TMI Blog2022 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any unaccounted cash transactions conducted by the assessee were 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. - Decided in favour of assessee. - ITA No.4702/DEL/2019 - - - Dated:- 27-4-2022 - Shri R. K. Panda, Accountant Member For the Assessee : Sh. Mayank Patawari, CA For the Revenue : Sh. Om Prakash Sr. DR ORDER PER R.K. PANDA, AM, This appeal filed by the assessee is directed against the order dated 14.03.2019 of the learned CIT(A)-40, New Delhi, relating to Assessment Year 2011-12. 2. The addition of ₹ 23,00,000/- made by the AO being corpus donation received from M/s Herbicure Bio- Herbal Research Foundation and upheld by the Ld. CIT(A) is the only issue pressed by the assessee in the grounds of appeal. 2.1. Facts of the case, in brief, are that information was received from the office of the Commissioner of Income Tax (Exemptions), Kolkata that the assessee was a beneficiary of accommodation entry in the garb of corpus donation of ₹ 23,00,000/- from H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant to the assessment year under consideration. The AO accordingly issued a show-cause notice dated 14/12/2016 asking the assessee to explain as to why the aforesaid corpus donation of ₹ 23,00,000/- reflected by the assessee in its balance sheet should not be treated as cash credit within the meaning of section 68. 2.4. In response to the same, the assessee inter-alia, submitted as under: i. Donation of ₹ 23,00,000/- was received vide RTGS of ₹ 18,00,000/- and ₹ 50,0000/- on 07/03/2011 from Herbicure Healthcare Bio-Herbal Research Foundation for which a proper receipt of donation was issued. ii. The amount received was duly declared in the audited balance sheet of the trust and was reflected in the return of income filed for the year under consideration. iii. The assessee has applied the fund so received in compliance with the instructions of the donor. iv. Amount received has already been shown as income by way of corpus and since the same has been utilised for allowable purposes as per the applicable provisions there is no occasion of any tax evasion loss to revenue. Even if the amount so received was to be accounted for as donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter issued from Investigation Wing has been held to be valid in the case of AGR Investigation Ltd. Vs. Additional CIT Anr: [333 ITR 146 (Del)]. In the case under consideration this is more so since no return of income had been filed by the assessee under section 139 despite there being a clear mandate for institutions claim'ng exemption under section 11 to file return of income. 4.3.3 In the case under consideration, the statement recorded during the survey operation under section 133A was used as information for reopening the case under section 148 in the case of the assessee. As noted above earlier, no return of income had been filed by the assessee and the same was filed for the first time only in response to notice under section 148. Objections raised to the notice under section 148 were also disposed off vide speaking order dated 13/06/2016. It has been contended by the appellant that cross examination of the Director of Herbicure Bio-Herbal Research Foundation was not given to the appellant before making the addition, it is seen from the assessment record that the such a request was made only toward the fag end of the assessment proceedings in response to showcause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs when the Appellant- Assessee was not able to contact the Director of M/s. Omega, that they came up with a request for his cross examination. Therefore, the submission on part of the Appellant that the delay has led to it being unable to produce evidence is of no avail as the delay was in seeking cross examination by it... 4.3.4. It is the contention of the appellant that the onus to prove genuineness of the transaction and creditworthiness of the party has been discharged with the submission of substantial documents. Reliance has also been placed on the decision of the Hon'ble ITAT Kolkata in the case of Sanskriti Sagar vs. CIT (Exemption), Kolkata in ITA No. 96/Kol/2017 wherein it was held that there was no reference of donation received/given prior to 31/03/2011 in the nature of bogus donations. It is to be noted that the facts of the case are different. In the case under consideration Herbicure Healthcare BioHerbal Research Foundation have given donation to the appellant. It is the contention of the appellant that it has proved creditworthiness of the donor. In the case relied upon by the appellant, question No. 22 of the statement of Shri Swapan Ranjan Das Gupta has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal No. 6 states that the appellant craves leave for addition, alteration or deletion of the grounds of appeal. Since no such option has been exercised during the appellate proceedings, this ground is academic in nature and considered to be a dismissed ground for statistical purposes. 5. In the end result, the appeal is DISMISSED. 4. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. 5. The ld. counsel for the assessee strongly challenged the order of the ld. CIT(A) in confirming the addition of ₹ 23 lakhs made by the AO. He submitted that the assessee has received corpus donation of ₹ 23 lakhs from M/s Herbicure Bio- Herbal Research Foundation through banking channel. Referring to page-27 and 28 of the paper book , the ld. counsel for the assessee drew the attention of the Bench to the letter dated 07.03.2011 issued by the donor giving ₹ 18 lakhs and ₹ 5 lakhs respectively totalling ₹ 23 lakhs through RTGS. Referring to page-29 and 30 of the paper book, the ld. counsel for the assessee drew the attention of the Bench to the receipt issued by the assessee trust to the donor acknowledging the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 taxmann.com 33 (Lucknow-Trib.) while considering the donation of ₹ 1 Crore from M/s Herbicure Health Care Bio Herbal Research Foundation for AY 2011-12 has observed as under:- 13. Having carefully examined the order of the