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TMI Blog2017 (9) TMI 1582X X X X Extracts X X X X X X X X Extracts X X X X ..... rd that the activities of the Assessee were not genuine and hence their registration is liable to be cancelled u/s.12AA(3) of the Act, and was rightly cancelled by the CIT(E) - Decided against assessee. - I.T.A Nos.756 And 912/Kol/2016 - - - Dated:- 13-9-2017 - Sri N.V.Vasudevan, JM and Shri J.Sudhakar Reddy, AM For The Appellant : Shri Subash Agarwal, Advocate For The Respondent : Shri G.Mallikarjuna, CIT(DR) ORDER Per Shri N.V.Vasudevan, JM These are appeals by the Assessee against two orders both dated 25.02.2016 of C.I.T. (Exemptions), Kolkata (i) passed u/s 12AA(3) of the Income Tax Act, 1961 withdrawing/cancelling the registration w.e.f. 01.04.2012 granted to the assessee u/s 12A of the Act and (ii) withdrawing the approval granted to the Assessee u/s.80G(5) of the Act. 2. The Assessee is a trust. The objects of the Trust were providing relief to the poor and needy, medical relief, education and advancement of any other objects of general public utility. The fact that the objects of the trust are charitable in nature is not disputed, as the revenue has in an order dated 6.8.2010 of DIT(E), Kolkata granted registration to the assessee u/s 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount. Her further statement was that since the assessee was entitled to exemption u/s 80G and u/s 35 of the Act their organization was chosen by the brokers for giving donations to SHG and PH as well as for giving donations by SHG and PH. The gist of the statement of Smt. Samadrita Mukherjee Sardar, Secretary of SHG PH was also identical. In reply to question no.13 as to how the money received as donations are given back, she explained that cheques are issued in the names of various companies/organizations specified by the brokers and the sums so returned are shown as expenses in the books of SHG PH. 5. Pursuant to the Survey in the case of SHG PH proceedings for cancellation of registration u/s 12A of the Act granted to them were initiated. In such proceedings, Smt. Samadrita Mukherjee Sardar (in a letter dated 24.8.2015) had given a list of donations and the source of those donations were given by her as follows :- This is to confirm that donations paid by our society to various trusts/societies under the head research development expenses in our income Expenditure Account for the respective years. However, while preparing the revised account filed before the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana Syndicate 2. P.C. Sales Corporation 3. Kalyani Enterprises 4. Riya Enterprises 5. laxmi Narayan Traders 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? Ans. I can remember only one name right now, that is Shri Gulab Pincha, Mob No. 98310 15157. He was the key 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 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.19. The Ledger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi). d) They have violated the objects of the- trust as converting cheque received through corpus donation in cash beyond-the-objects. The society was found to be involved in hawala activities. e) Corpus donation received is not voluntary, merely an accommodation entry and fictitious. f) Activities of the trust are not genuine as well as not being' carried out in accordance with its declared objects. Assessee's case is covered within the 60th limb of Section 12AA(3). g) Even ingenuine and illegal activities' carried on by assesssee thorough money laundering do not come within the conceptual framework of charity vis-a-vis activity of general public utility envisaged the Income Tax Act as laid down in Section- 2( 15). 7. Keeping in view the above, provision of Section 12AA(3) is invoked and registration granted u/s.12AA is withdrawn/cancelled w.e.f. 01.04.2012 from the starting of financial year, the year the society was found to be involved in money laundering through receipt of bogus donation, ingenuine activities and not carrying out activities as per object of the trust. Since the registration u/s.12AA(3) was cancelled as a conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodation entries for donation through certain mediators. The donations received were refunded back as per the instruction of the mediators after retaining service charges. It is also claimed by the Revenue that in the said letter SHG and PH admitted that the refunds made were in the form of donations to different parties as per the instruction of middlemen and by debiting such donations and booking donations as expenses of SHG PH. There is also a reference to the fact that a settlement application u/s 245C of the Act before the Hon ble Income Tax Settlement Commission (Income Tax and Wealth Tax) for A.Y.2012-13 to 2014-15 had been filed by SHG PH. In such an application the entire income including the income arising out of accommodation entries for donation have been offered for taxation without claiming any exemption. The ld. Counsel for the assessee submitted that the above letter does not establish the fact that donations of ₹ 1,23,87,550 received by the assessee from SHG PH was a bogus donation. It was his contention that as far as the assessee is concerned an appeal for donation was made and the donations were received. 11. The ld. Counsel for the assessee pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brokers for giving donations to SHG and PH as well as for giving donations by SHG and PH. Till now the Assessee s name did not figure in the statement recorded on 27.1.2015. However, pursuant to the Survey in the case of SHG PH proceedings for cancellation of registration u/s 12A of the Act granted to them were initiated. In such proceedings, Smt. Samadrita Mukherjee Sardar (in a letter dated 24.8.2015) had given a list of donations which were given by them after getting cash of equivalent amount. It is not disputed that the name of the assessee figures in the said list and the fact that SHG PH has admitted that Donations given by SHG and PH to the Assessee were against cash received from them in Financial Year 2012-13 of a sum of ₹ 1,23,87,550/-. Even at this stage all admissions were by third parties and the same were not binding on the Assessee. However in a survey conducted in the case of the Assessee on 24.8.2015, the Managing Triustee of the Assessee admitted that it gave cash and got back donations. We have already extracted the statement given by the Managing Trustee. Even in the proceedings for cancellation of registration, the Assessee has not taken any stand on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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