Income Tax Appellate Tribunal - Kolkata
M/S. Vidya Bharati Society For ... vs Cit(Exemptions), Kolkata, Kolkata on 6 September, 2017
1
ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH : KOLKATA
[Before Hon'ble Shri A.T.Varkey, JM & Shri M.Balaganesh, AM ]
I.T.A No. 1456/Kol/2016
Vidya Bharati Society for Educational -vs- CIT(Exemption), Kolkata
& Scientific Advancement,
[PAN : AAATV2139H]
(Appellant) (Respondent)
For the Appellant : Shri J.P. Khaitan, Sr. Adv
Shri Pawan Kr. Agarwal, FCA
Shri Pratyush Jhunjhunwala, Adv
For the Respondent : Goulen Hangshing, CIT, DR
Date of Hearing : 24.07.2017.
Date of Pronouncement : 06.09.2017
ORDER
Per M.Balaganesh, AM
1. This appeal is directed against the cancellation of registration u/s 12AA(3) & 12AA(4) of the Act passed by the Learned Commissioner of Income Tax (Exemptions), Kolkata [ in short ld CIT(E) ] vide his order dated 6.5.2016.
2. The brief facts of this issue is that the assessee is a society registered under the West Bengal Societies Registration Act, 1961 on 12.8.1965. The assessee is an educational institution running 3 schools namely (i) Bidya Bharati Girls High School ; (ii) Bidya Bharati School (Mominpore) and (iii) Bidya Bharati School (Behala) having accreditation from West Bengal Higher Secondary Board of 2 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
Education, Government of West Bengal and close to 3400 students are studying in the said schools. One school is imparting education upto Class XII and the other two schools are imparting education upto Class IV. The assessee was claiming exemption u/s 10(22) of the Act upto Asst Year 1998-99 and thereafter pursuant to omission of the said section from the statute, sought to obtain registration u/s 12A of the Act which was duly granted to the assessee with effect from 1.7.1999 from the Director of Income Tax (Exemptions), Calcutta vide Proceedings No. DIT(E) / T-80/8E/340/98-99 dated 6.8.1999 . It was also granted approval u/s 80G(5)(vi) of the Act. Hence from Asst Year 1999-2000 onwards, the assessee society was claiming exemption u/s 11 of the Act to the extent its receipts were applied for charitable purposes.
3. The ld CIT(E) observed that the assessee had indulged in the practice of money laundering through payment of bogus donations. He observed that these facts were confirmed in a survey operation conducted u/s 133A of the Act on 3.9.2015 in the case of M/s Batanagar Education & Research Trust, wherein a statement of Sri Rabindranath Lahiri, Vice Chairman and Trustee, was recorded during the survey operation . In the said statement, he accepted the alleged modus operandi of receiving bogus donations from various corporates / individuals / firms and repayment in cash to the donors through web of financial transactions and the assessee was one of such bogus donors. He reproduced certain portions of the said statement recorded from Sri Rabindranath Lahiri in his order and accordingly show caused the assessee for cancellation of registration u/s 12AA(3) of the Act. The copy of the show cause notice issued by the ld CIT(E) on 3.12.2015 is reproduced as below:-
"3A. Based on above alleged transactions, a show-cause notice for cancellation of registration u/s 12AA(3) was issued to the assessee on 03.12.2015. Relevant portion of show-cause notice is reproduced below:3 ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
2. A survey u/s 133A of the Income Tax Act, 1961 was conducted on Batanagar Education and Research Trust , Kolkata by ITO (Exemptions), Ward-1(2), Kolkata on 03.09.2015 in Kolkata. During the Survey operation, it was found that Batanagar Education and Research Trust, Kolkata was involved in accepting bogus donations and returning in cash through web of financial transactions.
4. It is seen that you have paid donation amounting to approximately Rs. 25,00,000/- for assessment year 2012-13 and Rs. 1,25,00,000/- in assessment year 2013-14 to the above mentioned person-Batanagar Education and Research Trust, Kolkata. It is evident that by giving bogus donation and then accepting the money in cash you have indulged in money laundering which is illegal, not genuine and not at par with the objects of the trust/society.
5. In view of the above your requested to explain why the registration u/s 12A/12AA will not get cancelled by invoking the provision of Section 12AA(3).
6. You are requested to furnish the following documents:
a) Income & Expenditure A/c. and Balance Sheet for the assessment years 2011-12 to 2015-16.
b) Certificate u/s 12A/12AA and any other registration certificate granted by the Income Tax Authorities.
c) List of donations corpus/non-corpus received by you along with their PAN, name and address from 01.04.2010 to 31.03.2015."
