Commissioner Of Income Tax ... vs Balaram Hanumandas Charitable ...
2022 Latest Caselaw 505 Cal/2

Form No.(J2)



                        IN THE HIGH COURT AT CALCUTTA
                      SPECIAL JURISDICTION (INCOME TAX)
                                ORIGINAL SIDE


Present :

THE HON'BLE JUSTICE T.S. SIVAGNANAM

                    A 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 revenue

under Section 260A of the Income Tax Act, 1961 (the 'Act' in

brevity) is directed against the order dated 15th September, 2017

passed 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 case and in law, the Learned Tribunal is right in quashing the order for cancellation of registration under Section 12AA(3) of the Income Tax Act, 1961 based on money laundering activities carried out by the assessee trust with Herbicure Healthcare Bio Herbal Research Foundation ignoring that such activities have been established in other similar basis ?

(ii) Whether on the facts and circumstances of the case and in law, the Learned Tribunal is perverse in law in holding that there is no allegations in the order of the Commissioner of Income Tax (Exemption), that the activities of the trust are not genuine or that activities are not carried out in accordance with the object of the trust particularly when the Commissioner of Income Tax (Exemption) has already given a finding that the activities of the trust are non-genuine?

We have heard Mr. P.K. Bhowmik, learned standing counsel

for the appellant/revenue and Mr. J.P. Khaitan, learned senior

standing counsel for the respondent/assessee.

On a reading of the substantial question of law (i) we

find that the revenue has mentioned the name of Herbicure

Healthcare Bio Herbal Research Foundation. However, on perusal of

the order of the Commissioner of Income Tax (Exemption), Kolkata

passed during December 2016 the allegation is against School of

Human Genetics and Population Health. Therefore, instead of

Herbicure Healthcare Bio Herbal Research Foundation, it has to be

mentioned as School of Human Genetics and Population Health.

The assessee was registered under Section 12A of the Act

by order dated 11th September, 1979. Pursuant to survey operations

conducted on School of Human Genetics and Population Health by the

investigation department, it was alleged that the said

organisation is engaged in money laundering and providing

accommodation entries to different individuals and orgnisations.

This was done by adopting two modes, namely, one accepting

donation and returning the same to the donor through web of

financial transaction and retaining the commission and the second

one is accepting money by cash or financial transaction and giving

donation after retaining the commission. The allegation against

the assessee was that they received donations through banking

channel and returned the same in cash to the donor. In this

regard, certain statements were referred to by placing reliance on

those statements and also that the approval granted in favour of

the School of Human Genetics and Population Health had been

withdrawn under Section 35(1)(2i) of the Act. The CIT(E) concluded

that 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 raised

various grounds on facts and placed reliance on the decision of

the tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors

Trust Vs. CIT(Ex) in ITA 1165/Kol/2016 dated 3rd May, 2017. The

Tribunal after examining the facts noted that there was a specific

request made by the assessee for granting opportunity of cross-

examination of the persons whose statements were referred to by

the CIT(E). When the registration was cancelled and having found

that such opportunity was not granted, the tribunal held that it

is in violation of principles of natural justice. Further, the

tribunal noted that the decision of the Hon'ble Supreme Court in

CIT Vs. S. Khader Khan Son 352 ITR 480 (SC) wherein it was held

that Section 133A of the Act does not empower the income tax

authorities to examine any person on oath, hence, any such

statement has no evidentiary value and any admission made during

such statement cannot, by itself, be made the basis for addition.

Further, the tribunal noted the decision in the case of Andaman

Timber Industries Vs. Commissioner of Central Excise, Kolkata - II

(2015) 62 taxmann.com 3 (SC) for the proposition that when the

statements of witnesses are made the basis for a demand, not

allowing the assessee to cross-examine the witnesses, is a serious

flaw which makes the order a nullity, as it amounts to violation

of principles of natural justice. Further, on facts, the tribunal

found that there is no evidence on record to show any connection

between the assessee and the brokers and in the absence of any

evidence it is not possible to come to any conclusion that the

assessee indulged in money laundering and the donation as received

by them was a bogus donation. The tribunal also noted that the

facts of the assessee's case were identical to that of the case in

Sri Mayapur Dham Pilgrim and Visitors Trust. Furthermore, the

tribunal noted that the CIT(E) did not dispute the fact that the

assessee was running an educational institution in the State of

Haryana imparting education to 2993 students and during the year

2013-14 they have received donation of Rs.7,71,02,000/- from 172

parties which were placed in the form of paper book before the

tribunal. Further, the tribunal held that CIT(E) has not doubted

the genuineness of the other donations except for two parties.

Further, with regard to the genuineness of the activities of the

assessee, the tribunal noted that the assessee was catering to the

need for high quality English medium school for around 100

villages at Bahal and they have ventured into the field technical

education for establishing an engineering college apart from

running fully free school since 2010 where under privileged

students of the society are imparted free education. That apart,

the tribunal also noted that the CIT(E) has not doubted the

charitable activities done by the assessee trust either to be not

genuine or not being carried on in accordance with the objects for

which the trust was formed. The facts of the case on hand are more

or less identical to that of the facts in Mayapur Dham Pilgrim and

Visitors Trust. Challenging the order passed by the tribunal in

favour of the said trust, the revenue was on appeal before us in

ITAT 312/2017 and by judgment dated 16th February, 2022 the appeal

filed by the revenue was dismissed and the order passed by the

tribunal was confirmed. Thus, for all the above reasons, we are of

the view that the tribunal has rightly granted relief to the

respondent/assessee.

In the result, the appeal filed by the revenue stands

dismissed and the substantial questions of law are answered

against the revenue.

With the dismissal of the appeal, the stay application

stands closed.

(T.S. SIVAGNANAM, J.)

I agree.

(HIRANMAY BHATTACHARYYA, J.)

S.Das/pa.