Income Tax Appellate Tribunal - Agra
Dr. Gyanendra Goel Foundation, Mathura vs Cit Exmp., Lucknow on 8 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH, AGRA
BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND
DR. MITHA LAL MEENA, ACCOUNTANT MEMBER
ITA No. 173 /AGR/2017
(N.A.)
Dr. Gyanendra Goel CIT(Exemption)
Foundation, Maa Saraswati Vs. Aaykar Bhawan,
Hospital, Jai Singh Pura, Vibhuti Khand Gomti Nagar,
Mathura Lucknow
PAN AACTD 2905 K
APPELLANT RESPONDENT
Appellant by: Shri Anurag Sinha, Advocate
Respondent by: Shri Rajarshi Dwivedi, CIT DR
Date of hearing: 06/02/2018
Date of Pronouncement: 08/03/2018
ORDER
PER, A.D. JAIN, JUDICIAL MEMBER, JM:
1. This appeal is directed against the order dated 23.02.2017 passed by the CIT(E) rejecting the application seeking grant of approval u/s 80G(5)(vi) of the I.T. Act, 1961. The following grounds have been raised:
"1. BECAUSE, the learned 'CIT (Exemption)' has erred in law as well as in the facts and circumstances of the 2 ITA No. 173 /AGR/2017 case in rejecting the application filed by the 'appellant1 seeking grant of approval under section 80G(5)(vi) of the 'Act'.
2. BECAUSE, the learned 'CIT(Exemption)' erred in drawing adverse conclusion in respect of Donation of Rs. 1,82,000/- , holding the same to be 'hefty donation' and rejection approval on the ground of non furnishing of address and PAN of Donors and evidence of 'uniform distribution to poor students', etc is highly unjustified.
3. BECAUSE, the rejection is based on all such reasons as were duly examined by the learned 'CIT(Exemption)'while granting registration under section 12A of the Act vide Certificate dated 05.04.2016 by the same learned 'CIT(Exemption)'.
4. BECAUSE, the learned 'CIT (Exemption)' erred in law in rejecting the application of the Society for grant of approval under section 80G(5)(vi) on irrelevant consideration ignoring the provisions of law that approval under that section could be refused if, and only if, the conditions laid under clause (i) to (v) of sub-section (5) of section 80G of the 'Act' were not met by the applicant.3 ITA No. 173 /AGR/2017
5. BECAUSE, the Registration has been denied without affording due and reasonable opportunity of hearing and the impugned order having been passed on the same day on which the case was fixed for hearing which is in direct conflict with the decision of Hon'ble Madras High Court in the case of S. Velu Palandar Vs DCIT (1972) 83 ITR 0683 (Mad).
6. BECAUSE, the order dated 23.02.2017 passed by the learned 'CIT(Exemption)' is based on conjectures and surmises and is wholly wrong, illegal, bad in law, unwarranted, passed in disregard of principal of natural justice and perverse.
7. BECAUSE, in any view of the matter order dated 23.02.2017 is bad on facts and in law and therefore, deserves to be quashed."
