TMI Blog2019 (6) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case erred in not giving the opportunity of cross examination Also the grounds for cancellation for registration u/s 12AA(3) is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. The cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed - Decided in favour of assessee. - I.T.A. No. 11/Kol/2017 - - - Dated:- 14-6-2019 - Shri A. T. Varkey, JM And Shri M. Balaganesh, AM For the Appellant : Shri S. M. Surana, Advocate For the Respondent : Dr. P. K. Srihari, CIT, DR ORDER PER SHRI A. T. VARKEY, JM: This appeal filed by assessee is against the order of Ld. CIT(E), Kolkata dated 22.12.2016 against the cancellation of registration of trust u/s. 12AA(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The main grievance of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olkata-700001 as mentioned in your above letter along with other donations, list enclosed, but we have never received any cash from them. The donations were paid keeping in view the charitable activities carried out by the said trust mainly in the field of providing health care services. Furthermore the donations have been paid by us as per objects of our trust. We would like to state that allegation of giving bogus donation and accepting the money in cash is baseless arbitrary and we deny such allegations. We once again like to state that our trust have never indulged in such activities. We request you to furnish us a copy of the said allegations so that necessary action as permissible by law can be initiated by us. You are requested to kindly call Sri Anand Agarwal for our cross examination. It may be stated here that the Hon'ble Madras high Court in the case of 5 Khader Khan Sons reported in 300 ITR page 157 that the deposition recorded in the course of Survey is not binding. According to Ld. CIT(E), the submission of the Ld. AR was not found to be tenable and, therefore he observed that indulging in ingenuine activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed donation of ₹ 5 lakh to Govind Ram Goel Charitable Trust in FY 2013-14. He also submitted that show cause notice has been issued u/s. 12AA(4) of the Act for cancellation of registration but order has been passed u/s. 12AA(3) of the Act, therefore, order is liable to be cancelled. In support of his submission he also relied on the following decisions: i) Radharaman Behari Trust, ITA No. 29/Kol/2017 dated 15.09.2017 ii) Bimladevi Dharamprakash Jan-Kalyan Nidhi in ITA No. 10/Kol/2017 and Radharaman Behari Trust in ITA No. 29/Kol/2017. iii) Andaman Timber Industries in Civil Appeal No. 4228 of 2006 (in respect of denial of cross-examination and effect thereof). The Ld. DR vehemently relied on the order of the Ld. CIT(E) and does not want us to interfere in the order of the Ld. CIT(E), since it indulged in money laundering activities which is prohibited by law. 5. Having given our thoughtful consideration, we note that identical issue in similar circumstances (on the same facts) arose i.e. after survey u/s. 133A of the Act on 11.09.2015 at the premises of Govind Ram Goel Charitable Trust (in short GRGCT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 3,34,56,101/- 2015-16 ₹ 2,80,34,000/- A8. The corpus donations received from A.Y 2008-09 to AY 2012-13 were genuine. Donations were received from different donors including persons associated with our group concern. From AY 2013-14 to AY 2015-16 the unaccounted profit earned by different concerns of our group as mentioned in Ans 3 was pumped in, in the form of corpus donation. In the three (3) years from AY 2013-14 to A.Y 2015-16 the entire donation of quantum of ₹ 10,01,27,103/- (Rupees ten crore one lakh twenty seven thousand and hundred and three) was pumped in form the unaccounted income of our group concerns. Q9. How was the process of such bogus corpus donation managed by you? A9. Sri Gaurav Agarwal, M:9830283320, approached us for providing accommodation entry so that the unaccounted income of the different concerns of our group could be pumped in the trust in form of corpus donation. We paid in cash and received the money through cheque. For this we have to pay a commission of 1% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te some time back. The entries in the above documents reflected the then status of investments by various stakeholders. We were informed that if we were interested to join the above projects as one of the stakeholder then may be one of the existing stakeholder would be interest to exist in our favour. However, we were negative to the proposal. The handwritten note stating Area and Payments to be made were given to us along with other proposal papers and the handwriting does not belong to us. Q15. D you want to add or alter anything, stated above? A15. No. This statement is given by me voluntarily and without any threat, force or coercion and are true to the best of my knowledge and belief. 6. The gist of the statement as recorded above is that donation received from AY 2008-09 to 2012-13 was genuine but subsequently from AY 2013 to 2015-16 it received bogus donation of ₹ 10,01,27,103.00 and return the same to the beneficiary in the form of cash through the web of financial transaction after retaining its commission. Such activity of GRGCT is nothing but an activity of money laundry. 7. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries, Vs. Assistant Commissioner of Income Tax (1998) 60 TTJ Mumbai 308 wherein the Hon'ble High Court has made some observations, exerpts of which are as-here-in under:- In our opinion, right to cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, audi alteram partem. The principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of court. It is part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the Revenue cannot rely on any evidence which has not been subjected to cross-examination. The view of Hon'ble Calcutta High Court in the case of Manidra Nath Chatterjee Vs. Collector of Central Excise Another (supra) is whether in a particular case the particular party should have the right to cross-examine or not depends upon the facts and circumstances of a particular case. This is so, because the right to cross-examine is not necessarily a part of reasonab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the managing trustee of the GRGCT obtained during the course of survey under section 131 of the Act wherein it was admitted by the managing trustee of the GRGCT that it is involved in bogus donations. It is important to note that the statement given by the managing trustee of the GRGCT was subsequently retracted as evident from the order of Hon ble ITAT of Kolkata in the case of Gobind Ram Goel Charitable Trust vs. CIT (Exemptions) in ITA Nos. 728 729/Kol/2016 vide order dated 18.8.2017. The relevant extract of the order is reproduced below:- 6.1 The ld. DR strongly placed reliance on this statement of the managing trustee and also stated that there is no other better person than the managing trustee of the trust to give a statement on behalf of the trust. In this regard, we find that the trust had immediately retracted within 3 days of the date of statement (statement recorded on 11.9.15 retracted on 14.9.15) stating that the contents of the deposition were not known to the managing trustee and that the same were recorded under huge pressure In any case, we find that the last line of the answer to question no. 13 cannot be read in isolation, wherein he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So far as the issue of violation of principles of Natural Justice is concerned, the same has been duly complied with in terms of directions contained in the earlier orders of the Tribunal which has been finally settled in several rounds of litigation before this Special Bench. As per the direction of the Tribunal, finally, the Revenue was required to provide certain material and cross-examination of certain witness. The ld. Counsel for the assessee placed strong reliance on the decision of ITAT, Kolkata Bench rendered in the case of Sri Mayapur Dham Pilgrim and Visitors Trust Nadia vs C.I.T.(Exemptions), Kolkata in ITA No.1165/Kol/2016 order dated 03.05.2017. 13.2 The ld. Counsel for the assessee also relied on the judgment of Hon ble Apex Court in the case of State of Kerala Vs. K.T. Shaduli Yusuff etc. (1977) reported in AIR 1627, 1977 SCR (3) 233 wherein it was held as under:- .. Such an issue can only be determined after examination of the accounts of both the parties and after affording the assessee the right to cross-examine the wholesale dealers concerned, particularly when the assessee makes a specific prayer to this eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nished by the managing trustee of GRGCT. Therefore in such situation the opportunity of cross examination was very much required in the presence of assessee and managing trustee of GRGCT as well as the middle man namely Shri Gaurav Agarwal. Thus the ld. CIT(Ex) in the instant case erred in not giving the opportunity of cross examination. Thus, the cases laws cited by the ld. AR for the opportunity of cross examination is very much applicable to the instant case. 15.2 In this connection we also rely in the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 where the Hon ble Supreme Court has held that : Section 133A does not empower any IT authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition In the absence of the cross examination of the statement the impugned addition cannot stand as held by the Hon ble Supreme Court in the case of Anadaman Timber Industries in civil appeal no. 4228 of 2006. The relevant extract of the judgment reads as under:- According to us, not allowing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation given by the assessee to GRGCT was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (supra) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. 16. Apart from the above, the grounds for cancellation for registration u/s 12AA(3) of the Act is that the activities of the trust should not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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