Jha Educational Trust, Kolkata V. CIT(EXEMPTIONS), KOLKATA, Kolkata

ITA 931/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9152 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 03-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: J P KHAITAN SENIOR; MANOJ KATARAKA
• Keywords: Charitable institution; Principle of natural justice; Retrospective amendment; Benefit of exemption; Capital expenditure
• Section: 143(3); 133A; 133(6); 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHOWDHURY, JUDICIAL MEMBER ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST C/O CALCUTTA PUBLIC SCHOOL, P.O. ASWINI NAGAR,BAGUIHATI, KOLKATA-700 159 [ PAN NO.AAATJ 5401 C ] / V/S . CIT (EXEMPTION), KOLKATA, 10B, MIDDLETON ROW, 6 TH FLOOR,KOLKATA-071 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI J.P. KHAITAN, SENIOR ADVOCATE & SHRI MANOJ KATARAKA, ADVOCATE /BY RESPONDENT SHRI NIRAJ KUMAR, CIT-DR /DATE OF HEARING 08-03-2017 /DATE OF PRONOUNCEMENT 17-03-2017 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE ARE THREE APPEALS FILED BY THE ASSESSEE IS AG AINST THE ORDER U/S 12AA(3) & 12AA(4)/80G(5)(VI)/10(23C)(VI) OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 10.03.2016 & 14. 03.2016 OF COMMISSIONER OF INCOME TAX (EXEMPTIONS)-, KOLKATA. SHRI J.P. KHAITAN AND SHRI MANOJ KATARAKA, LD. ADVO CATE APPEARED ON BEHALF OF ASSESSEE AND SHRI NIRAJ KUMAR, LD DEPARTMENTAL REPR ESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. ALL THE APPEALS ARE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF CONSOLIDATE ORDER. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 2 FIRST WE TAKE UP ITA NO.931/KOL/2016 . 3. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEA L ARE AS UNDER:- (A) FOR THAT THE ORDER WITHDRAWING/CANCELLING REGIS TRATION UNDER SECTION 12A WAS PASSED IN GROSS VIOLATION OF THE PRINCIPLES OF NATU RAL JUSTICE, WITHOUT DISCLOSING THE MATERIALS RELIED UPON, WITHOUT AFFORDING OPPORTUNIT Y TO CONTROVERT AND/OR DEAL WITH THE SAME INCLUDING BY WAY OF CROSS-EXAMINATION AND WITHOUT TAKING INTO CONSIDERATION THE SUBMISSIONS OF THE ASSESSEE MADE, INTER ALIA, O N MARCH 3,2016 AND MARCH 7, 2016. (B) FOR THAT THE CIT ERRED IN WITHDRAWING/CANCELLIN G THE ASSESSEE'S REGISTRATION UNDER SECTION 12A AND THAT TOO WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2006. (C) FOR THAT THE CIT ERRED IN HOLDING THAT- (I) ANY DONATION MADE BY THE ASSESSEE WAS BOGUS, FI CTITIOUS, ACCOMMODATION ENTRY OR FOR MONEY LAUNDERING OR THAT THE ASSESSEE RECEIVED BACK ANY CASH; (II) THE ASSESSEE RESORTED TO ANY MODUS OPERANDI OR TRANSACTED THROUGH ANY ENTRY OPERATOR OR MEDIATOR OR SIPHONED OFF TRUST MONEY; (III) TRUSTEES OF THE ASSESSEE RECEIVED CASH OR BEN EFITTED FROM THE DONATIONS; (IV) SECTION 13(1) OR SECTION 13(2) WAS APPLICABLE; (V) THE ASSESSEE MISUSED THE PROVISIONS OFSECTIONS1 2AA AND 80G(5)(VI); (VI) NO CHARITABLE WORK WAS DONE BY THE ASSESSEE BY GIVING DONATIONS; (VII) THE ACTIVITIES OF THE ASSESSEE WERE NOT GENUI NE OR WERE NOT CARRIED OUT IN ACCORDANCE WITH OR WERE CONTRARY TO ITS OBJECTS; AN D HIS PURPORTED FINDINGS INVOKING SUB-SECTIONS (3) AND (4) OF SECTION 12AA AND WITHDR AWING/CANCELLING THE REGISTRATION UNDER SECTION 12A ARE WHOLLY ARBITRARY, ERRONEOUS, UNREASONABLE AND PERVERSE. (D) FOR THAT FURTHER AND IN ANY EVENT AND WITHOUT P REJUDICE TO THE AFORESAID, THE CIT HAD NO POWER AND/OR JURISDICTION TO WITHDRAW/CANCEL THE REGISTRATION WITH RETROSPECTIVE EFFECT FROM APRIL 1, 2006. (E) FOR THAT THE ORDER APPEALED AGAINST IS OTHERWIS E ERRONEOUS ON FACTS AND/OR IN LAW. 4. THE COMMON ISSUE RAISED BY ASSESSEE IN THE GROUN DS OF APPEAL IS THAT LEARNED CIT(EXEMPTION) ERRED IN CANCELLING THE REGISTRATION CERTIFICATE GRANTED U/S 12A OF THE ACT. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 3 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A TRUST AND HAVING REGISTRATION U/S 12A AND 80G AND 10(23C)(VI) OF THE ACT. THE REGISTRATION U/S 12A OF THE ACT WAS GRANTED TO THE ASSESSEE ON THE 11 TH APRIL 2002 VIDE NO. DIT(E)/8E/437/2001-02 AND 80G CERTIFICATE WAS RENEW ED ON 23.09.2011 VIDE DIT(E)/2896/8E/43/2001-02 AND IT WAS ALSO GRANTED A PPROVAL UNDER SECTION 10(23C)(VI) OF THE ACT VIDE NO. CCIT-III/KOL/10(23C )(VI)/13-14/246 DATED 16.01.2014. 5.1 THE ASSESSEE-TRUST WAS ESTABLISHED WITH THE OBJ ECTS OF PUBLIC & CHARITABLE PURPOSES. THE ASSESSEE WAS ALSO RUNNING SCHOOL UNDE R THE NAME & STYLE OF CALCUTTA PUBLIC SCHOOL IN KOLKATA & RANCHI. 6. THE BACKGROUND OF THE CASE IS THAT A SURVEY OPER ATION WAS CONDUCTED U/S 133A OF THE ACT ON 03.09.2015 IN THE CASE OF A TRUST NAM ELY BATANAGAR EDUCATION AND RESEARCH TRUST (FOR SHORT BERT). THE STATEMENT OF T HE MANAGING TRUSTEE I.E. SRI RABINDRANATH LAHIRI OF BERT WAS RECORDED. THE RELEV ANT EXTRACT OF THE STATEMENT IS REPRODUCED BELOW:- Q. 11. PLEASE CONFIRM THE AUTHENTICITY OF THE ABOVE MENTIONED CORPUS DONATION. ANS . A MAJOR PART OF THE DONATIONS THAT WERE CLAIMED E XEMPTION U/S. 11(1)(D) WERE NOT GENUINE. THE DONATIONS RECEIVED IN FYS. 2008-09 , 2009-10 AND 2010-11 WERE GENUINE CORPUS DONATION RECEIVED EITHER FROM THE TR USTEES OR PERSONS WHO WERE CLOSE TO THE TRUSTEES OR PERSONS WHO WERE CLOSE TO THE TRUSTEES. IN FY 2011-12 AND 2012-13 A PART OF THE DONATION WERE GENUINE LIKE TH E EARLIER YEARS. HOWEVER, A MAJOR PART OF THE DONATIONS RECEIVED IN THESE TWO FYS VIZ . 