TMI Blog2017 (12) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... e not being carried out in accordance with the object of the trust or institution. When the assessee is carrying out the object of the trust for which it was created and has applied the donation it received from M/s. Herbicure for the objects for which it has been created, the assessee society cannot be termed to be ingenuine or cannot be held to be not carrying out its activity in accordance with the object of the trust. Therefore, we set aside the order of the Ld. CIT(E) and allow the appeal of the assessee. - I.T.A. No. 2434/Kol/2016 - - - Dated:- 6-9-2017 - Shri A. T. Varkey, JM And Shri M. Balaganesh, AM For The Appellant : Shri S. M. Surana, Advocate For The Respondent : Shri R. S. Biswas, CIT, DR ORDER Per Shri A.T.Varkey, JM This is an appeal filed by the assessee society against the order of Ld. CIT(E), Kolkata dated 16.12.2016 wherein the Ld. CIT(E) was pleased to cancel the registration granted u/s. 12A of the Income-tax Act, 1961 (hereinafter referred to as the Act ) exercising his powers u/s. 12AA(3) of the Act w.e.f. 01.04.2010 relevant to AY 2011-12. 2. Brief facts of the case are that the assessee society was formed in the year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 01.04.2010. Aggrieved by the said decision of the Ld. CIT(E) the assessee society is in appeal before us. 4. We have heard rival submissions and have gone through the case records carefully and the judicial precedents cited before us. We note that the assessee is a society registered u/s. 12A of the Act vide No. 83-S/WB.VI of 1973-74 dated 19.12.1973, which is available at paper book page 2. The assessee was also enjoying exemption granted u/s. 80G(5)(vi) of the Act, which is placed at page 3 and 4 of the paper book. A perusal of pages 32 to 40 of the paper book, wherein the assessee has placed its activities and the main objects of the society, which is established for philanthropic activities for encouraging education by helping deserving students by giving scholarship and also runs self employment training centre imparting training in cutting, stitching, knitting and embroidery to the poor girls and widows. The assessee society is also providing financial help by depositing fee and providing books to poor and needy students. The assessee also runs library for higher classes and post graduate students. The assessee society has also set up Homeopathy and Child care clinic an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be the sole basis for the impugned action. Therefore, the assessee society requested the Ld. CIT(E) to grant opportunity to cross examine Shri Swapan Ranjan Dasgupta and Shri Kishan Bhavsihinka. We note that the Ld. CIT(E) in order to cancel the registration has taken the statement of Shri Swapan Ranjan Dasgupta recorded on oath during survey conducted u/s. 133A of the Act and mainly the answer to the question nos. 22 and 23 which we have perused at page nos. 172 and 173 of the paper book are reproduced below: Q. 23. Please explain in detail the modus operandi of giving the accommodation entries by way of accepting donations to different beneficiaries, Also state who is the/are the broker/brokers (while giving his mobile no. and address) through which you have given accommodation entries in the form of bogus donations on commission? Please also state what are the commission charged by you and broker concerned for providing accommodation entries to different beneficiaries. Ans. The entire accommodation entries of bogus donations are facilitated by Mr. Kishan Bhawasingka having his mobile nos. 9830087866 9883051515 who lives somewhere in Bhawanipore near Netaji ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011-12 to 2015-16, the list of corpus donation received by the society along with their PAN, names and addresses from 01.04.2010 to 31.03.2015, list of corpus donation/non corpus donated by the assessee with the donees PANs, names and addresses from 01.04.2010 to 31.03.2015. The assessee society had furnished reply and produced the documents sought by the Ld. CIT(E) vide letter 19.12.2015 wherein the assessee has clearly refuted the allegation of accepting donation and returning the same in lieu of cash; and also have clearly explained with documents that ₹ 50 lacs which was donated by M/s. Herbicure has been applied for purchasing a building and the entire amount thus had been utilized for the objective for which it was established. The assessee society stoutly denied the allegation of money laundering and asked the Ld. CIT(E) to provide to it any material/document for making such allegation against the assessee society; and also asked for a copy of the statement of Shri Swapan Ranjan Dasgupta. Later, we note that the statement of Shri Swapan Ranjan Dasgupta was handed over to the assessee society. After perusal of the same, the assessee society pointed out to Ld. CIT(E) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and mode of payment which M/s. Herbicure verifies from the bank account and then certificate of exemption u/s. 35(1)(2) of the Act given to the donor wherein the donor qualifies for deduction 175% of the donated amount. We note that there was another letter dated 12.10.2015 issued by M/s. Herbicure to the Ld. CIT(E) which has been reproduced by the Ld. CIT(E) in the impugned order at page 15 wherein M/s. Herbicure has explained the fate of the donation made by it to the donees. It was stated that few brokers had arranged donation for it and asked M/s. Herbicure to return the donation to some other Trusts. It was stated in the letter that M/s. Herbicure made donation from the donation received from brokers. It was stated that the brokers collected the cash from whom the donations were made by M/s. Herbicure and it was certified that the donations to the Trusts were made as per the direction of the broker which letter also has been signed by the Director of M/s. Herbicure Shri Swapan Ranjan Dasgupta. After perusal of the statement recorded on oath as well as the letter, the ld. CIT(E) was of the opinion that since the assessee society has received donation to the tune of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. As per the Hon ble Supreme Court in S. Kader Khan Sons, (supra), has clearly laid out that section 133A of the Act does not empower any Income-tax Authorities to examine any person on oath. Hence, any such statement does not have any evidentiary value and any admission made during survey cannot by itself be made the sole basis of addition. In such a scenario, the statement of Shri Swapan Ranjan Dasgupta alone cannot be the basis for the impugned action of the Ld. CIT(E). The Hon ble Supreme Court in Andaman Timber Industries Vs. Commissioner of Central Excise 62 Taxman.com 3 wherein their Lordships has categorically held that not allowing the assessee to cross examine the third party though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. Their Lordships noted that in that case the impugned order of the ld. CIT(E) was based upon the statement given by two witnesses and even when the assessee disputed the correctness of the statement and wanted the cross examine, the adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kader Khan, (supra) and moreover, we note that this statement of Shri Swapan Ranjan Dasgupta has not been tested by cross examination cannot be the basis for the impugned action of the Ld. CIT(E) and, therefore, the assessee society which is carrying out philanthropic activities is a charitable organization. So its registration granted u/s. 12A of the Act cannot be cancelled without infraction of law as contemplated u/s. 12AA(3) of the Act. As per the requirement of section 12AA(3) of the Act, the Ld. CIT(E) has to be satisfied that the activities of the trust or institution are ingenuine or are not being carried out in accordance with the object of the trust or institution. When the assessee is carrying out the object of the trust for which it was created and has applied the donation it received from M/s. Herbicure for the objects for which it has been created, the assessee society cannot be termed to be ingenuine or cannot be held to be not carrying out its activity in accordance with the object of the trust. Therefore, we set aside the order of the Ld. CIT(E) and allow the appeal of the assessee. 7. In the result, appeal of assessee is allowed. Order is pronounced in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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