Calcutta High Court
Commissioner Of Income Tax ... vs Vidya Bharati Society For ... on 19 January, 2022
Form No.(J2)
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
Present :
The Hon'ble JUSTICE T. S. SIVAGNANAM
And
The Hon'ble JUSTICE HIRANMAY BHATTACHARYYA
ITAT/21/2018
IA NO.GA/1/2018 (Old No.GA/457/2018)
COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA
VS
VIDYA BHARATI SOCIETY FOR EDUCATIONAL & SCIENTIFIC ADVANCEMENT
Appearance:
Mr. Tilak Mitra, Adv.
...for the appellant.
Mr. J.P. Khaitan, Sr. Adv.,
Mr. Pratyush Jhunjhunwala, Adv.
Ms. Swapna Das, Adv.
Mr. Siddhartha Das, Adv.
for the respondent.
Heard on : 19.01.2022
Judgment on : 19.01.2022
T.S. SIVAGNANAMM J. : This appeal of the revenue filed
under Section 260A of the Income Tax Act (the 'Act' in brevity)
is directed against the composite order dated 6th September,
2017 passed by the Income Tax Appellate Tribunal, B-Bench,
Kolkata (the 'Tribunal') in ITA No.1456/Kol/2016.
The revenue has raised the following substantial
questions of law for consideration:
(i) Whether in the facts and in the circumstances of the
case, the Learned Tribunal is justified in law and on
facts by holding that the assessee trust was not
engaged any money laundering activity?
(ii) Whether in the facts and circumstances of the case,
the Learned Tribunal is justified in law and on facts
in setting aside the order for cancellation of
registration under Section 12AA(3) of the Income Tax
Act, 1961?
We have heard Mr. Tilak Mitra, learned standing
counsel appearing for the appellant/revenue and Mr. J.P.
Khaitan, learned senior counsel appearing for the
respondent/assessee.
The short question which falls for consideration is
whether the Commissioner of Income Tax (Exemption) [CIT(E)] was
justified in cancelling the registration granted to the
assessee trust under Section 12A of the Act dated 6th September,
2017 by its order dated 6th May, 2016. The CIT(E) concluded that
that the activities of the trust are not genuine and they are
not being carried out in accordance with the declared objects
as contained in the deed of trust. The assessee trust is
running three schools and the first of such schools was
established in the year 1965 and the three schools are stated
to have on their roll more than 3,400 students and the schools
are recognised by the West Bengal Higher Secondary Board of
Education, Government of West Bengal. The allegation based on
which the proceedings were initiated for cancellation was that
the name of the assessee trust appeared in the list of bogus
donor as culled out from the statement recorded from one Sri
Rabindranath Lahiri, managing trustee of Batanagar Education
and Research Trust. Based on such allegation, show cause notice
dated 3rd December, 2015 was issued to the assessee proposing
cancellation of registration by invoking the provisions under
Section 12AA(3) of the Act. The CIT(E) placed heavy reliance on
the statement recorded by Sri Rabindranath Lahiri on 5th
January, 2016 and that despite opportunity being granted to the
assessee trust to cross-examine the said Mr. Lahiri, such
opportunity was not availed by the assessee and, therefore,
drew adverse inference and cancelled the registration. The
assessee preferred appeal before the Tribunal contending that
the order of cancellation of registration granted under Section
12A was in gross violation of the principles of natural justice
without disclosing the materials relied upon and without
affording reasonable/adequate opportunity to controvert or deal
with the same including by way of cross-examination. It was
further contended that the cancellation of registration with
retrospective effect from 1st April, 2011 was bad in law.
Further, it was contended that no adverse inference could have
been drawn against the assessee trust solely for the reason
that the assessee had not cross-examined said Mr. Lahiri as a
need to cross-examine him did not arise as the said Mr. Lahiri
has not made any adverse comment against the assessee trust or
its managing trustee or the other trustees. Further, the
assessee submitted that they have not given any corpus donation
to Batanagar Education and Research Trust and there was no
material available on record to show that the donation was
given by the assessee trust to the said trust and such amounts
were returned back to the assessee and without any material,
the CIT(E) has made a bald allegation against the assessee and
has also made an observation to the effect that the assessee
trust is engaged in money laundering. Further, it was argued
that the CIT(E) examined the president of the society Mr. Mukul
Agarwal. However, no question whatsoever was ever put to him
about the transaction with Batanagar Education and Research
Trust. Therefore, it was submitted that the cancellation of the
registration that too with retrospective effect is illegal.
Reliance was placed on the decision in the case of CIT Vs
Apeejay Education Society, reported in (2015) 59 taxmann.com
102 (Punjab & Haryana) and the decision in the case of CIT Vs.
Islamic Academy of Education, reported in (2015) 54 taxmann.com
255 (Karnataka). Reliance was placed on the decision of the
Tribunal in the case of Jha Educational Trust Vs. CIT(E) in ITA
No.931-933/Kol/2016 dated 17th March, 2017. The revenue has
sought to sustain the order passed by the CIT(E) by referring
the finding recorded therein. The Tribunal after examining the
entire evidence which was available on record has held that
there is no whisper about the assessee's society or its officer
bearers by the said Mr. Lahiri when statement was recorded from
him and, therefore, held that merely because the assessee did
not cross-examine said Mr. Lahiri, no adverse inference could
have been drawn. Furthermore, the Tribunal on facts found that
the CIT(E) had not brought any material on record linking
several persons either with the assessee's society or with the
office bearers of the assessee's society. It has also noted
that no questions were posed to the president of the assessee's
society with regard to the alleged transactions with Batanagar
Education and Research Trust. After having rendered such
findings on fact, the Tribunal found that there was no case
made out for invoking the power under Section 12AA(3) of the
Act. Further, the Tribunal also took note of the decision in
the case of Jha Educational Trust (supra) where also the
transaction with Batanagar Education and Research Trust was the
subject matter. In the said case, the Tribunal had extensively
gone through the factual materials and held that the activities
of the said trust cannot be said to be not genuine. Ultimately,
the appeal filed by the said assessee was allowed.
After elaborately hearing the learned counsel for the
parties and carefully perusing the materials placed on record,
we find that the entire issue involved in this appeal is
factual. As rightly pointed out by the Tribunal the CIT(E) has
not brought on record any statement made by the said Mr. Lahiri
which is adverse to the interest of the assessee trust. That
apart, there was no document or material available with the
CIT(E) to hold that the assessee had given donation to the
Batanagar Education and Research Trust during the relevant year
in question, namely, assessment year 2015-2016. Thus, in the
absence of any material, the Tribunal rightly concluded that
the allegations against the trust based on which registration
was cancelled were all bald allegations with nothing specific
against the assessee. It is further pointed out by the learned
senior counsel appearing for the respondent/assessee that the
revenue had filed an appeal as against the decision in the case
of Jha Educational Trust in ITAT/228/2018 which was dismissed
by this Court by judgment dated 28th January, 2019. Thus, for
all the above reasons, we hold that there is no question of law
much less the substantial question of law arising for
consideration in this appeal.
Accordingly, the appeal (ITAT/21/2018) fails and is
hereby dismissed.
With the dismissal of the appeal, the stay application
(GA/1/2018) stands closed.
(T. S. SIVAGNANAM, J.)
I agree.
(HIRANMAY BHATTACHARYYA, J.)
S.Das/sp3
