Seacom Marine College, Kolkata V. CIT(Exemption) Kolkata, Kolkata

ITA 100/KOL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1483 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Bogus purchase; Business income; Opportunity of cross examination; Accommodation entries; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & DR.ARJUN LAL SAINI, AM] I.T.A NO. 100/KOL/2017 SEACOM MARINE COLLEGE -VS.- C.I.T. (EXEMP TION) KOLKATA KOLKATA. [PAN : AAETS 8042 E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI ANIL KOCHAR, ADVO CATE FOR THE RESPONDENT : SHRI G.MALLIKARJUNA, CIT (DR) DATE OF HEARING : 12.07.2017. DATE OF PRONOUNCEMENT : 28.07.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.12.2016 OF C.I.T. (EXEMPTION), KOLKATA CANCELLING THE REGISTRATION GR ANTED TO THE ASSESSEE TRUST U/S 12AA OF THE INCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS A TRUST CONSTITUTED UNDER THE DEED OF TRUST DATED 10.10.2003 AND AS AMENDED BY AMENDED DEED DATED 29.11.2004 AND 14. 07.2006. THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT BY AN ORDE R DATED 25.07.2006 BY THE DIRECTOR OF INCOME TAX (EXEMPTION), KOLKATA. THE ASSESSEE HA S BEEN ENJOYING THE BENEFIT OF REGISTRATION EVER SINCE THE GRANT OF REGISTRATION. THE ASSESSEE RUNS A COLLEGE AND DERIVES INCOME BY WAY OF COURSE FEES FROM THE STUDE NTS OUT OF WHICH IT MEETS ALL THE EXPENSES IN CONNECTION WITH RUNNING OF THE COLLEGE. THE ASSESSEE TRUST ALSO RECEIVES DONATIONS. 3. THERE WAS A SURVEY OPERATION CARRIED OUT U/S 133 A OF THE ACT ON 16.12.2006 IN THE BUSINESS PREMISES OF HERBICURE HEALTHCARE BIO-HERBA L RESEARCH FOUNDATION (HHBHRF). HHBHRF IS A COMPANY INCORPORATED UNDER SE CTION 25 UNDER THE ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 2 COMPANIES ACT, 1956. IT IS ENGAGED IN BASIC AND FUN DAMENTAL BIO MEDICAL RESEARCH IN THE FIELD OF MICRO BIOLOGY AND ANALYTICAL CHEMISTRY . THE ASSESSEE WAS RECOGNISED IN THE YEAR 2006-07 AS A SCIENTIFIC AND INDUSTRIAL RES EARCH ORGANISATION (SIRO) BY THE MINISTRY OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF I NDIA AND SUBSEQUENTLY RECOGNISED AS INSTITUTION U/S 35(1)(II) OF THE ACT. THE AFORESAID RECOGNITION WOULD MEAN THAT ANY SUM PAID TO HHBHRF WOULD BE ENTITLED TO A DEDUCTION OF ONE AND ONE FOURTH TIMES OF ANY SUM PAID TO THE ASSESSEE TO THE PERSON MAKING PAYMENT WHILE COMPUTING BUSINESS INCOME OF SUCH PAYEE. ANY SUM PA ID MEANS IT INCLUDES DONATIONS ALSO. 4. IN THE COURSE OF SURVEY OPERATIONS THE AUTHOR ISED OFFICER CARRYING OUT THE SURVEY RECORDED THE STATEMENT OF SHRI SWAPAN RANJAN DASGUP TA, THE FOUNDER DIRECTOR OF HHBHRF. THE REVENUE HAD INFORMATION THAT SINCE HHBH RF ENJOYS APPROVAL U/S 35(1)(II) OF THE ACT AND THEREFORE IT WAS BEING USE D BY MONEY LAUNDERERS TO GIVE DONATIONS WHICH IS BASICALLY ACCOMMODATION ENTRIES. QUESTION NO.22 AND 23 AND ANSWER TO THOSE QUESTIONS WILL SHOW THE MODUS OPERA NDI OF ALLEGED MONEY LAUNDERING CARRIED OUT BY HHBHRF. THE SAME READS AS