DISHA EDUCATION SOCIETY,RAIPUR vs. COMMISSIONER OF INCOME TAX, EXEMPTION, BHOPAL

आदेश / O R D E R Per Arun Khodpia, AM :

These two appeals are filed by the assessee against the order passed by the CIT(Exemption), Bhopal, dated 14/11/2018 and 15/02/2019. Since these two appeal are filed by the same assessee, having certain common information and facts, we are adjudicating the issues raised in these appeals under this common order.

2 ITA Nos. 32 & 60/RPR/19 principles of natural justice while revoking the registration granted to the appellant u/s 12A. 3. That on the facts and circumstances of the case and in law, The Commissioner of Income Tax (Exemption) could not point out a single instance of misapplication of the funds by the appellant towards the objects of the appellant and also could not point out single instance wherein the appellant has deviated from its objects.

The sole issue involved in this appeal is regarding revocation of registration granted u/s 12AA which is raised by the assessee by the aforesaid grounds.

3 ITA Nos. 32 & 60/RPR/19 4. The action of ld. CIT(E) was on the basis of information received from ld. CIT(E), Kolkata. In the report of ld. CIT(E), Kolkata, it was informed that the assessee society has received bogus donations from 3 of entities whose activities are found to have been bogus and involved in providing accommodation entries in the garb of donations. The show cause notices were issued to the assessee society and explanations were called for. The assessee society has submitted its explanations which were considered but were not found acceptable.

- Herbicure Healthcare Bio Herbal Research Foundation (HHBRFI - Jha Education Trust - Bimaldevi Dharamprakash Jankalyan Nidhi, Kolkata - Podar Education Trust - Anandilal & Ganesh Podar Society

4 ITA Nos. 32 & 60/RPR/19 Name of donor Material on record Assessee’s reply Herbicure a) Information received i) Name of assessee not Healthcare Bio from CIT(E), Kolkata that mentioned in the statement Herbal Research assessee indulged in of concerned personnel of Foundation bogus transaction and HHBRF. (HHBRF) gave its unaccounted cash ii) Observations of CIT(E) to HHBRF and received that assessee gave its cheque from them. unaccounted cash to HHBRF is baseless. b) HHBRF is a sham iii) No material brought on institution involved in record which implicates the money laundering assessee. iv) Adverse inference c) Registration u/s 12A and drawn on the basis of notification us 35(1)(ii) statement of one Shri withdrawn/ cancelled. Swapan Ranjan Dasgupta. Various Tribunals, including jurisdictional Raipur Bench have held that in absence of any material brought on record to show that the recipients paid cash to HHBRF, which came back in the form of donation, registration u/s 12A could not be cancelled. Details of such cases mentioned in the synopsis at para no. 14(iv).

v) In the case of Shree Jainarayan Hariram Goel Charitable Trust, which a received donation from HHBRF. held that on the basis of such information, registration could not be withdrawn. Jha Education Trust AO reported that i) Except for assessee)) received bogus mentioning this, there is donation of Rs 5 lakh and no reference of any Rs. 10 lakh from Jha other material Education Trust and whatsoever. BimladeviDharamprakash Observations are Jan Kalyan Nidhi, which

5 ITA Nos. 32 & 60/RPR/19 are sham trusts involved in unsupported and money laundering and unsubstantiated. There registration u/s 12A has is absolutely nothing been cancelled. brought on record. ii) Registration u/s 12A of these two trusts withdrawn, has been restored. Copy of ITAT order at PN 25 to 40 and 17 to 24 of case law compilation.

Bimaladevi Same observations as in Same as in the case of Jha Dharamprakash the Same as in the case of Education Trust. Jankalyan Nidhi Jha Education Trust case of Jha Education Trust Poddar Education a) Information received i) Name of assessee was 1 from Investigation Wing. Trust mentioned by Shri KD Mumbai that during search in Suba, CA and Shri Jayesh Podar Group of Mumbai, Zanami DDIT (Inv) ) Except for this, ii) Except for this, there is there is no other found that it no other material was into material implicating implicating the assessee. the assessee money iii) Both the deponents are laundering activities through outsiders so far as the giving bogus donations, donor trust is concerned which was received back in Therefore, effectively, there cash. b) Information contained is no mentioning of name of the name of assessee. assessee by any person related to the donor trust. c) Statement of one Shirt This position accepted by Jayesh Zananı (Manager, Hon'ble ITAT in the case of Accounts) recorded us donor trust, page no 75 to 132(4), he admitted that 110 of case law compilation bogus donations were (further case laws), relevant given from Podar Group finding at page no. 85 of Trusts. case law compilation, para d) Such modus operandi no. 23. was carried out with the help of one Shri K. D. iv) Both these persons Suba, CA, who deposed in retracted their statement, his statement u/s 131 that their retraction was cross- assessee was one of the examined by the AO and in beneficiary Trust which

6 ITA Nos. 32 & 60/RPR/19 received bogus donation such cross examination from Podar Education they stood by their Trust and Anandilal& retraction Retraction has Ganesh Podar Society. become final and accepted by Hon'ble ITAT, order at PN 75 to 110 of case law compilation (further case laws), relevant findings at page no. 96 thereof, para no 31

v) Effectively, there is nothing against the assessee in the case of this trust as well. vi) Donation given, disallowed, was directed to be allowed by Hon’ble ITAT. vii) No disallowance made in the hands of donor trust, of the donation given to assessee. Anandilal & Ganesh Same observations as in Same explanation as in the Podar Society the case of Podar case of Podar Education Education Trust Trust, except that its appeal before Hon’ble ITAT is pending.

Except for mentioning this fact, nothing else brought on record nor anything confronted to the assessee by the ld. Pr. CIT. There is no evidence whatsoever in support of the observations made in the show cause notice and in sec. 12AA(3) cancellation order.

7 ITA Nos. 32 & 60/RPR/19 i) In none of the relied upon statements, there is any reference of name of the assessee. Therefore, there is nothing specific against the assessee

ii) Donation from Jha Educational Trust and Bimla Devi Dharamprakash Jankalyan Nidhi - there is absolutely no reference of any statement of anybody and therefore, allegation in respect of these two donors is absolutely baseless and arbitrary. Reference of these two trusts in para no. 42 & 4.3-no reference of any material whatsoever.

iii) In written submission filed before ld. Pr. CIT, it was specifically mentioned that nothing has been provided to the assessee in support of the allegations leveled in the show cause notice Refer page no. 105 & 125 of PB.

iv) In all the above referred trusts, it was a case of giving of donations whereas in the case of assessee, it is a case of receipt of donation. The charge in the case of above trusts is different from the charge in the assessee's case.

- Ld. Pr. CIT has concluded that activities of assessee society are not genuine and are not being carried out in accordance with objects of the society. - Such observations of Pr CIT are totally arbitrary, baseless and devoid of any supporting material/ evidence whatsoever. It is totally an unsupported, bald statement. 7. Sec, 12AA(3) can be invoked only if Pr. CIT is satisfied that the activities are not genuine or are not being carried out in accordance with the objects

- No activity of the assessee found to be not genuine or not in accordance with the objects. - There is absolutely no observation whatsoever about the activities of the assessee. No doubt whatsoever has been raised in respect of educational activities in which the assessee is involved. The only adverse observation is about donation received There is absolutely nothing about any payments made or outgoings. Assuming without admitting that allegation of AO is correct, see 12AA(3) is not triggered. - Hon'ble Raipur Bench of ITAT has held in Shree Jainarayan Hariram Goel Charitable Trust vide para 7.2 (v) (at PN 48 of PB) that if the activity was never doubted nor the application of fund was ever doubted, cancellation of registration would not be justified.

8 ITA Nos. 32 & 60/RPR/19 8. Registration cancelled by Id. Pr. CIT relying solely on the statement recorded u/s 133A. There is absolutely no corroborative material on record. Statement recorded us 133A does not have evidentiary value. Reliance on CIT vs S Khader Khan Son (2013) 352 ITR 480 (SC).

Ld. Pr. CIT has relied upon statement of some persons. However, none of the deponents were allowed to be cross examined by the assessee. In view of this, their statements could not have been utilized to draw adverse inference. Reliance on Andaman Timber Industries vs Commissioner of Central Excise (2015) 281 CTR 241 (SC) 11. No enquiry by ld. Pr. CIT

Pr. CIT has not carried out any enquiry whatsoever

Due to amendment in law, assessee applied for re-registration u/s 12A and 80G, which was granted, Registration certificates at PN 127 to 131 of PB. 13 ha Educational Trust & Bimaladevi Dharamprakash Jan Kalyan Nidhi i) Neither in the show cause notice nor in the cancellation order, there is any reference of any material whatsoever for drawing inference that the donations received from these two trusts is not genuine. Conclusions devoid of any finding material evidence.

ii) In case of both the donor trust. registration was cancelled by their jurisdictional CIT invoking sec 12AA(3). Such cancellation held to be nor justified and registration u/s 12A directed to be restored in both the cases by Hon'ble Kolkata Bench of ITAT. Order of Hon'ble ITAT at PN 25 to 40 (Jha Education) & 17 to 24 (Bimladevi Dharamprakash) of case law compilation.

