Commissioner Of Income Tax, Bikaner v. Gopi Ram Goyal Charitable Trust(D.b.income Tax Appeal

COMMISSIONER OF INCOME TAX, BIKANER VS. GOPI RAMGOYAL CHARITABLE TRUST(D.B. INCOME TAX APPEAL NO.186/11) Dated:- 2.6.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.G.S.Chouhan, for the appellant.Mr.S.L.Jain, for the respondent. 1.This appeal is directed against order dated 12.6.09 ofIncome Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur,whereby an appeal preferred by the assessee-Gopi Ram GoyalCharitable Trust against the order dated 17.4.08 passed by theCommissioner of Income Tax (CIT), Bikaner, rejecting theapplication preferred by the assessee under Section 12A of theIncome Tax Act, 1961 ( for short “the Act”), has been allowed. 2.Learned counsel for the appellant submitted that after dueconsideration of the material on record, the CIT, Bikaner hadarrived at a categorical finding that the objects of the assesseetrust and its activities are not genuine and thus, the applicationpreferred by the assessee seeking registration under Section 12Awas rightly rejected. Learned counsel would submit that for theyear ending on 3.3.03, the assessee had shown addition ofRs.11,18,251/- during the year out of which Rs.11,00,000/-have been shown as FDR with the bank but it was not clear that whether fund was deposited as per requirement of Section 11(5)of the Act. Learned counsel submitted that issue of corpus funddonation was not proved by the assessee by producing anyevidence on record hence, the assessee could not have claimedthat it has applied its income to the extent of 85%. Learnedcounsel would submit that the assessee having failed to reply thespecific queries made by the CIT, the conclusion drawn thatthere is absence of charitable activities cannot be faulted with.Learned counsel would submit that ignoring the findings arrivedat by the CIT, the ITAT while setting aside the order passed bythe CIT, has seriously erred in directing to issue registration tothe assessee under Section 12A. 3.On the other hand, the counsel appearing for therespondent assessee submitted that as per the mandate of theprovisions of sub-section (2) of Section 12AA, the CIT was underan obligation to pass an order granting or refusing registrationbefore the expiry of six months from the ends of the month inwhich the application was received under clause (a) of sub-section (1) of Section 12A of the Act and thus, the CIT havingfailed to dispose of the application within the stipulated period,the ITAT was justified in holding that failure to do so will amountto deem that the registration is granted. Learned counsel submitted that a bare perusal of the order passed by the CITreveals that the finding arrived at regarding the objectsmentioned in the trust deed being non genuine was absolutelyperverse. Learned counsel submitted that while considering theapplication under Section 12A, the CIT entered into enquiry as ifhe was examining the entitlement of the assessee for exemptionunder Section 11 of the Act. Learned counsel submitted that theorder impugned passed by the ITAT does not give rise to anysubstantial question of law and thus, the appeal deserves to bedismissed. 4.We have considered the rival submissions and perused thematerial on record. 5.As per Section 12 AA (1) (b) of the Act, the registrationshall be granted by the Commissioner on being satisfied aboutthe objects of the trust or institution and genuineness of itsactivities. Undoubtedly, for claiming exemption under Section 11& 12 of the Act, the registration under Section 12A is conditionprecedent but, the registration under Section 12A by itself doesnot make a trust or institution entitled to claim exemption underSection 11 & 12 of the Act unless, the requirement for claimingexemption as envisaged under Section 11 & 12 of the Act. In theconsidered opinion of this court, the scope of the enquiry under 4.We have considered the rival submissions and perused thematerial on record. 5.As per Section 12 AA (1) (b) of the Act, the registrationshall be granted by the Commissioner on being satisfied aboutthe objects of the trust or institution and genuineness of itsactivities. Undoubtedly, for claiming exemption under Section 11& 12 of the Act, the registration under Section 12A is conditionprecedent but, the registration under Section 12A by itself doesnot make a trust or institution entitled to claim exemption underSection 11 & 12 of the Act unless, the requirement for claimingexemption as envisaged under Section 11 & 12 of the Act. In theconsidered opinion of this court, the scope of the enquiry under Section 12A for the purpose of grant of registration as envisagedunder Section 12AA by the Commissioner shall be confined withregard to the objects of the trust or institution and genuinenessof its activities and therefore, it cannot travel to the extent thatwhether the income of the trust from the property is whollyapplied for the charitable purposes or not so as to make thementitle to claim exemption under Section 11 & 12 of the Act. 6.A bare perusal of the order passed by the CIT makes itabundantly clear that it has transgressed its jurisdiction whileconsidering the application preferred by the assessee underSection 12A of the Act. The CIT has proceeded to record thefinding without any reasonable basis that it is not proved thatthe assessee has applied 85% of its income during the year2002-03 towards the objects of the trust and the same havebeen accumulated or set apart. The ITAT has rightly observedthat it was nowhere found by the CIT that the objects mentionedin the trust deed are not charitable or non genuine. It ispertinent to note that on the application of the assessee, the CIThad received a report from the Income Tax Officer concernedthrough Joint Commissioner of Income Tax concerned, but didnot pass any order on the application of the assessee for theregistration and therefore, the assessee had to approach this (D.B.INCOME TAX APPEAL NO.186/11) court for appropriate relief and after the directions being issuedby this court, the application of the assessee was considered bythe CIT. It is a matter of record that after perusing the report ofthe Income Tax Officer, documents and information filed by theassessee, the JCIT being satisfied about the genuineness of theobjects and the activities of the assessee, forwarded the reportto CIT, Bikaner vide letter dated 19.6.03, however, the CIT didnot choose to pass any order accepting or rejecting theapplication for registration within the stipulated period andduring the pendency of the application, a notice under Section148 for the assessment year 2004-05 was issued to theassessee. When the assessee reminded CIT about the pendencyof the application, the CIT again directed for report to JCIT videletter dated 1.8.07, which was responded to by the JCIT videletter dated 13.8.07 stating that the requisite report has alreadybeen sent to the office of CIT, Bikaner. The said letter wasaccompanied by copy of the report dated 19.6.03. Strangelyenough, while deciding the application of the assessee underSection 12A, the CIT has not even cared to take intoconsideration the report submitted by the JCIT as aforesaid.Thus, the ITAT has rightly arrived at the finding that the CIT wasbent upon to dispose of the application of the assessee for Aditya/ registration without considering such report. 7.A bare perusal of the order passed by the ITAT reveals that entire factual and legal position has been examined by the ITATthreadbare. After due examination of material on record, havingbeen satisfied about the genuineness of the objects and activitiesof the assessee trust, the ITAT has committed no error ingranting the application for registration preferred by theappellant under Section 12A of the Act. Aditya/ registration without considering such report. 7.A bare perusal of the order passed by the ITAT reveals that entire factual and legal position has been examined by the ITATthreadbare. After due examination of material on record, havingbeen satisfied about the genuineness of the objects and activitiesof the assessee trust, the ITAT has committed no error ingranting the application for registration preferred by theappellant under Section 12A of the Act. 8.The Revenue has not raised the question regarding thedeemed registration on failure on the part of the CIT in decidingthe application within the stipulated period. That apart, theapplication of the assessee for registration having been allowedby the ITAT, after due examination on merits, the question withregard to deemed registration does not remain relevant andtherefore, this court is not inclined to examine the said question,it is left open. 9.For the aforementioned reasons, no substantial question oflaw arises for consideration of this court in the present appealand therefore, the same is hereby dismissed. (KAILASH CHANDRA SHARMA), J. (SANGEET LODHA),J.