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TMI Blog2021 (8) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... effect. All pleas noted above and other arguments and position of law that were canvassed on behalf of the assessee requires proper appraisal and disposal thereof in an objective manner - order of the CIT(E) requires to deal with various pleas of the assessee raised to defend the registration granted. The doctrine of legitimate expectations demands that the assessee should be made privy to the tangible evidences in corroboration of statement sought to be relied upon. Similarly, the cross examination of deponent s statement is incumbent to prevent miscarriage of justice. As told in the open Court, the re-registration application of the assessee has been accepted by the Revenue recently and registration has been granted from a prospective date. All these facts require proper consideration. CIT(E) while cancelling the registration appears to have wrongfully placed the onus of proving bonafides of donations on the assessee without showing reasons/evidence for drawing adverse conclusion on a registered trust. The imperatives of basic procedure have not been adhered while resorting to drastic action of cancellation. We accordingly set aside the impugned cancellation order and resto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration granted under s.12AA of the Act to the trust was withdrawn and cancelled w.e.f. 01.04.2010 i.e. from the starting of the financial year in which the irregularities were alleged to have been committed by the trust as pointed out by the AO. 4. Aggrieved, the assessee preferred appeal before the Tribunal. 5. When the matter was called for hearing, the learned counsel for the assessee pointed out that the whole basis of cancellation of registration granted under s.12AA(1)(b) of the Act was a non-descript and unintelligible information received by the department from its counterpart i.e. CIT(E), Kolkata vide letter dated 25.10.2015 that the donor to the assessee are indulging in money laundering through receipt of bogus donation from various corporates and non-corporates whereby the benefits of Section 35(1)(ii) of the Act was illegally made available to them. The donor HHBRF, in turn, has given bogus donations to various trusts/societies by way of accommodation entries and the assessee is one of such beneficiaries. 5.1 In this context, the learned counsel for the assessee pointed out that despite all investigations including survey operations carried under s.133A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides of receipt of donation. 5.5 The learned counsel further vehemently contended that the facts in the present case are peculiar. A survey carried out on assessee in January 2016 has not surfaced any material against the assessee to show that assessee has pumped the unaccounted money by giving cash and receiving it back in the form of donation. The basis of cancellation rests upon bald allegations and unsupportable statement recorded in survey of donor which remained unconfronted. It is not the case where the donor and the assessee trust are ad idem on conceding the bald allegation. The assessee has continued to deny any impropriety in the receipt of donation. 5.6 The learned counsel for the assessee further referred to the decision of the co-ordinate bench of Tribunal in Urmila Devi Charitable Trust vs. CIT(E) ITA No.4136/DEL/2017, order dated 13th June, 2019 and submitted that on the identical set of facts having the same donor, namely, HHBRF as held in para 16 of its order that the statement cannot be used as evidence since the statement was never supplied to the assessee nor the assessee was allowed an opportunity to cross-examine such person whose statement is being sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on record and referred to in terms of Rule18(6) of the IT(Appellate Tribunal), Rules 1963. The correctness of invocation of Section 12AA(3) of the Act for cancellation of registration of Trust is in controversy. 7.1 The Act provides that the cancellation under s.12AA(3) of the Act can be done only on two situations i.e. when the Commissioner is satisfied that; (i) the activity of such trust or institution are not genuine, or, (ii) not being carried out in accordance with the objects of the trust or institution. It is the case of the assessee that neither the activity of the trust is proven to be ingenuine nor the activities are shown to have not been carried out in consonance with the objects of the trust or institution to invoke provisions of s.12AA(3) of the Act. 7.2 The CIT(E) has proceeded to cancel the existing registration granted under s.12AA of the Act on the ground that the donation received from above named two parties aggregating to ₹ 70Lakhs are orchestrated and bogus to avail wrongful tax benefits by abuse of status of charitable trust. Contextually, the question whether the transaction is proper and regular or bogus is essentially a question of fact. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in CIT vs. S. Khader Khan Son reported in (2013) 352 ITR 480 (SC). iii. When such bald statement cannot be used even against the deponent (donor), the assertions made in such statement cannot be obliquely used to the prejudice of a third party i.e. assessee herein without confronting the tangible material collected by the Revenue incriminating the assessee. In the absence of any tangible evidence to implicate the action of the assessee, the satisfaction contemplated under s.12AA(3) of the Act cannot be achieved. iv. The statement recorded by the DDIT (Inv.), Kolkata in the case of a third party and that too without confronting the assessee neither confirms to the ordinary prudence nor to the principles of natural justice. Cross examination of the deponent of the statement is paramount in the light of the judgment of Hon ble Supreme Court in Andaman Timber Industries vs. Commissioner of Central Excise (2015) 281 CTR 0241 (SC) and other plethora of judgments. v. The activity of the trust of running the school was never doubted in the past nor the application or utilization of the fund was ever doubted by the CIT(E) in any of the year since inception. vi. No s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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