Vishwaroopa Charity Trust, Kolkata V. CIT(Exemption) Kolkata, Kolkata

ITA 106/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1447 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HNGSHING
• Assessee Lawyers: A K GUPTA
• Keywords: Bogus purchase; Business income; Principle of natural justice; Retrospective amendment; Accommodation entries; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 106 / KOL / 2017 ASSESSMENT YEAR :2011-12 VISHWAROOPA CHARITY TRUST 9/1 R.N.MUKHERJEE ROAD, 5 TH FLOOR, KOLKATA-001 [ PAN NO.AAATV 2062 M ] V/S . CIT(EXEMPTION), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLKATA-71 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. GUPTA, FCA /BY RESPONDENT SHRI GOULEAN HNGSHING, CIT-DR /DATE OF HEARING 29-08-2017 !' /DATE OF PRONOUNCEMENT 15-09-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA U/ S 12AA(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 10.01.2017. GROUNDS RAISED BY ASSESSEE PER ITS APPE AL ARE AS UNDER:- (1) THAT THE ORDER DATED 10.1.2017 PASSED BY THE LD . COMMISSIONER OF INCOME TAX (EXEMPTIONS) [CIT(E)] CANCELLING THE REG ISTRATION OF THE APPELLANT UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 ( ACT) WITH EFFECT FROM 1.4.2010 IS BAD IN LAW AND ON FACTS OF THE CASE. (2) THAT THE REASONS GIVEN BY THE LD. CIT (E) FOR C ANCELLATION OF REGISTRATION OF THE APPELLANT UNDER SECTION 12AA(3) OF THE ACT ARE CONTRARY TO LAW AND ON FACTS OF THE CASE. ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 2 (3) THAT THE LD. CIT(E) ERRED IN CANCELLING THE REG ISTRATION WITHOUT REALLY GOING INTO THE GENUINENESS OF THE ACTIVITIES OF THE APPEL LANT AND WITHOUT ANY EVIDENCE WHATSOEVER HAS ERRED IN HOLDING THAT THE A CTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE APPELLANT. (4) THAT THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT ON THE GROUND THAT THE CORPUS DONATION OF RS.500000 RE CEIVED BY THE APPELLANT FROM M/S. HERBICURE HEALTHCARE SIO-HERBAL RESEARCH FOUNDATION (HERBICURE) DURING THE FINANCIAL YEAR 2010-2011 WAS AN ACCOMMOD ATION ENTRY BASED ON THE ALLEGED STATEMENT OF THE DIRECTOR OF HERBICURE, EVEN THOUGH THE GENUINENESS OF THE DONATION HAVING BEEN CONFIRMED B Y HERBIUCURE SUBSEQUENTLY. (5) THAT THE LD. CIT (E) WAS NOT JUSTIFIED IN CANCE LLING THE REGISTRATION OF THE APPELLANT WITHOUT PROVIDING AN OPPORTUNITY TO THE A PPELLANT FOR CROSS- EXAMINATION OF THE DIRECTOR OF HERBICURE WHICH IS I N GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND THEREFORE THE ORD ER OF THE LD. CIT (E) DESERVES TO BE QUASHED. (6) THAT THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT DESPITE THERE BEING NO SPECIFIC INFORMATION WITH RE GARD TO THE INGENUINENESS OF THE CORPUS DONATION OF RS.500000 RECEIVED BY THE AP PELLANT FROM HERBICURE DURING THE FINANCIAL YEAR 2010-2011. (7) THAT THE LD. CIT(E) FAILED TO RECORD ANY SATISF ACTION WITH REGARD TO THE CONDITIONS PRESCRIBED IN SECTION 12AA(3) OF THE ACT AND HAS THUS CLEARLY EXCEEDED HIS EXCEEDED HIS POWER IN CANCELLING THE R EGISTRATION. THE LD. CIT(E) ERRED IN NOT PROVIDING A SINGLE IOTA OF EVID ENCE THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AND THE CANCELLATION OF THE T RUST IS COMPLETELY DEPENDENT ON A NON- VERIFIED STATEMENT OF A THIRD PARTY. (8) THAT THE LD. CIT(E) ERRED IN CANCELLING THE REG ISTRATION OF THE APPELLANT WITH RETROSPECTIVE EFFECT I.E. FROM 1.4.2010 WHICH IS NO T 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 BEFOR E THE DATE OF HEARING OF THE APPEAL. SHRI A.K. GUPTA, LD. AUTHORIZED REPRESENTATIVE APPE ARED ON BEHALF OF ASSESSEE AND SHRI GOULEAN HANGSHIG, LD. DEPARTMENTA L REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 10.01.2017 OF LD. CIT (EX), KOLKATA CANCELLING THE REGISTRATIO N GRANTED TO THE ASSESSEE TRUST U/S 12AA OF THE ACT. 3. THE ASSESSEE IS A TRUST CONSTITUTED UNDER THE DEED OF TRUST DATED 27.3.1981. THE ASSESSEE WAS GRANTED REGISTRATION U/ S 12AA OF THE ACT BY AN ORDER DATED 06.07.1981 BY THE DIRECTOR OF INCOME TA X (EXEMPTION), KOLKATA. ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 3 THE ASSESSEE HAS BEEN ENJOYING THE BENEFIT OF REGIS TRATION EVER SINCE THE GRANT OF REGISTRATION. THE ASSESSEE IS ENGAGED IN V ARIOUS CHARITABLE ACTIVITIES. 4. THERE WAS A SURVEY OPERATION CARRIED OUT U/S 13 3A OF THE ACT ON 27.01.2015 IN THE BUSINESS PREMISES OF HERBICURE HE ALTHCARE BIO-HERBAL RESEARCH FOUNDATION (HHBHRF). HHBHRF IS A COMPANY I NCORPORATED UNDER SECTION 25 UNDER THE COMPANIES ACT, 1956. IT IS ENG AGED IN BASIC AND FUNDAMENTAL BIO MEDICAL RESEARCH IN THE FIELD OF MI CRO BIOLOGY AND ANALYTICAL CHEMISTRY. THE HHBHRF WAS RECOGNISED IN THE YEAR 20 06-07 AS A SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION (SIRO) BY THE MINISTRY OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA AND SUBSEQUENTLY RE COGNISED 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 PERSON MAKING PAYMENT WHILE COMPUTING BUSINESS INCOME OF SUCH PAYEE. ANY SUM PAID MEANS IT INCLUDE S DONATIONS ALSO. 5. IN THE COURSE OF SURVEY OPERATIONS THE AUTHOR ISED OFFICER CARRYING OUT THE SURVEY RECORDED THE STATEMENT OF SHRI SWAPAN RANJAN DASGUPTA, THE FOUNDER DIRECTOR OF HHBHRF. THE REVENUE HAD INFORMATION THA T SINCE HHBHRF ENJOYS APPROVAL U/S 35(1)(II) OF THE ACT AND THEREFORE IT WAS BEING USED BY MONEY LAUNDERERS TO GIVE DONATIONS WHICH IS BASICALLY ACC OMMODATION ENTRIES. QUESTION NO.22 AND 23 AND ANSWER TO THOSE QUESTIONS WILL SHOW THE MODUS OPERANDI 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 C OMPUTER EXTRACTS TAKEN OUT OF THE TALLY WHICH WAS FOUND IN YOUR E-MAIL. THESE PAG ES ARE RELATED TO THE BANK BOOK OF HERBICURE HEALTHCARE BIO-HERBAL RESEARCH FO UNDATION WHEREIN IT IS CLEARLY REFLECTED THAT THE AMOUNT OF RS.25 IAKH (IN TWO TRENCHES] RECEIVED FROM OCL INDIA LTD AN 15.07.2011, RS.251AKH RECEIVED FRO M OCL INDIA LTD ON 11.08.2011 & 17.084011 ARE IMMEDIATELY BEING TRANSF ERRED TO A.S. ENTERPRISES WHICH IS A PAPER COMPANY ON THE SAME DATES. SIMILAR TREND IS VISIBLE IN THE CASE ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 4 OF DONATIONS RECEIVED FROM OTHER PARTIES WHERE JUST IMMEDIATELY AFTER THE RECEIPT OF