2011-12 AND 2012-13 SHOWN AS CORPUS DONATION, WERE IN THE NATURE OF ACCOMMODATIO N ENTRIES TO FACILITATE TWO THINGS:- A) TO PROCURE LOANS FROM THE BANK WE HAD TO SHOW SU BSTANTIAL AMOUNT OF CAPITAL RESERVE IN OUR BALANCE SHEET. B) WE REQUIRED FUNDS FOR THE EXPANSION OF OUR COLLE GE. THE FEES RECEIVED FROM THE STUDENTS ALONG WITH GENUINE DONATIONS FROM THE TRUS TEES AND THEIR CONTRACTS WERE NOT SUFFICIENT TO RUN THE INSTITUTION. Q. 12 WHY ARE YOU SAYING THAT A MAJOR PART OF THE D ONATIONS RECEIVED WERE NOT GENUINE? ANS . IN THOSE CASES, WHICH I ADMIT ACCOMMODATION ENTRI ES, A PART OF THE DONATION RECEIVED WAS RETURNED BACK TO THE DONORS THROUGH IN TERMEDIARIES. Q. 13. WHO WERE THE INTERMEDIARIES AND WHAT WERE TH E MODES OF RETURNING THE MONEY? ANS . WE WERE INSTRUCTED TO TRANSFER FUNDS THROUGH TGS TO THE FOLLOWING SEVEN [7] PERSONS:- 1. SANTWANA SYNDICATE, ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 4 2. P.C. SALES CORPORATION 3. KALYANI ENTERPRISES, 4. RIYA ENTERPRISES, 5. LAXMI NARAYAN TRADERS 6. HANUMAN TRADERS 7. RANI SATI TRADE CUM PVT. LIMITED. THESE PAYMENTS WERE BOOKED AS CAPITAL EXPENDITURE U NDER THE HEAD BUILDING. Q. 14. IN RESPONSE TO THE EARLIER QUESTION YOU HAVE STATED THAT YOU WERE INSTRUCTED. WHO GAVE YOU THE INSTRUCTION? ANS . I CAN REMEMBER ONLY ONE NAME RIGHT NOW THAT IS SH RI GULAB PINCHA, MOB. NO.9831015157. HE WAS THE KEY PERSON FOR PROVIDING A LARGE APART OF BOGUS DONATION RECEIVED WHICH WAS IMMEDIATELY RETURNED BACK TO THE DIFFERENT PARTIES IN THE GUISE OF PAYMENTS TOWARDS CAPITAL EXPENDITURE IN BUILDING. W E DO NOT KNOW ANY DETAILS IN RESPECT OF THE DONORS ON BEHALF OF WHOM SHRI GULAB PINCHA ACTED AS A MIDDLE MAN. SHRI PINCHA PROVIDED US WITH THE DETAILS OF THE DON ORS, CHEQUE OF THE DONATIONS, LETTERS OF CORPUS DONATIONS ETC. HE ALSO PROVIDED US WITH T HE NAMES AND BANK A/C. DETAILS OF THE SEVEN (7) PERSONS, MENTIONED IN ANSWER 13 TO WH OM MONEY HAS TO BE RETURNED BACK THROUGH RTGS. HE ALSO COLLECTED THE MONEY RECE IPTS 80G CERTIFICATIONS ON BEHALF OF THE DONORS. Q. 19. THE LEDGER COPY FOR THE PERIOD FROM 01.04.20 14 TO 04.09.2014 IN RESPECT OF GENERAL FUND OF YOUR TRUST HAVING DETAILS OF THE DONORS IS BEING SHOWING TO YOU TO IDENTIFY THE BOGUS DONATIONS ALONG WITH BOGUS DONOR S. ANS . AFTER GOING THROUGH THE LIST OF THE DONORS APPEAR ED IN SUCH LEDGER, IT IS UNDERSTOOD THAT THE DONORS WHOSE NAMES ARE WRITTEN IN CAPITAL LETTERS UNDER THE SUB- HEAD DONATION-13, DONATION-I AND DONATION-II H AVING TOTAL AMOUNT OF RS.6,03,07,550/- IS BOGUS AND OUT OF WHICH RS.5,96, 28,973/- WAS RETURNED BACK THROUGH RTGS TO THE ABOVE MENTIONED SEVEN (7) PERSO NS FOLLOWING THE INSTRUCTIONS OF THE MEDIATORS. IT WAS OBSERVED THAT THE NAME OF THE ASSESSEE WAS R EFLECTING IN THE LIST OF BOGUS DONORS AS PROVIDED BY THE MANAGING TRUSTEE OF THE BERT IN HIS STATEMENT. AS PER THE STATEMENT, THE ASSESSEE-TRUST HAS GIVEN DONATION OF RS. 5 LACS IN THE AY 2012-13 TO BERT THROUGH THE BANKING CHANNEL. BUT SUBSEQUENTLY THE CASH WAS PAID BACK TO THE ASSESSEE THROUGH THE MEDIUM OF CERTAIN OUTSIDERS. IN VIEW OF ABOVE THE LD CIT(EXEMPTION) ISSUED SHOW CAUSE NOTICE FOR SEEKING THE EXPLANATION ON THE ABOVE STATED FACTS. THE ASSESSEE WAS ALSO HANDED OVER THE COPY OF STATEMENT OF MANAGING TRUSTEE OF BERT AND CALLED TH E ASSESSEE FOR CROSS EXAMINATION DATED 3.3.2016 BUT NOBODY APPEARED ON THAT DATE. HO WEVER, THE ASSESSEE IN ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 5 COMPLIANCE THERETO DENIED TO BE INDULGED IN MONEY L AUNDERING ACTIVITIES AS ALLEGED AGAINST IT. 6.1 BESIDES THE ABOVE CLARIFICATION, THE LD. CIT(EX EMPTION) HAS ALSO CALLED OTHER INFORMATION IN THE RELATION TO THE ACTIVITIES CARRI ED ON BY THE ASSESSEE IN THE EARLIER ASSESSMENTS YEARS. THE LD. CIT(EXEMPTION) FROM THE DETAILS SUBMITTED BY THE ASSESSEE ALSO OBSERVED THAT THE ASSESSEE HAS GIVEN DONATION TO VARIOUS OTHER TRUSTS/ SOCIETIES AS DETAILED UNDER :- SL.NO NAME & ADDRESS AMOUNT 06-07 1 CENTRE FOR ADVANCE STUDIES IN ENGINEERING AK- 11, ARRA KASHA ROAD, NEAR CHAND PALACE HOTEL, PAHARGANJ, NEW DELHI-55 4,00,000 2 VIDYAPATI SMARAK MANCH 511, RABINDRA SARANI, KOLKATA-700 005 25,000 07-08 1. INDIAN CENTRE FOR ADVANCEMENT OF RESEARCH & EDUCATION 4, B.B.D.BAG (EAST) STEPHEN HOUSE, 5 TH FLOOR, ROOM NO.87, KOLKATA-1 5,00,000 2 SETH POKHAR MAL EDUCATION SOCIETY RUKMANI DEVI PUBLIC SCHOOL, CD BLOCK, PITAM PURA, NEW DELHI-110034 5,00,000 3 LORD KRISHNA EDUCATION TRUST KE-81, KAVI NAGAR, GHAZIABAD 5,00,000 4 -DO- 5,00,000 09-10 1 VIDYAPATI SMARAK MANCH 511, RABINDRA SARANI, KOLKATA-005 25,000 2 MONAD EDUCATIONAL SOCIETY 66, SHANKAR VIHAR, DELHI-110092 5,00,000 3 -DO- 5,00,000 4 GLOBAL CULTURAL AND EDUCATION FOUNDATION 103, ENGINEERS ENCLAVE, PITAMPURA, NEW DELHI- 110034 