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TMI Blog2018 (2) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ri A. K. Gupta, FCA For The Respondent : Md. Usman, CIT, DR ORDER Per Shri A.T.Varkey, JM This is an appeal filed by the assessee Trust against the order of Ld. CIT(E), Kolkata dated 13.12.2016 wherein the Ld. CIT(E) was pleased to cancel the registration granted u/s. 12A of the Income-tax Act, 1961 (hereinafter referred to as the Act ) exercising his powers u/s. 12AA(3) of the Act w.e.f. 01.04.2010 relevant to AY 2011-12. 2. Brief facts of the case are that the assessee Trust was formed in the year 1981. The assessee Trust, thereafter, received certificate of registration u/s. 12AA of the Act vide No. DIT(E)/T-132/8E/204/81-82 dated 14.07.2010. The Trust Deed has been seen kept at page nos. 88 to 93 of the paper book wherein the main objects of the Trust were to establish, support, maintain and/or grant aid to schools, colleges, technical and/or other institutions, libraries, reading room etc., health for the poor and needy people, etc. 3. The Ld. CIT(E) took note of the survey operation carried out u/s. 133A of the Act on 27.01.2015 at the premises of M/s. Herbicure Healthcare Bio-Herbal Research Foundation (in short M/s. Herbicure ) wherein the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back in cash to the donor. The Ld. CIT(E) found that the assessee Trust in AY 2011-12 had received a donation of ₹ 2.90 lacs from M/s. Herbicure, therefore, he issued notice dated 02.12.2015 asking the assessee why the registration granted u/s. 12AA of the Act should not be cancelled. The assessee Trust replied that the amount of ₹ 2.90 lacs donated by M/s. Herbicure was received and applied for the objects of the Trust and stoutly refused that it was a bogus donation. There was series of letters written by the assessee to the Ld. CIT(E) which were dated 21.12.2015, 20.01.2016 and 03.02.2016 wherein the assessee Trust has denied to be part of any money laundering activity and even filed confirmation from M/s. Herbicure dt. 08.04.2016 which has been reproduced by the Ld. CIT(E) at page 16 of the impugned order. We note that the Ld. CIT(E) in order to cancel the registration has taken the statement of Shri Swapan Ranjan Dasgupta recorded on oath during survey conducted u/s. 133A of the Act and mainly the answer to the question nos. 23 which have been reproduced by ld CIT(E) is reproduced again below: Q. 23. Please explain in detail the modus operandi of giving the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articulars are then verified with the amount credited in our bank accounts after which an exemption u/s. 35(1)(ii) of the I.T.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. 5. As stated above and armed with the aforesaid sworn statement of Shri Swapan Ranjan Dasgupta, the Ld. CIT(E) issued notice dated 02.12.2015 for cancellation of registration granted u/s. 12AA of the Act. The assessee Trust was asked to produce the Income and Expenditure Account and Balance Sheet for AYs 2011-12 to 2015-16, the list of corpus donation received by the Trust along with their PAN, names and addresses from 01.04.2010 to 31.03.2015, list of corpus donation/non corpus donated by the assessee with the donees PANs, names and addresses from 01.04.2010 to 31.03.2015. The assessee Trust had furnished reply and produced the documents sought by the Ld. CIT(E) vide letter 21.12.2015 wherein the assessee has clearly refuted the allegation of accepting donation and returning the same in lieu of cash; and also have clearly explained with documents that ₹ 2.90 lacs which was donated by M/s. Herbicure has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are received by cheque/RTGS which is deposited in the accounts of M/s. Herbicure and on the advice of Mr. Kishan Bhawasingka bogus purchases are booked and amounts are disbursed through 2/3 layers and finally the donor receives cash after deducting the commission. Thereafter, a sanction letter is received from the donor reflecting the amount of donation and mode of payment which M/s. Herbicure verifies from the bank account and then certificate of exemption u/s. 35(1)(2) of the Act given to the donor wherein the donor qualifies for deduction 175% of the donated amount. We note that there was another letter dated 12.10.2015 issued by M/s. Herbicure to the Ld. CIT(E) which has been reproduced by the Ld. CIT(E) in the impugned order at page 14 wherein M/s. Herbicure has explained the fate of the donation made by it to the donees. It was stated that few brokers had arranged donation for it and asked M/s. Herbicure to return the donation to some other Trusts. It was stated in the letter that M/s. Herbicure made donation from the donation it received from brokers. It was stated that the brokers collected the cash from whom the donations were made by M/s. Herbicure and it was certified t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in receiving donation in lieu of cash or was practicing money laundering. Only piece of material was statement recorded on oath u/s. 133A (during survey) of the Act. As per the Hon ble Supreme Court in S. Kader Khan Sons, (2013) 352 ITR 480 (SC), has clearly laid out that section 133A of the Act does not empower any Income-tax Authorities to examine any person on oath. Hence, any such statement does not have any evidentiary value and any admission made during survey cannot by itself be made the sole basis of addition. In such a scenario, the statement of Shri Swapan Ranjan Dasgupta alone cannot be the basis for the impugned action of the Ld. CIT(E). The Hon ble Supreme Court in Andaman Timber Industries Vs. Commissioner of Central Excise 62 Taxman.com 3 wherein their Lordships has categorically held that not allowing the assessee to cross examine the third party though the statement of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. Their Lordships noted that in that case the impugned order of the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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