DONATION AMOUNT THE SAME IS BEING TRANSF ERRED 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 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 20 03 U/S 25 OF THE COMPANIES ACT, 1956 WHICH WAS RECOGNIZED IN 2006-07 AS A SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY THE MINI STRY OF SCIENCE & TECHNOLOGY, GOVT OF INDIA AND SUBSEQUENTLY WE BECAM E A GAZETTE NOTIFIED COMPANY U/S 35(1)(II) OF THE I.T. ACT. 1961 IN MARC H, 2008, DESPITE OF OUR - SINCERE, HONEST AND BEST INTENTION WE FAILED TO PRO CURE ANY GENUINE DONATIONS TILL 2010-11, THE SITUATION WAS BECOMING BAD TO WOR SE 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 POPULATI ON WE HAD NO OTHER ALTERNATIVE BUT TO BECOME THE VICTIM OF THE CIRCUMSTANCES AGAIN ST OUR WILL AND PRINCIPLE. SUBSEQUENTLY, I WAS APPROACHED BY ONE MR KISHAN BHA WASINGKA 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 T HE 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 MOBILE NO, AND ADDRESS) THROUGH WHICH YOU HAVE GIVEN ACCOMMODATION ENTRIES IN THE FORM OF BOGUS DONATIONS ON COMMISSION? PLEASE ALSO STATE WHAT ARE THE COMMISSION CHARGED B Y YOU AND BROKER CONCERNED FUR PROVIDING ACCOMMODATION ENTRIES TO DI FFERENT BENEFICIARIES. 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 PART Y. 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 ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 5 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 DE DUCTING 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 FO RM 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 CHA RGED BY MR KISHAN BHAWASINGKA FOR FACILITATING THE SAID ACCOMMODATION ENTRY. SUBSEQUENTLY, A SANCTION LETTER IS RECEIVED FROM TH E DONOR REFLECTING THE AMOUNT OF DONATION AND MODE OF PAYMENT. THE PARTICULARS AR C 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 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 B HAWASINGKA APPROACHED THE ASSESSEE FOR THE PURPOSE OF ENABLING THE ASSESS EE TO GIVE ACCOMMODATION ENTRY OF RECEIPTS OF DONATIONS AS WEL L AS GIVING OF DONATIONS BY THE ASSESSEE FOR WHICH THE ASSESSEE WOULD BE PAI D A COMMISSION. SINCE HHBHRF WAS HAVING FINANCIAL CRUNCH IT ACCEDED TO TH E PROPOSAL. WITH REGARD TO THE MODUS OPERANDI OF GIVING OF ACCOMMODATION EN TRIES IT WAS STATED THAT BOGUS DONATIONS ARE RECEIVED BY CHEQUES/RTGS INTO V ARIOUS BANK ACCOUNTS OF THE ASSESSEE OUT OF THE SAID BANK ACCOUNT PAYMEN TS WERE MADE TO PAPER OR BOGUS COMPANIES FOR BOGUS PURCHASES OR EXPENSES ON THE ADVICE OF SHRI KISHAN BHAWASINGKA. SOMETIMES DONATIONS ARE ALSO GI VEN FROM THE BANK ACCOUNT AS DONATIONS BY/OF THE ASSESSEE. THE COMMIS SION PAYABLE FOR SUCH TRANSACTIONS OF THE ASSESSEE AS WELL AS THE BROKER SHRI KISHAN BHAWASINGKA WOULD BE DEDUCTED AND THE REMAINING AMOUNTS WOULD B E SIPHONED EITHER AS DONATIONS OR TOWARDS LAUNDERING OF BOGUS PURCHASES OR EXPENSES OF PARTIES IDENTIFIED BY SHRI KISHAN BHAWASINGKA. 