2. In the impugned order, the ld. CIT(E) has held as follows:
"3. I have considered the material available on record. It is important to note that as norms mandated by law, mere submission of documents is not the sole criteria for approval u/s 80G(5) of the Income Tax Act, 1961. The approval u/s 80G(5 is not a mechanical process wherein the according of registration of u/s 12AA/10(23C) of the Income Tax,1961 and filing of documents at one end would result in the 4 ITA No. 173 /AGR/2017 issuance of approval u/s 80G(5) at the other. It is important that the application and the supporting documents duly pass the test as mandated by law for according the recognition u/s 80G(5). It appears from the material available on record that the applicant is under misapprehension that mere filing of documents, including those that are completely irrelevant to the present proceedings, somehow proves his claim. This is riot what is Iaid down by the law 3nd the relevant material needs to be examined in the light of the provisions of the Act. 4, On perusal of the material available, it can been seen that the applicant society has received hefty donations to the tune of Rs.1,82,000/- for the F.Y. 2015-16. The applicant however has failed to furnish any details regarding the source of funds and donations for the F.Y, 2015-16, The applicant has failed to provide the complete addresses and the PANs of the alleged donors. The fact that the applicant is trying to obscure the real identity of the donors, and has deliberately not submitted any details to divulge the same clearly goes to prove that there is a mala fide attempt on part of the applicant to introduce the unaccounted money into the trust income as donations. This clearly evinces the fact that the failure on the part of the applicant to verify his donors is an attempt to introduce money sourced out of unknown sources into the trust and to plant it as a part of the funds of the trust. On perusal of 5 ITA No. 173 /AGR/2017 the material available on record, it is found that the applicant has failed to provide any cogent proof that could verify that the applicant is actually carrying out activities in pursuance of the set forth in the memorandum of the trust, The applicant trust has had a long history of existence and cannot be regarded as germane. No noteworthy activity has been showcased by applicant that can be considered to be within the periphery of charity as mandated by law. This clearly establishes that the activities of the applicant society as claimed to being carried are not genuine and in that case the applicant fails to pass the test mandated by law for formation of satisfaction mandated by law for according the registration. In addition to that no photographs have been provided by the applicant for activities that it claims to have carried out under the name of 'Uniform Distribution to Poor Students'. In order to verify the genuineness of the said activity it was expected of the applicant to have provided a list of students to whom the said uniforms were distributed. However no details regarding the said beneficiaries have been provided. A mere declaration in the name of charity does not make an institution worthy of being accorded the said registration. It is only when acts of charity are substantiated by cogent evidences like vouchers and production of books that an institution can be awarded the recognition of pursuing genuine charitable activities. It is quite important to note that for the F.Y. 2015-16, the gross 6 ITA No. 173 /AGR/2017 receipts and surplus/profit and the percentage thereof is as under:
F.Y. Income Profit Profit Percentage 2015-16 1,82,000 1,46,069 80.25
It is clearly evident from the aforementioned profit percentages that the applicant trust is only engrossed in non-Charitable and commercial activities for the purpose of generating huge for registration by an institute that exists for commercial interests without any when viewed in the fight of the provisions mandated by law meets a dead end. The applicant had sufficient time and funds at hand to carry out charitable activities during this except for recital of objects nothing substantial or concrete has been done by the applicant trust in the field of charity. The applicant has shown bogus and fake expenses with a view to inflate its expenditure and thereby hide its ulterior motive of channelizing grants for purposes other than charity. No corroborating evidences could be produced by the applicant society which could hold testimony to its claims of charity. The entire application is based on mere recital of fake claims of charity without any actual activity being carried out. It is clearly evident from the material available on record that the applicant has not even intended to make use of the time and funds at hand to carry out any act of 7 ITA No. 173 /AGR/2017 charity. This inactivity cannot be regarded as an excuse for the so called adolescence as pretended by applicant to hide its real motive of securing tax benefits under the garb of charity without performing any genuine charitable activity. The above facts clearly state that the applicant trust has done a mere fake declaration with respect to charity and there is no genuineness in the activities as claimed to be carried out by the applicant. This proves detrimental to the application of the trust and clearly illustrates that the applicant trust has not made a case for according the said registration.
5. In the present proceedings the applicant has failed to corroborate his claim of charitable activities. The documents filed in the proceedings show that applicant has not worked towards the performance of the objects set out in the memorandum of the society. Thus the applicant has failed to accomplish the goals set by the law for according the said recognition. The documents filed in the proceedings show that the applicant has claimed to be involved in activities which apparently are for profit making on commercial lines and are far away from the definition of the term "charitable purpose". It is very clear that the applicant is doing a pretence of charity.