4. In response the assessee submitted a reply dated 17.12.2015 filed before the ld CIT(E) on 22.12.2015 , wherein , apart from giving brief introduction about the various schools run by it and its activities, stated that it had decided to make donations to other educational institutions and trusts for betterment of educational facilities within India out of surplus fund available with the society and in the course of carrying out such activities , the society had given the following donations :-
4 ITA No.1456/Kol/2016Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
VIDYA BHARATI SOCIETY FOR EDUCATIONAL & SCIENTIFIC ADVANCEMENT DONATION PAID Name PAN Amount CHQ No. FINANCIAL YEAR 2011-12 BATANAGAR EDUCATION AND AABTB3024G 1000000 648049 RESEARCH TRUST
-Do- AABTB3024G 1500000 648052 1/1/1, Jodhpur Park, Kolkata-700068 TOTAL 2500000 FINANCIAL YEAR 2012-13 SETH POKHARMAL EDUCATIONAL SOCIETY AADTS0508A 2500000 C/O-RDPS, CD-Block, Pitampura, New Delhi-
110034
BATANAGAR EDUCATION AND RESEARCH AABTB3024G 1500000 648076
TRUST
-Do- AABTB3024G 2500000 648078
-Do- AABTB3024G 3000000 648080
-Do- AABTB3024G 3000000 997561
1/1/1, Jodhpur Park, Kolkata-700068
TOTAL 12500000
FINANCIAL YEAR 2013-14
EMAMI FOUNDATION AAATE2145C 100000 997582
A/C EMAMI UTTARAKHAND RELIEF FUND
SE/28, Swami Ram Tirath Nagar, New Delhi-110055
BALLARAM HANUMANDUS CHARITABLE TRUST AAATB5411C 2500000 767913
-Do- AAATB5411C 2500000 767914
Tobaco House, 1, Old Court House Corner,
Kolkata-700001 TOTAL 5100000
FINANCIAL YEAR 2014-15
NABADWIP MANDAL DEVELOPMENT TRUST 5000000 767921
-Do- 2000000 767943
Sridham Mayapur, P.O.-Sri Mayapur,
Dist-Nadia, Pin-741313 TOTAL 7000000
5
ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
4.1 The assessee society in the said reply letter dated 17.12.2015 categorically denied that it had received back cash from Batanagar Education and Research Trust out of donations made to them during financial years 2011-12 and 2012-13.
The assessee also questioned the basis on which the ld CIT(E) had asserted in the show cause notice that M/s Batanagar Education and Research Trust had returned cash to assessee society. The assessee sought for the copy of statements recorded from Sri Rabindranath Lahiri and such other evidences which were relied upon by the ld CIT(E) for drawing adverse inferences against the assessee society. The assessee also sought for cross-examination of the witness in person on whose statement such adverse conclusion had been reached by the ld CIT(E). The assessee apart from making these objections , produced the appeal letter issued by M/s Batanagar Education and Research Trust to assessee, assessee's letter of donation and money receipts issued by the recipient trust, to prove the genuineness of donations paid by assessee to Batanagar Education and Research Trust supported by proper documentary evidences. It was also stated that the assessee had not received any cash from Batanagar Education and Research Trust out of donations paid to them by account payee cheques. It was also submitted that if there is any misappropriation or siphoning of funds at the end of Batanagar Education and Research Trust, the assessee had no role to play in such act done by the other trust and pleaded that it is in complete darkness about the allegations leveled on it. Apart from stating these facts and objections, the assessee also furnished the following documents before the ld CIT(E) :-
a) Balance Sheet, Income & Expenditure Accounts, Receipts and Payments Accounts of the assessee society as well as it schools for the Asst Years 2011-12 to 2015-16.6 ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
b) Copy of certificate u/s 12A of the Act and copy of society registration certificate under West Bengal Society Registration Act.
c) List of Donations received by the assessee society for the period from 1.4.2010 to 31.3.2015.
d) List of Donations paid by the assessee society for the period from 1.4.2010 to 31.3.2015.
4.2. The assessee was handed over the copy of statement on 5.1.2016 recorded from Sri Rabindranath Lahiri, Vice Chairman and Trustee of Batanagar Education & Research Trust and was also afforded an opportunity to file its objections, if any, and also cross-examine the said person, if it so desires. Accordingly, the assessee society filed its reply by filing its objections to the statements recorded from Sri Rabindranath Lahiri, vide its letter dated 13.1.2016 filed in person before the ld CIT(E) on 14.1.2016. In the said letter, the assessee categorically denied all the allegations leveled against it by relying on the sworn statement of Sri Rabindranath Lahiri. It categorically denied having had any financial transactions with 7 persons mentioned in the statement of Sri Rabindranath Lahiri and hence there is no question of assessee receiving any cash in lieu of cheque donations paid to Batanagar Education & Research Trust. The assessee also denied having even heard the name of Sri Gulab Pincha and stated it had no transaction with Sri Gulab Pincha which was mentioned in the statement of Sri Rabindranath Lahiri. The assessee also denied having given any corpus donation to Batanagar Education & Research Trust and also referred to question no. 10 & 11 which only mentioned about corpus donations and not regular revenue donations. It was also pointed out that in Question No. 19 of the said statement , the bogus donations along with bogus donors had emerged during the period 1.4.2014 to 4.9.2014 , but , whereas the donations given by the assessee trust to Batangar Education & Research Trust 7 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
were during the Asst Years 2012-13 & 2013-14 only. It was also stated that if there is any misappropriation or siphoning of funds at the end of Batanagar Education & Research Trust, then action needs to be taken on that trust and not on the assessee. Moreover, the seven persons to whom Batanagar Education & Research Trust had allegedly made payments are not related to the assessee trust in any manner whatsoever and assessee's name does not get reflected in the said list. Based on these replies, the assessee trust categorically denied all the allegations leveled against it in the show cause notice of the ld CIT(E) and stated that it is a genuine public charitable trust imparting education by running 3 schools as a noble cause and participating in the nation building process.
