TMI Blog2011 (9) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... EMBER For the Appellant: Shri M K kulkarni For the Respondent: Shri Tejindersingh (CIT) Hareshwar Sharma (CIT) ORDER PER G.S. PANNU, AM This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Central), Pune (in short the Commissioner) dated 29.08.2007 passed under section 12AA of the Income-tax Act, 1961 (in short the Act ), rejecting the assessee s application for registration under section 12A(a) of the Act. 2. Vide application dated 01.06.2011, the learned Counsel for the assessee has filed the following concised Grounds of appeal: 1. On the facts and circumstances of the case and in law, the ld CIT (Central) Pune was not justified in refusing the registration u/s 12AA to the appellant-Society without considering the exhaustive written submissions supported by precedents placed before him. The order passed by ld CIT (Central) is not a speaking order and runs counter to the provisions of law. 2. On the facts and circumstances of he case and in law especially when ld CIT (Central) having recorded a finding that There is no doubt that the Trust is running Educational institutions inescapable conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law the ld CIT refused granting of registration simply on the basis of AO s report dt 13.8.2007 that income earned by Society was totally on commercial lines and Society is not run for charitable purposes. The ld CIT ought to have applied his mind and could not have based his decision simply on the report of AO. 3. The relevant facts, in brief, leading to the dispute are that the assessee Trust filed an application for registration under section 12A(a) of the Act on 12.02.2007 accompanied by a letter dated 5.02.2007 written on the subject Reapplication of Registration under section 12A and condonation of delay. It was stated that the assessee has been granted Certificate under section 80G of the Act and that during the course of assessment proceedings for the assessment year 1999-2000, the Assessing Officer disallowed the claim of the Trust for exemption of its income under section 11 of the Act for the reason that the assessee was unable to produce registration certificate under section 12A of the Act. It was claimed that the assessee misplaced the Certification of Registration and could not produce it because the Certificate was given 20 years back and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected such plea of the assessee. The Commissioner of Income-tax further rejected assessee s request for condonation of delay observing that he was not satisfied with the reason that registration was already allowed and since the papers are lost, the delay should be condoned. Further, it was observed by the Commissioner of Income-tax that assessee has not maintained books of account in the normal course of business of the Trust and has not been getting its account books audited which was mandatory. In the absence of any return of income having been filed by the assessee, the Commissioner of Income-tax held that the assessee has deliberately prevented the Department from visiting its activities and, therefore, the assessee did not deserve condonation of delay. 5. The Commissioner of Income-tax thereafter proceeded to consider as to whether the assessee was entitled to registration with effect from 12.2.2007, i.e. the date on which the application was received. After making detailed enquiry on all aspects of the matter, the Commissioner of Income-tax rejected the application for registration under section 12A(a) of the Act by holding as under: 13.2 While granting registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case, it is claimed that all the funds of the Trust are being utilized for the purposes of running the educational institutions and, therefore, the application is for the objects of the trust. It is also pointed out that it was wrong on the part of the Commissioner to hold that the activities of the trust were being carried out on commercial lines and that such an observation is based purely on the report of the Assessing Officer and there has been no independent application of mind by the Commissioner. Further, the learned Counsel submitted that assessee was under a bona fide belief that it was duly registered under section 12A(a) for the last 20 years or so, but since the relevant registration certificate was not traceable, it requested the Commissioner to get the old records verified or that the registration be granted with retrospective effect considering the aforesaid bona fide impression as a reasonable cause for the unintended delay in seeking registration. 8. In the course of his submissions, the learned Counsel has relied upon the following decisions: (i) Sanjeevamma Hanumanthe Gowda Charitable Trust v. DIT (Exemption) 285 ITR 327 (Kar); (ii) Rama Rao Adik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival submissions. In this case, the appellant is a Society incorporated on 23.11.1986 and is duly registered under the Bombay Public Trusts Act 1950 on 13.3.1987. It also emerges from the impugned order of the Commissioner that the assessee is engaged in running educational institutions. On 12.2.2007, assessee applied for registration under section 12AA of the Act. The assessee also addressed a communication dated 5.2.2007 to the Commissioner stating that it had already been granted registration under section 12A in the past, but such certificate was not traceable because of the time lapse of 20 years or so. The assessee requested the Commissioner to call for the relevant record. In support of the plea that it was granted registration earlier, assessee referred to a certificate of recognition under section 80G dated 09.06.1989 issued by the Commissioner for the period 1.11.1988 to 31.3.1992. On this basis, the case made out was that since the recognition under section 80G of the Act was granted, the assessee would have enjoyed the registration under section 12AA of the Act also. In the alternative, the plea of the assessee was that the aforesaid impression of the assessee be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum and substance of the plea of the Commissioner is that the assessee has not come with clean hands . According to the Commissioner, assessee never applied for registration earlier, although it was incorporated on 23.11.1986 and its claim of having applied for registration earlier had remained unsubstantiated. According to the Commissioner, there is no guarantee that after granting of registration the assessee will come clean . In our considered opinion, no doubt the assessee could not substantiate its plea that it was granted registration on an earlier date, and in our view, the onus in this regard was clearly on the assessee which it failed to establish. So, however, while examining merits of the application dated 12.2.2007 preferred by the assessee to seek registration under section 12AA, the aforesaid is not a relevant factor. The second reason which emerges from the order of the Commissioner is to the effect that the assessee society is said to be running on commercial lines and not for charitable purposes. In this regard, the Commissioner has relied upon the report of the Assessing Officer wherein two instances have been brought out to show that the assessee was charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly by the Assessee-Trust but also for other Institutions of similar nature It is to be seen that application of funds for the charitable activities of another eligible Institution amounts to application of funds for charitable purposes. The law has made it very clear that the charitable activities may be carried out directly by an eligible Institution or through another eligible Institution for that matter. Therefore, those observations of the Commissioner stated to be adverse to the Assessee-Trust are not in fact prejudicial to the case of the Assessee-Trust. 49. The Karnataka High Court in the case of Sanjeevamma Hanumanthe Gowda Charitable Trust Vs. Director of Income Tax (Exemption) [285 ITR 327] has considered that in matters of registration and exemption of Charitable Institutions, the satisfaction of the Commissioner should be regarding the application of the income of the trust for the specified purposes, which only entitles the assessee to claim exemption. The Court observed that for arriving at such satisfaction primarily he has to look at the object of the trust, when the same is reduced into writing in the form of trust deed. If on the date of the application the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 14. In view of the aforesaid discussion, in our considered opinion, the Commissioner has examined the application of the assessee on irrelevant considerations which were beyond the scope of enquiry envisaged under section 12AA of the Act. We, therefore, deem it fit and proper to set aside the order of the Commissioner and restore the matter back to his file to be examined afresh strictly in terms of the scope of the enquiry envisaged under section 12AA(1) of the Act. 15. In so far as the assessee s plea for condonation of delay for filing of the application is concerned, the same in our view also deserves to be revisited by the Commissioner in the light of the decision of our co-ordinate Bench in the case of Church of Our Lady Grace (supra). We may hasten to add here that our decision to remand the issue of condonation of delay back to the file of the Commissioner is no reflection on the merits which the Commissioner shall adjudicate appropriately in accordance with law. 16. In so far as the plea of the assessee that it had been granted registration earlier, the same in our view has been rightly rejected by the Commissioner and no fault can be found with the action ..... X X X X Extracts X X X X X X X X Extracts X X X X
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