Shree Digamber Jain Shiksha Samiti Vs CIT (E) (ITAT Agra)
ITAT considered the rival contention of the parties and perused the material available on record, including the judgments cited at bar during the course of hearing by both the parties. As is evident from the paper book filed before us that the assessee has provided the requisite details of the name and addresses and the amount received from the persons who had booked the party hall before the Commissioner exemption further the assessee had also furnished the books of account showing the bifurcations of the commercial receipt and the income derived from commercial activities. However from the perusal of the order passed by the Commissioner exemption, it is abundantly clear that she had mentioned that the requisite details have not been provided by the assessee during the proceedings before her. The above said facts are contrary to the record and it seems to us that the impugned order was passed by the lower authorities without considering the complete record furnished by the assessee during the proceedings. In the light of the above we set aside the order passed by the Commissioner exemption and remand the matter to CIT exemption. The CIT (exemption) is directed to pass fresh speaking order, in terms of direction given herein above, after following the principle of natural justice and affording the opportunity of hearing to the assessee.
The Commissioner exemption is directed to give a detailed finding dealing with the documents and detail furnished by the assessee with respect to utilization of the party hall for commercial purposes and Commissioner exemption is also directed to examine the accounts and books of accounts of the assessee for the purpose of coming to the conclusion whether the assessee was involved into commercial activities or not. We also direct the Commissioner exemption to examine the case of the assessee in the light of the proviso to section 2(15) of the Act and return a finding whether the case of the assessee falls within or outside the purview of the provision proviso to section 2(15) of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
1. Present appeal was filed by the assessee feeling aggrieved by the order passed by the commission exemption whereby she had cancelled the registration earlier granted to the assessee on the ground, mentioned hereinbelow:
I. That the learned CIT Exemption, Lucknow (hereinafter referred to as ‘CIT(E)’) has grossly erred both in law and on facts in passing the impugned order dated 21.01.2021 U/S 12AA(3) of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) cancelling the registration granted to the appellant charitable society (hereinafter referred to as ‘Appellant’) U/S 12AA of the Act vide CIT(E) order dated 23.09.2015 bearing registration number 368/2015-16.
II. That in any view of the facts and circumstances of the case of the appellant impugned order dated 21.01.2021 U/S 12AA(3) of the Act has been passed in exparte manner, in complete violation of principles of natural justice and disregard to the facts and even material/evidences placed on records, thus the appellant has been denied adequate opportunity to defend its case properly and judiciously.
III. That the learned CIT(E) has erred both in law and on facts in cancelling the registration granted to the appellant U/S 12AA of the Act, solely on the basis of wrongly drawn unilateral adverse inferences and unwarranted observations, which are contrary to the facts of appellant’s case and even to the material/evidences placed on records. The appellant understand that the various compliance made and submissions alongwith the material/evidences placed from time to time before the predecessor of learned CIT(E) has escaped her attention. Thus the impugned order U/S 12AA(3) of the Act, which is solely based on suspicion, surmises and conjectures, is unsustainable in law.
IV. That the observations made by the learned CIT(E), in her order U/S 12AA(3) of the Act dated 21.01.2021 that in the spot enquiry report the ITI has stated that no charitable activities had been carried out as claimed in the objects and that the AR appeared from time to time and furnished that the society is a charitable society formed with the object of providing education to the students of Jain Community and so and so on, are untrue and completely contrary to the facts of the appellant’s case and thus impugned order U/S 12AA(3) of the Act liable to be quashed.
V. That while arbitrarily cancelling the registration granted to the appellant U/S 12AA of the Act the learned CIT(E) has completely brushed aside and disregarded the relevant facts and even material/evidences placed on records wherefrom it was beyond doubt evident that the appellant continued to conduct the charitable activities, mainly imparting education to needy and financially weak students from all sections of society, strictly in accordance with its charitable objects and thus the impugned order dated 21.01.2021 U/S 12AA(3) of the Act on the ground that the activities of the appellant are not in accordance with its objects, is erroneous and unsustainable in law.
VI. That while cancelling the registration granted to the appellant U/S 12AA of the Act by unlawfully invoking the provisions laid down U/S 12AA(3) of the Act, the learned CIT(E) unnecessarily got over influenced by the general nature, false complaint made by Mrs. Bhavna Jain wife of Dr. Rajiv Jain, Former Principal of Mahavir Digamber Jain Inter College, Agra (one of the charitable limb of the appellant) solely based upon ‘hear say’ and ‘mere say’, with ulterior motive and malafide intention, though Sub-Registrar of Firms, Societies & Chits, Agra and even Superintendent CGST, after extensive inquiry, did not draw any adverse inference or taken any cognizance of such baseless complaint. Thus the impugned order U/S 12AA(3) of the Act deserves to be quashed/annulled.