10,00,000 5 DISHA EDUCATION SOCIETY DISHA TOWER, NEW SHANTI NAGAR, RAIPUR-492007 10,00,000 10-11 1 DISHA EDUCATION SOCIETY, DISHA TOWER, NEW 5,00,0 00 ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 6 SHANTI NAGAR, RAIPUR-492007 2 SABITA DEVI EDUCATION TRUST, 1050/1, SURVEY PARK, KOLKTA-700075, (WB) 5,00,000 3 SANDIPANI CHARITABLE TRUST, TAPARIA ESTATE, AIRPORT ROAD, LALGHATA, BHOPAL (MP) 5,00,000 4 SEACOM MARINE COLLEGE, NO11, KENDUA MAIN ROAD, BAISHNABGHATA, GARIA, KOLKATA-700 084 5,00,000 5 BAIDEHI SEBA MANCH, 2A/3, GHOSH BAGAN LANE, P.O. COSSIPURE, KOLKATA-700002(WB) 10,000 11-12 1 BATANAGAR EDUCATION AND RESEARCH TRUST, 1/1/1, JODHPUR PARK, KOLKATA-700068 (WB) 5,00,000 12-13 1 DR. B.G. MEMORIAL TRUST,6/1, SARAT CHATTER AVENUE, KOLKATA-700 029 (WB) 8,00,000 2 SAVITRI EDUCATION FOUNDATION, 124, HANS BHAWAN,BAHADUR SHAH ZAFAR MARG, NEW DELHI- 110002 6,00,000 13-14 1 MRS EDUCATIONAL TRUST, 39-A, ARMENIAN STREET, GROUND FLOOR, KOLKATA-700 001 (WB) 1,00,000 14-15 1 TATA MEDICAL CENTRE TRUST, 1, BISHIP LEFROY ROAD, KOLKATA-700 020 (WB) 11,000 THE LD. CIT(EXEMPTION) ALSO CALLED THE ASSESSEE FOR THE CLARIFICATION OF THE CREDENTIALS OF TRUSTS/ SOCIETIES TO WHICH THE DONATION WERE PAI D VIDE ORDER SHEET ENTRY DATED 22.2.2016. HOWEVER, THE MANAGING TRUSTEE OF THE ASS ESSEE TRUST FAILED TO PROVIDE THE NECESSARY DETAILS AS DESIRED. THE QUESTIONS & ANSWE RS WITH THE MANAGING TRUSTEE WITH THE ASSESSEE TRUST ARE REPRODUCED BELOW:- Q.1 YOU HAVE PAID RS.8 LAKH TO M/S B.G. MEMORIAL TR UST. HOW DO YOU KNOW THEM? WHAT ARE THEIR ACTIVITIES? ANS . I DO NOT KNOW NAME OF MANAGING TRUSTEE. I DO NOT KNOW NAME OF SCHOOL. I DO NOT KNOW PERSONALLY. I DO NOT KNOW THEIR ACTIVITIES. I DO NOT REMEMBER WHY I PAID RS.8 LAKH. I HAVE NOT SEEN SCHOOL. I DO NOT KNOW THEIR W HEREABOUTS. Q.2 SIMILARLY SAVITRI EDUCATION TRUST? ANS . SAME ANSWER AS ABOVE IN EARLIER QUESTION. Q.3. DO YOU KNOW DISHA EDUCATIONAL SOCIETY, SANDIPA NI CHARITABLE TRUST, SEACOM MARINE COLLEGE, MRS EDUCATIONAL TRUST? WHAT ARE THE IR ACTIVITIES? ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 7 ANS . MY ANSWER IS SAME AS IN Q.1. 6.2 FROM THE ABOVE, THE LD. CIT(EXEMPTION) OPINED T HAT THE ASSESSEE IS ENGAGED IN THE MONEY LAUNDERING ACTIVITIES. IT WAS ALSO OBSERV ED THAT THE TRUST TO WHICH THE DONATION WAS GIVEN, THEIR REGISTRATION CERTIFICATE U/S 12A OF THE ACT WERE EITHER CANCELLED OR THEY WERE ISSUED SHOW CAUSE NOTICES FO R THE CANCELLATION OF THE REGISTRATION CERTIFICATE UNDER SECTION 12A OF THE A CT. IN VIEW OF ABOVE THE LD. CIT(EXEMPTION) HAS CANCELL ED THE REGISTRATION CERTIFICATE GRANTED U/S 12A OF THE ACT BY OBSERVING AS UNDER :- 10. CONCLUSION:- 10.1 THE INTENTION OF THE LEGISLATURE TO GRANT REGI STRATION U/S. 12AA AND 80G, TO GIVE THE BENEFIT U/S. 11 TO ENCOURAGE MEDICAL RELIEF TO THE POOR AND NEEDY PERSONS, PROMOTE EDUCATION AMONG MASSES AND SUPPORT TO THE POOR SECT ION OF THE SOCIETY. BUT TIME AND AGAIN THESE PROVISIONS HAVE BEEN MISUSED FOR PERSON AL NEED AND FOR BENEFIT OF TRUSTEES/MEMBERS OF THE TRUSTS AND SOCIETIES. THE A CT OF MISUSE SOMETIMES DISCOVERS ITSELF SO WIDE THAT IT MAY CONFUSE THE TRUST PURPOS E AND OBJECTIVES FOR ALLOWING SUCH BENEFIT IN THE ACT, RATHER IT EVALUATES THE PURPOSE OF THE ACT FOR THE BENEFIT OF INDIVIDUAL PERSONS HAVING MOTIVE TO EARN LOOSE AND EASY MONEY DEVIATING FROM THE CONCEPT OF BENEFIT OF ENDURING MASS. 10.2 LOOKING AT THE VOLUME AND DEPTH OF THEE ILLEGA L ACTIVITIES PERFORMED AND INDULGED BY THE TRUST TO USE THE PROVISIONS OF THE IT ACT PROVIDING SUPPORT AND ENCOURAGEMENT TO THE ORGANIZATIONS FOR DOING THE BE NEVOLENT ACTIVITIES, ASSESSEE TRUST NOT ONLY OPENED THE PANDORAS BOX DEFYING THE SOLE BENEVOLENT PURPOSE OF PROVISIONS AS PER THE IT ACT, BUT ALSO CHALLENGED THE CAUSE OF THE CONSTITUTIONAL PROVISIONS BY MAINTAINING CERTAIN WELL-NEEDED OBJECTIVES AS PER T HE ACT AND PERFORMING THE REVERSE IN REALITY. 10.3 BASED ON THE FACTS AND CIRCUMSTANTIAL EVIDENCE S AS DISCUSSED IN PARA 1 TO 9, IT CAN BE INFERRED:- A) ASSESSEE TRUST HAS PAID A SUM OF RS.5,00,000/- AS BOGUS DONATION TO M/S BATANAGAR EDUCATION & RESEARCH TRUST AND RECEIVED B ACK IN CASH. APART FROM THIS, OTHER BOGUS DONATIONS OF RS.1,04,00,000/- HAV E BEEN PAID TO OTHER TRUSTS/SOCIETIES STATIONED IN AND OUT OF KOLKATA AN D RECEIVED BACK IN CASH IN LIEU OF SUCH DONATIONS PAID IN PRECEDING AND SUCCEE DING YEARS. ASSESSEE WAS IN THE HABIT OF SIPHONING OFF TRUST PROFIT THROUGH THE ROUTE OF BOGUS DONATIONS. B) TRUSTEES OF THE TRUST HAVE BEEN BENEFITED OUT OF THE CASH SO RECEIVED. THERE WAS CONTINUOUS EFFORT STARTING FROM 01.04.2006 (AY 2006-07) TO PAY BOGUS DONATIONS AND CLAIM AS EXPENSES IN THE INCOME & EXP ENDITURE ACCOUNT. NO CHARITABLE WORK HAS BEEN DONE BYTE HE ASSESSEE BY W AY OF PAYING BOGUS DONATIONS, EXCEPT POCKETING CASH FOR TRUSTEES. C) THEY HAVE VIOLATED THE OBJECTS OF THE TRUST BY C ONVERTING CHEQUE PAID THROUGH DONATION AND RECEIVED IN CASH. THESE BOGUS DONATIONS WERE PAID TOWARDS THE ACTIVITIES OF TRUST WHICH NEVER HAPPENE D AND FOUND TO BE ON PAPER. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 8 D) CHARITY IN THE GUISE MADE THROUGH PAID DONATION IS NOT VOLUNTARY, MERELY AN ACCOMMODATION ENTRY AND FICTITIOUS. E) SOCIETY/TRUST HAS GROSSLY MISUSED THE PROVISION OF SECTION 12AA AND 80G(5)(VI). F) ACTIVITIES OF THE TRUST ARE NOT GENUINE AS WELL AS NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS DECLARED OBJECTS. ASSESSEES CA SE IS COVERED WITHIN THE BOTH LIMB OF SECTION 12AA(3). G) EVEN INGENUINE AND ILLEGAL ACTIVITIES CARRIED ON BY ASSESSEE THROUGH MONEY LAUNDERING DO NOT COME WITHIN THE CONCEPTUAL FRAMEW ORK OF CHARITY VIS--VIS ACTIVITY OF GENERAL PUBLIC UTILITY ENVISAGED BY THE INCOME TAX ACT AS LAID DOWN IN SECTION 2(15). 10. KEEPING IN VIEW THE ABOVE, PROVISIONS OF SECTIO N 12AA(3) AND 12AA(4) ARE INVOKED AND REGISTRATION GRANTED U/S.12A IS WITHDRA WN/CANCELLED W.E.F. 01.04.2006 FROM THE STARTING OF FINANCIAL YEAR, IN WHICH THE T RUST WAS FOUND TO BE INVOLVED IN MONEY LAUNDERING THROUGH PAYMENT OF BOGUS DONATION, INGENUINE ACTIVITIES AND NOT CARRYING OUT ACTIVITIES AS PER OBJECT OF THE TRUST. BEING AGGRIEVED BY THE ORDER OF LD CIT(EXEMPTION) T HE ASSESSEE CAME IN APPEAL BEFORE US. 7. BEFORE US LD. AR OF THE ASSESSEE FILED A PAPER B OOK WHICH IS RUNNING FROM PAGES 1 TO 426 AND SUBMITTED THAT:- 1. THE SHOW CAUSE NOTICE WAS ISSUED FOR THE CANCELLATI ON OF REGISTRATION GRANTED UNDER SECTION 12A/ 12AA OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT VIDE NO. CIT(E)/KOL/12AA/2015-16 /3595 ON 3.12.2015. BUT THE LD CIT(EXEMPTION) HAS CANCELLED THE REGISTR ATION VIDE ITS ORDER DATED 10.03.2016 BY INVOKING THE PROVISIONS OF SECTION 12 AA(3) AND 12AA(4) OF THE ACT. THE ASSESSEE HAS MADE THE SUBMISSION IN THE RE SPONSE TO THE SHOW CAUSE NOTICE ISSUED ON DATED 3.12.2015 CONSIDERING THE PR OVISIONS OF SECTION 12AA(3) OF THE ACT. THEREFORE THE ACTION OF THE LD CIT (EXE MPTION) U/S 12AA(4) OF THE ACT IS NOT WITHIN THE PROVISIONS OF LAW AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 2. THE LD. AR FURTHER SUBMITTED THAT THE NAME OF THE A SSESSEE IS NOT APPEARING IN THE LIST OF THE PERSONS TO WHOM THE AMOUNT OF DONAT ION WAS RETURNED BY BERT IN THE FORM OF BOOKING OF BOGUS CAPITAL EXPENDITURE UNDER THE HEAD BUILDING. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 9 3. THE PERSON ACTING AS CONDUIT BETWEEN THE ASSESSEE A ND BERT HAS NOT MENTIONED THE NAME OF THE ASSESSEE FOR RETURNING TH E AMOUNT OF DONATION TO THE ASSESSEE. 4. THE LD. AR HAS ALSO SUBMITTED THE REQUEST LETTER FR OM BERT FOR THE DONATION WHICH IS PLACED ON PAGE 19 OF THE PAPER BOOK ALONG WITH THE NECESSARY DETAILS OF THE DONEE SUCH AS DONATION RECEIPT, 80G CERTIFIC ATE. 5. THERE IS NO EVIDENCE THAT THE AMOUNT OF DONATION MA DE BY THE ASSESSEE HAS COME BACK TO THE ASSESSEE OR ITS ASSOCIATE CONCERN IN ANY FORM. 6. THE LEARNED AR ALSO SUBMITTED THAT THE DATE FOR CRO SS EXAMINATION OF THE STATEMENT OF THE MANAGING TRUSTEE OF BERT WAS FIXED DATED 3-3-2016 AND THE LEARNED CIT(EXEMPTION) HAS GIVEN A FINDING THAT NOB ODY FROM THE SIDE OF THE ASSESSEE APPEARED ON THE APPOINTED DATE. THE FINDIN G OF THE LEARNED CIT EXEMPTION IS NOT CORRECT AS THE LEARNED COUNSEL FOR THE ASSESSEE SHRI SOMNATH GHOSH AND MANAGING TRUSTEE SHRI BHOGENDRA JHA OF TH E ASSESSEE TRUST ATTENDED THE OFFICE OF THE LEARNED CIT (EXEMPTIONS). THE LEA RNED AR IN THIS CONNECTION HAS RELIED ON THE CERTIFIED COPY OF THE ATTENDANCE REGISTER WHICH IS MAINTAINED AT THE INCOME TAX OFFICE THE ACT AND COPY IS PLACED ON PAGES 131 TO 135 OF THE PAPER BOOK. THE LD. AR HAS ALSO PRODUCED THE COPY O F THE AFFIDAVIT OF THE MANAGING TRUSTEE IN SUPPORT OF HIS CLAIM WHICH IS P LACED ON PAGES 173 TO 179 OF THE PAPER BOOK. SIMILARLY THE COPY OF THE AFFID AVIT OF THE COUNSEL FOR THE ASSESSEE WAS ALSO SUBMITTED WHICH IS PLACED ON RECO RD IN THE FILE. ON THE OTHER HAND THE LD. DR SUBMITTED THAT THE ATT ENDANCE REGISTERS MAINTAINED AT THE INCOME TAX OFFICE CANNOT BE THE DECISIVE FACTORS TO DECIDE WHETHER THE MANAGING TRUSTEE AND THE COUNSEL FOR THE ASSESSEE ATTENDED T HE HEARING DATED 3.3.2016. A VERY SPECIFIC QUERY WAS POSED TO THE MANAGING TRUSTEE OF THE ASSESSEE TRUST ABOUT THE DETAILS OF THE TRUST/ SOCIETIES TO WHICH THE DONATION HAS B EEN PAID BY IT BUT THE MANAGING TRUSTEE COULD NOT MAKE ANY SATISFACTORY REPLY TO TH E LEARNED CIT(EXEMPTIONS) THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT (E XEMPTION). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INS TANT CASE RELATES TO THE CANCELLATION ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 10 OF REGISTRATION CERTIFICATE ISSUED U/S 12A/12AA OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS INVOLVED IN PROVIDING THE BOGUS DONATI ON TO THE VARIOUS TRUST AND SOCIETIES. THIS FACT OF BOGUS TRANSACTIONS IN THE F ORM OF DONATION WAS REVEALED ON THE BASIS OF THE STATEMENT OF THE MANAGING TRUSTEE RECO RDED IN THE COURSE OF SURVEY U/S 133A OF THE ACT ON BERT. THE MANAGING TRUSTEE OF BE BERT ADMITTED THAT IT HAS RECEIVED BOGUS DONATION THROUGH A PERSON NAMELY SHR I GULAB PINCHA. THUS THE LD. CIT(EXEMPTION) CANCELLED THE REGISTRATION CERTIFICA TE ISSUED U/S 12A OF THE ACT. HOWEVER ON THE PERUSAL OF THE STATEMENT GIVEN BY TH E MANAGING TRUSTEE OF THE BERT WE FIND THAT HE ADMITTED THAT THE MAJOR BOGUS DONAT ION WAS RECEIVED FROM VARIOUS TRUST/ SOCIETIES BUT THE LD CIT(EXEMPTION) HAS NOT PROVIDED ANY LIST IN ITS ORDER WHERE THE NAME OF THE ASSESSEE TRUST IS REFLECTING. WE AL SO FIND AS PER THE STATEMENT OF MANAGING TRUSTEE OF BERT THAT THE BOGUS DONATION WA S RECEIVED FROM THE VARIOUS TRUSTS/ SOCIETIES THROUGH SHRI GULAB PINCHA AND HE HAS NOT PROVIDED THE NAMES OF THE DONORS. SIMILARLY, THE BOGUS DONATION RECEIVED WAS SHOWN AS INCURRED FOR THE CAPITAL EXPENDITURE BY ISSUING CHEQUES IN THE NAME OF SEVER AL PERSONS. THE NAMES OF THESE PERSONS WERE VERY MUCH DISCLOSED BY THE MANAGING TR USTEE OF BERT BUT THE NAME OF THE DONORS WAS NOT ANYWHERE SHOWN IN THE RECORDED S TATEMENT. 8.1 IN VIEW OF ABOVE, WE FIND THAT THERE IS NO WHIS PER ABOUT THE NAME OF THE ASSESSEE THAT IT HAS GIVEN BOGUS DONATION AND THE S AME HAS COME BACK TO THE ASSESSEE IN THE FORM OF CASH THROUGH THE CHANNEL OF SOME PER SONS. ADMITTEDLY, THE ASSESSEE HAS GIVEN DONATION TO BERT FOR RS. 5 LACS. THE SAME WAS TREATED AS BOGUS DONATION ON THE BASIS OF THE STATEMENT OF THE MANAGING TRUSTEE OF B ERT BUT WE FIND THAT THE STATEMENT OF THE MANAGING TRUSTEE IS NOT REFLECTING THE NAME OF THE ASSESSEE RATHER IT IS SAYING THAT MAJOR DONATION RECEIVED WAS BOGUS. THE MAJOR D ONATION DOES NOT MEAN HUNDRED PERCENT DONATION RATHER IT REFERS MAJOR PART OF THE DONATION. NOW THE QUESTION ARISES WHETHER THE NAME OF THE ASSESSEE IS UNDER THE CATEG ORY OF MAJOR DONATION. IT IS A QUESTION OF FACT WHICH HAS TO BE ASCERTAINED FROM T HE AVAILABLE EVIDENCES. THERE IS NO EVIDENCE AVAILABLE ON RECORD SUGGESTING THE NAME OF THE ASSESSEE IN THE LIST OF BOGUS DONORS. AS PER THE ORDER OF LD CIT (EXEMPTION) SHRI GULAB PINCHA WAS ACTING AS THE CONDUIT IN ARRANGING THE BOGUS DONATION BUT NO STAT EMENT WAS RECORDED OF SHRI GULAB ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 11 PINCHA BY ISSUING NOTICE U/S 131 OF THE ACT. IN OUR CONSIDERED OPINION, THE STATEMENT SHRI GULAB PINCHA WAS VERY MUCH IMPORTANT TO UNVEIL THE FACTS OF THE BOGUS DONATION BUT THE LD CIT (EXEMPTIONS) HAS MISERABLY FAILED TO DO SO. IT IS ALSO IMPORTANT TO NOTE THAT THE REVENUE FAILED TO PROVE WITH SUPPORTING EV IDENCE THAT THE MONEY HAS COME BACK TO THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE EVEN ASSUMING THAT T HE DONATION TO BERT IS BOGUS THEN THE AMOUNT OF BOGUS DONATION WILL NOT BE ELIGI BLE FOR EXEMPTIONS U/S 11 OF THE ACT. UNDER SUCH CIRCUMSTANCES, THE REGISTRATION CER TIFICATE ISSUED U/S 12A OF THE ACT CANNOT BE CANCELLED AS LONG AS THE OBJECTS OF THE T RUST ARE WITHIN THE PROVISIONS OF LAW. THE OBJECTS/ BYELAWS OF THE TRUST ARE PLACED ON PAG ES 264 TO 283 OF THE PAPER BOOK AND ON THE BASIS OF SAME OBJECTS THE ASSESSEE WAS GIVEN REGISTRATION CERTIFICATE U/S 12A AND 80G AND 10(23C) OF THE ACT. WHILE HOLDING SO, WE FI ND SUPPORT & GUIDANCE FROM 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 INFORMATION F ROM THE RESPONDENT-ASSESSEE TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE INSTITUTION AND AFTER MAKING ENQUIRES HAD PASSED THE ORDER REGISTERING TH E SAID INSTITUTION AND GIVING IT THE BENEFIT UNDER SECTION 12A OF THE ACT, WHICH MADE TH E INSTITUTION ELIGIBLE FOR EXEMPTION FROM THE PROVISIONS OF SECTIONS 11 AND 12 OF THE AC T. UNDER SECTION 12AA(3) OF THE ACT, THE COMMISSIONER WAS TO BE SATISFIED ABOUT THE ACTIVITIES OF THE SAID INSTITUTION AND IF THEY WERE NOT GENUINE AND THE SAME WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION HE COULD PASS T HE 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 B EEN DOUBTED. 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 BECAUSE SH. SAN JAY D. SONAWANI HAD GIVEN A STATEMENT, THE COMMISSIONER AS SUCH IS NOT JUSTIFIE D IN CANCELLING THE REGISTRATION GRANTED ON 13.05.1999 W.E.F. THE ASSESSMENT YEAR 20 04-05. THE ASSESSEE HAD PLACED VARIOUS MATERIALS BEFORE THE TRIBUNAL TO 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 COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN PASSING THE IMPUGNED ORDER FOR WITHDRAWING THE E XEMPTION AS ADMITTEDLY, THE RESPONDENT-ASSESSEE IS CARRYING OUT EDUCATIONAL ACT IVITIES BY RUNNING A LARGE NUMBER OF EDUCATIONAL INSTITUTIONS ALL OVER THE COUNTRY AN D, THEREFORE, THE QUESTIONS OF LAW SOUGHT TO BE RAISED DO NOT ARISE. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 12 THE FACTS OF THE ABOVE CASE ARE SIMILAR TO THE INST ANT CASE BEFORE US. IN THE INSTANT CASE THE ASSESSEE IS A CHARITABLE TRUST DULY CONSTITUTED A CHARITABLE TRUST DULY CONSTITUTED 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. 