FOLLOWS :- Q.22. LET ME REMIND YOU THAT AS ONE OF THE DIRECTORS OF HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION YOU ARE DUTY BOUND' TO KEEP COMPLETE INFORMATION REGARDING TRANSACTIONS BEING MADE BY TH E SAID ENTITY AND THE GENUINENESS OF PERSONS / ENTITIES WITH WHOM THE SAI D TRANSACTIONS ARE BEING MADE. YOUR ATTENTION IS FURTHER BEEN DRAWN TO THE COMPUTE R EXTRACTS TAKEN OUT OF THE TALLY WHICH WAS FOUND IN YOUR E-MAIL. THESE PAGES A RE RELATED TO THE BANK BOOK OF HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION WHEREIN IT IS CLEARLY REFLECTED THAT THE AMOUNT OF RS.25 IAKH (IN TWO TRE NCHES] RECEIVED FROM OCL INDIA LTD AN 15.07.2011, RS.251AKH RECEIVED FROM OC L INDIA LTD ON 11.08.2011 & 17.084011 ARE IMMEDIATELY BEING TRANSFERRED TO A. S. ENTERPRISES WHICH IS A PAPER COMPANY ON THE SAME DATES. SIMILAR TREND IS V ISIBLE IN THE CASE OF DONATIONS RECEIVED FROM OTHER PARTIES WHERE JUST IM MEDIATELY AFTER THE RECEIPT OF DONATION AMOUNT THE SAME IS BEING TRANSFERRED TO TH E 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 Y OUR BANK BOOK AS ABOVE. ANS. SIR, I WISH TO STATE THAT OUR CONCERN HERBICURE HE ALTHCARE BIO-HERBAL RESEARCH FOUNDATION WAS INCORPORATED IN THE YEAR 2 003 U/S 25 OF THE COMPANIES ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 3 ACT, 1956 WHICH WAS RECOGNIZED IN 2006-07 AS A SCIE NTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY THE MINISTRY OF SCIENCE & TE CHNOLOGY, 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, HONES T 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 AGRE EING TO THE PREVALENT PRACTICE IN THE DONATION MARKET. THE SITUATION BECAME SO CRI TICAL 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 ALTERNATIVE BUT TO BECOME THE VICTI M OF THE CIRCUMSTANCES AGAINST OUR WILL AND PRINCIPLE. SUBSEQUENTLY. I WAS APPROACHED BY ONE MR KISH AN BHAWASINGKA WITH THE PROPOSAL TO ADOPT THE PREVALENT PRACTICE OF SCIENTI FIC AND RESEARCH ORGANIZATIONS OF GIVING ACCOMMODATION ENTRIES ON COMMISSION TO DI FFERENT BENEFICIARIES IN THE GARB OF DONATION RECEIPTS TO BE FINALLY GIVEN BACK TO THEM IN THE FORM OF CASH OR CHEQUE. SINCE WE WERE FACING SEVERE FINANCIAL CRISI S AND THE GENUINE DONATIONS WERE NOT COMING TO US WE WERE COMPELLED TO ACCEPT THE PROPOSAL. Q.23 PLEASE EXPLAIN IN DETAIL THE MODUS OPERANDI OF GIV ING THE ACCOMMODATION ENTRIES BY WAY OF ACCEPTING DONATIONS TO DIFFERENT BENEFICIARIES. ALSO STATE WHO IS THE / ARE THE BROKER / BROKERS (WHILE GIVING HIS MO BILE NO, AND ADDRESS) THROUGH WHICH YOU HAVE GIVEN ACCOMMODATION ENTRIES IN THE F ORM OF BOGUS DONATIONS ON COMMISSION ? PLEASE ALSO STATE WHAT ARE THE COMMISSION CHARGED B Y YOU AND BROKER CONCERNED FUR PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT BE NEFICIARIES. ANS. THE ENTIRE ACCOMMODATION ENTRIES OF BOGUS DONATION S ARE FACILITATED BY MR KISHAN BHAWASINGKA HAVING HIS MOBILE NOS, 983008786 6 & 9883051515 WHO LIVES SOMEWHERE IN BHAWANIPORE NEAR NETAJI SUBHAS