ld. Commissioner of Income Tax (Exemptions) in the light of the rival submissions, we find that on receipt of certain information from the ld. Commissioner of Income Tax (Exemptions), Kolkata; ld. Commissioner of Income Tax (Exemptions) has issued notice under section 12AA(3) of the Act to the assessee on 13.11.2015 for compliance on 24.11.2015. On 24.11.2015 the assessee sought adjournment and hearing was adjourned to 27.11.2015. On 27.11.2015 the assessee has filed a detailed reply to the charges leveled against it in show cause notice. The assessee emphatically denied the allegations leveled 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 7 pages and in para 8 of it, the assessee has specifically as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the ld. Commissioner of Income Tax (Exemptions), Kolkata that M/s Herbicure Health Care Bio Herbal Research Foundation was engaged in giving donations 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 assessee 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 ld. Commissioner of Income Tax (Exemptions) has simply shown this information to the assessee on 27.11.2015, but did not offer any further opportunity to make his comments in this regard. The assessee has emphatically denied the charges leveled against it in its reply filed on 27.11.2015 that if the ld. Commissioner of Income Tax (Exemptions) has received any authentic material 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 ld. Commissioner of Income Tax has passed an order of cancellation on the very same day. 15. It is settled position of law that any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the assessee has disclosed donations as its income. 18. Similarly in the case of DIT v. Hans Raj Samarak Society [2013] 35 taxmann.com 642/217 Taxman 114 (Mag.) , their Lordships of the Hon'ble Delhi High Court has held that 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 (supra) 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 V. B. Srinivas Rao (supra). 21. A reference was also made to the order of the Lucknow Bench of the Tribunal in the case of Sarswati Educational Charitable Trust (supra) which it was held that if the donation received was taken as income of the assessee wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Exemptions) has cancelled the registration under section 12AA of the Act on the basis of conjunctures 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 ld. 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 ld. Commissioner of Income Tax (Exemptions). Accordingly, we set aside the order of ld. Commissioner of Income Tax (Exemptions). 23. In the result, appeal of the assessee stands allowed. 8. I find the Kolkata Bench of the Tribunal in the case of Sanskriti Sagar vs CIT in ITA No.96/Kol/2017, order dated 15.09.2017 while accepting the donation of ₹ 85,000/- from M/s Herbicure Health Care Bio Herbal Research Foundation for AY 2011-12 has observed as under:- 12. We have heard the submissions of the Ld. Counsel for the assessee and the Ld. DR. The Ld. Counsel for the assessee firstly drew our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Ld. CIT(Exemptions), Kolkata. According to him the answer given at the time of survey in reply to question No. 22 is sufficient to come to a conclusion that the assessee has indulged in money laundering. Alternatively it was his submission that the assessee should be afforded an opportunity of cross examination of Shri Swapan Ranjan Dasgupta, the founder director of HHBHRF. 15. We have given a very careful consideration to the rival submissions. From the answer to question No. 22 given by Shri Swapan Ranjan Dasgupta, founder director of HHBHRF at the time of survey in the business premises of HHBHRF, it is possible to entertain a doubt with regard to genuineness of the donations given by HHBHRF. It can be a money launderings indulged by a third party, who gave donations to the assessee by using the middlemen connected with HHBHRF. So far as the assessee is concerned it received donation from HHBHRF a sum of ₹ 85,000/- duly accounted the same in profit and loss account as corpus donation. There is no evidence whatsoever brought on record to show that the cash was paid by the assessee which in turn reached the hands of HHBHRF which was returned in the form of donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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. 17. In the result, assessee s appeal stands allowed. 9. I find the Allahabad Bench of the Tribunal in the case of Bioved Research Society vs CIT(Exemption), reported in 170 ITD 160 (Allahabad Tribunal) while accepting the donation of ₹ 1 Crore from M/s Herbicure Health Care Bio Herbal Research Foundation for AY 2017-18, has observed as under:- 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 satisfied that - (a) Activities of such Trust or Institution are not genuine or (b) Are not being ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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] 4 Taxman 29/125 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 registration. May be the assessee did not appear before ld. CIT(E) as argued by ld. D.R. and he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying 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 of ₹ 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 assessee either to cross-examine the said witness or to make any further comments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 invited to the judgment of the Honble jurisdictional High Court in the case of CIT v. Uttara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh 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 simply an oral assertion and moreover the assessee was not afforded any opportunity to cross-e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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] 43 taxmann.com 95/147 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 impugned order dated 28.02.2017 and restore the registration under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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