Dr. B.G. Memorial Trust, Kolkata V. CIT, (Exemption), Kolkata, Kolkata

ITA 516/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1456 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 17-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURANA SHRI
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Gift; Charitable institution; Principle of natural justice; Opportunity of cross examination; Accommodation entries; Benefit of exemption; Cancellation of registration
• Section: 133A; 133(6); 80G; 12A; 12AA; 131; 12; 11

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 516 / KOL / 2017 DR. B.G. MEMORIAL TRUST 6/1 SARAT CHATTERJEE AVENUE, KOLKAT-29 [ PAN NO.AAATD 5235 A ] V/S . CIT (EXEMPTION), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLKATA-71 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.M SURANA, ADVOCATE /BY RESPONDENT SHRI G. HANGSHING, CIT-DR /DATE OF HEARING 01-08-2017 !' /DATE OF PRONOUNCEMENT 15-09-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF ORDE R OF COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA DATED 22.02.2016 U /S 12AA(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). GROUNDS RAISED BY ASSESSEE PER ITS APPEAL ARE AS UNDER:- 1. FOR THAT THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX, EXEMPTION IS ARBITRARY, ILLEGAL AND BAD AND IS NOT IN ACCORDANCE WITH LAW. 2. FOR THAT THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX (EXEMPTION) CANCELLING THE REGISTRATION U/S. 12AAA(3) WITHOUT F OLLOWING THE SPECIFIC DIRECTIONS OF THE HON'BLE INCOME TAX APPELLATE TRIB UNAL FOR EXAMINATION AND CROSS-EXAMINATION OF SRI DINESH AGARWAL AS WELL AS CA, PRADIP AGARWAL AND CA, AJAY AGARWAL. 3. FOR THAT THE LD. COMMISSIONER OF INCOME TAX EXEM PTION ERRED CANCELLING THE REGISTRATION SIMPLY RELYING ON THE STATEMENT OF DINESH AGARWAL WHICH WAS OBTAINED IN THE PROCEEDINGS U/S 133A WHICH CANNOT B E RELIED ON AS EVIDENCE WITHOUT BRINGING ON RECORD ANY EVIDENCE TO SUPPORT THE SAME. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASES THE LD. CIT(EXEMPTION) ERRED IN CANCELLING THE REGISTRATION U/S.12AAA(3)/254 WHEN THE ASSESSEE WAS CARRYING ON ITS ACTIVITIES IN ACCO RDANCE WITH THE OBJECTS, ALL ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 2 DONATIONS RECEIVED WERE APPLIED FOR EDUCATION AND C HARITABLE PURPOSE AND THERE WAS NOTHING ON RECORD TO SUGGEST THAT THE ACT IVITIES WERE NOT CARRIED ON IN ACCORDANCE WITH THE DEED OF SETTLEMENT. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (EXEMPTION) CANCELLING T HE REGISTRATION IS NOT IN ACCORDANCE WITH LAW AND THE TRUST WAS ENTITLED TO C ONTINUE ITS REGISTRATION UNDER THE PROVISIONS OF THE IT ACT, 1961. 6. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. SHRI S.M. SURANA, LD. ADVOCATE APPEARED ON BEHALF O F ASSESSEE AND SHRI G. HANGSHING, LD. DEPARTMENTAL REPRESENTATIVE REPRESEN TED ON BEHALF OF REVENUE. 2. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(EX) ERRED IN CANCELLING THE REGISTRATION CERTIFICATE U/S.12AA(3) OF THE ACT. 3. BRIEFLY STATED FACTS ARE THAT ASSESSEE-TRUST WAS REGISTERED U/S 12AA OF THE ACT. THE MAIN OBJECTIVES OF THE ASSESSEE-TRUST WERE TO PROVIDE RELIEF TO POOR, EDUCATION, MEDICAL RELIEF AND ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. 3.1 A SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 0 4.12.2015 AT THE PREMISES OF M/S QUADEYE SECURITIES PVT. LTD. (QSP F OR SHORT). DURING THE COURSE OF SURVEY OPERATION, A STATEMENT OF THE DIRE CTOR OF QSP, SHRI DINESH KUMAR AGARWAL UNDER OATH WAS RECORDED. IT WAS ADMIT TED THAT QSP IS PROVIDING ACCOMMODATION ENTRIES TO VARIOUS CHARITAB LE TRUST IN AND OUTSIDE KOLKATA. ACCORDINGLY, LD. CIT(EX) SHOW-CAUSED THE A SSESSEE FOR CANCELLATION OF REGISTRATION CERTIFICATE GRANTED U/S. 12A OF THE ACT. LD. CIT (EX) ALSO REQUESTED THE ASSESSEE TO PRODUCE THE FOLLOWING DET AILS:- A) INCOME AND EXPENDITURE A/C AND BALANCE SHEET FOR AYS 2011-12 TO 2015-16. B) ALL CERTIFICATE OF REGISTRATIONS GRANTED BY THE INCOME TAX DEPARTMENT. C) LIST OF DONATIONS RECEIVED ALONG WITH DETAILS OF DONORS FROM 01.04.2010 TO 31.03.2015 ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 3 D) LIST OF DONATIONS MADE ALONG WITH DETAILS OF DON E FROM 01.04.2010 TO 31.03.2015 LD. CIT(EX) ALSO PROVIDED THE COPY OF THE STATEMENT OF SHRI DINESH KUMAR AGARWAL IN THE INTEREST OF NATURAL JUSTICE AND FAIR PLAY. IN COMPLIANCE THERETO, THE ASSESSEE MADE FOLLOWING SUBMISSIONS:- 1) SHRI DINESH KUMAR AGARWAL IS A MAN OF MEANS AND THEREFORE ANY DONATION GIVEN OUT OF PHILANTHROPIC ACT CANNOT BE D ISPUTED. 2) IT WAS ASCERTAINED FROM THE STATEMENT OF SHRI DI NESH KUMAR AGARWAL THAT THE DONATION WAS MADE BY ASSESSEE THROUGH THE MIDDLEMAN NAMELY, PRADIP AGARWAL AND AJAY AGARWAL BUT ASSESSE E DENIED TO HAVE ANY CONNECTION OR INTERACTION WITH THESE PEOPLE. 