M ETRO STATION. THE MODUS IS LIKE THIS. THE INFORMATION IS GIVEN TO US BY MR. KISHAN BHAWASINGKA AS TO BOGUS DONATION ENTRY IS NEEDED BY A PARTICULAR PAR TY. SOMETIMES WE COME TO KNOW ABOUT THE ACCOMMODATION ENTRY BEING GIVEN TO A PARTY WHEN WE DIRECTLY RECEIVE COMMUNICATION FROM THE CONCERNED BANK THAT THE AMOUNT HAS BEEN CREDITED. THUS, THE ACCOMMODATION ENTRY IS COMPLETE LY CONTROLLED AND MANAGED BY MR KISHAN BHAWASINGKA. THE BOGUS DONATIONS ARE R ECEIVED VIDE CHEQUE/RTGS INTO ANY OF THE BANK ACCOUNTS MENTIONED BY ME IN RESPONSE TO QUESTION NO.7 OF THIS STATEMENT. AFTER THIS, PAYMEN T IS MADE TO ANY OF THE PAPER /BOGUS COMPANIES ON ACCOUNT OF BOGUS PURCHASE /EXPE NSE ON THE ADVICE OF MR KISHAN BHAWASINGKA. THE REMAINING TRANSACTION IS AL SO MANAGED ON PAPER BY HIM ONLY WHICH HAPPENS IN THE FORM OF ROUTING OF TH E DONATION AMOUNT THROUGH HIS BOGUS/PAPER COMPANIES IN 2 TO 3 LAYERS. FINALLY , CHEQUE OF THE DONATION AMOUNT (AFTER DEDUCTING THE CUT OF COMMISSION CHARG ED BY US AND BROKER MR KISHAN BHAWASINGKA) IS GIVEN 'BACK TO THE ORIGINAL BENEFICIARY WHO GAVE DONATION TO US. SOMETIMES, THE AMOUNT IS WITHDRAWN AT 3 RD OR 4 TH LEVEL AND CASH IS GIVEN BACK TO THE ORIGINAL BENEFICIARY (AFTER DEDUC TING THE CUT OF COMMISSION CHARGED BY US AND BROKER MR KISHAN BHAWASINGKA) WHO GAVE DONATION TO US. ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 4 IN THIS ENTIRE-PROCESS OF PROVIDING ENTRY IN THE FORM OF BOGUS DONATION TO DIFFERENT BENEFICIARY COMPANIES/ INDIVIDUALS A COMM ISSION OF 5 % APPROX IS CHARGED BY US WHICH IS THE ACTUAL DONATION WE RECEI VE FROM THAT PARTICULAR DONOR IN REALITY. THE COMMISSION OF ALMOST 5 TO' 8 % IS C HARGED BY MR KISHAN BHAWASINGKA FOR FACILITATING THE SAID ACCOMMODATION ENTRY. SUBSEQUENTLY, A SANCTION LETTER IS RECEIVED F ROM THE DONOR REFLECTING THE AMOUNT OF DONATION AND MODE OF PAYMENT. THE PARTICU LARS ARC THEN VERIFIED WITH THE AMOUNT CREDITED IN OUR BANK ACCOUNTS AFTER WHIC H AN EXEMPTION U/S 35(1)(II) OF THE LT. ACT, 1961 WHICH QUALIFIES HIM/HER TO CLA IM 'ONE AND THREE FOURTH' OF THE SAID DONATION AS TAX EXEMPT U/S 35(1)(II) OF THE I. T. ACT, 1961. 5. THE GIST OF THE STATEMENT AS RECORDED ABOVE I S THAT TILL 2010-11 HHBHRF COULD NOT GET GENUINE DONATIONS AND WAS STARVED OF FUNDS FOR CARRYING OUT ITS ACTIVITIES. IN THOSE CIRCUMSTANCES ONE MR.KISHEN BHAWASINGKA APPRO ACHED THE ASSESSEE FOR THE PURPOSE OF ENABLING THE ASSESSEE TO GIVE ACCOMMODAT ION ENTRY OF RECEIPTS OF DONATIONS AS WELL AS GIVING OF DONATIONS BY THE ASSESSEE FOR WHICH THE ASSESSEE WOULD BE PAID A COMMISSION. SINCE HHBHRF WAS HAVING FINANCIAL CRUNC H IT ACCEDED TO THE PROPOSAL. WITH REGARD TO THE MODUS OPERANDI OF GIVING OF ACCO MMODATION ENTRIES IT WAS STATED THAT BOGUS DONATIONS ARE RECEIVED BY CHEQUES/RTGS I NTO VARIOUS BANK ACCOUNTS OF THE ASSESSEE OUT OF THE SAID BANK ACCOUNT PAYMENTS WERE MADE TO PAPER OR BOGUS COMPANIES FOR BOGUS PURCHASES OR EXPENSES ON THE AD VICE OF SHRI KISHAN BHAWASINGKA. SOMETIMES DONATIONS ARE ALSO GIVEN FRO M THE BANK ACCOUNT AS DONATIONS BY/OF THE ASSESSEE. THE COMMISSION PAYABLE FOR SUCH TRANSACTIONS OF THE ASSESSEE AS WELL AS THE BROKER SHRI KISHAN BHAWASINGKA WOULD BE DEDUCTED AND THE REMAINING AMOUNTS WOULD BE SIPHONED EITHER AS DONATIONS OR TO WARDS LAUNDERING OF BOGUS PURCHASES OR EXPENSES OF PARTIES IDENTIFIED BY SHRI KISHAN BHAWASINGKA. 