M/s Raj Laxmi Charitable Trust, Meerut V. Commissioner of Income Tax (Exemption), Lucknow

ITA 680/LKW/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0921 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 17-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice
• Section: 80G; 12A; 12AA; 12

Judgement Text

I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.680/LKW/2017 ASSESSMENT YEAR:N.A. M/S RAJ LAXMI CHARITABLE TRUST, A-64, SAKET, MEERUT. PAN:AAATR 4883 Q VS. CIT (EXEMPTIONS), LUCKNOW. (APPELLANT) (RESPONDENT) O R D E R PER PARTHA SARATHI CHAUDHURY: THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FRO M THE ORDER OF LEARNED CIT (EXEMPTIONS), LUCKNOW DATED 31/08/2017 AS PER THE GROUNDS OF APPEAL ON RECORD. THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THE REJECTION OF GRANTING OF REGISTRATION U/S 12 AA OF THE ACT BY THE CIT (EXEMPTIONS). 2. LEARNED A. R. OF THE ASSESSEE APPRAISED THE BENC H THAT IN THIS MATTER HON'BLE ALLAHABAD HIGH COURT IN I.T.A. NO.301/2009 IN THE CASE OF CIT, MEERUT VS. RAJ LAXMI CHARITABLE TRUST DECIDED ON 01 /03/2017 HAVE PASSED ORDER REMANDING THE MATTER TO THE LEARNED CIT TO CR OSS EXAMINE THE WITNESS WHO HAS GIVEN STATEMENT ADVERSE TO THE ASSESSEE BEF ORE THE LUDHIANA AUTHORITY IN THE ORIGINAL ASSESSMENT PROCEEDINGS BU T GOT THE STATEMENT RECORDED FAVOURABLE TO THE ASSESSEE BEFORE THE MEER UT AUTHORITIES AND SUCH APPELLANT BY SHRI SUYASH AGARWAL, ADVOCATE ASSESSEE BY SHRI A. K. BAR, CIT (DR) DATE OF HEARING 15 / 11 /201 8 DATE OF PRONOUNCEMENT 20/11/2018 I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 2 CROSS EXAMINATION OF SUCH WITNESS WAS NECESSARY. T HE RELEVANT PORTION OF THE ORDER OF HON'BLE ALLAHABAD HIGH COURT IS QUOTED BELOW: WHILE WE FIND NO FAULT TO THE REASONING GIVEN BY T HE TRIBUNAL TO SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME TAX FOR REASON OF VIOLATION OF PRINCIPLES OF NATURA L JUSTICE, THE CONCLUSION REACHED BY THE TRIBUNAL TO SET ASIDE THA T THE ORDER IN ENTIRETY IS WHOLLY UNJUSTIFIED INASMUCH AS IT WAS N ECESSARY IN SUCH FACTS TO ALLOW THE ASSESSEE AN OPPORTUNITY TO CROSS EXAMINE THE WITNESSES RELIED UPON BY THE DEPARTMENT AND TO DIRECT THE PETITIONER TO PASS A FRESH ORDER IN ACCO RDANCE WITH LAW, THEREAFTER. IT WAS ALSO THE CASE OF ASSESSEE T HAT THE STATEMENTS RELIED UPON BY THE DEPARTMENT ARE CONTRA DICTORY INASMUCH AS THOSE PERSONS HAD GIVEN STATEMENTS ADVE RSE TO THE ASSESSEE BEFORE THE LUDHLANA AUTHORITY, IN THEI R ORIGINAL ASSESSMENT PROCEEDINGS BUT HAD GOT RECORDED STATEME NTS FAVOURABLE TO THE ASSESSEE BEFORE THE MEERUT AUTHOR ITY. THE CROSS EXAMINATION OF SUCH WITNESSES WAS THEREFORE E VEN NECESSARY FOR THIS REASON ALSO. ACCORDINGLY WE ANSWER REFRAINED QUESTION IN FAVOUR OF DEPARTMENT AND AGAINST THE ASSESSEE. THE MATTER IS REMANDED TO THE COMMISSIONER OF INCOME TAX FOR PASSING A FRE SH ORDER IN ACCORDANCE WITH OBSERVATIONS MADE ABOVE. 