3) THE ASSESSEE ALSO REQUESTED THE LD. CIT (EX) FOR THE CROSS- EXAMINATION OF SHRI DINESH KUMAR AGARWAL. SUBSEQUENTLY A PROPOSAL WAS RECEIVED BY LD. CIT(EX) FROM THE ASSESSING OFFICER HAVING JURISDICTION OVER THE ASSESSEE VIDE DATED 25.01.2016 FOR THE CANCELLATION OF REGISTRATION ON THE GROUND THAT NO CHARITABLE ACTIVITY WAS CARRIED ON BY ASSESSEE. THE CONTENTS OF THE PROPOSA L GIVE BY ASSESSING OFFICER WARD-1(2), KOLKATA STAND AS UNDER:- A) THE ASSESSEE TRUST HAS AN AGREEMENT WITH ALAGAP PA UNIVERSITY, TAMIL NADU FOR FACILITATING THE RUNNING OF DISTANCE LEARNING PROGRAMME OF THAT UNIVERSITY. B) IT WAS SEEN FROM THE TERMS AND CONDITIONS THAT T HE ASSESSEE TRUST DID NOT HAVE ANY DISCRETION. I) TO DECIDE THE PROGRAMME TO BE OFFERED. II) TO PRESCRIBE THE REGULATION AND SYLLABI TO CONDUCT SESSION OR PREPARE MATERIAL. III) TO PRESCRIBE FEES ETC. C) THE ONLY OBJECT OF THE ASSESSEE TRUST WAS TO ADV ERTISE, GIVE PUBLICITY AND CONDUCT PRACTICE GUIDANCE TO THE TEAC HERS. THE TRUST DID NOT HAVE ANY RIGHT EVEN TO ADMIT OR REJECT ANY STUDENT. ONLY ACTIVITY OF THE ASSESSEE TRUST WAS TO PROVIDE INFRA STRUCTURE AND TECHNICAL MANPOWER TO THE UNIVERSITY. THE ONLY EXPE NSES OF THE ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 4 ASSESSEE TRUST WAS ADMINISTRATIVE EXPENSES AND INCO ME WERE FROM THE SAID UNIVERSITY AND VARIOUS CORPUS DONATIO NS RECEIVED. 3.2 ACCORDINGLY, LD. CIT(EX) AGAIN ISSUED SHOW CAUS E NOTICE FOR CANCELLATION OF REGISTRATION CERTIFICATE AND FIXED THE DATE OF HEARING ON 15.02.2016. THE ASSESSEE FAILED TO APPEAR BEFORE LD . CIT(EX) AND SENT ITS REPLY BY POSTAL LETTER STATING THAT IT RUNS A SCHOO L IN THE NAME OF ST. PETERS SCHOOL AT 6/1 SARAT CHATTERJEE AVENUE, KOLKATA-29. BESIDES THE ABOVE, LD. CIT(EX) OBSERVED CERTAIN DET AILS AS MENTIONED BELOW:- PARTICULARS UPTO 31.03.11 UPTO 3103.12 UPTO 31.03.1 3 CORPUS DONATION 2.85 CRORE 4.48 CRORE 5.23 LAKH FIXED DEPOSITS 3.06 CRORE 4.73 CRORE 5.95 LAKH INTEREST INCOME 15.27 LAKH 28.65 LAKH 52 LAKH TOTAL RECEIPTS INCLUDING FEES 9483 LAKH 99.21 LAKH 1.73 CRORE I) THE ASSESSEE HAS BEEN RECEIVING MONEY THROUGH CO RPUS DONATION AND SAME HAS BEEN UTILIZED BY PARKING IN THE BANK A CCOUNT AS FIXED DEPOSIT. AS SUCH, THERE WAS NO CHARITABLE ACTIVITY CARRIED OUT BY ASSESSEE. THEREFORE, THE ASSESSEE HAS MISUSED THE P ROVISION OF SECTION 12AA AND 80G OF THE ACT. II) ASSESSEES ACTIVITIES ARE SUGGESTING AS IF IT I S ENGAGED IN CONVERTING CASH INTO CHEQUE WHICH IS ILLEGAL IN NATURE. III) DONATION RECEIVED IS MERELY AN ACCOMMODATION E NTRY AND IN FACT THE ASSESSEE IS CONVERTING ITS OWN CASH IN ACCOUNTING F ORM. THE ASSESSEE AVOIDED TO AVAIL THE CROSS-EXAMINATION OPPORTUNITY OF SHRI DINESH KUMAR AGARWAL. 3.3 IN VIEW OF THE ABOVE OBSERVATION, REGISTRATION CERTIFICATE OF ASSESSEE WAS CANCELLED BY LD. CIT(EX) VIDE ORDER DATED. 22.0 2.2016. SUBSEQUENTLY ASSESSEE PREFERRED AN APPEAL BEFORE HO N'BLE ITAT. DURING THE HEARING THE HONBLE ITAT MADE CERTAIN OBSERVATION A ND THEREAFTER DISPOSED ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 5 OFF THE APPEAL. THE RELEVANT OBSERVATION AND FINDIN G OF THE HONBLE ITAT IS REPRODUCED BELOW :- A) THERE IS PIMA FACIE GROUND TO BELIEVE THAT THE D ONATION OF RS.50 LAKHS GIVEN BY M/S QUADEYE SECURITIES PRIVATE LTD WAS NOT GENUINE. B) THE ASSESSEE CHOSE TO AVOID APPEARING BEFORE THE RESPONDENT WHEN THE OPPORTUNITY WAS PROVIDED TO IT. THIS CONDUCT OF THE ASSESSEE WAS NOT JUSTIFIED. C) IT IS NO DOUBT TRUE THAT THE STATEMENT OF SRI DI NESH KUMAR AGARWAL WITHOUT BEING SUBJECTED TO CROSS-EXAMINATION BY THE ASSESSE E AND FURTHER CORROBORATED BY THE EVIDENCE OF PERSON WHICH WAS ST ATED TO HAVE ARRANGED FOR BOGUS GIFTS CANNOT BE BELIEVED IN TOTO. NEVERTHELES S, THE FACT REMAINS THAT THERE ARE GROUNDS TO BELIEVE THAT THE DONATION RECE IVED BY THE ASSESSEE HAD TO BE DECIDED WITH REGARD TO ITS GENUINENESS. D) AS RIGHTLY CONTENDED BY THE LEARNED DR IF IT IS FOUND THAT THE ASSESSEE WAS ACCEPTING FACTS WERE ONLY LEAD TO INFERENCE THAT TH E ACTIVITIES OF THE TRUSTS ARE NOT GENUINE OR ARE NOT CARRIED IN ACCORDANCE WITH T HE OBJECT OF THE TRUST. E) WE THEREFORE ARE OF THE VIEW THAT IT WOULD BE AP PROPRIATE IN THE INTEREST OF JUSTICE TO SET ASIDE THE ORDER OF THE RESPONDENT AN D REMAND THE ISSUE OF THE CANCELLATION OF REGISTRATION TO THE RESPONDENT FOR FRESH CONSIDERATION. 2.13 THEREAFTER, THE HON'BLE ITAT DIRECTED: A) ASSESSEE SHOULD BE PROVIDED OPPORTUNITY TO CROSS -EXAMINATION SRI DINESH KUMAR AGARWAL. B) BEFORE CANCELLING THE REGISTRATION AN OPPORTUNIT Y MUST BE PROVIDED TO THE ASSESSEE OF BEING HEARD. C) IF THE CIT(EXEMPTIONS), KOLKATA DESIRES THEN HE MAY ALSO EXAMINE SRI PRADIP AGARWAL, SRI AJAY AGARWAL BUT IN THAT CASE T HE OPPORTUNITY OF CROSS- EXAMINATION OF THE SAID PERSONS SHOULD BE PROVIDED TO THE ASSESSEE. D) REGARDING THE CASE LAWS CITED BY THE ASSESSEE, T HE TRIBUNAL OBSERVED THAT THE FACTS OF THE CASES ARE ENTIRELY DIFFERENT AND H ENCE NOT RELEVANT. IN CONSONANCE WITH THE DIRECTION OF HON'BLE ITAT VI DE ORDER DATED 14.10.2016 THE CASE WAS FIXED FOR HEARING TO FACILITATE CROSS- EXAMINATION OF SHRI DINESH KUMAR AGARWAL. SIMILARLY, A SUMMONS WAS ALSO ISSUED TO SHRI DINESH KUMAR AGARWAL FOR HIS PERSONAL APPEARANCE U/S 131 OF THE ACT. 4. NOW THE SERIES OF EVENTS OF THE PROCEEDINGS ARE LISTED AS UNDER:- 14.10.2016 LD. AR OF THE ASSESSEE APPEARED WITHOUT THE ASSESS EE. THUS, LD. AR WAS DIRECTED TO PRODUCE THE TRUSTEE SHRI GOUTAM GHO SH AS WELL. LD. AR LEFT ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 6 THE OFFICE OF LD. CIT(EX) AT 11.20 A.M. BUT 11.30 A .M. SHRI DINESH KUMAR AGARWAL APPEARED FOR THE CROSS-EXAMINATION. 