6. THE ASSESSEE HAD RECEIVED A DONATION OF RS.9, 00,000/- FROM HHBHRF ON 16.03.2011. SINCE THE ASSESSEE HAD RECEIVED DONATIO NS FROM HHBHRF THE CIT(EXEMPTIONS) KOLKATA WAS OF THE VIEW THAT THE AS SESSEE HAD ALSO INDULGED IN MONEY LAUNDERING AND THEREFORE THE REGISTRATION GRA NTED TO THE ASSESSEE U/S 12AA OF THE ACT DESERVES TO BE CANCELLED BY INVOKING THE PO WERS OF C.I.T.(EXEMPTIONS), KOLKATA VESTED U/S 12AA(3) OF THE ACT WHICH READS A S FOLLOWS :- ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 5 12AA (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1)[OR HAS OBTAINED REGIS TRATION AT ANY TIME UNDER SECITON 12A [ AS IT STOOD BEFORE ITS AMENMENT BY TH E FINANCE (NO.2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSI ONER OF ] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION , AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR ISTITUTION : 7. THE C.I.T.(EXEMPTIONS), KOLKATA ISSUED A SHOW CAUSE NOTICE DATED 02.12.2015 IN WHICH HE EXPLAINED THE SURVEY OPERATIONS IN THE CAS E OF HHBHRF AND ADMISSION BY THEM AND THEY WERE ENGAGED IN PROVIDING ACCOMMODATI ON ENTRIES OF BOGUS DONATIONS. THE CIT(EXEMPTIONS), KOLKATA FURTHER WAS OF THE FOL LOWING OPINION : 3. IT IS SEEN THAT YOU HAVE RECEIVED DONATION AMOU NTING TO RS.9,00,000/- FOR A.Y.2011-12 FROM THE ABOVE MENTIONED PERSON HERBI CURE HEALTHCARE BIO- HERBAL RESEARCH FOUNDATION. IT IS EVIDENT THAT BY A CCEPTING BOGUS DONATION THEN RETURNING THE MONEY YOU HAVE INDULGED IN MONEY LAUN DERING WHICH IS ILLEGAL, NOT GENUINE AND NOT AT PAR WITH THE OBJECTS OF THE TRUS T/SOCIETY. 4. IN VIEW OF THE ABOVE YOU ARE REQUESTED TO EXPLAI N WHY THE REGISTRATION U/S 12A/12AA WILL NOT GET CANCELLED BY INVOKING THE PRO VISION OF SECTION 12AA(3). 8. THE ASSESSEE IN REPLY TO THE AFORESAID SHOW C AUSE NOTICE TOOK A STAND THAT AS FAR AS THE ASSESSEE WAS CONCERNED IT RECEIVED A CORPUS DON ATION FROM HHBHRF AND THAT THE SAME WAS GENUINE AND THAT IT HAD NOT INDULGED IN AN Y MONEY LAUNDERING. THEREAFTER ON 09.08.2016 THE DIRECTOR OF INCOME TAX (EXEMPTIONS), KOLKATA ADDRESSED ANOTHER LETTER ADDRESSED TO THE ASSESSEE IN WHICH THE C.I.T .(EXEMPTIONS), KOLKATA REFERRED TO ON-GOING PROCEEDINGS FOR CANCELLATION OF REGISTRATI ON U/S 12AA OF THE ACT AND REQUESTED THE ASSESSEE TO APPEAR ON 08.09.2016 TO D ISCUSS THE RELEVANT ISSUES AND FIND OUT AN ACCEPTABLE REMEDY. THE ASSESSEE HAD IN THE C OURSE OF PROCEEDINGS FOR CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT AGAIN FILED A CONFIRMATION FROM HHBHRF DATED 04.04.2016 WHEREIN HHBHRF HAVE AGAIN C ONFIRMED THAT THEY HAD GIVEN A SUM OF RS.9,00,000/- TO THE ASSESSEE AS DON ATION TOWARDS CORPUS FUND. 9. THE C.I.T.