New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 862 - ITAT KOLKATA

2016 (8) TMI 862 - ITAT KOLKATA - [2016] 49 ITR (Trib) 288 - Continuance of registration under section 12A denied - as per revenue the activities of the assessee were not genuine - Held that:- From the statement of Shri Dinesh Kumar Agarwal of M/s. Quadeye Securities Pvt. Ltd. it appears that there is prima facie ground to believe that the donation of ₹ 50,00,000 given by M/s. Quadeye Securities Pvt. Ltd was not genuine. Based on this statement alone it cannot be conclusively said that the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or bogus gifts cannot be believed in toto. Nevertheless the fact remains that there are grounds to believe that the donations received by the assessee had to be decided with regard to its genuineness. The fact that opportunity of cross-examination of Shri Dinesh Kumar Agrawal and the person who are alleged to have arranged the bogus gifts was not afforded to the assessee cannot be the basis to quash the order under section 12AA(3) of the Act. As rightly contended by the learned Departmental repr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cal purposes. - I. T. A. No. 366/Kol/2016 - Dated:- 20-5-2016 - N. V. Vasudevan (Judicial Member) and M. Balaganesh (Accountant Member) For the Appellant : S. M. Surana, Advocate For the Respondent : Vijay Shankar, Departmental Representative ORDER N. V. Vasudevan (Judicial Member) 1. This is an appeal by the assessee against the order dated February 22, 2016, of the Commissioner of Income-tax (Exemption), Kolkata, passed under section 12AA(3) of the Income-tax Act, 1961 (Act). 2. The facts and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

re was a survey under section 133A of the Act conducted on December 4, 2015, in the case of one M/s. Quadeye Securities Pvt. Ltd. by the Investigation Wing, Kolkata. In the course of the survey statement of Shri Dinesh Kumar Agrawal, director of M/s. Quadeye Securities Pvt. Ltd. was recorded. In the said statement he had stated that he had given donation of ₹ 50,00,000 to the assessee in lieu of cash given by the assessee. It was his statement that he was taking cash from several trusts/so .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e, vide letter dated December 26, 2015, submitted that even in the assessments completed for the assessment year 2012-13 the donations in question received by the assessee were accepted as genuine by the Assessing Officer. The assessee maintained that the donation received by M/s. Quadeye Securities Pvt. Ltd was genuine. The assessee demanded a copy of the statement of Shri Dinesh Kumar Agrawal, director of M/s. Quadeye Securities Pvt. Ltd. When this letter was handed over to the respondent the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of Shri Dinesh Kumar Agrawal in which he had stated that the entry for donation in favour of the assessee was arranged by Shri Pradip Agarwal, chartered accountant and Shri Ajay Agarwal, chartered accountant. The assessee submitted that they do not know any such person as is referred to in the statement of Shri Dinesh Kumar Agrawal. The assessee demanded an opportunity of cross-examination of Shri Dinesh Kumar Agrawal, Shri Pradip Agarwal and Shri Ajay Agarwal simultaneously. The assessee also .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1, 2016. None appeared on behalf of the assessee before the Assessing Officer. The respondent issued another show-cause notice on February 2, 2016, in which he again called upon the managing trustee to appear before him for examination on February 15, 2016. In this show-cause notice the respondent-Commissioner of Income-tax (Exemptions) also took the stand that the assessee was merely providing support to facilitate distance learning programme of Alagappa University, Tamil Nadu and doing so can .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to the statement of Shri Dinesh Kumar Agrawal, director of M/s. Quadeye Securities Pvt. Ltd. The relevant portion of the statement is as follows : "Question 18 Please furnish details of donation made to various charitable trust/organisation during the financial years 2009-10 to 2014-15. Answer Sir, the details of donation made by M/s. Quadeye Securities Pvt. Ltd. and Quadeye Trading are as under : Details of donation paid by Quadeye Securities P. Ltd. Sl. No. Name of trust Donation paid d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

