Batanagar Education & Research Trust v. CIT (Exemptions) (ITAT Kolkata)
It is clear from the statements of Secretary and Treasurer of SHG and PH that they were accepting cash and giving bogus donations. In the statement recorded in the survey conducted in the case of SHG and PH on 27-1-2015, it was explained that SHG&PH’s source of income was the money received in the form of donations from corporate bodies as well as from individuals. In the said statement it was explained that there were about nine brokers who used to bring donations in the form of cheque/RTGS to SHG and PH. The Donations received would be returned by issue of cheque/RTGS in the name of companies or organization specified by the nine brokers. SHG and PH would receive 7 or 8% of the donations amount. It was also stated in such statement that since the assessee was entitled to exemption under section 80G and under section 35 of the Act their organization was chosen by the brokers for giving donations to SHG and PH as well as for giving donations by SHG and PH. Till now the assessee’s name did not figure in the statement recorded on 27-1-2015. However, pursuant to the Survey in the case of SHG & PH proceedings for cancellation of registration under section 12A of the Act granted to them were initiated. In such proceedings, Smt. Samadrita Mukherjee Sardar (in a letter dated 24-8-2015) had given a list of donations which were given by them after getting cash of equivalent amount. It is not disputed that the name of the assessee figures in the said list and the fact that SHG & PH has admitted that Donations given by SHG and PH to the assessee were against cash received from them in Financial Year 2012-13 of a sum of Rs. 1,23,87,550. Even at this stage all admissions were by third parties and the same were not binding on the assessee. However in a survey conducted in the case of the assessee on 24-8-2015, the Managing Triustee of the assessee admitted that it gave cash and got back donations. We have already extracted the statement given by the Managing Trustee. Even in the proceedings for cancellation of registration, the assessee has not taken any stand on all the evidence against the assessee. In such circumstances, we are of the view that the conclusions drawn by the CIT(E) in the impugned order which we have extracted in the earlier part of the order are correct and calls for no interference. It is clear from the evidence on record that the activities of the assessee were not genuine and hence their registration is liable to be cancelled under section 12AA(3) of the Act, and was rightly cancelled by the CIT(E). We therefore uphold his orders and dismiss both the appeals by the assessee.
Full Text of the ITAT Order is as follows:-
These are appeals by the assessee against two orders both dated 25-2-2016 of C.I.T. (Exemptions), Kolkata (i) passed under section 12AA(3) of the Income Tax Act, 1961 withdrawing/cancelling the registration with effect from 1-4-2012 granted to the assessee under section 12A of the Act and (ii) withdrawing the approval granted to the assessee under section 80G(5) of the Act.
2. The assessee is a trust. The objects of the Trust were providing relief to the poor and needy, medical relief, education and advancement of any other objects of general public utility. The fact that the objects of the trust are charitable in nature is not disputed, as the revenue has in an order dated 6-8-2010 of DIT(E), Kolkata granted registration to the assessee under section 12A of the Act and by another order dated 31-8-2010 also granted approval under section 80G(5) of the Act to the assessee.
3. The C.I.T.(Exemptions), Kolkata issued a show cause notice dt. 4-12-2015 to the assessee proposing to cancel the registration granted to the assessee under section 12A of the Act for the reason that in a survey conducted under section 133A of the Act, on an entity by name School of Human Genetics and Population Health, Kolkata (SHG and PH) by the Investigation Wing of Kolkata on 27-1-2015 it transpired that the objects of the assessee were not genuine and the trust is not carrying out its activities in accordance with the objects of the Trust. It has further been mentioned in the show cause notice that during the survey operation statement of Smt. Moumita Raghavan, Treasurer of SHG and PH was recorded under oath and in her statement she admitted that SHG and PH was in the business of providing book entry of Donations to different individuals and organizations. It has further been mentioned in the show cause notice that the assessee has received donation of Rs. 1,23,87,550 in assessment year 2013-14 from the aforesaid organization and since it transpired that the said organisation was providing accommodation entries of donations, received, the donation of Rs. 1,23,87,550 received by the assessee from the said organization was also bogus. The CIT(Exemptions) accordingly proposed to invoke his powers under section 12AA(3) of the Act to cancel the registration granted to the assessee.
4. The CIT(E), in his impugned order has made a reference to the statement recorded in the course of survey under section 133A of the Act of Smt. Samadrita Mukherjee Sardar, Secretary of School of Human Genetics and Population Health (SHG&PH) and the statement of Smt. Moumita Raghavan, Treasurer of SHG&PH. These statements are reproduced in para 3.1 and 3.2 of the impugned order of the CIT(Exemptions). The gist of the statement of Smt. Moumita Raghavan is that SHG&PH’s source of income was the money received in the form of donations from corporate bodies as well as from individuals. She in her statement explained that there were about nine brokers who used to bring donations in the form of cheque/RTGS to SHG and PH. The Donations received would be returned by issue of cheque/RTGS in the name of companies or organization specified by the nine brokers. The assessee would receive 7 or 8% of the donations amount. Her further statement was that since the assessee was entitled to exemption under section 80G and under section 35 of the Act their organization was chosen by the brokers for giving donations to SHG and PH as well as for giving donations by SHG and PH. The gist of the statement of Smt. Samadrita Mukherjee Sardar, Secretary of SHG&PH was also identical. In reply to question no.13 as to how the money received as donations are given back, she explained that cheques are issued in the names of various companies/organizations specified by the brokers and the sums so returned are shown as expenses in the books of SHG&PH.
5. Pursuant to the Survey in the case of SHG & PH proceedings for cancellation of registration under section 12A of the Act granted to them were initiated. In such proceedings, Smt. Samadrita Mukherjee Sardar (in a letter dated 24-8-2015) had given a list of donations and the source of those donations were given by her as follows :–
“This is to confirm that donations paid by our society to various trusts/societies under the head research & development expenses in our income & Expenditure Account for the respective years. However, while preparing the revised account filed before the Hon’ble Settlement Commission, Kolkata these donations have been shown as parts of refund made against donations received.”
6. It is not disputed that the name of the assessee figures in the said list and the fact that SHG & PH has admitted that Donations given by SHG and PH to the assessee were against cash received from them in Financial Year 2012-13 of a sum of Rs. 1,23,87,550.
7. Based on the Survey in the case of SHG & PH and the admission of SHG & PH that the assessee was also a person who gave cash and got donations in return, a survey under section 133A of the Act was conducted on 3-9-2015 in the case of the assessee also. In the course of such survey the statement of Shri Rabindranath Lahiri, Managing Trustee of the assessee was recorded. He in his statement admitted that the assessee paid cash and got donations in return. The following were the relevant question & answer in the statement recorded on the aspect of bogus donations :–