(EXEMPTIONS), 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 ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 6 REFERENCE TO A LETTER DATED 12.10.2015 ADDRESSED TO THE CIT(EXEMPTIONS)KOLKATA IN WHICH HHBHRF HAVE REITERATED THAT THE BROKERS ARRAN GED FOR DONATIONS TO HHBHRF AND ALSO ASKED THEM TO RETURN THE DONATION IN THE F ORM OF DONATIONS TO OTHER TRUST. THE CIT(EXEMPTIONS), KOLKATA ALSO REFERRED TO THE FACT THAT HHBHRF DISOWNED HAVING DEALT WITH CASH AND THAT THE BROKERS DEALT WITH CAS H RECEIVED FROM THE PERSONS TO WHOM DONATIONS WERE MADE BY HHBHRF. THE CIT(EXEMPTI ONS) THEREAFTER REFERRED TO THE FACT THAT CBDT VIDE ITS NOTIFICATION DATED 06.0 9.2016 HAD WITHDRAWN THE APPROVAL ACCREDITED TO HHBHRF U/S 35(1)(II) OF THE ACT. THE REAFTER THE CIT(EXEMPTIONS) WITHDREW THE REGISTRATION GRANTED TO THE ASSESSEE B Y OBSERVING AS FOLLOWS :- INDULGING IN INGENUINE ACTIVITIES WHICH IS NOT AT PAR WITH THE TRUST .A DEED LEADS TO THE ULTIMATE CONCLUSION THAT THE SOCIETY IS IN T HE ACT OF MONEY LAUNDERING. THE PROVISIONS OF SECTION 12AA(3) OF THE I.T.ACT 19 61 IS AS FOLLOWS: 'WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED R EGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) [OR HAS OBTAINED REGISTRATION AT AN Y TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO.2) AC T, 1.996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSIONER OR] COMMIS SIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GEN UINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE 'MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATIO N OF SUCH TRUST OR INSTITUTION' CONSIDERING THE ACTIVITIES OF THE ASSESSEE NOT GENU INE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTIVES OF THE SOCIET Y, THE REGISTRATION U/S. 12A OF THE I.T.ACT 1961 VIDE ORDER NO. DIT(E)/T- 193/8E/52 1/05-06 DATED 25.07.2006 IS HEREBY CANCELLED U/S. 12AA(3) OF THE I.T.ACT 1961 W .E.F. 01.04.2010 I.E. F.Y. 2010-11 RELEVANT TO A.Y. 2011-12, AS THE VIOLATION TOOK PLACE IN THE F.Y. 2010- 11. 10. AGGRIEVED BY THE ORDER OF CIT(EXEMPTIONS), K OLKATA THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 11. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE FIRSTLY DREW O UR ATTENTION TO THE ANSWER GIVEN BY FOUNDER AND DIRECTOR OF HHBHRF TO QUESTION NO.22 RE CORDED AT THE TIME OF SURVEY CARRIED OUT IN THE BUSINESS PREMISES OF HHBHRF. HE DREW OUR ATTENTION TO THE FACT THAT IN THE SAID STATEMENT THE FOUNDER DIRECTOR HAD SPECIFICALLY REFERRED TO A PERIOD ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 7 FROM WHICH BOGUS DONATIONS WERE RECEIVED BY HHBHRF VIZ., AFTER A.Y.2010-11.HE DREW OUR ATTENTION TO THE FACT DONATION WAS GIVEN T O THE ASSESSEE BY HHBHRF THROUGH CHEQUE DATED 16.03.2011 WHICH WAS ADMITTEDL Y 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 I MPUGNED ORDER WAS PASSED WAS NOT INCRIMINATING, SO FAR THE ASSESSEE IS CONCERNED. AC CORDING TO HIM THEREFORE THE VERY BASIS ON WHICH THE IMPUGNED ORDER HAS BEEN PASSED B Y THE C.I.T.