TMI Blog2018 (3) TMI 1507X X X X Extracts X X X X X X X X Extracts X X X X ..... led on the basis of paper seized during search. The Tribunal set aside the cancellation of registration and restored the registration. - We restore the registration under section 12AA in favour of the assessee. - ITA. No. 109/Alld/2017 - - - Dated:- 8-1-2018 - BHAVNESH SAINI, JUDICIAL MEMBER AND L. P. SAHU, ACCOUNTANT MEMBER For The Appellant : Ashish Bansal, Adv. and Saurabh Agarwal, C.A For The Respondent : Umesh Pathak, Sr. D.R. ORDER Bhavnesh Saini, Judicial Member This appeal by assessee has been directed against the Order of the ld. CIT(E), Lucknow, dated 28th February, 2017, cancelling Registration under section 12AA(3) of the I.T. Act, 1961. 2. Briefly, the facts of the case as noted in the impugned order are that the ld. CIT(E) noted that assessee is not involved in performance of any charitable cause and its activities are not being carried out in accordance with the objects of the Trust. The ld. CIT(E), Kolkata, vide letter dated 19th November, 2016 had conveyed that survey under section 133A of the I.T. Act was conducted by Investigation Wing, Kolkata in the following cases: ( i) School of Human Genetics and Population Health ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance with the norms provided by Law by channelizing the funds to Institutions acting as commission agents, only to receive back, after deducting commission agreed upon, as bogus funds with prime motive for laundering the said funds and as such, is not involved in carrying out any charitable activities, which is the condition precedent for grant of registration under section 12AA of the I.T. Act, 1961. The ld. CIT(E) also relied upon Section 13(l)(c) of the I.T. Act and noted that ultimately by re-donating the funds subject to Commission, there is violation of Section 13(l)(c) of the I.T. Act, 1961. The assessee failed to provide any satisfactory explanation. The ld. CIT(E) was, therefore, satisfied that activities of the Trust/Society are not genuine and are not being carried out in accordance with objects of the Assessee-Trust. The ld. CIT(E), accordingly, cancelled the registration under section 12AA(3) w.e.f. 01.04.2010. 3. The Learned Counsel for the Assessee submitted that ld. CIT(E) has passed the order in gross violation of principles of natural justice, as on the date of hearing, assessee moved an application for adjournment because only short-time was given for complia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11 have been granted to the assessee. He has submitted that on the identical issue, the ITAT, Lucknow Bench in the case of Fateh Chand Charitable Trust v. CIT (Exemptions) 2016 (4) TMI 1119, set aside the order of ld. CIT(E) cancelling the registration under section 12AA(3) of the I.T. Act. Copy of the order is filed on record. 4. On the other hand, ld. D.R. relied upon the impugned order and submitted that information was received from Investigation Wing, Kolkata about money laundering by assessee which is part of the record. The assessee did not make any submission before ld. CIT(E). Therefore, the matter could be remanded to the ld. CIT(E) for re-consideration. 5. We have considered the rival submissions. In exercising the powers under section 12AA(3) for cancellation of registration under section 12A/12AA by Pr.CIT/CIT, following conditions have to be satisfied. (1) That the Trust or Society has already been granted registration under section 12AA(l)(b) of the I.T. Act. (2) W.E.F. 01.06.2001 registration has been granted at any time under section 12A as stood before Amendment by Finance Act, 2 of 1996. (3) The Commissioner subsequently found and satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta have been confronted to the assessee before taking action in the matter. Nothing is brought to our notice, if any information or material received from ld. CIT(E), Kolkata or any Investigation Wing was ever supplied to the assessee for comments of the assessee. The impugned order is silent regarding this fact. Therefore, it is clear that whatever information was received by the ld. CIT(E) from ld. CIT(E), Kolkata or Investigation Wing, was not supplied to the assessee. Therefore, any material collected at the back of the assessee cannot be read in evidence against the assessee. We rely upon the decision of the Hon'ble Supreme Court in the case of Kishin Chand Chellaram v. CIT [1980] 125 ITR 713. It, therefore, stands clear that except the report received from Investigation Wing, Kolkata, ld. CIT(E), Kolkata or Investigation Wing of Varanasi or Lucknow, there were no other material with the ld. CIT(E) to assume that assessee was indulged in receiving unaccounted money in the garb of fund or re-donating the funds subject to commission. The ld. D.R. has not