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2017 (5) TMI 1486

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..... d the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed. - Decided in favour of assessee. - I.T.A No. 1165/Kol/2016 - - - Dated:- 3-5-2017 - Hon ble Sri N.V.Vasudevan, JM Shri Waseem Ahmed, AM For the Appellant : Shri A.K.Tibrewal, FCA For the Respondent : Shri Goulen Hangshing, CIT(DR) ORDER Per N.V.Vasudevan, JM This is an appeal by the Assessee against the order dated 17.03.2016 of C.I.T. (Exemptions), Kolkata passed u/s 12AA(3) of the Income Tax Act, 1961 withdrawing/cancelling the registration w.e.f. 01.04.2012 granted to the assessee u/s 12A of the Act. 2. The Assessee is a charitable trust having come into existence pursuant to a deed of trust on 22.02.1989. The fact that the objects of the trust are charitable in nature is not disputed, as the revenue has in an order dated 23.03.1991 of DIT(E), Kolkata granted registration to the assessee u/s 12A of the Act as well as approval u/s 80G((vi) of the Act by order dated 31.08.2010. 3. The activities of the assessee during the financial year 2013-14 are as follows :- 1. Built, maintain and operate guest house for the comfortable stay of pilgrims and vis .....

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..... so bogus. The CIT(Exemptions) accordingly proposed to invoke his powers u/s 12AA(3) of the Act to cancel the registration granted to the assessee. 4. In reply to the aforesaid show cause notice the assessee submitted that its activities were charitable in nature and that the trust has not violated any law or indulged in money laundering activities. The assessee pointed out that it had issued appeal letters for donation to the institution in question and they have given a donation by bank transfer to the assesse s account. The assessee submitted that whatever cash collections, the assessee receives from guest house and food distribution are deposited in the bank account regularly and no cash was kept in hand. The assessee also pointed out that its name appearing in the list of alleged bogus donations allegedly given by Secretary of SHG and PH could be due to error on their part. 5. The CIT(E) however made a reference to the statement recorded in the course of survey u/s 133A of the Act of Smt. Samadrita Mukherjee Sardar, Secretary of School of Human Genetics and Population Health (SHG PH) and the statement of Smt. Moumita Raghavan, Treasurer of SHG PH. These statements are rep .....

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..... ss the provision of section 12AA(3) and finally concluded that the assessee s registration u/s 12A of the Act was liable to be cancelled as the activities of the assessee were not genuine and were not being carried out in accordance with its objects. 8. Aggrieved by the order of CIT(Exemptions) cancelling the registration granted u/s 12A of the Act the assessee has preferred the present appeal before the Tribunal. 9. We have heard the submissions of the ld. Counsel for the Assessee and the Ld. DR. the Ld. Counsel for the assessee submitted that the conclusions of the CIT(E) in the impugned order are purely based on surmises and conjectures. In para-2 of the impugned order the CIT(E) has referred to the facts with regard to survey u/s 133A of the Act on 27.01.2015 in the premises of SHG PH, Kolkata and the statement of Smt. Moumita Raghavan, Treasurer of SHG PH that SHG PH was in the business of providing entry to different individuals and organizations by (a) Accepting donations and returned the same through web of financial transactions after retaining commission and (b) Accepting money by cash or through web of financial transactions and making donations after retain .....

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..... ax) for A.Y.2012-13 to 2014-15 had been filed by SHG PH. In such an application the entire income including the income arising out of accommodation entries for donation have been offered for taxation without claiming any exemption. The ld. Counsel for the assessee submitted that the above letter does not establish the fact that donations of ₹ 18 lakhs received by the assessee from SHG PH was a bogus donation. It was his contention that as far as the assessee is concerned an appeal for donation was made and the donations were received. In the aforesaid letter there is no specific reference to the name of the assessee as the recipient of bogus donations given by SHG PH. 11. It was submitted that the CIT(E) in the impugned order has placed reliance of another letter dated 24.10.2015 which again is a letter filed by the Secretary of SHG PH in the course of proceedings for cancellation of their registration u/s 12A of the Act. In this letter it is alleged that there is a reference to the fact that donations paid by SHG PH were booked under the head Research and Development in their income and expenditure account and have been shown as refund made against the donations receive .....

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..... . It was submitted that in the absence of doing so, the order passed, placing reliance on such inadmissible evidence, should be held to be a nullity. In this regard reliance was placed by him on the decision of the Hon ble Supreme Court in the case of Andaman Timber Industries vs Commissioner of Central Excise (2015) 62 taxmann.com 3 (SC) and Kishinchand Chellaram vs. CIT (1980) 125 ITR 713 (SC). The following decisions rendered in the context of section 12AA(3) of the Act where identical proposition as above were also referred to : 1) Jha Educational Trust vs CIT(E) in ITA Nos.931-933/Kol/2016 Judgment dated 17.03.2017 2) Bhutoria Memorial Trust vs CIT(E) in ITA No.537/Kol/2016 Judgment dated 09.11.2016. 15. It was also submitted that the CIT(E) in the impugned order has drawn conclusions in para-8 of his order that over the years huge amount has been converted by providing accommodation entries and that looking into the volume and depth of the laundering activities the assessee defied the purpose behind granting exemption u/s 11 of the Act without any basis or material to substantiate such conclusion. It was also submitted that there are allegations that the assessee pum .....

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..... ission due to SHG PH.. The CIT(E) in the impugned order has placed reliance on the letters dated 24.10.2015 and 24.08.2015of Smt. Samadrita Mukherjee Sardar in the proceedings for cancellation of registration u/s 12A of the Act in the case of SHG PH. In the letter dated 24.10.2015 it is alleged that the list of donations paid by SHG PH at the instruction of the brokers also included the donation to the assessee of ₹ 18 lakhs. It is an admitted position that the copies of these letters were not furnished to the assessee and an opportunity of cross examination of Smt. Samadrita Mukherjee Sardar afforded to them. In the declaration dated 11.1.2016 as well as in the letter dated 24.12.2015, the assessee has denied that the donation in question was a bogus donation and that the assessee had paid equivalent cash to the donors. In the light of such denial, the CIT(E) ought to have confronted the material against the assessee and ought to have afforded an opportunity of cross examination to the assessee. Without doing so the CIT(E) is not entitled to use the material gathered against the assessee. The decision of the Hon ble Supreme Court in the case of Andaman Timber Industries vs C .....

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