(EXEMPTIONS), KOLKATA IS UNSUSTAINABLE. HIS NEXT SUBMISSION WAS T HAT 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 RS.9,00,000 /- AND IT WAS THE ASSESSEE WHO ARRANGED THROUGH THE BROKERS FOR GETTING BOGUS DONA TIONS. IT WAS ALSO HIS SUBMISSION THAT THERE IS NO EVIDENCE OF THE ASSESSEE HAVING IN DULGED IN MONEY LAUNDERINGS. THE ASSESSEE BROUGHT TO OUR NOTICE THAT THE ASSESSEE TH AT ASSESSEE RUNS A COLLEGE AND RECEIVES FEES FROM THE STUDENTS AND ALSO DONATIONS. THE DETAILS OF THE FEES RECEIVED BY THE ASSESSEE ARE GIVEN AT PAGE 98 OF THE PAPER BOOK AND THE SAME IS AS FOLLOWS :- STATEMENT OF FEES/EXPENSES ASSTT. YEAR TUITION FEES CR EXPENSES (REV) EXPENSES (CAP) 2016-17 98651754 84508870 4317852 2015-16 137758910 116569219 27291698 2014-15 135021346 109408737 82796250 2013-14 145548350 118067890 56416426 2012-13 159835033 103643556 128071867 2011-12 128690777 82806093 27577593 2010-11 98976303 65345316 102105267 2009-10 57798000 42054971 151560340 2008-09 34202700 26035075 106659284 12. HE ALSO DREW OUR ATTENTION TO THE LETTER OF CIT(EXEMPTIONS), KOLKATA DATED 19.08.2016 WHEREIN HE HAS CALLED THE ASSESSEE FOR A DISCUSSION FOR AN ACCEPTABLE REMEDY. ACCORDING TO HIM THIS LETTER OF CIT(EXEMPTI ONS), KOLKATA CLEARLY SHOWS THAT THERE WAS NO DIRECT EVIDENCE AGAINST THE ASSESSEE W ARRANTING CANCELLATION OF REGISTRATION U/S 12AA (3) OF THE ACT. IT WAS SUBMIT TED BY HIM THAT REGISTRATION GRANTED TO THE ASSESSEE CAN BE CANCELLED U/S 12AA(3) ONLY O N CONDITIONS BEING SATISFIED (A) ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 8 THAT THE ACTIVITIES OF THE TRUST OF INSTITUTION ARE NOT GENUINE (B) THAT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT IN A CCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THERE IS NO EVIDENCE BROUGHT ON REC ORD WHATSOEVER TO SHOW EITHER OF THE AFORESAID CONDITIONS HAVE BEEN SATISFIED TO WARRANT CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT. THE LD. COUNSEL FOR THE ASSESS EE PLACED STRONG RELIANCE ON THE DECISION OF ITAT, KOLKATA BENCH RENDERED IN THE CA SE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST NADIA VS C.I.T.(EXEMPTIONS), KOL KATA IN ITA NO.1165/KOL/2016 ORDER DATED 03.05.2017. 13. THE LD. DR PLACED RELIANCE ON THE ORDER OF C.I .T.(EXEMPTIONS), KOLKATA. ACCORDING TO HIM THE ANSWER GIVEN AT THE TIME OF SU RVEY IN REPLY TO QUESTION NO.22 IS SUFFICIENT TO COME TO A CONCLUSION THAT THE ASSESSE E HAS INDULGED IN MONEY LAUNDERING. ALTERNATIVELY IT WAS HIS SUBMISSION THAT THE ASSESS EE SHOULD BE AFFORDED AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI SWAPAN RAN JAN DASGUPTA, THE FOUNDER DIRECTOR OF HHBHRF. 14. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. FROM THE ANSWER TO QUESTION NO.22 GIVEN BY SHRI SWAPAN RANJA N DASGUPTA, FOUNDER DIRECTOR OF HHBHRF AT THE TIME OF SURVEY IN THE BUSINESS PREMIS ES 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 PART Y, WHO GAVE DONATIONS TO THE ASSESEE BY USING THE MIDDLEMEN CONNECTED WITH HHBHR F. SO FAR AS THE ASSESSEE IS CONCERNED IT RECEIVED DONATION FROM HHBHRF A SUM OF RS.9,00,000/- DULY ACCOUNTED THE SAME IN PROFIT AND LOSS ACCOUNT AS CORPUS DONAT ION. 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 DONATION TO THE ASSESSEE AFTER RETAINING THE COMMISSION. AS WE HAVE ALREADY OBSERVED THAT THE ANSWER TO QUESTION NO.22 GIVEN BY SHRI SWAPAN RANJAN DASGU PTA REFERRED TO DONATIONS GIVEN IN THE FINANCIAL YEAR 2011-12 AS BOGUS DONATIONS. W ITH REGARD TO THE DONATIONS RECEIVED/GIVEN PRIOR TO 31.03.2011 THERE IS NO REFE RENCE TO SUCH DONATIONS GIVEN OR ITA NO.100/KOL/2017 SEACOM MARINE COLLEGE 9 RECEIVED BY HHBHRF BEING IN THE NATURE OF BOGUS DON ATIONS. THE ASSESSEE HAD RECEIVED THE DONATION FROM HHBHRF ON 16.03.2011. IT IS THEREFORE NOT POSSIBLE TO PLACE RELIANCE ON THE STATEMENT RECORDED AT THE TIM E OF SURVEY AND COME TO A CONCLUSION THAT THE ASSESSEE HAS BEEN INDULGING IN MONEY LAUNDERING. 15. IN ANSWER TO QUESTION NO.23 SHRI SWAPAN RANJ AN 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 LAUND ERING. THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW ANY CONNECTION BETWEEN TH OSE BROKERS AND THE ASSESSEE. IN THE ABSENCE OF SUCH CORROBORATIVE EVIDENCE, IT IS N OT POSSIBLE TO COME TO ANY CONCLUSION THAT THE ASSESSEE INDULGED IN MONEY LAUN DERING AND THAT THE DONATION RECEIVED BY THE ASSESSEE FROM HHBHRF WAS A BOGUS DO NATION. 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 REGISTR ATION 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 MADE A REFERENCE TO THE NAME OF THAT ASSESSEE IN A LIST OF BOGUS DONATIONS GIVEN BY IT IN AN APPLICATION FI LED BEFORE THE SETTLEMENT COMMISSION OF INCOME TAX. STILL THE TRIBUNAL CAME T O THE CONCLUSION THAT THERE WAS ABSENCE OF MATERIAL TO SHOW THAT THE CONCERNED TRUS T HAD INDULGED IN MONEY LAUNDERING. WE ARE OF THE VIEW THAT IN THE CASE OF THE ASSESSEE IN THIS APPEAL STANDS ON A MUCH BETTER FOOTING THAN IN THE CASE OF THE ASSES SEE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST (SUPRA). 16. APART FROM THE ABOVE, THE GROUNDS FOR CANCELL ATION FOR REGISTRATION U/S 12AA(3) IS THAT THE ACTIVITIES OF THE TRUST SHOULD NOT BE GENU INE 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 A NY OF THE AFORESAID CONDITIONS EXIST IN THE CASE OF THE ASSESSEE. WE THEREFORE ARE OF TH E 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.100/KOL/2017 SEACOM MARINE COLLEGE 10 17. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28.07.2017. SD/- SD/- [DR.A.L.SAINI] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28.07.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SEACOM MARINE COLLEGE, 11, KENDUA MAIN ROAD, GAR IA, KOLKATA-700084. 2. C.I.I. (EXEMPTION), KOLKATA. 3. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR.PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT KOLKATA