Income Tax Appellate Tribunal - Amritsar
Sai Shyam Educational Society,, Jammu vs Assessee on 12 May, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND
SH. T.S. KAPOOR, ACCOUNTANT MEMBER
[
I.T.A No.567(Asr)/2014
Assessment Year: 2010-11
Sai Shyam Educational Vs. ITO, Ward2(3), Jammu
Society, Jammu. (J&K)
PAN:AACTS8409H
(Appellant) (Respondent)
Appellant by: Sh. Vinamar Gupta (CA)
Respondent by: Sh. S.S.Kanwal (DR.)
Date of hearing: 10.05. 2016
Date of pronouncement: 12.05.2016
ORDER
PER T. S. KAPOOR (AM):
This is an appeal filed by assessee against the order of learned CIT(A), dated 25.07.2014, for Asst. Year 2010-11.
2. The assessee has taken following grounds of appeal.
"(i) That order of the learned commissioner (Appeals), J&K confirming the assessed income of Rs.69,50,320/- made by the Income Tax Officer in computing the income of the appellant is contrary to law & the fact of case.
(ii) On the facts brought on record the learned Commissioner(Appeals) ought of have held that the Society was registered u/s 12AA of the Income Tax Act,1961.
(iii) That the learned Commissioner (Appeals) ought to have held that levy of tax & interest of Rs.28,47,800/- is bad in law."
3. The Revenue has filed an application for short adjournment. However, after going through the facts of the case, we were of the 2 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 considered opinion that the appeal can be disposed off and therefore adjournment application was rejected and learned AR was directed to proceed with the arguments.
4. The brief facts of the case as noted in the assessment order are that assessee is a society registered under Societies Registration Act and is running three institutions namely (a) Sai Shyam College of Education,
(b) Sai Shyam Public High School and (c) Sai Shyam Elementary Teachers Training Institute. The assessee filed its return of income claiming the income exempt u/s 12AA of the Act. During the assessment proceedings, assessee was asked to file exemption certificate u/s 12AA of the Income Tax Act. In reply the assessee submitted the following reply.
"REGISTRATION OF THE SOCIETY
(i) The assessee Society genuinely applied for registration u/s 12A & for me said purpose applied in Form No. 10A & same was acknowledged by the department vide receipt r 1167 dt. 27.06.2002. As no communication rejecting the application was received from the department within the stipulated period of 6 months as provided in the Income Tax Act, 1961, the registration is deemed to have been granted.
(ii) The overwriting in the receipt has been made by the person issuing the receipt at the very same time when the receipt was issued in order to show receipt of correct documents i.e Form No. 10A
(iii) The overwriting on the figure 2 & corrected to 1 in order to make 10A. Presuming that the document submitted by the assessee Society under 20A will lead to absurd result as there is no such form provided in the Income Tax Act, 1961 which is applicable to an individual firm/Society/Company. It is, however, pertinent to mention that Form No. 20 was withdrawn/omitted by the Income Tax Act, (9th Amendment) Rules, 1988 w.e.f- 91.04.1989. (Photocopy of the pages " Income Tax Rules 2002 are enclosed for your perusal & record) It is very clear from above that there was no such Form as 20A applicable at the time when the Society filed Form No. 10A vide receipt no 1167 dt 27.U6.2002.
(iv) The overwriting as done in the receipt as said earlier was genuinely made by the Counter clerk & any allegation of tampering attributed to the assessee Society appears to be atrocious and baseless 3 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 and needs investigated by holding proper enquiry with reference to record available with the department rather than presuming it to be a proved fact.
A reference can be made to the following documents to arrive at proper conclusion:
(v) Carbon Copy of receipt no. 1167 dr. 27.06.2002 (available with the Deptt.) to establish as to whether alleged tempering has actually taken place or not to know nature of documents filed.
• Register in which receipts are entered' & sent to various wards/ departments for processing.
• Incoming Dak register maintained at CIT Office (wherefrom documents are sent to ITO (technical section).
It is very interesting to point out that what document/Form was filed by the assessee Society under the above referred receipt, the authenticity of which has not been doubted & such document/Form should be available with the dept. to counter the submissions made by the assessee Society. It may also be clarified that the receipt which was stapled with another papers in the relevant file & while removing got torn it the place where the "Office" was mentioned to the misfortune of the assessee. It is worthwhile to mention that the receipt is ten and a half year old.
