2017 (6) TMI 332 - AT - Income Tax

Cancelling the registration granted u/s. 12AA - as per CIT-A Assessee is involved in the process of making black money into white money by making bogus donations - survey u/s. 133A - statement given by Smt. Moumita Raghavan, Treasurer, during the survey operation u/s. 132 of the Act on the said School of Human Genetics and Population Health relied upon - Held that - We find that the statements together with the letter of confirmation filed by the concerned person of School of Human Genetics & Population Health remained not rebutted to the fact that the Assessee is indulged in money laundering against to the objects of the Assessee, in such circumstances and on an analysis of finding in the impugned order and taking into consideration the answer of Assessee to question no-16 at page no-22 of paper book, though it was not argued before us and in the interest of justice, we are of the view the issue shall be remanded to the CIT-E for affording an opportunity to Assessee for cross examination in respect of admission made by School of Human Genetics and population health in the survey operation. Payment of commission B-Tech said to have been paid by Assessee to Susanta Vaidya A/c Biswajit Das - Held that - Assessee could not bring on record the details in support of his contention that the disputed amount was paid in relation to land development work, therefore, in view of the decision rendered on first point, in the interest of justice, we remand the 2nd point to the file of CIT-E for giving an opportunity to the Assessee to substantiate its claim with a liberty file any evidence, if any. Appeal of the Assessee is allowed for statistical purposes.

Summary

Issues Involved:
1. Legality of the cancellation of registration under section 12AA(3) of the Income Tax Act, 1961.
2. Allegation of payment of ?25,000/- towards commission out of books of the Assessee.

Detailed Analysis:

Issue 1: Legality of the Cancellation of Registration under Section 12AA(3)

The core issue in this appeal is whether the order of the Commissioner of Income Tax (Exemptions) [CIT(E)], cancelling the registration granted to the Assessee Trust under section 12AA(3) of the Income Tax Act, 1961, is illegal, unsustainable, and arbitrary.

The Assessee Trust argued that the CIT(E) based the cancellation on statements made during a survey on another institution, School of Human Genetics and Population Health, without direct evidence against the Assessee. The Assessee received donations totaling ?37,00,000/- from this institution, which were treated as corpus funds. The CIT(E) alleged that these donations were part of a money-laundering scheme, converting black money into white through bogus donations.

The Assessee contended that the CIT(E) did not satisfy the conditions under section 12AA(3) of the Act, which requires that the activities of the Trust must be genuine and carried out in accordance with its objects. The Assessee's reliance on the case of CIT Vs. Red Rose School emphasized that the inquiry into the genuineness of activities should not extend beyond these conditions.

The Tribunal found that the CIT(E) relied heavily on the statements of Smt. Moumita Raghavan and Smt. Samadrita Mukherjee Sardar, who admitted to issuing accommodation entries. However, the Assessee Trust did not take sufficient steps to rebut these allegations or cross-examine the individuals who made these statements.

The Tribunal concluded that the CIT(E) acted within the scope of section 12AA(3) but noted procedural lapses. The Tribunal remanded the issue to the CIT(E) to afford the Assessee an opportunity to cross-examine the individuals who made the statements and to present further evidence.

Issue 2: Allegation of Payment of ?25,000/- Towards Commission

The second issue pertains to the allegation that the Assessee paid ?25,000/- as a commission to Susanta Baidya for student admission, which was not recorded in the Trust's books. The Assessee argued that this amount was paid by Shri Krishna Kumar Gupta from his pocket for land development work, not for student admission.

The CIT(E) found that the Assessee could not provide specific details or evidence to support this claim. The Registrar of Maulana Abul Kalam Azad University of Technology confirmed that Susanta Baidya was a student admitted to the Assessee's institution, contradicting the Assessee's explanation.

The Tribunal observed that the Assessee failed to substantiate its claim with concrete evidence and noted discrepancies in the statements provided by Shri Krishna Kumar Gupta. Consequently, the Tribunal remanded this issue to the CIT(E) for a fresh examination, allowing the Assessee to present additional evidence.

Conclusion:

The Tribunal set aside the impugned order dated 15-03-2016 and remanded the case to the CIT(E) for a fresh examination, providing the Assessee an opportunity to cross-examine witnesses and present further evidence. The appeal was allowed for statistical purposes, and the Tribunal emphasized the need for a thorough and fair inquiry in accordance with the law.