 Mr. K. K. Somani A-9, Sarvodaya Nagar, AHIIS9087Q 9839077442 Kanpur 2 Mr.Girish Somani A-9, Sarvodaya Nagar, AUFPS2602H 9839081442 Kanpur 3 Mr.Nimish Kumar A-9, Sarvodaya Nagar, AUFPS2604B 9839037534 Somani Kanpur 4 Mrs.Usha Somani A-9, Sarvodaya Nagar, AAPPS6282D 9336812727 Kanpur 8. In reply to point no. 8 of the notice under reply it is to inform your honour that Ws Han Krishan Somani Charitable Trust was executed on 28.04.2017 i.e. inF.Y. 2017-18 and as such the question of activities conducted during last three years does not arise. 9. Likewise point no. 9 is not applicable in our case. However except the amount settled upon the execution of the Trust Deed no other donation fund, loans, member fee or grant of Rs.5000/- or more has been received. 10. In reply to point no. 10 of the notice under reply we are submitting confirmed copy of Account of donation of Rs.5,000/- received from Shri Krishan Kumar Somani, Managing Trustee of the Trust, vide Cheque No. 000032 dated 15.04.2017 drawn on HDFC Bank for your kind perusal and record marked Annexure 'D' (page No. 23).
11. In reply to point no. 11 of the notice under reply we wish to inform your honour that M/s Han Krishan Somani Charitable Trust does not have any immovable asset and has maintained Saving Bank Account only with M/s Kotak Mahindra Bank, M. G. Road, The Mall, Kanpur 12. In reply to point no. 12 of the notice under reply it is, hereby undertaken that there will be no infringement to the 1st proviso to section 2(15) of the Act.
In reply to point no. 13 of the notice under reply it is to inform your honour that no telephone connection is held by the applicant Trust and email address is as under Email ID: contact@rhlprofiles.com 14. Apropos of point no. 14 it is to request you, Sir, to peruse Trust Deed enclosed with the application for registration which covers relief of the poor/education/medical relief and advancement of other objects of General Public utility and the activities are covered by the proviso to section 2(15) so as to attract the said provision of law. The Trust has come into existence only as in April, 2017 and uptil now no activity has been carried out and therefore question of submitting details of the same docs. not apply in our matter.
In reply to point no. 15 of the notice under reply in clarification to item covered by Si. No. 15 it is hereby declared by the settler and all the trustee declare that the settlement is irrevocable and the factum of the registration by sub registrar Kanpur lends strength to its irrevocability.
In reply to point no. 16 of the notice under reply it is clarified and put on record that the objects of the Trust, on being perused closely reveals that the Trust is for the benefit of the public and not any specific individuals or individual.
In reply to point no. 17 of the notice under reply it is to put on record that there is no such requirement under law.
In reply to point no. 18 of the notice under reply the provisions of enclosed Trust Deed are sufficient enough to indicate and establish that the Trust finds/property will be used only of the objective of the Trust and it appears that the said factor/aspect of the matter has escaped your kind and judicious attention.
In reply to point no. 19 of the notice under reply it is to inform your honour that we have not applied for registration u/s 80G of the Act. However, we shall apply for the same at the appropriate time. 20. In reply to point no. 20 of the notice under reply we are submitting copy of Bank Statement of Kotak Mahindra Bank, Kanpur as on date marked Annexure 'E' age no. 24) 21. In reply to point no. 21 of the notice under reply copy of the Corpus account in the Books of A/c is being enclosed herewith for your kind perusal and record. There are no bills and vouchers, since no activities etc. have so far been carried on. 22. In reply to point no. 22 of the notice under reply that no trustee/settler is either a member or trustee in any other Trust registered u/s 12A of the Act. 23. In reply to point no. 23 of the notice under reply it is to inform your honour that the Question of any accumulation or set apart u/s 11(2) for the last 3 years does not arise since the trust came into existence in April, 2017. In view of the submissions/explanations and clarifications given herein above, we request your goodseif to kindly grant us registration at your earliest and oblige. Respectfully submitted, Yours faithfully, For HARI KRISHAN SOMANI CHARITABLE TRUST Sd/- MANAGING TRUSTEE/ A.R. End : As above. (Annexure A to E contain in 24 pages only)”
5. The ld. Counsel for the assessee, placing reliance on the decision of the Hon'ble jurisdictional High Court in ‘Hardayal Charitable & Educational Trust vs. CIT’, 355 ITR 354 (All.), has submitted that where no activities have been initiated by the trust/society/institution and the trust/society/institution, set up to achieve its objects of education/medical relief and advancement of other objects of general public utility, is in the process of establishing such institution, registration under section 12A cannot be refused. The ld. Counsel for the assessee prayed that therefore, in the interest of justice, the matter may be restored to the file of the ld. CIT (Exemptions), Lucknow for deciding the issue relating to grant of registration under section 12A of the Act, in view of the aforesaid judgment of the Hon'ble jurisdictional High Court, after affording due opportunity of hearing to the assessee.
The ld. D.R. has placed reliance on the order of the ld. CIT (Exemption), Lucknow. 7. Heard. We find that the assessee had specifically submitted before the ld. CIT (E), vide letter dated 12.12.2017, inter alia, that this is the very first year of institution of the trust and the trust has proposed to achieve the objects of education/ medical relief and advancement of other objects of general public utility. However, the ld. CIT(E) rejected the application of the assessee for registration under section 12A of the Act, observing that the Applicant-Society is not carrying out any activities of charitable nature. 8. In ‘Hardayal Charitable & Educational Trust vs. CIT’ (supra), the Hon'ble jurisdictional High Court, on the issue relating to registration under section 12AA of the Act, held as under:
At the time of registration under s. 12AA, which is necessary for claiming exemption under ss. 11 and 12, the CIT is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under s. 12AA cannot be refused, on the ground that the trust has not yet commenced the charitable activity. Any enquiry of the nature would amount to putting the cart before the horse. At this stage only the genuineness of the objects has to be tested and not the activities, which have not commenced. The enquiry of the CIT at such preliminary stage should be restricted to genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under s. 12AA and thus at such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused.
No decision contrary to ‘Hardayal Charitable & Educational Trust vs. CIT’ (supra) has been cited before us by the Department.
In the case of the assessee under appeal, as contended by the assessee before the ld. CIT(E) and also before us, a trust was set up by the assessee to achieve its objects of education/ medical relief and advancement of other objects of general public utility. In such a situation, registration under section 12AA cannot be refused. Therefore, we set aside the order of the ld. CIT (Exemptions) and restore the matter to his file with a direction to re-adjudicate the issue of grant of registration under section 12A of the Act, keeping in view of the judgment of the Hon'ble jurisdictional High Court in ‘Hardayal Charitable & Educational Trust vs. CIT’ (supra), preferably within two months from the date of receipt of this order, on affording due opportunity of hearing to the assessee,.
In the result, for statistical purposes, the appeal of the assessee is allowed. Order pronounced in the open Court on 05/04/2022.