3. THAT ON THE BASIS OF THESE OBSERVATIONS OF HON'B LE HIGH COURT, IT WAS VEHEMENTLY ARGUED BY LEARNED A. R. THAT LEARNED CIT (EXEMPTIONS), LUCKNOW IN THE REMAND PROCEEDINGS WAS SUPPOSE TO AD JUDICATE WHETHER DONATIONS WERE RECEIVED WHEREAS THE LEARNED CIT (EX EMPTIONS) HAS ONLY RELIED UPON THE STATEMENT OF ONE MR. B. K. AGARWAL WHEREIN HE HAS STATED THAT THE DEDUCTIONS FOR DONATIONS WERE WRONGFULLY C LAIMED. IT IS THE SUBMISSION OF LEARNED A. R. THAT THE DIRECTION OF H ON'BLE HIGH COURT WAS ABSOLUTELY CLEAR TO IDENTIFY WHETHER ACTUALLY DONAT IONS WERE DONE OR NOT. BUT ONLY ON THE BASIS OF THE STATEMENT OF MR. B. K. AGARWAL, WHERE HE HAS SAID THAT THE DEDUCTIONS FOR THE DONATIONS WERE WRO NGFULLY CLAIMED, THE CIT (EXEMPTIONS) HAS REJECTED THE 12A APPLICATION OF TH E ASSESSEE. THIS EXERCISE CARRIED OUT IS NOT IN ACCORDANCE WITH THE LAW OF LAND. I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 3 4. LEARNED D. R., ON THE OTHER HAND, PLACED RELIANC E ON THE ORDER OF LEARNED CIT (EXEMPTIONS) AND PLACED RELIANCE ON THE FOLLOWING FINDINGS OF LEARNED CIT (EXEMPTIONS): FROM THE ABOVE REPLY OF DR. B.K. AGARWAL IT IS CLEAR THA T ASSESSEE IS CHANNELIZING UNACCOUNTED MONEY IN TO THE TRUST AND CAMOUFLAGING IT AS DONATIONS THEREBY GROSSLY VI OLATING THE PROVISIONS LAID DOWN FOR ACCORDING REGISTRATION U/S 12AA AND RECOGNITION U/S 80G OF THE INCOME TAX ACT, 1961. NO T ONLY HAS DR. B.K. AGARWAL CONFESSED TO HAVING CLAIMED WRONG DEDUCTIONS BUT HAS ALSO REMITTED THE TAXES AND INTEREST THEREO N. SUBSEQUENT OF WHICH THE CLAIM OF THE APPLICANT STAT ING THE DONATION WITH RESPECT TO DR. B.K. AGARWAL IS LEGITI MATE, HOLDS NO GROUND AS DR. B.K. AGARWAL HAS ALREADY PAID THE TAX ES AND THE RESPECTIVE INTEREST ARISING OF THE FAKE 80G DEDUCTI ON CLAIMED BY HIM. THE ASSESSEE CONTENTED THE ABOVE REPLY OF DR. B.K. AGARWAL BY STATING THAT DR. B.K. AGARWAL HAD FAILED TO APPEAR IN PERSON, WE NEED TO CONSIDER THE FACT THAT BOTH DR. B.K. AGARWAL AND DR. BALBIR KUMAR COULD NOT APPEAR IN PERSON CIT ING THEIR OLD AGE AND RELATED MEDICAL HEALTH ISSUES AND THEREFORE BOTH OF THEM HAVE SUBMITTED THEIR REPLIES WITH SUPPORTING D OCUMENTS. WHILE THE APPLICANT HAS NOT PUT FORTH THE SAME ARGU MENT FOR DR. BALBIR KUMAR WHO ALSO COULD NOT APPEAR IN PERSON IN PURSUANCE OF THE SUMMON GIVEN JUST BECAUSE DR. BALBIR HAS GIV EN A FAVORABLE REPLY WITH REGARD TO THE ASSESSEE. THUS T HE ARGUMENT