Sanskriti Sagar, Kolkata V. CIT(Exemption) Kolkata, Kolkata

ITA 96/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1458 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 19-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HANGSHING
• Assessee Lawyers: A K GUPTA
• Keywords: Bogus purchase; Principle of natural justice; Retrospective amendment; Accommodation entries; Cancellation of registration
• Section: 12A; 12AA

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 96 / KOL / 2017 ASSESSMENT YEAR :2011-12 SANSKRITI SAGAR 9/1, R.N. MUKHERJEE ROAD 5 TH FLOOR, KOLKAT-001 [ PAN NO.AABTS 5231 Q ] V/S . CIT(EXEMPTION) 10B, MIDDLETON ROW, 6TH FLOOR,KOLKATA-71 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI A.K. GUPTA, FCA /BY RESPONDENT GOULEAN HANGSHING, CIT-DR /DATE OF HEARING 29-08-2017 !' /DATE OF PRONOUNCEMENT 15-09-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (EXEMPTIONS) U/S 12AA(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDER DATED 06.01.2017 FOR ASSESSMENT YEAR 2011-12 ONWARDS. GROUNDS RAISED BY ASSESSEE PER ITS APPEAL ARE AS UNDER:- (1) THAT THE ORDER DATED 6.1.2017 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (EXEMPTIONS) [CIT(E)] CANCELLING THE REGISTRATI ON OF THE APPELLANT UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 (ACT) W ITH EFFECT FROM 1.4.2010 IS BAD IN LAW AND ON FACTS OF THE CASE. (2) THAT THE REASONS GIVEN BY THE LD. CIT (E) FOR C ANCELLATION OF REGISTRATION OF THE APPELLANT UNDER SECTION 12AA(3) OF THE ACT ARE CONTRARY TO LAW AND ON FACTS OF THE CASE. (3) THAT THE LD. CIT(E) ERRED IN CANCELLING THE REG ISTRATION WITHOUT REALLY GOING INTO THE GENUINENESS OF THE ACTIVITIES OF THE APPEL LANT AND WITHOUT ANY EVIDENCE WHATSOEVER HAS ERRED IN HOLDING THAT THE A CTIVITIES OF THE TRUST ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE APPELLANT. ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 2 (4) THAT THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT ON THE GROUND THAT THE CORPUS DONATION OF RS.85,000 RE CEIVED BY THE APPELLANT FROM M/S. HERBICURE HEALTHCARE SIO-HERBAL RESEARCH FOUNDATION (HERBICURE) DURING THE FINANCIAL YEAR 2010-2011 WAS AN ACCOMMOD ATION ENTRY BASED ON THE ALLEGED STATEMENT OF THE DIRECTOR OF HERBICURE, EVEN THOUGH THE GENUINENESS OF THE DONATION HAVING BEEN CONFIRMED B Y HERBIUCURE SUBSEQUENTLY. (5) THAT THE LD. CIT (E) WAS NOT JUSTIFIED IN CANCE LLING THE REGISTRATION OF THE APPELLANT WITHOUT PROVIDING AN OPPORTUNITY TO THE A PPELLANT FOR CROSS- EXAMINATION OF THE DIRECTOR OF HERBICURE WHICH IS I N GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND THEREFORE THE ORD ER OF THE LD. CIT (E) DESERVES TO BE QUASHED. (6) THAT THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT DESPITE THERE BEING NO SPECIFIC INFORMATION WITH RE GARD TO THE INGENUINENESS OF THE CORPUS DONATION OF RS.85000 RECEIVED BY THE APP ELLANT FROM HERBICURE DURING THE FINANCIAL YEAR 2010-2011. (7) THAT