4.3. On 15.1.2016, the ld CIT(E) directed the assessee to produce the president of the assessee society Mr Mukul Agarwal for personal appearance together with his computation of total income, balance sheet, profit and loss account for Asst Years 2012-13 , 2013-14 , 2014-15 & 2015-16. On 9.2.2016, Mr Mukul Agarwal appeared in person before the ld CIT(E) and was asked to explain about the donations given to (i) Seth Pokharmal Educational Society , Delhi ; (ii) Ballaram Hanumandas Charitable Trust, Kolkata and (iii) Nabadwip Mandal Development Trust and no questions were asked about donations given to Batanagar Education & Research Trust by the ld CIT(E) to Mr Mukul Agarwal. The replies to the questions asked by the ld CIT(E) about the three other different trusts as above were duly filed in writing by Mr Mukul Agarwal on 15.2.2016. On 11.4.2016, the assessee was given opportunity to cross -examine Mr Rabindranath Lahiri of Batanagar Education & Research Trust and date was fixed for the same on 21.4.2016. But on 21.4.2016, Mr Rabindranath Lahiri was present in the department but none appeared on behalf of the assessee . On 3.5.2016 , the assessee society filed a letter dated 3.5.2016 for non-appearance on 3.5.2016 due 8 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
to illness of authorized representative of assessee society for undergoing major surgery and accordingly it was pleaded for one more hearing.
4.4. On 10.5.2016, the ld CIT(E) without providing further opportunity to the assessee society, proceeded to pass an order u/s 12AA(3) of the Act cancelling the registration of the trust based on the show cause notice issued by him and without considering the various replies filed by the assessee and by making allegations that all the donations paid by the assessee were through accommodation entries . Accordingly he concluded that the assessee had given donations to various trusts in and out of Kolkata through entry operators and had received cash back from the various trusts. The ld CIT(E) also observed that the assessee society had started earning huge surplus in each year and the President and Members of the assessee society started siphoning off the funds from the society in the form of bogus donations in lieu of cash for their personal benefit. He accordingly held that the activities carried out by the assessee society as not to be genuine and activities are not as per its objects and was only involved in money laundering. He further held that the expenses incurred through bogus donations are not exclusively for the objects of the trust or for the purpose for which the assessee society was created. Accordingly he sought to cancel the registration u/s 12AA(3) of the Act. The ld CIT(E) also invoked the provisions of section 12AA(4) read with section 13 of the Act which was introduced with effect from 1.10.2014 onwards. Based on these observations, he withdrew the registration granted u/s 12A of the Act with effect from 1.4.2011.
5. Aggrieved, the assessee is in appeal before us on the following grounds:-
(A) For that the order withdrawing/cancelling registration u/s 12A was passed in gross violation of the principles of natural justice, without disclosing the materials relied upon, without affording 9 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
reasonable/adequate opportunity to controvert and/or deal with the same including by way of cross-examination and without taking into consideration the submissions of the assessee.
(B) For that the CIT erred in withdrawing/cancelling the assessee's registration u/s 12A and that too with retrospective effect from 01.04.2011.
(C) For that the CIT erred in holding that'
(i) Any donation made by the assessee was bogus, fictitious, accommodation entry or for money laundering or that the assessee received back any cash;
(ii) The assessee resorted to any modus operandi or dealt with any entry operator or siphoned off society's money.
(iii) The president or members or trustees of the assessee received cash or benefited from the donations or the students were deprived;
(iv) Section 13(1) or Section 13(2) or Section 13(3) were applicable;
(v) The assessee misused the provisions of Section 12AA or Section 80G(5)(vi);
(vi) No charitable work was done by the assessee by giving donations;
(vii) The activities of the assessee were not genuine or were not carried out in accordance with or were contrary to its objects or illegal or immoral;
And his purported findings invoking sub-sections (3) and (4) of Section 12AA and withdrawing/cancelling the registration u/s 12A are wholly arbitrary, erroneous, unreasonable and perverse. (D) For that further and in any event and without prejudice to the aforesaid, the CIT had no power and/or jurisdiction to withdraw/cancel the registration with retrospective effect from April 1,2011. (E) For that the order appealed against is otherwise erroneous on facts and/or in law.
The assessee craves leave to add to, alter, amend and/or modify the grounds taken herein.
