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TMI Blog2021 (7) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... its powers u/s 80G(5) read with proviso of the 1961 Act and Rule 11AA of the 1962 Rules as the assessee did not co-operated with the Revenue and did not furnished original bills and vouchers to enable verification as to activities and also to verify whether the expenses were incurred for attainment of charitable objects of society , details of donations received and confirmation of cash donations exceeding ₹ 2000 received during last three year were also not furnished by assessee before ld. CIT(E) and also the assessee did not furnish evidence to enable ld. CIT(E) in support that activities carried out by assessee are charitable in nature. The aforesaid documents/evidences are also not furnished before us by the assessee , except that renewal of registration dated 11.06.2021 with retrospective effect from 23.04.2020 under Societies Registration Act, 1860 is filed for the first time before tribunal which is a fresh evidence filed for the first time before tribunal which as per ld. CIT-DR requires verification by department. We have already held that inquiry as contemplated u/s 80G(5) of the 1961 Act read with Rule 11AA of the 1962 Rules as to genuineness of the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. 3. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong to reject the 80G application ignoring the fact that the appellant trust fulfilled all the conditions laid down u/s 80G (5) of the Act. 4. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong in rejecting the application under Section 80G on the finding that the Appellant Society had not renewed its registration under the Societies Registration Act. 5. That the Ld. CIT(E) was wrong in contending that the material filed by the appellant was not sufficient to prove genuineness of activities and its objects. 6. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong in coming to the conclusion that the appellant trust did not carry out any charitable activities ignoring the fact that the appellant trust was already registered u/s 12AA of the Act and carrying out its activities as per its objects. 7. That the Ld. Commissioner of Income Tax (Exemptions) Lucknow was wrong in rejecting the application under Section 80G on the basis that the no documentary proof of activities was submitted by the appellant. 8. That the Ld. Commissioner of Income Tax (Exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is less. (3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. (4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval after recording the reasons for such rejection in writing. .. 3. The written submission of the applicant have been considered. It is to be noted that the Registration certificate of the society has expired on 23.04.2020. No original bills vouchers have been produced for verification of the activities and the expenses as per the objectives of the trust. The applicant was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that the assessee s registration under Societies Registration Act, 1860 expired on 24th April, 2020 , which could not be renewed within time owing to spread of pandemic Covid-19 disease , and as well owing to restrictions /lockdowns imposed by Government to control the spread of pandemic Covid19 disease. It was submitted by ld. Counsel for the assessee that later on the said registration of the assessee Society under Societies Registration Act, 1860 was renewed by Registrar of Societies , Varanasi , vide Renewal of Registration No. R/MIR/02568/2021-2022 Certificate No. V-48970, dated 11th June, 2021 , effective from 24th April, 2020 for a period of five year, which is placed in Paper Book-II, at page No. 5 6 . It was submitted that in the interim period before it could obtain renewal certificate under Societies Registration Act, 1860 , the ld. CIT(Exemption) rejected the claim of the assessee for grant of approval u/s 80G of the 1961 Act, vide orders dated 22.12.2020 , inter-alia, owing to registration of the assessee society having been expired on 23rd April, 2020 under the Societies Registration Act, 1860. It was submitted by ld. Counsel for the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration Act, 1860 before its expiry on 24.04.2020 , and when the application for grant of approval u/s 80G was processed by ld. CIT(E), the registration of the assessee under Societies Registration Act had already expired on 24.04.2020 and hence ld. CIT(Exemption) was right in rejecting the approval u/s 80G, vide orders dated 22.12.2020. The ld. CIT-DR submitted that it is only subsequently on 11.06.2021, the assessee got the Societies registration renewed under the Societies Registration Act,1860 retrospectively with effect from 24.04.2020, but by that time the Ld. CIT(E) had already rejected application of the assessee for approval u/s 80G of the 1961 Act.The ld. CIT-DR submitted that the certificate issued by Registrar of Societies, Varanasi granting renewal of registration to assessee under Societies Registration Act, 1860 , was vide certificate dated 11.06.2021 albeit effective retrospectively from 24.04.2020 for a period of five years and is in the form of additional evidence filed by the assessee for the first time before the tribunal as the same was obtained by assessee on 11.06.2021 after the order was passed by ld. CIT(E) on 22.12.2020 refusing to grant approval to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee was also registered with Revenue u/s 12AA of the 1961 Act, vide orders dated 16.05.2019. The said order is placed in paper book-I , at page 1-2. The assessee applied with Revenue for grant of approval u/s 80G of the 1961 Act, vide application dated 10.03.2020. The said application for grant of approval u/s 80G of the 1961 Act was rejected by ld. CIT(Exemption), vide orders dated 22.12.2020 as the assessee registration under the Societies Registration Act,1860 had already expired on 23rd April, 2020 and till the date order was passed by ld. CIT(Exemption) on 22.12.2020 ,the assessee was not holding registration under the Societies Registration Act, 1860 . It is only on 11th June, 2021 that the assessee got renewal of registration under Societies Registration Act, 1860, with retrospective effect from 24.04.2020 , which was now valid for a period of five years. This document dated 11.06.2021 granting renewal of registration of the assessee under Societies Registration Act, 1860 is an additional evidence which is now been filed by the assessee for the first time before the tribunal and the same had not test the scrutiny of verification by the Revenue . The ld CIT-DR has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter back to the file of ld. CIT(E) for consideration afresh of the assessee s application for grant of approval u/s 80G of the 1961 Act. The assessee has relied upon following judicial decisions to support its contentions : i. ITAT, Lucknow Bench decision in the case of Ratan Chand Chhattibhai Seva Samiti v. Commissioner of income tax (Exemption) ,Lucknow in ITA no. 570/LKW/2019 , dated 16.12.2020. ii. ITAT, Lucknow Bench decision in the case of Samekit Mahila Evam Bal Vikas Sansthan v. Commissioner of income tax (Exemption) Lucknow in ITA No. 666/LKW/2017, dated 16.11.2018. iii. Larger Bench judgment(Three Judge Bench) in the case of Hon ble Allahabad High Court decision in the case of Commissioner of income tax (Exemption) Lucknow U.P v. Reham Foundation in ITA No. 37 of 2017, dated 26.09.2019. iv. Hon ble Allahabad High Court judgment in the case of CIT v. Babu Ram Education Society, in ITA No. 341 of 2013, dated 14.12.2017. It is gainful at this stage to reproduce provisions of Section 80G(5) of the 1961 Act and Rule 11AA of the Income-tax Rule, 1962, which are reproduced hereunder: Section 80G ***** ***** (5) This section applies to don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being [approved by the Principal Commissioner or Commissioner;] [***]] [(vii) where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been,- (a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009;] [(viii) the institution or fund prepares such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass an order in writing granting it approval for a period of five years; or (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its approval after affording it a reasonable opportunity of being heard; (iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the institution or fund: Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the first proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received: Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under- (a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund; (b) clause (iii) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceding the year in which the said application is made) for which such accounts have been made up; (h) note on the activities of the applicant. (3) Form Nos. 10A or 10AB, as the case may be, shall be furnished electronically, - (i) under digital signature, if the return of income is required to be furnished under digital signature; (ii) through electronic verification code in a case not covered under clause (i). (4) Form Nos. 10A or 10AB, as the case may be, shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the applicant. (5) On receipt of an application in Form No.10A, the Principal Commissioner or Commissioner, authorised by the Board shall pass an order in writing granting approval under clause (i) or (iii) of the second proviso read with third proviso of sub-section (5) of section 80G in form 10AC and issue a sixteen digit alphanumeric Unique Registration Number (URN) to the applicants making application as per clause (a) of the sub-rule (1). (6) If, at any point of time, it is noticed that form 10A has not been duly filled in by not providing, fully or partly, or by providing f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval u/s 80G was made by assessee on 10.03.2020. Thus, keeping in view time lag between grant of registration u/s 12AA by Revenue and application having being filed u/s 80G, it is all the more incumbent on ld. PCIT or CIT to verify whether the affairs of the assessee conducted for charitable purposes and for stated objects for which registration u/s 12AA was granted. Thus, the powers vested with ld. PCIT or CIT to make inquiries into the activities and affairs of the taxpayer institution to verify its genuineness as well as that activities and affairs are conducted for charitable objects, as it provided u/s 80G of the 1961 Act read with Rule 11AA of the 196 Rules is not a mere empty formality. It is established principal that the assessee has no vested right in procedures and once statute has provided for the procedures, the assessee has to comply with the same before being eligible for grant of approval u/s 80G. As is emanating from the order passed by ld. CIT(E) , the assessee did not co-operated with the Revenue and did not furnished original bills and vouchers to enable verification as to activities being conducted for charitable purposes and for stated objects, also to verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances in which tribunal should itself grant registration u/s 12AA and the circumstances in which tribunal should remand the matter back to Revenue for fresh consideration of its application for registration u/s 12AA , which is reproduced as hereunder as under: 1. This Full Bench has been constituted in terms of the reference order dated 18.01.2019 passed by Division Bench in the case of Commissioner of Income Tax Exemption U.P. State Construction and Infrastructure vs. M/s. Reham Foundation Kandhari Lane, Behind Islamia College, Lal Bagh, Lucknow vide order dated 18.01.2019. The questions referred are as folllows:- (i) Whether Income Tax Appellate Tribunal while hearing Appeal in a matter where registration under Section 12AA has been denied by Commissioner Income Tax can itself pass an order directing Commissioner to grant registration or should leave the matter to be considered by Commissioner Income Tax to consider matter afresh giving rise to further litigation in the matter; (ii) Whether co-extensive Appellate jurisdiction conferred upon Income Tax Appellate Tribunal being a last court of fact can be read to confer upon it similar powers as been exercised by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after holding that the Appellate Tribunal is not competent to direct for registration of a Trust under Section 12AA of the Act of 1961, rather it should remand the case to the Commissioner for the aforesaid. 5. The argument raised by learned counsel for the Revenue has been opposed by learned counsel appearing for the assessee. It is submitted that after the rejection of an application for registration of a Trust under Section 12AA of the Act of 1961, if refusal is without considering any material, then on Appeal, after considering the issue and recording satisfaction, the Tribunal can direct for registration of the Trust. It is not only for the reason that such power exists with the Tribunal pursuant to Section 254 of the Act of 1961 but even to take the order of the Tribunal to its logical conclusions. 6. It is stated that if application for registration is rejected by the Commissioner after recording a perverse finding then on an Appeal, it can be corrected after taking a proper view and recording satisfaction, as required under Section 12AA of the Act of 1961, to direct for registration of the Trust. If the required satisfaction is recorded by the Appellate Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue before the larger Bench is in reference to Section 12AA of the Act of 1961, thus, it would be gainful to refer the provisions aforesaid. It is quoted hereunder for ready reference:- Procedure for registration. 12AA. (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a Trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of Section 12A, shall-- (a) call for such documents or information from the Trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the Trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the Trust or institution and the genuineness of its activities, he-- (i) shall pass an order in writing registering the Trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the Trust or institution, and a copy of such order shall be sent to the applicant: Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the activities to be carried out in the said manner. 10. A perusal of Section 12AA of the Income Tax Act shows that the Principal Commissioner or the Commissioner, on receipt of an application for registration of a Trust or an institution, may call for such document or information as he thinks necessary to satisfy himself about the genuineness of the activities of the Trust or the Institution, as it deems necessary. After calling for such an information and satisfying himself about the object and genuineness of the activities of the Trust, he shall pass an order for registering the Trust or the Institution or in the alternate, refuse such registration. In view of the aforesaid provision, the registration of the Trust is subject to satisfaction of the Commissioner, not only over the genuineness of the activities of the Trust, but also about the objects of the Trust or the Institution. In view of above, the registration of the Trust requires satisfaction of the Commissioner. In case the Commissioner is satisfied with the genuineness of the activities and even the objects, he can register the Trust under Section 12AA of the Act of 1961 and in case the Commissioner is not satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al v. Sillem [33 LJ Ex 209 : 10 LT 434 : 10 HLC 704, 724 : 11 ER 1200] , ER p. 1209.) The Appeal, strictly so called, is one in which the question is, whether the order of the court from which the Appeal is brought was right on the materials which that court had before it (Per Lord Devuil Ponnammal v. Arumogam [1905 AC 383, 390] . The right of Appeal, where it exists, is a matter of substance and not of procedure (Colonial Sugar Refining Co. v. Irving [1905 AC 369 : (1904-07) All ER Rep Ext 1620 : 92 LT 738 (PC)] ). 17. Right of Appeal is statutory. Right of Appeal inhered in no one. When conferred by statute it becomes a vested right. In this regard there is essential distinction between right of Appeal and right of suit. Where there is inherent right in every person to file a suit and for its maintainability it requires no authority of law, Appeal requires so. As was observed in State of Kerala v. K.M. Charia Abdulla and Co. [AIR 1965 SC 1585] the distinction between right of Appeal and revision is based on differences implicit in the two expressions. An Appeal is continuation of the proceedings; in effect the entire proceedings are before the Appellate Authority and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disapproved the approach adopted by the Court of Appeal in discerning the intention of the legislature; it is observed that: (WLR p. 157 C-D) ... the role of the judiciary is confined to ascertaining from the words that Parliament has approved as expressing its intention what that intention was, and to giving effect to it. Where the meaning of the statutory words is plain and unambiguous it is not for the Judges to invent fancied ambiguities as an excuse for failing to give effect to its plain meaning because they themselves consider that the consequences of doing so would be inexpedient, or even unjust or immoral. In controversial matters such as are involved in industrial relations there is room for differences of opinion as to what is expedient, what is just and what is morally justifiable. Under our Constitution it is Parliament's opinion on these matters that is paramount. (emphasis supplied) In the same judgment, it is further observed: (WLR p. 157 F) ... But if this be the case it is for Parliament, not for the judiciary, to decide whether any changes should be made to the law as stated in the Acts.... (emphasis supplied) 15. With regard to taxing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as est, non debet admitti voluntatis quaestio . Following such maxim, the courts sometimes have made strict interpretation subordinate to the plain meaning rule [Mangalore Chemicals and Fertilisers Ltd. v. CCT, 1992 Supp (1) SCC 21] , though strict interpretation is used in the precise sense. To say that strict interpretation involves plain reading of the statute and to say that one has to utilise strict interpretation in the event of ambiguity is self-contradictory. 16. The principles with regard to 'casus omissus' and its implementation have also been dealt with by Hon'ble the Supreme Court in the case of Shiv Shakti Cooperative Housing Society (supra) in which the relevant paragraphs are as follows:- 19. It is a well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See Institute of Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Artemiou v. Procopiou [(1966) 1 QB 878 : (1965) 3 All ER 539 : (1965) 3 WLR 1011 (CA)] (All ER p. 544 I), is not to be imputed to a statute if there is some other construction available . Where to apply words literally would defeat the obvious intention of the legislation and produce a wholly unreasonable result , we must do some violence to the words and so achieve that obvious intention and produce a rational construction. Per Lord Reid in Luke v. IRC [1963 AC 557 : (1963) 1 All ER 655 : (1963) 2 WLR 559 (HL)] where at AC p. 577 (All ER p. 664 I) he also observed: This is not a new problem, though our standard of drafting is such that it rarely emerges. 17. A conspectus of the aforesaid judgments make it amply clear that statutory interpretation particularly with regard to taxing statutes has to be strict and only in accordance with the unambiguous words used in the statute. The intention of the legislature in incorporating or leaving out certain words is necessarily required to be seen. 18. The words 'as it thinks fit' used in relation to the powers of the Appellate Tribunal exercisable under Section 254(1) of the Act, 1961 is of the widest amplitude. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure? Proviso does cut down the ambit of the main provision but it cannot be interpreted to denude the main provision of any efficacy and reduce it to a paper provision. Both must be so interpreted as to permit interference which if not undertaken there would be miscarriage of justice. Sub-clause (c) of the first proviso to Section 66(1) will permit the Industrial Court to interfere with the order made by the Labour Court, if the Labour Court has acted with material irregularity in disposal of the dispute before it. If the finding recorded by the Labour Court is such to which no reasonable man can arrive, obviously, the Industrial Court in exercise of its revisional jurisdiction would be entitled to interfere with the same even if patent jurisdictional error is not pointed out. 20. Upon a perusal of the powers of the Appellate authority as indicated in section 254(1) of the Act, 1961, it can be seen that the widest jurisdiction has been conferred upon the Appellate authority in the wisdom of the legislature. The said power has not been proscribed in any manner whatsoever. 21. Hon'ble the Supreme Court in the case of Clariant International Limited and another vers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to accept the application for registration of Trust after recording its finding on the basis of material on record before him holding that the activities and object of the Trust are not genuine and the Appellate Tribunal on the basis of the same material on record comes to the conclusion that the order of the Commissioner is perverse since it has been passed ignoring, misconstruing or misinterpreting such evidence, then it can direct registration of the Trust without remanding the matter to the Commissioner. 25. Remand of the case to the Commissioner in the said circumstance after recording of satisfaction by the Appellate Tribunal about the genuineness of objects and activities of the Trust, on the basis of material on record, would be an empty formality because the Commissioner in such a case can not go against the specific finding recorded by the Appellate Tribunal. 26. In view of the unfettered power of the Appellate Tribunal in terms of section 254 (1) of the Act, 1961 the Tribunal can very well record its satisfaction on the genuineness of the activities and object of the Trust and can very well direct registration of the Trust without remand of case to the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vergent view on the basis of material which has been filed before the Appellate Tribunal for the first time. Remand for determination of question regarding grant of registration to a Trust would also be necessitated in cases where the registration application has been rejected by the Commissioner income tax on technical grounds without recording his satisfaction as contemplated under Section 12 (AA) of the Act, 1961 and such decision is overturned by the income tax Appellate Tribunal. (ii) The power of the Appellate Tribunal are co-extensive with the power of the Commissioner under Section 12 (AA) of the Act, 1961 subject to what has been indicated herein above. However order for registration can be issued only after recording satisfaction with regard to genuineness of activities of the Trust as provided under Section 12 (AA) of the Act, 1961. 32. In view of the aforesaid the reference is answered. 33. The Registry is directed to place Appeals before the appropriate court dealing with the matter. Thus, as held by Larger Bench of Hon ble Allahabad High Court that tribunal has powers of widest amplitude u/s 254(1) of the 1961 Act, which also included powers t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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