Commissioner Of Income Tax(Exemption), Kolkata v. Khaitan Foundation

ITAT/244/2018 IA No.GA/1/2018 (Old No.GA/2146/2018)IA No.GA/2/2018 (Old No.GA/2147/2018) IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE COMMISSIONER OF INCOME TAX(EXEMPTION), KOLKATA -Versus- KHAITAN FOUNDATION Appearance:Mr. Prithu Dudheria, Adv....for the appellant. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE HIRANMAY BHATTACHARYYA Date : 12[th] April, 2022. The Court : We have heard Mr. Prithu Dudheria, learnedstanding counsel appearing for the appellant/revenue. There is a delay of 36 days in filing the appeal. We have perused the affidavit filed in support of the applicationfor condonation of delay and we find that the reasons assignedtherein are satisfactory. However, we note that therespondent/assessee has not been served as of now. In anyevent, we are inclined to take up the main appeal forconsideration and we have heard the submissions of the learnedstanding counsel for the appellant. For such reasons, we exercise discretion and condonethe delay in filing the appeal. Accordingly, the application for condonation of delay (IA No.GA/1/2018 (old No.GA/2146/2018)is allowed. Re: ITAT/244/2018: This appeal filed by the revenue under Section 260A ofthe Income Tax Act, 1961 (the ‘Act’ in brevity) is directedagainst the order dated 19[th] January, 2018 passed by the IncomeTax Appellate Tribunal, “A” Bench, Kolkata (the ‘Tribunal’ inshort) ITA No.09/Kol/2017 for the assessment year 2014-15. The revenue has raised for the following substantialquestions of law for consideration: “a) Whether on the facts and in the circumstances of the casethe Learned Income Tax Appellate Tribunal, “A” Bench,Kolkata has erred in law in annulling the cancellation ofthe registration of the trust under Section 12AA(3) ofthe Income Tax Act, 1961 without considering the factthat the Assessee was found to have been indulged inillegal activity of money laundering which is not genuineand not being carried out in accordance with the objectof the trust ? b) Whether the impugned order is bad, arbitrary, illegalperverse and the same is nothing but a total non-application of mind of the Income Tax Appellate Tribunal,Kolkata and as such the same is liable to be set asideand/or quashed ? We have heard Mr. Prithu Dudheria, learned standingcounsel for the appellant/revenue. The short question involved in this appeal is whetherthe Commissioner of Income Tax (Exemption), Kolkata wasjustified in cancelling the registration granted to therespondent/assessee under Section 12AA of the Act. The basis of cancellation of registration was a statement recorded from oneAnand Agarwal, Managing Trustee of Gobind Ram, Goel CharitableTrust. Apart from the said statement there was no othermaterial adverse to the interest of the respondent/assesseeplaced for consideration before the Commissioner of Income Tax(Exemption). The statement so recorded from Shri Anand Agarwalwas subsequently retracted. The Tribunal, while testing thecorrectness of the order passed by the Commissioner, took noteof the settled legal principle that a statement made by a thirdparty during the course of survey operation is not binding onthe assessee and in this regard rightly placed reliance on thedecision of the Hon’ble Supreme Court in S Khadder Khan & Sonsreported in 352 ITR 480. Furthermore, the Tribunal examined thefacts of the case and found that no other adverse finding hasbeen recorded by the Commissioner with regard to the activitiesof the trust to be not in accordance with the object of thetrust. Nor there is any adverse finding recorded by theCommissioner as regards the genuinity of the activities of thetrust. These are all the relevant factors which need to betaken into consideration for the purpose of grantingregistration under Section 12AA of the Act. In absence of anyadverse material against the assessee on this aspect, theTribunal was fully justified in setting aside the order passedby the Commissioner of Income Tax (Exemption). Thus, we find no grounds to interfere with the orderpassed by the Tribunal. Accordingly, the appeal (ITAT/244/2018) fails and is dismissed. Consequently, the substantial questionsof law are answered against the revenue. In the result, the connected application for stay IANo.GA/2/2018 (Old No.GA/2147/2018) stands closed. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Pal/As.