6. The ld AR apart from reiterating the submissions made by the assessee society before the ld CIT(E) vide various written submissions as stated supra , stated that 10 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
the assessee need not have cross-examined Sri Rabindranath Lahiri as nothing was stated against the assessee society or its members/ office bearers , by the said person in his statement recorded during survey . Hence the assessee was not at all aggrieved by the statement of Sri Rabindranath Lahiri and hence choose not to cross - examine him. He also pointed out that the assessee was prevented from reasonable cause by not presenting itself on the scheduled date of hearing for cross-examination , though the letter to this effect was filed belatedly before the ld CIT(E). He ultimately argued that only when the statement of any person relied upon by the ld CIT(E) contains any adverse contents against the assessee, the assessee would be required / warranted to cross-examine the said person. In the instant case, no adverse comments were stated by Sri Rabindranath Lahiri about the assessee society or its office bearers and hence mere non-utilisation of an opportunity of cross-examination by the assessee would not make the activities of the assessee society ingenuine. He argued that absolutely no evidence was brought on record by the ld CIT(E) to prove that the assessee society or its office bearers had indeed received back the cash in lieu of donation cheques given by it, apart from merely making a bald allegation to that effect. Moroever, the questions that were posed to Sri Rabindranath Lahiri while recording statement on 3.9.2015 were only in respect of corpus donations received by Batanagar Education & Research Trust as could be evident from various questions in the statement. The assessee had not given any corpus donations to Batanagar Education & Research Trust and all the allegations leveled by the ld CIT(E) by placing reliance on the said statement is totally unwarranted and has got no legs to stand in the eyes of law. Moreover, the adverse conclusion was reached by the ld CIT(E) from the statement of Sri Rabindranath Lahiri vide Question No. 19 wherein he was asked by the department to inform about the corpus donations received during the period 1.4.2014 to 4.9.2014 (Asst Year 2015-16) only, whereas the assessee had given 11 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
revenue donations to the said trust during Asst Years 2012-13 & 2013-14. Moreover, nowhere in the entire statement of Sri Rabindranath Lahiri , he had mentioned the name of the assessee or its office bearers and hence there is no reason to draw an adverse inference against the assessee based on a third party statement, which is actually not against the assessee. He alternatively argued that even if the donations paid by the assessee were held to be bogus, then the same should not be treated as application of income u/s 11 of the Act and for this purpose, the registration granted u/s 12AA of the Act need not be withdrawn. He argued that absolutely no evidence had been brought on record by the ld CIT(E) that the officer bearers of the assessee society had indeed received back the cash in lieu of donations given by cheques from Batanagar Education & Research Trust and other trusts. Infact when the ld CIT(E) examined the President of the assessee society Mr Mukul Agarwal, no questions whatsoever were even put to him about the transactions with Batanagar Education & Research Trust as could be evident from the order sheet entries filed herewith. All the details called for by the ld CIT(E) from Mr Mukul Agarwal about the other three trusts were duly filed in writing by him vide letter dated 15.2.2016, which has been conveniently ignored by him in the order of cancellation of registration. In any case, he argued that there is no provision in the Act for withdrawal of registration u/s 12AA of the Act with retrospective effect when the said provision itself came into effect only from 1.10.2014. In support of his various arguments as above, he placed reliance on the following decisions :-
a) Decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs Apeejay Education Society reported in (2015) 59 taxmann.com 102 (Punjab & Haryana) dated 10.3.2015.12 ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
b) Decision of Hon'ble Allahabad High Court, Lucknow Bench, in the case of CIT vs Red Rose School reported in (2007) 163 Taxman 19 (All) dated 7.2.2007.
c) Decision of Hon'ble Karnataka High Court in the case of CIT vs Islamic Academy of Education reported in (2015) 54 taxmann.com 255 (Karnataka) dated 9.9.2014.
d) Decision of Co-ordinate Bench of Kolkata Tribunal in the case of Jha Educational Trust vs CIT (E) in ITA Nos. 931- 933 / Kol / 2016 dated 17.3.2017.
7. The ld DR vehemently relied on the order of the ld CIT(E) .
8. We have heard the rival submissions and perused the materials available on record including the detailed paper book filed by the assessee comprising of various correspondences between the ld CIT(E) , replies filed thereon together with the annexures and statement of Sri Rabindranath Lahiri which was heavily relied upon by the ld CIT(E). The facts have been elaborately dealt with in the aforesaid paragraphs and hence the same are not reiterated for the sake of brevity. We find that the triggering factor for the ld CIT(E) for invoking the plenary powers of cancellation of registration u/s 12AA(3) and 12AA(4) of the Act is the statement recorded from Sri Rabindranath Lahiri, Vice Chairman and Trustee of Batanagar Education & Research Trust. It is not in dispute that the statement had been recorded from Vice Chairman & Trustee of Batanagar Education & Research Trust on 3.9.2015 during the course of survey operation conducted in the hands of Batanagar Education & Research Trust, wherein , he had deposed that the said trust had resorted to receipt of certain bogus corpus donations from various other trusts. For the sake of convenience, the relevant portions of the statement recorded from Sri Rabindranath Lahiri are reproduced below:-
13 ITA No.1456/Kol/2016Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
Q.10. It is seen from the Donor List that you have received Corpus Donation amounting to Rs. 9,17,17,550/- form various persons over a period of six (6) years from financial year 2008-09 to financial year 2013-14. Did you claim exemption under Sec 11(1)(d) for such Corpus Donation?
A.10. Yes.
Q.11. Please confirm the authenticity of the above mentioned Corpus donation.
A.11. A major part of the donations that were claimed exemption u/s 11(1)(d) were not genuine. The donation received in financial years 2008-09, 2009-10 and 2010-11 were genuine Corpus Donation received either from the Trustees or persons who were close to the Trustees. In financial year 2011-12 and 2012-13 a part of the donation were genuine like the earlier years. However, a major part of the donations received in these two financial years viz. 2011-12 and 2012-13, shown as Corpus Donation, were in the nature of accommodation entries to facilitate two things-
(a) To procure Loans from the Bank we had to show substantial amount of capital Reserve in our Balance Sheet.