7. THE ASSESSEE HAD RECEIVED A CORPUS DONATION O F RS.5 LAKH FROM HHBHRF VIDE CHEQUE NO. 645854 DATED 3.03.2011. SINCE THE A SSESSEE HAD RECEIVED ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 6 DONATIONS FROM HHBHRF THE LD. CIT(EX) KOLKATA WAS O F THE VIEW THAT THE ASSESSEE HAD ALSO INDULGED IN MONEY LAUNDERING AND THEREFORE THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12AA OF TH E ACT DESERVES TO BE CANCELLED BY INVOKING THE POWERS OF C.I.T.(EXEMPTIO NS), KOLKATA VESTED U/S 12AA(3) OF THE ACT WHICH READS AS FOLLOWS :- 12AA (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN G RANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1)[OR HAS OBTAINED REGIS TRATION AT ANY TIME UNDER SECTION 12A [ AS IT STOOD BEFORE ITS AMENDMENT BY T HE FINANCE (NO.2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMM ISSIONER 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 OB JECTS OF THE TRUST OR INSTITUTION , AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRI TING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. 8. THE LD, CIT(EX), 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 THAT THEY WERE ENGAGED IN PROVIDI NG ACCOMMODATION ENTRIES OF BOGUS DONATIONS. THE LD. CIT(EX), KOLKAT A FURTHER WAS OF THE FOLLOWING OPINION : 3. IT IS SEEN THAT YOU HAVE RECEIVED DONATION AMOUN TING TO RS. 5,00,000/- 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 LAUNDERING WHICH IS ILLEGAL, NOT GENUINE AND NOT AT PAR WITH THE OBJECT S OF THE TRUST/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). 9. THE ASSESSEE IN REPLY TO THE AFORESAID SHOW C AUSE NOTICE TOOK A STAND THAT AS FAR AS THE ASSESSEE WAS CONCERNED IT RECEIV ED A CORPUS DONATION FROM HHBHRF AND THAT THE SAME WAS GENUINE AND THAT IT HA D 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 RS. 5,00,000/- TO THE ASSESSEE AS DONATION TOWAR DS CORPUS FUND. THE LETTER IS ENCLOSED ON PAGE 25 OF THE PB. TO ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 7 THE TRUSTEE VISHWAROOPA CHARITY TRUST 9/1, R.N. MUKHERJEE ROAD, KOLAKTA-700001 DEAR SIR, PLEASE FIND ENCLOSED HEREWITH A SUM OF RS.5,00,000/ - (RUPEES FIVE LAKH ONLY) BY /C PAYEE CHEQUE NO 645854 DT. 03.03.2011 OF ICIC I BANK LTD TOWARDS MY DONATION TO YOUR CORPUS FUND. KINDLY SEND ME YOUR MONEY RECEIPT FOR THE SAME AND ISSUE ME AN INCOME TAX EXEMPTION CERTIFICATE ISSUED BY YOUR INCOME TAX DEP ARTMENT TO YOUR TRUST. MY PAN NO.:AABCH4849J NAME: HERBICURE HEAL THCARE BIO HERBAL RESEARCH FOUNDATION. YOURS FAITHFULLY FOR HERBICURE HEALTHCARE BIO HERBAL RESEARCH FOUNDA TION. SD/- ACCOUNTANT 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 ADD RESSED TO THE LD. CIT(EX)KOLKATA IN WHICH HHBHRF HAVE REITERATED THAT THE BROKERS ARRANGED FOR DONATIONS TO HHBHRF AND ALSO ASKED THEM TO RETU RN THE DONATION IN THE FORM OF DONATIONS TO OTHER TRUST. THE LD.CIT(EX), K OLKATA ALSO REFERRED TO THE FACT THAT HHBHRF DISOWNED HAVING DEALT WITH CASH AN D THAT THE BROKERS DEALT WITH CASH RECEIVED FROM THE PERSONS TO WHOM DONATIO NS WERE MADE BY HHBHRF. THE LD. CIT(EX) THEREAFTER REFERRED TO THE FACT THAT CBDT VIDE ITS NOTIFICATION DATED 06.09.2016 HAD WITHDRAWN THE APP ROVAL ACCREDITED TO HHBHRF U/S 35(1)(II) OF THE ACT. THEREAFTER