Commissioner Of Income Tax (Exemptions), Kolkata v. Vidya Bharati Society For Educational & Scientific Advancement

Form No.(J2) ORDER SHEETIN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE Present : The Hon'ble JUSTICE T. S. SIVAGNANAM And The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA ITAT/21/2018 IA NO.GA/1/2018 (Old No.GA/457/2018) COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA VS VIDYA BHARATI SOCIETY FOR EDUCATIONAL & SCIENTIFIC ADVANCEMENT Appearance:Mr. Tilak Mitra, Adv.…for the appellant.Mr. J.P. Khaitan, Sr. Adv.,Mr. Pratyush Jhunjhunwala, Adv.Ms. Swapna Das, Adv.Mr. Siddhartha Das, Adv.for the respondent. Heard on : 19.01.2022Judgment on : 19.01.2022 T.S. SIVAGNANAMM J. : This appeal of the revenue filed under Section 260A of the Income Tax Act (the ‘Act’ in brevity) is directed against the composite order dated 6[th] September,2017 passed by the Income Tax Appellate Tribunal, B-Bench,Kolkata (the ‘Tribunal’) in ITA No.1456/Kol/2016. The revenue has raised the following substantial questions of law for consideration: (i)Whether in the facts and in the circumstances of thecase, the Learned Tribunal is justified in law and onfacts by holding that the assessee trust was notengaged any money laundering activity? (ii)Whether in the facts and circumstances of the case,the Learned Tribunal is justified in law and on factsin setting aside the order for cancellation ofregistration under Section 12AA(3) of the Income TaxAct, 1961? We have heard Mr. Tilak Mitra, learned standingcounsel appearing for the appellant/revenue and Mr. J.P.Khaitan, learned senior counsel appearing for the respondent/assessee. The short question which falls for consideration iswhether the Commissioner of Income Tax (Exemption) [CIT(E)] wasjustified in cancelling the registration granted to theassessee trust under Section 12A of the Act dated 6[th] September,2017 by its order dated 6[th] May, 2016. The CIT(E) concluded thatthat the activities of the trust are not genuine and they arenot being carried out in accordance with the declared objects as contained in the deed of trust. The assessee trust isrunning three schools and the first of such schools wasestablished in the year 1965 and the three schools are statedto have on their roll more than 3,400 students and the schoolsare recognised by the West Bengal Higher Secondary Board ofEducation, Government of West Bengal. The allegation based onwhich the proceedings were initiated for cancellation was thatthe name of the assessee trust appeared in the list of bogusdonor as culled out from the statement recorded from one SriRabindranath Lahiri, managing trustee of Batanagar Educationand Research Trust. Based on such allegation, show cause noticedated 3[rd] December, 2015 was issued to the assessee proposingcancellation of registration by invoking the provisions underSection 12AA(3) of the Act. The CIT(E) placed heavy reliance onthe statement recorded by Sri Rabindranath Lahiri on 5[th]January, 2016 and that despite opportunity being granted to theassessee trust to cross-examine the said Mr. Lahiri, suchopportunity was not availed by the assessee and, therefore,drew adverse inference and cancelled the registration. Theassessee preferred appeal before the Tribunal contending thatthe order of cancellation of registration granted under Section12A was in gross violation of the principles of natural justicewithout disclosing the materials relied upon and withoutaffording reasonable/adequate opportunity to controvert or dealwith the same including by way of cross-examination. It was further contended that the cancellation of registration withretrospective effect from 1[st] April, 2011 was bad in law.Further, it was contended that no adverse inference could havebeen drawn against the assessee trust solely for the reasonthat the assessee had not cross-examined said Mr. Lahiri as aneed to cross-examine him did not arise as the said Mr. Lahirihas not made any adverse comment against the assessee trust orits managing trustee or the other trustees. Further, theassessee submitted that they have not given any corpus donationto Batanagar Education and Research Trust and there was nomaterial available on record to show that the donation wasgiven by the assessee trust to the said trust and such amountswere returned back to the assessee and without any material,the CIT(E) has made a bald allegation against the assessee andhas also made an observation to the effect that the assesseetrust is engaged in money laundering. Further, it was arguedthat the CIT(E) examined the president of the society Mr. MukulAgarwal. However, no question whatsoever was ever put to himabout the transaction with Batanagar Education and ResearchTrust. Therefore, it was submitted that the cancellation of theregistration that too with retrospective effect is illegal.Reliance was placed on the decision in the case of CIT VsApeejay Education Society, reported in (2015) 59 taxmann.com102 (Punjab & Haryana) and the decision in the case of CIT Vs.Islamic Academy of Education, reported in (2015) 54 taxmann.com 255 (Karnataka). Reliance was placed on the decision of theTribunal in the case of Jha Educational Trust Vs. CIT(E) in ITANo.931-933/Kol/2016 dated 17[th] March, 2017. The revenue hassought to sustain the order passed by the CIT(E) by referringthe finding recorded therein. The Tribunal after examining theentire evidence which was available on record has held thatthere is no whisper about the assessee’s society or its officerbearers by the said Mr. Lahiri when statement was recorded fromhim and, therefore, held that merely because the assessee didnot cross-examine said Mr. Lahiri, no adverse inference couldhave been drawn. Furthermore, the Tribunal on facts found thatthe CIT(E) had not brought any material on record linkingseveral persons either with the assessee’s society or with theoffice bearers of the assessee’s society. It has also notedthat no questions were posed to the president of the assessee’ssociety with regard to the alleged transactions with BatanagarEducation and Research Trust. After having rendered suchfindings on fact, the Tribunal found that there was no casemade out for invoking the power under Section 12AA(3) of theAct. Further, the Tribunal also took note of the decision inthe case of Jha Educational Trust (supra) where also thetransaction with Batanagar Education and Research Trust was thesubject matter. In the said case, the Tribunal had extensivelygone through the factual materials and held that the activities of the said trust cannot be said to be not genuine. Ultimately,the appeal filed by the said assessee was allowed. of the said trust cannot be said to be not genuine. Ultimately,the appeal filed by the said assessee was allowed. After elaborately hearing the learned counsel for theparties and carefully perusing the materials placed on record,we find that the entire issue involved in this appeal isfactual. As rightly pointed out by the Tribunal the CIT(E) hasnot brought on record any statement made by the said Mr. Lahiriwhich is adverse to the interest of the assessee trust. Thatapart, there was no document or material available with theCIT(E) to hold that the assessee had given donation to theBatanagar Education and Research Trust during the relevant yearin question, namely, assessment year 2015-2016. Thus, in theabsence of any material, the Tribunal rightly concluded thatthe allegations against the trust based on which registrationwas cancelled were all bald allegations with nothing specificagainst the assessee. It is further pointed out by the learnedsenior counsel appearing for the respondent/assessee that therevenue had filed an appeal as against the decision in the caseof Jha Educational Trust in ITAT/228/2018 which was dismissedby this Court by judgment dated 28[th] January, 2019. Thus, forall the above reasons, we hold that there is no question of lawmuch less the substantial question of law arising forconsideration in this appeal. Accordingly, the appeal (ITAT/21/2018) fails and ishereby dismissed. With the dismissal of the appeal, the stay application(GA/1/2018) stands closed. (T. S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) S.Das/sp3