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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per:Anikesh Banerjee, JM: The instant appeal of the assessee is directed against the order of the ld. Commissioner of Income Tax (Exemptions), Chandigarh,[in brevity the ‘CIT (E)’] order passed u/s 12AA(1)(b)(ii) of the Income Tax Act 1961,[in brevity the Act ] order dated 26.12.2019. The assessee has taken the following ground:- “The worthy CIT Exemptions is not justified in not granting registration u/s 12AA to the assessee company.”
The assessee was called for hearing, but none was present on behalf of the assessee. The date of hearing is fixed on 13/04/2023 and the final opportunity was given to the assessee for representing the matter before the bench. We find no other option to dispose of the matter ex parte qua for assessee. After considering the submission of the ld. DR the matter is disposed of accordingly.
Brief fact of the case is that the assessee applied for registration u/s 12AA of the Act. The reasonable opportunity was allowed by the ld. CIT(E). The ld. CIT(E)found that there is no activity in relation to this charitable organisation. The ld. CIT(E) was unable to recognize the charitable activities of the assessee in relation to the main object. After passing the speaking order, the matter was disposed ofand the application was rejected. Being aggrieved assessee filed an appeal before us.
The ld. DR vehemently argued and relied on the order of the ld. CIT(E). The ld. DR further invited our attention in page no. 5 to 8 of the order of the CIT(E) which is reproduced as under:
“7. In response to the additional queries letter dated 05.12.2019, neither anybody attended nor was any request for adjournment received. In order to follow the principle of natural justice, another opportunity was accorded to the applicant on 09.12.2019 and matter was fixed for 12.12.2019. On 09.12.2019, the applicant company has submitted its reply through ITBA Portal.
On perusal of submission of the applicant it is noticed that no details of charitable activities were furnished by the Applicant. Hence applicant company was asked vide additional questionnaire dated 05.12.2019 about the activities of the company In response the applicant company has stated in its reply as under “Few meetings have taken place in which various policy decisions were taken. Charitable activities will start in the near future. ”
On perusal of the reply it is noticed that your company has not performed any activity since inception and failed to provide any evidence of activity done by the company. Applicant in its reply itself stated that no such activities has been commenced till now. It is evident from the plain reading of the Act that Section 12AA(1) clearly stipulates that the Commissioner shall satisfy himself about the objects and the genuineness of its activities. Therefore, satisfaction of the Commissioner is must about the genuineness of the activities, inter alia, before granting of registration. Therefore, for a trust or institution it is mandatory to do charitable activities that will stand the test of inspection by the Commissioner before the registration is granted. In absence of any worthwhile activity by the applicant undersign does not have a chance to satisfy himself about the genuineness of any activity. An identical view has been expressed by Hon’ble Kerala High Court in the case of Self Employers Service Society vs. Commissioner of Income-tax, 247 ITR 018 [2001], In this case both the single bench and on appeal filed by the assessee, the division bench of the Hon’ble High Court decided the issue in favour of the revenue. Therefore, in a case where no activity has been carried out by a trust since its inception, it may not be a case to grant registration u/s 12AA of the Act.
On perusal of Balance Sheet of applicant company, it is noticed that share of Applicant Company are held by Government of Jammu & Kashmir. However, on perusal of MoA it is noted that following individuals are holding shares of applicant company: -
S. No. Name No. of shares. 1. Sh. Shailendra Kumar 4,000
2. Dr. Mohammad Ismail Parry 960 In this regard, relevant part of MoA and Balance sheet is reproduced here: -
We heard the submission of the ld. DR, consider the documents available in the record& relied on order of the revenue authorities. For registration u/s 12AAit is clearly stipulating that the ld. CIT(E)shall satisfy himself about the objects and the genuineness of its activities. There is no such any charitable activities was recognised by the ld. CIT(E) as well as bench. We find no infirmity in the order of the ld. CIT(E). As per our considered view, we are not interfering in the order of the ld. CIT(E). Accordingly, the appeal of the assessee is dismissed.