(b) We required funds for the expansion of our college. The Fees received from the students along with genuine donations from the Trustees and their contacts were not sufficient to run the institution.
Q.12. Why are you saying that a major part of the donations received were not genuine?
A.12. In those cases, which I admit as accommodation entries, a part of the donation received was returned back to the donors through intermediaries.
Q.13. Who were the intermediaries and what were the modes of returning the money?
A.13. We were instructed to transfer funds through RTGS to the following seven(7) persons:
1. Santwana Syndicate
2. P.C. Sales Corporation'
3. Kalyani Enterprises
4. Riya Enterprises
5. Laxmi Narayan Traders 14 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
6. Hanuman Traders
7. Rani Sati Trade cum Pvt. Limited These payments were booked as capital expenditure under the head Building.
Q.14. In response to the earlier question you have stated that you were "instructed". Who gave you the instruction?
A.14. I can remember only one name right now, that is Shri Gulab Pincha, Mob No. 9831015157. He was the hey person for providing a large part of bogus donation received which was immediately returned back to the different parties in the guise of payments towards capital expenditure in building. We 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 donors, cheque of the donations, letters of the corpus donations etc. He also provided us with the names and bank a/c details of the seven (7) persons, mentioned in Answer 13 to whom money has to be returned back through RTGS. He also collected the money receipts/80G certifications on behalf of the donors.
Q.15. Do you know anyone by the name of Shri Ashoke Kumar Roy, Ph No. 9432058699?
A.15. No, I do not know any such person.
Q.16. What are the Address and PAN No of the above mentioned Seven (7) persons/entities.
A.16. It will be provided in due course.
Q.17. It is seen that your trust has been taken over by the Techno Group in the year 2013. What was modus operandi and consideration received of such take over?
A.17. As per the understanding Six(6) out of the original nine (9) trustees resigned from the Board and they were replaced by Six(6) Trustees by the Techno Group. As a consideration the Techno Group provided unsecured soft loans to this trust which is reflected in the Balance Sheet.
Q.18. the Ledger copy for the period from 01.04.2014 to 04.09.2014 in respect of "General Fund" of your trust having details of the donors is being shown to you to identify the bogus donations along with bogus donors.
A.18. After going through the list of the donors appeared 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" having total amount of Rs. 6,03,07,550/- is bogus and out of which Rs. 5,96,28,973/- was returned back through 15 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
RTGS to the above mentioned seven (7) persons following the instructions of mediators.
8.1. Once this statement was furnished to the assessee by the ld CIT(E) , the assessee replied vide letter dated 13.1.2016. For the sake of convenience, the entire letter dated 13.1.2016 filed on 14.1.2016 is reproduced below:-
January13, 2016 To, The Commissioner of Income Tax (Exemption)-Kolkata 10B, Middleton Row, 6th Floor Kolkata-700071.
Dear Sir, Sub: Cancellation of registration granted u/s 12A/12AA of the I.T. Act, 1961- regarding Ref: (1) Your letter No. CIT(E)/Kol/12AA/2015-16/3590 dated 03.12.2015 (2) Our letter dated 17th December, 2015 submitted on 22nd December, 2015 Your honour granted us a hearing on the above subject on 5th January, 2016.
During the course of hearing you submitted to us, through our Authorized Representative Shri P.K. Agrawal, FCA, a copy of statement of Shri Rabindranath Lahiri, Vice-Chairman of Batanagar Education and Research Trust recorded on 3rd September, 2015. Your honour had instructed us to submit our reply/comments on the above statement. In response to the same we submit our reply and comments as under:
1. You alleged in your show-cause notice dated 3rd December, 2015 that Batanagar Education and Research Trust, Kolkata, had returned "cash to us through web of financial transactions." Our trust had no financial transaction with 7(seven) persons mentioned in reply to Question No. 13. These names are new for us and for the first time these names have come to our notice. Now the question arise that these seven persons gave cash to whom? This reply can be given by these seven persons only. However, we deny that we had any financial transactions with such persons. A further question arise in this regard that 16 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
whether these seven persons had given any statement that they or any one of them had given any cash to our Trust?
2. In reply to question No. 14 name of Shri Gulab Pincha appears in the answer. We have not heard this name any time before receipt of this statement, nor we had any financial transaction with him. We would like to know from your honor that whether Shri Gulab Pincha had given statement that he had any financial transaction with our Trust? It is required to be ascertained from Mr. Gulab Pincha that whether he know any of our trustee or its office bearers at any point of time.
3. Clarification is required from reply to Question No. 19, according to which a list of donors appearing in the ledger copy was shown to the deponent. Whether such list include the name of our Trust which had been termed as bogus by the deponent. In any case before alleging a donation as bogus, appropriate evidence(s) must support such allegation.
4. In question no. 10 &11 the term "Corpus donation" had been used. In reply to question no. 11 the deponent had stated- "In financial year 2011-12 and 2012-13 a part of the donation were genuine like the earlier years." We state that our donation given to the said Batanagar Education and Research Trust falls under this part.