THE LD . CIT(EX) WITHDREW THE REGISTRATION GRANTED TO THE ASSESSEE BY OBSERVING A S FOLLOWS :- INDULGING IN INGENUINE ACTIVITIES WHICH IS NOT AT P AR WITH THE TRUST DEED LEADS TO THE ULTIMATE CONCLUSION THAT THE SOCIETY IS IN THE 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 ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (N O.2) ACT, 1.996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSIONE R OR] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 8 THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION 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. T/62/W.B.VII OF 198 1-82 DATED 06.07.1981 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. 11. AGGRIEVED BY THE ORDER OF LD. CIT(EX), KOLKA TA THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE FIRSTL Y DREW OUR ATTENTION TO THE ANSWER GIVEN BY FOUNDER AND DIRECTOR OF HHBHRF TO Q UESTION NO. 22 RECORDED AT THE TIME OF SURVEY CARRIED OUT IN THE BUSINESS P REMISES OF HHBHRF. HE DREW OUR ATTENTION TO THE FACT THAT IN THE SAID STA TEMENT THE FOUNDER DIRECTOR HAD SPECIFICALLY REFERRED TO A PERIOD FROM WHICH BO GUS 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 THROUG H CHEQUE DATED 03.03.2011 WHICH WAS ADMITTEDLY PRIOR TO THE PERIOD IN WHICH BOGUS DONATIONS WERE RECEIVED BY HHBHRF. ACCORDING TO HIM THE STATE MENT RECORDED AT THE TIME OF SURVEY BASED ON WHICH THE IMPUGNED ORDER WA S 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 BY THE LD. CIT(EX), KOLKATA IS UNSUSTAINABLE. HIS NEXT SUBMISS ION 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 RS .5 LAKHS AND IT WAS THE ASSESSEE WHO ARRANGED THROUGH THE BROKERS FOR GETTI NG BOGUS DONATIONS. IT WAS ALSO HIS SUBMISSION THAT THERE IS NO EVIDENCE O F THE ASSESSEE HAVING INDULGED IN MONEY LAUNDERINGS. THE ASSESSEE BROUGHT TO OUR NOTICE THAT ASSESSEE HAS BEEN CARRYING OUT CHARITABLE ACTIVITIE S. 13. ACCORDING TO THE LD. AR, THE LD. CIT(EX), K OLKATA HAS NO DIRECT EVIDENCE AGAINST THE ASSESSEE WARRANTING CANCELLATION OF REG ISTRATION U/S 12AA (3) OF ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 9 THE ACT. IT WAS SUBMITTED BY HIM THAT REGISTRATION GRANTED TO THE ASSESSEE CAN BE CANCELLED U/S 12AA(3) ONLY ON CONDITIONS BEING S ATISFIED (A) THAT THE ACTIVITIES OF THE TRUST OF INSTITUTION ARE NOT GENU INE (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 BROU GHT ON RECORD WHATSOEVER TO SHOW EITHER OF THE AFORESAID CONDITIONS HAVE BEEN S ATISFIED TO WARRANT CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT . THE LD. COUNSEL FOR THE ASSESSEE PLACED STRONG RELIANCE ON THE DECISION OF ITAT, KOLKATA BENCH RENDERED IN THE CASE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST NADIA V S C.I.T.(EXEMPTIONS), KOLKATA IN ITA NO.1165/KOL/2016 ORDER DATED 03.05.2017. 