Shiv Shambu Sewa Mandal, Bathinda vs Assessee

Shri Shiv Shambu Sewa Mandal, vs. Commissioner of Income Tax, Maur Mandi, Bathinda. Bathinda. (Appellant) (Respondent)

Appellant by:Sh.Tarun Bansal, Advocate Respondent by:Smt. Ratinder Kaur, DR

Date of hearing:03/03/2015 Date of pronouncement:26/03/2015

ORDER

PER B.P.JAIN,AM:

This appeal of the assessee arises from the order of the CIT, Bathinda,

dated 29.10.2013 against the order passed u/s 12AA of the Act. The

assessee has raised the following grounds of appeal:

"1. That the Ld. CIT has ignored the judgment of jurisdictional Court that the Commissioner is to see the objects of the trust and not its application of income.

355 ITR 280 (P&H) CIT vs. Surya Educational & Charitable Trust.

2. Similar view:

The ld. CIT has ignored the fact that other High Courts have taken similar judicial view as that of Punjab High Court.

355 ITR 534 (All) 355 ITR 361 (Del) 2 ITA No.737(Asr)/2013

354 ITR 219 (Karn)

3. That he ld. CIT wrongly refused registration to the trust u/s 12 AA of the Act.

a) Without considering the objects of the trust

b) Without pointing out any defect in the objects of the trust

c) Without appreciating the audit report for 3 years."

2. The brief of the case as arising from the order of the ld. CIT are

reproduced hereinbelow for the sake of convenience:

"The applicant Society "Shri Shiv Sewa Mandal, C/o Happy Chilling Centre, Factory Road, Near Petrol Pump, Maur Mandi" had applied for registration u/s 12AA of the Income Tax Acct.1961 in this Office on 22.04.2013 in the prescribed form No. 10A. The appellant society is registered with the Additional Registrar of Societies, Punjab (Bathinda) vide No.321 of 2005 on the Fourth day of January,2006.

2. Vide this office letter No.CIT/BTI/ITO (T)/52-12AA/2013-14/491 dated 15.07.2013, the applicant was requested to attend this office on 06.08.2013 and to produce books of account and certain information/documents. Since no compliance was made by the applicant on 06.08.2013, the case was refixed on 07.10.2013 by issuing letter No.CIT/BTI/ITO(T)/52-12AA/2013-15/927 dated 24.09.2013. On 07.10.2013 Sh. Sham Lal Bansal Advocate, Counsel for the applicant society attended and requested for adjournment on the plea that the person dealing with accounts is out of station. At his request, the case was adjourned to 11.10.2013. On 11.10.2013, Sh Pankaj Bansal, Advocate, counsel for the assessee attended and filed written reply alongwith certain information /documents but books of account were not produced. The case was adjourned to 23.10.2013. Sh. Prahlad Garg, Chairman alongwith Sh. Pankaj Bansal. Advocate attended and produced books of account for the AY. 2012-13 only. Again on 24.10.2013, the remaining books of account for the AYs 2010-11 and 2011-12 were produced and the case was discussed.

3 ITA No.737(Asr)/2013 3. During the financial years.2009-10 to 2011-12 the applicant has shown to have received the donations as under:-

S. No. Financial Year Donations shown as Received

1 2009-10 2863501

2 2010-11 3146385

3 2011-12 4825153

4. From the documents such as 'Donations Account' filed by the applicant before the Assessing Officer, for all the above mentioned three financial years, it has been noticed that major part of the donations has been shown as received in case. The applicant has not been able to furnish the names and addresses of the donors on the plea that the donations were given by the people from far off places like Bihar. UP etc. where volunteers of the society collect the donations on behalf of the society and after collecting the donations, they deposit the same in the bank account of the society. Further, the applicant has stated that the society is receiving donation in the form of cash being directly deposited in the bank account of the society by the donors. The contention to justify the donations received is not tenable because firstly the applicant has stated that the amounts of donations were directly deposited as cash in bank account of the society by the donors. Both the versions of the applicant are contradictory to each other. Moreover, as stated by the applicant that the donations were received by the volunteers from far off places, then the applicant should have intimated the names and addresses of the donors which has not been done either before the Assessing Officer or in this office at the time of hearing. All these facts go to reveal that the donations credited to income of Expenditure Account are not verifiable. 4 ITA No.737(Asr)/2013

5. In all the three financial years.2009-10 to 2011-12, the applicant has debited the following major expenses to the Income & Expenditure Account.

S. No. Financial Year Nature of Expenses Amount

1 2009-10 Langar Expenses 2458127

Travelling Expenses 60530

Printing Expenses 31422

2 2010-11 Langar Expenses 2556863

Travelling Expenses 60644

Printing Expenses 105200

3 2011-12 Langar Expenses 4048742

Travelling Expenses 79460

Printing Expenses 259100

6. Vide reply dated 11.10.2013, in Para 5 the applicant has stated that some of the vouchers for the expenses debited to Income & Expenditure Account are enclosed. Perusal of the copies of so called bills/vouchers reveals that most of the vouchers in respect of expenses under the heads Tour, Labour Account, Fixed Goods, Rashan Expenses, Transport Expenses are in the shape of " Self Prepared Vouchers" and on most or these vouchers, there are no signatures of the persons receiving the payments. In view of these facts, the expenses debited to the Income & Expenditure account under various heads are not verifiable.

