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TMI Blog2017 (5) TMI 1486X X X X Extracts X X X X X X X X Extracts X X X X ..... and visitors to the Holy land of Sreedham Mayapur. 2. Built, maintain and operate guest cottages for benefit of poor and low income group of pilgrims and visitors to the Holy land of Sreedham Mayapur. 3. Constructed roads, gardens and lotus pond for beautification and cleanliness and comfortable stay and entertainment of the visitors during their stay at Mayapur . 4. Provided water and sanitary facilities for the benefit of visitors to Mayapur . 5. Provided medical camp and distributed medicines free of cost to. the villagers as a part of social welfare measure by arranging regular medical checkup by specialist doctors. 6. Conducted seminars and classes to identify and develop various sites of public interest. 7. Free distribution of food to the poor and distressed village people was carried out on regular basis. 8. Free distribution of clothes and children's garments was also carried out from time to time for benefit of poor villagers. 9. In order to promote village and cottage industries products, the Trust used to regularly collect various products made by the local villagers for distribution to the pilgrims and visitors to Mayapur." 3. The C.I.T.(Exemptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 and 4.2 of the impugned order of the CIT(Exemptions). The gist of the statement of Smt. Moumita Raghavan is that SHG&PH's source of income was the money received in the form of donations from corporate bodies as well as from individuals. She in her statement explained that there were about nine brokers who used to bring donations in the form of cheque/RTGS to SHG and PH. The Donations received would be returned by issue of cheque/RTGS in the name of companies or organization specified by the nine brokers. The assessee would receive 7 or 8% of the donations amount. Her further statement was that since the assessee was entitled to exemption u/s 80G and u/s 35 of the Act their organization was chosen by the brokers for giving donations to SHG and PH as well as for giving donations by SHG and PH. The gist of the statement of Smt. Samadrita Mukherjee Sardar, Secretary of SHG&PH was also identical. In reply to question no.13 as to how the money received as donations are given back, she explained that cheques are issued in the names of various companies/organizations specified by the brokers and the sums so returned are shown as expenses in the books of SHG&PH. 6. In the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E) has concluded that since the assessee received donation amounting to Rs. 18 lakhs in A.Y.2013-14 from SHG&PH the donation received by the assessee is also bogus and that the assessee has returned money representing the value of gift back to SHG&PH. He drew our attention to the fact that all the general donation received during the F.Y. 2012-13 by the assessee including the donation received from SHG&PH have been duly reflected in assessee's books of accounts and profit and loss account (page 38 of the paper book s the list of general donations and page 105 of the paper book is Income and Expenditure account for the year ending 31.03.2013). He also brought to our notice that the return of income filed for A.Y.2013-14 clearly indicates the donation received, application of income of the assessee for charitable purposes and accumulation of unutilized income. In the light of the above documents, the allegation of CIT(E) in the show cause notice that the assessee returned donation received back to SHG&PH is unsustainable. 10. The ld. Counsel for the assessee drew our attention to the statement of Smt. Moumita Raghavan and that of Smt. Samadrita Mukherjee Sardar, the Treasurer and Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted that copies of both letters were never furnished to the assessee and they were not confronted with the aforesaid letters. It was also submitted that the assessee in reply to the show cause notice issued before cancellation of registration u/s 12A of the Act by its letter dated 24.12.2015 clearly mentioned that they have received donations and have not indulged in any money laundering activities at any time and that the donations in question were genuine. The ld. Counsel for the assessee brought to our notice declaration of the Chairman and the Trustee of the assessee filed before the CIT(E) wherein they have denied that the assessee gave cash to the donor and subsequently received donation by RTGS. 13. The ld. Counsel for the assessee brought to our notice that in para 6.1. of the impugned order the CIT(E) has referred to the fact that on 13.01.2016 the assessee trust was given an opportunity to cross examine the Secretary and Treasurer of SHG&PH. In this regard a copy of the order sheet entries in the proceedings before CIT(E) were filed before us and the same is given as Annexure to this order. It was brought to our notice that on 14.01.2016 the trustee of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough bogus corpus donations. It was submitted by him that all these allegations are purely based on surmises and conjectures without bringing out any evidence on record. It was also submitted that the final conclusion in para 8.4. that the activities of the society are not genuine and are not being carried out in accordance with the objects of the Trust are again unsustainable conclusions. 16. Reference was also made to the decision of the Hon'ble Karnataka High Court in the case of CIT vs Islamic Academy of Education in IT Appeal No.805 of 2008 order dated 9th September, 2014 and CIT vs Red Rose School 163 Taxman 19 (All.). 17. The ld. DR placed reliance on the order of CIT(E). According to him in the event of the assessee claiming that it had not got an opportunity of cross examination of the Secretary and Treasurer of SHG&PH, such opportunity should be afforded to the assessee and for this purpose the issue should be remanded back to the CIT(E). According to him failure to afford opportunity of cross examination cannot render the impugned order of the CIT(E) a nullity. 18. We have given a very careful consideration to the rival submissions. We have also perused the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliance cannot be placed on such statement without affording right of cross examination and doing so is a serious flaw which makes his order a nullity as it amounts to violation of principles of natural justice. It is clear from a perusal of the impugned order that except the statement recorded at the time of survey and letters given in the course of proceedings for cancellation of registration granted u/s 12A of the Act of SHG&PH there is no other material against the assessee to come to a conclusion that the assessee has indulged in receiving any bogus donations. 19. The fact that assessee's name figures in the list of donations given by SHG&PH as submitted by them in an application filed before the Settlement Commission of Income Tax u/s 245C of the Act, throws doubts about the genuineness of the Donation received by the assessee from SHG&PH. As far as the assessee is concerned all general Donations received by it during the F.Y. relevant to A.Y. have been duly accounted for and spent for charitable purpose. The money representing the Donation from SHG&PH cannot be said to be money of the assessee. The case of the Revenue also is that the money representing the Donation is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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