Commissioner Of Income Tax (Exemptions),Delhi v. Mata Parvati Educational &Innovative Society

Signature Not Verified $~8 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 119/2020 & CM APPL. 6637/2020 COMMISSIONER OF INCOME TAX (EXEMPTIONS),DELHI..... Appellant Through:Mr. Ajit Sharma, Senior StandingCounsel for Revenue with Mr. A.Renganath, Advocate. versus MATA PARVATI EDUCATIONAL &INNOVATIVE SOCIETY ..... Respondent Through:None. %Date of Decision: 03[rd]November, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMEET PRITAM SINGH ARORA, J (ORAL): CM APPL. 6637/2020 (for condonation of delay) Keeping in view the averments in the application, the delay of 130days in re-filing the present appeal is condoned. ITA 119/2020 1.The present appeal has been filed challenging the order dated 29[th]March, 2019 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITANo. 2296/DEL/2018 and to restore the order passed by Commissioner of Income Tax (Exemptions) [‘CIT(E)’]. 2.Learned senior standing counsel for Revenue, states that the ITATerred in directing the CIT(E) to register the Assessee Society under Section12AA of the Income Tax Act, 1961, (‘Act’) considering that, there weredoubts with respect to the genuineness of the activities of the Respondent.He states that the ITAT failed to consider the fact that cash deposits to thetune of Rs. 17,00,000/- were made in the bank account of the Assesseeduring the Financial Year (‘FY’) 2016-17, which raises questions withrespect to the genuineness of the objectives of the society. 3.He states that the ITAT failed to appreciate that the school run by theAssessee is not recognised by the Department of Education, Government ofNCT of Delhi, and therefore, in the absence of formal recognition of theschool by the competent authority, the claim of the Assessee that it wasrunning the school cannot be accepted. 4.He states that the ITAT erred in holding that at the time of theregistration of the trust, no enquiry with respect to the actual activities orapplication of funds of the Applicant, Assessee, is to be examined by theCIT(E). He lastly states, that the ITAT erred in holding that the CIT(E) wasexamining the ‘application of income’ of the Assessee whereas in fact, theCIT(E) was only limiting its exercise to call for documents/information tosatisfy himself about the genuineness of the activities of the Respondent.5.We have perused the paper book. 6.The ITAT has recorded that the Respondent society is engaged in theactivity of imparting education by running a school, the Rainbow KidsValley School, which fact is not in dispute. The Respondent filed anapplication on 23[rd]August, 2017 in Form No. 10A seeking registration under Section 12AA of the Act. The Authorised Representative (‘AR’) ofthe Respondent appeared before the CIT(E) and filed certain documents.The CIT(E) observed that there were cash deposits in the bank accountduring the Financial Year (FY) 2016-17 which were not found supported bythe corresponding documentations. He observed that the school run by thePetitioner is not recognised by the Department of Education, Government ofNCT of Delhi (GNCTD) and in the absence of formal recognition thefunctioning of the school cannot be validly claimed. The CIT(E) concludedthat the Assessee was not able to satisfactorily establish the genuineness ofthe conduct of the charitable activity as defined in Section 2 (15) of the Actand required under Section 12AA of the Act. In view of the said finding, theCIT(E) rejected the application of the Assessee under Section 12AA of theAct. 7.The ITAT allowed the appeal by holding that at the stage ofconsidering an application under Section 12AA of the Act, the CIT(E) is notto examine the ‘application of income’ of the Applicant Assessee, which isan exercise to be undertaken by the Assessing Officer on a year-to-yearbasis at the time of assessment of income. The relevant findings of the ITATare as under:- 7.The ITAT allowed the appeal by holding that at the stage ofconsidering an application under Section 12AA of the Act, the CIT(E) is notto examine the ‘application of income’ of the Applicant Assessee, which isan exercise to be undertaken by the Assessing Officer on a year-to-yearbasis at the time of assessment of income. The relevant findings of the ITATare as under:- “6. Undisputedly, the conjoint reading of the aims and objects ofthe assessee society goes to prove that it has been set up to openand run educational and vocational school or institutions in orderto bring education within the reach of poor and backward childrenin the National Capital Region of Delhi by establishing libraries,providing hospital and residential accommodation, by establishingand maintaining institution for handicap or adult education, etc.,which certainly falls in the definition of "charitable activities" asdefined in the provisions contained under section 215 of the Act. Signature Not Verified xxx xxx xxx 10. It is settled principle of law that at the stage of grantingregistration u/s 12AA of the Act, ld. CIT (E) is not to examine theapplication of income, which is to be done by the AO on year toyear basis at the time of deciding the exemption u/s 11 of the Act;that the ld. CIT (E) is not (sic) to examine the genuineness of theTrust but not the income of the Trust for charitable or religiouspurpose which functions are assigned to AO and that theregistration of the Trust does not involve inquiry into the actualactivities or application of the funds etc., particularly when there isnothing on record to make out that the object of the Trust oractivities of the were not genuine; and that non-production ofbooks does not mean that the genuineness of the charitableactivities of the assessee society is not established. Reliance in thisregard may be placed on Vidyadayani Shiksha Samiti vs. CIT ITANo.309/Del/2016 order dated 14.12.2017; Bhartiya Kisan Sanghvs. CIT- (2017 59 ITR (Trib) 228 (ITAT-Del); Shanti EducationandWelfare Society vs. CIT ITA No.5970/Del/2012;FifthGeneration Education Society -185 ITR 634; CIT vs. Babu RamEducation Society - (2018) 96 taxmann.com 606 (Allahabad); CITvs. B.K.K. Memorial Trust- (2013) 256 CTR 424; and DIT (E) vs.PannaLalbhai Foundation -216 taxman 148. xxx xxx xxx 12. In view of what has been discussed above, we are of theconsidered view that when aims and objects of the assessee societyto open schools for imparting education and vocational trainingwhich is per se a charitable object under section 2(15) of the Actand the assessee society has been running a school in the nameand style of Rainbow Kids Valley School, the ld. CIT (E) had noground to decline the registration under section 12AA of the Act.Consequently, appeal filed by the assessee society is herebyallowed directing the ld. CIT (E) to grant the registration to theassessee society u/s 12AA of the Act.” (Emphasis supplied) Signature Not Verified 8.There is no dispute raised in the appeal to the finding of ITAT that theAssessee is in fact running the Rainbow Kids Valley School. Further, thelearned counsel for the Respondent confirmed on written instructions that noscrutiny assessment was made in the case of the Respondent, Assessee, forAssessment Year (AY) 2017-18 which is relevant for FY 2016-17 when thecash deposits of Rs. 17,00,000/- were made in the bank account of theRespondent, Assessee. There is, therefore, no adverse finding of theAssessing Officer against the Assessee with respect to the said cashdeposits. The scope of the application was to examine the genuineness of theobjects of the society and to ascertain if the said objects are charitable or not.Learned senior standing counsel for Revenue, has failed to show anyinfirmity in the findings of the ITAT which hold that the objects of theAssessee are charitable. 9.We are of the considered view that the facts have been correctlyassessed by the ITAT and no substantial question of law arises in the presentcase. Thus, we see no merits in the present appeal and the same isaccordingly dismissed. MANMEET PRITAM SINGH ARORA, J MANMOHAN, J NOVEMBER 03, 2022msh