Maa Bhagwati Siksha Prasar Samiti, Meerut v. CIT, Meerut

ITA 241/DEL/2009 | 2006-2007
Pronouncement Date: 10-02-2010 | Result: Allowed

Appeal Details

RSA Number 24120114 RSA 2009
Assessee PAN EYEAR2008A
Bench Delhi
Appeal Number ITA 241/DEL/2009
Duration Of Justice 1 year(s) 19 day(s)
Appellant Maa Bhagwati Siksha Prasar Samiti, Meerut
Respondent CIT, Meerut
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 10-02-2010
Assessment Year 2006-2007
Appeal Filed On 21-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E : NEW DELHI BEFORE SHRI A.D. JAIN JUDICIAL MEMBER AND SHRI B.P. JAIN ACCOUNTANT MEMBER I.T.A. NO.241/DEL/2009 ASSESSMENT YEAR : 2006-07 MAA BHAGWATI SIKSHA PRASAR SAMITI COMMISSIONER O F INCOME-TAX MEERUT. VS. MEERUT. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.K. GOEL ADVOCATE. RESPONDENT BY : MS. BANITA DEVI RAOREM SR. DR . O R D E R PER B.P. JAIN ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX MEERUT DATED 19.12.200 8. 2. ALL THE GROUNDS RAISED BY THE ASSESSEE ARE TAKEN TOGETHER SINCE THE ISSUE INVOLVED IS IDENTICAL. GROUND NOS.1 TO 4 IN APPEAL ARE AS UNDER: 1. THAT LD. CIT MEERUT HAS NOT FOLLOWED THE DIREC TION OF I.T.A.T. TO DECIDE THE ISSUE OF REGISTRATION U/S 12 A OF I.T. ACT REFRESH. LD. CIT WITHDRAW THE REGISTRATION U/S 12A ON THE BASIS OF HIS EARLIER ORDER ONLY. 2. THAT INCOME-TAX ACT DOES NOT PERMIT TO WITHDRAWA L THE REGISTRATION GRANTED BY CIT MEERUT ON 29-07-2005 W ITH EFFECT FROM 19-08-2004 THEREFORE WITHDRAWAL OF REGISTRATI ON IS AGAINST THE PROVISION OF I.T. ACT. 2 3. THAT THE PURPOSE OF THE CREATION OF THE SOCIETY WAS TO ESTABLISHED AN EDUCATIONAL INSTITUTE FOR WHICH IT O BTAINED THE PERMISSION FROM THE REGISTRAR OF MAHATMA JYOTI PHOL AY ROOHELKHAND UNIVERSITY BAREILLY ON 12-12-2006 THERE FORE NON- PRODUCTION OF CREDITORS DOES NOT EFFECT THE NATURE OF ACTIVITY (CHARITABLE ACTIVITY) OF THE SOCIETY THEREFORE WIT HDRAWAL OF REGISTRATION U/S 12A GRANTED TO CHARITABLE INSTITUT ION CANNOT BE SAID JUSTIFIED. HENCE WITHDRAWAL OF REGISTRATION IS NOT JUSTIFIED AS PROVISION OF SECTION 12AA OF THE I.T. ACT. 4. THAT LD. A.O. IGNORED THE EVIDENCE IN THE FORM O F AFFIDAVIT & OTHER EVIDENCE WHICH JUSTIFY THE GENUINENESS OF T HE LOAN THEREFORE WITHDRAW OF REGISTRATION U/S 12A CANNOT BE JUSTIFIED. 3. BRIEF FACTS OF THE CASE AS PER ORDER OF THE LEAR NED COMMISSIONER OF INCOME-TAX ARE AS UNDER:- THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION U/S 12AA VIDE ORDER DATED 29.7.2005. DURING THE PROCEEDINGS U/S 12AA IT WAS SEEN THAT THE ASSESSEES BALANCE SHEET SHOWE D UNSECURED LOANS AGGREGATING TO RS.10 21 300/-. THE THEN CIT DIRECTED THE A.O. TO VERIFY THE GENUINENESS OF THESE LOANS. THE A.O. FOUND THAT OF THE 44 CREDITORS 33 HAD ADVANCED LOANS IN CASH. THE ASSESSEE WAS UNABLE TO PROVE THE CREDITWORTHINESS A ND GENUINENESS OF THESE CREDITORS. THE A.O. AFTER EXA MINATION OF THESE CREDITORS HELD THAT THE PROMOTERS OF THE SOCI ETY HAD INTRODUCED THEIR UNEXPLAINED MONEY IN THE GARB OF L OANS. THE A.O. ALSO FOUND THAT THE ASSESSEE HAD NOT CARRIED O UT ANY CHARITABLE ACTIVITY IN PURSUANCE OF ITS OBJECTIVES. THE A.O. ALSO FOUND THAT AT THE RELEVANT DATE THE ASSESSEE WAS NO T AFFILIATED TO ANY EDUCATIONAL BOARD. 2. IN VIEW OF THE ABOVE FINDINGS PROCEEDINGS U/S 1 2AA(3) WERE INITIATED BY THE THEN CIT MEERUT ON 16.3.2006 . A NUMBER OF OPPORTUNITIES WERE GRANTED TO THE ASSESSEE OVER A PERIOD OF SEVEN MONTHS BUT THE ISSUES RAISED COULD NOT BE CLA RIFIED. CONSEQUENTLY AN ORDER U/S 12AA(3) WITHDRAWING REGI STRATION GRANTED ON 29.7.2005 WAS PASSED ON 30.10.2006. 3 3. THE ASSESSEE FILED AN APPEAL BEFORE THE ITAT WH ICH BY AN ORDER DATED 7.4.2008 SET ASIDE THE COMMISSIONER S ORDER WITHDRAWING REGISTRATION. 4. IN RESPONSE TO NOTICE SHRI V.K. GOEL ADVOCATE ATTENDED AND FILED SUBMISSIONS ON VARIOUS DATES. 5. IT WAS CONTENDED THAT APPROVAL TO THE INSTITUTE FOR RUNNING A B. ED. COURSE WAS GRANTED ON 18.10.2004 24.1.200 7 AND 5.3.2006. HOWEVER ON EXAMINATION OF THE ATTACHED DOCUMENTS IT IS SEEN THAT THE LETTER DATED 18.10.2004 OF MJPR UNIVERSITY BAREILLY IS ONLY A LETTER ADDRESSED TO THE SECRETAR Y HIGHER EDUCATION U.P. RECOMMENDING GRANT OF APPROVAL AND THE LETTER CLAIMED TO BE DATED 5.3.2006 IS ACTUALLY DATED 5.3. 2008. IN FACT BY SUBMISSIONS DATED 9.1.2007 THE ASSESSEE ITSELF H AS STATED THAT THE SOCIETY WAS GRANTED APPROVAL OF THE GOVERNOR U .P. BY LETTER ES2582/65 DATED 12.12.2006. THUS ON THE DATE OF C ANCELLATION OF REGISTRATION (30.10.2006) THE ASSESSEE SOCIETY W AS NOT APPROVED FOR RUNNING ANY COLLEGE. 6. THE ASSESSEE HAS BROUGHT ON RECORD THE CASE OF C IT VS. KAILASHA NAND MISSION TRUST DECIDED BY U.K. HIGH CO URT TO THE EFFECT THAT REGISTRATION GRANTED U/S 12A CANNOT BE WITHDRAWN I MAY POINT OUT THAT IN THE CASE CITED B Y THE ASSESSEE REGISTRATION WAS WITHDRAWN PRIOR TO THE ENACTMENT O F SECTION 12AA(3). AFTER ENACTMENT OF SECTION 12AA(3) REGIS TRATION CAN BE CANCELLED IF THE REASONS ENUMERATED THEREIN ARE SATISFIED. 7. IN THE INSTANT CASE AFTER CARRYING OUT THE ENQU IRY ORDERED BY THE CIT THE ADDL. CIT INITIATED ACTION U/S 147 AGAINST THE ASSESSEE SOCIETY. AFTER EXAMINING THE ALLEGED DEPO SITORS THE ADDL. CIT FOUND THAT DEPOSITS AMOUNTING TO RS.4 03 500/- COULD NOT BE PROVED TO BE GENUINE. IT IS THE ASSESEES C ONTENTION THAT (A) IT WAS ABLE TO PROVE GENUINENESS OF THE REST OF THE LOANS (B) THIS ORDER HAS BEEN APPEALED AGAINST. I WOULD LIKE TO OBSERVE THAT RS.4 LAKHS IS A SUBSTANTIAL SUM AND TILL THE A SSESSING OFFICERS ORDER HOLDS IT HAS TO BE TAKEN AS FULLY O PERATIVE. IF A SOCIETY IS BROUGHT INTO EXISTENCE ONLY TO ABSORB TH E UNEXPLAINED WEALTH OF ITS PROMOTERS THEN ITS ACTIVITIES CANNOT BE SAID TO BE 4 GENUINE. ALSO POINTED OUT EARLIER IN PARA 5 (ABOVE ) THE SOCIETY WAS NOT AFFILIATED TO ANY EDUCATIONAL BOARD/UNIVERS ITY ON THE DATE OF CANCELLATION. THUS THE CONCLUSIONS RECORD ED IN THE ORDER U/S 12AA(3 STILL HOLD GOOD. 8. REGISTRATION GRANTED TO THE SOCIETY BY ORDER DAT ED 29.7.2005 IS THEREFORE WITHDRAWN. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS AND MATERIAL AVAILABLE ON RECORD. THE MAIN DISPUTE BEF ORE US IS TWO FOLDS I.E. THE LETTER FOR APPROVAL BY THE GOVERNOR OF UP WAS NOT A VAILABLE ON THE DATE OF CANCELLATION OF REGISTRATION AND SECONDLY THE DEPO SITS OF RS.4 03 500/- OUT OF TOTAL DEPOSITS OF RS.10 21 300/- WERE NOT PROVED AS GENUINE BY THE ADDL. CIT DURING THE ASSESSMENT PROCEEDINGS WHICH WERE A DDED BACK TO THE INCOME OF THE ASSESSEE AS PER ASSESSING OFFICERS O RDER AVAILABLE AT PAPER BOOK PAGES 17 TO 21 AND ACCORDINGLY THE LEARNED CIT HELD THAT THE ASSESSEE SOCIETY HAD BEEN BROUGHT INTO EXISTENCE ONLY TO ABS ORB THE UNEXPLAINED WEALTH OF ITS PROMOTER AND THEREFORE THE ACTIVITIE S CANNOT BE SAID TO BE GENUINE. 5. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSE E HAD BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT VIDE ORDE R OF THE COMMISSIONER OF INCOME-TAX DATED 29.7.2005 WITH EFFECT FROM 19.8.20 04. THE REGISTRATION UNDER SECTION 12A IS GRANTED AFTER FOLLOWING THE PR OCEDURE FOR REGISTRATION UNDER SECTION 12AA OF THE ACT WHERE THE COMMISSIONE R ON RECEIPT OF 5 APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUT ION CALLS FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH ENQUIRIES AS HE DEEMS IN THIS BEHALF ABOUT THE OBJECTS OF THE TRUST AND INSTITUTION AND GENUINENESS OF ITS ACTIVITIES HE SHALL PASS AN ORDER IN WRITING REGISTERING THE T RUST OR INSTITUTION AND IF HE IS NOT SATISFIED SHALL PASS AN ORDER IN WRITING REFUS ING REGISTRATION OF A TRUST OR INSTITUTION. IN THE PRESENT CASE AS MENTIONED HEREI NBEFORE THE ASSESSEE HAD BEEN GRANTED REGISTRATION BY THE LEARNED COMMISSION ER OF INCOME-TAX VIDE ORDER DATED 29.7.2005 WITH EFFECT FROM 19.4.2004 AN D THEREFORE THE LEARNED COMMISSIONER OF INCOME-TAX WAS SATISFIED ABOUT THE OBJECTS OF THE TRUST/INSTITUTION AND GENUINENESS OF ITS ACTIVITIES . WITH REGARD TO THE WITHDRAWAL/CANCELLATION OF REGISTRATION OF THE TRUS T/INSTITUTION UNDER SECTION 12AA(3) OF THE ACT THE REGISTRATION CAN BE CANCELL ED WHERE THE TRUST OR INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER SEC TION 12AA(1)(B) OF THE ACT AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. IN T HE PRESENT CASE THE LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE MAIN OBJECTS OF THE TRUST AT PAGES 24 & 25 OF THE PAPER BOOK. NONE OF THE SAID OBJECTS HAS BEEN 6 SAID TO BE NON-CHARITABLE AND THERE IS NO FINDING T O THAT EFFECT IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX FOR CANCELLA TION OF REGISTRATION AND NO PLEADINGS HAVE BEEN ADVANCED IN THIS REGARD BY T HE LEARNED DR. AS REGARDS THE GENUINENESS OF THE ACTIVITIES THE OBSER VATION OF THE LEARNED CIT THAT UNSECURED LOAN/DEPOSITS OF RS.4 03 500/- OUT O F TOTAL UNSECURED LOAN OR DEPOSIT OF RS.10 21 300/- COULD NOT BE PROVED TO BE GENUINE AS HELD BY THE ADDL. CIT IN THE ASSESSMENT PROCEEDINGS. THE COPY OF THE ORDER OF THE ADDL. CIT/ASSESSING OFFICER AT PAGE 17 TO 21 OF THE PAPER BOOK WAS BROUGHT TO OUR NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE AND HE HAS SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL THE REQUIRED DOCUMEN TS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS BUT THE A DDITIONS HAVE BEEN MADE BY THE ADDL. COMMISSIONER OF INCOME-TAX/ASSESSING O FFICER SINCE THE SOURCE OF DEPOSIT OF RS.4 03 500/- COULD NOT BE PRO VED GENUINE. THERE IS NO FINDING OF THE ASSESSING OFFICER THAT THE SAID SOUR CE OF DEPOSIT IS FROM THE MEMBERS OF THE SOCIETY. WE ARE CONVINCED WITH THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THERE IS NO F INDING TO THIS EFFECT IN THE ORDER OF THE ASSESSING OFFICER THAT THE AMOUNT HAS BEEN CONTRIBUTED BY THE MEMBERS OF THE SOCIETY BUT AS OBSERVED BY THE LEARN ED CIT THAT THE SOCIETY HAS BEEN BROUGHT INTO EXISTENCE ONLY TO ABSORB THE UNEXPLAINED WEALTH OF ITS PROMOTERS. IN THIS REGARD IF THERE IS UNEXPLAINED WEALTH OF THE PROMOTERS 7 WHAT ARE THE MATERIALS AVAILABLE WITH THE ASSESSING OFFICER IN THIS REGARD HAS NOT BEEN BROUGHT ON RECORD. EVEN IF THE INCOME IS FROM THE UNEXPLAINED SOURCES THE SOCIETY CANNOT BE TERMED AS NON-CHARIT ABLE. THE AUTHORITIES HAVE TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION AND HOW THE INCOME DERIVED FROM THE TRUST/INSTITUTIONAL PROPERTY IS APPLIED TO THE CHARITABLE PURPOSES AND NOT THE NATURE OF ACTIVITY BY WHICH THE INCOME HAS BEEN DERIVED BY THE TRUST/I NSTITUTION. THESE VIEWS ARE FORTIFIED BY THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SANJEEVAMMA HANUMANTHE GOWDA CHARITABLE TRUST VS. D IRECTOR OF INCOME- TAX (EXEMPTION) (2006) 285 ITR 327. HONBLE SUPREM E COURT IN THE CASE OF SOLE TRUSTEE LOKA SHIKSHANA TRUST VS. CIT (1975) 1 01 ITR 234 HAS OBSERVED THAT IF THE PROFITS MUST NECESSARILY FEED A CHARITABLE PURPOSE UNDER THE TERMS OF THE TRUST THE MERE FACT THAT THE ACTI VITIES OF THE TRUST YIELD PROFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUS T. THE HONBLE SUPREME COURT IN THE CASE OF DELHI STOCK EXCHANGE ASSOCIATI ON LTD. VS. CIT (1997) 225 ITR 235 AT PAGE 240 HAS HELD THAT WHAT IS THERE FORE REQUIRED IS THAT THERE MUST BE AN OBLIGATION CREATED TO SPEND THE MONEY EX CLUSIVELY AND ESSENTIALLY ON CHARITY. RELIANCE HAS ALSO BEEN PLACED ON THE D ECISION OF COORDINATED BENCH OF ITAT IN THE CASES OF SHRI KRISHNA EDUCATIO N & WELFARE TRUST VS. CIT (2009) 27 SOT 321 (DEL); BHARTI VIDYAPEETH VS. ITO (2009) 28 SOT 32 8 (PUNE); & ANAND CHARITABLE TRUST VS. CIT (2009) 33 SOT 21 (DEL). SIMILAR ARE THE FACTS OF THE PRESENT CASE WHERE THE CANCELL ATION OF REGISTRATION BY THE COMMISSIONER OF INCOME-TAX HAD BEEN HELD TO BE INVA LID. THEREFORE IN THE CIRCUMSTANCES AND FACTS OF THE CASE AND THE DECISIO NS RELIED UPON HEREINABOVE OF VARIOUS AUTHORITIES THE LEARNED COM MISSIONER OF INCOME-TAX HAS TO SATISFY ABOUT THE GENUINENESS OF THE ACTIVIT IES OF THE TRUST/INSTITUTION AND NOT ABOUT THE INCOME DERIVED FROM SUCH TRUST/IN STITUTION AND NONE OF THE ACTIVITIES OR APPLICATION OF INCOME HAS BEEN HELD T O BE FOR NON-CHARITABLE PURPOSE BY THE LEARNED COMMISSIONER OF INCOME-TAX THE ADDITION OF RS.4 03 500/- BY THE ASSESSING OFFICER IN THE ASSES SMENT PROCEEDINGS FOR WHICH THE APPEAL IS PENDING BEFORE THE LEARNED CIT( A) CANNOT BE SAID TO BE AN ACTIVITY FOR NON-CHARITABLE PURPOSE AND THEREFOR E THE SOCIETY/INSTITUTION IN THE PRESENT CASE CANNOT BE HELD TO BE FOR NON-CHARI TABLE PURPOSE ON THIS GROUND. AS REGARDS APPROVAL FROM THE GOVERNOR OF U P OUR ATTENTION WAS INVITED TO THE SAID APPROVAL AT PB PAGE 23 WHERE TH E GOVERNOR OF UP HAS GRANTED REGISTRATION FROM 1.7.2006 FOR 3 YEARS IN P ARA 2 VIDE LETTER DATED 12.12.2006. NOTHING HAS BEEN BROUGHT ON RECORD BY THE COMMISSIONER OF INCOME-TAX AND THE LEARNED DR TO ESTABLISH THAT THE SAID LETTER PERTAINS TO HAVE BEEN ISSUED IN THE YEAR 2008 AND THEREFORE TH E OBSERVATIONS OF THE LEARNED COMMISSIONER OF INCOME-TAX ARE WITHOUT ANY BASIS AND MATERIAL ON 9 RECORD. IN THE CIRCUMSTANCES AND FACTS OF THE CASE THE LEARNED CIT IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION OF THE ASS ESSEE GRANTED UNDER SECTION 12AA(1)(B) OF THE ACT. THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME- TAX CANCELLING THE REGISTRATION IS DIRECTED TO BE Q UASHED AND REGISTRATION OF THE ASSESSEE SOCIETY/INSTITUTION IS DIRECTED TO BE RESTORED. THUS ALL THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE A LLOWED. 6. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY 2010. SD/- SD/- (A.D. JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 H FEBRUARY 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.