THE LD. CIT (E) FAILED TO RECORD ANY SATIS FACTION WITH REGARD TO THE CONDITIONS PRESCRIBED IN SECTION 12AA(3) OF THE ACT AND HAS THUS CLEARLY EXCEEDED HIS POWER IN CANCELLING THE REGISTRATION. THE LD. CIT(E) ERRED IN NOT PROVIDING A SINGLE IOTA OF EVIDENCE THAT THE ACTIVI TIES OF THE TRUST ARE NOT GENUINE AND THE CANCELLATION OF THE TRUST IS COMPLE TELY DEPENDENT ON A NON- VERIFIED STATEMENT OF A THIRD PARTY. (8) THAT THE LD. CIT (E) ERRED IN CANCELLING THE RE GISTRATION OF THE APPELLANT WITH RETROSPECTIVE EFFECT I.E. FROM 1.4.2010 WHICH IS NOT PROVIDED UNDER THE PROVISIONS OF THE ACT. (9) THAT THE APPELLANT RESERVES THE RIGHT TO ADD TO THE ABOVE GROUNDS AND / OR AMEND OR DELETE ANY OF THEM AT THE TIME OF OR BEFOR E THE DATE OF HEARING OF THE APPEAL. SHRI A.K. GUPTA, LD. AUTHORIZED REPRESENTATIVE APPE ARED ON BEHALF OF ASSESSEE AND SHRI GOULEAN HANGSHING, LD. DEPARTMENT AL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 06.01.2017 OF C.I.T. (EXEMPTION), KOLKATA CANCELLING THE REGIS TRATION GRANTED TO THE ASSESSEE TRUST U/S 12AA OF THE INCOME TAX ACT, 1961 (ACT). 3. THE ASSESSEE IS A SOCIETY CONSTITUTED UNDER T HE WEST BENGAL SOCIETY REGISTRATION ACT 1961 DATED 26.3.1985. THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT BY AN ORDER DATED 20.02.1989 BY THE DIRECTOR OF INCOME TAX (EXEMPTION), KOLKATA. THE ASSESSEE HA S BEEN ENJOYING THE BENEFIT OF REGISTRATION EVER SINCE THE GRANT OF REG ISTRATION. THE ASSESSEE IS ENGAGED IN VARIOUS CHARITABLE ACTIVITIES. ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 3 4. THERE WAS A SURVEY OPERATION CARRIED OUT U/S 13 3A OF THE ACT ON 27.01.2015 IN THE BUSINESS PREMISES OF HERBICURE HE ALTHCARE BIO-HERBAL RESEARCH FOUNDATION (HHBHRF). HHBHRF IS A COMPANY I NCORPORATED U/S 25 UNDER THE COMPANIES ACT, 1956. IT IS ENGAGED IN BAS IC AND FUNDAMENTAL BIO MEDICAL RESEARCH IN THE FIELD OF MICRO BIOLOGY AND ANALYTICAL CHEMISTRY. THE HHBHRF WAS RECOGNIZED IN THE YEAR 2006-07 AS A SCIE NTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY THE MINISTRY OF SCI ENCE AND TECHNOLOGY, GOVERNMENT OF INDIA AND SUBSEQUENTLY RECOGNIZED AS INSTITUTION U/S 35(1)(II) OF THE ACT. THE AFORESAID RECOGNITION WOULD MEAN THAT ANY SUM PAID TO HHBHRF WOULD BE ENTITLED TO A DEDUCTION OF ONE AND ONE FOU RTH TIMES OF ANY SUM PAID TO THE PERSON MAKING PAYMENT WHILE COMPUTING BUSINE SS INCOME OF SUCH PAYEE. ANY SUM PAID MEANS IT INCLUDES DONATIONS ALS O. 5. IN THE COURSE OF SURVEY OPERATIONS THE AUTHOR IZED OFFICER CARRYING OUT THE SURVEY RECORDED THE STATEMENT OF SHRI SWAPAN RANJAN DASGUPTA, THE FOUNDER DIRECTOR OF HHBHRF. THE REVENUE HAD INFORMATION THA T SINCE HHBHRF ENJOYS APPROVAL U/S 35(1)(II) OF THE ACT AND THEREFORE IT WAS BEING USED BY MONEY LAUNDERERS TO GIVE DONATIONS WHICH IS BASICALLY ACC OMMODATION ENTRIES. QUESTION NO.22 AND 23 AND ANSWER TO THOSE QUESTIONS WILL SHOW THE MODUS OPERANDI OF ALLEGED MONEY LAUNDERING CARRIED OUT BY HHBHRF. THE