12A OF THE IT ACT OF THE JHA EDUC ATIONAL TRUST BEFORE THE DIRECTOR OF INCOME TAX (EXEMPTION) IN CONFORMITY WITH RULE 17A AND SUBMITTED FORM NO. 10A TOGETHER WITH OTHER REQUISITE DOCUMENTS. THE DIRECT OR OF INCOME TAX (EXEMPTION) AFTER VERIFICATION OF DOCUMENTS AND AFTER BEING SAT ISFIED ABOUT THE OBJECT OF THE TRUST AND GENUINENESS OF ITS ACTIVITIES GRANTED REGISTRAT ION EFFECTIVE FROM 01.04.2001 VIDE ORDER NO. DIT(E)/T-3/8E/437/2CCI-02 DATED 11.04.200 2. A COPY OF THE SAID REGISTRATION IS ENCLOSED ON PAGES 4-6 OF THE PAPER BOOK. THE COMMISSIONER OF INCOME TAX (EXEMPTION) GRANTED APPROVAL UNDER SECTION 80G, INITIALLY FROM 26.03.2002 TO 31.03.2005 AND THEN FOR ASSESSMENT YEAR 2006-07 TO ASSESSMENT YEAR 2008-09. FURTHER, ON 23.09.2011 IT WAS EXTENDED IN PERPETUIT Y. A COPY OF THE CERTIFICATE GRANTING APPROVAL UNDER SECTION 80G IS ENCLOSED ON PAGES 6 TO 6C OF THE PAPER BOOK. IT WAS ALSO OBSERVED THAT NO DONATION WHATSOEVER HA S BEEN RECEIVED BY JHA TRUST (IN SHORT) TILL DATE. JHA TRUST IS RUNNING SCHOOLS IN T WO CAMPUS SINCE LAST SEVERAL YEARS. ONE IS PRIMARY AND JUNIOR HIGH SCHOOL ON VIP ROAD, BAGUIATI, KOLKATA-159 AND ANOTHER IS SECONDARY (ICSE) AND HIGHER SECONDARY (I SC) SCHOOL AT ASWINI NAGAR, BAGUIATI, KOLKATA-159. THE SCHOOL IS AFFILIATED WIT H COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS NEW DELHI (ICSE-X AND ISC- XII). THE TRUST HAS STARTED ANOTHER SCHOOL NEAR RANCHI WHICH IS SITUATED IN REM OTE AREA MAINLY WITH THE OBJECT OF IMPARTING EDUCATION TO GENERAL AND TRIBAL POOR STUD ENTS AND PROVIDING FREE TUITION AND/OR CHARGING CONCESSIONAL RATE OF TUITION FEES T O A LARGE NUMBER OF STUDENTS IN DESERVING CASES. THE SCHOOL IS OPERATIONAL SINCE AP RIL 2015. THE ROLL STRENGTH OF STUDENTS AT PRESENT IS ABOUT 3000 IN ALL THE SCHOOL S TAKEN TOGETHER. AT PRESENT, MORE THAN 200 STAFF MEMBERS ARE INVOLVED IN THE SCHOOL I NCLUDING TEACHING AND NON- TEACHING STAFF. APART FROM STAFF SEVERAL OTHER PERS ONS ARE DEPENDENT ON SCHOOLS FOR THEIR LIVELIHOOD AS THEY ARE ASSOCIATED WITH RELATE D ACTIVITIES OF SCHOOL SUCH AS CANTEEN, TRANSPORTATION ETC., THE HIGHER SECONDARY SCHOOL IS IMPARTING GOOD EDUCATION. THE PASS RESULT IS BETWEEN 97% TO 100% AT CLASS X AND CLASS XII LEVELS WITH HIGHEST SCORE ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 13 TOUCHING AS HIGH AS 98%. FURTHER, EVERY YEAR MORE T HAN 40 STUDENTS SCORE MORE THAN 90% AND MANY MERITORIOUS STUDENTS HAVE COME OUT FRO M THIS SCHOOL WHO HAVE GONE FOR FURTHER HIGHER STUDIES IN ENGINEERING, MEDICAL AND OTHER PROFESSIONAL DEGREES. EVERY YEAR A SCHOOL MAGAZINE DAWN IS PUBLISHED BY THE STUDENTS AND TEACHERS. TRUST ALSO PUBLISHES QUARTERLY NEWS BULLETINS FOR T HE BENEFIT OF STUDENTS. A SAMPLE COPY WAS ALSO FILED DURING THE COURSE OF HEARING FO R THE PURPOSE OF THE RECORD. IN OTHER CO-CURRICULAR ACTIVITIES ALSO MAY STUDENTS HAVE REP RESENTED AT STATE AND NATIONAL LEVEL. THE VISION OF THE TRUST IS TO IMPART EDUCATION WHER E THE NEED IS MORE AND AS SUCH THE SCHOOLS ARE BEING OPENED IN RURAL AREAS. LAST YEAR, IT HAS ACQUIRED LAND AT RAHIKI, IN MADHUBANI DISTRICT OF BIHAR AND IT PLANS TO START C ONSTRUCTION IN THE NEXT YEAR. HOWEVER ON PERUSAL OF THE ORDER OF THE LD. CIT(EXEM PTION) HAS NO WHERE HIGHLIGHTED THE ABOVE ACTIVITIES OF THE ASSESSEE AND NO DEFECT HAS ALSO BEEN REPORTED. THEREFORE, IT CAN SAFELY BE CONCLUDED THAT ALL THE ACTIVITIES ARE THE GENUINE ACTIVITIES. IT IS ALSO IMPORTANT TO NOTE THAT THE ASSESSMENT FOR THE AY 20 12-13 WAS CARRIED OUT U/S 143(3) OF THE ACT AND THE DONATION GIVEN BY THE ASSESSEE W AS DULY ACCEPTED. IT IS ALSO OBSERVED THAT THE DONATION GIVEN BY THE ASSESSEE OVER THE SEVERAL YEARS ARE NEGLIGIBLE TO THE GROSS RECEIPTS OF THE TRUST AS DE TAILED UNDER:- F Y GROSS RECEIPT DONATION DONATION AS % OF GROSS RECEIPT 2010-11 42,296,282 2,010,000 5% 2011-12 46,450,797 500,000 1% 2012-13 51,353,957 1,400,000 3% 2013-14 60,157,202 1,000,000 2% 2014-15 67,355,336 11,000 0% 8.2 SIMILARLY, WE ALSO RELY IN THE JUDGMENT OF HON BLE 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:- ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 14 IF TRUSTEES WERE MISAPPROPRIATING FUNDS AND WERE MA INTAINING FALSE ACCOUNTS, IT WAS OPEN TO AUTHORITIES TO DENY BENEFIT UNDER SECTION 1 1 OF THE INCOME TAX ACT, BUT THAT COULD NOT BE GROUND FOR CANCELATION OF REGISTRATION ITSELF. APPLYING THE ABOVE RATIO LAID DOWN BY THE HONBLE H IGH COURT OF KARNATAKA IN THE CASE OF ISLAMIC ACADEMY OF EDUCATION (SUPRA), IT CAN BE CONCLUDED THAT EVEN THE DONATION TO BERT IS PROVED TO BE BOGUS THEN ALSO TH E REGISTRATION U/S 12A OF THE ACT CANNOT BE CANCELLED BUT THE SAID AMOUNT OF DONATION WILL NOT BE ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT. THE PROVISIONS OF SECTION 12A OF THE ACT PRESCRIBE CONDITIONS FOR REGISTRATION OF TRUST AND MAKE OBLIGATORY TO THE TRUST OR THE INSTITUTION TO SEEK REGISTRATION UNDER SECTION 12AA OF THE ACT, IF SUCH TRUST OR INSTITUTION INTEN DS TO HAVE THE BENEFIT OF THE PROVISIONS OF SECTION 11 AND 12 OF THE ACT. THESE P ROVISIONS THUS MAKE IT CLEAR THAT IF THE TRUST OR THE INSTITUTION IS NOT REGISTERED UNDE R 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 LIA BLE TO BE EXCLUDED UNDER ANY OF THE CLAUSES OF SECTION 11 OF THE ACT. THUS, IN A CASE W HERE REGISTRATION IS REFUSED, THE TRUST OR THE INSTITUTION WOULD NOT BE ALLOWED