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Sri Mayapur Dham Pilgrim and -vs. - C.I.T. (Exemptions) Kolkata

2017 (5) TMI 1486 - ITAT KOLKATA

Withdrawing/cancelling the registration granted to the assessee u/s 12A - 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 - Held that:- There is no material brought on record to come to a conclusion that the assessee was part of the scheme of money laundering and that the Donation received by the assessee from SHG&PH was also part of .....

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cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and 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 d .....

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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 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 beau .....

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e 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), Kolkata issued a show cause notice dt. 04.12.2015 to the assessee pro .....

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uring the survey operation statement of Smt. Moumita Raghavan, Treasurer of SHG and PH was recorded under oath and in her statement she admitted that SHG and PH was in the business of providing book entry of Donations to different individuals and organizations. It has further been mentioned in the show cause notice that the assessee has received donation of ₹ 18 lakhs in A.Y.2013-14 from the aforesaid organization and since it transpired that the said organisation was providing accommodati .....

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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 .....

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ney 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/ .....

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ses in the books of SHG&PH. 6. In the proceedings for cancellation of registration u/s 12A of the Act in the case of SHG&PH Smt. Samadrita Mukherjee Sardar had given a list of donations and the source of those donations were given by her as follows :- This is to confirm that donations paid by our society to various trusts/societies under the head research & development expenses in our income & Expenditure Account for the respective years. However, while preparing the revised acco .....

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Smt. Moumita Raghavan and Smt. Samadrita Mukherjee Sardar and other documents were also given opportunity to cross examine those persons but the assessee did not avail of the opportunity. The CIT(Exemptions) accordingly proceeded to discuss 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. Aggriev .....

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n 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 retaining commission. The CIT(E) has concluded that since the assess .....

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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 .....

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5 by Smt. Samadrita Mukherjee Sardar, the Secretary of SHG&PH, in the course of proceedings initiated by CIT(E) for cancellation of registration granted u/s 12A of the Act to SHG&PH wherein she had admitted that SHG&PH had received income by providing accommodation entries for donation through certain mediators. The donations received were refunded back as per the instruction of the mediators after retaining service charges. It is also claimed by the Revenue that in the said letter S .....

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ng 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 .....

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nd expenditure account and have been shown as refund made against the donations received. 12. The ld. Counsel for the assessee 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 .....

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he 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 assessee had appeared and it was on this date that the declaration of the trustee referred to earlier was filed before CIT(E). Therefore it is not correct to contend that the ass .....

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ust/institution. With regard to both the above conditions there is neither an allegation by CIT(E) in the impugned order nor facts exist which can justify coming to a satisfaction regarding the existence of both the aforesaid conditions. It was submitted that evidence and material gathered from a third party can be used against an assessee only after confronting the same to the assessee and allowing opportunity of cross examination of the deponent (if the material is oral evidence). It was submi .....

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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 .....

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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 opportu .....

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e Treasurer and Secretary of SHG&PH. These statements are placed at pages 7 to 18 of the assessee s paper book. As we have already mentioned while narrating the facts of the case, the gist of the statement of the Secretary and treasurer was that nine brokers whose names have been given in answer no.11 by Smt. Samadrita Mukherjee Sardar, used to give donations to SHG&PH., in the form of cheques/RTGS and simultaneously used to ask for return cheques in the name of certain companies/organis .....

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r and Secretary of SHG&PH and got back donation in the form of cheques after paying the commission 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 do .....

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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 CCE (supra) clearly supports the plea of the assessee that reliance cannot be placed on such statement without affording right of cross examination and doing so is a serious flaw which makes hi .....

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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 .....

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