FORTH BY THE ASSESSEE CONSIDERING THE REPLY OF DR. BALBIR KUMAR AND OBJECTING TO THE REPLY OF DR. B.K. AGARWAL IS P REJUDICIAL AND IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE. FURTH ER THE CLAIM OF THE APPLICANT THAT THE REPLIES OF DR. A.K. GUPTA AN D DR. BALBIR KUMAR ARE FAVOURABLE TO THE ASSESSEE HOLD NO GROUND AS DR. B.K.AGARWAL HAS EXPLICITLY ACCEPTED TO CLAIMING WRO NG DEDUCTION IN RESPECT OF DONATION TO M/S RAJ LAXMI CHARITABLE TRUST, A-64, SAKET, MEERUT, U.P. U/S 80G IN THE A.Y. 2004-05 & 2 005-06 OF RS. 30,000/- AND RS.70,000/- RESPECTIVELY WHICH EST ABLISHES THE FACT THAT THE DONATION OF RS. 30,000/- WAS INDECORO USLY CAMOUFLAGED AS DONATED BY THE ASSESSEE TO CHANNELIZ E UNACCOUNTED MONEY BY SHOWING BOGUS DONATION. THE ST ATEMENT OF SHRI. B.K. AGARWAL TOGETHER WITH THE SUPPORTING DOCUMENTS ITSELF IS A TESTIMONY TO THE FACT THAT THE ASSESSEE HAS BEEN A PARTY TO THE BOGUS DONATION AND THIS SINGLE VIOLATI ON IS IN ITSELF A VIOLATION-OF THE NORMS MANDATED BY THE LAW. THE CLA IM OF THE APPLICANT WITH THE REGARD TO THE TWO ALLEGED FAVOUR ABLE CLAIMS I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 4 OF DR. A.K. GUPTA AND DR. BALBIR KUMAR CANNOT BE US ED TO OVERSHADOW THE FACT THAT DR. B.K. AGARWAL HAS ACCEP TED WRONG DEDUCTIONS BEING CLAIMED IN RESPECT OF DONATION TO M/S RAJ LAXMI CHARITABLE TRUST WHICH ITSELF IS A STRONG BAS E INVITING CANCELLATION OF THE REGISTRATION U/S 12AA GRANTED T O ANY INSTITUTION. THUS THE STATEMENT OF SHRI. B.K. AGARW AL NULLIFIES THE ALLEGED CLAIMS OF THE ASSESSEE AND MAKES IT STAND I N LINE WITH THE INSTITUTIONS NOT WORTHY OF BEING ACCORDED/CONTI NUING TO BE AWARDED WITH REGISTRATION U/S 12AA OF THE INCOME TA X ACT, 1961. THUS IN PURSUANCE OF DIRECTION THE HON'BLE HI GH COURT, UPON MAKING A FRESH ENQUIRIES THE APPLICANT HAS FAI LED TO COME OUT CLEAN OF THE ALLEGATIONS LEVELLED AGAINST IT PR EVIOUSLY AS ONE OF DONORS I.E. SHRI. B.K. AGARWAL HAS EXPLICITLY AD MITTED TO HAVING CLAIMED A WRONG DEDUCTION IN THE NAME OF THE M/S RAJ LAXMI CHARITABLE TRUST WHICH IS A VIOLATION ENOUGH TO AWARD CANCELLATION OF A REGISTRATION THAT IS EXTENDED TO CHARITABLE AND PHILANTHROPIC INSTITUTIONS AND NOT TO INSTITUTIONS IN THE LIKES OF THE ASSESSEE WHOSE SOLE MOTTO IS TO AMASS EXORBITAN T FINANCIAL ASSETS TO CATER TO ITS COMMERCIAL PROPAGANDA EVEN I F THAT INVITES MANUFACTURING BOGUS DONATIONS CLAIMS TO NOT ONLY CL AIM EXEMPTION ON IT BUT ALSO BELIE THE LAW BY MISLEADIN G IT. 4. IN LIGHT OF THE ARGUMENTS STATED ABOVE AND THE REASONS THEREOF, I FIND NO REASON TO INTERFERE WITH THE ORD ER BY THE LD. COMMISSION OF INCOME TAX, MEERUT RIGHTFULLY CANCELL ING REGISTRATION