Subject: Society and its chapters which organize annual conference on its behalf.
Referred Sections:
Section 12AA (3) of The Income Tax Act
Section 80 G
Section 2 (15) of The Income Tax Act,
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G": NEW DELHI
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 2503/Del/2015
Indian Association of Vs. CIT(E),
th
Cardiovascular Throacic 26 Floor, E-2, Block,
Anaesthesiologists (IACTA). Civil Centre, Minto Road,
E-969, LGF, Chitranjan Park, New Delhi
New Delhi
PAN: AAATI0574P
(Appellant) (Respondent)
Assessee by : Shri Rohan Khare, Adv
Revenue by: Shri S. S. Rana, CIT DR
Date of Hearing 02/07/2018
Date of pronouncement 02/07/2018
ORDER
PER PRASHANT MAHARISHI, A. M.
1. This appeal is filed by the assessee against the order of The
Commissioner Of Income Tax (Exemptions), New Delhi [ The Ld CIT ]
dated 26/3/2015 under section 12AA (3) of The Income Tax Act 1961
wherein the registration granted to the assessee under section 12 A is
withdrawn w.e.f. 1/4/2009.
2. The assessee has raised following grounds of appeal:
"1. The leaned CIT (Exemption) erred in fact and in law in withdrawing
registration w.e.f. 01.04.2009) which is not only bad in law but also
against the facts and circumstances of the case.
2. The learned CIT (Exemption) erred in fact and in law in passing the
withdrawal order u/s 12AA(3) which is not only illegal but void ib
initio because the registration was granted u/s 12A of the Income
Tax Act, 1961.
3. The learned CIT (Exemption) erred in fact and in law in not
following the CBDT circular No. 11/2008 while passing the order
which binding on them.
4. The learned CIT (Exemption) erred in fact and in law in wrongly
interpreting the nature of income which was received from
subscription of medical journal and conference income as business
income.
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5. The learned CIT(Exemption) erred in fact and in law in not taking
into account the detail reply filed on 26.11.2014 hence, the order
passed is not only illegal but also against the facts and
circumstances of the case."
3. The only issue involved in this appeal is that the Ld. CIT(E) has
withdrawn the exemption already granted to the assessee under section
12 A of The Income Tax Act by passing an order under section 12 AA (3)
of The Income Tax Act, 1961. The assessee is challenging the action of
the Ld. CIT.
4. The Ld. authorized representative submitted that the registration already
granted to the assessee was t withdrawn without any valid reason. Merely
for the reason that activities of the society are not genuine and not as per
its objects of the society, the ld CIT for the simple reason that some
information was received that the society is though no longer approved
for exemption under section 80 G however, it continues to use its earlier
approvals of certificate while issuing receipt to its donors stating that it is
approved for exemption under section 80 G. It was further alleged that
such receipts are being issued by Society and its chapters which organize
annual conference on its behalf. He submitted that there is no such
misuse of any such recognition granted to the trust. He further submitted
that there is no change in the object of the society and it continues to
carry on the same object of the society. He therefore submitted that the
action of the Ld. CIT (Exemption) in withdrawing the exemption under
section 12 A of the act of the society is not sustainable in law.
5. The Ld. CIT DR vehemently supported the order of the Ld. CIT
Exemptions stating that assessee is not carrying on activities according to
its object and the society's activities are also not genuine and therefore
the registration already granted to the assessee trust under section 12 A
of the act was correctly withdrawn by invoking the powers contained
under subsection 3 of that section. He supported the order withdrawing
the exemption.
6. We have carefully considered the rival contention and perused the orders
of the ld CIT. The brief facts show that the assessee is a society
registered under The Societies Registration Act and as well as was
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granted recognition under section 12 A of The Income Tax Act on
31/3/1998. The assessee was also granted approval under section 80 G
from time to time and the last approval was granted on 20/4/2005 for the
period 01/04/2005 to 31/ 3/2008. Subsequently the CIT Exemption
received some information that society is issuing exemption certificates
under section 80 G despite exemption lapsed on 31/3/2008. Therefore,
show cause notice was issued this was replied by the assessee. The main
contention of the Ld. CIT was that the assessee is organizing a
conference and earning profit there from it is also publishing a Journal.