14. THE LD. DR PLACED RELIANCE ON THE ORDER OF LD. CIT(EX), KOLKATA. ACCORDING TO HIM, THE ANSWER GIVEN AT THE TIME OF S URVEY IN REPLY TO QUESTION NO.22 IS SUFFICIENT TO COME TO A CONCLUSION THAT TH E ASSESSEE HAS INDULGED IN MONEY LAUNDERING. ALTERNATIVELY IT WAS HIS SUBMISSI ON THAT THE ASSESSEE SHOULD BE AFFORDED AN OPPORTUNITY OF CROSS EXAMINAT ION 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 SWA PAN 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 RE GARD TO GENUINENESS OF THE DONATIONS GIVEN BY HHBHRF. IT CAN BE A MONEY LAUNDE RINGS INDULGED BY A THIRD PARTY, WHO GAVE DONATIONS TO THE ASSESSEE BY USING THE MIDDLEMEN CONNECTED WITH HHBHRF. SO FAR AS THE ASSESSEE IS CO NCERNED IT RECEIVED DONATION FROM HHBHRF A SUM OF RS.5 LAKH DULY ACCOUN TED THE SAME IN PROFIT AND LOSS ACCOUNT AS CORPUS DONATION. THERE IS NO EV IDENCE 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 COMMIS SION. AS WE HAVE ALREADY OBSERVED THAT THE ANSWER TO QUESTION NO.22 GIVEN BY SHRI SWAPAN RANJAN ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 10 DASGUPTA REFERRED TO DONATIONS GIVEN IN THE FINANCI AL YEAR 2011-12 AS BOGUS DONATIONS. WITH REGARD TO THE DONATIONS RECEIVED/GI VEN PRIOR TO 31.03.2011 THERE IS NO REFERENCE TO SUCH DONATIONS GIVEN OR RE CEIVED 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 POSS IBLE TO PLACE RELIANCE ON THE STATEMENT RECORDED AT THE TIME OF SURVEY AND CO ME TO A CONCLUSION THAT THE ASSESSEE HAS BEEN INDULGING IN MONEY LAUNDERING . 16. IN ANSWER TO QUESTION NO.23 SHRI SWAPAN RANJ AN DASGUPTA FOUNDER DIRECTOR OF HHBHRF HAS MADE REFERENCE TO CERTAIN MI DDLE MEN WHO ARE ENGAGED IN MONEY LAUNDERING USING HHBHRF AS A MEDIU M FOR MONEY LAUNDERING. THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW ANY CONNECTION BETWEEN THOSE BROKERS AND THE ASSESSEE. IN THE ABSE NCE 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 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 FILED BEFORE THE SETTLEMENT COMMISSION OF INCOME TA X. STILL THE TRIBUNAL CAME TO THE CONCLUSION THAT THERE WAS ABSENCE OF MATERIA L TO SHOW THAT THE CONCERNED TRUST HAD INDULGED IN MONEY LAUNDERING. W E 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 ASSESSEE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST (SUPRA). 17. 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 GENUINE OR THE ACTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANC E WITH THE OBJECTS OF THE TRUST. THERE IS NEITHER AN ALLEGATION IN THE IMPUGN ED ORDER NOR FINDING THAT ANY OF THE AFORESAID CONDITIONS EXIST IN THE CASE OF TH E ASSESSEE. WE THEREFORE ARE ITA NO.106/KOL/2017 A.Y. 2011-12 VISHWAROOPA CHARITY TRUST VS. CIT(EX) KOL. PAGE 11 OF THE VIEW THAT THE CANCELLATION OF REGISTRATION G RANTED 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. 18. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 15 /09/2017 SD/- SD/- ($%&) ( %&) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (%)*- 15 / 09 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-VISHWAROOPA CHARITY TRUST, 9/1 R.N.MUKHE RJEE ROAD 5 TH FL, KOLKATA-01 2. /RESPONDENT-CIT(EX), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLKATA-71 3.)2)3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5.789$$3 , 3 , / DR, ITAT, KOLKATA 6.9;<=> / GUARD FILE. BY ORDER/ %, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3 ,