TO CLAIM AN Y SUCH EXEMPTION OR EXCLUSION OF ITS INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR. THE INCOME-TAX ACT THROUGH SECTION 12A HAS MADE IT OBLIGATORY FOR CHARITABLE T RUSTS 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 REQU IREMENT OF REGISTRATION BEING PROCEDURAL IS PRESCRIBED UNDER SECTION 12AA 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 INSTITUT ION 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 GEN UINENESS 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, ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 15 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 EN QUIRIES AS HE THINKS FIT IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST. ONCE THE LD CIT(EXEMPTION) IS SATISFIED WITH THE GENUINENESS OF THE ACTIVITIES THEN HE WILL GRANT THE REGISTRATION CERTIFICATE. IN THE INSTANT CASE B EFORE US, WE FIND THAT THE ACTIVITIES OF THE TRUST HAVE NOT BEEN DOUBTED EXCEPT THE DONATION GIVEN BY THE ASSESSEE TO BERT. THUS IN OUR VIEW AT THE MOST THE EXEMPTION U/S 11 O F THE ACT WILL BE DENIED TO SUCH DONATION. THUS, IN SUCH CIRCUMSTANCES THE REGISTRAT ION U/S 12A 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 GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION AND ALSO ABOUT THE OBJECTS OF THE TRUST OR THE INST ITUTION. ON BEING SATISFIED ABOUT THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE I NSTITUTION AND ALSO ABOUT ITS OBJECTS, THE CIT WOULD EITHER GRANT THE CERTIFICATE OR WOULD REJECT THE PRAYER. IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR THE INSTITUTION, HE CAN CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUST OR THE INSTITUTION, AS HE THINKS NECESSARY AND HE IS ALSO EMPOWERED TO MAKE S UCH ENQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF. THE OBJECTS OF THE TRUST CAN BE HAD FROM THE BYE-LAWS OR THE DEED OF TRUST, AS THE CASE MAY BE AND UNLESS, OF CO URSE, THE 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 GENUIN ENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION, WHOSE OBJECTS DO NOT RUN CONTRA RY TO PUBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, THE CIT IS AGAIN EM POWERED TO MAKE ENQUIRIES AS HE THINKS FIT. IN CASE THE ACTIVITIES ARE NOT GENUINE AND THEY ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/SOCIETY OR THE INSTITUTION, OF COURSE, THE REGISTRATION CAN AGAIN BE REFUSED. BUT ON MERE PRES UMPTIONS AND ON SURMISES THAT INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS B EING MISUSED OR THAT THERE IS SOME APPREHENSION THAT THE SAME WOULD NOT BE USED IN THE PROPER MANNER AND FOR THE PURPOSES RELATING TO ANY CHARITABLE PURPOSE, REJECT ION CANNOT BE MADE. SEC. 12AA, WHICH LAYS DOWN THE PROCEDURE FOR REGISTRATION, DOE S NOT SPEAK ANYWHERE THAT THE CIT, WHILE CONSIDERING THE APPLICATION FOR REGISTRA TION, SHALL ALSO SEE THAT THE INCOME DERIVED BY THE TRUST OR THE INSTITUTION IS EITHER N OT BEING SPENT FOR CHARITABLE PURPOSE OR SUCH INSTITUTION IS EARNING PROFIT. THE LANGUAGE USED IN THE SECTION ONLY REQUIRES THAT ACTIVITIES OF THE TRUST OR THE INSTITUTION MUS T BE GENUINE, WHICH ACCORDINGLY WOULD MEAN, THEY ARE IN CONSONANCE WITH THE OBJECTS OF TH E TRUST/INSTITUTION, AND ARE NOT MERE CAMOUFLAGE BUT ARE REAL, PURE AND SINCERE, NOR AGAINST THE PROPOSED OBJECTS. ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 16 THE PROFIT EARNING OR MISUSE OF THE INCOME DERIVED BY CHARITABLE INSTITUTION FROM ITS CHARITABLE ACTIVITIES, MAY BE A GROUND FOR REFUSING EXEMPTION ONLY WITH RESPECT TO THAT PART OF THE INCOME BUT CANNOT BE TAKEN TO BE A SYNO NYM TO THE GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION. IT IS S IGNIFICANT TO MENTION THAT REGISTRATION UNDER S. 12AA DOES NOT NECESSARILY ENTITLE THE ASSE SSEE TO GET THE INCOME EXCLUDED FROM THE INCOME OF THE PREVIOUS YEAR FOR THE PURPOS E OF DETERMINATION OF TAX LIABILITY BUT IT ONLY ENTITLES THE ASSESSEE TO CLAIM SUCH EXE MPTION, WHICH OTHERWISE COULD NOT BE CLAIMED IN THE ABSENCE OF REGISTRATION. THE ENQUIRY BY THE CIT SHALL REMAIN RESTRICTED TO THE EXAMINATION, AS TO WHETHER THE ASSESSEE, WHO HAS MOVED THE APPLICATION FOR REGISTRATION UNDER S. 12A, IS ACTUALLY IN THE ACTIV ITIES WHICH ARE GENUINE. GENUINENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION H AS TO BE SEEN, KEEPING IN MIND THE OBJECTS THEREOF, WHICH NECESSARILY MEANS THAT THE C IT SHALL SATISFY HIMSELF ABOUT THE FACT THAT THE ACTIVITIES ARE GENUINE AND IN CONSONA NCE WITH THE 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 SAT ISFIED THAT THE SOCIETY HAS ESTABLISHED THE SCHOOL, WHERE EDUCATION IS BEING IMPARTED AS PE R RULES AND THE FACTUM OF ESTABLISHMENT AND RUNNING SCHOOL IS A GENUINE ACTIV ITY. THE ENQUIRY REGARDING GENUINENESS OF THE ACTIVITIES CANNOT BE STRETCHED B EYOND THIS. SUFFICIENT SAFEGUARDS HAVING BEEN GIVEN IN SS. 11, 12 AND 13 FOR ASSESSIN G THE INCOME WHICH HAS NOT BEEN APPLIED TO THE PURPOSE OF THE TRUST OR THE INSTITUT ION, THE INTENTION OF THE LAW MAKER AND THE SCOPE AND PURPORT OF THE PROVISION IS APPAR ENT WHILE CONSIDERING THE QUESTION 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 T HE BASIS OF SAME ACTIVITIES VARIOUS REGISTRATIONS U/S 12A, 80G AND 10(23C) WERE AWARDED TO THE ASSESSEE. SIMPLY THE ASSESSEE HAS GIVEN DONATION TO A TRUST WHICH IS INV OLVED IN THE BOGUS TRANSACTIONS CANNOT BE THE BASIS FOR THE DENIAL OF THE REGISTRAT ION CERTIFICATES AS DISCUSSED ABOVE. 