Ememption v. Mitra Parishad

ITAT/91/2018 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income Tax)ORIGINAL SIDE COMMISSIONER OF INCOME TAX, (EMEMPTION) -Versus- MITRA PARISHAD Appearance:Mr. Vipul Kundalia, Adv.Mr. Anurag Roy, Adv....for the appellant. Mr. Bhaskar Sengupta, Adv....for the respondent. BEFORE: The Hon’ble JUSTICE T.S. SIVAGNANAM -And- The Hon’ble JUSTICE SUPRATIM BHATTACHARYA Date : 12[th] September, 2022. The Court: This appeal filed by the revenue underSection 260A of the Income Tax Act, 1961 (the ‘Act’ for brevity) is directed against the order dated 6[th] September,2017 passed by the Income Tax Appellate Tribunal, “A” Bench,Kolkata (the Tribunal) in ITA No.2434/Kol/2016. The revenue has raised the following substantialquestion of law for consideration: (i)Whether on the facts and circumstances of thecase and in law, the Learned Tribunal is right in quashing the order for cancellation ofregistration under Section 12AA(3) of theIncome Tax Act, 1961 based on money launderingactivities carried out by the assessee withHerbicure Health Care Bio Herbal ResearchFoundation ignoring that such activities havebeen established in other similar case? (ii)Whether on the facts and circumstances of thecase and in law, the Learned Tribunal is rightin quashing the order on the basis of perceivedprocedural lapses ignoring truthfulness offact?case and in law, the Learned Tribunal is rightin quashing the order on the basis of perceivedprocedural lapses ignoring truthfulness offact? (iii)Whether on the facts and circumstances of thecase and in law, the Learned Tribunal isperverse in law in holding that there is noallegations in the impugned order nor findingthat the activities of the trust are notgenuine or that activities are not beingcarried out in accordance with the object ofthe trust particularly when the Commissioner ofIncome Tax (Exemption) has already given afinding that the activities of the trust arenon-genuine?case and in law, the Learned Tribunal isperverse in law in holding that there is noallegations in the impugned order nor findingthat the activities of the trust are notgenuine or that activities are not beingcarried out in accordance with the object ofthe trust particularly when the Commissioner ofIncome Tax (Exemption) has already given afinding that the activities of the trust arenon-genuine? We have heard Mr. Vipul Kundalia, learned seniorcounsel assisted by Mr. Anurag Roy, learned advocate for theappellant/revenue and Mr. Bhaskar Sengupta, learned advocatefor the respondent/assessee. The short issued involved in this appeal is whetherthe Commissioner of Income Tax (Exemption) [CIT(E)] was We have heard Mr. Vipul Kundalia, learned seniorcounsel assisted by Mr. Anurag Roy, learned advocate for theappellant/revenue and Mr. Bhaskar Sengupta, learned advocatefor the respondent/assessee. The short issued involved in this appeal is whetherthe Commissioner of Income Tax (Exemption) [CIT(E)] was justified in cancelling the registration granted in favour ofthe respondent society that too with retrospective effect. Thelearned tribunal has allowed the appeal filed by the respondenttaking note of the fact that the opportunity to cross-examinethe persons who were in charge of the company which hadextended a donation of Rs.50 lacs to the assessee was fatal.That apart, on facts the tribunal found that the amount ofRs.50 lacs was being utilised for purchase of property and,therefore, even though the receipt of donation has to betreated as unexplained receipt of the assessee as per Section68, the addition cannot be made because the assessee itself hasapplied the entire receipt for the objects of the assesseesociety. Further, the learned tribunal after taking note of thevarious decisions of the High Court, on facts, found that theassessee has shown the donation as corpus fund and had appliedthe same by advance money to the land and building which wasshown in the balance-sheet as at 31.3.2011 which was placedbefore the learned tribunal in the form of a paper book. Thelearned tribunal also found that the application of the saidfund was admittedly for a charitable purpose in tune with theobjects of the assessee society. Furthermore, the tribunalnoted that the revenue did not dispute the fact that thedonations received by the respondent were not applied forcharitable purposes. Thus, on the grounds mentioned in the order the tribunal came to the conclusion that the activitiesof the assessee society cannot be terminated to be ingenuine orit cannot be held that the their activities are not inaccordance with the objects of the assessee trust. Mr. Kundalia, learned counsel for theappellant/revenue placed reliance on the decision of theHon’ble Supreme Court in the case of Commissioner of Income Tax(Exemptions) Kolkata Vs. Batanagar Education and ResearchTrust, reported in (2021) 9 SCC 439. On going through the saiddecision we find that the same is factually distinguishable asin the said case the Hon’ble Supreme Court brought out theanswers which were culled out from the managing trustee of thesaid trust. A questionnaire had been given by the department.In the case on hand the tribunal has noted that in spite ofspecific request made by the assessee for cross-examination oftwo persons, namely, Sri Swapan Ranjan Dasgupta and Sri KishenBhawshingka which was rejected on the ground that the assesseesociety has indulged in ingenuine activities. In fact,substantial part of the order passed by the learned tribunalhas been devoted on the correctness of denial to afford anopportunity to cross-examine those two persons.Thus, we find that the tribunal has considered thefactual position and granted relief to the assessee. Thus, the appeal is dismissed and the substantialquestions are answered against the revenue. (T.S. SIVAGNANAM, J.) (SUPRATIM BHATTACHARYA, J.) As//S.Das