VII. That from the facts of the appellant’s case and in the light of material/evidences placed on records it is evident that since long the appellant towards the attainment of its objects of social welfare has been providing its space mainly to poor/weaker section and needy persons to perform marriages or community group marriages or other social functions, without any discrimination for any particular religion, community or caste, free of cost or at a nominal rate and the income/funds generated from providing space are wholly and exclusively utilized towards the attainment of the charitable objects of the appellant and such facts even existed at the time of grant of registration U/S 12AA of the Act to it and therefore the order U/S 12AA(3) of the Act passed by complete disregard to the past established history, facts of the case and material/evidences placed on records, is bad in law and legally unsustainable and thus deserves to be quashed.
VIII. That the learned CIT(E) has been arbitrary and unjust in completely disregarding the 2nd proviso to section 2(15) of the Act, introduced w.e.f.01.04.2009 vide Finance Act, 2010, which got substituted by the new proviso introduced w.e.f. 01.04.2016 vide Finance Act, 2015 and circular no.21/2016 (F.No.197/17/2016-ITA-I) .
IX. That the learned CIT(E) has erred both in law and on facts in holding that the provisions laid down U/S 13(1)(b) of the Act are attracted over the appellant’s case, by completely ignoring that as the appellant has been created/established prior to the commencement of the Income Tax Act, 1961, thus these are inapplicable over its case.
X. That the order U/S 12AA(3) of the Act dated 21.01.2021 is against the law and facts of the case of the appellant charitable society.
Brief facts
2. The assessee had filed the detailed synopsis in support of its case before us. We are reproducing hereinbelow the details submissions filed before us , which were to the following effect:
“FACTS
1. a) That the Assessee Public Charitable Institution (hereinafter referred to as ‘Assessee Society’)came into existence on 22′ August, 1959 (prior to the commencement of the Income Tax Act, 1961) vide registration no.661/1958-59 issued by Registrar of Society, Uttar Pradesh under Societies Registration Act, 1860 (XXI of 1860).
b) That the assessee society has been granted registration under clause(aa) of sub section(1) of section 12A of the Act by your Honour vide order U/S 12AA(1)(B)(i) of the Act dated September, 015 bearing reference no.F.No.CIT(Exemption)/Lucknow/12A/2015- 16/6051(URN No.368/2015) and also has been approved U/S 80(5)(vi) of the Act :vide order dated 21′ June, 2016 bearing reference no. F.No.CIT(Exemption)/Lucknow/ 80G/2016-17/53/1304/2537.
c) i) That\ripm the perusal of latest bye-laws(amended), it is evident that the Osessee society has following objects
ii) That the english translation of latest amended objects of the assessee society is given hereunder :-
(1) The Object of this society shall be to propogate and impart knowledge pertaining to Religion, Education, social behaviour and to upkeep & raise physical and mental health of boys and girls.
(2) To encourage Archeology, philosophy, history, astrology, and extend cooperation to researchors to publish jainlituarature work. To publish jain literature and periodicals. To of like books published in Sanskrit, Prakrat and languages_andto publish or to bring in light such concern our–-4ne.e of interest. To collect material and history a’ 4n,sure safe
(3) To help poor intelligent students.
(4) To help in arranging living place for needy students from outstation.
(5) The executive committee keeping in mind the interest of Shiksha Samiti may provide affiliation to other educational institution to whom the objects of the society are acceptable.
(6) To open hospital/dispensary and to help programs of upkeeping of good health of people in general.
(7) To work for upliftment of spiritual and social welfare.
d) a)i) That it is most humbly submitted that towards the attainment of charitable objects for propogating and imparting education the assessee society is primarily running Inter College under the name and style of Mahavir Digamber Jain Inter College, Hariparvat, Agra wherein about 3000 students from various caste, creed, religion and community i.e. from all sections of society, are studying in Class VI to Class XII, which has separate blocks for both Hindi and English medium.
ii)a) That it is pertinent to apprise your Honour that while no fees is charged from students studying in Class VI to VIII, nominal fee of Rs.450 per annum is charged from the students studying in Class IX to XII out of which 60% is passed on to Department of Education, Government of Uttar Pradesh. Further in many cases looking to the financial status of the parents/guardian, concession in fee is allowed to the number of students and even in many cases the fees is waived. Such Inter college has well equipped science (1) Physics lab (2) Chemistry lab (3) Biology lab and Air conditioned Computer training lab having about 130 computers with qualified & experienced and knowledgable trainers. The college has very highly qualified and dedicated lecturers and teachers numbering about 60. It has outdoor games and qualified games and gymnasium teachers. The college is having examination results for both High School and Intermediate Boards examination 100% pass, out of which about 70% of the students passing in first division. For moral upliftment of the students “NAITIK SHIKSHA” is also imparted to the students. This college_ has been assessed as “A” Grade by the Directorate of .Education,; Government of Uttar Pradesh. The students of this college have been awarded Trophy/Certificate in various fields like science, various game,s, and debate, social-service and other important activities.
b) That’, apart from the aforementioned primary charitable activity of propogating and imparting education the assessee society has another charitable limb styled as ‘Shri Shantinath Digamber Jain Mandir’, which is of religious and historical importance. In such charitable limb the assessee society is actively engaged in propogating massages, teachings, ideals and philosophy of religious and spiritual reformers to create a sense of non violence, brotherhood, humanity, communal harmony and equality among general public. Hundreds of visitors from various religious community or caste or creed participate in the discourses for the spiritual and moral upliftment.
