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Radharaman Behari Versus Commissioner of Income Tax, (Exemptions) , Kolkata

2017 (10) TMI 527 - ITAT KOLKATA

Cancelling the registration granted to the assessee trust u/s 12AA - registration certificate u/s 12AA cancelled merely on the basis of the statement furnished by the managing trustee of the GRGCT obtained during the course of survey u/s 131 wherein as admitted by the managing trustee of the GRGCT that it is involved in bogus donations - non opportunity to cross examine - Held that:- The name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT. Therefore .....

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essee indulged in money laundering and that the donation given by the assessee to GRGCT was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (2017 (5) TMI 1486 - ITAT KOLKATA) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. - Apart from the above, the grounds for cancellation for registration u/s 12AA(3) of the Act is that the activities of the trust should not be genuine or the activi .....

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al Member And Shri Waseem Ahmed, Accountant Member For The Appellant : Shri S.M. Surana, Advocate For The Respondent : Shri Goulean Hangshing, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Exemptions), Kolkata u/s 12AA(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 22.12.201.Grounds raised by assessee per its appeal are as under:- 1. For that the order of the L .....

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n was to be allowed and by denying the same the order has become bad in law. 3. For that the Ld C.I.T(Exemption) erred in cancelling the Registration of the Trust U/s. 12AA(3) of the I.T. Act, 1961 holding that the activities of the assessee were not genuine and were not being carried out in accordance with the objective of the trust when the object are being carried on accordance with the objects and there was no such finding except that the assessee paid the alleged bogus donations 4. For that .....

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eated as application of income but on that registration cannot be cancelled . 6. For that on the facts and circumstances of the case the order of the C.I,.T(Exemption) is bad in law, not maintainable and perverse and as such should be set aside. 7. For that on the facts and circumstances of the case the order of the CIT (Exemption) be cancelled/ modified and the assessee be given the relief prayed for. 8. For that the assessee craves leave to add, alter or amend any around before or at the time .....

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Act by an order dated 23.06.1977 by the Director of Income Tax (Exemption), Kolkata. The assessee has been enjoying the benefit of registration ever since the grant of registration. The assessee is engaged in various charitable activities. 4. There was a survey operation carried out u/s 133A of the Act on 11.09.2015 in the premises of M/s Govind Ram Goel Charitable Trust (for short GRGCT). 5. In the course of survey operations the Authorized Officer carrying out the survey recorded the statemen .....

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008-09 to AY 2012-13. Offer your explanation. A.Y Corpus donation 2008-09 Rs.11,000/- 2009-10 Rs.21,91,000/- 2010-11 Rs.2,55,000/- 2011-12 Rs.34,88,000/- 2012-13 Rs.25,73,000/- 2013-14 Rs.3,86,37,002/- 2014-15 Rs.3,34,56,101/- 2015-16 Rs.2,80,34,000/- A8. The corpus donations received from A.Y 2008-09 to AY 2012-13 were genuine. Donations were received from different donors including persons associated with our group concern. From AY 2013-14 to AY 2015-16 the unaccounted profit earned by differe .....

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that the unaccounted income of the different concerns of our group could be pumped in the trust in form of corpus donation. We paid in cash and received the money through cheque. For this we have to pay a commission of 1% of the corpus donation to Shri Gaurav Agarwal and don t know the address of Shri Gaurav Agarwal. Q.10. Do you know or ever met any of the alleged Donors? A10. I neither know any of the donor nor had ever met any of them. Q11. It is seen from the documents that you received don .....

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A12. We understand that the creditworthiness and existence of any donor, if not established, then such donation may not be treated as genuine by the Income Tax Department. Some of the donors submitted such documents through Shri Gaurav Agarwal on their own. Q.13. In view of the all above please state specifically what amount are being disclosed by you voluntarily. A13. The total sum as mentioned in A8 amounting to ₹ 10,01,27,103/- (Rupees ten crore one lakh twenty seven thousand one hundr .....

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, which shows different amounts of payments in coded text b) A 8 papers of print out showing expenses of Sekhra Iron in respect of some realty project at B.T. Road c) A blank Memorandum of Understanding between Mr. P.B and Mr. A.A and signed by only P.B. Please explain all. A14. All the above documents are a proposal for a realty project at B.T. road brought to us by some broker quite some time back. The entries in the above documents reflected the then status of investments by various stakehold .....

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any threat, force or coercion and are true to the best of my knowledge and belief. 6. The gist of the statement as recorded above is that donation received from AY 2008-09 to 2012-13 was genuine but subsequently from AY 2013 to 2015-16 it received bogus donation of ₹ 10,01,27,103.00 and return the same to the beneficiary in the form of cash through the web of financial transaction after retaining its commission. Such activity of GRGCT is nothing but an activity of money laundry. 7. The as .....