The application of registration u/s 12A submitted in form no. 10A was accompanied by the following documents:
a) A copy of Registration Certificate issued by the Registrar of Societies.
b) A copy of Memorandum of Association/Bye-Laws.
c) List of Managing Committee members. d) Balance Sheet as at 31.03.2002,
The form no. 10A is addressed to the Commissioner of Income Tax Jammu as is apparent from Cm photocopy of such Form submitted during assessment proceedings and accordingly, as to which Office it pertains stands clearly mentioned. It is also worthwhile to mention that Commissioner of Income Tax is alone competent to grant registration u/s 12A of the Income Tax Act, 1961.
It is pertinent to mention that the Office of CIT was supposed to maintain the register for receipt of applications submitted under 12A of the Income Tax Art, 1961 and as per enquiry the same has not been maintained/handed over to the successive clerks. As a matter of natural justice the department is requested to provide access to the Register, if any maintained in the Office of CIT to satisfy the assessee Society.
It is also brought to your notice that ITO Ward 1(3) had so certain information about the assessee vide letter dt.08.11.2005 while processing the return for the A.Y 2005-06 and in the replies furnished by the assessee Society, it was stated that form no. 10A has been filed vide receipt no. 1167 dt. 27.06.2002 and in this regard original receipt and office copy of Form No.10A were produced to the then learned I.T.O for Verification. The photocopy of letter of then ITO & replies furnished by the assessee Society along with acknowledgement are enclosed for your perusal. It is worthwhile to mention that at that stage the receipts of the assessee Society were far below the limit of Rs. One Crore and the institution was 4 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 covered u/s 10(23C)(iiiad) and same facts could have been provided to the concerned ITO. But as the assessee had genuinely applied u/s 12A, these facts were conveyed to the concerned I.T.O for him to complete the asst. proceedings. The return for the said year was accepted and assessment completed treating the registration of the assessee Society u/s 12A.
It may also be pointed out that form No. 10A was downloaded from CTR software on 12.11.2001 and applied in the same Form to the Department as is evident from the photocopy annexed hereto.
There has been no malafide intention on part of the assessee Society. The assessee once again reiterates that Form No. 10 A as required under the Act was filed under the receipt mentioned hereinbefore.
As the assessee Society's application was not rejected within the stipulated period of Six months, the registration u/s 12AA is deemed to have been granted to the assessee.
The assessee hereby submits an affidavit declaring therein Form No. 10A has been filed vide R No. 1167 dt. 27.06.2002 and that the overwriting in the receipt has not been done h any person connected with the assessee Society and if it is proved otherwise, the society is liable to tax and punitive action as per law."
The Assessing Officer, however, was not satisfied with the reply of assessee as he held that in assessment 2007-08 the issue of registration u/s 12AA has already been decided against the assessee and therefore, he rejected the claim of assessee u/s 12AA and assessed the society as AOP.
5. Aggrieved the assessee filed appeal before learned CIT(A) and filed various submissions. The learned CIT(A) on the basis of remand report from Assessing Officer held that it was not justified to conclude that appellant had not submitted application to the department, however, he upheld the action of Assessing Officer and rejected the contentions of assessee by holding as under:
"9.3 Ground of Appeal No 3 to 5 relates to denial of exemption claimed by the appellant u/s 11 & 12 of the Act. The appellant has argued that appellant society had submitted an application for granting exemption u/s 5 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 12A of the Act on 25.06.2002 and no order u/s 12A of the Act was passed by the then CIT till the expiry of six months from the filing of application. The appellant argued that since the application for exemption u/s 12A was not disposed off by the CIT w prescribed time, it amounts to deemed exemption u/s 12A of the Act. The' AO enquired from the ITO(tech) o/o Commissioner of Income Tax , who vide his letter dated 14.12.2009 reported a that the name of appellant society does not exist in the register maintained by the office of CIT for receiving such letters for granting exemption and accordingly rejected the plea of the appellant objecting to the authenticity of receipt. The appellant has argued that in reply to the RTI application, the office of CIT has replied to the appellant that the said register is not traceable. Further, the appellant has also identified the person (clerk in the department now) whom the application was made and who has issued the receipt. The AO was directed to examine the clerk of the department identified by the appellant. On examination by the AO, the clerk admitted that he was a daftri at that time and he was asked by the receipt clerk to receive the dak. He also admitted to have issued the said receipt produced by the appellant on receipt of the documents which he handed over to the receipt clerk. On the examination of the facts of the case, I am of the opinion that it is not justified to conclude that the appellant has not submitted the application to the department. Nevertheless, there is an another issue under consideration; whether non disposal of application by the CIT within prescribed time would amount to deemed registration or not. The evidences indicates towards the fact that the application was filed by the appellant but it might have been misplaced and perhaps due to this reason no proceedings were conducted in the case of appellant. But it is equally surprising that the appellant did not pursue the case and waited for six months to expire in order to claim deemed registration. Even if filing of application is presumed and no response made by the department for six months, the deemed registration is not automatic. This could never be the intention of the law to grant exemption without verification of documents and other relevant provisions by prescribing the time limit in the provisions of the Act.
