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TMI Blog2017 (10) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... has been indulging in money laundering. In answer to question no.23 Shri Swapan Ranjan Dasgupta founder director of HHBHRF has made reference to certain middle men who are engaged in money laundering using HHBHRF as a medium for money laundering. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by the assessee from HHBHRF was a bogus donation. Cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed. - ITA No.106/Kol /2017 - - - Dated:- 15-9-2017 - Shri N.V.Vasudevan, Judicial Member And Shri Waseem Ahmed, Accountant Member For The Appellant : Shri A.K. Gupta, FCA For The Respondent : Shri Goulean Hngshing, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Exemptions), Kolkata u/s 12AA(3) of the Income Tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty. (8) That the Ld. CIT(E) erred in cancelling the registration of the appellant with retrospective effect i.e. from 1.4.2010 which is not provided under the provisions of the Act. (9) That the appellant reserves the right to add to the above grounds and / or amend or delete any of them at the time of or before the date of hearing of the appeal. Shri A.K. Gupta, Ld. Authorized Representative appeared on behalf of assessee and Shri Goulean Hangshig, Ld. Departmental Representative represented on behalf of Revenue. 2. This is an appeal by the Assessee against the order dated 10.01.2017 of Ld. CIT (Ex), Kolkata cancelling the registration granted to the assessee trust u/s 12AA of the Act. 3. The assessee is a trust constituted under the deed of trust dated 27.3.1981. The assessee was granted registration u/s 12AA of the Act by an order dated 06.07.1981 by the Director of Income Tax (Exemption), Kolkata. The assessee has been enjoying the benefit of registration ever since the grant of registration. The assessee is engaged in various charitable activities. 4. There was a survey operation carried out u/s 133A of the Act on 27.01.2015 in the business premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o speak the truth and explain the transactions reflected from your bank book as above. Ans . Sir, I wish to state that our concern Herbicure Healthcare Bio-Herbal Research Foundation was incorporated in the year 2003 u/s 25 of the Companies Act, 1956 which was recognized in 2006-07 as a scientific and industrial research organization (SIRO) by the Ministry of Science Technology, Govt of India and subsequently we became a Gazette notified company u/s 35(1)(ii) of the I.T. Act. 1961 in March, 2008, Despite of our - sincere, honest and best intention we failed to procure any genuine donations till 2010-11, The situation was becoming bad to worse due to non-availability of fund for not agreeing to the prevalent practice in the donation market. The situation became so critical for us to survive and carry on our mission to do the work for the larger interest of the ailing population we had no other alternative but to become the victim of the circumstances against our will and principle. Subsequently, I was approached by one Mr Kishan Bhawasingka with the proposal to adopt the prevalent practice of scientific and research organizations of giving accommodation entries o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als a commission of 5% approx is charged by us which is the actual donation we receive from that particular donor in reality. The commission of almost 5 to 8% is charged by Mr Kishan Bhawasingka for facilitating the said accommodation entry. Subsequently, a sanction letter is received from the donor reflecting the amount of donation and mode of payment. The particulars arc then verified with the amount credited in our bank accounts after which an exemption u/s 35(1)(ii) of the LT. Act, 1961 which qualifies him/her to claim 'one and three fourth' of the said donation as tax exempt u/s 35(1)(ii) of the I. T. Act, 1961. 6. The gist of the statement as recorded above is that till 2010-11 HHBHRF could not get genuine donations and was starved of funds for carrying out its activities. In those circumstances one Mr. Kishen Bhawasingka approached the assessee for the purpose of enabling the assessee to give accommodation entry of receipts of donations as well as giving of donations by the assessee for which the assessee would be paid a commission. Since HHBHRF was having financial crunch it acceded to the proposal. With regard to the modus operandi of giving of accommod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust/society. 4. In view of the above you are requested to explain why the registration u/s 12A/12AA will not get cancelled by invoking the provision of Section 12AA(3). 9. The assessee in reply to the aforesaid show cause notice took a stand that as far as the assessee was concerned it received a corpus donation from HHBHRF and that the same was genuine and that it had not indulged in any money laundering. The assessee had in the course of proceedings for cancellation of registration u/s 12AA(3) of the Act filed a confirmation from HHBHRF dated NIL wherein HHBHRF have confirmed that it had given a sum of ₹ 5,00,000/- to the assessee as Donation towards corpus fund. The letter is enclosed on page 25 of the PB. To The Trustee Vishwaroopa Charity Trust 9/1, R.N. Mukherjee Road, Kolakta-700001 Dear Sir, Please find enclosed herewith a sum of ₹ 5,00,000/- (Rupees five Lakh only) by /c Payee cheque no 645854 dt. 03.03.2011 of ICICI Bank Ltd towards my donation to your corpus fund. Kindly send me your money receipt for the same and issue me an income tax exemption certificate issued by your income tax department to your t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present appeal before the Tribunal. 12. We have heard the submissions of the ld. Counsel for the assessee and the ld. DR. The ld. Counsel for the assessee firstly drew our attention to the answer given by founder and director of HHBHRF to question no. 22 recorded at the time of survey carried out in the business premises of HHBHRF. He drew our attention to the fact that in the said statement the founder director had specifically referred to a period from which bogus donations were received by HHBHRF viz., after A.Y.2010-11.He drew our attention to the fact donation was given to the assessee by HHBHRF through cheque dated 03.03.2011 which was admittedly prior to the period in which bogus donations were received by HHBHRF. According to him the statement recorded at the time of survey based on which the impugned order was passed was not incriminating, so far the assessee is concerned. According to him therefore the very basis on which the impugned order has been passed by the Ld. CIT(Ex), Kolkata is unsustainable. His next submission was that there was no other incriminating material on the basis of which it can be concluded that the assessee gave cash and in return got donation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ached the hands of HHBHRF which was returned in the form of donation to the assessee after retaining the commission. As we have already observed that the answer to question no.22 given by Shri Swapan Ranjan Dasgupta referred to donations given in the financial year 2011-12 as bogus donations. With regard to the donations received/given prior to 31.03.2011 there is no reference to such donations given or received by HHBHRF being in the nature of bogus donations. The assessee had received the donation from HHBHRF on 03.03.2011. It is therefore not possible to place reliance on the statement recorded at the time of survey and come to a conclusion that the assessee has been indulging in money laundering. 16. In answer to question no.23 Shri Swapan Ranjan Dasgupta founder director of HHBHRF has made reference to certain middle men who are engaged in money laundering using HHBHRF as a medium for money laundering. There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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