Ganeshi Lal Education Society vs Commissioner of Income Tax

Rajive Bhalla, J.—The appellant challenges order dated 24.02.2012 (Annexure A-11), passed by the Income Tax Appellate Tribunal, Delhi, ''C Bench (hereinafter referred to as ''the Tribunal''). Counsel for the appellant submits that as the learned Tribunal has accepted the appeal, set aside order passed by the Commissioner of income tax, it should have granting exemption u/s 12AA(1)(b)(ii) of the income tax Act, 1961 (hereinafter referred to as ''the Act''), instead of remitting the matter. As the appellant had already filed the original instrument of establishment of the society and furnished complete information regarding the school being run since inception and the Tribunal has held that the CIT was not justified in raising an inference against the appellant on the ground that family members are part of the trust, the Income Tax Appellate Tribunal should have itself allowed exemption.

Counsel for the revenue submits that as the Tribunal has merely remanded the matter, the appeal is misconceived. The CIT shall reconsider the matter in the light of findings recorded and the directions issued by the Tribunal. The appellant''s apprehension that he may not get justice from the CIT, is unfounded.

We have heard counsel for the parties, perused the impugned order as well as the entire paper book and find no reason to entertain the appeal.

A perusal of the impugned order reveals that the Tribunal has accepted the appellant''s contentions regarding errors in the orders passed by the Commissioner of income tax and while doing so has remanded the matter after holding as follows:--

A mere glance at the aforesaid provisions reveals that before considering registration in terms of the aforesaid provisions, the Id. CIT has to satisfy himself about the objects of the trust or institution and the genuineness of its activities, after making such inquiries as he make may deem necessary in this behalf In the instant case, indisputably the society is running a school since 2003 and has been continuously allowed exemption u/s. 10(23C (iiiad) of the Act. Ignoring these aspects, the Id. CIT in the impugned order rejected the request for registration while observing that the society did not place before him or the Addl. CIT, original instrument of its establishment and that it was controlled by family members of Shri Rajinder Singh while cash payments had been made without deduction of TDS. Thereafter, the Id. CIT concluded that ''neither aims/objects and terms of memorandum are of the charitable nature nor are there any activities which may be put to a test of genuineness''. The Ld. CIT did not elaborate in his order u/s. 12AA(1)(b)(ii) of the Act as to which specific aim/object or activity was not of charitable nature. The Id. AR now contends before us that the society is running a school since inception and its claim for exemption u/s. 10(23C)(iiiad) of the Act has been accepted by the A.O. As already observed the Id. CIT did not examine this aspect of the activities nor elaborated as to which specific clause in the memorandum of the society is not of charitable nature. Merely because wife and son of Shri Rajinder Singh are also members of the society or tax has not been deducted at source from certain payments does not ipso facto mean that objects or activities of running the school are not genuine or are not of charitable nature. The Id. CIT has all the powers under the Act to enquire into genuineness of activities of the society. In any case, there is nothing to suggest as to whether or not the Id. CIT conducted any independent inquiries to ascertain the genuineness of activities of the society before rejecting the application for registration. In these circumstances, especially when the applicant society did not place the original instrument of its establishment before the Id. CIT, we consider it fair and appropriate to vacate the findings of the Id. CIT and restore the matter to his file with the directions to allow a final opportunity to the assessee for establishing genuineness of the activities of the society in the light of aims and objects stipulated in the Memorandum of the society and thereafter, pass a speaking order in accordance with law. Inter alia, the society shall place before the Id. CIT, the original instrument of its establishment. We may clarify that the Id. CIT is free to undertake any independent inquiries, necessary to ascertain the genuineness of activities of the society. With these directions ground Nos. 1 to 3 in the appeal are disposed of.

A perusal of the above extract reveals that the Tribunal has held that the CIT has considered irrelevant facts, failed to conduct an independent enquiry, disregarded the fact that the appellant was allowed exemption, u/s 10(23C)(iiiad) of the Act and in essence has raised inferences contrary to facts. The Tribunal has also held that the CIT has ignored that the appellant is running a school since its inception.

The appellant is aggrieved by remand of the matter to the CIT. The jurisdiction to allow or reject an application, filed u/s 12AA of the Act rests with the CIT. The CIT having ignored relevant facts and considered factors that were not germane to the controversy, the order of the Tribunal, declining to impose its own opinion on merits and remitting the matter to the CIT to decide a matter afresh, cannot be faulted. In view of what has been recorded hereinabove, the appeal is dismissed. The Commissioner of income tax, Rohtak, shall decide the petition filed by the appellant, u/s 12AA of the Act, within three months of receipt of a certified copy of this order.