SAME READS AS FOLLOWS :- Q.22. LET ME REMIND YOU THAT AS ONE OF THE DIRECTORS OF HERBICURE HEALTHCARE BIO- HERBAL RESEARCH FOUNDATION YOU ARE DUTY BOUND' TO K EEP COMPLETE INFORMATION REGARDING TRANSACTIONS BEING MADE BY THE SAID ENTIT Y AND THE GENUINENESS OF PERSONS / ENTITIES WITH WHOM THE SAID TRANSACTIONS ARE BEING MADE. YOUR ATTENTION IS FURTHER BEEN DRAWN TO THE COMPUTER EXTRACTS TAKEN OUT OF THE TAL LY WHICH WAS FOUND IN YOUR E-MAIL. THESE PAGES ARE RELATED TO THE BANK BOOK OF HERBICU RE HEALTHCARE BIO-HERBAL RESEARCH FOUNDATION WHEREIN IT IS CLEARLY REFLECTED THAT THE AMOUNT OF RS.25 IAKH (IN TWO TRENCHES] RECEIVED FROM OCL INDIA LTD AN 15.07. 2011, RS.251AKH RECEIVED FROM OCL INDIA LTD ON 11.08.2011 & 17.08-2011 ARE IMMEDI ATELY BEING TRANSFERRED TO A.S. ENTERPRISES WHICH IS A PAPER COMPANY ON THE SAME DA TES. SIMILAR TREND IS VISIBLE IN THE CASE OF DONATIONS RECEIVED FROM OTHER PARTIES WHERE JUST IMMEDIATELY AFTER THE RECEIPT OF DONATION AMOUNT THE SAME IS BEING TRANSFERRED TO THE ACCOUNT OF ANY PAPER COMPANY. IN VIEW OF THE SAME YOU ARE ONCE AGAIN BEING GIVEN AN OPPORTUNITY TO SPEAK THE TRUTH AND EXPLAIN THE TRANSACTIONS REFLECTED FROM YOUR BA NK BOOK AS ABOVE. ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 4 ANS. SIR, I WISH TO STATE THAT OUR CONCERN HERBICURE HE ALTHCARE BIO-HERBAL RESEARCH FOUNDATION WAS INCORPORATED IN THE YEAR 2003 U/S 25 OF THE COMPANIES ACT, 1956 WHICH WAS RECOGNIZED IN 2006-07 AS A SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANIZATION (SIRO) BY THE MINISTRY OF SCIENCE & TECHNOLOGY, GOV T OF INDIA AND SUBSEQUENTLY WE BECAME A GAZETTE NOTIFIED COMPANY U/S 35(1)(II) OF THE I.T. ACT. 1961 IN MARCH, 2008, DESPITE OF OUR -SINCERE, HONEST AND BEST INTENTION WE FAILED TO PROCURE ANY GENUINE DONATIONS TILL 2010-11, THE SITUATION WAS BECOMING BAD TO WORSE DUE TO NON-AVAILABILITY OF FUND' FOR NOT AGREEING TO THE PREVALENT PRACTICE IN THE DONATION MARKET. THE SITUATION BECAME SO CRITICAL FOR US TO SURVIVE AND CARRY ON O UR MISSION TO DO THE WORK FOR THE LARGER INTEREST OF THE AILING POPULATION WE HAD NO OTHER ALTERNATIVE BUT TO BECOME THE VICTIM OF THE CIRCUMSTANCES AGAINST OUR WILL AND PR INCIPLE. SUBSEQUENTLY, I WAS APPROACHED BY ONE MR KISHAN BHA WASINGKA WITH THE PROPOSAL TO ADOPT THE PREVALENT PRACTICE OF SCIENTIFIC AND RESE ARCH ORGANIZATIONS OF GIVING ACCOMMODATION ENTRIES ON COMMISSION TO DIFFERENT BE NEFICIARIES IN THE GARB OF DONATION RECEIPTS TO BE FINALLY GIVEN BACK TO THEM IN THE FO RM OF CASH OR CHEQUE. SINCE WE WERE FACING SEVERE FINANCIAL CRISIS AND THE GENUINE DONA TIONS WERE NOT COMING TO US WE WERE COMPELLED TO ACCEPT THE PROPOSAL. Q.23 PLEASE EXPLAIN IN DETAIL THE MODUS OPERANDI OF GIV ING THE ACCOMMODATION ENTRIES BY WAY OF ACCEPTING DONATIONS TO DIFFERENT BENEFICI ARIES. ALSO STATE WHO IS THE / ARE THE BROKER / BROKERS (WHILE GIVING HIS MOBILE NO, AND A DDRESS) THROUGH WHICH YOU HAVE GIVEN ACCOMMODATION ENTRIES IN THE FORM OF BOGUS DO NATIONS ON COMMISSION? PLEASE ALSO STATE WHAT ARE THE COMMISSION CHARGED B Y YOU AND BROKER CONCERNED FUR PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT BENEFI CIARIES. ANS. THE ENTIRE ACCOMMODATION ENTRIES OF BOGUS DONATION S ARE FACILITATED BY MR KISHAN BHAWASINGKA HAVING HIS MOBILE NOS, 9830087866 & 988 3051515 WHO LIVES SOMEWHERE IN BHAWANIPORE NEAR NETAJI SUBHAS METRO STATION. TH E MODUS IS LIKE THIS. THE INFORMATION IS GIVEN TO US BY MR. KISHAN BHAWASINGK A AS TO BOGUS DONATION ENTRY IS NEEDED BY A PARTICULAR PARTY. SOMETIMES WE COME TO KNOW ABOUT THE ACCOMMODATION ENTRY BEING GIVEN TO A PARTY WHEN WE DIRECTLY RECEI VE COMMUNICATION FROM THE CONCERNED BANK THAT THE AMOUNT HAS BEEN CREDITED. T HUS, THE ACCOMMODATION ENTRY IS COMPLETELY CONTROLLED AND MANAGED BY MR KISHAN BHAW ASINGKA. THE BOGUS DONATIONS ARE RECEIVED VIDE CHEQUE/RTGS INTO ANY OF THE BANK ACCOUNTS MENTIONED BY ME IN RESPONSE TO QUESTION NO.7 OF THIS STATEMENT. AFTER THIS, PAYMENT IS MADE TO ANY OF THE PAPER /BOGUS COMPANIES ON ACCOUNT OF BOGUS PURCHASE /EXPENSE ON THE ADVICE OF MR KISHAN BHAWASINGKA. THE REMAINING TRANSACTION IS AL SO MANAGED ON PAPER BY HIM ONLY WHICH HAPPENS IN THE FORM OF ROUTING OF THE DONATIO N AMOUNT THROUGH HIS BOGUS/PAPER COMPANIES IN 2 TO 3 LAYERS. FINALLY, CHEQUE OF THE DONATION AMOUNT (AFTER DEDUCTING THE CUT OF COMMISSION CHARGED BY US AND BROKER MR KISHA N BHAWASINGKA) IS GIVEN 'BACK TO THE ORIGINAL BENEFICIARY WHO GAVE DONATION TO US. S OMETIMES, THE AMOUNT IS WITHDRAWN AT 3 RD OR 4 TH LEVEL AND CASH IS GIVEN BACK TO THE ORIGINAL BENEF ICIARY (AFTER DEDUCTING THE CUT OF COMMISSION CHARGED BY US AND BROKER MR KISHA N BHAWASINGKA) WHO GAVE DONATION TO US. IN THIS ENTIRE-PROCESS OF PROVIDING ENTRY IN THE FORM OF BOGUS DONATION TO DIFFERENT BENEFICIARY COMPANIES/ INDIVIDUALS A COMMISSION OF 5% APPROX IS CHARGED BY US WHICH IS THE ACTUAL DONATION WE RECEIVE FROM THAT PARTICU LAR DONOR IN REALITY. THE COMMISSION OF ALMOST 5 TO 8% IS CHARGED BY MR KISHAN BHAWASING KA FOR FACILITATING THE SAID ACCOMMODATION ENTRY. SUBSEQUENTLY, A SANCTION LETTER IS RECEIVED FROM TH E DONOR REFLECTING THE AMOUNT OF DONATION AND MODE OF PAYMENT. THE PARTICULARS ARC T HEN VERIFIED WITH THE AMOUNT CREDITED IN OUR BANK ACCOUNTS AFTER WHICH AN EXEMPT ION U/S 35(1)(II) OF THE LT. ACT, 1961 WHICH QUALIFIES HIM/HER TO CLAIM 'ONE AND THRE E FOURTH' OF THE SAID DONATION AS TAX EXEMPT U/S 35(1)(II) OF THE I. T. ACT, 1961. ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 5 6. THE GIST OF THE STATEMENT AS RECORDED ABOVE I S THAT TILL 2010-11 HHBHRF COULD NOT GET GENUINE DONATIONS AND WAS STARVED FU NDS FOR CARRYING OUT ITS ACTIVITIES. IN THOSE CIRCUMSTANCES ONE MR. KISHEN B HAWASINGKA APPROACHED THE ASSESSEE FOR THE PURPOSE OF ENABLING THE ASSESS EE TO GIVE ACCOMMODATION ENTRY OF RECEIPTS OF DONATIONS AS WEL L AS GIVING OF DONATIONS BY THE ASSESSEE FOR WHICH THE ASSESSEE WOULD BE PAI D A COMMISSION. SINCE HHBHRF WAS HAVING FINANCIAL CRUNCH IT ACCEDED TO TH E PROPOSAL. WITH REGARD TO THE MODUS OPERANDI OF GIVING OF ACCOMMODATION EN TRIES IT WAS STATED THAT BOGUS DONATIONS ARE RECEIVED BY CHEQUES/RTGS INTO V ARIOUS BANK ACCOUNTS OF THE ASSESSEE OUT OF THE SAID BANK ACCOUNT PAYMEN TS WERE MADE TO PAPER OR BOGUS COMPANIES FOR BOGUS PURCHASES OR EXPENSES ON THE ADVICE OF SHRI KISHAN BHAWASINGKA. SOMETIMES DONATIONS ARE ALSO GI VEN FROM THE BANK ACCOUNT AS DONATIONS BY/ OF THE ASSESSEE. THE COMMI SSION PAYABLE FOR SUCH TRANSACTIONS OF THE ASSESSEE AS WELL AS THE BROKER SHRI KISHAN BHAWASINGKA WOULD BE DEDUCTED AND THE REMAINING AMOUNTS WOULD B E SIPHONED EITHER AS DONATIONS OR TOWARDS LAUNDERING OF BOGUS PURCHASES OR EXPENSES OF PARTIES IDENTIFIED BY SHRI KISHAN BHAWASINGKA. 7. THE ASSESSEE HAD RECEIVED A CORPUS DONATION O F RS. 85,000/- FROM HHBHRF VIDE CHEQUE NO. 645855 DATED 3.03.2011. SINC E THE ASSESSEE HAD RECEIVED DONATIONS FROM HHBHRF THE LD. CIT(EXEMPTIO NS) KOLKATA WAS OF THE VIEW THAT THE ASSESSEE HAD ALSO INDULGED IN MONEY L AUNDERING AND THEREFORE THE REGISTRATION GRANTED TO THE ASSESSEE U/S 12AA O F THE ACT DESERVES TO BE CANCELLED BY INVOKING THE POWERS OF LD. CIT(EXEMPTI ONS), KOLKATA VESTED U/S 12AA(3) OF THE ACT WHICH READS AS FOLLOWS :- 12AA (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN G RANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1)[OR HAS OBTAINED REGIS TRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY TH E FINANCE (NO.2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMM ISSIONER OF ] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION , AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRI TING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION : ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 6 8. THE LD. CIT(EX), KOLKATA ISSUED A SHOW CAUSE NOTICE DATED 02.12.2015 IN WHICH HE EXPLAINED THE SURVEY OPERATIONS IN THE CAS E OF HHBHRF AND ADMISSION BY THEM THAT THEY WERE ENGAGED IN PROVIDI NG ACCOMMODATION ENTRIES OF BOGUS DONATIONS. THE LD. CIT(EXEMPTIONS) , KOLKATA FURTHER WAS OF THE FOLLOWING OPINION : 3. IT IS SEEN THAT YOU HAVE RECEIVED DONATION AMOUN TING TO RS. 85,000/- FOR A.Y.2011-12 FROM THE ABOVE MENTIONED PERSON HERBI CURE HEALTHCARE BIO- HERBAL RESEARCH FOUNDATION. IT IS EVIDENT THAT BY A CCEPTING BOGUS DONATION THEN RETURNING THE MONEY YOU HAVE INDULGED IN MONEY LAUNDERING WHICH IS ILLEGAL, NOT GENUINE AND NOT AT PAR WITH THE OBJECT S OF THE TRUST/SOCIETY. 4. IN VIEW OF THE ABOVE YOU ARE REQUESTED TO EXPLAI N WHY THE REGISTRATION U/S 12A/12AA WILL NOT GET CANCELLED BY INVOKING THE PRO VISION OF SECTION 12AA(3). 