Further the deponent had stated in the same reply "however a major part of donation received in this two financial years viz. 2011-12 and 2012-13, 'shown as corpus donation', were in the nature of accommodation entries................".
Please note that our Trust had not made any corpus donation to the said Batanagar Education and Research Trust. Rather our donation was simple donation i.e. non-corpus, which is evident from our donation letters as well as receipts granted by the said Batanagar Education and Research Trust, where you will not find the term 'corpus' used anywhere.
5. In reply to Question No. 12 we state that the case referred in the reply are with reference to corpus donation as mentioned in reply to question no. 11. Therefore, this part of the statement does not relate to our Trust.
6. In the entire statement nowhere the deponent i.e. Shri Rabindranath Lahiri, had mentioned the name of our Trust.
7. We had stated in our letter dated 17th December, 2015 at Paragraph 4 that "we, however, would like to add here that if there is any misappropriation or siphoning of fund at the end of Batanagar Education and Research Trust, our society had no role to play in such act done by the Batanagar Education and Research Trust people and we are in the dark and not aware of such facts."
17 ITA No.1456/Kol/2016Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
It appears to us after going through the statement of Shri Rabindranath Lahiri that the transfer of funds through RTGS to the seven persons mentioned in reply to question no. 13 are part of misappropriation or siphoning of funds at the end of Batanagar Education and Research Trust and to cover their own misdeeds they made up a story without any piece of evidence that donation received was returned back to the donors.
8. We once again reiterate that we would like to cross-examine the said Shri Rabindranath Lahiri before an Income Tax Authority, before his statement is taken as legal piece of document in our case.
9. We state that no direct & legal evidence, had been brought on record which throw light on the allegations made in your show-cause notice dated 3rd December, 2015.
10. Copy of Affidavit duly sworn & affirm by the undersigned is attached.
In conclusion we once again state that our Trust had made genuine donations and carried out charitable activities which are evident from income and expenditure and balance sheet of three schools runs by our society for different years and further reconfirm that our trust is not engaged in receiving back any donated amount from the donee.
By giving donations to other educational institutions our society had been spreading the educational facilities in our nation and these are a noble cause for which our society is functioning for last so many years. We request your honour to not to take any adverse steps which will adversely affect the activities of running our schools and making further donations to other educational institutions within India.
In view of the above we request you to drop the proceedings for cancellation of registration certificate granted u/s 12A of the I.T. Act, 1961.
Thanking you, Yours Faithfully, For Vidya Bharati Society for Educational & Scientific Advancement (B.N. Jain) Jt. Secretary 18 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
8.2. At the outset, we are in agreement with the arguments of the ld AR that there is no need to cross-examine Sri Rabindranath Lahiri by the assessee as no adverse statements / contents were reflected against the assessee in the said statement. In fact there is not even a whisper about the assessee society or its office bearers in any manner whatsoever in the entire statement of Sri Rabindranath Lahiri. Hence the ld CIT(E) deciding against the assessee on the ground that the assessee society had not availed the opportunity of cross-examination is of no relevance for invoking the provisions of section 12AA(3) of the Act. We find that the ld CIT(E) had made a bald allegation that the assessee society was involved in money laundering by receiving cash from various other trusts in lieu of donations paid to them by cheques. This allegation is not proven by any material evidence brought on record and is completely without any basis. It could be seen from the statement reproduced supra that Sri Rabindranath Lahiri had in fact deposed that certain corpus donations received by Batanagar Education & Research Trust were bogus. But the assessee had not given any corpus donations to the said trust. Infact it had given only revenue donations to the said trust. Moroever, we find from the statement that some of the corpus donations during the period 1.4.2014 to 4.9.2014 were bogus, but whereas, the assessee had not given any donations to Batanagar Education & Research Trust during the said period. Infact from the details of donations paid by assessee society to other trusts, it is evident that the assessee had given donations to Batanagar Education & Research Trust only in Asst Years 2012-13 & 2013-14. Moreover, in reply to Question No. 13 in the said statement, Sri Rabindranath Lahiri had replied that their trust were instructed to transfer funds through RTGS to seven different persons , out of which, none of the seven persons were related to the assessee society. Infact the ld CIT(E) had not brought any material on record linking those seven persons with either the assessee society or the office bearers of the assessee society, in any manner whatsoever. It is well 19 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
settled that the person making the allegation has to prove with material evidences that the allegation leveled against any other person is true and correct. In the instant case, except making a bald allegation, no evidences in any manner whatsoever had been brought on record . We find that the assessee trust had been unnecessarily impleaded by the ld CIT(E) in the entire episode, without any basis. Moreover, we find that when the ld CIT(E) examined the President of the assessee society Mr Mukul Agarwal, no questions were posed on him about the transactions with Batanagar Education & Research Trust. This is evident from the copies of order sheet entries filed by the ld AR. All the details called for by the ld CIT(E) from Mr Mukul Agarwal about the other three trusts were duly filed in writing by him vide letter dated 15.2.2016, which we find had been ignored by the ld CIT(E) in the order of cancellation of registration. Accordingly we hold that there is no case made out by the ld CIT(E) for invoking powers of cancellation of registration u/s 12AA(3) and 12AA(4) of the Act. We find that similar issue had cropped up before the co-ordinate bench of this tribunal with reference to transactions with Batanagar Education & Research Trust in the case of Jha Educational Trust vs CIT(E) in ITA Nos. 931-933/Kol/2016 dated 17.3.2017 wherein it was held as under:-
8. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the instant case relates to the cancellation of registration certificate issued u/s 12A/12AA of the Act on the ground that the assessee was involved in providing the bogus donation to the various trust and societies. This fact of bogus transactions in the form of donation was revealed on the basis of the statement of the managing trustee recorded 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 Shri Gulab Pincha. Thus the Id. CIT(Exemption) cancelled the registration certificate issued U/S 12A of the Act.