6. The Hon'ble ITAT Lucknow bench in order ITA No. 809/LKW/2014 dated 26.02.2015 has held that "We have 8 ITA No. 173 /AGR/2017 considered the submissions of Learned D.R. of the1 Revenue, perused the material available on record and gone through the impugned orders of learned CIT-II, Kanpur. It is noted by the learned OT in the order passed by him for rejecting the claim for registration u/s 12AA that the material required for formation of the satisfaction mandated by the Act is unavailable and therefore, it is held by learned CIT that the assessee has failed to fulfill the conditions for grant of registration u/s 12AjpJ the Act. Similarly, in his order for rejecting the claim of the assessee for registration u/s 80G, he has given a finding that the assessee has failed to fulfill the conditions for approval u/s 80G of the Act, Hence, we do not find any justification to interfere in these orders of learned CIT. -i
7. In view of the above discussion, it is clear that the applicant is not engaged in any ."charitable purpose'' which is the prerequisite for approval u/s 80G of the Act. Under, these circumstances and for these reasons, I hereby reject the application of the society u/s 800(5) of the Income Tax Act 1961."
3. The ld. counsel for the appellant Institution has contended that the ld. CIT (Exemption) has erred in law as well as in the facts and circumstances of the case in rejecting the application filed by the appellant seeking grant of approval under section 80G(5)(vi) of 9 ITA No. 173 /AGR/2017 the Act; that the learned CIT(Exemption) erred in drawing adverse conclusion in respect of donation of Rs. 1,82,000/-, holding the same to be a hefty donation and rejecting the application for approval on the ground of non-furnishing of addresses and PANs of the donors and evidence of 'uniform distribution to poor students', etc.; that the rejection is based on all such reasons as were duly examined by the ld. CIT(Exemption) while granting registration under section 12A of the Act vide Certificate dated 05.04.2016 by the same learned CIT(Exemption); that the learned CIT (Exemption) erred in law in rejecting the application of the Society for grant of approval under section 80G(5)(vi) on irrelevant considerations, ignoring the provisions of law that approval under that section could be refused if, and only if, the conditions laid down under clause (i) to (v) of sub-section (5) of section 80G of the Act were not met by the applicant; and that the approval has been denied without affording due and reasonable opportunity of hearing and the impugned order has been passed on the same day on which the case was fixed for hearing, which is in direct conflict with 10 ITA No. 173 /AGR/2017 the decision of the Hon'ble Madras High Court in the case of "S. Velu Palandar Vs DCIT", (1972) 83 ITR 683 (Mad).
4. On the other hand, ld. DR has placed strong reliance on the order under appeal.
5. We have heard the parties and perused the material on record. At the outset, it is seen that registration u/s 12AA(1)(b)(i) of the I.T. Act was granted to the appellant Institution vide order dated 05.04.2016 (APB, 16-18). It is not disputed that this registration has hitherto not been revoked or cancelled. The ld. CIT(E) has observed, interalia, that approval u/s 80G(5) of the Act is not a mechanical process, wherein the according of registration u/s 12AA of the Act at one end would result in the issuance of approval u/s 80G(5) at the other. Consistent judicial opinion in this regard, however, otherwise. The issue is, as such, res integra.
6. In "Hiralal Bhagwati vs. CIT", 246 ITR 188 (Guj.), while holding that once registration u/s 12AA of the Act was granted, the order rejecting the application u/s 80G(5) of the Act was liable to be quashed, the Hon'ble High Court observed that the registration of a charitable trust u/s 12A of the Act is not an idle or empty formality; 11 ITA No. 173 /AGR/2017 that this is apparent from the provisions of Section 12A; that it requires that not only an application should be filed in the prescribed form, setting out the details of the origin of the trust, but also the names and addresses of the trustees and/ or Managers should be furnished; that the CIT has to examine the objects of creating the trust as well as an empirical study of the past activities of the applicant; and that the CIT has to examine that it is really a charitable trust or Institution eligible for registration. The Hon'ble High Court took into account the submissions that once registration u/s 12A of the Act is granted, a grant of benefits under the act cannot be denied; that the ITO was not justified in refusing the benefits under the act which would otherwise accrue under the registration; that if there was no registration, the Revenue would have been justified in submitting that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied.
7. "Hiralal Bhagwati" (Supra) was followed by the Agra ITAT in "Maa Bhagwati Samagra Utthan Trust vs. CIT" vide order (APB, 72-
75) dated 18.03.2011, in ITA No. 293/Agr/2009, holding that when 12 ITA No. 173 /AGR/2017 the CIT has granted registration u/s 12AA of the Act after examining the genuineness of the activities of the Trust, it is not proper for the CIT to reject the application of the trust for the benefit of exemption u/s 80G(5) of the Act by holding that the activities of the trust are not genuine.
8. In "N.N. Desai Charitable Trust vs. CIT", 246 ITR 452 (Guj), it has held, interalia, that while considering the certification of the Institution for the purpose of Section 80G, inquiry should be confined to finding out if the Institution satisfies the prescribed conditions as mentioned in Section 80G; that it is well settled that at the time of granting the application u/s 80G, what is to be examined is whether the trust is registered u/s 12A and the objects of the trust; that so far as the aspect of income is concerned, the same can be very well examined by the Assessing Officer at the time of framing assessment; and that the Authority examining the question whether a trust/Institution is eligible to be certified for the purposes of Section 80G is not to act as an AO.
9. "N.N. Desai", (Supra) was followed by the Pune ITAT in "B.P.H.E. Society vs. ITO", in ITA No. 111/PN/2010, vide order 13 ITA No. 173 /AGR/2017 dated 30.08.2011, holding that when the CIT is to examine an application seeking recognition u/s 80G, he is not required to act as an AO and decide upon the claim of the assessee in respect of his assessment of income; that the actual assessment of the assessee and its actual liability to tax are matters to be decided only in the assessment proceedings; and that since the assessee was (in that case, as herein also) registered u/s 12A of the Act and such registration continued, the assessee fulfilled the conditions prescribed u/s 80G(5)(i) of the Act.
10. "N.N. Desai" (Supra) has also been followed in "Marathi Vidyan Parishad Nashik Vibhag vs. CIT, Nashik", (APB, 95-102), by the Pune Tribunal, vide order dated 20.05.2016, in ITA No. 1465/PN/2014.
11. "N.N. Desai" (Supra) was also followed in "CIT vs. Pujya Jalarambpa & Matushri Virbaima Charitable Trust" (APB, 84-88), by the Rajkot Tribunal in ITA No. 249/Rjt/2014, vide order dated 30.05.2014. This order of the Tribunal stands approved by the Hon'ble Gujarat High Court in "CIT vs. Pujya Shri Jalarambapa & Matushri Virbaima Charitable Trust" 55 taxmann.com 52 (Rjt). 14 ITA No. 173 /AGR/2017
12. "Pujya Shri Jalarambapa"(Supra) rendered by the Hon'ble Gujarat High Court has been followed by this Bench in "M/s Samajik Pragya Prasar Samiti, Agra vs. CIT(E)" (APB, 76-83) vide order (authored by one of u/s., the ld. AM) dated 16.01.2018, in ITA No.343/Agr/2016.
13. No decision contrary to the above case laws has either been referred by the ld. CIT(E) in the impugned order, or cited before u/s.
14. Therefore, respectfully following the above decisions, we hold that the ld. CIT(E) was not justified in rejecting, on the very same date as that of the hearing, clearly in direct contravention of "Velu Palandar" (Supra), the appellant's application seeking grant of approval u/s 80G(5)(vi) of the Act, despite the undisputed fact that the applicant was granted registration u/s 12AA of the Act and that too, by he himself, on examining the Institution's objects and the genuineness of its activities, and such registration continues uninterrupted hitherto, and inspite of the fact that it remains undisputed that the appellant duly fulfils all the conditions prescribed u/s 80G(5)(i) to (v) of the Act.
15ITA No. 173 /AGR/2017
15. Accordingly, the order under appeal is reversed and it is directed that the appellant be granted approval u/s 80G of the Act forthwith.
16. Nothing further survives for adjudication, nor was any other point argued.
17. In the result, the appeal is allowed.
Order pronounced, in the open Court on 08/03/2018.
Sd/- Sd/-
(DR. MITHA LAL MEENA) (A. D. JAIN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 08/03/2018
Aks
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
16
ITA No. 173 /AGR/2017
Date
1. Draft dictated (DNS) 05.03.2018 PS
2. Draft placed before author 06.03.2018 PS
3. Draft proposed & placed before the second JM/AM
member
4. Draft discussed/approved by Second Member. JM/AM
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.