OF THE ASSESSEE FOR BEING INVOLVED IN THE PURPORTING BOGUS DONATIONS AND MISLEADING THE AUTHORITIES AND THE LAW. THE ASSESSEE IS INVOLVED INTO ACTIVITIES THAT ARE N OT BEING WORTHY OF BEING ACCORDED THE SAID REGISTRATION AND DO NOT WARRANT OF PERMITTING THE ASSESSEE TO AVAIL OF ANY FURTHER EXEMPTIONS AS ENVISAGED BY THE PROVISIONS OF SECTIO N 11 CONSEQUENTIAL TO THE REGISTRATION U/S 12AA OF THE I NCOME TAX ACT, 1961. ACCORDINGLY, THE REGISTRATION CANCELLED U/S 12AA(3) BY THE LD. CIT, MEERUT VIDE HIS ORDER DATED 22.02.2 008, IN RESPECT OF THE ASSESSEE I.E. M/S RAJ LAXMI CHARITAB LE TRUST, A- 64, SAKET, MEERUT, U.P., CANNOT BE RESTORED. 5. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVA L CONTENTIONS AND WE FIND THAT IN PAGE 29 OF THE PAPER BOOK, FILED BE FORE US, THE STATEMENT OF MR. B. K. AGARWAL BEFORE THE ADDL. C.I.T., RANGE-2, MEERUT IS THERE WHERE HE HAS ACCEPTED OF MAKING DONATION DURING THE YEAR 200 3-04 AND HAS PLACED THE DETAILS OF SUCH DONATIONS THEREIN. SIMILARLY, IN PAGE 82 OF THE PAPER I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 5 BOOK THERE IS ANOTHER STATEMENT MADE BY THE SAME MR . B. K. AGARWAL WHERE HE HAS STATED BEFORE THE LEARNED CIT (EXEMPTIONS), LUCKNOW THAT HE HAS WRONGLY CLAIMED THE DEDUCTION IN RESPECT OF DONATIO N TO M/S RAJ LAXMI CHARITABLE TRUST. THE CONTENTION OF LEARNED A. R. THAT AS PER THE DIRECTION OF HON'BLE HIGH COURT, THE ISSUE BE ADJUDICATED UPO N WAS WHETHER ACTUALLY THE DONATION WAS MADE OR NOT. LEARNED CIT (EXEMPTI ONS) IN HIS OPERATIVE PART OF THE DECISION HAS NOT SPECIFICALLY BROUGHT O UT ANY FACTS ON THIS ISSUE AND ONLY ON THE STATEMENT OF MR. B. K. AGARWAL, HAS REJECTED THE APPLICATION U/S 12AA OF THE ACT. WE ARE OF THE CONSIDERED VIEW THAT IN SUCH SCENARIO THE ORDER OF LEARNED CIT (EXEMPTIONS) SHOULD BE SET ASIDE AND THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF CIT (EXEMPTI ONS) TO ADJUDICATE SPECIFICALLY IN THE LIGHT OF THE DIRECTION GIVEN BY HON'BLE JURISDICTIONAL HIGH COURT. THE FOLLOWING CASE LAWS MAY ALSO BE LOOKED INTO BY LEARNED CIT (EXEMPTIONS): (I) ANDAMAN TIMBER INDUSTRIES VS. CCE, KOLKATA 2012 [32 4) ELT 641 (SC) (II) CIT VS. GEETANJALI EDUCATION SOCIETY [2008] 174 TAX MANN 440 (RAJ) (III) CIT VS. SUNIL AGGARWAL [2015] 64 TAXMANN.COM 107 (D ELHI) (IV) CIT DELHI-IV VS. DHARAM PAL PREM CHAND LTD. [2008] 167 TAXMANN 168 (DELHI) WE, THEREFORE, ORDER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/11 /2018) SD/. SD/. ( T. S. KAPOOR ) (PART HA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:20/11/2018 *SINGH I.T.A. NO.680/LKW/2017 ASSESSMENT YEAR:N.A. 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW