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TMI Blog2015 (9) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment in the case was completed u/s 143(3)/148 of the Income tax Act, 1961 whereby exemption u/s 11 & 12 of the Act was denied to the assessee society. The assessee succeeded before the CIT(A) and the Revenue assailed the said order before the ITAT wherein the Co-ordinate Bench vide its order in ITA No.-3347/Del/2008 dated 19.06.2009 restored the issue back to the file to the AO with the following observations:- "We have considered the facts of the case and rival submissions. From the facts mentioned in the assessment order, it does not appeal to us that the assessee has tried to enter unaccounted money in the books of account as donations. Inspite of repeated opportunities, no explanation was filed before the AO or the Ld. CIT(A). It is true that these amounts were shown as income by way of donations, but that does not settle the character of receipts. The AO has also not mentioned reasons, being the conditions imposed for grant of registration, because of which exemption was denied to the assessee u/s 11 & 12. In these circumstances, we think it fit to restore the matter to the file of the AO with a direction to consider the matter afresh and pass a speaking order on both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that no real business was done and the books of accounts were never produced in regard to the entry operating business. The purpose of which has been accepted as for making payment to DDA for which purpose the assessee needed funds urgently. The arrangement so made through illegal means was held to be in contravention to the provisions of law. Consequently it was held that the assessee has violated the conditions for grant of exemption u/s 12A of the Act as a result thereof the benefits u/s 11 & 12 of the Act was denied. Accordingly addition for the payment of commission for the purpose of arranging the funds also incurred out of undisclosed sources of income was also made. 2.4. In the second round before the CIT(A) which is the order under challenge the assessee again succeeded. The Ld. CIT(A) held that the AO could not specify which conditions of Section 11 & 12 has not been complied. She was also of the view that the issue was covered by the decision of the Hon'ble Delhi High Court in the case of DIT Vs. Kehsav Social Charitable Foundation (2005) 146 Taxman 569 and S. R. M. M. C. T. M. Tirripani Trust Vs. CIT (1998) 145 CTR (SC). The said finding is under challenge. 3. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of rupees whereas there was nothing on record to show that these parties had the means to enter into such huge transactions. The assessee was also found to have failed to furnish the details of other parties from whom donations have been received during the year. Therefore, it was held that the genuineness remained unverified. The reasons recorded for reopening of the case it was held were provided to the assessee. 3.2. Accordingly it was held that the assessee has collected funds through illegal means and thus having violated the conditions for grant of exemption u/s 12A the benefits u/s 11 & 12 of the Act was denied. 3.3. On challenging the action before the Ld. CIT(A) the appeal was allowed in favour of the assessee relying upon the judicial precedent of the Hon'ble Delhi High Court in Kehsav Social Charitable Foundation (cited supra). The said order is under challenge in the present proceedings. 4. Aggrieved by this, the Revenue is in appeal before the Tribunal in both the years. 5. The ld. Sr. DR relying upon the findings recorded in the assessment order by the AO in both the years submitted that the Ld. CIT(A) on facts has granted relief solely relying upon the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions and perused the material available on record. On a consideration thereof on facts, we are of the view that the impugned order cannot stand in the eyes of the law. The CIT(A) has failed to address the speaking findings on record made by the AO namely that the assessee had collected funds through illegal means. The so called donations through entry operators who admittedly did no business whatsoever and only provided accommodation entries cannot be termed as "donations" let alone "voluntary donations" in the eyes of law. It is a matter of record that at the relevant point of time the assessee was in need of funds for making payments to DDA and the urgency in the need of funds as per record was addressed by arranging the funds through illegal means in contravention of law. These facts on record have not been addressed by the CIT(A). The impugned order in both the years is contrary to the facts on record and also the judicial precedent cited by the Ld. Sr. DR who has placed reliance on the judgement of the Delhi High Court in the case of CIT vs Sh. Vishwa Vigyan Telugu Linguistic Minority Education Society (cited supra). 8.1. In the aforesaid judgement which has been rendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng commission to the entry operator was strongly censured by the Hon'ble High Court as the donations through the "conduit pipe" of cheques by entry providers moved the Hon'ble High Court to make the following serious observations:- "It is shocking to note that the Commissioner of Income Tax, Muzaffarnagar who passed the above order has dropped the proceedings for cancellation of registration without assigning any reason. The order being bereft of any reason cannot be treated an order in the eyes of law. One fails to understand what impelled him to do so. The order being bereft of any reason is no order in the eyes of law and is liable to be ignored being illegal and void. The petitioner's counsel was put to notice to support the order. The only reply he could give is that in the present petition the order dated 25.1.2008 is not in issue. We are not at all impressed by the said argument. When there as a transaction of Rs. 1,57,00,000/- a speaking order even dropping the proceeding at least was required. We, therefore, hold that the petitioner cannot derive any advantage from the aforesaid order. The income tax authorities are required to administer the Act. The right to administer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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