TMI Blog2017 (9) TMI 1943X X X X Extracts X X X X X X X X Extracts X X X X ..... certain middle men who are engaged in money laundering using HHBHRF as a medium for money laundering. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by the assessee from HHBHRF was a bogus donation. As 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 activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. We therefore are of the view that the cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed. - ITA No.96/Kol /2017 Assessment Year :2011-12 - - - Dated:- 15-9-2017 - Shri N.V.Vasudevan, Judicial Member and Shri Waseem Ahmed, Accountant Member By Appellant Shri A.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cancelling the registration. The Ld. CIT(E) erred in not providing a single iota of evidence that the activities of the trust are not genuine and the cancellation of the trust is completely dependent on a nonverified statement of a third party. (8) That the Ld. CIT (E) erred in cancelling the registration of the appellant with retrospective effect i.e. from 1.4.2010 which is not provided under the provisions of the Act. (9) That the appellant reserves the right to add to the above grounds and / or amend or delete any of them at the time of or before the date of hearing of the appeal. Shri A.K. Gupta, Ld. Authorized Representative appeared on behalf of assessee and Shri Goulean Hangshing, Ld. Departmental Representative represented on behalf of Revenue. 2. This is an appeal by the Assessee against the order dated 06.01.2017 of C.I.T. (Exemption), Kolkata cancelling the registration granted to the assessee trust u/s 12AA of the Income Tax Act, 1961 (Act). 3. The assessee is a society constituted under the West Bengal Society Registration Act 1961 dated 26.3.1985. The assessee was granted registration u/s 12AA of the Act by an order dated 20.02.1989 by the Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates. Similar trend is visible in the case of Donations received from other parties where just immediately after the receipt of donation amount the same is being transferred to the account of any paper company. In view of the same you are once again being given an opportunity to speak the truth and explain the transactions reflected from your bank book as above. Ans. Sir, I wish to state that our concern Herbicure Healthcare Bio-Herbal Research Foundation was incorporated in the year 2003 u/s 25 of the Companies Act, 1956 which was recognized in 2006-07 as a scientific and industrial research organization (SIRO) by the Ministry of Science Technology, Govt of India and subsequently we became a Gazette notified company u/s 35(1)(ii) of the I.T. Act. 1961 in March, 2008, Despite of our -sincere, honest and best intention we failed to procure any genuine donations till 2010-11, The situation was becoming bad to worse due to non-availability of fund for not agreeing to the prevalent practice in the donation market. The situation became so critical for us to survive and carry on our mission to do the work for the larger interest of the ailing population we had no other alternati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neficiary (after deducting the cut of commission charged by us and broker Mr Kishan Bhawasingka) who gave donation to us. In this entire-process of providing entry in the form of bogus Donation to different beneficiary Companies/ Individuals a commission of 5% approx is charged by us which is the actual donation we receive from that particular donor in reality. The commission of almost 5 to 8% is charged by Mr Kishan Bhawasingka for facilitating the said accommodation entry. Subsequently, a sanction letter is received from the donor reflecting the amount of donation and mode of payment. The particulars arc then verified with the amount credited in our bank accounts after which an exemption u/s 35(1)(ii) of the LT. Act, 1961 which qualifies him/her to claim 'one and three fourth' of the said donation as tax exempt u/s 35(1)(ii) of the I. T. Act, 1961. 6. The gist of the statement as recorded above is that till 2010-11 HHBHRF could not get genuine donations and was starved funds for carrying out its activities. In those circumstances one Mr. Kishen Bhawasingka approached the assessee for the purpose of enabling the assessee to give accommodation entry of receipts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned person Herbicure Healthcare Bio- Herbal Research Foundation. It is evident that by accepting bogus donation then returning the money you have indulged in money laundering which is illegal, not genuine and not at par with the objects of the trust/society. 4. In view of the above you are requested to explain why the registration u/s 12A/12AA will not get cancelled by invoking the provision of Section 12AA(3). 9. The assessee in reply to the aforesaid show cause notice took a stand that as far as the assessee was concerned it received a corpus donation from HHBHRF and that the same was genuine and that it had not indulged in any money laundering. The assessee had in the course of proceedings for cancellation of registration u/s 12AA(3) of the Act filed a confirmation from HHBHRF dated NIL wherein HHBHRF have confirmed that it had given a sum of ₹ 85,000/- to the assessee as Donation towards corpus fund. 10. The Ld. CIT(Ex), Kolkata proceeded to pass an order u/s 12AA of the Act after making a reference to the survey in the case of HHBHRF and also after making a reference to a letter dated 12.10.2015 addressed to the Ld. CIT(Ex) Kolkata in which HHBHRF have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch bogus donations were received by HHBHRF viz., after A.Y.2010-11.He drew our attention to the fact donation was given to the assessee by HHBHRF through cheque dated 03.03.2011 which was admittedly prior to the period in which bogus donations were received by HHBHRF. According to him the statement recorded at the time of survey 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 gave cash and in return got donation of ₹ 85,000/- and it was the assessee who arranged through the brokers for getting bogus donations. It was also his submission that there is no evidence of the assessee having indulged in money launderings. The assessee brought to our notice that assessee has been carrying out charitable activities and the activities carried out by it during the FY 2010-11 are placed on page 90 of the paper book. 13. According to the ld. AR, the ld. CIT(Ex), Kolkata has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no reference to such donations given or received by HHBHRF being in the nature of bogus donations. The assessee had received the donation from HHBHRF on 03.03.2011. It is therefore not possible to place reliance on the statement recorded at the time of survey and come to a conclusion that the assessee has been indulging in money laundering. 15.1 In answer to question no.23 Shri Swapan Ranjan Dasgupta founder director of HHBHRF has made reference to certain middle men who are engaged in money laundering using HHBHRF as a medium for money laundering. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by the assessee from HHBHRF was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (supra) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. In fact in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (supra) the factual position was that the donor had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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