9. THE ASSESSEE IN REPLY TO THE AFORESAID SHOW C AUSE NOTICE TOOK A STAND THAT AS FAR AS THE ASSESSEE WAS CONCERNED IT RECEIV ED A CORPUS DONATION FROM HHBHRF AND THAT THE SAME WAS GENUINE AND THAT IT HA D NOT INDULGED IN ANY MONEY LAUNDERING. THE ASSESSEE HAD IN THE COURSE OF PROCEEDINGS FOR CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT FILED A CONFIRMATION FROM HHBHRF DATED NIL WHEREIN HHBHRF HAVE CONFIRMED THAT IT HAD GIVEN A SUM OF RS. 85,000/- TO THE ASSESSEE AS DONATION TOWARDS CORPUS FUND. 10. THE LD. CIT(EX), KOLKATA PROCEEDED TO PASS A N ORDER U/S 12AA OF THE ACT AFTER MAKING A REFERENCE TO THE SURVEY IN THE C ASE OF HHBHRF AND ALSO AFTER MAKING A REFERENCE TO A LETTER DATED 12.10.20 15 ADDRESSED TO THE LD. CIT(EX) KOLKATA IN WHICH HHBHRF HAVE REITERATED THA T THE BROKERS ARRANGED FOR DONATIONS TO HHBHRF AND ALSO ASKED THEM TO RETU RN THE DONATION IN THE FORM OF DONATIONS TO OTHER TRUST. THE LD. CIT(EX), KOLKATA ALSO REFERRED TO THE FACT THAT HHBHRF DISOWNED HAVING DEALT WITH CASH AN D THAT THE BROKERS DEALT WITH CASH RECEIVED FROM THE PERSONS TO WHOM DONATIO NS WERE MADE BY HHBHRF. THE LD. CIT(EX) THEREAFTER REFERRED TO THE FACT THAT CBDT VIDE ITS NOTIFICATION DATED 06.09.2016 HAD WITHDRAWN THE APP ROVAL ACCREDITED TO HHBHRF U/S 35(1)(II) OF THE ACT. THEREAFTER THE LD . CIT(EX) WITHDREW THE REGISTRATION GRANTED TO THE ASSESSEE BY OBSERVING A S FOLLOWS :- ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 7 INDULGING IN INGENUINE ACTIVITIES WHICH IS NOT AT P AR WITH THE TRUST DEED LEADS TO THE ULTIMATE CONCLUSION THAT THE SOCIETY IS IN THE ACT OF MONEY LAUNDERING. THE PROVISIONS OF SECTION 12AA(3) OF THE I.T. ACT 1 961 IS AS FOLLOWS: 'WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED R EGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) [OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (N O.2) ACT, 1.996 (33 OF 1996)]] AND SUBSEQUENTLY THE [PRINCIPAL COMMISSIONE R OR] COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE 'MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION' CONSIDERING THE ACTIVITIES OF THE ASSESSEE NOT GENU INE AND ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTIVES OF TH E SOCIETY, THE REGISTRATION U/S. 12A OF THE I.T. ACT 1961 VIDE ORDER NO. ASSMNT ./8E/80/85-86/CT/4645 DATED 09/20.02.1989 IS HEREBY CANCELLED U/S. 12AA(3 ) OF THE I.T.ACT 1961 W.E.F. 01.04.2010 I.E. F.Y. 2010-11 RELEVANT TO A. Y. 2011-12, AS THE VIOLATION TOOK PLACE IN THE F.Y. 2010-11. 11. AGGRIEVED BY THE ORDER OF CIT(EX), KOLKATA T HE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COU NSEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE FIRSTL Y DREW OUR ATTENTION TO THE ANSWER GIVEN BY FOUNDER AND DIRECTOR OF HHBHRF TO Q UESTION NO.22 RECORDED AT THE TIME OF SURVEY CARRIED OUT IN THE BUSINESS P REMISES OF HHBHRF. HE DREW OUR ATTENTION TO THE FACT THAT IN THE SAID STA TEMENT THE FOUNDER DIRECTOR HAD SPECIFICALLY REFERRED TO A PERIOD FROM WHICH BO GUS DONATIONS WERE RECEIVED BY HHBHRF VIZ., AFTER A.Y.2010-11.HE DREW OUR ATTENTION TO THE FACT DONATION WAS GIVEN TO THE ASSESSEE BY HHBHRF THROUG H CHEQUE DATED 03.03.2011 WHICH WAS ADMITTEDLY PRIOR TO THE PERIOD IN WHICH BOGUS DONATIONS WERE RECEIVED BY HHBHRF. ACCORDING TO HIM THE STATE MENT RECORDED AT THE TIME OF SURVEY BASED ON WHICH THE IMPUGNED ORDER WA S PASSED WAS NOT INCRIMINATING, SO FAR THE ASSESSEE IS CONCERNED. AC CORDING TO HIM THEREFORE THE VERY BASIS ON WHICH THE IMPUGNED ORDER HAS BEEN PASSED BY THE LD. CIT(EX), KOLKATA IS UNSUSTAINABLE. HIS NEXT SUBMISS ION WAS THAT THERE WAS NO OTHER INCRIMINATING MATERIAL ON THE BASIS OF WHICH IT CAN BE CONCLUDED THAT THE ASSESSEE GAVE CASH AND IN RETURN GOT DONATION OF RS .85,000/- AND IT WAS THE ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 8 ASSESSEE WHO ARRANGED THROUGH THE BROKERS FOR GETTI NG BOGUS DONATIONS. IT WAS ALSO HIS SUBMISSION THAT THERE IS NO EVIDENCE O F THE ASSESSEE HAVING INDULGED IN MONEY LAUNDERINGS. THE ASSESSEE BROUGHT TO OUR NOTICE THAT ASSESSEE HAS BEEN CARRYING OUT CHARITABLE ACTIVITIE S AND THE ACTIVITIES CARRIED OUT BY IT DURING THE FY 2010-11 ARE PLACED ON PAGE 90 OF THE PAPER BOOK. 13. ACCORDING TO THE LD. AR, THE LD. CIT(EX), K OLKATA HAS NO DIRECT EVIDENCE AGAINST THE ASSESSEE WARRANTING CANCELLATION OF REG ISTRATION U/S 12AA (3) OF THE ACT. IT WAS SUBMITTED BY HIM THAT REGISTRATION GRANTED TO THE ASSESSEE CAN BE CANCELLED U/S 12AA(3) ONLY ON CONDITIONS BEING S ATISFIED (A) THAT THE ACTIVITIES OF THE TRUST OF INSTITUTION ARE NOT GENU INE (B) THAT THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE NOT BEING CARRIED OUT IN A CCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. THERE IS NO EVIDENCE BROU GHT ON RECORD WHATSOEVER TO SHOW EITHER OF THE AFORESAID CONDITIONS HAVE BEEN S ATISFIED TO WARRANT CANCELLATION OF REGISTRATION U/S 12AA(3) OF THE ACT . THE LD. COUNSEL FOR THE ASSESSEE PLACED STRONG RELIANCE ON THE DECISION OF ITAT, KOLKATA BENCH RENDERED IN THE CASE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST NADIA V S C.I.T.(EXEMPTIONS), KOLKATA IN ITA NO.1165/KOL/2016 ORDER DATED 03.05.2017. 14. THE LD. DR PLACED RELIANCE ON THE ORDER OF LD. CIT(EXEMPTIONS), KOLKATA. ACCORDING TO HIM THE ANSWER GIVEN AT THE TIME OF SU RVEY IN REPLY TO QUESTION NO.22 IS SUFFICIENT TO COME TO A CONCLUSION THAT TH E ASSESSEE HAS INDULGED IN MONEY LAUNDERING. ALTERNATIVELY IT WAS HIS SUBMISSI ON THAT THE ASSESSEE SHOULD BE AFFORDED AN OPPORTUNITY OF CROSS EXAMINAT ION OF SHRI SWAPAN RANJAN DASGUPTA, THE FOUNDER DIRECTOR OF HHBHRF. 15. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. FROM THE ANSWER TO QUESTION NO.22 GIVEN BY SHRI SWA PAN RANJAN DASGUPTA, FOUNDER DIRECTOR OF HHBHRF AT THE TIME OF SURVEY IN THE BUSINESS PREMISES OF HHBHRF, IT IS POSSIBLE TO ENTERTAIN A DOUBT WITH RE GARD TO GENUINENESS OF THE DONATIONS GIVEN BY HHBHRF. IT CAN BE A MONEY LAUNDE RINGS INDULGED BY A THIRD PARTY, WHO GAVE DONATIONS TO THE ASSESSEE BY USING THE MIDDLEMEN ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 9 CONNECTED WITH HHBHRF. SO FAR AS THE ASSESSEE IS CO NCERNED IT RECEIVED DONATION FROM HHBHRF A SUM OF RS.85,000/- DULY ACCO UNTED THE SAME