14.12.2016 SHRI GOUTAM GHOSH, THE TRUSTEE OF THE ASSESSEE AND LD. AR APPEARED BUT DINESH KUMAR AGARWAL DID NOT APPEAR. 16.112.2016 BOTH PARTIES APPEARED BUT LD. CIT(EX) HAD TO GO TO ATTEND CONFERENCE BEING ADDRESSED BY CHAIRMAN OF CBDT. 10.01.2017 A LETTER DATED 06.01.2017 WAS SUBMITTED BY SHRI DI NESH KUMAR AGARWAL WHEREIN IT WAS STATED THAT IT IS CAUSING HARDSHIP T O APPEAR AGAIN AND AGAIN ON THE SAME MATTER AND THEREFORE AN EXPLANATION IN WRI TING WAS FORWARDED TO LD. CIT (EX). THE CONTENTS OF THE LETTER REPRODUCED BEL OW:- TO COMMISSIONER OF INCOME TAX (EXEMPTIONS) 6 TH FLOOR, MIDDLETON ROW, KOLKAT-700071 SUB: REGARDING SUMMON ISSUED U/S. 131 OF INCOME TAX ACT, IN CASE OF B.G. MEMORIAL TRUST(PAN- DEAR SIR, WITH REFERENCE TO THE ABOVE, WE WISH TO INFORM YOU THAT WE HAD ATTENDED YOUR OFFICE ON14.10.2016, WHEN THE REPRESENTATIVE OF B.. G. MEMORIAL TRUST WAS NOT PRESENT FOR CROSS EXAMINING US. SUBSEQUENTLY, THE D ATE AS REFIXED ON 16.12.2016, WHEN ALSO THE EXAMINATION BY B G MEMORI AL TRUST COULD NOT TAKE PLACE AND THE MATTER WAS ADJOURNED TO 10.01.2017. I T IS CAUSING HARDSHIP TO US FOR APPEARING AGAIN AND AGAIN ON THE SAME MATTER BEFORE YOURSELF AND THEREFORE WE REQUEST YOU TO ALLOW US TO SUBMIT OUR EXPLANATION ON THIS MATTER HEREIN WRITING. THE DONATION TO BG. MEMORIAL TRUST AMOUNTING TO RS. 50,00,000/- WAS MADE DURING THE FY 2011-12 BY US. THIS MOUNT WAS DECLARE D BY U9S UNDER INCOME DECLARATION SCHEME, 2016 AND APPROPRIATE TAX WAS AL SO PAID UNDER THE SAID SCHEME. SINCE THE DONATION MADE TO B.G. MEMORIAL TRUST STAN DS ALREADY DECLARED UNDER THE SAID IDS, 2016, WE HAVE NOTHING MORE TO A DD/SAY ON THE MATTER IN THIS REGARD. THANKING YOU, FOR QUADEYE SECURITIES PRIVATE LIMITED, QUADEYE SECURITIS PVT. LTD. SD/- ILLEGIBLE AUTHORISED SIGNATORY DIRECTOR ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 7 ON THE DATE OF HEARING I.E. 10.1.2017 THE ASSESSEE AND LD. AR APPEARED BEFORE THE LD. CIT(EX) WHO SHOWED THE LETTER WRITTE N BY SHRI DINESH KUMAR AGARWAL TO BOTH OF THEM I.E. ASSESSEE AND HIS AR. S UBSEQUENTLY THE LD. AR FOR THE ASSESSEE MADE A REPLY IN RESPONSE TO THE LETTER OF SHRI DINESH KUMAR AGARWAL VIDE LETTER DATED 25.1.2017. THE CONTENTS O F THE REPLY OF THE ASSESSEE READ AS UNDER : A) IT IS APPARENT FROM THE STATEMENT OF SRI DINESH KUMAR AGARWAL THAT HE RUNS A HUGE BUSINESS AND THEREFORE HAVE A SOLID CREDITWORT HINESS. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE DONATION WA S BOGUS AND THE SAME WAS DECLARED UNDER IDS. B) THE ASSESSEE APPEARED FOR CROSS-EXAMINATION WHER EAS SRI DINESH KUMAR AGARWAL TRIED TO AVOID. C) SRI DINESH AGARWAL NEVER ADMITTED THAT HE RECEIV ED MONEY FROM THE ASSESSEE FOR MAKING THE DONATIONS. D) IT CLAIMED THAT THE ASSESSEE HAD PURCHASED LAND WITH THE DONATION AND THEREFORE THE DONATION RECEIVED HAS BEEN APPLIED. S O UNDER NO CIRCUMSTANCES, THE ACTIVITIES CAN BE HELD AS NOT GE NUINE. ON THE BASIS OF ABOVE DISCUSSION, LD. CIT(EX) MADE FOLLOWING OBSERVATIONS:- 1) TO PROVE A TRANSACTIONS AS GENUINE THERE HAS TO BE THREE INGREDIENTS:- A) EXISTENCE OF THE PARTY B) CREDITWORTHINESS OF THE PARTY C) GENUINENESS OF TRANSACTIONS 2) LD. CIT(EX) ACCEPTED THE EXISTENCE AND CREDITWOR THINESS OF THE PARTY BUT DENIED THE GENUINENESS OF THE SAID TRANSACTION. 3) LD. CIT(EX) ALSO OBSERVED THAT THE PRINCIPLE OF NATURAL JUSTICE DO NOT REQUIRE FORMERLY CROSS-EXAMINATION AS PER LAW AS CR OSS-EXAMINED IS A PART OF PROCEDURE. THEREFORE THE ORDER OF ANY AUTHO RITY CANNOT BE HELD INVALID IN THE ABSENCE OF CROSS-EXAMINATION. IN THI S CONNECTION LD. CIT(EX) RELIED ON THE FOLLOWING JUDGMENTS:- A) GTC INDUSTRIES VS. ACIT (1998) 60 TTJ MUMBAI B) MANINDRA NATH CHATTERJEE VS. COLLECTOR OF CENTRA L EXCISE & ANOTHER ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 8 C) M.K. THOMAS VS. STATE OF KERALA 40 STC 278 (KEL) D) K.T. SHADULI VS. STATE OF KERALA 39 STC 478 (SC ) FROM THE ABOVE FACTS, IT IS TRANSPIRED THAT QSP HAS MADE A DECLARATION OF INCOME UNDER IDS SCHEME 2016 WHICH PROVES THAT QSP HAS MADE THE DONATION TO THE ASSESSEE THROUGH CHEQUE AND RECEIVE D CASH FROM THE ASSESSEE-TRUST. THE CASH WHICH WAS AVAILABLE WITH Q SP WAS DECLARED UNDER IDS SCHEME, 2016. THE ASSESSEE HAS RECEIVED MOST OF ITS DONATION IN C ORPUS FORM WHICH HAS IN TURN BEING PARKED WITH THE BANK AS FIXED DEPOSIT. T HERE ARE NO DETAILS AVAILABLE FOR SUGGESTING THAT ASSESSEE HAS INVESTED A CORPUS FUND IN SOME IMMOVABLE PROPERTIES. IN VIEW OF ABOVE LD. CIT(EX) CONCLUDED THAT THE ACTIVITIES OF ASSESSEE/TRUST ARE NOT CHARITABLE IN NATURE AND ACCORDINGLY CANCELLED THE REGISTRATION CERTIFICATE ISSUED U/S 1 2A OF THE ACT BY OBSERVING AS UNDER:- 5.1. THE HON'BLE ITAT, KOLKATA HAD ALREADY OBSERVED THAT THE FACTS OF THE CASE CLEARLY INDICATE THAT THE DONATION RECEIVED WA S BOGUS AND THEREFORE THE TRUST HAD INVOLVED ITSELF IN INGENUINE ACTIVITIES. THE ORDER WAS SET ASIDE BY THE HOU'BLE TRIBUNAL FOR PROVIDING THE ASSESSEE WITH AN OTHER OPPORTUNITY TO CROSS- EXAMINE SRI DINESH KURNAR AGARWAL. AS NARRATED IN P ARA 3 OF THIS ORDER THAT DESPITE SEVERAL ATTEMPTS, THE CROSS-EXAMINATION COU LD NOT TAKE PLACE. HOWEVER, SRI DINESH KUMAR AGARWAL HAD SUBMITTED A L ETTER WHEREIN HE HAS STOOD BY HIS STATEMENT MADE BEFORE THE INCOME TAX A UTHORITIES. HE HAD ALSO STATED THAT THE BOGUS DONATION MADE TO THE ASSESSEE TRUST HAS BEEN DECLARED BY HIM UNDER INCOME DECLARATION SCHEME, 2016. TAXES ON SUCH DECLARATION HAD ALREADY BEEN PAID. THIS FACT LEADS TO THE INESC APABLE CONCLUSION THAT THE DONATION MADE BY M/S. QUADEYE SECURITIES PRIVATE LT D. TO THE ASSESSEE TRUST BY CHEQUE HAS ILL FACT CI)J11E BACK TO THE CHEST OF M/S. QUADEYE SECURITIES PRIVATE LTD. IN FORM OF CASH. NOW WHO IN THE WORLD WILL RETURN THE CASH OTHER THAN THE ASSESSEE TRUST OR THE TRUSTEES OF THE ASSE SSEE TRUST ITSELF? ALL INCOME TAX PROCEEDINGS ARE GUIDED BY THE PRINCIPLE OF PREP ONDERANCE OF HUMAN PROBABILITIES. GOING BY THAT VERY PRINCIPLE, THE FA CT OF THE CASE LEADS TO THE INESCAPABLE CONCLUSION THAT THE ASSESSEE TRUST HAS PARKED UNACCOUNTED MONEY OF ITS TRUSTEES IN THE GARB OF CORPUS DONATIO N. 5.2. IT MUST BE UNDERSTOOD (HAT CHARITABLE TRUSTS T HAT ENJOY THE BENEFIT U/S. 12AA ARC, BY ITS VERY NATURE, AKIN TO PUBLIC INSTIT UTIONS. IT RUNS ON PUBLIC MONEY AND FOR THE WELFARE OF THE GENERAL PUBLIC. THE EXEM PTION U/S 11 ETC. IS ALLOWED AS SUCH ORGANISATIONS ARE SUPPOSED TO PERFORM A ROL E THAT THE GOVERNMENT, BECAUSE OF DIFFERENT CONSTRAINTS, CANNOT. SO FOR AL L PRACTICE PURPOSES, THE ACTIVITIES OR THE TRUST WHICH IS REGISTERED U/S. 12 AA AND ENJOYING BENEFITS OF SECTION 11 MUST HAVE PROBITY AND ADHERE TO TRANSPAR ENT, GENUINE, LEGAL AND ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 9 WELFARE ACTIVITIES LIKE ANY OTHER PUBLIC INSTITUTIO NS. IT WILL NOT BE OUT OF CONTEXT TO COMPARE MONEY LAUNDERING BY CHARITABLE TRUST WIT H CORRUPTION BY THE PUBLIC SERVANTS. IN A VERY RECENT CASE OF STATE OF KARNATA KA VIS. SELVI J. JAYALALITA. HONBLE SUPREME COURT STATED THE FOLLOWING: ANY INTERPRETATION OF THE PROVISIONS OF SUCH LAW H AS TO BE ESSENTIALLY PURPOSIVE IN FURTHERANCE OF ITS MISSION AND NOT IN RETROGRESSION THEREOF. INNOVATIVE NUANCES OF EVIDENTIAL INADEQUACIES PROCE SSUAL INFIRMITIES AND INTERPRETATIONAL SUBTLETIES ARTFULLY ADVANCE IN DEFENCE, OTHERWISE INTANGIBLE AND IN A CONSEQUENTIAL OUGHT TO BE CONSC IENTIOUSLY CAST ASIDE WITH MORAL MATURITY AND SINGULAR SENSITIVITY TO UPHOLD THE STATUTORY SANCTITY, LEST THE COVETED CAUSE OF JUSTICE IS CAUS ALITY. IT HAS BEEN SEEN IN RECENT TIMES THAT MANY ENTITIES REGISTERED U/S 12A / 12AA OF THE ACT HAVE MISUSED AND ABUSED THE LEGAL PROVIS ION TO DO MONEY LAUNDERING AND SAVED THEMSELVES FROM CANCELLATION B Y METHODS AS IS STATED BY THE HON'BLE SUPREME COURT, MENTIONED ABOVE. IN T HE SAME JUDGEMENT THE HON 'BLE SUPREME COURT FURTHER OBSERVED: 'A COLLECTIVE, COMMITTED AND COURAGEOUS TURNAROUND IS THUS THE PRESENT DAY IMPERATIVE TO FREE THE CIVIL ORDER FRONT THE SU FFOCATIVE THROTTLE OF THIS DEADLY AFFLICTION.' SO IT IS DUTY OF ALL CONCERNED TO PUT IN THEIR BEST TO ERADICATE THE STATE FROM THE VICES OF MONEY LAUNDERING AND CORRUPTION, IN THIS I NSTANT CASE THE ONLY ISSUE UNDER CONSIDERATION WAS ARRANGEMENT OF CROSS EXAMIN ATION OF SHRI DINESH KUMAR AGARWAL BY THE SHRI GOUTAM GHOSH MANAGING TRU STEE OF THE ASSESSEE TRUST. IT HAS ALREADY BEEN DISCUSSED THAT SUCH CROS S EXAMINATION COULD NOT TAKE PLACE BUT THE DECLARATION BY M/S. QUADEYE SECU RITIES PRIVATE LTD. UNDER INCOME DECLARATION SCHEME. 2016 AND ITS WRITTEN SUB MISSION BEFORE THE UNDERSIGNED UNAMBIGUOUSLY PROVES THAT THE DONATION RECEIVED BY THE ASSESSEE TRUST WAS BOGUS. 5.3 IN VIEW OF ALL ABOVE, I HEREBY INVOKE THE PROVI SION OF SECTION 12AA(3) OF THE ACT TO CANCEL THE REGISTRATION U/S 12A THAT WAS GRANTED TO THE ASSESSEE VIDE MEMO, NO,DIT(E)/T-, 41/301/02-03 DATED) 7.07.2 003. BEING AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFOR E US. 5. LD. AR BEFORE US FIELD PAPER BOOK WHICH IS RUNNI NG FROM PAGES 1 TO 51 AND SUBMITTED VARIOUS CASE LAWS WHICH ARE KEPT ON R ECORD. HE SUBMITTED THAT NO CROSS-EXAMINATION HAS BEEN CARRIED OUT BY LD. CI T(EX) IN THE INSTANT CASE. THEREFORE, THE IMPUGNED ORDER OF LD. CIT(EX) IS NOT TENABLE IN VIEW OF THE PRINCIPLE LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF M/S ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCIS E IN CIVIL APPEAL NO. 4228 OF 2006 DATED 02.09.2015. LD. AR ALSO RELIED O N THE ORDER OF THIS CO- ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 10 ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST VS. CIT (EXEMPTIONS) IN ITA NO. 1165/KOL/2016 DATED 03.05.2017. THE STATEMENT TAKEN UNDER OATH DURING THE SURVEY OP ERATION IS NOT ADMISSIBLE IN TERMS OF THE PRINCIPLE LAID DOWN BY HON'BLE SUPR EME COURT IN THE CASE OF S. KHADER KHAN SON REPORTED IN 352 ITR 480 WHERE THE HONBLE SUPR EME COURT HAS HELD THAT:- SECTION 133A DOES NOT EMPOWER ANY IT AUTHORITY TO E XAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MA DE THE BASIS FOR ADDITION IN THE INSTANT CASE, LD. CIT(EX) HAS ACCEPTED THE I DENTITY AND CREDITWORTHINESS OF THE DONOR BUT REJECTED THE GENUINENESS OF THE TR ANSACTIONS THOUGH THE TRANSACTIONS WAS MADE THROUGH BANKING CHANNEL. THU S, THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBTED. NO STATEMENT OF DINESH KUMAR AGARWAL WAS RECORDED W HEN HE APPEARED BEFORE LD. CIT(EX). THE DONATION MADE BY SHRI DINES H KUMAR AGARWAL TO OTHER CHARITABLE ORGANIZATIONS AS RECORDED IN QUEST ION NO.37 OF THE STATEMENT WAS DULY ACCEPTED. THUS, IT IS CLEAR THAT SHRI DINE SH KUMAR AGARWAL WAS A MAN OF PHILANTHROPIC. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE OPP ORTUNITY FOR CROSS- EXAMINATION HAS NOT BEEN PROVIDED TO THE ASSESSEE. THEREFORE, MATTER SHOULD BE RESTORED BACK TO THE FILE OF LD. CIT(EX) FOR FRE SH ADJUDICATION. IN REJOINDER LD. AR SUBMITTED THAT ORDER OF LD. CIT (EX) DOES NOT STAND IN THE ABSENCE OF CROSS-EXAMINATION OF THE PARTIES. LD. AR IN THIS CONNECTION, RELIED ON THE ORDER OF SPECIAL BENCH OF MUMBAI IN THE CASE OF M/S GTC INDUSTRIES LTD. VS. ACIT IN ITA NO. 5996/MUM/1993, 1055/BOM/1994 & ITA NO.1056/BOM/1994 DATED 07.03.2017, WHEREIN IT WAS H ELD AS UNDER : SO FAR AS THE ISSUE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE IS CONCERNED, THE SAME HAS BEEN DULY COMPLIED WITH IN TERMS OF DIRECTIONS CONTAINED IN THE EARLIER ORDERS OF THE TRIBUNAL WHI CH HAS BEEN FINALLY SETTLED IN SEVERAL ROUNDS OF LITIGATION BEFORE THIS SPECIAL BENCH. AS PER THE DIRECTION OF THE TRIBUNAL, FINALLY, THE REVENUE WAS REQUIRED TO PROVIDE CERTAIN MATERIAL AND CROSS-EXAMINATION OF C ERTAIN WITNESSES. IN ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 11 COMPLIANCE THEREOF, THE REVENUE HAS PROVIDED THE OP PORTUNITY TO CROSS- EXAMINE IN THE CASE OF FIVE PERSONS AS PER THE LIST GIVEN BY THE ASSESSEE. . 6. WE HAVE CAREFULLY CONSIDERED THE ENTIRE GAMUT OF FACTS, RIVAL CONTENTIONS RAISED BY THE PARTIES BEFORE US AND ALSO THE MATERI AL REFERRED TO DURING THE COURSE OF HEARING. IN THE INSTANT CASE ORIGINALLY L D. CIT(EX) CANCELLED THE REGISTRATION CERTIFICATE U/S.12A OF THE ACT VIDE OR DER DATED 22-2-2016. AGAINST THE ORDER OF LD. CIT(EX) ASSESSEE PREFERRED AN APPE AL WHO DIRECTED THE REVENUE TO PROVIDE AN OPPORTUNITY OF CROSS-EXAMINAT ION TO ASSESSEE. ACCORDINGLY, APPEAL WAS ALLOWED FOR STATISTICAL PUR POSE. SUBSEQUENTLY, IT WAS ALSO OBSERVED THAT IN SPITE OF SEVERAL NOTICES ISSUED BY LD. CIT(EX) TO BOTH THE PARTIES BUT THE PROCESS OF CROSS-EXAMINATION WAS NOT FULFILLED. WE OBSERVE IN THE INSTANT CASE THAT SHRI DINESH KUMAR AGARWAL DIRECTOR OF QSP DENIED TO AVAIL THE OPPORTUNITY OF CROSS EXAMINATION BY SUBMITTING A LETTER AS DISCUSSED ABOVE. THUS THE LD . CIT(EX) IN THE INSTANT CASE ERRED IN NOT GIVING THE OPPORTUNITY OF CROSS E XAMINATION. THUS THE CASES LAWS CITED BY THE LD. AR FOR THE OPPORTUNITY OF CRO SS EXAMINATION IS VERY MUCH APPLICABLE TO THE INSTANT CASE. 6.1 IN THIS CONNECTION WE ALSO RELY ON THE CASE CIT VS. S. KHADER KHAN SON REPORTED IN 352 ITR 480 WHERE THE HONBLE SUPREME C OURT HAS HELD THAT:- SECTION 133A DOES NOT EMPOWER ANY IT AUTHORITY TO E XAMINE ANY PERSON ON OATH, HENCE, ANY SUCH STATEMENT HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE DURING SUCH STATEMENT CANNOT, BY ITSELF, BE MA DE THE BASIS FOR ADDITION 6.2 IN THE ABSENCE OF THE CROSS EXAMINATION OF THE STATEMENT THE IMPUGNED ADDITION CANNOT STAND AS HELD BY THE HONBLE SUPREM E COURT IN THE CASE OF ANADAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO. 4228 OF 2006. THE RELEVANT EXTRACT OF THE JUDGMENT READS AS UNDER : ' ACCORDING TO US, NOT ALLOWING THE ASSESSEE TO CROSS -EXAMINE THE WITNESSES BY THE ADJUDICATING AUTHORITY THOUGH THE STATEMENTS OF THOSE WITNESSES WERE MADE THE BASIS OF THE IMPUGNED ORDER IS A SERIOUS FLAW W HICH MAKES THE ORDER NULLITY INASMUCH AS IT AMOUNTED TO VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BECAUSE OF WHICH THE ASSESSEE WAS ADVERSELY AFFECTED. IT IS TO BE BORNE IN MIND THAT THE ORDER OF THE COMMISSIONER WAS BASED UPON THE STATEM ENTS GIVEN BY THE ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 12 AFORESAID TWO WITNESSES. EVEN WHEN THE ASSESSEE DIS PUTED THE CORRECTNESS OF THE STATEMENTS AND WANTED TO CROSS-EXAMINE, THE ADJ UDICATING AUTHORITY DID NOT GRANT THIS OPPORTUNITY TO THE ASSESSEE. IT WOULD BE PERTINENT TO NOTE THAT IN THE IMPUGNED ORDER PASSED BY THE ADJUDICATING AUTHORITY HE HAS SPECIFICALLY MENTIONED THAT SUCH AN OPPORTUNITY WAS SOUGHT BY TH E ASSESSEE. HOWEVER, NO SUCH OPPORTUNITY WAS GRANTED AND THE AFORESAID PLEA IS NOT EVEN DEALT WITH BY THE ADJUDICATING AUTHORITY. AS FAR AS THE TRIBUNAL IS CONCERNED, WE FIND THAT REJECTION OF THIS PLEA IS TOTALLY UNTENABLE. THE TR IBUNAL HAS SIMPLY STATED THAT CROSS-EXAMINATION OF THE SAID DEALERS COULD NOT HAV E BROUGHT OUT ANY MATERIAL WHICH WOULD NOT BE IN POSSESSION OF THE APPELLANT T HEMSELVES TO EXPLAIN AS TO WHY THEIR EX-FACTORY PRICES REMAIN STATIC. IT WAS N OT FOR THE TRIBUNAL TO HAVE GUESS WORK AS TO FOR WHAT PURPOSES THE APPELLANT WA NTED TO CROSS-EXAMINE THOSE DEALERS AND WHAT EXTRACTION THE APPELLANT WAN TED FROM THEM. AS MENTIONED ABOVE, THE APPELLANT HAD CONTESTED THE TRUTHFULNESS OF THE STATEMENTS OF THESE TWO WITNESSES AND WANTED TO DIS CREDIT THEIR TESTIMONY FOR WHICH PURPOSE IT WANTED TO AVAIL THE OPPORTUNITY OF CROSS-EXAMINATION. THAT APART, THE ADJUDICATING AUTHORITY SIMPLY RELIED UPO N 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 D EALERS/WITNESSES AT THE PRICE WHICH IS MENTIONED IN THE PRICE LIST ITSELF COULD B E THE SUBJECT MATTER OF CROSS- EXAMINATION. THEREFORE, IT WAS NOT FOR THE ADJUDICA TING 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 T HAT ON AN EARLIER OCCASION WHEN THE