TMI Blog2016 (4) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has received donation on making payment in cash and it may be his own money which was introduced in the trust through circuitous means, but it was applied for charitable purposes, therefore, it cannot be added under section 68 of the Act. Thus, even on merit, we do not find any force in the allegations raised by the Revenue. The ld. Commissioner of Income Tax (Exemptions) has cancelled the registration under section 12AA of the Act on the basis of conjunctures and surmises, as he has observed in his order that the assessee might have been charging capitation fee from the parents of the students, but in this regard no evidence was brought on record. It is also obvious from the record that the ld. Commissioner of Income Tax (Exemptions) has passed an order on the same day when the assessee has furnished detailed explanation in writing and even without verifying the same. - Decided in favour of assessee. - ITA No. 792/LKW/2015 - - - Dated:- 18-3-2016 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri. Ajay Wadhwa, Advocate For The Respondent : Shri. A. K. Singh, CIT (DR) ORDER PER SUNIL KUMA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. Commissioner of Income Tax, Meerut vide his order dated 20.10.1992. Consequently, its income has been exempted under section 11 of the Act from its inception till date, until its withdrawal w.e.f. 2010-11. On the basis of the report of the ld. Commissioner of Income Tax (Exemptions), Kolkata vide letter dated 28.10.2015, in which it was mentioned that bogus donations were received in lieu of cash by the assessee from M/s Herbicure Health Care Bio Herbal Research Foundation of Kolkata in assessment year 2011-12 and having relied upon the statement of Shri. Swapan Ranjan Das Gupta, the founder Director of M/s Herbicure Health Care Bio Herbal Research Foundation, the ld. Commissioner of Income Tax (Exemptions) issued shown cause notice for cancellation of registration under section 12AA(3) of the Act to the assessee on 13.11.2015 for compliance on 24.11.2015. On 24.11.2015, the assessee sought adjournment to 27.11.2015 and detailed reply was filed on 27.11.2015 stating therein that cheque for ₹ 1 crore drawn on ICICI Bank, Minto Park Branch, Kokata was received by the assessee on 10.3.2011 from M/s Herbicure Health Care Bio Herbal Research Foundation, Kolkata. 3. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erbal Research Foundation were filed before the Assessing Officer during the course of assessment proceedings. After conducting enquiries and applying his mind and being satisfied with the explanations furnished on behalf of the trust, the Assessing Officer has accepted the aforesaid contention and has treated it as income while completing the assessment. Before the ld. Commissioner of Income Tax (Exemptions), the assessee has furnished all the relevant information and written submissions on 27.11.2015 and the ld. Commissioner of Income Tax (Exemptions) has passed an order cancelling the registration on the very same day even without looking to the written submissions and documents placed on record. 5. The ld. counsel for the assessee has further contended that the ld. Commissioner of Income Tax (Exemptions) did not confront the report of the ld. Commissioner of Income Tax (Exemptions), Kolkata with respect to M/s Herbicure Health Care Bio Herbal Research Foundation and statement of Shri. Swapan Ranjan Das Gupta, founder Director of M/s Herbicure Health Care Bio Herbal Research Foundation to the assessee. The assessee was also not allowed to make his detailed submission in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that even the breach of the conditions of the trust deed, if committed by the assessee, would not disentitle the assessee from getting the benefit which it had been granted earlier being a charitable trust. 7. The ld. counsel for the assessee has also placed reliance upon the judgment of the Hon ble Apex Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, 62 taxmann.com 3 wherein it has been held that where an addition is based merely on facts and evidence of a third party, the same cannot be used if the right to cross examine is not allowed to the assessee. It was also held by the Hon ble Apex Court that in such a situation, the entire assessment has to be quashed as denial of cross examination is a serious flaw which makes the order nullity. 8. Reliance was also placed upon the judgment of the Hon ble Delhi High court in the case of CIT vs. SMC Share Brokers Ltd., 159 Taxman 306 wherein it was held that statement cannot be relied upon or no weight given to it unless it is tested under cross examination. Our attention was also invited to the judgment of the Hon ble Allahabad High Court in the case of CIT vs. Smt. Laxmi Mehrotra, 41 taxman.co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of ₹ 1 crore through cheque after making payment of the same in cash to M/s Herbicure Health Care Bio Herbal Research Foundation. The reply filed by the assessee is available at pages 19 to 25 of the compilation of the assessee running into 7 pages and in para 8 of it, the assessee has specifically asked the ld. Commissioner of Income Tax that in case there is any authentic material available with him which could throw some light on this issue, the same may be given to the assessee so that specific reply on the same could be submitted on it, besides denying the allegations leveled against him. For the sake of reference, we extract para 8 as under:- 8. That your goodself has, in your notice dated 13/11/2015, alleged that the assessee has received a donation of ₹ 1,00,00,000/- from M/s Herbicure Health Care Bio Herbal Research Foundation in the A/Y 2011-12 by paying an amount of ₹ 1,00,00,000/- in cash to M/s Herbicure Health Care Bio Herbal Research Foundation itself. This allegation is totally untrue as nothing of this sort has been written or mentioned in the confirmation, given by M/s Herbicure Health Care Bio Herbal Research Foundation. Till da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial in this regard, the same may be provided to the assessee so that the assessee can make a proper reply. But without affording any further opportunity to the assessee, the ld. Commissioner of Income Tax has passed an order of cancellation on the very same day. 15. It is settled position of law that any evidence collected at the back of the assessee cannot be used adversely unless and until it is confronted to the assessee and the assessee is allowed to cross-examine the witness, if any. 16. Our attention was also invited to various judicial pronouncements in this regard and in the case of Andaman Timber Industries vs. Commissioner of Central Excise, 62 taxmann.com 3, their Lordships of the Hon ble Apex Court has categorically held that not allowing the assessee to cross-examine the witness by the adjudicating authority, though the statement of those witnesses were made basis of the impugned order, is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely effected. Their Lordships have, however, held that it is to be borne in mind that the order of the ld. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Srinivas Rao (supra). 21. A reference was also made to the order of the Lucknow Bench of the Tribunal in the case of Income Tax Officer vs. Sarswati Educational Charitable Trust in I.T.A. No. 776/LKW/2014 in which it was held that if the donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the Act cannot be invoked. The relevant observations of the Tribunal are extracted hereunder for the sake of reference:- 8.Though the Revenue has taken a plea that for anonymous donation, provisions of section 115BBC of the Act can be invoked but in the instant case where the assessee has filed various documents to prove the identity of the donors, these donations cannot be called to be anonymous. So far as applicability of provisions of section 68 of the Act is concerned, it has been held by various High Courts including the jurisdictional High Court that once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the Act cannot be invoked. Since we do not find any infirmity in the order of the ld. CIT(A), we confirm the same as he has adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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