Further, with respect to the misuse of certificate of approval issued under
section 80 G of the income tax act assessee did not reply. Therefore the
Ld. CIT further issued a show cause notice on 05/06/2014 in which it
was alleged that that the conferences were organized and the nature and
the details of the profit thereon was not given. It was therefore stated
that the society is carrying on the activities in a commercial fashion and
therefore it is no longer a charitable within the meaning of provisions of
section 2 (15) of The Income Tax Act, 1961. Further the assessee has
shown receipt of Rs. 11, 79, 958/ because of publication of the journal
and details of the same have not been filed. It was further mentioned
that the society though not approved under section 80 G, it has come to
the notice of the income tax Department that such receipts are being
issued citing the earlier exemption number whenever the conferences are
organized. The assessee replied by letter dated 20/6/2014 clarified that
assessee is carrying on the same activities, which it was carrying on prior
to that. It was further stated that the profit that arise in because of
conference is merely a surplus which has been used for the purpose of
the charities and the object of the trust. Further the Ld. CIT Exemption
further stated that assessee has not filed any reply with respect to the
misuse of certificate issued under section 80 G. Despite repeated
opportunities the reply was not forthcoming from the assessee and
therefore the Ld. CIT applied the provisions of section 12 AA (3) held that
for the reason that society is misrepresenting its status to its donors by
continuing to use the certificate issued by the office which was valid up to
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31/3/2008 even after that and therefore it is a clear-cut case of society's
activities not being genuine. He therefore held that the assessee society
is not eligible for registration granted by this office and therefore it is
liable to be withdrawn. He further referred to the provisions of section 12
AA (3) and stated that there are adequate provisions in the law for
withdrawal of the certificate already granted under section 12 AA (3) of
the act. Therefore he held that the activities of the society are not
genuine and not as per its objects therefore the registration granted
under section 12 A is withdrawn w.e.f. 1/4/2009. According to the
provisions of section 12 AA (3)
"[(3) Where a trust or an institution has been granted registration
under clause (b) of sub-section (1) 29[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
25[Principal Commissioner or] Commissioner is satisfied that the
activities of such trust or institution are not genuine or are not
being carried out in accordance with the objects of the trust or
institution, as the case may be, he shall pass an order in writing
cancelling the registration of such trust or institution:
Provided that no order under this sub-section shall be passed unless
such trust or institution has been given a reasonable opportunity of
being heard.]"
7. On reading of the above section it is clear that the activities of the
institution or trust are not found genuine or not being carried out in
accordance with the object of the trust or institution then only the Ld. CIT
E is empowered to pass an order in writing cancelling the registration of
such trust or institution. On reading of the order of the Ld. CIT E we did
not find that there is any finding that the activities of the trust are not
genuine and further it was also not found by him that the duties are not
carried out in accordance with the object for which the assessee trust was
formed. Further there are no such instances in the order also which
shows that assessee has issued certificate to the donors saying that
donation given to the society are tax deductible u/s 80 G of the act.
Therefore we are not inclined to uphold order of the Ld. CIT E passing
an order under section 12AA (3) in cancelling the registration granted to
the assessee trust under section 12 A of the act.
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8. However we have also per used the reasons for which the Ld. CIT E
has invoked provisions of section 12 AA (3) of the act that assessee trust
was allegedly misusing by issuing receipts of the nation mentioning that
certificate issued to it under section 80 G of the income tax act. Before
the Ld. CIT E the assessee has not answered these queries. Despite
there being specific information with the income tax Department the
assessee has remained Silent about issuing of certificate to the donors.
Further, the Ld. CIT E has also not brought out any instance about
issue of such receipts by the assessee and to whom. Therefore, the issue
involved is very serious as it involves the non-payment of tax by the
donor on the wrong representation made by the assessee society. It was
also not sure that for what purpose the assessee society has issued the
recognition certificate to the various donors, if at all issued. In addition,
whether such activities were permitted by the object of the society is not
known. In view of the above facts we set aside the whole issue back to
the file of the Ld. CIT E to examine the issue afresh. Ld. CIT E is also
directed to take necessary actions in accordance with the other provisions
of the law against the donors for disallowance of any deductions claimed
by them under the provisions of section 80 G of the act as well as against
the society for issuing receipts, if any. After this, he may decide about the
continuation of registration under section 12 AA of the trust afresh.
9. In the result, appeal filed by the assessee is allowed for statistical
purposes.
10. Order pronounced in the open court on 02/07/2018.
-Sd/- -Sd/-
(H.S.SIDHU) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:02/07/2018
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
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5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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