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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri Waseem Ahmed & Shri K.Narsimha Chary
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is against the order of Commissioner of Income Tax (Exemptions), Kolkata vide M.No. CIT(E)/Kol/12AA(3)2015-16/4518-20 dated 19.01.2016 u/s 12A(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’)
Shri S.L. Kochar and Shri Anil Kochar, Ld. Advocates appeared on behalf of assessee and Shri Niraj Kumar, Ld. Departmental Representative appeared on behalf of Revenue. Subhas Harlal Doshi Charitable Trust vs. CIT (E) Kol. Page 2 2. The only issue raised by assessee in this appeal is that the ld CIT (Exemption) erred in cancelling the registration certificate u/s 12 AA(3) of the Act.
Before coming to the specific issue of the case, let us have a brief note on the factual history of the case. A search was conducted u/s 132 of the Act on 15.06.2010 at the premise of M/s Prathiba Constructions Engineers and Constructions Private Limited (for short PCEC) at Kolhapur. During the search, it was found that the Director of PCEC has paid cash of Rs. 65 lacs to various persons during the financial year 2009-10. These persons further donated the said sum of money to an Educational Society located at Karnataka, Belgaum Karnataka, through cheques/ drafts. The name of the Society is Karnataka Lingayat Educational Society (for short KLES). The purpose of making the payment by the company-PCEC is to secure the admission of the Director’s daughter in KLES in post graduate course. The list of the persons through whom the payment of Rs.65 lacs routed stand as under:- Sl Name of the Trust Cheque /DD No. Date of Amount (Rs) No. cheque Funds channelized through Kolkata 1 Saralaben Bhansali 231834 of Standard 14.12.09 15,00,000 Charities Trust Chartered Bank 2 Mukesh Bhansali 92588 of Standard 14.12.09 10,00,000 Charities Trust Chartered Bank 3 Suhash Hiralal Doshi 352488 of Standard 10.12.09 6,00,000 Charitable Trust Chartered bank 4 Sunil Collection Pvt. 997783 of Oriental 12.12.09 9,00,000 Ltd. Bak of Commerce 5 Neelgaur Trust 174442 of Vijaya 10.12.09 5,00,000 Bank Total funds channelized through Kolkata 50,00,000 Other persons used to channelize money 6 Ashish Kiran Shah, DD No.3447730 on 02.02.10 5,00,000 Belgaun SBI 7 Biltube Industries, 2531452 15.12.09 10,00,000 Pune Total funds channelized through other persons 15,00,000 Total money sent to KLE 65,00,000 Subhas Harlal Doshi Charitable Trust vs. CIT (E) Kol. Page 3 There was a person who was acting as a conduit between the donors, PCEC and KLES. The name of the person acting as conduit was Shri J.K. Jain resident of 18, R.N. Mukherjee Road, Kolkata- 700001. All the above facts were admitted by the Director of PCEC in the statement recorded u/s 132(4) of the Act on 16.6.2010. Besides the above statement u/s 132(4) of the Act the other documents were also found such as the receipts issued by KLES to the aforesaid donors and two letters signed by Shri J.K. Jain containing the details of the cheques/ drafts, PAN of the donors, request for the 80G receipts.
3.1 The investigation report of income tax office of Kolahpur was forwarded to the income tax office of the Kolkata with regard to the transaction of the instant assessee. Accordingly, the notice was issued to the assessee u/s 148 of the Act and assessment was framed u/s 147/144 of the Act. During the course of assessment proceedings, the statement of the Managing Trustee(s) and Shri J.K. Jain was also recorded. The AO during assessment proceedings also observed that the activity of the society was negligible and accordingly the assessment was framed after making the addition of Rs. 6 lacs to the income of the assessee. On the basis of the above, the ld CIT (Exemption) issued a show cause notice on 13.05.2014 for the cancellation of registration granted u/s 12A of the Act. In compliance to the notice the assessee submitted that donation was made through cheque and it was duly recorded in the books of accounts. The allegation that the assessee has received cash in lieu of donation is not correct. However, the ld CIT has cancelled the registration certificate issued u/s 12A of the Act by observing as under:- “10. Considering the observations of assessing officer and your submission, I am of the opinion that – a) The activities of your organization was not genuine and designed to bypass the law of State and not in accordance with the stated objectives of your organization. b) You have defeated the purpose for which your organization was granted registration u/s. 12A of the Income Tax Act. c) You were found to indulge in the practice of money laundering through receipt of cash for alleged donation paid. d) You have not made any voluntary donation.
Subhas Harlal Doshi Charitable Trust vs. CIT (E) Kol. Page 4 e) Conclusive findings of assessing officer as mentioned in the assessment order clearly establishes that you have received cash of Rs.6 lakh and issued donation cheque in the name of M/s KLE society to facilitate payment of Capitation Fee for admission.
Hence, registration granted to Subhas Harilal Doshi Charitable Trust u/s. 12AA(1) is hereby cancelled us. 12AA(3) of the Income Tax Act, 191 from 01.04.2009 (i.e. from the financial year 2009-10) the year in which activities of your organization were fund too be ingenuine and indulged in money laundering.”
Aggrieved by the order of Ld. CIT(E), assessee is in appeal before us. The ld. AR before us filed a paper book comprising of pages 1 to 7 of the paper book and submitted that the donation was paid by the assessee from its own fund. The assessee has received back no fund from Shri Ramchandra D. Jadav in cash. The allegation of the lower authorities is baseless. The information received from the income tax office of Kolhapur was not made available to the assessee. The ld. Director exemption has just copied the assessment order passed by the AO under section 143(3) of the Act and he has not applied his own mind. The donation was made to KLES out of the corpus fund of the assessee and there was no replenishment of the fund in the books of the assessee. On the other hand the ld. DR submitted that several opportunities were given to the assessee but he failed to avail any of them for the cross examination. There is no charitable activity carried out by the assessee for the last several years. In view of above the ld. DR vehemently supported the order of the ld, DIT(E).
We have heard the rival contentions of both the sides and perused the materials available on record. At the outset we find that the ld. AR has submitted that the details received from the income tax office of Kolhapur has not been furnished to the assessee for the cross examination. The ld. DR in its rejoinder submitted that sufficient opportunities were furnished to the assessee but he chose not to avail the same. Now in the interest of justice & fair play we are inclined to restore the file back to the ld. CIT(E) for fresh adjudication as per law after giving reasonable opportunity Subhas Harlal Doshi Charitable Trust vs. CIT (E) Kol. Page 5 of being heard to assessee. Hence this ground of appeal of the assessee is allowed for statistical purpose.