18 Mar U.P. Distillers’ Association v. CIT
[2017] 399 ITR 143 (Delhi)
HIGH COURT OF DELHI
U.P. Distillers Association
v.
Commissioner of Income-tax*
S. RAVINDRA BHAT AND Sanjeev Sachdeva, JJ.
IT Appeal No. 830 of 2017
OCTOBER 23, 2017
Section 12AA of the Income-tax Act, 1961 – Charitable or religious trust – Registration procedure (Cancellation of registration) – Cancellation of registration of assessee-trust on basis of material found during search at premises of Secretary of assessee-trust was justified when statement of secretary pointed out that he virtually ran assessee’s activities from same premises [In favour of revenue]
The Commissioner cancelled the registration granted to the assessee-trust on basis of material found and statement recorded during search at premises of Secretary of assessee-trust, namely, ‘M’. The assessee contended that the statement of ‘M’ was made in the course of a search in respect of his own premises and not that of the assessee/association and therefore, materials indicated by him or the facts disclosed by him could not be the basis of the order cancelling the registration under section 12AA.
Held that although the premises in which the search took place belonged to ‘M’, there was no gain saying the fact that he virtually ran assessee’s activities from the same premises. The information, which he provided in the course of the statement, clearly pointed out to the activities of the association and not his. Therefore, there was no infirmity with the findings recorded by the lower authorities.
CASE REVIEW
CIT v. Radico Khaitan Ltd. [2017] 83 taxmann.com 375/249 Taxman 384/396 ITR 644 (Delhi) distinguished.
CASES REFERRED TO
CIT v. Radico Khaitan Ltd. [2017] 83 taxmann.com 375/249 Taxman 384/396 ITR 644 (Delhi) (para 6) and Mohan Meakin Ltd. v. Asstt. CIT [2017] 87 taxmann.com 171/[2018] 169 ITD 99 (Delhi – Trib.) (para 6).
S. Krishnan, Adv. for the Appellant. Asheesh Jain, Adv. for the Respondent.
JUDGMENT
S. Ravindra Bhat, J. – The assessee is aggrieved by an order of the Income-tax Appellate Tribunal (ITAT) upholding the Commissioner of Income-tax’s determination that it was disentitled to registration under section 12AA as a charitable trust under the Income-tax Act, 1961 (hereinafter referred to as the Act).
2. The facts are that a search took place on February 14, 2006 in the premises of one Mr. R. K. Miglani—who was the Secretary General of the UPDA/assessee.
3. During the course of search, the statement of Shri Miglani was recorded under section 132(4) of the Act. The statement was retracted but the retraction letter was filed after a considerable period of time, i.e., after two years on March 3, 2008.
4. In the meanwhile, the Commissioner of Income-tax cancelled the registration under section 12AA(3), initially granted to the assessee, after considering the seized material and statements. That order was upheld by the Income-tax Appellate Tribunal.
5. Mr. S. Krishnan, learned counsel appearing on behalf of the assessee firstly urged that the statement of Mr. Miglani was made in the course of a search in respect of his own premises and not that of the assessee/association. It was submitted that in such an event, the statement could not be attributable to the assessee nor could the materials indicated by Mr. Miglani or the facts disclosed by him be the basis of the order cancelling the registration under section 12AA.
6. Mr. Krishnan also relied upon the judgment of this court in CIT v. Radico Khaitan Ltd. [2017] 83 taxmann.com 375/249 Taxman 384/396 ITR 644 and the Income-tax Appellate Tribunal decision—pursuant to a remand order of this court, rendered subsequently, i.e., on August 1, 2017 in Mohan Meakin Ltd. v. Asstt. CIT [2017] 87 taxmann.com 171/[2018] 169 ITD 99 (Delhi – Trib.) and connected batch of cases).
7. Radico Khaitan and Mohan Meakin were two assessees—the Income-tax Appellate Tribunal dealt with the case of the Mohan Meakin in the batch of cases decided on August 1, 2017.
8. Radico Khaitan, on the other hand, approached the Settlement Com mission, which had accepted his submissions surely but proceeded on some income basis of the search and seizure operation.
9. The assessee urges that the Income-tax Appellate Tribunal has returned findings that the documents seized A — 1 to A — 10 series—and relied upon were “dumb documents” and, therefore, indebting credence to them, it was submitted that since in Radico and in Mohan Meakin, the approach of this court and the Tribunal has been one of scepticism and disbelief, the assessee/association’s case too has to be treated similarly and the cancellation of its registration as a charitable trust under section 12AA was unjustified.
10. It is lastly urged that, in any event, the cancellation could not have been from inception but only from the date Parliament amended section 12AA, i.e., from October 1, 2004.
11. This court has noticed that the findings of the lower authorities are con current as to the submission that the statement was recorded in the course of search and seizure that did not concern the assessee, the findings of the Income-tax Appellate Tribunal as well as the Commissioner of Income-tax are clearly to the contrary.
12. Although the premises in which the search took place belong to Mr. Miglani, there is no gainsaying the fact that he virtually ran the assessee’s activities as it is from the same premises. The information, which he provided in the course of the statement recorded on February 14, 2006, clearly pointed out to the activities of the association and not his. Therefore, this court is of the opinion that there is no infirmity with the findings recorded by the lower authorities.
13. So far as the reliance of the assessee with respect to the findings in Radico are concerned, at the outset, what can be noticed is that the court, therefore, was examining the findings of the Settlement Commission in writ proceedings. The jurisdiction of the writ court in such cases to intervene in proceedings in determination of the decision of the Settlement Commission, which are statutorily final are necessarily sacrosanct in terms of the various judgments of this court, as noticed in that judgment, therefore, that decision does not confer any power to the court in this case.
14. So far as the decision in Mohan Meakin with respect to the documents being characterized as “dumbed case” is concerned, the court notices that some of them may overlap with the documents of the assessee, but that itself is not determinative of their character or their credibility. The court, based upon the materials on that case, so far as the Mohan Meakin is concerned, rendered its findings in the context of the facts of that case. Further, in paragraph 56 of that order, the Tribunal had expressly recorded that search proceedings took place in the context of section 153A, in the very premises of Mr. Miglani, i.e., with respect to the assessee.
15. In the light of the above observations, the court is of the opinion that there is no merit in the appeal. However, it is clarified that the cancellation of registration in this case could have related back only from the date of introduction of section 12AA(3), i.e., with effect from October 1, 2014 and not earlier.
The appeal is dismissed but in terms of the above observations.
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*In favour of revenue.
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