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13-06-2019, Urmila Devi Charitable, Section 12AA(3), 12AA, Tribunal Delhi

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3 months 6 days ago #9743 by amit
Section - 12AA(3), 12AA, 11, 13, 132(4)
Order Date - 13-06-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Urmila Devi Charitable Trust
Respondent - CIT
Justice - G.D.AGRAWAL VP & SUCHITRA KAMBLE JM
Citation - 619Taxpundit159
Appeal No. - ITA No.4136/Del/2017
Asstt. Year - 2011-12

Order

PER : G. G D.ARAWAL, D. R L VP

This appeal by the assessee for the assessment year 2011-12 is directed against the order of learned Commissioner of Income Tax (Exemptions), Lucknow dated 22nd April, 2016.

2. The assessee has raised the following grounds of appeal :-

“1. The order dated 22.04.2016 passed by the ld. Commissioner of Income-tax (Exemptions) cancelling registration of the appellant u/s 12AA of the Income-tax Act, 1961 w.e.f. 01.04.2010 is bad in law and on facts.

2. (i) That the reasons given for cancellation of registration u/s 12AA(3) of the Act are contrary to law and facts since the appellant being a trust exists solely for educational, medical aid and other charitable purposes and not for the purpose of profit.

(ii) The ld.CIT(Exemptions) has erred in challenging the genuineness of the activities of the trust by stating that the said activities are not being carried out in accordance of the object of the trust.

3. (i) The ld. Commissioner of Income-tax (Exemptions) has erred in cancelling the registration of the applicant on the ground that applicant has received voluntary donation in exchange of cash and was not justified in stating without any basis that the applicant is not doing any charity but it is making clear profits.

(ii) The Ld.CIT(Exemptions) has erred in cancelling the registration of the trust on the ground of unverifiable donation of Rs.85,00,000/- without confronting the
assessee with the evidence he purportedly had and hence ignoring the principles of natural justice.

(iii) That the ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without providing the opportunity of cross examination to the appellant.

4. The Ld. Commissioner of Income-tax (Exemptions) was not justified in cancelling the registration without giving any meaningful opportunity to the appellant to show cause.

5. The appellant craves leave to add, amend or modify any ground before or at the time of hearing of the appeal.”

3. At the time of hearing before us, the learned counsel for the assessee argued at length which can be summarized as below.

4. That learned CIT(Exemptions) cancelled the registration granted under Section 12AA(3) on the allegation that the assessee had received the donation of `85 lakhs in lieu of cash from M/s Herbicure Healthcare Bio-Herbal Research Foundation (hereinafter referred to as HHBRF) of Kolkata during the assessment year 2011-12. The above allegation is based upon some information claimed to have been received from CIT(Exemptions), Kolkata and also on the basis of alleged statement of the Director of HHBRF. However, despite the assessee’s specific request, neither the material claimed to have been received from CIT(Exemptions), Kolkata nor the copy of statement of the Director of HHBRF was supplied to the assessee. It is a settled law that any evidence collected behind the back of the assessee cannot be utilized against the assessee unless the copy of the same is supplied to the assessee. Similarly, any statement recorded behind the back of
the assessee cannot be used against the assessee unless the copy of such statement is supplied to the assessee and the assessee is also allowed an opportunity to cross-examine the said person. In support of this contention, he relied upon the decision of Hon’ble Apex Court in the case of M/s Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II - 281 CTR 241.

5. Learned counsel further stated that as per Section 12AA(3), where a trust has been granted registration, it can be revoked by this Section only when the Commissioner is satisfied that the activities of such trust or institution are not genuine or not being carried out inaccordance with the objects of the trust or the institution. That in this case, none of these two conditions is satisfied. Learned CIT(Exemptions) first made an allegation that assessee has received donation of `85 lakhs by paying cash to HHBRF and then based upon the said allegation, further presumed that the assessee trust is carrying out some business outside the books and therefore, the activities of the assessee are not being carried out in accordance with the objects of the society. He stated that the entire order of learned CIT is based upon presumptions and suspicion without giving any specific finding or any specific instance where the assessee carried out any activity which is outside the purview of the trust or the institution.

6. Learned counsel further argued that learned CIT(Exemptions) issued notice for cancellation of registration on 25th January, 2016 but the registration was cancelled with retrospective effect from 1st April, 2010. This act of the Assessing Officer is contrary to the decision of Hon'ble Jurisdictional High Court in the case of ACIT Vs. Agra Development Authority – [2018] 407 ITR 562 (Allahabad). He, therefore, stated that the order of the CIT passed under Section 12AA(3) may be cancelled.

7. Learned CIT-DR, on the other hand, relied upon the order of learned CIT(Exemptions) and he stated that the CIT, after considering the evidences on record with him, has arrived at the conclusion that the assessee was earning income outside the books. Obviously, such income could have been earned from the activity which is not as per the object of the trust. Therefore, learned CIT(Exemptions) was fully justified in withdrawing the exemption granted to the assessee. He has also relied upon the decision of Hon’ble Apex Court in the case of ITO Vs. M. Pirai Choodi – [2011] 334 ITR 262 (SC). In addition to above, learned CIT-DR also filed written submissions, which read as under :-

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