7. The applicant society has alleged to have incurred the expenses for providing food, refreshment, first and free of cost to Shri Amarnath Pilgrims. As mentioned above, neither 5 ITA No.737(Asr)/2013

the donations alleged to have been received nor the expenses alleged to have been incurred are verifiable.

8. In view of the above fact s of the case, I am satisfied that the activities of the applicant society are not charitable, in nature within the meaning of proviso to section 2(15) of the Income Tax Act, 1961. Moreover as per Income & Expenditure account for the financial years 2009-10 to 2011-12, the receipts and expenditures are not verifiable as mentioned above in view of the facts on record, the applicant society does not qualify to be treated as a charitable society. Hence, its request for grant of registration u/s 12AA is not allowed and the application of Shri Shiv Sewa mandal, C/o Happy Chilling Centre, Factory Road, Near Petrol Pump, Maur Mandi is hereby REJECTED."

3. The ld. Counsel for the assessee filed paper book containing 198

pages and argued that the assessee is a society and is registered with

Additional Registrar of Societies, Bathinda and the trust is organizing 40

days camp near Baba Amarnath Temple in J & K for free distribution of

food and shelter. The constitution of the society alongwith English

translation is part of the paper book and the account of the trust is audited by

a Chartered Accountant.

4. The Ld. Counsel for the assessee placed on record point-wise reply to

the objections raised by the ld. CIT available at PB 4 to 16 and argued that

the volunteers from different places in the country collecting donations in 6 ITA No.737(Asr)/2013

small parts and some volunteers make the draft of the said amount so

collected and deposit in the account of the assessee-trust. A copy of the

letter head alongwith identity and addresses are enclosed at PB 39 to 40 and

47 to 58. As regards the bills and vouchers, as produced before the Ld. CIT

and few samples of bills and vouchers of expenses debited to Income &

Expenditure Account for the year ending 31.3.2010, which are available at

PB 59 to 130. He further argued that the ld. CIT has ignored many

appreciation letters from various Institutions given to the assessee-trust for

its charitable purpose, which in fact, are letters from Government/Semi

Govt. organizations. The nine such appreciations are placed at PB 181 to

189. The ld. Counsel for the assessee relied upon the decisions of various

courts in support of his arguments. He further argued that the main object of

the trust was to provide free service to Yatris at height of 13750 ft. above

from sea level for 24 hours round the clock free sewa includes drinking

bisleri water, first aid treatment, provision for 500 beds and beddings in

winter cold nights, food starting from breakfast, lunch, evening tea and milk

etc. provision for carrying patients for hospitalization round the clock from

base camp at a height of 13750 ft. to Srinagar Hospital. None of the objects

placed on record or any activities have been held to be non-genuine.

Accordingly, the ld. Counsel for the assessee prayed to cancel the order of 7 ITA No.737(Asr)/2013

the ld. CIT and direct the CIT to grant registration u/s 12AA of the Act, as

applied by the assessee.

5. The Ld. DR, relied upon the order of the Ld. CIT.

6. We have heard the rival contentions and have perused the material

placed on record. The main objects, as part of the constitution placed on

record at PB 24 to 31 are reproduced hereinbelow:

"1. Name of this institution will be Shri Shiv Shambu Sewa Mandal at Maur Mandi.

2. The main office of this will be at Happly Chilling Centre, Maur Mandi, Distt. Bathinda (Pb.)

3. To arrange food and shelter for pilgrims of Amarnath Yatra.

4. To provide medical treatment of the ill or injured pilgrims.

5. To work for arrangement to provide better healthy hygiens facilities to pilgrims.

To provide clock room to the pilgrims.

To arrange washroom for the pilgrims of Amarnath Yatra."

6.1. The main objection of the Ld. CIT in rejecting the application of the

assessee u/s 12AA of the Act is that the assessee has not provided the names

and addresses of the donors and expenditure is not verifiable and therefore,

the assessee does not qualify to be treated as a charitable society. The ld.

Counsel for the assessee, at the outset, invited our attention at page 17 of the

paper book which is an 'affidavit' of the Chariman of the Society, which for

the sake of convenience is reproduced hereinbelow:

"Affidavit of Prahlad Garg S/o Sh. Manohar Lal Garg aged about 44 years permanently residing at Maur Mandi (Bathinda) acting as a 8 ITA No.737(Asr)/2013

Chairman of "Shri Shiv Shambu Sewa Mandal", Maur Mandi (Bathinda).

I, Prahlad Garg [Chairman of the Society) have named solemnly declare as under:

1. This affidavit is filed to confirm the facts y/r 10 of the ITAT Rules.

2. That our society is a charitable one and is registered with the Additional Registrar of Societies , Punjab (Bathinda) vide certificate No.321 of 2005 dt. 4.1.2006.

3. That our accounts are audited year to year.

4. That the aim of the charitable society is to employ camp at Baltal near Amarnath Temple J & K.

5. That at Baltal where we employ camp from 40 to 45 days after seeking permission from J & K Govt. we provide 100% free sewa to Amarnath pilgrims with

i) Bisleri water

ii) Bed tea/Breakfast, Lunch, Evening tea, Dinner and milk.

iii) First aid

iv) Arrangement of 500 beds for Amarnath pilgrims

v) Carry serious patients to Srinagar at a distance of 100 Kms for medical treatment.

6. That Baltal is situated at a distance of 850 Kms from Bathinda and is at a height of 135000 ft. from seal level, where oxygen is less and difficult to breath.

7. That we applied for registration u/s 12AA with CIT, Bathinda.

8. That CIT, Bathinda did not examine the charitable objects of the society as per constitution of the society.

9. That the CIT neither demanded the appellant to produce different certificates issued by J & K Govt. for free charitable work.

10. That in the camp at Baltal about 40 days , the young team from Maur Mandi (Bathinda) work hours.

11. That I again confirm that we do not charge a single penny from any of the visitors at Baltal camp in J & K State.

12. Our all above services are free of cost round the clock.

Dated 05.02.2014 9 ITA No.737(Asr)/2013

Place: Maur Mandi Sd/- (Deponent) Verification

I Prahlad Garg ( Chairman of the Society) above named hereby declare that the above contents are true to the best of my knowledge and belief and no part of it is false.

Dt.05.04.2014 Sd/- (Deponent)"

6.2. From the perusal of the affidavit of the Chairman of the assessee

society, it is evident that the assessee trust is registered with the Additional

Registrar of Societies, Punjab (Bathinda) dated 04.01.206 and accounts are

audited and aims and objects of the society to employ camp at Baltal for a

period of 40 to 45 days after seeking permission from J & K Govt. where

they provided 100% free sewa to Amarnath Pilgrims for providing food,

medical facilities etc. mentioned hereinabove. In support of the same, the

assessee has placed on record copy of letters of the volunteers who collect

donations from different persons alongwith letters of the donors at PB 39 to

58 where the volunteers after collecting small donations from different

persons, make a draft and deposit the same in to the bank account of the

assessee-trust. Therefore, the objection of the ld. CIT that the cash is

directly deposited by the donors and their identity is not verifiable has been

met by the ld. Counsel for the assessee and the details were filed before the

ld. CIT for his verification but the ld. CIT, in fact, has misconceived the

facts. The said donations are therefore, verifiable from volunteers is a matter 10 ITA No.737(Asr)/2013

of record. As regards the expenses, the assessee has placed vouchers

alongwith bills at PB 59 to 180, which have been perused by us and

therefore, except few vouchers for petty expenses, every expense is

verifiable and therefore, the ld. CIT's objection that expenses are not

verifiable is without any basis and cannot be upheld. Moreover, the ld. CIT

has ignored the appreciation of letters received from Government/Semi

Govt. placed at PB 181 to 189, where the said organizations have clearly

stated that the assessee-trust has participated in charitable activities

willingly volunteered organized social service and facilities like refreshment,

food, first aid and transit shelter to pilgrims of Holy Shrine of Amar Nath

Yatris. Such nine certificates from different Govt./Semi Govt.

organizations, which are placed at PB 181 to 189 are as under:

i) Certificate of appreciation by Davinder Singh Commandat, 21st Bn. ITB Police Force.

ii) Certificate of appreciation by Officer Commanding F/54, C.B.P.F.

iii) Certificate of appreciation by Commandant 21st Bn. ITB Police.

iv) Certificate of appreciation by Commanding Officer 2nd Bn. The Mahar Regiment.

v) Certificate of appreciation by Shyam Mehrotra Dy. Inspector General (SNR) ITBP.

vi) Certificate of appreciation by A.K. Singh Commandant K-1, BN BSF.

vii) NOC granted by Shri Amarnath Shrine Board for the year 2012.

viii) Certificate of appreciation by S.C.S. Rawat Commandant 54 Bn. CRPF.

ix) NOC granted by Shri Amarnath Board for the year 2013."

11 ITA No.737(Asr)/2013 6.3. Therefore, in the facts and circumstances of the case, the objections

raised by the ld. CIT are mis-conceived and are based on conjectures and

surmises and are without any basis. In fact, the assessee is a charitable trust

providing free sewa to Yatris of Amarnath for providing drinking water,

medical facilities and food etc. round the clock. In the facts and

circumstances of the case, it is a fit case for providing registration u/s 12AA

of the Act. Accordingly, the order of the ld. CIT is reversed that he is

directed to grant registration u/s 12AA of the Act to the assessee. Thus, all

the grounds are allowed.

7. In the result, the appeal filed by the assessee in ITA

No.737(Asr)/2013 is allowed.

Order pronounced in the open court on March, 2015.

Sd/p Sd/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: March, 2015 /SKR/ Pronounced on 26/03/2015 Sd/- JM Copy of the order forwarded to:

1. The Assessee:Shri Shiv Shambu Sewa Mandal, Maur Mandi.

Bathinda.

2. The CIT, Bathinda.

3. The SR DR, ITAT, Amritsar.

True copy By order