MATTER CAME BEFORE THIS COURT IN CIVIL APP EAL NO. 2216 OF 2000, ORDER DATED 17.03.2005 WAS PASSED REMITTING THE CASE BACK TO THE TRIBUNAL WITH THE DIRECTIONS TO DECIDE THE APPEAL ON MERITS GIVING IT S REASONS FOR ACCEPTING OR REJECTING THE SUBMISSIONS. IN VIEW THE ABOVE, WE ARE OF THE OPINION THAT IF TH E TESTIMONY OF THESE TWO WITNESSES IS DISCREDITED, THERE WAS NO MATERIAL WIT H THE DEPARTMENT ON THE BASIS OF WHICH IT COULD JUSTIFY ITS ACTION, AS THE STATEM ENT OF THE AFORESAID TWO WITNESSES WAS THE ONLY BASIS OF ISSUING THE SHOW CA USE WE, THUS, SET ASIDE THE IMPUGNED ORDER AS PASSED BY THE TRIBUNAL AND ALLOW THIS APPEAL.' THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW ANY CONNECTION BETWEEN THOSE BROKERS AND THE ASSESSEE. IN THE ABSENCE OF S UCH CORROBORATIVE EVIDENCE, IT IS NOT POSSIBLE TO COME TO ANY CONCLUS ION THAT THE ASSESSEE INDULGED IN MONEY LAUNDERING AND THAT THE DONATION RECEIVED BY IT WAS A BOGUS DONATION. IN FACT ON IDENTICAL FACTS THIS TRI BUNAL 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 SUS TAINED. ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 13 7. APART FROM THE ABOVE, THE GROUNDS FOR CANCELLATI ON FOR REGISTRATION U/S 12AA(3) OF THE ACT IS THAT THE ACTIVITIES OF THE TR UST SHOULD NOT BE GENUINE OR THE ACTIVITIES OF THE TRUST ARE NOT BEING CARRIED O UT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. THERE IS NEITHER AN ALLEGATIO N 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 ACCOR DINGLY ALLOWED. 8. WITHOUT PREJUDICE TO THE ABOVE EVEN ASSUMING THA T THE DONATION TO ASSESSEE IS BOGUS THEN THE AMOUNT OF BOGUS DONATION WILL NOT BE ELIGIBLE FOR EXEMPTIONS U/S 11 OF THE ACT. UNDER SUCH CIRCUMSTAN CES, THE REGISTRATION CERTIFICATE ISSUED U/S 12AA OF THE ACT CANNOT BE CA NCELLED AS LONG AS THE OBJECTS OF THE TRUST ARE WITHIN THE PROVISIONS OF L AW. THE OBJECTS/ BYELAWS OF THE TRUST ARE PLACED ON PAGES 1 TO 12 OF THE PAPER BOOK AND ON THE BASIS OF SAME OBJECTS THE ASSESSEE WAS GIVEN REGISTRATION CE RTIFICATE U/S 12AA OF THE ACT. WHILE HOLDING SO, WE FIND SUPPORT & GUIDANCE F ROM THE JUDGMENT OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. APEEJAY EDUCATION SOCIETY REPORTED IN 59 TAXMANN.COM 102 WHEREIN IT WAS HELD AS UNDER:- UNDER SECTION 12AA OF THE ACT, THE COMMISSIONER, AT THE RELEVANT TIME IN THE YEAR 1999 HAD CALLED FOR ALL DOCUMENTS AND INFORMAT ION FROM THE RESPONDENT- ASSESSEE TO SATISFY HIMSELF ABOUT THE GENUINENESS O F THE ACTIVITIES OF THE INSTITUTION AND AFTER MAKING ENQUIRES HAD PASSED TH E ORDER REGISTERING THE SAID INSTITUTION AND GIVING IT THE BENEFIT UNDER SECTION 12A OF THE ACT, WHICH MADE THE INSTITUTION ELIGIBLE FOR EXEMPTION FROM THE PRO VISIONS OF SECTIONS 11 AND 12 OF THE ACT. UNDER SECTION 12AA(3) OF THE ACT, THE C OMMISSIONER WAS TO BE SATISFIED ABOUT THE ACTIVITIES OF THE SAID INSTITUT ION AND IF THEY WERE NOT GENUINE AND THE SAME WERE NOT BEING CARRIED OUT IN ACCORDAN CE WITH THE OBJECTS OF THE INSTITUTION HE COULD PASS THE ORDER CANCELLING THE REGISTRATION. IT CANNOT BE DISPUTED THAT THE RESPONDENT-ASSESSEE IS ENGAGED IN CARRYING OUT ITS OBJECTS AND THE GENUINENESS OF THE SAME HAS NEVER BEEN DOUB TED. THE ALLEGATION IS REGARDING THE ALLEGED SUPPLY OF THE INSTALLATION OF THE SOFTWARE AND WHETHER THE SAME WAS DONE BY M/S. WSL OR NOT. MERELY BECAUS E SH. SANJAY D. SONAWANI HAD GIVEN A STATEMENT, THE COMMISSIONER AS SUCH IS NOT JUSTIFIED IN CANCELLING THE REGISTRATION GRANTED ON 13.05.1999 W .E.F. THE ASSESSMENT YEAR 2004-05. THE ASSESSEE HAD PLACED VARIOUS MATERIALS BEFORE THE TRIBUNAL TO ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 14 SHOW THAT SOFTWARE MODULES PURCHASED WERE INSTALLED BETWEEN 2004 TO 2011 AND THE ASSESSEE HAD INCURRED AS MUCH AS 91.71% OF THE RECEIPTS FOR THE ASSESSMENT YEAR 2004-05. ACCORDINGLY, KEEPING IN VIEW THE PECULIAR FACTS AND CIRCUMSTANCES AS NOTICED ABOVE, HIGH COURT ARE OF THE OPINION THAT THE COMMI SSIONER OF INCOME TAX WAS NOT JUSTIFIED IN PASSING THE IMPUGNED ORDER FOR WITHDRAWING THE EXEMPTION AS ADMITTEDLY, THE RESPONDENT-ASSESSEE IS CARRYING OUT EDUCATIONAL ACTIVITIES BY RUNNING A LARGE NUMBER OF EDUCATIONAL INSTITUTIO NS ALL OVER THE COUNTRY AND, THEREFORE, THE QUESTIONS OF LAW SOUGHT TO BE RAISED DO NOT ARISE. 8.1 THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE INSTANT CASE BEFORE US. IN THE INSTANT CASE THE ASSESSEE IS A CHARITABLE TRUST DULY CONSTITUTED AS CHARITABLE TRUST UNDER A DEED OF TRUST AS A PUBLIC CHARITABLE TRUST FOR IMPARTING EDUCATION WHICH IS A CHARITABLE PURPOSE U/S. 2(15) OF THE INCOME TAX ACT. THE TRUST DULY APPLIED FOR REGISTRATION U/ S. 12AA OF THE IT ACT BEFORE THE DIRECTOR OF INCOME TAX (EXEMPTION) IN CONFORMIT Y WITH RULE 17A AND SUBMITTED FORM NO. 10A TOGETHER WITH OTHER REQUISIT E DOCUMENTS. THE DIRECTOR OF INCOME TAX (EXEMPTION) AFTER VERIFICATION OF DOC UMENTS AND AFTER BEING SATISFIED ABOUT THE OBJECT OF THE TRUST AND GENUINE NESS OF ITS ACTIVITIES GRANTED REGISTRATION EFFECTIVE FROM 01.03.2003 VIDE REGISTR ATION NO. DIT(E)/T- 41/8E/391/02-03 DATED 27.03.2003. SIMILARLY, WE ALSO RELY IN THE JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. ISLAMIC ACADEMY OF EDUCATION REPORTED IN 59 TAXMANN.COM 102 WHEREIN IT WAS HELD AS UNDER:- IF TRUSTEES WERE MISAPPROPRIATING FUNDS AND WERE MA INTAINING FALSE ACCOUNTS, IT WAS OPEN TO AUTHORITIES TO DENY BENEFIT UNDER SE CTION 11 OF THE INCOME TAX ACT, BUT THAT COULD NOT BE GROUND FOR CANCELATION O F REGISTRATION ITSELF. 