Action Alliance for Recycling Beverage Cartons ('AARC'), New Delhi v. CIT (Exemption), New Delhi

ITA 7684/DEL/2019 | misc
Pronouncement Date: 28-02-2020 | Result: Allowed

Appeal Details

RSA Number 768420114 RSA 2019
Assessee PAN AAHAA3445P
Bench Delhi
Appeal Number ITA 7684/DEL/2019
Duration Of Justice 5 month(s) 9 day(s)
Appellant Action Alliance for Recycling Beverage Cartons ('AARC'), New Delhi
Respondent CIT (Exemption), New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-02-2020
Assessment Year misc
Appeal Filed On 18-09-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SH. R. K. PANDA ACCOUNTANT MEMBER AND SH. K. N. CHARY JUDICIAL MEMBER ITA NO.7684 & 7685/DEL/2019 ACTION ALLIANCE FOR RECYCLING BEVERAGE CARTONS (AARC) A-73 (BASEMENT) MALVIYA NAGAR NEW DELHI-110017 PAN NO. AAHAA3445P VS. COMMISSIONER OF INCOME TAX (EXEMPTION)E-2 BLOCK PRATYAKSHKAR BHAWAN CIVIC CENTRE NEW DELHI-110001 (APPELLANT) (RESPONDENT) APPELLANT BY SH. ROHIT JAIN CA SH. DEEPESH JAIN CA RESPONDENT BY SH. S. S. RANA CIT DR DATE OF HEARING: 10/12/2019 DATE OF PRONOUNCEMENT: 28/02/2020 ORDER PER R.K PANDA AM: THE ABOVE TWO APPEALS FILED BY THE ASSESSEE ARE DI RECTED AGAINST THE ORDER DATED 30.07.2019 OF THE CIT (EXEM PTION) NEW DELHI REFUSING REGISTRATION U/S. 12AA AND APPROVAL U/S. 80G. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS A SOCIETY AND FILED AN APPLICATION IN FORM 10A AND 10G ON 29 TH JANUARY 2019 SEEKING REGISTRATION U/S.12AA AND EXEMPTION U/ S.80G OF THE INCOME TAX ACT 1961. PAGE | 2 3. THE LD. CIT(E) ISSUED A QUESTIONNAIRE DATED 19.0 2.2019 REQUESTING IT TO SUBMIT CERTAIN DOCUMENTS IN SUPPOR T OF ITS CLAIM. THE ASSESSEE FILED PART DETAILS. AGAIN A LETTER DAT ED 13.06.2019 WAS SENT TO THE ASSESSEE ASKING HIM TO FILE THE DET AILS ON 21.06.2019 AS CALLED FOR EARLIER. HOWEVER SINCE NO NE APPEARED ON THAT DATE ANOTHER SHOW CAUSE NOTICE DATED 27.06.201 9 WAS ISSUED TO THE ASSESSEE ASKING HIM TO FURNISH THE FO LLOWING DETAILS BY 08.07.2019. I. PLEASE PROVIDE THE FINANCIAL STATEMENT I.E. BALAN CE SHEET AND INCOME & EXPENDITURE A/C FOR THE F.Y. 2018-19 (01.0 4.2018 TO 31.03.2019) ALONGWITH LIST OF DONORS NAME ADDRESS PAN & MODE OF RECEIPT. II. PLEASE ALSO PROVIDE THE PHOTOGRAPHS OF CHARITABL E ACTIVITIES DONE DURING THE F.Y. 2018-19. III. PLEASE PROVIDE THE DOCUMENTARY EVIDENCE (RECEIPT S ETC.) FOR ANNUAL FEES OF RS.34 00 000/- AND MEMBERSHIP FEE OF RS.57 00 000/- RECEIVED DURING THE F.Y. 2018-19 AS SH OWN IN THE INCOME & EXPENDITURE A/C FOR THE PERIOD 02.05.20 18 TO 31.12.2018. IV. PLEASE ALSO PROVIDE A COPY OF 26AS FOR THE F.Y. 2 018-19. V. AS PER THE DETAILS OF EXPENSES IT IS SEEN THAT AN AMOUNT OF RS.1 15 394/- HAS BEEN SPENT ON ENGAGEMENT WITH STATE FOR ENVIRONMENT AND WASTE REGULATIONS. PLEASE PROVIDE A COPY OF CONTRACT FOR THE SAME. PAGE | 3 VI. ON PERUSAL OF THE BILLS PLACED ON FILE IT IS SE EN THAT MOST OF THE BILLS ARE IN THE NAME OF M/S CONSOCIA ADVISO RY PVT. LTD. PLEASE EXPLAIN. VII. ONE OF THE BILL DATED 16.08.2018 SHOWS THAT TOT AL AMOUNT OF RS.26 475/- IS BEING SPENT ON LAVISH FOOD INCLUDI NG AMOUNT OF RS.3 750/- SPENT ON FRANKIE PANEER TIKKA RS.3 8 75/- SPENT ON FRANKIE CHICKEN TIKKA RS.3 875/- SPENT ON CLUB SANDWICH ETC. PLEASE PROVIDE THE NAME OF THE BENEFICIARIES A LONGWITH TELEPHONE NO. 4. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESS EE THE LD. CIT(E) NOTED THAT ASSESSEE HAS RECEIVED TOTAL AMOUN T OF RS. 94 LACS AS ANNUAL FEE AND MEMBERSHIP FEE AND SPENT ONL Y RS.4 47 593/-ON CHARITABLE ACTIVITY SPENT RS.10 81 202/- ON ADMINISTRATIVE EXPENSES WHICH INCLUDED CONSULTANCY FEE OF RS.6 37 083/- AND LEGAL AND PROFESSIONAL EXPENSES O F RS.3 90 277/-. THE ASSESSEE HAS SHOWN EXCESS OF IN COME OVER EXPENDITURE OF RS.81 04 539/- WHICH IS MORE THAN 15 % OF THE TOTAL INCOME. HE NOTED THAT ASSESSEE HAS RECEIVED ANNUAL FEE OF RS. 35 LACS AND MEMBERSHIP FEE OF RS. 59 LACS BOTH TOTALING TO RS.94 LACS OUT OF WHICH AN AMOUNT OF RS.8 00 000/- HAS BEEN RECEIVED FROM M/S. HAZELWOOD LABORATORIES PVT. LTD. . FURTHER RS. 8 00 000/-FROM M/S. PARAG MILK FOODS AND RS. 8 00 000/- FROM M/S. UNITED SPIRITS LTD. TDS OF RS.16000/- HA S BEEN DEDUCTED U/S. 194 BY M/S. HAZELWOOD PRIVATE LIMITED AND TDS OF RS.80 000/- EACH HAS BEEN DEDUCTED BY M/S. PARAG MI LK FOODS LIMITED AND UNITED SPIRITS LIMITED. HE THEREFORE HELD THAT THE AMOUNT OF RS. 24 LACS RECEIVED FROM M/S. PARAG MILK FOODS PAGE | 4 PRIVATE LIMITED AND M/S. HAZELWOOD PRIVATE LIMITED WERE NOT THE MEMBERSHIP FEE OR ANNUAL FEE BUT AN AMOUNT RECEIVED FROM SOME CONTRACTUAL SERVICES PROVIDED BY THE ASSESSEE. THE RE WAS A DIFFERENCE IN THE AMOUNT RECEIVED AS PER BANK STATE MENT M/S. COCA COLA INDIA PRIVATE LIMITED AND THE AMOUNT SHOW N BY THE ASSESSEE. HE THEREFORE ASKED THE ASSESSEE TO SUBM IT DOCUMENTARY EVIDENCE OF ENGAGEMENT WITH STATE FOR ENVIRONMENT AND WASTE REGULATIONS BUT THERE WAS NO COMPLIANCE. ACCORDING TO THE CIT(E) FOR GRANTING APPROVAL U/S. 12AA THE ASSESSEE HAS ALSO TO SUBSTANTIATE THAT THE OBJECT OF THE SOCIETY / TRUST SHOULD BE CHARITABLE IN NATURE AND ACTIVITIES OF THE SOCIE TY/ TRUST SHOULD BE GENUINE. SINCE THE ASSESSEE NEITHER FILED THE R EQUISITE DETAILS NOR SUBMITTED ANY EVIDENCE OR DETAILS OF ACTIVITIES AND EVIDENCE FOR EXPENSES TOWARDS CHARITABLE ACTIVITY HE HELD T HAT THE GENUINENESS OF THE ACTIVITIES OF THE COMPANY COULD NOT BE ESTABLISHED. HE THEREFORE REJECTED THE CLAIM OF GRANT OF REGISTRATION U/S. 12A/12AA. SINCE THE REGISTRATION U/S.12AA WAS REJECTED HE REJECTED THE CLAIM FOR GRANT OF APPROVA L U/S.80 G OF THE INCOME TAX ACT. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(E) THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL :- (ITA NO.7684/DEL/2019) 1. THAT THE COMMISSIONER OF INCOME TAX (EXEMPTION) DELHI [CIT(E)] ERRED ON FACTS AND IN LAW IN DENYING RE GISTRATION TO THE APPELLANT UNDER SECTION 12AAOF THE INCOME TAX ACT 1961 (THE ACT)VIDE ORDER DATED 30.07.2019 (IMPUGNED ORDER). PAGE | 5 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER HAVING BEEN PASSED WITHOUT AFFOR DING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELL ANT IS ILLEGAL AND BAD IN LAW. 1.2 THAT THE CIT(E) ERRED IN DENYING REGISTRATION U NDER SECTION 12AAOF THE ACT ON ILLEGAL AND UNTENABLE GROUNDS WI THOUT APPRECIATING THAT THE SCOPE OF REGISTRATION PROCEED INGS WAS LIMITED TO EXAMINING THE OBJECTS MORE SO WITHOUT DOUBTING TH E CHARITABLE OBJECTS OF THE APPELLANT. 1.3 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DE NYING REGISTRATION UNDER SECTION 12AA OF THE ACT ON THE G ROUND THAT THE APPELLANT FAILED TO FILE NECESSARY DETAILS/ EVIDENC ES TO ESTABLISH GENUINENESS OF THE CHARITABLE ACTIVITIES CARRIED ON BY THE APPELLANT. 1.4 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DR AWING ADVERSE INFERENCE FROM CERTAIN FACTS/ INFORMATION/ DETAILS (IN PARA 4 TO 9 OF THE IMPUGNED ORDER) WITHOUT PROVIDING ADEQUATE OPP ORTUNITY OF BEING HEARD AND WITHOUT CONSIDERING THE REPLIES FIL ED BY THE APPELLANT. 1.5 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DR AWING ADVERSE INFERENCE FROM THE FACT THAT THE APPELLANT HAD EXCE SS OF INCOME OVER EXPENDITURE TO THE TUNE OF RS.81 04 539 IN FINANCIA L YEAR 2018-19 WITHOUT APPRECIATING THAT - (A) THE SAME WAS THE FI RST YEAR OF OPERATION; AND (B) THE SAME CANNOT BE THE GROUND TO DENY REGISTRATION. 1.6 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DR AWING ADVERSE INFERENCE FROM THE FACT OF- (A) DEDUCTION OF TAX AT SOURCE BY SOME MEMBERS WHILE PAYING MEMBERSHIP FEE; (B)DIFFERENCE IN AMOUNT OF MEMBERSHIP FEE RECEIVED FROM COCA COLA INDIA PVT. L TD. REFLECTED AS RS.9 44 000 (INCLUSIVE OF GST) IN BANK STATEMENT AS AGAINST RS.8 00 000 (EXCLUSIVE OF GST) STATED BY THE APPELL ANT; (C) REIMBURSEMENT OF EXPENSES PAID TO CONSOCIA ADVISORY PVT. LTD. (ONE PAGE | 6 OF FOUNDER MEMBERS) TOWARDS REIMBURSEMENT OF EXPENS ES INCURRED FOR ADMINISTRATION OF APPELLANT TRUST. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR VARY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. (ITA NO.7685/DEL/2019) 1. THAT THE COMMISSIONER OF INCOME TAX (EXEMPTION) DELHI [CIT(E)] ERRED ON FACTS AND IN LAW IN DENYING REG ISTRATION TO THE APPELLANT UNDER SECTION 80G(5)(VI) OF THE ACT VIDE ORDER DATED 30.07.2019 (IMPUGNED ORDER) [CONSOLIDATED ORDER FOR DENYING REGISTRATION UNDER SECTION 12AA AND 80G]. 1.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE IMPUGNED ORDER HAVING BEEN PASSED WITHOUT AFFOR DING REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELL ANT IS ILLEGAL AND BAD IN LAW. 1.2 THAT THE CIT(E) ERRED IN DENYING REGISTRATION U NDER SECTION 80G(5)/ 12AAOF THE ACT ON ILLEGAL AND UNTENABLE GRO UNDS WITHOUT APPRECIATING THAT THE SCOPE OF REGISTRATION PROCEED INGS WAS LIMITED TO EXAMINING THE OBJECTS MORE SO WITHOUT DOUBTING TH E CHARITABLE OBJECTS OF THE APPELLANT. 1.3 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DE NYING REGISTRATION UNDER SECTION 80G(5) OF THE ACT ON THE GROUND THAT THE APPELLANT FAILED TO FILE NECESSARY DETAILS/ EVIDENC ES TO ESTABLISH GENUINENESS OF THE CHARITABLE ACTIVITIES CARRIED ON BY THE APPELLANT. 1.4 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DR AWING ADVERSE INFERENCE FROM CERTAIN FACTS/ INFORMATION/ DETAILS (IN PARA 4 TO 9 OF THE IMPUGNED ORDER) WITHOUT PROVIDING ADEQUATE OPP ORTUNITY OF BEING HEARD AND WITHOUT CONSIDERING THE REPLIES FIL ED BY THE APPELLANT. 1.5 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN DR AWING ADVERSE INFERENCE FROM THE FACT THAT THE APPELLANT HAD EXCE SS OF INCOME OVER EXPENDITURE TO THE TUNE OF RS.81 04 539 IN FINANCIA L YEAR 2018-19 PAGE | 7 WITHOUT APPRECIATING THAT - (A) THE SAME WAS THE FI RST YEAR OF OPERATION; AND (B) THE SAME CANNOT BE THE GROUND TO DENY REGISTRATION. 1.6 THAT THE CIT(E) ERRED ON FACTS AND IN LAW IN D RAWING ADVERSE INFERENCE FROM THE FACT OF (A) DEDUCTION OF TAX AT SOURCE BY SOME MEMBERS WHILE PLAYING MEMBERSHIP FEE; (B) DIFFERENC E IN AMOUNT OF MEMBERSHIP FEE RECEIVED FROM COCA COLA INDIA PVT. L TD. REFLECTED AS RS.9 44 000 (INCLUSIVE OF GST) IN BANK STATEMENT AS AGAINST RS.8 00 000 (EXCLUSIVE OF GST) STATED BY THE APPELL ANT; (C) REIMBURSEMENT OF EXPENSES PAID TO CONSOCIA ADVISORY PVT. LTD. ( ONE OF FOUNDER MEMBERS) TOWARDS REIMBURSEMENT OF EXPENS ES INCURRED FOR ADMINISTRATION OF APPELLANT TRUST. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND OR VAR Y THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 6. WE HAVE HEARD THE RIVAL ARGUMENTS MADE BY BOTH T HE SIDES AND PERUSED THE ORDERS OF THE CIT(E). WE FIND THE L D. CIT(E) REFUSED TO GRANT REGISTRATION 12A/12AA ON THE GROUN D THAT THE ASSESSEE FAILED TO SUBSTANTIATE THAT THE OBJECTS OF THE SOCIETY / TRUST ARE CHARITABLE IN NATURE AND THE ACTIVITIES O F THE SOCIETY/ TRUST ARE GENUINE SINCE THE ASSESSEE FAILED TO PRO DUCE THE REQUISITE DETAILS CALLED FOR BY HIM. WE FIND THE A SSESSEE IN THE GROUNDS OF APPEAL HAS SPECIFICALLY TAKEN GROUNDS TH AT THE CIT(E) HAS NOT GRANTED HIM REASONABLE OPPORTUNITY OF BEING HEARD. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE A ND IN THE INTEREST OF JUSTICE WE DEEM IT PROPER TO RESTORE THE ISSUE T O THE FILE OF THE CIT(E) WITH A DIRECTION TO GRANT ONE FINAL OPPORTUN ITY TO THE ASSESSEE TO SUBSTANTIATE THE CHARITABLE ACTIVITY OF THE SOCIETY FOR GRANT OF REGISTRATION 12AA OF THE ACT. THE ASSESSE E IS ALSO HEREBY DIRECTED TO APPEAR BEFORE CIT(E) AND FILE THE REQUI SITE DETAILS AS PAGE | 8 CALLED FOR BY HIM WITHOUT SEEKING ANY ADJOURNMENT U NDER ANY PRETEXT. THE LD. CIT(E) SHALL DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SINCE WE ARE RESTORING THE ISSUE OF REGISTRATION 12 A/ 12AA WHICH IS ONE OF THE PRE CONDITION FOR GRANTING OF APPROVA L U/S. 80 G OF THE ACT THEREFORE WE ALSO RESTORE THE GROUNDS CHA LLENGING THE DENIAL OF APPROVAL U/S. 80G TO THE FILE OF THE CIT( E) FOR FRESH ADJUDICATION. 7. IN THE RESULT BOTH THE APPEALS FILED BY THE AS SESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2020. SD/- SD/- (K. NARSIMHA CHARY) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:-28 .02.2020 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 27.02.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 28.02.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 28.02.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER