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TMI Blog2017 (6) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... urvey 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. - I.T.A No. 597/KOL/2016 - - - Dated:- 10-4-2017 - Shri S.S. Viswanethra Ravi, Judicial Member And Shri Dr. A.L. Saini, Accountant Member Shri N.K. Poddar, Senior Advocate, ld. AR for the assessee Dr. Amlan Tripathy, CIT, ld.DR for the revenue ORDER Shri. S.S.Viswanethra Ravi, JM: This appeal by the Assessee is against the order dt: 15-03-2016 passed by the Commissioner of Income Tax-(Exemptions), Kolkata u/s. 12 AA(3) of the Income-tax Act 1961 hereinafter the Act cancelling the registration granted u/s. 12AA of the Act w.e.f 01-04-2008. 2. Initially the assessee has raised as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of survey operation conducted on other similar societies the registration granted to the assessee u/s. 12AA be cancelled. Secondly, whether on the allegation of payment of ₹ 25,000/- towards commission out of books of Assessee be a ground for cancellation of registration u/s. 12AA of the Act. 5. For the first point the ld.AR for the Assessee submits that the assessee received donations from various persons and concerns totaling to ₹ 1,90,33,000/- for the year 2012-2013 and referred to page no s 132 and 134 of the paper book. The ld.AR submits that the School of Human Genetics and Population Health donated ₹ 17,00,000/- on 25-02-2013 through RTGS and the assessee received the same under corpus fund. Again, said Institution donated an amount of ₹ 20,00,000/- on 4-3-2013 through RTGS and the assessee treated the same totaling to ₹ 37,00,000/- as corpus fund. The ld.AR submits that the CIT (E) basing on the statement given by Smt. Moumita Raghavan during the survey operation u/s. 132 of the Act on the said School of Human Genetics and Population Health and also on the statement given by Smt. Samadrita Mukherjee Sardar during the course of proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 for refusing exemption only with 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. 35. This is more evident if we see the provisions of section 11, which, while exempting the income given in its various sub-clauses from being included in the total income of the previous year of the person in receipt of the income, for example, in sub-clause (1) says income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property. 36. The aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is so applied or ceases to be accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be, of the previous year immediately following the expiry of the period aforesaid. 40. Section 12 also only says that any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes, shall for the purposes of section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and section 13 shall apply accordingly. 41. The provision thus, emphasizes upon the income of the trust created wholly for charitable or religious purposes or an institution established wholly for such purposes and so is the case in sub-section (2) of the aforesaid section. The provisions of section13 excludes the applicability of section 11 in certain cases. 42. A cumulative reading of the aforesaid provisions leaves no manner of doubt that exemption under the aforesaid provisions can be claimed with respect to the income derived by the trust or the institution, which is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re being reproduced hereunder:- 1.Baalakon ka maansik, samajik, charitrik tatha naitik vikas karna. 2.Poorv Prathmik, Junior High School, High School, Intermediate va Degree star tak ki Siksha ki vyavastha karna, jaisa ki samay-samay par shasan dwara uchit samjha jaega. 3.Samajik drishti se anaath, nirashrit, Harijan, pichhdi jaati aur apang baalakon ke sanrakshan va punarvas ki vyavastha karna. 4 Baalakon ke sharirik vikas hetu vyayam, khelkood aadi ki vyavastha karna. 5.Baalakon ke maansik vikas hetu pustakalaya aur vachnalaya ki sthapna karna. 6.Uprokt uddeshyon ki poorti hetu evam inse sambandhit anya aavashyak karya jo Societies Act ki dhara 20 ke antargat honge evam any aakasmik karyon ke liye prabandh karna. 47. The Tribunal has rightly found that the objects aforesaid show that none of the objects were against public policy and the main activity of the said Society was to provide education to children from Primary section to Degree level and to improve the mental, social and other development of the students. 8. The ld.AR further argued that the CIT (E) did not find any adverse inference that the activities of the Assessee Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.] As is clear from the circular No.5 of 2005 dated 15.7.2005 issued by the Central Board of Direct Taxes, the aforesaid section was amended so as to specifically provide that if the Commissioner of Income Tax is satisfied that the activities of any Trust or Institution are not genuine or are not being carried out in accordance with the objects of the Trust or Institution, he shall, after giving reasonable opportunity of being heard to the concerned Trust or Institution, pass an order in writing cancelling the registration granted under the said section. Therefore, in view of the aforesaid express provision, registration granted to a Trust could be cancelled under two circumstances namely, (1) When the activities of the Trust or Institution are not genuine; and (2) The activities of the Trust or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le disposing of the issue in hand relied on the decision of the Hon ble Allahabad High Court in the case of Red Rose School supra. 