8.2 APPLYING THE ABOVE RATIO LAID DOWN BY THE HONB LE HIGH COURT OF KARNATAKA IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION (SUPRA), IT CAN BE CONCLUDED THAT EVEN THE DONATION IS PROVED TO BE BO GUS THEN ALSO THE REGISTRATION U/S 12AA OF THE ACT CANNOT BE CANCELLE D BUT THE SAID AMOUNT OF DONATION WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 15 THE PROVISIONS OF SECTION 12AA OF THE ACT PRESCRIBE CONDITIONS FOR REGISTRATION OF TRUST AND MAKE OBLIGATORY TO THE TRUST OR THE IN STITUTION TO SEEK REGISTRATION UNDER SECTION 12AA OF THE ACT, IF SUCH TRUST OR INS TITUTION INTENDS TO HAVE THE BENEFIT OF THE PROVISIONS OF SECTION 11 AND 12 OF T HE ACT. THESE PROVISIONS THUS MAKE IT CLEAR THAT IF THE TRUST OR THE INSTITUTION IS NOT REGISTERED UNDER SECTION 12AA OF THE ACT, IT WOULD NOT BE ABLE TO CLAIM ANY EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR, EVEN IF SUCH INCOME IS OTHERWISE LIABLE TO BE EXCLUDED UNDER ANY OF THE CL AUSES OF SECTION 11 OF THE ACT. THUS, IN A CASE WHERE REGISTRATION IS REFUSED, THE TRUST OR THE INSTITUTION WOULD NOT BE ALLOWED TO CLAIM ANY SUCH EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR. THE INC OME-TAX ACT THROUGH SECTION 12AA HAS MADE IT OBLIGATORY FOR CHARITABLE TRUSTS AND INSTITUTIONS TO GET THEMSELVES REGISTERED WITH THE INCOME-TAX AUTHORITI ES FAILING WHICH THE BENEFIT OF EXEMPTION FROM INCOME-TAX WOULD BE DENIED. THE R EQUIREMENT OF REGISTRATION BEING PROCEDURAL IS PRESCRIBED U/S 12A A OF THE ACT WHICH READS AS UNDER:- PROCEDURE FOR REGISTRATION . 12AA. (1) THE [***] [PRINCIPAL COMMISSIONER OF] COMMISSI ONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTI TUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A , SHALL- (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF T HE 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 ORDE R IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPL ICANT; FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT THE LD CIT(EXEMPTION) BEFORE GRANTING THE REGISTRATION CERTIFICATE SHALL CONDUCT NECESSARY ENQUIRIES AS HE THINKS FIT IN ORDER TO SATISFY HIMSELF ABOUT THE GE NUINENESS OF ACTIVITIES OF THE TRUST. ONCE THE LD CIT(EXEMPTION) IS SATISFIED WITH THE GENUINENESS OF THE ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 16 ACTIVITIES THEN HE WILL GRANT THE REGISTRATION CERT IFICATE. IN THE INSTANT CASE BEFORE US, WE FIND THAT THE ACTIVITIES OF THE TRUST HAVE NOT BEEN DOUBTED EXCEPT THE DONATION RECEIVED BY THE ASSESSEE FROM TWO PART IES. THUS IN OUR VIEW AT THE MOST THE EXEMPTION U/S 11 OF THE ACT WILL BE DE NIED TO SUCH DONATION. THUS, IN SUCH CIRCUMSTANCES THE REGISTRATION U/S 12 A OF THE ACT CANNOT BE CANCELLED. IN THIS REGARD, WE RELY IN THE PRINCIPLE S LAID DOWN BY THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. RED ROSE SCHOOL (2007) 212 CTR 394 (ALL). THE RELEVANT EXTRACT OF THE JUDGMENT IS EXTRACTED BELOW:- A READING OF PROVISIONS OF SUB-CLS. (A) AND (B) OF S. 12AA MAKES IT CLEAR THAT THE CIT HAS TO SATISFY HIMSELF ABOUT THE GENUINENES S OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO ABOUT THE OBJECTS OF THE TRUST OR THE INSTITUTION. ON BEING SATISFIED ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR THE INSTITUTION AND ALSO ABOUT ITS OBJECTS, THE CIT WOU LD EITHER GRANT THE CERTIFICATE OR WOULD REJECT THE PRAYER. IN ORDER TO SATISFY HIM SELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, HE CAN CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR THE INSTITUTION, AS H E THINKS NECESSARY AND HE IS ALSO EMPOWERED TO MAKE SUCH ENQUIRIES AS HE MAY DEE M NECESSARY IN THIS BEHALF. THE OBJECTS OF THE TRUST CAN BE HAD FROM TH E BYE-LAWS OR THE DEED OF TRUST, AS THE CASE MAY BE AND UNLESS, OF COURSE, TH E OBJECTS OF THE TRUST APPARENTLY MAKE OUT THAT THEY WERE NOT IN CONSONANC E WITH THE PUBLIC POLICY OR THAT THEY WERE NOT THE OBJECTS OF ANY CHARITABLE PURPOSE, REGISTRATION CANNOT BE REFUSED ACCORDINGLY ON THIS GROUND. IN REGARD TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE O BJECTS DO NOT RUN CONTRARY TO PUBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITAB LE PURPOSES, THE CIT IS AGAIN EMPOWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CA SE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCOR DANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION, OF COURSE, TH E REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRESUMPTIONS AND ON SURMISES T HAT INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS BEING MISUSED OR TH AT THERE IS SOME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNE R AND FOR THE PURPOSES RELATING TO ANY CHARITABLE PURPOSE, REJECTION CANNO T BE MADE. SEC. 12AA, WHICH LAYS DOWN THE PROCEDURE FOR REGISTRATION, DOE S NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGI STRATION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER NOT BEING SPENT FOR CHARITABLE PURPOSE OR SUCH INSTITUTION IS EARNING P ROFIT. THE LANGUAGE USED IN THE SECTION ONLY