produced any material on record to justify the findings of the ld. CIT(E) against the assessee for cancelling the registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- from M/s Herbicure Health Care Bio Herbal Research Foundation in the A/Y 2011-12 by paying an amount of ₹ 1,00,00,000/- in cash to M/s Herbicure Health Care Bio Herbal Research Foundation itself. This allegation is totally untrue as nothing of this sort has been written or mentioned in the confirmation, given by M/s Herbicure Health Care Bio Herbal Research Foundation. Till date no evidence to the contrary has been made available to the assessee which could substantiate your honour's allegation that the amount ofRs.1,00,00,000/- was paid by the assessee in cash to the donor in exchange of donation received by cheque. However, in case, there is any authentic material available with your honour which could throw some light on this issue, the same may be given to the assessee so that a specific reply on the same could be submitted on it 14. It is also evident from record that the report received from the Id. Commissioner of Income Tax (Exemptions), Kolkata and the statement of Shri Swapan Ranjan Das Gupta, Director of M/s Herbicure Health Care Bio Herbal Research Foundation was simply shown to the assessee on 27.11.2015, but no opportunity was afforded to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness by the adjudicating authority, though the statement of those witnesses were made 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 effected. Their Lordships have, however, held that it is to be borne in mind that the order of the Id. Commissioner of Income Tax was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statement and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. The Hon'ble Apex Court accordingly held that in the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action. 17. We have also examined the arguments of the assessee that even if receipt of donation is to be treated as unexplained receipt under section 68 of the Act, the addition of the same cannot be made because the assessee itself has applied the entire receipts for the objects of the assessee-trust. In support of this proposition, our attention was invite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cability of provisions of section 68 of the Act is concerned, it has been held by various High Courts including the jurisdictional High Court that once donation received was taken as income of the assessee which was applied for charitable purposes, provisions of section 68 of the Act cannot be invoked. Since we do not find any infirmity in the order of the id. CIT(A), we confirm the same as he has adjudicated he issue in the tight of various judicial pronouncements. Accordingly we conform his order. 22. Undisputedly, the assessee has taken receipt of donation as part of its income and the same was applied for charitable purposes and these facts are borne out from the consolidated balance sheet of the assessee available at page 8 of the compilation of the assessee. The Revenue has not made out a case that the donation received by the assessee was not taken as part of income and was applied for non- charitable purposes. The allegation of the Revenue is only that the donation was received by the assessee on making payment in cash to M/s Herbicure Health Care Bio Herbal Research Foundation, but to substantiate this claim, no evidence was brought on record by the Revenue. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere found. There is no evidence on record to show that assessee received or paid any commission for indulging in any unaccounted money. Therefore, cancellation of registration in the matter is merely on presumption only. 7. In the case of Sharda Educational Trust v. CIT [2014] 147 ITD 271 (Agra - Trib.), it was held that in the absence of any examination of any student and their parents about payment of any money/capitation fees to the assessee trust and there being no corroborative evidence to prove receipt of any such amount, registration of assessee trust, could not be cancelled on the basis of paper seized during search. The Tribunal set aside the cancellation of registration and restored the registration. The order of the Tribunal have been confirmed by the Hon'ble Allahabad High Court by dismissing the departmental appeals in Income Tax Appeal No. 303 of 2013 in the case of CIT v. Sharda Educational Trust vide Judgment dated 07.11.2013. In view of the above discussion, we are of the view that the impugned order of ld. CIT(E) cannot survive in Law. Therefore, there is no need to remand the matter to ld. CIT(E) for fresh consideration. We, accordingly, set aside the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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