The Orissa High Court in the case of Srikhetra, A. C. Bhakti-Vedanta Swami Charitable Trust vs. Asst. CIT (2006) 2 OLR 75 and of the Madras High Court in the case of Anjuman-E-Khyrkhah-E- Aam 354 ITR 474, held that there was no concept of deened registration u/s. 12AA(2).
The Madras High Court analysed the provisions of section 12AA(2) and the decision of the Orissa High Court referred to above. It agreed with the Orissa High Court that the time frame laid down u/s. 12AA(2) was only 6 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 direct y and not mandatory and that the Commissioner could pass an order even after the expiry of the statutory time limit. It observed that section 12AA(lj(b)(i) and (ii) made it clear that the, e was a statutory mandate imposed on the Commissioner to pass an order in writing either registering the trust or refusing to register the trust. It noted that the Madras high court in Anjuman's case (supra), where the Commissioner had passed an order on the last day of the time limit neither accepting nor rejecting the application but lodging the complaint instead, had rejected the concept of deemed registration and remitted the matter back to the Commissioner to afford an opportunity of hearing to the trust and to decide the matter afresh.
In view of the above, and noting that the counsel for the trust also fairly submitted to the Court that there was no question of "deemed registration"
and that the matter be remitted back to the Commissioner for consideration of the matter afresh, the Madras High Court held that non consideration of the registration application, within the prescribed time, did net amount to "deemed registration" of the trust. The Madras High Court therefore set aside the matter and remitted it back to the Commissioner for consideration of the application afresh, to pass orders after affording sufficient opportunity to the trust.
This decision of the Madras High Court was also followed by it in a subsequent decision in the case of CIT vs. Karimangalam Onriya Pengal Semipu Amaipu Ltd.354 ITR 483, where also a similar concession was given by the counsel for the trust and there also, the Madras High Court remitted the matter back to the Commissioner for consideration afresh. In view of above legal and factual position, I am of the opinion that the plea of the appellant that the appellant society be granted deemed registration as the CIT did not pass the order within prescribed time is not sustainable. This ground of appeal is dismissed."
6. Aggrieved the assessee is in appeal before us.
7. At the outset, the learned AR invited our attention to an additional ground of appeal raised vide letter dated 2.05.2016 and submitted that the additional ground was a legal ground, therefore, assessee was entitled to take up at this forum and reliance in this respect was placed 7 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 on the case law of National Thermal Power Co. Ltd. 229 ITR 383 decided by Hon'ble Supreme Court.
8. The Ld. DR however objected to the admission of additional ground. However, we find that assessee has taken a legal ground, therefore, the same was admitted. For the sake of convenience the additional ground taken by assessee is reproduced below.
"That the fact that the assessee had submitted the application for grant of registration u/s 12A to the department having been admitted by learned CIT(A), the assessee be granted registration u/s 12AA(2) on account of expiry of six months from the end of the month in which the application was received."
9. The learned AR submitted that assessee had filed an application for registration u/s 12AA of the Act and learned Commissioner has not decided the issue within six months and as per the Hon'ble Supreme Court Judgment in the case of CIT vs. Society for Promotion of Education, Allahabad in an appeal No.1478 of 2016, the assessee was entitled for deemed registration and in this respect filed a copy of Hon'ble Supreme Court Judgment.
10. The learned DR, on the other hand, submitted that the issue of registration u/s 12AA of the Act has already been decided by Hon'ble Jammu and Kashmir High Court in Asst. Year 2007-08 wherein Hon'ble Court has upheld the decision of Tribunal whereby the exemption was denied to the assessee, and therefore, learned DR submitted that on the same facts and circumstances the issue has to be decided in favour of 8 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 Revenue as both ITAT and Hon'ble High Court has held that assessee was not able to conclusively prove as to whether the application for registration was filed or not.
11. The learned AR, in his rejoinder submitted that in Asst. Year 2007- 08, though assessee was not able to prove the filing of application but in the present year the learned CIT(A) on the basis of a remand report from Assessing Officer has held that application was filed.