8.3 IT IS ALSO IMPORTANT TO NOTE THAT THE ASSESSEE HAS BEEN GIVING DONATION IN EVERY YEAR WHICH HAS BEEN DULY ACCEPTED BY THE REVENUE AS EVIDENCED FROM THE DETAILS SUBMITTED WHICH IS PLACED ON PAGES 23 OF THE PAPER BOOK. THE AMOUNT OF DONATION GIVEN BY THE ASSESSEE TRUST OVER THE SEVERAL YEARS TO THE OTHER TRUST IS VERY MUCH CHARITABLE ACTIVITIES. IN THIS CONNECTION THE CBDT HAS ISSUED INSTRUCTION NO. 1132 DATE 05.01.1978 WHEREIN IT WAS CLARIFIED THAT THE P AYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILIZATION BY THE DONEE-TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR A CHARITABLE PURPO SE. WE ALSO FIND THAT THE NOTICE FOR THE CANCELLATION O F THE REGISTRATION CERTIFICATE WAS ISSUED U/S 12AA(3) OF THE ACT AS EVIDENT FROM THE N OTICE PLACED ON PAGE 12 OF THE PAPER BOOK. HOWEVER, LD. CIT(EXEMPTION) HAS ALSO IN VOKED THE PROVISIONS OF SECTION ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 17 12AA(4) OF THE ACT FOR CANCELLING THE REGISTRATION CERTIFICATE WHICH IN OUR CONSIDERED VIEW AGAINST THE PRINCIPAL OF NATURAL JUSTICE. THE LD. CIT(E) BEFORE INVOKING THE PROVISIONS OF SECTION 12AA(4) SHOULD HAVE ISSUED TH E SHOW CAUSE NOTICE. THEREFORE, WE FIND THAT THE PROPER OPPORTUNITY TO THE ASSESSEE HAS NOT BEEN FURNISHED. 8.4 WE ALSO FIND THAT LD. AR HAS GIVEN THE DETAILED PROFILE OF THE ASSESSEE AND ITS ACTIVITIES WHICH ARE PLACED IN ITS ANNUAL MAGAZINE WITH THE NAME DAWN . THE TRANSACTION FOR THE DONATION WAS MADE THROUGH BANKI NG CHANNEL AND THE DEPARTMENT FAILED TO BRING ANYTHING ON RECORD THAT THE DONATIO N GIVEN BY THE ASSESSEE HAS COME BACK TO IT IN THE FORM OF THE CASH. AT THE MOST, IN OUR CONSIDERED VIEW, THE REVENUE COULD HAVE BROUGHT THE AMOUNT OF DONATION TO THE TA X. IN THE INSTANT CASE SHREE GULAB PINCHA (SGP FOR SHO RT) MOB. NO.9831015157 WAS ACTING AS CONDUIT IN PROVIDING A LARGE AMOUNT OF BO GUS DONATION RECEIVED WHICH WAS IMMEDIATELY RETURNED BACK TO THE DIFFERENT PARTIES IN THE GUISE OF PAYMENTS TOWARDS CAPITAL EXPENDITURE IN BUILDING. HOWEVER, NO STATEM ENT WAS SGP WAS RECORDED BY THE REVENUE AUTHORITIES BY ISSUING ANY NOTICE/SUMMON U/ S 133(6) / 131 OF THE ACT. THE MANAGING TRUSTEE OF BERT HAS ACCEPTED IN HIS STATEM ENT THAT SGP WAS INVOLVED IN THE AFORESAID BOGUS DONATION TRANSACTION. THEREFORE, IT WAS NECESSARY FOR THE REVENUE AUTHORITIES TO CROSS EXAMINE SGP TO ESTABLISH / ASC ERTAIN HOW THE MONEY HAS RETURNED BACK TO THE ASSESSEE-TRUST. IN THE INSTANT CASE, TH E MANAGING TRUSTEE OF BERT HAS HIGHLIGHTED THE NAME OF 7 INTERMEDIARIES USED FOR R ETURNING THE MONEY OF THE DONATION AND THE NAME OF THE ASSESSEE TRUST IS NOT APPEARING IN THAT LIST. SIMILARLY, THE MANAGING TRUSTEE OF BERT HAS NOT MENTIONED THE NAME OF THE A SSESSEE THAT THE BOGUS DONATION WAS RECEIVED. THE MANAGING TRUSTEE OF BERT HAS MENT IONED VERY VAGUELY THAT MAJOR PART OF THE DONATION WAS BOGUS WITHOUT BRINGING THE NAME OF THE DONORS ON RECORD. BUT HE MENTIONED THE NAME OF SGP AS THE MIDDLE MAN FOR ARRANGING SUCH BOGUS DONATION. THUS IN OUR CONSIDERED VIEW, THE STATEMENT OF SGP W AS NECESSARY FOR ESTABLISHING THE FACT THAT HOW THE MONEY HAS RETURNED TO ASSESSEE AN D WHETHER THE MONEY WAS ACTUALLY RETURNED TO THE ASSESSEE-TRUST. AS THE STATEMENT O F THE SGP HAS NOT BEEN RECORDED, THE QUESTION OF CONFRONTING THE SAME TO THE ASSESSEE DO ES NOT ARISE. AS PER QUESTION NO. 14 ITA NO.931-933/KOL/2016 JHA EDUCATIONAL TRUST VS. CIT (EX) KOL. PAGE 18 OF THE STATEMENT OF THE MANAGING TRUSTEE OF BERT, I T IS CLEAR THAT SGP WAS THE ONLY PARTY TO ARRANGE ALL THE BOGUS DONATIONS BUT HIS ST ATEMENT IS MISSING WHICH WAS CRUCIAL TO UNVEIL THE CHAIN OF BOGUS DONATION. IN VIEW OF ABOVE, WE HAVE NO HESITATION IN REVERSIN G THE ORDER OF LD. CIT(E) AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. NOW COMING TO THE OTHER APPEALS OF THE ASSESSEE IN ITA 932/KOL/2016 AND 933/KOL/2016 9. AT THE OUTSET, WE FIND THAT WE HAVE ALREADY ADJU DICATED THE ISSUE RAISED BY ASSESSEE IN ITA NO. 931/KOL/2016 IN ITS FAVOUR. FOLLOWING THE SAME PRINCIPLES, WE ALLOW BOTH THE APPEALS OF THE ASSESSEE. 10. IN THE RESULT, ALL THE THREE APPEALS OF ASSESSEE AR E ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 17/03/2017 SD/- SD/- (PARTHA SARATHI CHOWDHURY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S '#$ - 17/03/2017 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-JHA EDUCATIONAL TRUST, C/O CALCUTTA PUBLI C SCHOOL, P.O. ASWINI NAGAR, BAGUIHATI, KOLKATA-159 2. /REVENUE-CIT-(EXEMPTION), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLKATA-71 3. ##%& ' / CONCERNED CIT 4. ' - / CIT (A) 5. ()* ++%& , %& / DR, ITAT, KOLKATA 6. *,- / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / # %&,