00,000 - 50,00,000 8. Sandipani Charitable Trust - 20,00,000 20,00,000 - 40,00,000 9. Smt. Katori Devi Garg Siksha Samity - 30,00,000 - 30,00,000 10. Dinodia Educational Society - 25,00,000 - 25,00,000 11. Dhoot Foundation - 25,00,000 - 25,00,000 12. Society For Welfare Handicap persons - 25,00,000 - 25,00,000 13. Pushpa Devi Bansal Charitable Trust - 21,00,000 21,00,000 14. Ballaram Hanuman Das Charitable Trust - 20,00,000 - 20,00,000 15. Badhit Bal Vikas Kendra - 4,00,000 2,50,000 - 6,50,000 1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ern. Sir, donation was made by Quadeye Securities Pvt. Ltd. through cheque/RTGS in turn the abovementioned persons returned the amount in cash after deducting their commission. Question 20 How did you decide to make donation to the above mentioned trust. Answer Sir, as I stated above, to get exemption under section 35(1)(ii) and deduction under section 80G of the Income-tax Act, 1961, the bogus donation was made. Question 21 Please state have you visited the office of the trust ? Answer Sir, I n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. Answer Sir as I stated above the donation was prearranged in order to get exemption under section 35(1)(ii) and section 80G of the Income-tax Act, 1961, in lieu of such arrangement commission was paid to Mr. Pradeep Kumar Agarwal and Mr. Ajay Agarwal both being chartered accountants. Question 24 Please state how did you get the request letter for donation ? Answer Sir, the same was arranged by Mr. Pradeep Kumar Agarwal and Mr. Ajay Agarwal. I do not have contact with the trust. Question 25 Ple .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s operandi of such bogus dona tion and also furnish names and addresses of brokers who has arranged the said bogus donation. Answer Sir, as I stated above, it was a prearranged bogus donation to various trusts. All this was arranged by Mr. Pradeep Agarwal, chartered accountant of 1 British India Street, Room No. 503, Kolkata and Ajay Agarwal, chartered accountant of P-1, Metropolitan City, Salt Lake, Kolkata. In connivance with these two persons I made donation through RTGS/cheques to various tr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cash was handed over to me by Mr. Pradeep Kumar Agarwal and Ajay Agarwal." 9. The Commissioner of Income-tax on the basis of the aforesaid statement came to the conclusion that the assessee had pumped in unaccounted money through bogus corpus donation claimed under section 11(1)(d) of the Act. The respondent also held that the assessee was pumping in cash through corpus donation and investing the same in fixed deposits and arranging interest income. The respondent Commissioner of Income-tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

bjects of the society as converting cash in cheque is beyond the objects (c) The activity of converting unaccounted cash available with trustee through corpus donation is illegal, ingenuine and immoral. (d) Donation received is not voluntary, merely an accommodation entry and fictitious. Therefore, the claim of exemption under section 11(1)(d) was not absolutely enable. (e) Activities of the society are not genuine as well as not being carried out in accordance with its objects. (f) Even ingenui .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rove genuineness of transactions. (i) Looking at the volume and depth of the illegal activities performed and indulged by the society to use the provisions of the Income-tax Act providing support and encouragement to the organisations for doing the benevolent activities, the assessee-society only opened the pandora's box defying the sole benevolent purpose of the provisions as per the Income-tax Act but also challenged the cause of the constitutional provisions by maintaining certain well ne .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The learned counsel for the assessee submitted that under section12AA(3) of the Act registration already granted under section 12A of the Act can be cancelled only on the ground that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust. According to him, mere allegation that the assessee was receiving bogus donations cannot be the basis to cancel the registration under section 12AA(3) of the Act. He drew our attention to question No .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

. He pointed out that in the assessment completed under section 143(3) of the Act for the assessment year 2012-13 the Assessing Officer has not drawn any adverse inference in so far as this donation received from M/s. Quadeye Securities P. Ltd. The learned counsel drew our attention to the decision of the Income-tax Appellate Tribunal, Lucknow Bench, in the case of Fateh Chand Charitable Trust v. CIT (Exemptions), vide ITA No. 792/Lkw/2015 order dated March 18, 2016, [2016] 49 ITR (Trib) 276 (Lu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

arch Foundation of Kolkata in the 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 learned Commissioner of Income-tax (Exemptions) issued show-cause notice for cancellation of registration under section 12AA(3) of the Act." 11. The Tribunal, while quashing the order under section 12AA(3) of the Act, held as follows (page 284) : "But in the instant case the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n Das Gupta was also made but in that statement also there was no reference of the assessee. The learned Commissioner of Income- tax (Exemptions) has simply shown this information to the assessee on November 27, 2015, but did not offer any further opportunity to make his comments in this regard. The assessee has emphatically denied the charges levelled against it in its reply filed on November 27, 2015, that if the learned Commissioner of Income-tax (Exemptions) has received any authentic materi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2. Our attention was also drawn to the decision of the hon'ble Karnataka High Court in the case of CIT v. Islamic Academy of Education in ITA No. 805 of 2008 order dated September 9, 2014. In the aforesaid case, the facts were that a search was conducted in the residential premises of the three of the trustees of a charitable institution. In the course of such search evidence was found regarding collection of fees for admission much higher than recorded in the books of account of the institu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ldings for housing the college, hostel and to provide other facilities to the students who are studying in the college. The college is recognised by the Medical Council of India, State of Karnataka and all other statutory authorities. Therefore, it cannot be said that the trust is not genuine. Admittedly, the students are being admitted every year. Students are studying in all courses. Thus, the object of the constitution of the trust namely imparting of education is going on uninterruptedly. Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s not a ground for cancellation of registration itself. That is precisely what the Tribunal has held. Therefore, the substantial question of law is answered in favour of the assessee and against the Revenue. Therefore, is no merit in this appeal." 13. The learned counsel drew our attention to the decision of the hon'ble Supreme Court in the case of Queen's Educational Society v. CIT [2015] 372 ITR 699 (SC) in Civil No. 5167 of 2008 order dated March 16, 2015, wherein the hon'ble .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to be that of money laundering and doing so would only mean that the activities of the trust are not genuine or are not carried out in accordance with the objects of the trust and, therefore, there is every justification for cancellation of the registration. With regard to the complaint of lack of opportunity of cross examination, the learned Departmental representative submitted that the assessee did not appear before the respondent despite several directions and unless the assessee appears and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or assessment year 2012-13 in the case of the assessee by the Assessing Officer by order dated March 25, 2015, passed under section 143(3) of the Act. At that time the Assessing Officer had no opportunity to go into this question regarding the activities of the trust being genuine or not as survey under section 133A of the Act in the case of M/s. Quadeye Securities Pvt. Ltd. took place much later, i.e., on December 4, 2015. He pointed out that even in the said order the assessee was not granted .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s confronted to the assessee and when the assessee was asked to appear before the respondent, the assessee chose to avoid appearing before the respondent. This conduct of the assessee was not justified. It is no doubt true that the statement of Shri Dinesh Kumar Agarwal without being subjected to cross-examination by the assessee and further corroborated by evidence of the persons who are stated to have arranged for bogus gifts cannot be believed in toto. Nevertheless the fact remains that there .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t fact can only lead to an inference that the activities of the trust are not genuine or are not carried out in accordance with the objects of the trust. We, therefore, are of the view that it would be proper in the interest of justice to set aside the order of the respondent and remand the issue of cancellation of registration to the respondent for fresh consideration. 17. The assessee will present himself before the respondent and if the respondent desires he is at liberty to issue summons und .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee of being heard and decide the issue in accordance with law. For statistical purposes the appeal of the assessee is treated as allowed. The case law cited by the learned counsel for the assessee before us are not considered at this stage as, in our opinion, the truth or otherwise of the statement of Shri Dinesh Kumar Agrawal is very material for ascertaining the true position with regard to the genuineness of the donation/gift. Even otherwise the facts of the case of the assessee and that of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version