9 ITA Nos. 32 & 60/RPR/19 iii) In the case of Bimladevi Dharmprakash Jan Kalyan Nidhi Trust, Hon'ble ITAT gave specific finding that allegation of bogus donation is not proved. Such finding is in para no. 6 of the appellate order, PN 23 of case law compilation

iv) In the case Jha Education Trust, a finding has been rendered that in the enquiry survey conducted, which was made the basis for cancellation of registration, there was no specific reference of Jha Education Trust and the name of that trust was not coming out anywhere. Such finding is at para no. 8.1 of the appellate order, PN 33 of case law compilation.

v) Very basis of Pr. CIT's order becomes unsustainable so far as these two donors are concerned

vi) Summary of orders.

vii) The managing trustee stated that he did not know the name of the managing trustee of assessee, name of school etc. However, he did not say that donation given to the assessee was bogus. Only some information was either not known/ given.

i) Material/statement relied upon by Pr. CIT not provided to the assessee. This fact brought to the notice of Pr. CIT in the written submission and relevant contention is at PN 124 & 125 of PB.

ii) Allegation leveled on the basis of statement of Manager Accounts and one Chartered Accountant. These persons were outsiders and not related to the trust as is coming out at para no. 23 of the ITAT order passed in the case of this trust Placed at PN 75 to 110 of further case law compilation, relevant contention at PN 85 thereof.

iii) Both the persons retracted their admission and their retraction was cross-examined by their AO during the assessment proceedings and in such cross-examination also, they stood by their retraction and thereby, their retraction has become final. This is coming out of the order of the Tribunal in the case of above trust, at PN 75 to 110 of further case law compilation. Relevant finding at PN 96 of thereof.

iv) Hon'ble ITAT has held in the case of trust that retraction of the two deponents is valid.

v) When no adverse view taken in the case of Podar Education Trust, there is no question of taking any adverse view in the case of assessee society

10 ITA Nos. 32 & 60/RPR/19 vi) Summary of order.

Matter pending before Hon'ble Mumbai ITAT 16. HHBRF

i) Allegation is that assessee received alleged bogus donation from this trust. Case of the assessee for AY 2010/11 & 2011/12 reopened u's 147 on the basis of same information and in the re-assessment so made, donation received from this institution has been added as assessee's income. Whatever consequence could flow in respect of the alleged bogus donation, it has already flown in assessee's case. No further adverse view possible.

ii) Adverse view taken on the basis of statement of one Shri Swapan Ranjan Dasgupta, founder director of HHBRF. Copy of his statement at PN 58 to 66 of PB. There is no specific reference of assessee in such statement No reference of any other donee also. This fact brought to the notice of Id. Pr. CIT vide the written submission filed before him, relevant part whereof is at PN 106 of PB, last para.

iii) When there is no specific reference of assessee, it is a case where there is no material whatsoever against the assessee.

iv) Similar cancellation orders passed in other case, vacated

On the basis of identical finding, other trusts which had received donation from HHBRF also were visited with the same consequence le cancellation of registration u/s 12A. Hon'ble Tribunal vacated the cancellation order passed us 12AA(3) and directed for restoration of registration u/s 12A. Reliance on. –

 Vishwaroopa Charity Trust in ITA No. 106/Kol 2017 dt: 15.09.2017, PN 6 to 14 of case law compilation, relevant findings on PN 8 (para no. 4 & 5 of order), PN 13 & 14 (para no. 15 to 17) of case law compilation.  Fateh Chand Charitable Trust in ITA No, 792/Lkw /2015 dt. 18.03.2016, PN 51 to 64 of further case law compilation, relevant findings on PN 63 & 64 (para no 22) thereof.  Sanskriti Sagar in ITA No. 96/Kol/2017 dt. 15.09.2017, PN 65 to 74 of further case law compilation, relevant findings on PN 73 & 74 (para no 15,1 & 16) thereof.

11 ITA Nos. 32 & 60/RPR/19 v) In Shree Jainarayan Hariram Goel Charitable Trust in ITA No. 25/RPR/2019 d. 02/08/2021, Hon'ble Raipur Bench held in the context of this very donor as under (order at PN 41 to 50 of case law compilation): -

- Para 7.2 allegation of bogus donation was based on certain information. Primary onus was on the CIT(E) to dislodge the ordinary presumption of bonafide and donations received in ordinary course.

- PN 47 [para no (ii)] of case law compilation - Allegation based on some non descript and vague information received by CIT(E) in respect of donor.

- PN 47 [para no. (11)] of case law compilation Vague and non descript statement u/s 133A does not carry evidentiary value in absence of tangible evidence to corroborate the assertion.

- PN 48 [para no. (iii)] of case law compilation - In absence of tangible evidence to implicate assessee, satisfaction contemplated u/s 12AA(3) cannot be achieved.

- PN 48 [para no. (iv)] of case law compilation - Since no cross-examination was allowed, statement could not be used.

- PN 48 [para no. (v)] of case law compilation - Neither the activity nor the application of fund ever doubted.

- PN 48 [para no. (vi)] of case law compilation - No instance recorded that the assessee is generating unaccounted cash, which was allegedly transferred to the donor for receiving money through cheque.

- PN 48 [para no. (vii)] of case law compilation - Addition to the extent of alleged ingenuine donation may be plausible but registration cannot be withdrawn.

- PN 49 of case law compilation, para 7.4-CIT(E) wrongfully placed onus of proving bonafide of donation on assessee without showing reasons/ evidence for drawing adverse conclusions. 17. Cancellation not justified.”

12 ITA Nos. 32 & 60/RPR/19 is no evidence whatsoever in support of the observations made in show cause notice and in cancellation order. The revenue has nothing brought on record to show that cash was exchanged between the assessee and the donor trust. The action was motivated from the allegations in some statements recorded, however none of relied upon the statements there is any reference of the name of the assessee. Therefore, there is nothing specific against the assessee. The name of other trusts referred to by the ld. PCIT was for giving of donations whereas in the case of assessee it is a case of receipt of donation. The charge in case of Jha Education Trust, Bimladevi Dharamprakash Jan Kalyan Nidhi, Kolkata is different from the charge in the assessee’s case. No dispute whatsoever has been raised by the department in respect of object or the activities being carried out by the assessee trust, but ld. PCIT has concluded that activities of assessee’s society are not genuine and are not being carried out in accordance with the objects of the society is totally arbitrarily, baseless and devoid of any supporting material/ evidence. The registration was cancelled relying solely on the statement recorded u/s 133A. There is absolutely no corroborative material on record against the assessee. It was also submissions of the assessee that no cross examination was allowed to the assessee. The ld. AR also alleged that no enquiry was carried out by ld. CIT(E). The ld. AR further submitted that due to amendment in law. The assessee has applied for re-registration u/s 12A & 80G and provisional registration were granted to the assessee on 10.03.2022, which itself substantiate that the activities of the trust are considered as genuine by the department and therefore, the

13 ITA Nos. 32 & 60/RPR/19 registration u/s 12A and 80G were granted. The assessee relied upon the judgment in the case of Raipur Bench of ITAT in the case of Jainarayan Harriram Goel Charitable Trust vs. CIT (E) in ITA No. 25/RPR/2019 dated 20.08.2021 wherein it has been held as under:- “7.3 We find prima facie merit in the various pleas advanced on behalf of the assessee as narrated above. It is a settled principle of law that the onus lies on the person who alleges untruthfulness against the other persons. In the instant case, the allegation has been made on behalf of the Revenue for adversial conduct of the assessee. It is thus the duty of the Revenue to comply with the sacrosanct principles of natural justice and grant opportunity to the assessee for rebuttal of evidences in possession of the Revenue. The registration already granted cannot be withdrawn arbitrarily and in a light hearted manner giving retrospective 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. The 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.

7.4 As told in the open Court, the re-registration application of the assessed has been accepted by the Revenue recently and registration has been granted from a prospective date. All these facts require proper consideration. The 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.”

14 ITA Nos. 32 & 60/RPR/19 10. We have considered the rival submissions, perused the material available on record and have taken guidance from judicial pronouncement relied upon by the assessee. Admittedly, the proceedings of cancellation were initiated against the assessee trust as inspired by the report of ld. CIT(E), Kolkata wherein it is informed that the assessee society has received bogus donations from 3 of entities whose activities are found to have been bogus and involved in providing accommodation entries in the garb of donations. It was the allegation by the department that bogus donations were received from 3 trusts by the assessee’s trust, namely Jha Education Trust, Kolkata, Bimladevi Dharamprakash Jan Kalyan Nidhi, Kolkata and M/s Hebicure Healthcare Bio-Herbal Research Foundation, Kolkata. Regarding Jha Education Trust, the assessee has placed before us a copy of order of ITAT, Kolkata in ITA Nos. 831 & 933/Kol/2016 dated 17.03.2017 wherein the issue of withdrawal of registration u/s 12AA has been quashed. The similar finding was given in the case of Bimladevi Dharamprakash Jan Kalyan Nidhi in ITA No. 10/Kol/2017 dated 18.10.2017, in the case of M/s Hebicure Healthcare Bi-Herbal Research Foundation, it was the submission of the assessee that the same trust has given donation to Sh. Jainarayan Hariram Goel Charitable Trust in ITA No. 25/RPR/2019 dated 20.08.2021 wherein name of Hebicure Healthcare Bio- Herbal Research Foundation was reflacted in para 5.6 of the order, wherein it was the observation that a statement cannot be used as evidence since the statement was never supplied to the assessee nor the assessee was allowed an opportunities to cross examine such person whose statement is

15 ITA Nos. 32 & 60/RPR/19 being sought to be relied upon by the ld. CIT(E). Once these documents are ignored, there remains no material with the department to hold that the assessee received the donation from M/s Hebicure Healthcare Bio-Herbal Research Foundation, Kolkata in lieu of the cash. Therefore, on the basis of such information registration could not be withdrawn. On another allegation by the department with respect to the information received from Investigation Wing, Mumbai that a search and seizure operation carried out in the case of Poddar Group of Mumbai and the DDIT ( Inv.) has found that the assessee is into money laundering activities through bogus donations given by Poddar Group Trust, Mumbai. In this respect, it was the submission of the assessee that name of the assessee mentioned by Sh. K. D. Suba, CA and Sh. Jayesh Zanani, Manager Accounts, except for their statements, there is no other material implicating the assessee. Both these persons have retracted from their statement subsequently and the retraction has become final and accepted by Hon’ble ITAT, Mumbai in ITA Nos. 1876, 1877, 1880 and 1869/Mum/2021 vide order dated 28.09.2022. Effectively, department has no case against the assessee with respect to Poddar Education Trust as well. The same explanation has been offered by the assessee for Anandilal & Ganesh Podar Society also.

16 ITA Nos. 32 & 60/RPR/19 10.03.2022. In view of the aforesaid observations, we do not see any substance in the contention of the department and therefore, are of the view that once the department itself has accepted that the assessee’s activities are genuine, the cause for invoking provisions of section 10AA(3), effecting the cancellation of registration u/s 12A becomes nullified and therefore, considering the explanations and decisions in favour of various donors allegedly involved in the transactions of bogus donations who have granted donations to the assessee trust, we are of the opinion that the order of cancelation by ld. CIT(E) cannot survive, since the registration is granted to the assessee society having no change in its activities, byelaws and objects in a later year. We therefore, set aside the order of ld. CIT(E) and direct to restore registration u/s 12A of the society. In the result grounds raised in the present appeal are allowed. In the result, appeal no. 32/RPR/23019 of the assessee is allowed.

17 ITA Nos. 32 & 60/RPR/19 2. That on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Exemption) erred in not following the principles of natural justice while cancelling the approval granted to the appellant u/s 10(23C)(iv) of the Act.

18 ITA Nos. 32 & 60/RPR/19 reproduced relevant part of the statements recorded u/s 133A of the IT. Act and has concluded that the assessee societie’s activities are found to be not genuine, even the donations received and shown in its accounts are nothing but bogus accommodation entries. In light of such irregularities pointed out, the ld. CIT(E) considered that the assessee society is not entitled for approval u/s 10(23C)(vi) of the I.T. Act, 1961 and therefore, the approval granted u/s 10(23C)(vi) by the then ld. CIT(E), Raipur vide dated 22.09.2008 was withdrawn w.e.f 01.04.2010.

19 ITA Nos. 32 & 60/RPR/19 withdrawing the approval to the assessee society u/s 10(23C)(vi) dated 15.02.2019 and direct ld. CIT(E) to restore approval u/s 10(23C)(vi) to the assessee society. In the result ground of the appeal in the instant appeal of the assessee are allowed.

In the result, appeal no 60/RPR/2019 of the assessee is allowed.

Order pronounced in the court on 08/06/2023. Sd/- Sd/-

(RAVISH SOOD) (ARUN KHODPIA) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER रायपुर/Raipur; �दनांक Dated 08/06/2023 Ganesh Kumar, P.S(on tour) आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant- 1. ��यथ� / The Respondent- 2. 3. आयकर आयु�(अपील) / The CIT(A), 4. आयकर आयु�त / CIT 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाड� फाईल / Guard file. स�या�पत ��त //True Copy// आदेशानुसार/ BY ORDER,

(Assistant Registrar) आयकर अपील�य अ�धकरण, रायपुर/ITAT, Raipur

20 ITA Nos. 32 & 60/RPR/19

Date Initial 1. Draft dictated on 2. Draft placed before author 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member. 5. Approved Draft comes to the Sr.PS/PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the Sr.PS 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order.