Patna H.C : The assessee society had not violated the provision of s. 13(1)(c) of the Act even though it was diverting substantial funds through its sub-contractors to the founder author of the trust who is a person covered under s. 13(3)(a)

High Court Of Patna

DCIT vs. Sulabh International Social Service Organisation

Section 2(15), 11, 13(1)(c), 13(3)(a), 260A,

Asst. Year 2006-07

Sudhir Kumar Katriar & Samarendra Pratap Singh, JJ.

Misc. Appeal No. 657 of 2010

30th March, 2011

Counsel appeared :

Rishi Raj Sinha & Harshwardhan Prasad, for the Appellant : M.L. Varma with S.K. Verma, A.K. Rastogi, S. Alamdar Hussain, Anil K. Sinha, Arindam Mukherjee & Kumari Gargi Tuli, for the Respondent

Judgment

Sudhir Kumar Katriar, J. :

Heard learned counsel for the parties at length. The following issues have been formulated for adjudication in this appeal, purporting to be substantial questions of law within the meaning of s. 260A of the IT Act, 1961 (hereinafter referred to as ‘the Act’):

“(i) Whether in the facts and circumstances of this case the learned Tribunal was justified in allowing the maintenance work as a charitable purpose under s. 2(15) of the Act, when the memorandum of association of the society does not include it as an object in any clause ?

(ii) Whether in the facts and circumstances of this case the learned Tribunal was justified in holding that the assessee society had not violated the provision of s. 13(1)(c) of the Act even though it was diverting substantial funds through its sub-contractors to the founder author of the trust who is a person covered under s. 13(3)(a) of the Act ?

(iii) Whether in the facts and circumstances of the case the learned Tribunal was justified in allowing exemption under s. 11 in complete oversight of the fact and law that the founder author is a person covered under s. 13(3)(a) of the Act and is deriving benefit from the assessee trust directly or indirectly and therefore, hit by the provisions of s. 13(1)(c) of the Act ?

(iv) Is the appeal maintainable in view of the scope and sweep of s. 260A of the Act, having been concluded by findings of facts ? and

(v) Whether or not the appeal raises a substantial question of law in view of the parameters of s. 260A of the Act ?”

The Department of Income-tax has preferred this appeal under s. 260A of the Act, and have challenged the judgment dt. 31st March, 2010, passed by the Tribunal, Patna Bench, Patna, in ITA No. 7/Pat/2010 (Dy. CIT vs. Sulabh International Social Service Organisation), with respect to the asst. yr. 2006-07, whereby the order dt. 20th Nov., 2009, passed by the learned CIT(A), has been upheld. The learned CIT, in his turn, disagreed with, and set aside, the order of assessment dt. 31st Dec., 2008, passed by the learned Dy. CIT, Circle-1, Patna, whereby he had rejected the returns submitted by the respondent, and had proceeded to tax the receipts of the respondents.

A brief statement of facts essential for the disposal of this appeal may be indicated. It is with respect to assessment of the respondent’s income under the Act for the asst. yr. 2006-07. The respondent is a society registered under the Societies Registration Act, 1860. Its aims and objects have been set out in the impugned order, and we shall have the occasion to refer to them at the appropriate stage. It is also registered as a charitable institution by the CIT in terms of s. 12A of the Act. The respondent is engaged in the charitable work of abolishing the system of service latrines, installation of inexpensive water-seal, flush latrines for the poor people as a common and general facility, and also to take care of the problems of, and abolish the inhuman practice of, manual scavenging, and carriage of head-load of human excreta. In order to attain its aims and objects, the respondent ever since its registration in 1971, in relentless pursuit of its revolutionary step, has been building flush latrines in public places. It has been building toilets on mass scale for public use, has also carried out the function of running, repair and maintenance of those latrines, as well as the task of abolition of manual scavenging, and disposal of human excreta by its carriage by Bhangis (scavengers) on their heads. It is relevant to state that, perhaps on account of the enormity of the task of construction and installation, the respondent has engaged contractors and sub-contractors at different places for construction of latrines. However, the respondent has itself been doing the job of running and maintenance of those latrines. The respondent charges nominal amount from the users to run and maintain the latrines, which naturally brings certain money every year. The respondent, therefore, submitted its returns for the period in question showing nil income because the receipts were shown as not taxable in view of its aims and objects, as well as its registration under s. 12A of the Act.

3.1 The learned AO selected the respondent’s case for the period in question for scrutiny, and notices under ss. 143(2) and 142(1) of the Act were issued. After a detailed hearing, the learned AO did not accept the returns of the respondent. He held that the alleged activities of the respondent are not charitable activities within the meaning of s. 2(15) of the Act as it stood at the relevant point of time. He, inter alia, held that the alleged activities of the respondent, namely, maintenance of latrines, is not within the aims and objects and, therefore, cannot enjoy the benefit of exemption from tax under the Act. He has also held that the respondent has received huge sums of money from the users of latrines which is indicative of commercial activity and disentitles the respondent for the benefit of exemption from taxation.

3.2 Aggrieved by the order of the learned AO, the respondent preferred appeal which was allowed by the learned CIT(A). He disagreed with the order of the learned AO and set aside the same. The learned CIT has, inter alia, held that maintenance of public toilets is a necessary, incidental activity for attainment of the objectives of the respondent. He has also held that the Department has consistently and uniformly in the past periods held that the activities of the respondent are charitable in nature and are, therefore, entitled to the benefit of exemption. He has further held in the same vein that, in the absence of fresh materials, it was not open to the learned AO to take a different view on identical facts. He has also held that running and maintenance of the gigantic operation of the respondent is likely to bring in its wake cash in-flow which is essential for the maintenance of the project, and for further attainment of its aims and objects.

3.3 Aggrieved by the order of the learned CIT, the Department preferred appeal before the learned Tribunal which has been dismissed by the impugned order, and the order of the learned CIT has been upheld. The learned Tribunal in its elaborate judgment has upheld the findings of facts recorded by the learned CIT, and dismissed the appeal.

4. While assailing the validity of the impugned order, the learned assistant standing counsel submits that maintenance of latrines is nowhere to be found in the aims and objects of the respondent and, therefore, the cash in-flow of the respondent on account of maintenance of its project does not qualify for exemption from taxation. He has taken us through the order of the learned AO in an effort to satisfy us that the huge in-flow of cash is per se indicative of commercial nature of activities. He wraps up his elaborate submissions by submitting that the impugned order is fit to be set aside in view of the findings of facts recorded by the learned AO.

5. Learned counsel for the respondent has in his elaborate submissions supported the impugned order. He, inter alia, raises a preliminary objection as to the maintainability of this appeal. In his submissions, the issues are concluded by findings of facts recorded by the learned CIT, and upheld by the learned Tribunal, and the present appeal does not raise any substantial question of law within the meaning of s. 260A of the Act.

6. We have perused the materials on record, and considered the submissions of learned counsel for the parties. We shall first of all consider the preliminary objection raised by the learned counsel for the respondent. Sec. 260A of the Act is reproduced hereinbelow : “260A. (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal (before the date of establishment of the National Tax Tribunal), if the High Court is satisfied that the case involves a substantial question of law. (2) The Chief CIT or the CIT or an assessee aggrieved by any order passed by the Tribunal may file an appeal to the High Court and such appeal under this sub-section shall be- (a) filed within one hundred and twenty days from the date on which the order appealed against is received by the assessee or the Chief CIT or CIT; (b) (****) (c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question; Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which(a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-s. (1). ((7) Save as otherwise provided in this Act, the provisions of the CPC, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this section.) (Emphasis, italiczed in print, added)

It is evident that, in view of the mandate of law, an appeal under s. 260A of the Act will be maintainable before the High Court if the appellant is able to satisfy this Court that it involves a substantial question of law. This expression has acquired a definite connotation over the years by authoritative pronouncements of the Supreme Court and High Courts. The same expression occurs in s. 100 of the CPC which provides that a second appeal shall lie in this Court if the High Court is satisfied that the case involves a substantial question of law. It has been consistently held that the High Court in exercise of its second appellate jurisdiction should normally accept all findings of facts recorded by the first appellate Court, being a forum of facts. Adequacy of materials or possibility of another view on facts, is no ground for the High Court to entertain a second appeal. High Court can on facts interfere only after it reaches the conclusion that, in view of the materials on record, no person duly instructed in law can reach that conclusion. In other words, it is not possible to reach the conclusion as has been arrived at by the first appellate Court. This wellestablished principle has avowed public policy that there should be finality to judgments and orders of Courts and quasi judicial authorities. Judicial experience has shown that unlimited number of appeals is never conducive to administration of justice. One author has gone to the extent of observing that unlimited number of appeals is only permissive of substituting one speculation on facts for another. The position is far more stringent for the appellant in the present case in contradistinction to the second appellate jurisdiction under s. 100 of the CPC, in as much as the second appeal before the High Court is the third forum for the appellant, whereas the present forum is the fourth one. This, to our mind, it is a vital aspect of the matter and the appellant will have to make out a strong case of substantial questions of law to maintain this appeal. Speaking on the scope of second appeal within the meaning of s. 100 CPC, the Supreme Court has observed in the case of Santosh Hazari vs. Purushottam Tiwari (Dead) By LRs (2001) 170 CTR (SC) 160 : (2001) 3 SCC 179 that a point of law which admits of no two opinions may be a proposition of law, but cannot be a substantial question of law. To be substantial, a question of law must be debatable, not previously settled under law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned.

The Supreme Court has held in the case of M. Janardhana Rao vs. Jt. CIT (2005) 193 CTR (SC) 585 : (2005) 2
SCC 324 that the conditions mentioned in s. 260A of the Act must be strictly fulfilled in order to maintain appeal thereunder, otherwise the appeal would not be maintainable. The High Court must make every effort to distinguish between a question of law and a substantial question of law. In exercise of the powers under s. 260A of the Act, the findings of facts of the Tribunal cannot be disturbed. The right of appeal is neither a natural nor an inherent right attached to the litigation. Being a statutory right, it has to be regulated in accordance with law in force at the relevant time. Such an appeal cannot be decided on merely equitable grounds. The expression ‘substantial question of law’ has not been defined anywhere in the statute. But it has acquired a definite connotation through various judicial pronouncements. The conditions mentioned in s. 260A must be strictly fulfilled before an appeal can be maintained under s. 260A.

9.1 In Sir Chunilal V. Mehta & Sons Ltd. vs. Century Spg. & Mfg. Co. Ltd. (1962) Supp. (3) SCR 549 : AIR 1962
SC 1314, the Supreme Court laid down the following tests to determine whether a substantial question of law is
involved. The tests are: (1) whether directly or indirectly it affects substantial rights of the parties, or (2) the question is of general public importance, or (3) whether it is an open question in the sense that the issue is not settled by pronouncement of this Court or Privy Council or by the Federal Court, or (4) the issue is not free from difficulty, and (5) it calls for a discussion for alternative view. There is no scope for interference by the High Court with a finding recorded when such finding could be treated to be a finding of fact.

We have hereinabove summarized the findings of facts recorded by the three forums. The findings of facts recorded by the learned AO have not found favour by the learned CIT(A) as well as the Tribunal. The issues are concluded by concurrent findings of facts. In such a situation, the needless emphasis placed by the learned assistant standing counsel on the order of the learned AO is completely misplaced. He was unable to point out any change of circumstance which enabled the learned AO to take a different view from those taken by the authorities under the Act with respect to the same respondent and its ancillary organizations with respect to the past periods. It is in fact evident from the impugned order that the assessment with respect to the respondent in identical situation for the asst. yr. 2004-05, the learned Tribunal had found in favour of the respondent which attained finality, no appeal having been taken to the High Court. We further observe from the materials on record that the respondent’s returns for the next period, namely, asst. yr. 200506, were accepted in full. On the self-same facts, the learned AO for the period in question has taken a different view without any change of circumstance, without any suppression of material facts, fraud or misrepresentation. The learned AO also completely overlooked the order for the past years in identical situation, where identical transactions have been treated to be charitable activities qualifying for exemption from taxation. We cannot understand the approach of the appellant, and wholly disapprove of the appeal at the instance of the Department which ought to have been done thoughtfully, and has burdened this Court with a most unwanted matter. In that view of the matter, we are clearly of the view that the learned AO exceeded his jurisdiction in passing the order of assessment. We are equally convinced that the learned CIT(A) has rightly set aside the order of the learned AO, and the learned Tribunal rightly upheld the order of the learned CIT(A). A Division Bench of this Court to which one of us (S.K. Katriar, J.), was a party, passed the judgment dt. 28th Sept.,2010 in CWJC No. 4748 of 1997 (Dr. Bindeshwar Pathak vs. CIT & Ors.), since reported in (2011) 242 CTR (Pat) 63 : (2011) 57 DTR (Pat) 1 : 2011(1) BBCJ 595, wherein the present respondent was respondent No. 5. On the issue of consistency, this Court observed as follows : “7. Learned counsel for the petitioner submits that consistency is the hall-mark of justice and the assessee should not be rattled by inconsistent decisions of the authorities. Every assessee is entitled to organize his affairs in the manner they perceive to have been accepted by the authorities in the previous years. Learned counsel for the petitioner has rightly relied on assessment orders and the appellate orders with respect to respondent Nos. 3 to 7 with respect to the past periods which are to the same effect as the appellate orders for the period in question. Looking at it from this angle, the view taken by the learned assessing authority in the present case with respect to the period in question seems to be without justification. There was no allegation against the petitioner, nor against respondent Nos. 3 to 7, of suppression of income or material facts. A mere change of opinion on the self-same facts should not normally be the basis to alter the approach consistently followed in the previous years and later also. This would unsettle and discourage honest assessees.

7.1 The return of respondent No. 5 herein for the period 1995-96, a later period, for example was allowed by the learned AO by his order dt. 5th March, 1998 (Annex. 9), whereby he held that Sulabh International is indeed a charitable society, its income is exempt under ss. 11, 12 and 13 of the Act, it is not a benami organization of the petitioner, the fees payable to the petitioner was just and reasonable and for genuine and worthwhile services.

7.2 Learned counsel has rightly relied on the judgment of a Division Bench of this Court in Dr. Narendra Prasad (supra) to which one of us (S K. Katriar, J.) was a party. That was a case where the order of assessment had been passed by the Settlement Commission which was followed by the authorities under the Act in the subsequent years. During a period of 17 years, the view taken by the Settlement Commission was followed for 15 years, except for a brief period of two years in between when the learned assessing authority on the self-same facts had taken a different view. In other words, the view taken by the Settlement Commission was followed by the learned assessing authority for a long length of time preceding the two periods in question there as well as the periods following thereafter. This Court disapproved of such an approach on the part of the learned assessing authority and observed as follows : ‘Suppose for the sake of argument that it were open to the learned AO to take a different view on the returns submitted by the two assessees. However, in the peculiar facts and circumstances of the present case, the Department will have to make out an extraordinary case for departure from the settled state of affairs. We do not find adequate justification for the learned authorities under the Act to take a different view for the two periods in question from the periods preceding thereto and following thereafter. It would need strong and adequate justification to take a sharp departure for the two years in-between which we find absent in the present case. Consistency is the hallmark of law and justice, and the individuals are entitled to organize their affairs in a manner perceived to have been accepted by the authorities for such a long length of time. No such change of circumstances is discernible in the present case. The learned authorities under the Act have neither come across new facts or circumstances, nor suppression of fact, and is really a case of different view on the self-same facts as it obtained before the Settlement Commission. The view taken by the Settlement Commission has been followed by the learned authorities under the Act even for the periods that have followed the ones in question apart from the preceding periods.’

8. The learned assessing authority should trust honest assessees, and discard their returns for very valid reasons in a situation like the present one, as it had happened in the case of Dr. Narendra Prasad (supra), that the Department has taken a consistent view for all these years except the period in question. We hope the learned authorities under the Act will keep this in mind in future, otherwise it gives rise to clearly avoidable litigations, and rattles honest assessees.”

We really regret to record that the learned AO completely overlooked the principle of consistency, and passed an illegal order of assessment. To repeat the words of the said Division Bench judgment, every assessee is entitled to organize his affairs in the manner they perceive it to have been accepted by the authorities in the previous years. As stated above, the learned AO grievously erred in exercise of his jurisdiction in passing the order of assessment. In the facts and circumstances of this case, we are clearly of the view that the present appeal indeed does not give rise to any issue at all, let alone a substantial question of law. The issues are concluded by findings of facts. The appeal is not maintainable.

We must also deal with the issues elaborately argued by the learned counsel for the parties about the aims and objects of the respondent, particularly its functions relating to maintenance of the toilets. The learned AO has held that maintenance of public latrines described as Sulabh Shauchalaya is nowhere to be found in the aims and objects of the respondent and, therefore, does not qualify for exemption. The contention is stated only to be rejected. Law is well settled by a long line of authoritative pronouncements of Courts that every functionary has all the incidental and ancillary powers for the effective exercise of the dominant power, otherwise the dominant and the primary power may be rendered otiose. Taking cue from this salutary and well-established principle of law, it appears to us that the respondent has the necessary obligation to maintain toilets in furtherance of the dominant object of installation of modern public toilets, and the extraordinary task of abolition of manual scavenging and carriage of head-loads of human excreta by human beings. The aims and objects of the respondent organization have been quoted in the impugned order. The society has as many as 34 aims and objects listed in its memorandum of association. The relevant objects of the society are reproduced hereinbelow : “3(i) To plan and arrange for imparting theoretical and practical training to the masons, Government employees, public servants, citizens and villagers in the aims and objects of the organization. 3(ii) To carry out necessary research and effect improvements in the organization. 3(iii) To plan and arrange for widespread publicity and expansion of the scheme in urban and rural areas throughout the world. 3(iv) To render co-operation and help to all the municipalities, notified area committees, corporations, other connected organizations and government Departments all over the world in abolishing the system of service latrines and assisting in the installation of Sulabh Shauchalayas in its place. 3(v) To train Government employees in this work with the co-operation of the Departments concerned. 3(vi) To try to find out total easy and practical solutions to many problems, like those of public health, personal health, manure, food, economic problem, the problem of Bhangis and of unemployment, by providing for public and general use, the Sulabh Shauchalaya system and by giving wide publicity to it, to arrange demonstration-cum-training camps and to boost agricultural output with the help of manures. ……………. 3(viii) To make easily available materials such as water-seal, pan, etc. required for its construction, to arrange for contractors and to prepare materials for the Shauchalayas on no-profit-no-loss basis and to construct the Shauchalayas on contract basis. ……………. 3(xi) To render full co-operation and help in making the Government sponsor Bhangi Mukti programme a success…………….. 3(xiii) To arrange for training and making trained masons available to the institutions, villagers and city- dwellers from time to time and when needed. 3(xiv) To open branches at different places for wide publicity of the Sulabh Shauchalaya system. 3(xv) To construct and get constructed house for the Bhangis. To make all efforts to improve the living conditions of the Bhangis. To ensure jobs to those Bhangis and their children who have been relieved from the course of cleaning service latrines. To arrange for education of Bhangis and their wards and to give them various kinds of vocational training. To make other necessary efforts for improving the lot of Bhangis…………..” (Emphasis, italiczed in print, added)

14. The contention of the learned assistant standing counsel for the Revenue to the effect that maintenance of toilets are not an incidental activity essential to bring into fruition the stated aims and objects of the society is without any substance. Any construction or its accessories and fittings, falling into disrepair on account of use and wear and tear, become unfit for human use, undoubtedly require upkeep and maintenance. The aims and objects of the society in cl. 3(viii) enumerated hereinbefore clearly state construction of toilets. Though maintenance of toilets does not specifically find mention in the aims and objects, but maintenance is an essential and inalienable part of any civil construction whatever may be the scale of construction. We may also refer to The Employment of Manual Scavengers & Construction of Dry Latrines (Prohibition) Act, 1993 (Act No. 46 of 1993), the statement of object and reasons of which is reproduced hereinbelow : “An Act to provide for prohibition of employment of manual scavengers as well as construction or continuance of dry latrines and for the regulation of construction and maintenance of water-seal latrines and for matters connected therewith or incidental thereto.” (Emphasis, italiczed in print, added)

It is evident that the statute makes it amply clear that the legislature thought it fit to treat maintenance of the same as an activity incidental to the act of construction of water-seal latrines, etc. The activity of construction by its very nature creates the need for maintenance, for without the former the need for the latter does not arise. To treat the two activities as being disjointed activities shall create an absurdity in law and in fact that will neither be sustainable in law nor desirable.

We do not feel the necessity of referring to the remaining aims and objects of the respondent. It is evident that abolition of service latrines, installation of toilets for the common man in public places described as Sulabh Shauchalaya, taking care of the problem of Bhangis and the extraordinary idea of abolition of manual scavenging is undoubtedly amongst the dominant aims and objects of the respondent. If the contention of the appellant were to be accepted that maintenance of these latrines were not essential and incidental to the dominant object indicated above, the latrines would be in a state of disrepair within a short time in a situation where it is being used by general public on mass scale. For example, it may lead to an undesirable and obnoxious situation that the toilets would be without doors, deprived of all privacy. Does the appellant desire this revolutionary movement to reach this ludicrous state ?

We are quite convinced in the facts and circumstances of the case that maintenance of latrines is an essential and inseparable incidental activity to attain the sublime and the dominant aims and objects of the respondent. The contention advanced on behalf of the appellant is rejected.

In the judgment in ITO vs. M.K. Mohammed Kunhi AIR 1969 SC 430 the Supreme Court considered the question whether or not the Tribunal under the Act has the powers to grant stay in a situation where s. 255(5) of the Act does not seem to confer that power. The Supreme Court held that an express grant of statutory power carries with it by necessary implication the authority to use all reasonable means to make such grant effective. The powers which have been conferred by s. 254 on the Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers fully effective. Sec. 255(5) of the Act does empower the Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. But the Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when s. 220(6) deals expressly with a situation when an appeal is pending before the AAC, but the Act is silent in that behalf when an appeal is pending before the Tribunal. When s. 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceeding as will prevent the appeal if successful from being rendered nugatory.

16.1 The Supreme Court dealt with this principle in the case of Jamal Uddin Ahmad vs. Abu Saleh Najmuddin & Anr. AIR 2003 SC 1917. The Supreme Court approved of the statement of law stated in the treatise entitled Principles of Statutory Interpretation by Mr. G.P. Singh, that a power conferred by a statute often contains express conditions for its exercise and, in the absence of or in addition to the express conditions, there are also implied conditions for exercise of the power.

17. Learned counsel for the respondent is right in his submission that the respondent and its ancillary organizations are engaged in this mass movement ever since 1971, with identical aims and objects, identical structure of working, and identical recognition as a charitable institution in terms of s. 12A of the Act. The aims and objects over all these years have remained unchanged, and the recognition as a charitable institution in terms of s. 12A of the Act still subsists. There has been no material change in the facts and circumstances, and never has suppression of facts, misrepresentation, fraud or the like been attributed to the respondent, and this position has been accepted all through by the Department and upheld by this Court, notwithstanding which we fail to understand the kind of approach adopted by the learned AO in the present case. The Courts have repeatedly observed that consistency is the hallmark of administration of justice, and all Courts as well as the authorities exercising quasi-judicial functions, may follow this salutary principle of law, otherwise it generates unwanted litigations.

18. This Court is left with the feeling that the Department has not shown due consideration to the Sulabh Shauchalaya movement. If that were not so, the learned AO would not have passed the kind and nature of order that he has passed, and the Department would not have preferred this appeal completely without merit. Such a tendency may drive honest taxpayers to contrivances and unethical methods. As has been noticed in the aforesaid judgment, the IT Department should show due deference to the honest taxpayers, instead of rattling them by inconsistent orders in similar situations. We are informed at the Bar that the Department maintains volumes of best practices. The present litigation seems to be inconsistent with its catalogue of best practices. The Department has not appreciated the pioneering work being carried on by the respondent and its ancillary organizations for amelioration of the miserable condition of Bhangis, and also for the health, hygiene and dignity of the deprived sections of the country. However, para 7 of the memorandum of appeal is reproduced hereinbelow :

“7. That the founder author of the assessee is still actively working for it. In 2007, he represented it as founder on inauguration of World Toilet Summit in New Delhi, represented the assessee before Dr. Manmohan Singh, the Prime Minister of India and before the President of India, Smt. Pratibha Devi Singh Patil. It is on record that in 2008 he represented Sulabh International at the UN on the occasion of formal launch of International year of Sanitation,2008.”

19. We are in this connection reminded of the observations of a learned Single Judge of this Court with respect to the Sulabh Shauchalaya movement, in the judgment dt. 14th May, 1999, in CWJC No. 7653 of 1998 (Nalin Kumar Jha vs. the State of Bihar & Ors.), since reported in 1999 (2) PLJR 808, paras 4 to 8 of which are reproduced hereinbelow : “4. It was perhaps in view of the aforesaid facts and circumstances that Mr. Ram Balak Mahto, senior counsel appearing for the petitioner did not say anything in support of the second relief but confined his submissions only in respect of the first relief concerning the contract of maintenance of public lavatories popularly known as ‘Sulabh Shauchalaya’. As Mr. Mahto did not make any submission concerning the second relief it is not needed to say anything further in that regard. 5. Turning now to the first prayer, it is the case of the petitioner that the municipal corporations/municipalities in this State (with the exception of the municipal corporations of Patna, Darbhanga, Arrah and Begusarai) were unduly favouring respondent No. 29 by their action in giving the contract of maintenance of public lavatories to it. It is stated that a public auction for giving the contract would bring substantial sums of money to the concerned corporation/municipality. The petitioner goes on to make an offer of Rs. 40 lacs, for the right to maintain public lavatories under the respondent corporation/municipalities and makes a prayer that a direction be made in his favour. The case of the petitioner appears to me to be plainly based on the notion that maintenance of public lavatories is analogous with the collection of tools for a bridge or a road. In fact the main thrust of Mr. Mahto’s argument was that the State, in the distribution of its largesses cannot be allowed to take a discriminatory stance. To my mind the argument is quite misconceived and it completely over-looks the circumstances in which the Sulabh Sauchalayas came into existence in the first place. The argument also fails to see that certain basic technological knowledge is necessary for the maintenance of the Shauchalayas in an efficiently working State.

It is common knowledge that till the late 1960s and early 1970s service latrines were a common feature in many houses even in the urban centres of this State and scavengers carrying night soil on their heads was a familiar sight in the lanes and streets of the State capital. The practice was so old established that to most it was an unimutable fact of life. It is stated in the counter affidavit filed on behalf of the State that at that time Sulabh Sauchalaya (later known as Sulabh International, respondent No. 29) was among the first to challenge this practice and to call it the sign of degradation of man. Sulabh Sauchalaya not only advocated for abolishing the practice of scavengers carrying night soil on their heads but also suggested the means to do so. It took up the scheme for conversion of service latrines into Water Seal Pot Hole Latrines (Sulabh Sauchalayas). The State Government on the basis of repeated decisions taken on different dates entrusted the job of conversion of service latrines into Water Seal Pot Hole Latrines and the construction of public lavatories all over the State to respondent No. 29 Sulabh Sauchalaya. The organisation constructed public lavatories all over the State and changeover was so rapid, noticeable and impressive that public lavatories all over the State got the popular name after the name of the organisation-Sulabh Shauchalayas. In this State public lavatories are still commonly known as Sulabh Shauchalayas. As part of the Government decision Sulabh Sauchalaya was also to be given the job of maintenance of the lavatories constructed by it for a period of 30 years. It was in this background that the public lavatories of Sulabh Sauchalayas were constructed in this State and it was only after they came into existence that the petitioner has come forward to stake his claim for the contract of their maintenance.

It also cannot be lost sight of that a public lavatory does not only consist of building or a structure but it also has a running system. Its maintenance, therefore, does not mean simply collecting tolls on charges from its users but requires sufficient skill to efficiently maintain the running system. The system of public lavatories may be irreparably damaged in the hands of someone without sufficient skill and know-how to manage the system. The State Government, therefore, may be held to be fully justified in giving the job to agencies duly recognized by it.” We entirely agree with the observations made by the learned Single Judge.

Learned counsel for the respondent has rightly raised grievance with respect to certain unsavoury and unwarranted statements made in this memorandum of appeal. There are needless and profuse references to Dr. Bindeshwar Pathak, the founder of Sulabh Shauchalaya movement, without impleading him as party respondent. Learned counsel for the respondent has vehemently objected to the derisive manner in which the appellant refers to his consultation services rendered to the respondent organization as “…lecture of the founder….”, and also attributes to him diversion and siphoning off funds of the respondent. We record our feeling of displeasure for such irresponsible and irrelevant statements in the memorandum of appeal in the absence of Dr. Bindeshwar Pathak. The question of payment of fee to Dr. Bindeshwar Pathak, and diversion of funds of ancillary organizations including the respondent herein, was the subject-matter of CWJC No. 4748 of 1997, Dr. Bindeshwar Pathak vs. CIT allowed by a Division Bench on 28th Sept., 2010, to which one of us (S.K. Katriar, J.) was a party, (supra) dealt with just the same issues and have been answered against the Revenue.

In the result, this appeal is dismissed. No substantial question of law arises in this case. All the issues framed above are answered against the Revenue and in favour of the assessee. In the circumstances of the case, we do not propose to impose any costs.

[Citation : 350 ITR 189]