SATYAM FOUNDATION,VARANASI vs. CIT (E),, LUCKNOW

This appeal, filed by assessee, being for assessment year: N.A. , is directed against the order under Section 12AA(1)(b)(ii) of the Income- tax Act, 1961 , dated 30.08.2019 in Order No. ITBA/EXM/S/EXM1/2019- 20/1017676852 (1)passed by learnedCommissioner of Income Tax (Exemption), Lucknow(hereinafter called "theCIT(E)"), rejecting application dated 06.02.2019 filed by the assessee for registration u/s 12A(1) of the 1961 Act . This appeal was heard in Open court proceedings through physical hearing mode. Assessment Year: N.A. Satyam Foundation v. CIT(E) 2. The grounds of appeal raised by the assesseein memo of appeal filed with Income Tax Appellate Tribunal, Varanasi (hereinafter called “the tribunal”) , reads as under :

When this appeal was called for hearing before the Division Bench on 25.05.2022, none appeared on behalf of the assessee nor any adjournment application was filed . The notice sent through RPAD as well by email by Registry. It is observed that on earlier occasions also ,when the appeal came up for hearing before the DB, none appeared on behalf of the assessee nor any adjournment applications were filed , albeit the DB was pleased to adjourn the appeal to next date of hearing on the earlier occasions . This clearly establishes that the assessee is not vigilant about pursuing its appeal and is taking a casual approach after filing the appeal with the tribunal. The Division Bench decided to hear this appeal on 25.05.2022 and declined to grant any further adjournments.

The assessee claimed itself to be a charitable entity and has filed application for registration u/s. 12A(1) of the Act on 06.02.2019 with ld. 2 Assessment Year: N.A. Satyam Foundation v. CIT(E) CIT(E). The assessee was accorded an opportunity of being heard by ld. CIT(E) and details were called from the assessee by ld. CIT(E). The assessee furnished certain details before ld. CIT(E) . It was observed by ld. CIT(E) that the assessee’s Trust deed does not have irrevocability clause . The ld. CIT(E) also observed that the trust deed of the assessee also does not provide that in case of winding up/dissolution of the assessee, its funds /property will be transferred to another charitable entity. Further , it was observed by ld. CIT(E) that the trust deed of the assessee does not have a clause that the beneficiaries are a section of public and not specific individuals .The ld. CIT(E) also observed that trust deed of the assessee does not have a clause that the assets/funds of the assessee will be used for the objects of the assessee. The ld. CIT(E) asked the assessee to reply on all these issues. The ld. CIT(E) issued notice dated 30.07.2019 to the assessee directing it to incorporate the clauses as per CBDT letter number F.No. 240/8/2015-A &PACII ,dated 14.12.2018 as under: “3. As per the notice/letter dated 30-07.2019, incorporating, inter-alia, the requirements as per Board's letter no.F.No. 240/8/2015-A & PAC-II dated 14.12.2018, the applicant was required to furnish information/reply on following issues: 15. Your Society Deed/Memorandum of Association does not have irrevocability clause. Please include this clause in your Society Deed/Memorandum of Association and file a certified copy of the amended Society Deed/Memorandum of Association. 16. Your Society 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 Society Deed/Memorandum of Association and file a certified copy of the amended Society Deed/Memorandum of Association. 17. Your Society Deed/Memorandum of Association does not have any clause providing that in the event of dissolution of society/society/non profit company, the fund/assets of the society/society non profit company will be transferred only to some other society/society MFP/non profit company having similar objectives. Please include this clause in your society deed/memorandum of association and file certified copy of the amended society deed/memorandum of association. 3 Assessment Year: N.A. Satyam Foundation v. CIT(E) 18. Your Society Deed/Memorandum of Association does not have any clause providing that the funds/property of the society will be used only for the objectives of the society/society/non profit company. Please include this clause in your Society Deed/Memorandum of Association and file a certified copy of the amended Society Deed/Memorandum of Association.” The ld. CIT(E) observed that the assessee’s trust deed does not have aforesaid clauses as per 15 to 18 , and despite the assessee being called upon to explain, the assessee did not submitted any replies on these issues.Accordingly, the ld. CIT(E) rejected the application filed by the assessee for grant of registration u/s 12A(1) of the 1961 Act 5. Aggrieved , the assessee has filed an appeal before the tribunal and despite several notices issued and sent to the assessee through RPAD and email also , the assessee has chosen not to appear before the Bench , nor any adjournment application(s) were filed. This is now abundantly clear that the assessee is not interested in pursuing its appeal filed with tribunal. The DB rejected to adjourn the hearing on 25.05.2022 , and proceeded to decide this appeal after hearing ld. CIT-DR and material on record. The ld. CIT-DR vehemently supported the order passed by ld. CIT(E) and submitted that even after grant of opportunity by ld. CIT(E), the assessee did not file reply as well did not produced the amended trust deed , and hence ld. CIT(E) rightly rejected the assessee’s application for grant of registration u/s 12A(1). We have observed that ld. CIT(E) has rejected the application of assessee for grant of registration u/s 12A on four grounds, firstly that the assessee’s trust deed does not have irrevocability clause , secondly that the trust deed of the assessee also does not provide that in case of winding up/dissolution of the assessee, its funds /property will be transferred to another charitable entity, thirdly that the trust deed of the assessee does not have a clause that the ITA No.222/Vns/2019 Assessment Year: N.A. Satyam Foundation v. CIT(E) beneficiaries are a section of public and not specific individuals, and fourthly that the assessee will use its funds/property for its objects .The ld. CIT(E) asked assessee to file reply on all these issues , but the assessee chose not to file reply before ld. CIT(E) , nor filed amended copy of trust deed, and even before us amended trust deed is not filed. The primary condition for grant of registration u/s 12A is that the assessee is a public charitable trust and is required to fulfill the conditions as are mandated under the 1961 Act for grant of exemption from tax. In the instant case, the assessee trust deed does not comply with the requirements of being a charitable entity, entitled for grant of registration u/s 12A. The assessee has not produced amended trust deed even before tribunal, and since the assessee is claiming itself to be charitable entity seeking exemption of its income u/s 11 and 12, the onus is on the assessee to prove that it is a charitable entity fulfilling all the statutory requirements. Under these circumstances, we do not find any merit in the appeal filed by the assessee, which stood dismissed. We order accordingly.

In the result, the appeal filed by the assessee in for ay: NA stood dismissed. Order pronounced in Open Court on 27/05/2022at Varanasi .