The Commissioner Of Income Tax (Exemptions), Chandigarh v. M/S Jk Education Samiti, Jkr Public School, Gohana

ITA-115-2017 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-115-2017 Date of Decision: 17.8.2017 The Commissioner of Income Tax (Exemptions), Chandigarh Versus ....Appellant. M/s JK Education Samiti, JKR Public School, Gohana ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE AMIT RAWAL. PRESENT: Mr. Denesh Goyal, Senior Standing Counsel for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 22.7.2016 (Annexure A-3) passed by the Income Tax AppellateTribunal, Delhi Bench (Friday), New Delhi (hereinafter referred to as “theTribunal”) in MA No. 08/Del/2016 in ITA No. 6251/Del/2013, claiming thefollowing substantial questions of law:- I.Whether on the facts and in the circumstances ofthe case, the order of the ITAT is not perverse indismissing the miscellaneous application on theground that the revenue has not pointed out anymistake in the order whereas it was clearly pointedout that the CIT had declined grant of registrationas the applicant had not been able to provegenuineness of its activities. The applicant did notthe case, the order of the ITAT is not perverse indismissing the miscellaneous application on theground that the revenue has not pointed out anymistake in the order whereas it was clearly pointedout that the CIT had declined grant of registrationas the applicant had not been able to provegenuineness of its activities. The applicant did not furnish documentary evidence in support ofunsecured loan a fact overlooked by the ITATwhile directing to grant registration?unsecured loan a fact overlooked by the ITATwhile directing to grant registration? II.Whether on the facts and in the circumstances ofthe case, the ITAT is justified in declining theprayer of the revenue to recall its order passed inITA No. 6251/Del/2013 in the light of Hon'bleP&H High Court's observations contained in itsorder in the case CIT-I v. Sri Guru Gorakh NathCharitable Educational Society upholding CIT'spowers to look into the genuineness of objects andactivities when the basis is that of non-supply ofinformation?the case, the ITAT is justified in declining theprayer of the revenue to recall its order passed inITA No. 6251/Del/2013 in the light of Hon'bleP&H High Court's observations contained in itsorder in the case CIT-I v. Sri Guru Gorakh NathCharitable Educational Society upholding CIT'spowers to look into the genuineness of objects andactivities when the basis is that of non-supply ofinformation? 2.A few facts necessary for adjudication of the instant appeal asnarrated therein may be noticed. The assessee moved an application forregistration under Section 12AA of the Act to the Commissioner of IncomeTax (CIT). The CIT vide order dated 24.9.2013 (Annexure A-1) dismissedthe said application holding that neither aims/objects and terms ofmemorandum of the assessee are of the charitable nature nor there areactivities which may be put to a test of genuineness. Feeling aggrieved bythe order, Annexure A-1, the assessee filed an appeal before the Tribunal.The Tribunal vide order dated 20.5.2015 (Annexure A-2) held the assesseeto be eligible for registration and directed the CIT to grant registration to theassessee. Thereafter, the revenue moved MA No. 08/Del//2016 before theTribunal for recalling its order and referring the matter back to the CIT forfresh consideration. However, the Tribunal vide order dated 22.7.2016 ITA-115-2017 -3- (Annexure A-3) dismissed the said miscellaneous application. Hence, thepresent appeal by the revenue. 3.After hearing learned counsel for the revenue, we do not findany merit in the appeal. ITA-115-2017 -3- (Annexure A-3) dismissed the said miscellaneous application. Hence, thepresent appeal by the revenue. 3.After hearing learned counsel for the revenue, we do not findany merit in the appeal. 4.Examining the factual matrix, it may be noticed that the CITvide order dated 24.9.2013 (Annexure A-1) rejected the application of theassessee for registration under Section 12AA of the Act primarily on theground that the assessee had failed to produce material to establish theauthenticity of the unsecured loan received by it. On the aforesaid premises,it was concluded that the assessee had been charging hefty fees and was notestablished for charitable purpose and the activities were also not genuine.In appeal, the Tribunal vide order dated 20.5.2015 (Annexure A-2) whileallowing the appeal directed the CIT to grant registration to the assesseeunder Section 12AA of the Act. The Tribunal vide order dated 20.5.2015after examining the factual matrix and the case law on the subject hadcategorically concluded as under:- “It is an undisputed fact that assessee is runningeducational institution as is apparent from the assessmentorder of earlier years placed at paper book pages 124-126and moreover the object clause as placed in paper bookpages 3-14 suggests that assessee is running school foreducational purposes. The argument of Ld. D.R. thatoriginal constitution needs to be examined with respectto objects clause does not hold much force as A.O. inassessment orders of earlier years (as placed in paperbook pages 124-126) has noted that society was running -4- a school. In view of above facts and circumstances and inview of the judgments as noted above, we direct theCommissioner to allow registration u/s 12AA of the Act.The A.O. during assessment proceedings will however beentitled to examine the books of accounts of assesseewith a view to examine any violation of the act and candisallow exemption u/s 11 if anything adverse is found.” 5.It was recorded that the object clause of the assessee as placedon the paper book shows that it is running school for educational purposes.The assessment order of earlier years as placed in the paper book had alsoclearly pointed out to the same effect. However, liberty was granted to theAssessing Officer to examine the books of account and in case there wasany violation of the Act then to disallow exemption under Section 11 of theAct. No illegality or perversity could be demonstrated in the aforesaidapproach of the Tribunal. 6.However, inspite of the same, the revenue moved anmiscellaneous application before the Tribunal for recalling the order,Annexure A-2. The Tribunal had noticed that by moving the MA, therevenue had tried to review the order which was not permissible underSection 254 of the Act. Further, vide order dated 20.5.2015, the Tribunalhad clearly held that the Assessing Officer would be entitled to examine thebooks of account of the assessee during assessment proceedings and ifanything adverse was found, the Assessing Officer can disallow exemptionunder Section 11 of the Act. The Tribunal had rightly held that the revenuehas failed to point out any mistake apparent on the face of the record andrectifiable under Section 254(2) of the Act, with the following ITA-115-2017 observations:- ITA-115-2017 observations:- “3.We have considered the averments of the Revenuein the light of order sought to be rectified. A perusal ofthe miscellaneous application shows that the Revenuehas raised such contentions in this application whichrequires reappraisal of facts, consideration of long drawnarguments and elaborate discussion. In fact, thedepartment has tried to review the order of the Tribunalin the name of rectification, which is not permissible inthe proceedings u/s 254 of the Act. A perusal of ordersought to be recalled shows that the Tribunal has passedan elaborate order discussing therein the procedure ofSection 12AA and the powers of the CIT for granting orrefusing the registration. Not only this at the end oforder, the Tribunal has given categorical finding that theAO during assessment proceedings will however, beentitled to examine the books of accounts of assesseewith a view to examine any violation of the Act and candisallow exemption u/s 11 if anything adverse is found.This finding itself contains complete answer to theaverments made in this MA by the Revenue. In act, theRevenue has failed to point out any such mistake in theorder, which is apparent on the face of record andrectifiable u/s 254(2) of the Act. We, accordingly, beingnot empowered to review the order of the Tribunal, areof the opinion, that the Misc. application filed by thein the light of order sought to be rectified. A perusal ofthe miscellaneous application shows that the Revenuehas raised such contentions in this application whichrequires reappraisal of facts, consideration of long drawnarguments and elaborate discussion. In fact, thedepartment has tried to review the order of the Tribunalin the name of rectification, which is not permissible inthe proceedings u/s 254 of the Act. A perusal of ordersought to be recalled shows that the Tribunal has passedan elaborate order discussing therein the procedure ofSection 12AA and the powers of the CIT for granting orrefusing the registration. Not only this at the end oforder, the Tribunal has given categorical finding that theAO during assessment proceedings will however, beentitled to examine the books of accounts of assesseewith a view to examine any violation of the Act and candisallow exemption u/s 11 if anything adverse is found.This finding itself contains complete answer to theaverments made in this MA by the Revenue. In act, theRevenue has failed to point out any such mistake in theorder, which is apparent on the face of record andrectifiable u/s 254(2) of the Act. We, accordingly, beingnot empowered to review the order of the Tribunal, areof the opinion, that the Misc. application filed by the ITA-115-2017 -6- Revenue is not fit to be accepted. Accordingly, the Misc. application of the Revenue deserves to bedismissed.” 7.Equally, no illegality or perversity could be demonstrated bylearned counsel for the revenue in the aforesaid findings recorded by theTribunal. 8.Thus, no substantial questions of law arises in this appeal. Accordingly, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE August 17, 2017gbs (AMIT RAWAL)JUDGE Whether Speaking/ReasonedYesWhether ReportableYes