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Maria Social Service Society Versus Commissioner of Income Tax, Davangere, Karnataka

2016 (10) TMI 197 - ITAT BANGALORE

Registration to the appellant u/s.12AA withdrawn - Held that:- The provisions of section 12AA(3) mandates the cancellation of registration on satisfaction of either of twin conditions i.e. activity of the trust are not genuine or are not being carried out in accordance with the objects. When there is no change either in the objects of the assessee trust during the year under consideration or any diversion of the activity from the earlier year. Giving money to another trust would not amount to ch .....

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pted this fact that the fund given to other trust namely Malankara Catholic Diocese of Puttur was also granted registration under Section 12AA of the Act and therefore the objects of the said trust was also considered and accepted as charitable in nature. Since this is a subject matter of assessment therefore we do not express any opinion or view on the issue of application of income for the purpose of exemption under Section 11 of the Act in the present proceedings. Thus when there is no change .....

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r of assessee. - I.T. A. No.1361/Bang/2014 - Dated:- 19-8-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Shri Narayana Murthy, Advocate. For The Respondent : Shri Sanjay Kumar, CIT-III (D.R) ORDER Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order Dt.19.12.2013 of Commissioner of Income Tax, Davangere passed under Section 12AA(3) of the Income Tax Act, 1961 (in short 'the Act') for cancellat .....

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ra Catholic Diocese of Puttur, without appreciating that it was the project of the appellant itself. 5. The CIT erred in misconstruing the apology of the appellant as adversarial and withdrawing the registration. 6. For these and other grounds that may be urged at the time ofhearing, the appellant prays that the order of the CIT be cancelled and registration of the appellant u/s.12AA continued. 3. The assessee is a registered organization run by Maria Social Service Society. The assessee society .....

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trust as well as Affidavit from Auditor and the Authorised Representative of the assessee. 5. We have heard the learned Authorised Representative as well as learned Departmental Representative on condonation of delay and considered the relevant material on record. It has been explained that the impugned order of the CIT was served on 23.12.2013. However, the Secretary who was looking after the activity of the trust has undergone medical treatment and was not able to move. The assessee has furnis .....

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ons in the month of Oct./Nov., 2014. Supporting document has been filed along with the Affidavit. Thus the assessee has pleaded that the delay in filing the appeal is neither intentional nor deliberate due to unavoidable circumstances beyond the control of the assessee. 6. On the other hand, the learned Departmental Representative has vehemently objected to the condonation of delay. 7. Having considered the rival submissions and material on record, we find that the assessee has explained that th .....

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mala fide and reasons explained are bogus or vague. Therefore while considering the sufficient cause a liberal view has to be taken. Whenever substantial justice and technical considerations are opposed to each other, cause of substantial justice has to be preferred. However it does not mean that litigant gets a free license to approach court at its will. In the case on hand, the assessee has explained the cause which was duly supported by the medical certificate as well as the delay in hiring t .....

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ssing Officer noted that the assessee trust has transferred ₹ 1,23,00,323 to Malankara Catholic Diocese of Puttur on various dates. The Assessing Officer observed that this amount was a foreign contribution and was taken directly to capital receipt on the receipt side of payment and account. Accordingly, the Assessing Officer sent a proposal for withdrawal of registration granted under Section 12AA of the Act. The CIT accordingly issued a show cause notice dt.13.11.2013 calling for objecti .....

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nsfer of money by the assessee to Malankara Catholic Diocese of Puttur is not as per the objects of the assessee trust and further it is a violation of FCRA as the assessee has misused the foreign donation without the permission of competent authority. Accordingly, the CIT has held that the activities are not being carried out in accordance with the objects of the trust and consequently the registration granted under Section 12AA vide order dt.27.4.2005 was withdrawn. 9. Before us, the learned A .....

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e has pointed out that in the meantime few donors from abroad came forward to help the poor and to support some social developmental programs. Accordingy, the donation was received by the assessee for the specific purpose of giving the same to Malankara Catholic Diocese of Puttur. He has further submitted that the said trust namely Malankara Catholic Diocese of Puttur has been granted Registration under Section 12AA of the Act by the Department and therefore the objects of the said trust are con .....

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ves of the trust. 10. On the other hand, the learned Departmental Representative has submitted that the Assessing Officer has clearly pointed out that the assessee has received the foreign contribution on behalf of the other trusts and therefore this act of receiving the foreign contribution and transferring the same to the unauthorized trust is in violation of FCRA as well as the activity of the assessee are not in accordance with the objects of the trust. Thus the undisputed act of the transac .....

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ities are not being carried out in accordance with the objects of the trust. Section 12AA(3) conferred the jurisdiction to CIT to cancel the registration if the conditions provided under Section 12AA(3) are satisfied as under : 12AA(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently the 15a[P .....

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jects of the assessee trust are charitable in nature as it was accepted at the time of grant of registration under Section 12AA. It is not the case of the CIT or of the revenue that there is any change in the nature of activity of the assessee or in the objects of the assessee. The impugned order of the Commissioner is based on the consideration which is not relevant for the cancellation of registration under Section 12AA(3) of the Act. The sole ground for initiating the proceedings for cancella .....

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iolation of FCRA and in the absence of any such order of the competent authority it is not proper to assume that the assessee has violated FCRA by receiving the foreign contribution and transferring the same to another trust. The provisions of section 12AA(3) mandates the cancellation of registration on satisfaction of either of twin conditions i.e. activity of the trust are not genuine or are not being carried out in accordance with the objects. When there is no change either in the objects of .....

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