TMI Blog2019 (6) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... ch person whose statement is being sought to be relied upon by the CIT(Exemptions). Once these two documents are ignored, there remains no material for the Department to hold that the assessee received the donation from HHBRF in lieu of cash. The CIT(Exemption) s finding, that the assessee was not carrying out activities in accordance with the objects of the society and no genuine activities are being carried out by the society, is solely based upon the allegation that the assessee received the donation of ₹ 85 lakhs in lieu of cash. As we have already stated, there is no basis for the Department to hold that the assessee received the donation of ₹ 85 lakhs from HHBRF in lieu of cash. Further, merely because the genuineness of one donation in one year is doubted, it cannot be a ground to draw the inference that the activities of the assessee society are not being carried out in accordance with the objects of the society or that no genuine activities are being carried out by the assessee. a conclusion cannot be drawn that the activities of the society are not being carried out in accordance with the objects of the society or that no genuine activity is being carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the assessee with the evidence he purportedly had and hence ignoring the principles of natural justice. (iii) That the ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without providing the opportunity of cross examination to the appellant. 4. The Ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without giving any meaningful opportunity to the appellant to show cause. 5. The appellant craves leave to add, amend or modify any ground before or at the time of hearing of the appeal. 3. At the time of hearing before us, the learned counsel for the assessee argued at length which can be summarized as below. 4. That learned CIT(Exemptions) cancelled the registration granted under Section 12AA(3) on the allegation that the assessee had received the donation of ₹ 85 lakhs in lieu of cash from M/s Herbicure Healthcare Bio-Herbal Research Foundation (hereinafter referred to as HHBRF) of Kolkata during the assessment year 2011-12. The above allegation is based upon some information claimed to have been received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated that the order of the CIT passed under Section 12AA(3) may be cancelled. 7. Learned CIT-DR, on the other hand, relied upon the order of learned CIT(Exemptions) and he stated that the CIT, after considering the evidences on record with him, has arrived at the conclusion that the assessee was earning income outside the books. Obviously, such income could have been earned from the activity which is not as per the object of the trust. Therefore, learned CIT(Exemptions) was fully justified in withdrawing the exemption granted to the assessee. He has also relied upon the decision of Hon ble Apex Court in the case of ITO Vs. M. Pirai Choodi [2011] 334 ITR 262 (SC). In addition to above, learned CIT-DR also filed written submissions, which read as under :- Sub : Written submission in the above case reg. In the above case, it is humbly submitted as follows : 1. As mentioned in para 2 of order u/s 12AA, vide letter dated 12.10.2015, M/s Herbicure Health Care Bio Herbal Research Foundation admitted that as per directions of brokers they received cash in lieu of donations given by cheque. 2. As mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant : Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard. [(1A) All applications, pending before the [Principal Chief Commissioner or] Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the [Principal Commissioner or] Commissioner and the [Principal Commissioner or] Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.] (2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uine; and b. the activities of such trust or institution are not being carried out in accordance with the objects of the trust or institution. 10. In the case under appeal before us, the CIT has cancelled the registration granted under Section 12AA(1) on the alleged ground that the trust had received the donation of ₹ 85 lakhs from HHBRF in lieu of cash. The above finding of the CIT(Exemptions) is based upon the report received from CIT(Exemptions), Kolkata. On the basis of above, the CIT(Exemptions), Lucknow has held that the activities of the society cannot be said to be carried out in accordance with the objects of the society. At the same time, he further drew the inference that no genuine activities are being carried out by the assessee. The learned counsel for the assessee has stated before us that the assessee has repeatedly requested for the supply of any material in the possession of the Department on the basis of which the allegation has been made against the assessee. However, no such material was supplied to the assessee. Therefore, no adverse inference can be drawn against the assessee in this regard. Learned DR, on the other hand, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee after payment of equal amount in cash and commission through brokers. Thus total amount of ₹ 85,00,000/- has been received by cheque from M/s Herbicure Healthcare Bio- Herbal Research Foundation by the assessee after paying cash of ₹ 85,00,000/- plus 5 to 10% of this amount also in cash as commission. 12. Similarly, in paragraph 13, which reads as under, he has relied upon the statement on oath and the letter signed by HHBRF :- 13. Moreover, the statement on oath and the letter signed by M/s Herbicure Healthcare Bio-Herbal Research Foundation have clearly demonstrated that the assessee trust has paid cash and commission to get donation in cheques from M/s Herbicure Healthcare Bio-Herbal Research Foundation. It has been clearly indicated in the statement and report send by the Ld. CIT(E), Kolkata that the assessee has paid cash in addition to commission to manage this donation by cheque from M/s Herbicure Healthcare Bio-Herbal Research Foundation. The assessee is apparently running a business and is generating huge amount of cash. This cash has been used to obtain or manage the donation from M/s Herbicure Healthcare Bio- Herbal Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich would not be in possession of the appellant themselves to explain as to why their exfactory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. 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 cross-examination. 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 mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Hon'ble Jurisdictional High Court in the case of UP Distillers Association (supra) and has also pointed out that the SLP filed by the assessee against the above decision was dismissed by the Hon ble Apex Court. From a perusal of the above decision, we find that the facts in the aforesaid case were altogether different. In the aforesaid case, there was search and seizure operation on the assessee i.e., UP Distillers Association and during the course of such search, the material was found as well as statement of Shri R.K. Miglani was recorded under Section 132(4). Thus, the facts in the aforesaid case were altogether different. In the case of the assessee, there is no search but the Department is relying upon some letter claimed to have been received from CIT(Exemptions) and the statement of some office bearers of HHBRF. Learned DR has also relied upon the decision of Hon ble Punjab Haryana High Court in the case of Scientific Educational Advancement Society (supra). We find that the facts in the above case were also altogether different. In the aforesaid case, a piece of land belonging to the assessee society was sold to a private builder. The builder built ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the society or that no genuine activities are being carried out by the assessee. That if the genuineness of a donation in one year is doubted, the addition, if any, can be made in the assessment of the relevant assessment year in accordance with law. However, that, by itself, would not be sufficient to withdraw the registration under Section 12AA(3). If the genuineness of a donation is doubted, at the most, it can be a ground to examine deep into the activities of the society so as to ascertain whether the activities of the society are being carried out in accordance with the objects of the society. However, a conclusion cannot be drawn that the activities of the society are not being carried out in accordance with the objects of the society or that no genuine activity is being carried out by the assessee merely because the genuineness of one donation in one year is doubted. 17. Learned counsel for the assessee has also relied upon the decision of Hon'ble Jurisdictional High Court in the case of Agra Development Authority (supra) to support his contention that Section 12AA(3) does not authorize the Commissioner to cancel charitable registration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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