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stration under clause (b) of sub-section (1)[or has obtained registration at any time under section 12A [ as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner of ] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of .....

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the assessee. The assessee in support of his claim relied on the judgement of the Honourable Supreme Court in the case of S Khader Khan & Sons reported in 352 ITR 480 (SC). Besides the above, the assessee requested to the Ld.CIT(Ex) for providing the opportunity of cross examination with the managing trustee of GRGCT Shri Anand Agarwal and as well as Shri Gaurav Agarwal who was acting as conduit in the transactions of bogus donations. 10. However the C.I.T.(Exemptions), Kolkata proceeded to .....

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o cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, audi alteram partem. The principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of court. It is part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the Reve .....

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were also pronounced by the Hon'ble Keala High Court in the case of M.K. Thomas Vs. State of Kerala [40 STC 278] in view of the decision of Hon'ble Supreme Court in the case of K.T. Shaduli vs. State of Kerala [39 STC 478 SC ] All these judgemeknts/decisions lead to one conclusion that right to crossexamine the witness, who made adverse reports, is not an invariable attribute of the requirement of the dictum,audi alterant partem . It is pertinent to mention here that the case law mentio .....

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-section (1)[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner of ] Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution : Cons .....

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l. 12. The ld. Counsel for the assessee before us filed a paper book which is running from pages 1 to 19 and submitted that the registration certificate under section 12AA of the Act has been cancelled merely on the basis of the statement furnished by the managing trustee of the GRGCT obtained during the course of survey under section 131 of the Act wherein it was admitted by the managing trustee of the GRGCT that it is involved in bogus donations. It is important to note that the statement give .....

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on behalf of the trust. In this regard, we find that the trust had immediately retracted within 3 days of the date of statement (statement recorded on 11.9.15 retracted on 14.9.15) stating that the contents of the deposition were not known to the managing trustee and that the same were recorded under huge pressure In any case, we find that the last line of the answer to question no. 13 cannot be read in isolation, wherein he had stated that ₹ 1001 crores may be treated as income in the ha .....

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ust in the form of donations. If at all there is any fault, it is only in the hands of the business concerns and the assessee trust cannot be faulted with at all. In fact the assessee trust had received donations for betterment of its charitable objects. It is not the case of the revenue that the cash belonging to the trust had been paid to certain outsiders which had come back to the trust in the form of donations. It is not the case of the revenue that the trustees of the trust had misappropri .....

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ion of registration certificate issued under section 12AA of the Act. 13.1 The ld AR further submitted that the name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT therefore it cannot be concluded that the assessee has given bogus donation. It was also submitted that the learned CIT (ex) failed to provide the opportunity of cross examination as desired by the assessee. The learned AR in support of his claim has relied on the order of special bench of .....

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several rounds of litigation before this Special Bench. As per the direction of the Tribunal, finally, the Revenue was required to provide certain material and crossexamination of certain witness. The ld. Counsel for the assessee placed strong reliance on the decision of ITAT, Kolkata Bench rendered in the case of Sri Mayapur Dham Pilgrim and Visitors Trust Nadia vs C.I.T.(Exemptions), Kolkata in ITA No.1165/Kol/2016 order dated 03.05.2017. 13.2 The ld. Counsel for the assessee also relied on th .....

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urvey based on which the impugned order was passed was not incriminating, so far the assessee is concerned. According to him therefore the very basis on which the impugned order has been passed by the Ld.CIT(Ex), Kolkata is unsustainable. His next submission was that there was no other incriminating material on the basis of which it can be concluded that the assessee got back the amount of donation of ₹ 6 lakh and it was the assessee who arranged through the brokers for providing such bogu .....

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ities of the trust or institution are not being carried out in accordance with the objects of the trust or institution. There is no evidence brought on record whatsoever to show either of the aforesaid conditions have been satisfied to warrant cancellation of registration u/s 12AA(3) of the Act. 14. The ld. DR heavily reliance on the order of Ld.CIT(Ex), Kolkata. According to him, the assessee should be afforded an opportunity of cross examination of Shri Anand Agarwal, the managing trustee of G .....

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nt. There is no evidence of whatsoever brought on record to show that the cash was received by the assessee from GRGCT against the donation. 15.1 We also observe that the name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT. Therefore in such situation the opportunity of cross examination was very much required in the presence of assessee and managing trustee of GRGCT as well as the middle man namely Shri Gaurav Agarwal. Thus the ld. CIT(Ex) in the in .....

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ng such statement cannot, by itself, be made the basis for addition In the absence of the cross examination of the statement the impugned addition cannot stand as held by the Hon ble Supreme Court in the case of Anadaman Timber Industries in civil appeal no. 4228 of 2006. The relevant extract of the judgment reads as under:- According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the i .....

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tinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would .....

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tion. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of crossexamination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as me .....

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