IN PROFIT AND LOSS ACCOUNT AS CORPUS DONATION. THERE I S NO EVIDENCE WHATSOEVER BROUGHT ON RECORD TO SHOW THAT THE CASH WAS PAID BY THE ASSESSEE WHICH IN TURN REACHED THE HANDS OF HHBHRF WHICH WAS RETURNED IN THE FORM OF DONATION TO THE ASSESSEE AFTER RETAINING THE COMMIS SION. AS WE HAVE ALREADY OBSERVED THAT THE ANSWER TO QUESTION NO.22 GIVEN BY SHRI SWAPAN RANJAN DASGUPTA REFERRED TO DONATIONS GIVEN IN THE FINANCI AL YEAR 2011-12 AS BOGUS DONATIONS. WITH REGARD TO THE DONATIONS RECEIVED/GI VEN PRIOR TO 31.03.2011 THERE IS NO REFERENCE TO SUCH DONATIONS GIVEN OR RE CEIVED BY HHBHRF BEING IN THE NATURE OF BOGUS DONATIONS. THE ASSESSEE HAD RECEIVED THE DONATION FROM HHBHRF ON 03.03.2011. IT IS THEREFORE NOT POSS IBLE TO PLACE RELIANCE ON THE STATEMENT RECORDED AT THE TIME OF SURVEY AND CO ME TO A CONCLUSION THAT THE ASSESSEE HAS BEEN INDULGING IN MONEY LAUNDERING . 15.1 IN ANSWER TO QUESTION NO.23 SHRI SWAPAN RAN JAN DASGUPTA FOUNDER DIRECTOR OF HHBHRF HAS MADE REFERENCE TO CERTAIN MI DDLE MEN WHO ARE ENGAGED IN MONEY LAUNDERING USING HHBHRF AS A MEDIU M FOR MONEY LAUNDERING. THERE IS NO EVIDENCE BROUGHT ON RECORD TO SHOW ANY CONNECTION BETWEEN THOSE BROKERS AND THE ASSESSEE. IN THE ABSE NCE OF SUCH CORROBORATIVE EVIDENCE, IT IS NOT POSSIBLE TO COME TO ANY CONCLUSION THAT THE ASSESSEE INDULGED IN MONEY LAUNDERING AND THAT THE DONATION RECEIVED BY THE ASSESSEE FROM HHBHRF WAS A BOGUS DONATION. IN FACT ON IDENTICAL FACTS THIS TRIBUNAL IN THE CASE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST (SUPRA) CAME TO THE CONCLUSION THAT CANCELLATION OF REGISTR ATION U/S 12AA CANNOT BE SUSTAINED. IN FACT IN THE CASE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST (SUPRA) THE FACTUAL POSITION WAS THAT THE DONOR HAD MADE A REFERENCE TO THE NAME OF THAT ASSESSEE IN A LIST OF BOGUS DONATIONS GIVEN BY IT IN AN APPLICATION FILED BEFORE THE SETTLEMENT COMMISSION OF INCOME TA X. STILL THE TRIBUNAL CAME TO THE CONCLUSION THAT THERE WAS ABSENCE OF MATERIA L TO SHOW THAT THE CONCERNED TRUST HAD INDULGED IN MONEY LAUNDERING. W E ARE OF THE VIEW THAT IN ITA NO.96/KOL/2017 SANSKRITI SAGAR VS. CIT-EX) KOL PAGE 10 THE CASE OF THE ASSESSEE IN THIS APPEAL STANDS ON A MUCH BETTER FOOTING THAN IN THE CASE OF THE ASSESSEE OF SRI MAYAPUR DHAM PILGRIM AND VISITORS TRUST (SUPRA). 16. APART FROM THE ABOVE, THE GROUNDS FOR CANCELL ATION 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. 17. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 15/ 09/2017 SD/- SD/- ($%&) ( %&) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (%)*- 15 / 09 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SANSKRITI SAGAR 9/1 R.N.MUKHERJEE ROAD, 5 TH FL, KOLKATA-001 2. /RESPONDENT-CIT-EX), 10B, MIDDLETON ROW, 6 TH FLOOR, KOLAKTA-71 3.)2)3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5.789$$3 , 3 , / DR, ITAT, KOLKATA 6.9;<=> / GUARD FILE. BY ORDER/ %, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3 ,