12. We have heard the rival parties and have gone through the material placed on record. We find that during assessment year 2007-08 the assessee had been denied exemption u/s 12AA of the Act and that order of Commissioner was challenged before ITAT which also dismissed the appeal of assessee. The said dismissal of appeal by ITAT was challenged before Hon'ble High Court and Hon'ble High Court vide its order dated 29.01.2013 placed at (PB-29-33) also dismissed the appeal of assessee by recording the following observations:
"5. Having heard the learned counsel for the assessee appellant, we are of the considered opinion that no interference in the impugned order passed by the Tribunal would be warranted. At no stage, the assessee appellant has been able to show that it has ever applied for registration under Section 12(AA) of the Act. On the contrary a copy of the application which was produced on the record has been found to be compared with. It there was any authentic entry in the record then the assessee appellant would have first preferred an application for summoning of the record. The onus to show that the assessee appellant has been registered or deemed to be so as a Charitable Trust was on the assessee-appellant and not on the department. Even before the Tribunal no effort was make to produce any evidence by summoning the record or obtaining the information under the Right to Information Act. if it has not been done before the ITO, 9 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 Commissioner (Appeal) and the Tribuna, we find no justification for undertaking any such exercise because it would be wholly undesirable.
6. The appeal does not involve any question of law. There are pure findings of facts. No question of law, much less a substantive question would emerge from the order of the Tribunal."
From the above findings of Hon'ble High Court, we find that the appeal of assessee was dismissed as the Hon'ble Court had held that the assessee was unable to show that it had applied for registration.
13. However, in the present case, we find that learned CIT(A) has made a categorical finding of fact that it was not justified to conclude that appellant had not submitted the application to the Department. For this purposes the relevant finding of learned CIT(A) are important which has already been reproduced in bold in earlier part of this order. The above findings recorded by learned CIT(A) are based upon the remand report of Assessing Officer who had examined the clerk who was Daftari at the time when the application was filed before him. The learned CIT(A) on the one hand has admitted that assessee must have filed the application, however, he did not allow the registration relying upon the case law of Hon'ble Orissa High Court in the case of Srikhetra, A. C. Bhakti-Vedanta Swami Charitable Trust vs. Asst. CIT (2006) 2 OLR 75.
14. We find that in the latest judgment of Hon'ble Supreme Court in the case of CIT vs. Society for the Promotion of Education, Allahabad the Hon'ble Supreme Court has held that after expiry of six months from the date of filing of application for registration u/s 12AA, the assessee 10 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 will be deemed to have been granted registration if no order is passed within that period of six months. The operative part of Hon'ble Supreme Court is reproduced below.
"1.Leave granted.
2.There is no appearance on behalf of the sole respondent despite service of notice and adjournment sough for on a couple of occasions earlier.
3. The short issue is with regard to the deemed registration of an application under Section 12AA of the Income Tax Act. The High Court has taken the view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision.
4. The learned Additional Solicitor General appearing for the appellants, has raised an apprehension that in the case of the respondent, since the date of application was of 24.02.2003, at the worst, the same would operate only after six months from the date of the application.
5. We are no basis for such an apprehension since that is the only logical sense in which the Judgment could be understood. Therefore, in order to disabuse any apprehension, we make it clear that the registration of the application under Section 12Aa of the Income Tax Act in the case of the respondent shall take effect from 24.08.2003.
6. Subject to the above clarification and leaving all other questions of law open, the appeal is disposed of with no order as to costs.
15. We find that Hon'ble Jammu and Kashmir High Court in Asst. Year 2007-08 had decided against the assessee for registration u/s 12AA of the Act as in that year the assessee was not able to demonstrate any evidence for filing of application whereas in the present case, the learned CIT(A) has made a categorical finding of fact that assessee cannot be said to have not filed the said application, therefore, the facts in the present case are distinguishable from the facts in the Asst. Year 2007-08 and in this year the judgment of Hon'ble Supreme Court is squarely applicable 11 ITA No.567 (Asr)/2014 Asst. Year: 2010-11 as in this year the learned CIT(A) has not denied that assessee had made application. In view of the above, the additional ground taken by assessee is allowed. The original grounds of appeal taken by assessee are also allowed in favour of the assessee in view of the allowability of additional ground.
16. In nutshell, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 12th May, 2016 Sd/- Sd/-
(A.D. JAIN) (T. S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:12.05.2016.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By order