Itat/63/2018 Of Comm Of Income Tax Exemptio0N) v. Balaram Hanumandas Charitable Trust

Form No.(J2) IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE Present : THE HON’BLE JUSTICE T.S. SIVAGNANAMA N D THE HON’BLE JUSTICE HIRANMAY BHATTACHARYYA ITA/63/2018 IA NO.GA/1/2018 (Old No.GA/616/2018) COMMISSIONER OF INCOME TAX (EXEMPTION) KOLKATA -Versus- BALARAM HANUMANDAS CHARITABLE TRUST For the Appellant: Mr. P.K. Bhowmik, Adv. For the Respondent: Mr. J.P. Khaitan, Sr. Adv.Mr. Pratyush Jhunjhunwala, Adv.Mr. Indranil Banerjee, Adv.Mr. S. Rudra, Adv. Heard on : 16.02.2022 Judgment on : 16.02.2022 T. S. SIVAGANANAM, J. : This appeal filed by the revenueunder Section 260A of the Income Tax Act, 1961 (the ‘Act’ inbrevity) is directed against the order dated 15[th] September, 2017passed by the Income Tax Appellate Tribunal, “B” Bench, Kolkata (the ‘Tribunal’ in short) in ITA No.431/Kol/2017 for the assessment year 2012-13. The revenue has raised the following substantial questions of law: (i)Whether on the facts and circumstances of the caseand in law, the Learned Tribunal is right inquashing the order for cancellation ofregistration under Section 12AA(3) of the IncomeTax Act, 1961 based on money laundering activitiescarried out by the assessee trust with HerbicureHealthcare Bio Herbal Research Foundation ignoringthat such activities have been established inother similar basis ? (ii)Whether on the facts and circumstances of the caseand in law, the Learned Tribunal is perverse inlaw in holding that there is no allegations in theorder of the Commissioner of Income Tax(Exemption), that the activities of the trust arenot genuine or that activities are not carried outin accordance with the object of the trustparticularly when the Commissioner of Income Tax(Exemption) has already given a finding that theactivities of the trust are non-genuine? We have heard Mr. P.K. Bhowmik, learned standing counselfor the appellant/revenue and Mr. J.P. Khaitan, learned seniorstanding counsel for the respondent/assessee. On a reading of the substantial question of law (i) wefind that the revenue has mentioned the name of Herbicure Healthcare Bio Herbal Research Foundation. However, on perusal ofthe order of the Commissioner of Income Tax (Exemption), Kolkatapassed during December 2016 the allegation is against School ofHuman Genetics and Population Health. Therefore, instead ofHerbicure Healthcare Bio Herbal Research Foundation, it has to bementioned as School of Human Genetics and Population Health.The assessee was registered under Section 12A of the Actby order dated 11[th] September, 1979. Pursuant to survey operationsconducted on School of Human Genetics and Population Health by theinvestigation department, it was alleged that the saidorganisation is engaged in money laundering and providingaccommodation entries to different individuals and orgnisations.This was done by adopting two modes, namely, one acceptingdonation and returning the same to the donor through web offinancial transaction and retaining the commission and the secondone is accepting money by cash or financial transaction and givingdonation after retaining the commission. The allegation againstthe assessee was that they received donations through bankingchannel and returned the same in cash to the donor. In thisregard, certain statements were referred to by placing reliance onthose statements and also that the approval granted in favour ofthe School of Human Genetics and Population Health had beenwithdrawn under Section 35(1)(2i) of the Act. The CIT(E) concludedthat the activities of the assessee are not genuine and are not being carried out in accordance with the objectives of the trust.The assessee preferred appeal before the tribunal and raisedvarious grounds on facts and placed reliance on the decision ofthe tribunal in the case of Sri Mayapur Dham Pilgrim and VisitorsTrust Vs. CIT(Ex) in ITA 1165/Kol/2016 dated 3[rd] May, 2017. TheTribunal after examining the facts noted that there was a specificrequest made by the assessee for granting opportunity of cross-examination of the persons whose statements were referred to bythe CIT(E). When the registration was cancelled and having foundthat such opportunity was not granted, the tribunal held that itis in violation of principles of natural justice. Further, thetribunal noted that the decision of the Hon’ble Supreme Court inCIT Vs. S. Khader Khan Son 352 ITR 480 (SC) wherein it was heldthat Section 133A of the Act does not empower the income taxauthorities to examine any person on oath, hence, any suchstatement has no evidentiary value and any admission made duringsuch statement cannot, by itself, be made the basis for addition.Further, the tribunal noted the decision in the case of AndamanTimber Industries Vs. Commissioner of Central Excise, Kolkata – II(2015) 62 taxmann.com 3 (SC) for the proposition that when thestatements of witnesses are made the basis for a demand, notallowing the assessee to cross-examine the witnesses, is a seriousflaw which makes the order a nullity, as it amounts to violationof principles of natural justice. Further, on facts, the tribunal found that there is no evidence on record to show any connectionbetween the assessee and the brokers and in the absence of anyevidence it is not possible to come to any conclusion that theassessee indulged in money laundering and the donation as receivedby them was a bogus donation. The tribunal also noted that thefacts of the assessee’s case were identical to that of the case inSri Mayapur Dham Pilgrim and Visitors Trust. Furthermore, thetribunal noted that the CIT(E) did not dispute the fact that theassessee was running an educational institution in the State ofHaryana imparting education to 2993 students and during the year2013-14 they have received donation of Rs.7,71,02,000/- from 172parties which were placed in the form of paper book before thetribunal. Further, the tribunal held that CIT(E) has not doubtedthe genuineness of the other donations except for two parties.Further, with regard to the genuineness of the activities of theassessee, the tribunal noted that the assessee was catering to theneed for high quality English medium school for around 100villages at Bahal and they have ventured into the field technicaleducation for establishing an engineering college apart fromrunning fully free school since 2010 where under privilegedstudents of the society are imparted free education. That apart,the tribunal also noted that the CIT(E) has not doubted thecharitable activities done by the assessee trust either to be notgenuine or not being carried on in accordance with the objects for which the trust was formed. The facts of the case on hand are moreor less identical to that of the facts in Mayapur Dham Pilgrim andVisitors Trust. Challenging the order passed by the tribunal infavour of the said trust, the revenue was on appeal before us inITAT 312/2017 and by judgment dated 16[th] February, 2022 the appealfiled by the revenue was dismissed and the order passed by thetribunal was confirmed. Thus, for all the above reasons, we are ofthe view that the tribunal has rightly granted relief to therespondent/assessee. In the result, the appeal filed by the revenue standsdismissed and the substantial questions of law are answeredagainst the revenue.With the dismissal of the appeal, the stay applicationstands closed. (T.S. SIVAGNANAM, J.) I agree. (HIRANMAY BHATTACHARYYA, J.) S.Das/pa.