REQUIRES THAT ACTIVITIES OF THE TR UST OR THE INSTITUTION MUST BE GENUINE, WHICH ACCORDINGLY WOULD MEAN, THEY ARE IN CONSONANCE WITH THE OBJECTS OF THE TRUST/INSTITUTION, AND ARE NOT MERE CAMOUFLAGE BUT ARE REAL, PURE AND SINCERE, NOR AGAINST THE PROPOSED OBJECTS. THE PROFIT EARNING OR MISUSE OF THE INCOME DERIVED BY CHARITABLE INSTITUTION FROM I TS CHARITABLE ACTIVITIES, MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPEC T TO THAT PART OF THE INCOME BUT CANNOT BE TAKEN TO BE A SYNONYM TO THE GENUINEN ESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION. IT IS SIGNIFICANT TO MENTION THAT REGISTRATION UNDER S. 12AA DOES NOT NECESSARILY ENTITLE THE ASSESSEE TO G ET THE INCOME EXCLUDED ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 17 FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOS E OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAI M SUCH EXEMPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF RE GISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN RESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MOVED THE APPLICATION FOR REGISTR ATION UNDER S. 12A, IS ACTUALLY IN THE ACTIVITIES WHICH ARE GENUINE. GENUI NENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION HAS TO BE SEEN, KEEPIN G IN MIND THE OBJECTS THEREOF, WHICH NECESSARILY MEANS THAT THE CIT SHALL SATISFY HIMSELF ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONANCE WITH T HE OBJECTS OF THE TRUST OR THE INSTITUTION. IN OTHER WORDS, IF ESTABLISHING AN D RUNNING A SCHOOL IS THE OBJECT OF THE SOCIETY, AS GIVEN IN ITS BYE-LAWS, IT HAS TO BE SATISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHOOL, WHERE EDUCATION IS BEIN G IMPARTED AS PER RULES AND THE FACTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIVITY. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CAN NOT BE STRETCHED BEYOND THIS. SUFFICIENT SAFEGUARDS HAVING BEEN GIVEN IN SS . 11, 12 AND 13 FOR ASSESSING THE INCOME WHICH HAS NOT BEEN APPLIED TO THE PURPOSE OF THE TRUST OR THE INSTITUTION, THE INTENTION OF THE LAW MAKER AND THE SCOPE AND PURPORT OF THE PROVISION IS APPARENT WHILE CONSIDERING THE QUE STION OF REGISTRATION. IN VIEW OF ABOVE PRECEDENT, WE FIND THAT THE ACTIVI TIES OF THE TRUST IN RELATION TO ITS EDUCATION ACTIVITIES HAVE NOT BEEN DOUBTED AND ON THE BASIS OF SAME ACTIVITIES REGISTRATION U/S 12AA OF THE ACT WAS AWA RDED TO THE ASSESSEE. SIMPLY THE ASSESSEE HAS RECEIVED DONATION FROM SOME PARTIES WHICH ARE INVOLVED IN THE BOGUS TRANSACTIONS CANNOT BE THE BA SIS FOR THE DENIAL OF THE REGISTRATION CERTIFICATES AS DISCUSSED ABOVE. 9. WE ALSO FIND THAT THE LD. CIT(EX) HAS CANCELLED THE REGISTRATION ON THE GROUND OF NON-GENUINENESS OF TRANSACTION THOUGH THE SAME WAS ROUTED THROUGH BANKING CHANNEL. THUS IN OUR CONSIDERED VIE W THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED IN THE AFORESAID FACT S & CIRCUMSTANCES. IN THIS CONNECTION WE RELY ON THE JUDGMENT OF BOMBAY HIGH C OURT IN THE CASE OF CIT VS. GREEN INFRA LIMITED REPORTED IN 397 ITR 7 WHEREIN IT WAS HELD AS UNDER : THE IDENTITY OF THE SUBSCRIBERS WAS CONFIRMED BY VI RTUE OF THE ASSESSING OFFICER ISSUING A NOTICES UNDER SECTION 133(6) TO T HEM. FURTHER, IT HOLDS THAT THE REVENUE ITSELF MAKES NO GRIEVANCE OF THE IDENTI TY OF THE SUBSCRIBERS. SO FAR AS THE GENUINENESS OF THE TRANSACTION OF SHARE SUBS CRIBER IS CONCERNED, IT CONCLUDES AS THE ENTIRE TRANSACTION IS RECORDED IN THE BOOKS OF ACCOUNT AND REFLECTED IN THE FINANCIAL STATEMENTS OF THE ASSESS EE SINCE THE SUBSCRIPTION WAS DONE THROUGH THE BANKING CHANNELS AS EVIDENCED BY BANK STATEMENTS WHICH WERE EXAMINED BY THE TRIBUNAL. WITH REGARD TO THE CAPACITY OF THE SUBSCRIBERS THE IMPUGNED ORDER RECORDS A FINDING TH AT 98 PER CENT OF THE SHARES IS HELD BY IDFC PRIVATE EQUITY FUND-II WHICH IS A FUND MANAGER OF ITA NO.516/KOL/2017 DR. B.G. MEMORIALA TRUST VS. CIT(EX) KOL. PAGE 18 IDFC LTD. MOREOVER, THE CONTRIBUTIONS IN IDFC PRIVA TE EQUITY FUND-II ARE ALL BY PUBLIC SECTOR UNDERTAKINGS. WE ARE ALSO IN DISAGREEMENT WITH THE FINDING OF LD. CIT(EX) THAT THE QSP GAVE ITS ACCOUNTED MONEY THROUGH BANK TO THE ASSESSEE AN D RECEIVED THE SAME IN CASH FROM THE ASSESSEE AND SUBSEQUENTLY THE CASH WA S OFFERED TO TAX UNDER IDS. IT IS BECAUSE WHY A PRUDENT MAN WILL CONVERT T HE ACCOUNTED MONEY INTO UNACCOUNTED FORM AND THEREAFTER HE WILL OFFER THE S AME TO TAX UNDER IDS. THERE IS NO DOCUMENTARY EVIDENCE AVAILABLE IN SUPPO RT OF THE ABOVE FINDING OF THE LD. CIT(EX) WHICH IS BASED ON HIS SURMISE & CON JUNCTURE. THEREFORE WE DISAGREE WITH THE FINDING OF LD. CIT(EX). IN VIEW OF ABOVE, WE HAVE NO HESITATION IN REVERSIN G THE ORDER OF LD. CIT(EX) AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOW ED. 9. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 15/ 09/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP #$%&- 15 / 09 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DR. B.G. MEMORIAL TRUST, 6/1, SARAT CHAT TERJEE AVENUE, KOLKATA-29 2. /RESPONDENT-CIT(EX), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLAKATA-71 3.%.%/ 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5.34566/ , / , / DR, ITAT, KOLKATA 6.589 / GUARD FILE. BY ORDER/ $, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO / ,