The Grace land Rural Socio Economic project centre, Trivandrum v. CIT, Trivandrum

ITA 483/COCH/2009 | misc
Pronouncement Date: 14-07-2010

Appeal Details

RSA Number 48321914 RSA 2009
Assessee PAN AABAT6459L
Bench Cochin
Appeal Number ITA 483/COCH/2009
Duration Of Justice 10 month(s) 13 day(s)
Appellant The Grace land Rural Socio Economic project centre, Trivandrum
Respondent CIT, Trivandrum
Appeal Type Income Tax Appeal
Pronouncement Date 14-07-2010
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 14-07-2010
Date Of Final Hearing 17-05-2010
Next Hearing Date 17-05-2010
Assessment Year misc
Appeal Filed On 31-08-2009
Judgment Text
IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN JM AND SANJAY AR ORA AM I.TA.NO. 483/COCH./2009 THE GRACE LAND (RURAL SOCIO- ECONOMIC PROJECT CENTRE) ROYAL COMPLEX ARYANAD P.O. TRIVANDRUM-695542. [PAN: AABAT 6459L] VS. THE COMMISSIONER OF INCOME-TAX TRIVANDRUM. (APPLICANT-APPELLANT) (REVENUE- RESPONDENT) APPLICANT BY SHRI K.S.HARIHARAN ADV. REVENUE BY SHRI M.K.GOPINATHAN DR O R D E R PER SANJAY ARORA AM: THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME-TAX TRIVANDRUM (CIT FOR SHORT) DATED 29.6 .2009 CONTESTING THE ORDER U/S. 12AA OF THE INCOME-TAX 1961 (THE ACT HEREINAFTER ) REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S. 12A OF THE ACT. 2. BEFORE US THE PRINCIPAL GROUND OF OBJECTION RAISED BY THE LD. AR WAS THE DENIAL OF PROPER OPPORTUNITY OF HEARING TO THE APPLICANT-S OCIETY BY THE COMPETENT AUTHORITY PRIOR TO THE PASSING THE IMPUGNED ORDER SO THAT IT COULD NOT PROPERLY PRESENT ITS CASE THERE-BEFORE. AS A RESULT ITS CONCLUSIONS IN THE PRESENT CASE WERE NOT PRECEDED BY PROPER VERIFICATION OF THE FACTS. NO DOUBT THE LD. CIT VIDE HIS OFFICE LETTER DATED 4.3.2009 INSTRUCTED THE APPELLANT TO AMEND/MODIFY SEVERAL CLAUSES OF THE BYE-LAWS BUT THE SAME DOES NOT MENTION OF THE PRESENCE OF AN Y COMMERCIAL COMPONENT IN THE BYE-LAWS. HE HAD FAILED TO OBSERVE THAT THE ACTIVIT Y REPORT DID NOT CONTAIN ANY ACTIVITY OF COMMERCIAL NATURE. IT WOULD BE UNJUSTIFIABLE TO INFER COMMERCIAL CONTENT OR MOTIVE ON THE BASIS OF ONE OR TWO OBJECTIVES OUT OF A TOTA L OF 107 OBJECTIVES. IN FACT THE ITA NO. 483/COCH/2009 2 ASSESSEE WAS EVEN PREPARED IN THE EVENT OF NON-SAT ISFACTION OF THE REGISTERING AUTHORITY TO MAKE SUITABLE CHANGES IN ITS BYE-LAWS . FURTHERMORE THE IMPUGNED ORDER CONTAINS SOME FACTUAL ERRORS AND TOWARD WHICH THE ASSESSEE HAD MOVED A RECTIFICATION APPLICATION AND WHICH HAS SINCE BEEN REJECTED VIDE COMMUNICATION DATED 15.4.2010 STATING THAT NO RECTIFICATION ORDER U/S. 154 OF THE ACT IS CONTEMPLATED WHERE THE APPLICATION U/S. 12A IS REJECTED ON MERITS. THE LD. DR ON THE OTHER HAND WOULD CONTEND THAT THE APPELLANT HAVING BEEN ISSUED A DEF ECT MEMO ON 4.3.2009 IT STANDS ALLOWED ADEQUATE OPPORTUNITY TO REMOVE THE DEFECTS. AS SUCH ADVERTENCE TO A LACK OF OPPORTUNITY IS ONLY AN ALIBI AND THE LD. CIT HAS P ASSED AN INFORMED ORDER ON THE BASIS OF THE MATERIALS FURNISHED BY THE APPELLANT IN SUPP ORT OF ITS APPLICATION. FURTHER ON THERE HAS BEEN NO EXPLANATION WITH REGARD TO THE CO NDONATION OF DELAY OF 13 YEARS IN FILING ITS APPLICATION FOR REGISTRATION U/S. 12A. HE NEXT POINTED OUT CLAUSE 6(XVII) OF THE RULES AND REGULATIONS OF THE APPLICANT-SOCIETY WHICH STATE OF OPENING AND CONDUCTING BRANCHES OR SHOWROOMS AND G.S. DEPOTS A S ONE OF THE OBJECTIVES OF THE INSTITUTION. THE SAME CANNOT BY ANY MEANS BE CONSID ERED AS A CHARITABLE OBJECTIVE PARTICULARLY IN VIEW OF THE AMENDED DEFINITION OF T HE TERM `CHARITABLE PURPOSE UNDER THE ACT EVEN AS POINTED OUT BY THE LD. CIT. HIS O RDER THEREFORE MERITS CONFIRMATION. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 3.1 THE APPLICANT IS A CHARITABLE SOCIETY REGISTE RED IN THE YEAR 1995 UNDER THE TRAVANCORE-COCHIN LITERARY SCIENTIFIC AND CHARITABL E SOCIETIES REGISTRATION ACT XII OF 1995 BEARING REGISTRATION NO. 675/1995. IT CLAI MS TO BE AN NGO WORKING FOR THE ECONOMIC UPLIFTMENT OF AND BETTER LIVING CONDITION S FOR THE RURAL MASSES OF ALL CLASSES. IT APPLIED FOR REGISTRATION AS A CHARITABL E ORGANISATION UNDER THE ACT IN THE PRESCRIBED FORM 10A ON 24.12.2008. BASED THEREON A LETTER DATED 4.3.2009 WAS ISSUED TO IT (WRONGLY MENTIONED AS `4.3.2008) TO C URE THE INCONSISTENCIES BETWEEN THE APPLICANTS TRUST DEED AND THE PROVISIONS OF THE AC T (PB PG. 54). THIS LETTER POINTED OUT CERTAIN REQUIREMENTS/INFIRMITIES/DEFICIENCIES OBSER VED BY THE DEPARTMENT WHILE VETTING THE APPELLANTS APPLICATION FOR REGISTRATIO N; THOSE APPLICABLE TO THE ASSESSEES CASE BEING MARKED ( ). THEREAFTER THE ONLY COMMUN ICATION BY THE DEPARTMENT WAS ITA NO. 483/COCH/2009 3 VIDE LETTER DATED 15.6.2009 TO BE REPLIED BY THE AS SESSEE BY 22.6.2009. THE SAME IS IN THE NATURE OF A REMINDER TO THE APPLICANT-SOCIETY O F IT HAVING NOT RESPONDED TO THE EARLIER COMMUNICATION (DATED 19.1.2009) AND THAT A FAILURE TO RESPOND NOW ON OR BEFORE THE DATE FIXED WOULD RENDER ITS APPLICATION LIABLE FOR REJECTION. THE ASSESSEE CONTENDS THAT NO SUCH LETTER DATED 19.1.2009 STANDS RECEIVED BY IT. IN ANY CASE THE HEARING TOOK PLACE ON 22.6.2009 FOLLOWED BY THE IMP UGNED ORDER DATED 29.6.2009. NO FURTHER OPPORTUNITY STOOD ALLOWED. EVEN DURING HEAR ING THE IMPRESSION GIVEN WAS THAT THE AUTHORITY WAS SATISFIED NOR ANY REQUISITIONS M ADE OR INFORMATION SOUGHT. THE FIRST THING THAT STRIKES US THUS IS A DEFINITE LACK OF OPPORTUNITY TO THE APPLICANT IN PRESENTING ITS CASE. 3.2 WE FURTHER ALSO DISCUSS THE REASON(S) STATED IN THE IMPUGNED ORDER FOR THE REJECTION OF ITS APPLICATION. THE FIRST ISSUE IS OF CONDONATION OF THE DELAY. THERE HAS BEEN AN INORDINATE DELAY OF 13 YEARS IN MOVING THE APPLICATION FOR REGISTRATION AND BESIDES WE OBSERVE NO ATTEMPT BY THE APPLICANT EVE N TO EXPLAIN THE SAME SO THAT THERE ARE NO VALID REASONS JUSTIFYING THE DELAY ON RECORD . SO HOWEVER THE SAME CAN ONLY HAVE BEARING IN-SO-FAR AS THE ASSESSEES CLAIM FOR REGISTRATION FOR THE BACK (LAPSED) PERIOD IS CONCERNED AND WOULD NOT IN ANY MANNER AF FECT THE FUTURE. THE MATTER WOULD STAND TO BE RESOLVED WITH REFERENCE TO THE PROVISIO N OF SECTION 12A(1) ITSELF AND WE THEREFORE CONSIDER IT OF NO MOMENT INSOFAR AS THE DENIAL OF THE REGISTRATION IS CONCERNED. THE SECOND REASON AS STATED IS OF THE ACTIVITIES WHICH ARE ENLISTED ON THE BASIS OF THE ACTIVITY REPORT AS BEING NOT COMMENSURATE WI TH THE OBJECTIVES OF THE INSTITUTION. THE APPLICANT HAS EXPLAINED BEFORE US THAT THE ACTI VITIES OF THE SOCIETY DEPEND LARGELY ON THE VOLUNTARY CONTRIBUTIONS OF ITS MEMBERS AND THOSE BEING LIMITED THE SAME FINDS REFLECTION IN THE ACTIVITIES CONDUCTED BY IT. FURTH ER SOME EXPENDITURE STANDS DIRECTLY SPONSORED BY MEMBERS/WELL-WISHERS. FURTHER NEW GOV ERNMENTAL PROJECTS ARE ON THE ANVIL. WE FIND THAT GENERALLY THE FOUNDER(S) OF ANY INSTITUTION HAVE A VISION WHICH TRANSLATES IN A BROAD STATEMENT OF OBJECTS COVERIN G A LARGE CANVASS WHICH WOULD NOT NECESSARILY IMPLY A COMMENSURATE WORK WHICH IS TO BE AT THE GROUND LEVEL IN THE FACE ITA NO. 483/COCH/2009 4 OF SEVERAL CONSTRAINTS AND PRACTICAL CONSIDERATIONS ESPECIALLY IF THE ACCESS TO FUNDS - AS IT APPEARS TO BE THE CASE IN THE INSTANT CASE AS WELL - IS LIMITED. IT TAKES TIME TO BUILD CREDIBILITY ON THE GROUND IN SUCH A SCENARIO AS WE LL AS WITH THE GOVERNMENT AGENCIES. THE SAME CANNOT BY ITSELF BE A GROUND FOR REJECTI ON UNLESS ACCOMPANIED BY REASONS TO DOUBT THE GENUINENESS OF THE APPLICANT AS SUCH. BESIDES THE APPELLANT HAS PLACED ON RECORD A LETTER OF APPRECIATION FROM THE GOVERNMENT OF KERALA (PB PG. 102) BY WAY OF A CERTIFICATE FROM THE ENERGY MANAGEMENT CENTRE DAT ED 26.11.2008 AS ALSO LISTED ITS MAJOR RESEARCHES (PB 100 & 101). THIS IS PRECISELY THE DICHOTOMY IN PERCEPTION WHICH ONLY A HEARING PROCESS COULD RESOLVE AND WHI CH IS A CASUALTY WHERE THE REGISTERING AUTHORITY IS PLACED UNDER CONSTRAINT OF TIME AS WE OBSERVE IT TO BE IN THE PRESENT CASE. WITH REGARD TO THE FINDING THAT THE DECLARED OBJEC TIVES SMACK OF COMMERCIAL INTEREST NOT CONFORMING TO THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT WE OBSERVE THE SAME TO BE THE ONLY SERIOUS OBJECTION O F THE REVENUE IN THE INSTANT CASE ALSO EMPHASIZED BY THE LD. DR. THE APPELLANT CONTEN DS THAT THE DEVELOPMENT OF KHADI AND VILLAGE INDUSTRIES FORMS ONLY ONE OF THE ACTIVI TIES OF THE INSTITUTION. THE ASSESSEE HAS RAISED A LEGAL ISSUE BY PLACING THE DECISION IN THE CASE OF THE SOCIETY OF PRESENTATION SISTERS CALICUT VS. I.T.O. CALICUT (IN I.T.A. NO. 457/COCH/2007 DATED 22.9.2009) ON RECORD. THE SAME WOULD NEED TO BE VI SITED AND ITS IMPACT IF ANY IN THE PRESENT CASE EXAMINED. IN ANY CASE WE FIND T HAT THE ASSESSEE HAS ALSO STATED OF IT BEING PREPARED TO MAKE SOME AMENDMENTS I.E. AFTER CLARIFYING ITS STAND TO THE REVENUE IN CASE OF A DIFFERENCE OF VIEW POINT SUBS ISTING EVEN AFTER CONSIDERING THE LEGAL POSITION AS WELL AS THE ASSESSEES FACTS AND EXPLANATIONS WITH REGARD THERE-TO. 4. UNDER THE CIRCUMSTANCES WE THEREFORE ON LY CONSIDER IT FIT AND PROPER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE MATTE R IS RESTORED BACK TO THE FILE OF THE LD. CIT FOR A FRESH AND PROPER EXAMINATION ALLOWIN G THE ASSESSEE A REASONABLE OPPORTUNITY TO PRESENT ITS CASE AND DECIDE THE ISS UE OF REGISTRATION ON MERITS PER A SPEAKING ORDER. WE MAY CLARIFY THAT WE DO SO OBSER VING THAT THERE IS NOTHING ON RECORD TO SUGGEST THAT THE APPELLANT IS NOT A GENUI NE ORGANIZATION SO THAT IT IS ALLOWED ITA NO. 483/COCH/2009 5 PROPER OPPORTUNITY AND THE PRINCIPLES OF NATURAL J USTICE ARE NOT COMPRISED. THE SAME MAY THEREFORE NOT BE CONSTRUED AS IN ANY MANNER EXP RESSING ANY OPINION IN THE MATTER. THE REGISTERING AUTHORITY MAY REQUIRE INFORMATION A ND CLARIFICATION ON ANY OF POINTS IT CONSIDERS NECESSARY FOR ARRIVING AT A SATISFACTION OR OTHERWISE IN THIS REGARD AS ALSO OPPORTUNITY TO MAKE AMENDMENT(S) IN ITS DEFINING CH ARTER REQUIRED IF AND TO THE EXTENT TO MAKE IT CONSISTENT WITH THE LAW. IN THIS REGARD WE WOULD ALSO LIKE TO DRAW ATTENTION TO THE AMENDED PROVISION OF S. 2(15) AND S. 11(4A) OF THE ACT WHICH REMAINS UNAMENDED SO THAT THE TWO SHALL HAVE TO BE READ HA RMONIOUSLY. WE DECIDE ACCORDINGLY. 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 14TH JULY 2010 GJ COPY TO: 1. THE GRACE LAND RURAL SOCIO ECONOMIC PROJECT CEN TRE ROYAL COMPLEX ARYANAD P.O. TRIVANDRUM - 695 542. 2. THE COMMISSIONER OF INCOME TAX TRIVANDRUM. 3. D.R./I.T.A.T. COCHIN BENCH CDOCHIN. 4. GUARD FILE. BY ORDER (ASISTANT REGISTRAR)