11. The ld.AR submits that in the present case the CIT(E) went beyond the scope of enquiry as contemplated u/s. 12AA(3) of the Act and without there being any adverse inference against the said two conditions and cancelling the registration as granted U/Sec 12AA is arbitrary and is illegal. 12. On the other hand, the ld. DR argued that the Respondent conducted survey operation u/s. 133A of the Act in the case of School of Human Genetics Population Health and found bogus donations of ₹ 9.7 crores from the FYs 2011-12 to 2014-15. During the proceedings u/sec 12A of the Act the said institution was asked to explain the genuineness of the donations. During such proceedings Smt Moumita Raghavan, Treasurer given statement admitting the business of providing accommodation entry to different individuals and organisations which was confirmed by Smt. Samadrita Mukherjee Sardar, Secretary submitted reply on 24-10-2015 stating that all the donations paid by her society recorded under the head research and development expenses in their income and expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f charitable purposes for public particularly to give relief to poor and needy, which provides medical relief, education and advancement of any other objects of general public utility. The Trust is running Engineering Institute. The Respondent found that the assessee has been indulging in the practice of money laundering through bogus donations. A show cause notice dt. 04-12- 2015 for cancellation of registration was issued seeking explanation. 16. According to CIT(E) a survey was conducted on 27-01-2015 u/s. 133A of the Act by the Investigation Wing of Kolkata on School of Human Genetics and Population Health, Kolkata. On an examination of Smt. Moumita Raghavan, Treasurer of above said school, the CIT-E found that the assessee have received donation amounting to ₹ 37,00,000/- for the A.Y 2013-14 from said School. According to him, the Assessee involved in the process of making black money into white money by making bogus donations and thereby, the Assessee have indulged in money laundering, which is illegal, not genuine and not at par with the objects of the assessee. Whereby, the Assessee was asked to explain why the registration u/s. 12A/12AA of the Act will not get can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has no knowledge about their internal affairs by referring to contents of the said letter dt. 28-09-2015. Therefore, we are of the view that the contents of the said letter was in knowledge of said secretary to the fact that they received donation from the said School is bogus and sought ten days time to respond the same in detail. We find that the respondent again examined the said Shri Krishna Kumar Gupta on 28-10-2015 at Q.No. 16 at page no-22 of paper book regarding offering of explanation in respect of admission by School of Human Genetics Population Health that the donations given by them to assessee were in the nature of accommodation entries and the said Secretary did not give any specific reply to falsify the admission as contained in letter dt:28-09- 2015, except stating that is their internal matter and if any need arises he is ready to confront the same. We find no step as such taken by the Assessee to rebut the admission as rightly pointed by the Ld.DR from the recording of first statement i.e 07-10-2015 till the passing of impugned order i.e 15-03-2016. 20. We find, on 28-10-2015, at Q.No. 17 at page no-22 of paper book the Respondent confronted the Secre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. We also derive support from the order of Co-ordinate Bench of this Tribunal passed in similar set of facts in M/s. Dr.B.G.Memorial Trust -vs.- C.I.T. (Exemption) is reproduced in para-26 herein below. 22. In view of the discussion above, we set aside the impugned order dt:15- 03-2016 and restore the issue to the file of CIT-E for giving an opportunity to Assessee to prosecute its case in accordance with law as indicated above. 23. Point no.2 as raised by the ld.AR of the assessee is regarding the allegation of payment of ₹ 25,000/- made towards commission B-Tech said to have been paid by Assessee to Susanta Vaidya A/c Biswajit Das. The ld.AR submits that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected the name of Susanta Baidya at Sl. No. 17 of Civil Engineering. It clearly established that the Assessee paid commission to lure the students for getting admission into Institution i.e BBIT. The ld. DR argued that the Assessee did not bring any evidence in support of its contention that the said amount paid towards land related work and inspite of having taken ample opportunities. 