Income Tax Appellate Tribunal - Amritsar
M/S Dera Baba Bhai Gurdas Ji, Mansa vs Commissioner Of Income Tax, ... on 22 February, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. N.S.SAINI, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA No.547(Asr)/2017
Assessment Year:2017-18
M/s Dera Bhai Gurdas Ji Vs. Commissioner of Income Tax
Udasin Trust Ward No.21, (Exemptions), Chandigarh.
Baba Bhai Gurdas Road,
Mansa.
[PAN:AABTD 9345A]
(Appellant) (Respondent)
Appellant by: Sh. P.N.Arora (Ld. Adv.)
Respondent by: Sh. M.P. Singh (Ld. CIT-DR)
Date of hearing: 20.02.2019
Date of pronouncement: 22.02.2019
ORDER
PER N.K.CHOUDHRY, JM:
The instant appeal has been preferred by the Assessee/Appellant against the order dated 30.06.2017 passed by the Ld. CIT(Exemptions), Chandigarh u/s 12AA(1)(ii) of the Income Tax Act, 1961 (hereinafter called as 'the Act').
2. The Appellant has raised the following grounds of appeal.
"1. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Exemptions), Chandigarh has erred in rejecting the application filed for registration under section 12AA of the Income Tax Act whereas as per explanation and material placed on record, assessee appellant trust fulfills all the conditions required for granting registration under section 12AA of the Income Tax Act.
2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Exemptions), Chandigarh has erred in rejecting the application filed for registration under section 12AA of the Income Tax Act on the ground that assessee appellant failed to prove that the activities 2 ITA No.547 /Asr/2017 (A.Y.2017-18) M/s Dera Baba Bhai Gurdas Ji vs. CIT(E) undertaken by it are of charitable nature whereas ail the activities undertaken by the trust are in accordance with the objects of the trust which are charitable and duly covered by the definition as per section 2(15) of the Income Tax Act. As such, registration rejected on this ground is unjustified, illegal and uncalled for. The same be allowed.
3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Exemptions), Chandigarh has erred in rejecting the application filed for registration under section 12AA of the Income Tax Act on the ground that the land owned by the trust has not been mentioned in the trust deed and has not made part of the fixed assets of the trust without appreciating that the land in question has been acquired by the Government of Punjab and compensation has been given to the trust by the Government and the same has been made part of the capital fund of the trust. As such, registration rejected on this ground is unjustified, illegal and uncalled for. The same be allowed.
4. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Exemptions), Chandigarh has erred in rejecting the application filed for registration under section 12AA of the Income Tax Act on the ground that assessee trust advanced a sum of Rs.31 lacs to Gaushala Sewa Samiti which is not a registered trust without appreciating that the amount has been spent/given as per objects of the trust out of the capital fund of the trust. As such, registration rejected on this ground is unjustified, illegal and uncalled for. The same be allowed."
3. An application for registration u/s 12A of the Act was filed by the appellant on dated 21.12.2016 by disclosing the fact that the assessee society is an ongoing entity and is in operation since 23rd Sep. 2013. The appellant also disclosed the aims and object of the trust are to that the trust will be doing such religious and social works for the fulfillment of the motives of Udasin sect by which would spread the religion and Udasin sect would be developed and community would be grow; this trust will do work for the better of Dera Baba Bhai Gurdass Ji Udasin; that this trust will make the schemes time to time for assistance of poor students and help them, so that social welfare can be done. Beside this trust will help for providing the scholarship, grant and play grounds to the meritorious students/players; this trust will help for run the cowhides at its own level and will help for grass to the already established cowhides as for as its own power; this dust will work 3 ITA No.547 /Asr/2017 (A.Y.2017-18) M/s Dera Baba Bhai Gurdas Ji vs. CIT(E) for arranging the Bhandaras on the different Religious days; that this trust will provide the help for study, marriage and subsistence of the poor and reedy girls and widows; this trust will do those works the trustees understand the necessary time to time; this trust provide help for running the cultural organization.
4. The application of the appellant was taken into consideration and in order to accord an opportunity, the date was fixed for hearing on 2nd June, 2017 and certain documents/clarifications were sought by 12.06.2017 by the Ld. CIT(E) as appears in para No.5 of the order. In response to which the appellant filed the reply thereafter the reply of the assessee was considered and finally the Ld. CIT(E) while giving reasons, rejected the registration u/s 12AA of the Act. The relevant part of the order is reproduced herein below for the sake of brevity and completeness.
"6. The reply submitted by the applicant 'Dora Baba Bhai Gurdas Ji Udasin Trust' has Seen examined. The examination of the submissions reveals th.it the applicant trust applied for 12A registration in 2014 also but later on it was withdrawn by the said trust. The reason for the same has not been explained in its submissions. During FY 2013-14, the trust received Rs.15,40,67,304/- on account of acquisition of land by the government and this was utilized by the trust in acquiring agricultural land. The trust holds agricultural land worth Rs. 10,68,33,500/-. Tire financial statements of the trust have been placed on record, the summary of which is tabulated below:-
F.Y. Gross receipts Net Surplus (Rs.) (%) Fixed Assets (Rs.) Cash & Bank (Rs.) (Rs.) 2013-14 4,92,207/- 73,386/-(15%) 10,80,18,223/- 4,30,88,467/-
2014-15 65,68,491/- 30,41,323/-(46%) 1,51,35,764/- 14,00,676/-
2015-16 8,75,278/- 16,22,815/-(42%) 11,64,07,732/- 17,60,879/- 2016-17 50,84,427/- (-)6,41,228/-(-ve) 11,75,98,685/- 7,50,208/-
The income & expenditure account shows that the receipts of the trust are mainly through Bank Interests, Interest on FDR and donations. The donations received by the trust are stated to be 'Golak donations' and 'Donations on Mela', however, no evidence in support of sources of donations has been produced. Expenditures have been incurred mainly under the head 'Depreciation, Salary, Food to employees, diesel, electricity, gardening etc.' 4 ITA No.547 /Asr/2017 (A.Y.2017-18) M/s Dera Baba Bhai Gurdas Ji vs. CIT(E) Clearly the main focus of the applicant trust is on capital expenditure and acquisition of assets which lacks the essence of charity.
7. Further, from the documentary evidences of possession of agricultural land, it has been noticed that the land was possessed by Dera Chaditaman through Mahant Amrit Muni in June 2011. The applicant trust was established in September 2013 and Mahant Amrit Muni is trustee of the applicant trust.
There is no mention of this land in the trust deed of the applicant trust. There should have been addition of land in the Fixed Assets when the trust was created in FY 2013-14 if the land in possession of 'Dera Chaditaman' had been transferred to the present applicant. In the absence of any such evidence the department is free to assume that proceeds from land (owned by another entity) that went on to finance purchase of another piece of land worth 10.68 crores is clearly not the society's. This clearly depicts non-disclosure of complete activities on the part of the applicant and in such case, the claims of charitable activities performed by the applicant trust cannot be relied upon. Also, the applicant trust has shown advances of 31 lacs to 'Gaushala Sewa Samiti1 which is not a registered entity under section 12AA of the I.T. Act, 1961.
8. In view of all the above, it is safe to conclude that there is no other activity of the applicant trust other than capital expenditure and acquisition of assets the source of which is evidently doubtful (Para 7). The applicant has failed to prove that the activities undertaken by it are of charitable nature and hence cannot be termed to fall under the category of "charitable purpose" as envisaged in section 2(15) of the I.T. Act, 1961. In light of the above, I have no option but to proceed on merits and deny the registration to the applicant u/s 12AA of Income Tax Act, 1961."
5. According to section 12AA of the Act, the procedure for registration of a trust or institution is as follows:--
12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause
(a) or clause (aa) 8[or clause (ab)] of sub-section (1) of section 12A, shall--
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he--5 ITA No.547 /Asr/2017 (A.Y.2017-18)
M/s Dera Baba Bhai Gurdas Ji vs. CIT(E)
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant :
Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.
6. According to proviso of clause (b) of clause (1) of section 12AA of the act, before passing an order for refusal of registration, it is mandatory to give a reasonable opportunity of being heard to the applicant. The principle of audi alterm partem, which mandates that no one shall be condemned unheard is part of the rules of natural justice. Natural justice is a great humanising principle intended to invest the law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action. The inquiry must always be done, whether a fair opportunity to be heard has been given or not to the person affected. In the instant case, after getting reply/clarification from the appellant, the Ld. CIT(E) did not provide any opportunity either to substantiate/corroborate its claim and/or contradict the issue(s) in any posed by the Ld. CIT(E). Non- providing the opportunity not only amounts to denial of natural justice but also amounts to violation of rule of 'Audi Alteram Partem', hence considering the peculiar facts and circumstance and in order to provide reasonable opportunities of being heard, we feel it appropriate to remand back this case to the file of the CIT(E) to decide afresh, while affording reasonable opportunity of being heard, without being influenced by the observations made above.
6 ITA No.547 /Asr/2017 (A.Y.2017-18)M/s Dera Baba Bhai Gurdas Ji vs. CIT(E)
7. In the result, the appeal filed by the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 22.02.2019.
Sd/- Sd/-
(N.S.SAINI) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 22.02.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) M/s Dera Bhai Gurdas Ji, Udasin Trust Ward No.21, Baba Bhai Gurdas Road, Mansa.
(2) The CIT(Exemptions), Chandigarh
(3) The SR DR, I.T.A.T., Amritsar
True copy
By order
Filename: Dera Baba Bhai Gurdas Ji, 547-17
Directory: D:\DOCUMENT\NKC Orders 2018\NS Saini & NKC
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