KOLKATA CLASSICS TRUST,KOLKATA vs. CIT(EXEMPTIONS), KOLKATA, KOLKATA

The main grievance of the assessee trust as pointed out to us by the Ld. Counsel was that the trustee did not receive any notice dated 26.05.2016 as mentioned by the Ld. CIT(E) and, therefore, no one could represent on behalf of the assessee trust on the date of hearing before the Ld. CIT(E). It was pointed out by the Ld. Counsel that the rejection order which is impugned before us was correctly served upon the assessee at the very same address as mentioned in the application, therefore, according to Ld. counsel, the impugned order passed by the Ld. CIT(E) is in violation principles of natural justice and, therefore, is bad in law. It was also urged before us by the Ld. Counsel that the assessee trust came into existence only on 01.04.2015 and had filed the application for registration u/s. 12AA of the Act on 30.03.2016 and they had commenced its functioning in consonance with the objectives enshrined in the trust deed and drew our attention to pages 8 to 19 wherein the trust deed has been annexed in the paper book. According to Ld. Counsel, the Ld. CIT(E) erred in finding that the activities of the trust cannot be ascertained in the absence of note/proof of its activities and that the existence of the trust cannot be determined when the facts remain that the assessee had filed the PAN of the settlers and other two trustees and the list of trustees with their PAN and the bank statements with Allahabad Bank and the very fact that the impugned rejection orders have been received in the address given in the application goes on to show that the purported notice issued by the Ld. CIT(E) dated 26.05.2016 could have been a wrong address. So, therefore, the order of the Ld. CIT(E) is bad in law and it needs to be set right. The Ld. DR supported the order of the Ld. CIT(E).

We have heard the rival submissions and gone through facts and circumstances of the case. We note that the assessee trust came into existence vide trust deed dated 3 Kolkata Classics Trust 01.04.2015 and had filed an application in Form 10A on 30.03.2016 for registration u/s. 12AA of the Act as well as for approval u/s. 80G(5)(vi) of the Act. We note that the Ld. CIT(E) has mentioned that a notice was issued on 26.05.2016 informing the assessee about the hearing on 10.06.2016 and according to the Ld. CIT(E), the said notice has been returned undelivered to the assessee. Thereafter, he found fault with the assessee for not registering that the deed of trust with the Registrar/Sub-registrar etc. and that the applicant for not submiting any proof of its activities. Therefore, he was of the opinion that he could not ascertain the activities of the trust in the absence of the notes/proof of activities and he was of the opinion that the existence of the trust itself is not determinable. So, he rejected the application for registration u/s. 12AA of the Act. Similarly, the Ld. CIT(E) has also rejected the application of assessee for approval u/s. 80(G)(5)(vi) of the Act as he rejected the application of assessee for grant of registration u/s. 12AA of the Act. We do not subscribe to the said actions of the Ld. CIT(E). We are of the view that so far as grant of registration u/s. 12AA of the Act is concerned, the Ld. CIT(E)’s jurisdiction is only to verify the objectives of the institution and genuinity of the activities, meaning thereby that, he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that, they are in consonance for achieving of charitable object and nothing else. We note that the main grievance of the assessee is that it was not given an opportunity to present its case before the Ld. CIT(E). The plea of the assessee trust is that when it can receive the impugned rejection order in the address given in the application, the question of the notice dated 26.05.2016 not being able to be served does not arise and that it might have been wrongly addressed. Rejection of its application before the Ld. CIT(E), causes civil consequences and hearing the assessee before passing adverse order against it is a must and not an empty formality. Admittedly, the Ld. CIT(E) only issued one notice on 26.05.2016, fixing the hearing on 10.06.2016 and thereafter passed the impugned order on 12.07.2016. From the impugned order it is not discernable as to whether any notice of hearing on 12.07.2016 was issued to the assessee trust and what was the fate of it is not emanating from the impugned order. So, in the aforesaid circumstances, we hold the impugned 4 Kolkata Classics Trust order bad in law for violation of natural justice. In such a scenario, we are of the opinion that for the ends of justice the assessee trust needs to be given an opportunity to represent its case before the Ld. CIT(E). Therefore, we are inclined to set aside the order of the Ld. CIT(E) and remand the matter back to his file with a direction to consider the application u/s. 12AA of the Act and pass a speaking order after giving adequate opportunity to the assessee trust. The assessee trust is directed to cooperate with the Ld. CIT(E). Since we have allowed the appeal of the assessee for statistical purpose in respect to registration u/s. 12AA of the Act consequently, the application for approval u/s. 80G(5)(vi) of the Act is also restored back to the file of the Ld. CIT(E) to pass a fresh order 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 09.06.2017 Sd/- Sd/- (Dr. A. L. Saini) (Aby. T. Varkey) Accountant Member Judicial Member Dated : 9th June, 2017 Jd.(Sr.P.S.) Copy of the order forwarded to: Appellant – Kolkata Classics Trust, C/o G. P. Agrawal & Associates, 7A, 1. Kiran Shankar Ray Road, 2nd floor, Kolkata-700 001. Respondent –CIT(Exemption), Kolkata. 2 The CIT(A), Kolkata 3.