c) That in the other charitable limb styled as ‘Jain Sahitya SodhSansthan’ the assessee society is maintaining a library wherein more than 3000 rare books, shastras are preserved/maintained and the public from various section/society visit such library for reading and even for research work.
d) That in the fourth charitable limb the assessee society is running charitable homeopathic dispensary under the name and style of ‘Shri Mahavir Digamber Jain Homeopathic Aushadhalaya’, for the benefit of public at large for providing medical relief to the poor and needy patients irrespective of caste, creed, religion or community. In such dispensary two qualified and experienced doctors and three compounders are working both in the morning and evening and around 82 to 100 patients are attended every day.
e) i) That so far so Shree Digamber Jain Shiksha Samiti is concerned towards the attainment of its objects of social welfare, it is providing space to poor/weaker section and needy persons irrespective of caste, creed, religion or community for performing marriages, group marriages and other social functions free of cost or at very nominal charges without any profit motive. Normally the space is provided for use after the educational institution and other charitable institutions are over so that charitable activities are not hampered. The funds generated from such charges recovered are utilized wholly and exclusively towards the attainment of the charitable objects cf_the assessee society which is evident from financial statement particularly income and expenditure and receipt and payment account
ii)/ That various documents mentioning details where space was provided any charge or against nominal charges were space was before the Ld. CIT (E), Lucknow. On account of such charitable activity the poor/weaker section and needy persons are able to perform the marriages in limited budget because these days performing marriage in hotels or marriage homes involves exorbitant expenditure beyond means of majority of middle class. Such charitable provided by the assessee society is appreciated by all. The space is provided to all without any discrimination of caste, creed, religion or community. Such facts were duly brought to the knowledge of Ld.CIT(E), Lucknow both at the time of grant of registration U/S 12AA of the Act and in the proceedings for cancellation of registration U/S 12AA(3) of the Act.
f) That the ‘Assessee Society’ finds it pertinent to apprise your Honours’ that in the the proceedings for grant of registration under section 12AA of the Act, it had strictly in accordance with Form No.10A, Rule 17A and in compliance to the notice(s) and queries raised by the learned Commissioner of Income-tax (Exemption), Lucknow (hereinafter referred to as ‘Ld. CIT(E)’), the requisite details, informations and documents/evidences, who after being satisfied about the charitable objects and genuineness of its activities granted the registration to the ‘Assessee Society’ under section 12AA of the Act on 23.09.2015.
g) That in support of the fact that till date neither there is no change in the charitable objects nor in the genuineness of the activities conducted by the ‘Assessee Society’ towards the attainment of its charitable activities which were existing at the time of grant of registration to the ‘Assessee Society under section 12AA of the Act on 23.09.2015, it is filing herewith the following documents/material, which were placed before the Ld.CIT(E) at the time of grant of registration U/S 12AA of the Act :-
1. Copy of Audited Income & Expenditure accounts relevant to F.Yrs.2011-12 to 2013-14.
2. Consolidated Income & Expenditure Account.
3. Copy of acknowledgement receipts for filing ITR for A.Y. 2013-14 and 2014-15.
4. Copy of Sthanopyog account for F.Y.2011-12 to 2013-14.
5. Classwise details of number of students who have taken education in Inter College run by ‘Assessee Society’ under the name and style of M.D. Jain Inter College during F.Yrs.2011-12, 2012-13 and 2013-14.
6. Brief write up on Charitable activities carried on by the ‘Assessee Society’ and its limb.
h) That9even at the time of grant of registration U/S 12AA of the Act, the ‘Assesde ‘Society’ towards the attainment of its object of social welfare, providing space to poor weaker section and needy persons irrespective of caste, creed, religion or community for performing marriages, group marriages and other social functions free of cost or at a very nominal charges, without any profit motive. The funds generated from such activities have always been utilized wholly and exclusively towards the attainment of charitable objects of the ‘Assessee Society’, which is evident from the relevant financial statement(s) particularly Income & Expenditure and receipt and payment account.
i) That the ‘Assessee Society’ has been regularly filing its return of income and GST, in support of such fact, copies of ITR, computation of total income and return of GST relevant to A.Yrs.2017-18, 2018-19 and 2019-20 are filed.
j) That the ‘Assessee Society’ finds it right place to apprise you that its case for A.Y.2017-18 was selected for complete scrutiny and after extensive investigation, the assessment was completed U/S 143(3) of the Act vide assessment order dated 31′ November, 2019, wherein the declared income was accepted and it was found that the ‘Assessee Society’ towards the attainment of its charitable objects has been carrying genuine activities by holding at paras 3 and 4 as under :-
“3. During the year the assessee society is registered under section 12AA/80G of the Income Tax Act, 1961. The assessee is running educational institutions as well as general charitable activities. As per information available on record, the activities are being carried out as per the objects of the trust/society which are charitable in nature as defined in section 2(15) of the IT Act, 1961.
4. The assessee has furnished audited statement of financial affairs with copy of Balance sheet, computation of total income and income & expenditure account which is as under-
