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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI S. S. GODARA, JM &DR. A.L.SAINI, AM
Per Dr. A. L. Saini: These are appeals preferred by the assessee trust against the orders of ld. CIT(Exemption), Kolkata dated 24.05.2017 (by separate orders), who has rejected the application of the assessee trust made u/s 12AA of the Income Tax Act, 1961 and refused approval u/s 80G(5) of the Income Tax Act. (hereinafter referred to as the ‘Act’). 2. These captioned two appeals filed by the assessee are barred by limitation by 6 days. The assessee has moved a petition requesting the Bench to condone the delay. We heard the party on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeals for hearing.
The brief facts qua the issue are that ld. CIT(Exemption) passed ex parte order u/s 12AA(1)(b)(ii) of the Act and u/s 80G(5)(vi) of the Income
M/s. Eastwood Charitable Society ITA Nos.1775 & 1776/Kol/2017 Tax Act,1961, as the assessee trust did not produce books of accounts, bills and vouchers therefore annual accounts could not be verified. The assessee trust did not submit the details of funds accumulated and utilized for the perusal and verification by the CIT(E ). The ld CIT (E ) noted that assessee had merely filed the application for the sake of filing it and was not interested to pursue it further. The assessee did not make compliance with any of the letters written to him asking for various details, so as to examine whether conditions specified for approval U/s 12AA are fulfilled or not. Therefore, ld CIT (E ) observed that in absence of verification of the financial transactions being true and correct, genuineness and nature of activities, application of funds for charitable activities as defined U/s 2 (15) of the Act, it cannot be held that the assessee trust is a charitable institution eligible for registration. Hence, ld CIT (E), rejected the application of the assessee under section 12AA and consequently denied the approval under section 80G of the Act, in limine.
The contention referred to before us by the learned counsel for the assessee is that the notices for hearings were not properly served upon the assessee, therefore, he could not attend the hearings before the ld. CIT(Exemption), hence assessee was not given sufficient time to prepare the relevant documents to submit before the ld.CIT(Exemption). The ld. Counsel for the assessee also submitted before us that ld. CIT(Exemption) has passed the order in hurry without giving sufficient opportunity to the assessee, therefore, he requested the Bench to remit the case back to the file of the ld. CIT(Exemption) to reconsider the same. However,Learned Departmental Representative did not have much to say but he nevertheless relied upon the order of the ld.CIT(Exemption).
We have given a careful consideration to the rival submissions and perused the materials available on record, we note that the assessee trust came into existence as a society on 04.08,2015 and it applied for
M/s. Eastwood Charitable Society ITA Nos.1775 & 1776/Kol/2017 registration and made application u/s 12AA of the Act and for approval u/s 80G(5) of the Act before the CIT(E ). The ld. CIT(Exemption) after taking note that the assessee has not attended the hearings and has not provided, books of accounts, vouchers, bills and other relevant documents and information, therefore, he passed an ex parte order without presence of the assessee.
We do not subscribe to the above-said action of the Ld. CIT(E). We are of the opinion that so far as grant of registration u/s 12AA of the Act is concerned, the Ld. CIT’s jurisdiction is only to verify the objects of the institution and genuineness of the activities, meaning thereby that he has to satisfy himself that objects are charitable in nature and activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving of charitable objects and nothing else. From a reading of section 12A and 12AA of the Act what is intended thereby is only a registration simplicitor of the entity/trust. The registration u/s 12AA of the trust has been made a condition precedent for claiming the benefits of the exemption u/s 11 and 12 of the Act. While processing the application for registration u/s 12AA of the Act, no examination of the modus of the application of the funds of the assessee is called for. The stage for consideration of the application of the funds vis-a-vis objectives of the trust arises at the time of assessment by the A.O. where benefits are claimed by the assessee in terms of section 11 and 12 of the Act and AO can examine the question as to the nature of the contributions etc. at the time of assessment. At the time of registration of the assessee u/s 12AA is concerned what is to be looked into is whether the assessee is a genuine one or whether it is a sham institution floated only to avail the benefits of exemption under the Act (Refer SreeAnjanaya Medical Trust vs. CIT 382 ITR 399 Ker). In the light of the aforesaid discussion the impugned order of rejection for registration under 12AA by the Ld. CIT(E) cannot be sustained. The Ld. CIT(E) could have examined only the genuineness of the trust and its activities postulated are to achieve the objects for which it
M/s. Eastwood Charitable Society ITA Nos.1775 & 1776/Kol/2017 is created. There was no material to show that the trust was not genuine or that its activities were not as professed in the deed of trust. There was no finding that the trust was a sham entity and therefore, we are inclined to set aside the order of the Ld. CIT(E) with the direction to him to consider the application for registration u/s 12AA and approval sought under 80G(5) of the Act de novo by passing a speaking order in accordance to law and after giving adequate opportunity to the assessee in accordance to law.
In the result both the appeals of the assessee are allowed for statistical purposes.
Order is pronounced in the open court on 30.05.2018.
Sd/- Sd/- (S. S. GODARA) (A.L.SAINI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक/ Date: 30/05/2018 (RS, SPS) आदेशक���त�ल�पअ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ�/The Appellant- M/s. Eastwood Charitable Society ��यथ�/ The Respondent-DCIT(Exemp.), Kolkata 2. 3. आयकरआयु�त(अपील) / The CIT(A), आयकरआयु�त/ CIT 4. 5. �वभागीय��त�न�ध, आयकरअपील�यअ�धकरण, कोलकाता/ DR, ITAT, Kolkata 6. गाड�फाईल / Guard file. स�या�पत��त
//True Copy// By Order
Senior Private Secretary, Head of Office/D.D.O, I.T.A.T, Kolkata Benches, Kolkata.
M/s. Eastwood Charitable Society ITA Nos.1775 & 1776/Kol/2017