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TMI Blog2021 (10) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1. This appeal is filed by M/s. Romana Herbal Care Pvt. Ltd. assessee against the order passed by the ld. Commissioner of Income Tax (Appeals) 38, New Delhi, dated 8.01.2018 for assessment year 2014-15. 2. The solitary ground in this appeal is the disallowance of deduction under Section 35(1)(ii) of the Income Tax Act, 1961 (the Act) of ₹ 17,50,000/- confirmed by the ld. CIT (Appeals) holding that the donation amounting to ₹ 10,00,000/- made by the assessee to one donee organization is held to be non-genuine. 3. The briefly stated facts show that assessee - company is engaged in the business of manufacturing and trader of cosmetics. It filed return of income on 23.11.2014 at ₹ 9,13,33,830/-. The assessment was selected for complete scrutiny. During the year the assessee claimed deduction under Section 35(1)(ii) of the Act of ₹ 17,50,000/- by making a donation of ₹ 10,00,000/- to M/s. Herbicure Healthcare Bio Herbal Research Foundation at Kolkata and claimed deduction @ 1.75 times of the donation under Section 35(1)(ii) of the Act. The Assessing Officer confronted the assessee about the report of the Investigation Wing, who carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch organization was also approved. He further referred to the decision of co-ordinate bench in ITA. No. 5385/Mum/2018 for assessment year 2013-14 dated 29.01.2020 whereon the identical facts and circumstances of the case in the case of same donee was discussed. He referred to para No. 6.10 of the order. He further referred to para No. 6.27 of that order wherein on identical facts and circumstances the deduction under Section 35(1)(ii) of the Act is allowed. He, therefore, submitted that the issue is squarely covered in favour of the assessee. He further relied upon several other judicial precedents holding that the statement given during the course of survey does not have investigatory value. The other judicial precedents were also submitted that the assessee has relied upon the survey granted by the prescribed authority at the time of donation to the respective institutes for claiming of the deduction. The retrospective withdrawal and cancellation of the certificate will not have any impact upon the assessee, who has acted upon it when it was valid and operative. Therefore, he submitted that the orders of the lower authorities in denying the deduction claimed by the assessee un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the donee might have given a statement, but it cannot be considered against the assessee. He, thus stated that the orders of the lower authorities are in accordance with law and should be upheld. He further submitted that various judicial precedents do not apply to the facts of the case in view of the remand report which is placed at page No. 6 of the Paper book filed by the assesse. 7. we have carefully considered the rival contention and perused the orders of the lower authorities. We have also gone through all the judicial precedents cited before us. Recently the honourable Supreme Court has considered the issue of bogus donation received by the trust in case of Commissioner of Income-tax (Exemptions), Kolkata v. Batanagar Education And Research Trust* [2021] 129 taxmann.com 30 (SC) wherein honourable Supreme Court was also seized of the matter of one of the trust which were covered in the survey report of the investigation wing Calcutta. Honourable Supreme Court held as Under:- 3. In a survey conducted on an entity named School of Human Genetics and Population Health, Kolkata under section 133A of the Act, it was prima facie observed that the Trust was not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9831015157. 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 now know any details in respect of the donors on behalf of whom Shri Gulab Pincha acted as a middleman. 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 copy for the period from 1-4-2014 to 4-9-2014 in respect of General Fund of your trust having details of the donors is being shown to you to identify the bogus donations along with bogus donors. Ans. After going through the list of the donors appeared in such ledger it is understood that the Donors whose names ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee through 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). The CIT, therefore, invoked the provisions of section 12AA(3) of the Act and cancelled the registration granted under section 12AA of the Act w.e.f. 1-4- 2012. Consequently, the approval granted to the Trust under section 80G of the Act was also cancelled. 6. The matter was carried in appeal by the Trust by filing Income Tax Appeal Nos.756 912/Kol/2016 before the Tribunal. After considering the entire material on record, the Tribunal concluded as under: 13. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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). We therefore, uphold his orders and dismiss both the appeals by the Assessee. With this view, the appeals preferred by the Trust were dismissed. 7. The Trust being aggrieved, filed Income Tax Appeal No. 116 of 2018 before the High Court. By its order dated 4-7-2018, following questions were framed as substantial questions of law: (i) Whether the Tribunal and the Commissioner of Income Tax (Exemptions) were right in law in directing the cancellation of registration of the Appellant granted under section 12AA to the Appellant Trust on the ground that the Trust had received bogus donation from School of Human Genetics and Population Health? (ii) Whether statement recorded in the course of survey under section 133A of the Act has any probative or evidentiary value? 8. It was submitted on behalf of Trust that it had received donations from various donors and the Trust was under no obligation to verify the source of the funds of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us donations and that the registration conferred upon it under sections 12AA and 80G of the Act was completely being misused by the Trust. An entity which is misusing the status conferred upon it by section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under sections 12AA and 80G of the Act. 12 The High Court completely erred in entertaining the appeal under Section 260A of the Act. It did not even attempt to deal with the answers to the questions as aforesaid and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid. In our view, this appeal, therefore, deserves to be allowed. 8. In view of the above facts, the decisions relied upon by the learned authorised representative are not relevant. The honourable Supreme Court has categorically held that Where substantial amount of money received as donations by assessee-trust by way of cheques was ploughed back or returned to donors in cash and assessee, misused status of trust conferred upon it by section 12AA, cancellation of registration under sections 12AA and 80G was justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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