TMI Blog2017 (7) TMI 1246X X X X Extracts X X X X X X X X Extracts X X X X ..... planation in writing and even without verifying the same. Therefore, we find no merit in the order of CIT(Exemptions). See Fateh Chand Charitable Trust [2016 (4) TMI 1119 - ITAT LUCKNOW] - Decided in favour of assessee. - I. T. A. Nos. 138 and 147/Lucknow/2016 - - - Dated:- 26-7-2017 - P. K. Bansal (Vice-President) And Amarjit Singh (Judicial Member) For the Assessee : Rakesh Garg, Advocate For the Department : Himanshu Pandey, Senior Departmental representative ORDER P. K. Bansal (Vice-President) - 1. Both these appeals filed by the assessee have arisen out of the order of the Commissioner of Income-tax (Exemptions), Lucknow dated February 15, 2016 passed under section 12AA(3) of the Act cancelling the registration granted under section 12AA and the order of the Commissioner of Income-tax (Exemptions), Lucknow dated February 15, 2016 passed under section 80G(5)(vi) of the Income-tax Act derecognising the assessee under the said provision with effect from April 1, 2014. Both these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience. I. T. A. No. 138/Lucknow/2016 2. In this appeal the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, we find that on receipt of certain information from the learned Commissioner of Income-tax (Exemptions), Kolkata the learned Commissioner of Income- tax (Exemptions) has issued notice under section 12AA(3) of the Act to the assessee on November 13, 2015, for compliance on November 24, 2015. On November 24, 2015, the assessee sought adjournment and hearing was adjourned to November 27, 2015. On November 27, 2015, the assessee has filed a detailed reply to the charges levelled against it in the show-cause notice. The assessee emphatically denied the allegations levelled against the assessee that it has received a donation of ₹ 1 crore through cheque after making payment of the same in cash to M/s. Herbicure Health Care Bio Herbal Research Foundation. The reply filed by the assessee is available at pages 19 to 25 of the compilation of the assessee running into seven pages and in paragraph 8 of it, the assessee has specifically asked the learned Commissioner of Income-tax that in case there is any authentic material available with him which could throw some light on this issue, the same may be given to the assessee so that specific reply on the same could be submitted on it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns on receipt of cash through brokers but nowhere it has been stated that M/s. Herbicure Health Care Bio Herbal Research Foundation has paid donation to the asses see on receipt of cash of the equal amount through brokers. Similar statement of Shri Swapan Ranjan Das Gupta was also made but in that statement also there was no reference of the assessee. The learned Commissioner of Income-tax (Exemptions) has simply shown this information to the assessee on November 27, 2015 but did not offer any further opportunity to make his comments in this regard. The assessee has emphatically denied the charges levelled against it in its reply filed on November 27, 2015, that if the learned Commissioner of Income-tax (Exemptions) has received any authentic mate rial in this regard, the same may be provided to the assessee so that the assessee can make a proper reply. But without affording any further opportunity to the assessee, the learned Commissioner of Income- tax has passed an order of cancellation on the very same day. 15. It is settled position of law that any evidence collected at the back of the assessee cannot be used adversely unless and until it is confronted to the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similarly in the case of DIT v. Hans Raj Samarak Society [2013] 35 taxmann.com 642 (Delhi), their Lordships of the hon'ble Delhi High Court has held that the provisions of section 68 of the Act could not be applied as donation had already been shown by the assessee as income. 19. Similar views were also expressed by the Chennai Bench of the Tribunal in the case of Padanilam Welfare Trust v. Deputy CIT [2011] 10 ITR (Trib) 479 (Chennai) in which it was held that merely because capitation fee was collected by the assessee-trust from students, the same would not constitute the violation of the provisions of granting registration under section 12AA of the Act where there was no valid allegation against the assessee that the income of the trust has not been applied for educational activities. 20. Similar view was also expressed by the Hyderabad Bench of the Tribunal in the case of Asst. CIT v. V. B. Srinivas Rao 37 CCH 237 (Hyd). 21. A reference was also made to the order of the Lucknow Bench of the Tribunal in the case of ITO v. Saraswati Educational Charitable Trust [2015] 42 ITR (Trib) 393 (Lucknow) (I. T. A. No. 776/LKW/2014 in which it was held that if the donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Thus, even on the merits, we do not find any force in the allegations raised by the Revenue. The learned Commis sioner of Income-tax (Exemptions) has cancelled the registration under section 12AA of the Act on the basis of conjectures and surmises, as he has observed in his order that the assessee might have been charging capitation fee from the parents of the students, but in this regard no evidence was brought on record. It is also obvious from the record that the learned Commissioner of Income-tax (Exemptions) has passed an order on the same day when the assessee has furnished detailed explanation in writing and even without verifying the same. Therefore, we find no merit in the order of the learned Commissioner of Income-tax (Exemptions). Accordingly, we set aside the order of the learned Commissioner of Income-tax (Exemptions). 23. In the result, the appeal of the assessee stands allowed. 7.1 Respectfully following this Tribunal order on the similar line for the present case also, the issue involved is decided in favour of the asses see. 8. As a result, the order passed by the Commissioner of Income-tax (Exemptions) dated February 15, 2016 stands quashed and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 12A. Once the registration granted to the assessee under section 12AA got restored, this objection of the Commissioner of Income- tax (Exemptions) does not have any leg to stand. We have also gone through the provisions of section 80G(5). For approval under section 80G(5), an institution is required to fulfil the following conditions : (i) The trust should not have any income which is not exempted, such as business income. If, the NGO has business income then it should maintain separate books of account and should not divert donations received for the purpose of such business. (ii) The bylaws or objectives of the trust should not contain any provision for spending the income or assets of the NGO for purposes other than charitable. (iii) The trust is not working for the benefit of particular religious community or caste. (iv) The trust maintains regular accounts of its receipts and expenditures. (v) The trust is properly registered under the Societies Registration Act, 1860 or under any law corresponding to that Act or is registered under section 25 of the Companies Act, 1956. Out of these conditions, the Commissioner of Income-tax (Exemptions) in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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