25. Heard rival submissions and perused the material available on record. During the final statement the CIT-E sought explanation from assessee regarding the payment of ₹ 25,000/- as commission in B Tech, which was paid to Sri Susanta Baidya as found from page 14 of loose sheets inventorised as BBIT-1. The assessee replied that the commission was paid to Sri Biswajit Das through Sri Susanta Baidya for a work related to land development. The assessee replied that it is a mere allegation made on the basis of assumption without there being no concrete evidence and submitted that the registration granted u/s. 12AA of the Act cannot be cancelled on such allegation, if at all any required action to be taken for any group concern at the time of assessment proceedings on such three concerns and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts inventorised as BBIT-1, containing voucher, serially page marked as 14 found in the Locker, placed in the adjacent and connected room with the room of the Executive Director, Smt. Shubhangi Gupta, wherein payment of ₹ 25,000/- was made on 19.08.2014 as Commission in B. Tech and paid to Shri Susanta Baidya A/c Biswajit Das. Please explain. A. 27. Please give me 10 days time to answer this question. Statement dt:28-10-2015 Q. 24. The following question was asked vide Q25 of Final Statement during survey operation. The same question is reproduced as under: Please go, through the bunch of loose sheets inventorised as BBIT - 1, containing vouchers serially page marked as 16 and 17 found in the Locker, placed in the adjacent and connected room with the room of the Executive Director, Smt Shubhangi Gupta, wherein payments of ₹ 55,000/- and ₹ 25,000/- were made on 31.07.2013 and 01.08.2013 respectively. Further from Cash Flow statements for the period 30.07.2013 - 06.08.2013, which has been shown to you, the same payments are not accounted for. Please explain. A. 24 The money was paid out of my own pocket on an emergency basis to Mr. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de the details viz. address, ph no, PAN of the above said two persons and the contractor. A29. Since I am not prepared for this I will provide the details by 02-11-2015. Q30. You are under oath. Please state whether this commission was paid to an agent named Susanta Baidya for bringing in a student named Biswajit Das for the B. Tech Course. A30. No sir. Q31. Do you have any student in your institute who took admission in the academic session 2014-15 by the name Biswajit Das or Susanto Baidya? A31. Readily I cannot tell you since there are more than 3000 student. I will check and let you know by 02-11-2015. Q32. You have a very large group of buildings spread over a huge land. Please inform, to engage contractors for such construction have you paid commission to any one? A.32 I cannot recall at this point of time the buildings were made over a period of 8 ...............02-11-2015. Q.33 Can you give any plausible reason for paying commission to engage a contractor. It is also noted that over a period of 8 yrs you have engaged a no. of contractors for similar job and who are known to your organization. A.33 It must be because of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust. Shri K.K.Gupta had stated that he had borne the expenditure. A scrutiny of Shri K.K.Gupta's return of income revealed that such expenses have not been claimed by him. Therefore, this expense has not been booked either by the trust or Shri Gupta. There is only one explanation to this. Such payment was illegal, so was not claimed either by the trust or the trustee. Therefore, it is clear from the above, that the assessee is just trying to confuse the department by merely claiming that Shri Susanta Baidya and Shri Sushanta Baidya are two different persons without discharging its onus to prove. Moreover, even if the assessee is claiming that the payment was for commission for engaging a contractor for land development it could not clarify why the same was recorded as Commission for B.Tech. 26. In the aforementioned finding of CIT-E, it is observed that the 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 opportunit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inesh Kumar Agrawal. If the respondent so desires he shall also examine Shri Pradip Agarwal and Shri Ajay Agarwal and afford right of cross examination to the assessee. If the respondent after such exercise still desires to cancel the registration then he shall afford opportunity to the assessee of being heard and decide the issue in accordance with law. For statistical purposes the appeal of the assessee is treated as allowed. The case laws cited by the ld. Counsel for the assessee before us are not considered at this stage as in our opinion the truth or otherwise of the statement of Shri Dinesh Kumar Agrawal is very material for ascertaining the true position with regard to the genuineness of the donation/gift. Even otherwise the facts of the case of the Assessee and that of the case laws cited by the learned counsel for the Assessee are distinguishable. In the case of Fatechand Charitable Trust (supra), in the statement recorded of the Donor the name of that Assessee was not mentioned as a person to whom bogus donations were given, whereas in the present case the Director of Qudeyes Securties Pvt.Ltd., in his statement has clearly mentioned the name of the Assessee as a recipien ..... X X X X Extracts X X X X X X X X Extracts X X X X
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