However on the perusal of the statement given by the managing trustee of the BERT we find that he admitted that the major bogus donation was received from various trust/societies but the Id CIT(Exemption) has not provided any list in its order where the name of the assessee trust is reflecting. We also find as per the 20 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
statement of managing trustee of BERT that the bogus donation was 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 several persons. The names of these persons were very much disclosed by the managing trustee of BERT but the name of the donors was not anywhere shown in the recorded statement.
8.1 In view of above, we find that there is no whisper about the name of the assessee that it has given bogus donation and the same has come back to the assessee in the form of cash through the channel of some persons. Admittedly the assessee has given donation to BERT for Rs. 51acs. The same was treated as bogus donation on the basis of the statement of the managing trustee of BERT 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 donation 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 category of major donation. It is a question of fact which has to be ascertained from the 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 Id CIT (Exemption) Shri Gulab Pincha was acting as the conduit in arranging the bogus donation but no statement was recorded of Shri Gulab Pincha by issuing notice u/· 131 of the Act. In our considered opinion, the statement Shri Gulab Pincha wa: very much important to unveil the fact' of the bogus donation but the Id CIT (Exemptions) has miserably failed to do so. It is also important to note that the Revenue faded to prove with supporting evidence that the money has come back to the assessee.
Without prejudice to the above even assuming that the donation to BERT is bogus then the amount of bogus donation will not be eligible for exemptions U/S 11 of the Act. Under such circumstances, the registration certificate issued U/S 12A of the Act cannot be cancelled as long as the objects of the trust are within the provisions of law. The objects byelaws of the trust are placed on pages 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 find support & guidance from the judgment of Hon'ble 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 from the respondent-assessee to satisfy himself about the genuineness of the activities of the institution and after making enquires had passed the order registering the said institution and giving it the benefit under Section 12A 21 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
of the Act, which made the institution eligible for exemption from the provisions of Sections 11 and 12 of the Act. 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 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 doubted. The allegation isregarding the alleged supply of the installation of the software and whether the same was done by M/s. WSL or not. Merely because 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 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 oticed above, High Court are of the opinion that the Commissioner 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 institutions all over the country and, therefore, the questions of law sought to be raised do not arise. "
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 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 Educational Trust before the Director of Income Tax (Exemption) in conformity with rule 17 A and submitted Form No. 1OA together with other requisite documents. The Director of Income Tax (Exemption) after verification of documents and after being satisfied about the object of the trust and genuineness of its activities granted registration effective from 01.04.2001 vide order No. DIT(E)(f- 3/8E/437/2CCI-02 dated 11.04.2002. 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 perpetuity. A copy of the certificate granting approval under section 80G is enclosed on pages 6A to 6C of the paper book. It was also observed that no donation whatsoever has been received by Jha Trust (in 22 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
short) till date. Jha Trust is running schools in two 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 (ISC) School at Aswini Nagar, Baguiati, Kolkata-159. The school is affiliated with 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 remote area mainly with the object of imparting education to general and tribal poor students and providing free tuition and/or charging concessional rate of tuition fees to a large number of students in deserving cases. The school is operational since April 2015. The Roll- strength of students at present is about 3000 in all the schools taken together. At present, more than 200 staff members are involved in the school including teaching and non- teaching staff. Apart from staff several other persons are dependent on schools for their livelihood as they are associated with related activities of school such as canteen, transportation etc., the Higher secondary school is imparting good education. The pass result is between 97% t 100% at class X and Class XII levels with highest score touching as high as 9 Cc Further, every year more than 40 students score more than 90% and man meritorious students have come out from 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 the benefit of students. A sample copy was also filed during the course of hearing for the purpose of the record. In other co-curricular activities also may students have represented at State and National level The vision of the trust is to impart education where 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 construction in the next year. However on perusal of the order of the Id. CIT(Exemption) 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 2012-13 was carried out u/s 143(3) of the Act and the donation given by the assessee was 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 detailed under:-
FY 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%
23
ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
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:-
"If trustees were misappropriating funds and were maintaining false accounts, it was open to authorities to dell) benefit under Section 11 of the Income Tax Act, but that could not be ground for cancelation of registration itself."
Applying the above ratio laid down by the Hon'ble High Court of Kamataka 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 the registration u1s 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 intends to have the benefit of the provisions of section 11 and 12 of the 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 clauses 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 Income-tax Act through section 12A has made it obligatory for charitable trusts and institutions to get themselves registered with the income-tax authorities failing which the benefit of exemption from income tax would be denied. The requirement 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] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (l)] 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 the trust or institution and the genuineness of its activities, he-24 ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, ' and a copy of such order shall be sent to the applicant:"
From the above provisions, it is clear that the Id CIT(Exemption) before granting the registration certificate shall conduct necessary enquiries as he think fit in order to satisfy himself about the genuineness of activities of the trust. Once the Id CIT(Exemption) is satisfied with the genuineness of the activities then he will grant the registration certificate. In the instant case before 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 e emption U/S 11 of the Act will be denied to such donation. Thus, in such circumstances the registration U/S 12A of the Act cannot be cancelled. In this regard, we rely in the principles laid down by the Hon'ble 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. 12M 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 institution. On being satisfied about the genuineness of the activities of the trust or the institution 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 activities 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 such 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 course, the objects of the trust apparently make out that they were not in consonance 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 objects do not run contrary to public policy and are, in fact, related to charitable purposes, the CIT is again empowered 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 presumptions and on surmises that income derived by the trust or the institution is being 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, rejection cannot be made. Sec. 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for 25 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
registration, 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 profit. The language used in the section only requires that activities of the trust 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 its charitable activities, may be a ground [or refusing exemption only wait respect to that part of the income but cannot be taken to be a synonym to the genuineness 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 get the income excluded from the income of the previous year for the purpose of determination of tax liability but it only entitles the assessee to claim such exemption, 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 activities which are genuine. Genuineness of the activities of the trust or the institution has to be seen, keeping 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 the objects of the trust or the institution. In other words, if establishing and 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 being imparted as per rules and the factum of establishment and running school is a genuine activity. The enquiry regarding genuineness of the activities cannot 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 question of registration. " ' In view of above precedent, we find that the activities of the trust in relation to its education activities have not been doubted and on the basis of same activities various registrations u/s 12A, 80G and 1O(23C) were awarded to the assessee. Simply the assessee has given donation to a trust which is involved in the bogus transactions cannot be the basis for the denial of the registration 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 26 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
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 payment 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 purpose.
We also find that the notice for the cancellation of the registration certificate was issued u/s 12AA(3) of the Act as evident from the notice placed on page 12 of the paper book. However, Ld. CIT(Exemption) has also invoked the provisions of section 12AA(4) of the Act for cancelling the registration certificate which in our considered view against the principal of natural justice. The Id. CIT(E) before invoking the provision Section 12AA(4) should have issued the show cause notice. Therefore, we find that the proper opportunity to the assessee has not been furnished.
8.4 We also find that Id. 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 banking channel and the department failed to bring anything on record that the donation 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 tax.
In the instant case Shree Gulab Pincha (SGP for short) Mob. No.9831015157 was acting as conduit in providing a large amount of bogus donation received which was immediately returned back to the different parties in the guise of payments towards capital expenditure in building. However, no statement 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 statement that SGP was involved in the aforesaid bogus donation transaction. Therefore, it was necessary for the Revenue Authorities to cross examine SGP to establish / ascertain how the money has returned back to the assessee-trust. In the instant case, the managing trustee of BERT has highlighted the name of 7 intermediaries used for returning 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 assessee that the bogus donation was received. The managing trustee of BERT-has mentioned 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 was necessary for establishing the fact that how the money has returned to assessee and whether the money was actually returned to the assessee-trust. As the statement of the SGP has not been recorded, the question of confronting the same to the assessee does not arise. As per question no. 14 of the statement of the managing trustee of 27 ITA No.1456/Kol/2016 Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
BERT, it is clear that SGP was the only party to arrange all the bogus donations but his statement is missing which was crucial to unveil the chain of bogus donation.
In view of above, we have no hesitation in reversing the order of Id. CIT(E) and accordingly the appeal of the assessee is allowed.
Now coming to the other appeals of the assessee in ITA 9321K0l/2016 and 933/Kol/2016
9. At the outset, we find that we have already adjudicated the issue raised by assessee in ITA No. 9311K02016 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 are allowed."
8.3. In view of the aforesaid findings and respectfully following the judicial precedents relied upon hereinabove, we hold that the ld CIT(E) ought not to have invoked the provisions of section 12AA(3) and 12AA(4) of the Act for cancellation of registration to the assessee society. Accordingly the grounds raised by the assessee are allowed. Since the preliminary grounds raised by the assessee are allowed, we are not giving any finding with regard to withdrawal of registration granted u/s 12A of the Act with retrospective effect from 1.4.2011 in this appeal.
9.In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 06.09.2017
Sd/- Sd/-
[A.T.Varkey] [ M.Balaganesh ]
Judicial Member Accountant Member
Dated : 06.09.2017
SB, Sr. PS
28
ITA No.1456/Kol/2016
Vidya Bharati Society for Educational & Scientific Adv.
A.Yr.
Copy of the order forwarded to:
1. Vidya Bharati Society for Educational & Scientific Advancement
2. CIT(Exemption), Kolkata
3. C.I.T.- Kolkata.
4. CIT(DR), Kolkata Benches, Kolkata.
True copy By Order Senior Private Secretary Head of Office/D.D.O., ITAT, Kolkata Benches