M/s. Sivasakthi Charities, Salem v. ITO, Salem

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH C : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER] I.T.A.NO.1584/MDS/2009 ASSESSMENT YEAR : NA SIVASAKTHI CHARITIES MAHALAKSHMI APARTMENTS B BLOCK 3 RD FLOOR NO.28/14 SIVASAMY STREET SALEM 636 001 VS THE ITO WARD I(1) SALEM (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR RESPONDENT BY : SHRI TAPAS KUMAR DUTTA O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE-TRUST IS DI RECTED AGAINST THE ORDER OF THE LD. CIT SALEM PASSED U/S 12AA OF THE INCOM E-TAX ACT 1961 (HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT). 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A N APPLICATION IN FORM 10A WAS FILED BY THE ASSESSEE-TRUST FOR ITS RE GISTRATION U/S 12AA OF THE ACT ON 12.3.2009. THE TRUST CAME INTO EXIST ENCE BY A DEED DATED 21.11.2007 WHICH WAS SUPPLEMENTED BY ANOTHER DEED DATED 6.6.2008. AT THE TIME OF CONSIDERATION OF APPLICAT ION FOR REGISTRATION IT ITA 1584/09 :- 2 -: WAS NOTICED BY THE LD. CIT THAT THE TRUST DEED DID NOT CONFORM TO THE CONDITIONS LAID DOWN IN THE INDIAN TRUST ACT. ON A NOTICE GIVEN IN THIS RESPECT THE TRUST AMENDED ITS DEED BY INCORPORATIN G THE REQUISITE CLAUSES AND FILED THE SUPPLEMENTARY DEED ON 22.7.20 09. WHILE CONSIDERING THE GRANT OF REQUISITE REGISTRATION TH E LD. CIT WANTED TO EXAMINE THE FOLLOWING ASPECTS: (I) NOTES ON ACTIVITIES UNDERTAKEN BY THE TRUST SO FAR WITH SATISFACTORY DOCUMENTARY EVIDENCE IN SUPPORT OF THE EXPENSES DEBITED IN THE INCOME & EXPENDITURE ACCOUNT FOR THE PERIOD FROM THE DATE OF INCEPTION TILL DATE. (II) DETAILS OF DONATIONS RECEIVED (FOREIGN AS WELL AS DOMESTIC) ALONGWITH PAN AND ASSESSMENT PARTICULARS OF DONORS DONATING ` 5 000/- AND ABOVE. (III) RECEIPTS AND PAYMENTS ACCOUNT INCOME & EXPENDITURE ACCOUNT AND BALANCE SHEET AS AT 31.3.2008 AND 31.3.2009. (IV) DETAILS OF ASSESSMENT PARTICULARS OF THE TRUSTEES AS WELL AS BREAK-UP DETAILS OF TRUSTEES CONTRIBUTIONS TOGETHER WITH SOURCES THEREOF. 3. WHEN NOBODY APPEARED TO ANSWER THE ABOVE QUERIES N OTICES WERE SENT REPEATEDLY AND FINALLY ON 14.8.2009 S HRI V.S. VENKAT PATI CA APPEARED AND THE CASE WAS DISCUSSED WITH HIM. IT WAS NOTICED BY THE LD. CIT FROM PARA 8 AT PAGE 9 OF THE TRUST DEED THAT THE DELEGATION OF ALL OR ANY OF THE POWERS AUTHORITIES AND DIREC TIONS VESTED IN THE TRUSTEES GENERALLY HAS BEEN INCORPORATED WHICH H E FOUND TO BE ITA 1584/09 :- 3 -: VAGUE AND AGAINST THE SPIRIT OF EXECUTION OF SUCH P UBLIC CHARITABLE TRUST DEED. IT WAS ALSO NOTED THAT CLAUSE (P) OF THE TRUS T DEED SPEAKS ABOUT ADDITION/DELETION OR AMENDMENT OF ANY OF THE POWER S OF THE TRUSTEES WHICH HE FOUND TO BE NOT PERMISSIBLE. LIKEWISE CL AUSE(Q) PERMITTED THE ADDITION OF ANY OTHER OBJECT(S) PROVIDED WHOLLY EDUCATIONAL AND CHARITABLE IN NATURE. FROM THIS CLAUSE THE LD. CI T INFERRED THAT THIS PROVISION MAY BE USED TO THE VERY PURPOSE OF FORMAT ION OF SUCH CHARITABLE TRUST. THE OBJECTS OF THE TRUST MENTION ED IN THE DEED WERE HOWEVER FOUND TO BE CHARITABLE IN NATURE. BUT THE POWERS GIVEN IN THE MANNER STATED ABOVE TO AMEND THE TRUST DEED ARBITR ARILY AT THE WHIMS AND FANCIES OF THE TRUSTEES ACCORDING TO THE LD. CI T WOULD RENDER THE OBJECT CLAUSES SIMPLY VAGUE AND IS NOT PERMISSION I N VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT R ENDERED IN THE CASE OF CIT VS P. BHANDARI 147 ITR 500. WITH THESE OBS ERVATIONS WHICH REMAINED UNREPLIED THE LD. CIT REFUSED TO GRANT RE GISTRATION SOUGHT FOR BY THE ASSESSEE-TRUST. NOW THE ASSESSEE-TRUST IS A GGRIEVED AND HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX SA LEM DATED 28.8.2009 IN C.NO.9755(146)/SLM/2008-09 IN REFUSING REGISTRATION IN TERMS OF SECTION 12 AA OF INCOME TA X ACT 1961 IS CONTRARY TO LAW FACTS AND IN THE CIRCUMSTANCES OF THE CASE. ITA 1584/09 :- 4 -: 2. THE CIT ERRED IN REJECTING THE APPLICATION F ILED FOR REGISTRATION U/S 12 AA OF THE ACT WITHOUT ASSIGNING PROPER REASO NS AND JUSTIFICATION. 3. THE CIT FAILED TO APPRECIATE THAT THE OBJECTS OF THE TRUST WERE CHARITABLE WITHIN THE SCOPE OF SECTION 2(15) OF THE ACT AND HAVING NOT DISPUTED THE NATURE OF SUCH OBJECTS THE REJECTION OF THE PRAYER FOR REGISTRATION U/S 12AA OF THE ACT WAS WRONG INCORRECT UNJUSTIFIED ERRONEOUS AND NOT SUSTAINAB LE BOTH ON FACTS AND IN LAW. 4. THE CIT FAILED TO APPRECIATE THAT THE OBJECTS ENUMERATED IN THE DEED OF TRUST WERE NOT VAGUE AND IN THIS REGARD THE DECISION RELIED UPON IN THE IMPUGNED ORDER BY HIM W AS NOT APPLICABLE TO THE FACTS OF THE CASE CITED OUT OF C ONTEXT. 5. THE CIT FAILED TO APPRECIATE THAT THE FINDING S ON THE POWERS OF THE TRUSTEES WERE OUTSIDE THE SCOPE OF PROCEEDIN GS BEFORE HIM INASMUCH AS HAVING NOT OBJECTED TO THE N ATURE OF THE OBJECTS FOR WHICH THE REGISTRATION SOUGHT FOR REJECTING THE SAID PRAYER WAS WRONG INCORRECT UNJUSTIFIED ERRO NEOUS AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. 6. THE CIT FAILED TO APPRECIATE THAT THE FINDINGS RECORDED IN THIS REGARD IN PARA 4.1 OF THE IMPUGNED ORDER WERE WRONG INCORRECT UNJUSTIFIED ERRONEOUS AND NOT SUSTAINAB LE BOTH ON FACTS AND IN LAW. 7. THE CIT FAILED TO APPRECIATE THAT THE FIND INGS RECORDED IN THIS REGARD IN PARAS 4.5 AND 4.6 OF THE IMPUGNED ORDER W ERE WRONG INCORRECT UNJUSTIFIED ERRONEOUS AND NOT SU STAINABLE BOTH ON FACTS AND IN LAW. 8. THE CIT FAILED TO APPRECIATE THAT THE ORDE R REJECTING THE PRAYER FOR REGISTRATION U/S 12AA OF THE ACT WAS PAS SED OUT OF TIME INVALID PASSED WITHOUT JURISDICTION AND NOT SUSTAINABLE BOTH ON FACTS AND IN LAW. ITA 1584/09 :- 5 -: 9. THE CIT FAILED TO APPRECIATE THAT THERE WA S NO PROPER OPPORTUNITY GIVEN BEFORE PASSING THE IMPUGNED ORDER AND ANY ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IS NULLITY IN LAW. 10. THE CIT FAILED TO APPRECIATE THAT THE DECI SIONS CITED IN THE IMPUGNED ORDER WERE NOT APPLICABLE TO THE FACTS OF THE CASE AND RELIED UPON ERRONEOUSLY AND OUT OF CONTEXT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE C AREFULLY PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE-TRUST HAS TAKEN A GROUND THAT OPPORTUNITY OF HEARING WAS NOT PROPERLY GIVEN TO IT TO EXPLAIN THE OBJECTIONS NOTICED BY THE LD. CIT IN HIS ORDER. WE ALSO FIND THAT INITIALLY WHEN THE CASE OF THE TRUST REMA INED UNREPRESENTED ON THREE OCCASIONS THE LD. CIT GAVE HEARING TO THE CA WHO APPEARED ON FOURTH OCCASION AND THE CASE IS STATED TO HAVE B EEN DISCUSSED WITH HIM. BUT AS PER THE SPECIFIC GROUND TAKEN BY THE A SSESSEE-TRUST IN THIS REGARD I.E GROUND NO.9 WE DEEM IT FIT TO SEND THE ISSUE OF REGISTRATION TO THE FILE OF THE LD. CIT SO THAT THE DETAILS CALL ED FOR BY HIM CAN BE PROPERLY EXAMINED AND THE GRIEVANCE OF THE ASSESSEE -TRUST CAN BE REDRESSED. ACCORDINGLY WE SEND THIS ISSUE TO THE FILE OF THE LD. CIT AND DIRECT HIM TO DECIDE THE APPLICATION FOR REGIST RATION U/S 12AA OF THE ACT AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT AND A LLOW THE APPEAL OF THE ASSESSEE-TRUST FOR STATISTICAL PURPOSES ONLY. ITA 1584/09 :- 6 -: 5. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE-TRU ST IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 4.2.2011 SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 4.2. 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR