TaxTMI 
TaxTMI 
2017 (10) TMI 527
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....ng on the judgements which in fact supported that on the facts and circumstances of the case, cross examination was to be allowed and by denying the same the order has become bad in law. 3. For that the Ld C.I.T(Exemption) erred in cancelling the Registration of the Trust U/s. 12AA(3) of the I.T. Act, 1961 holding that the activities of the assessee were not genuine and were not being carried out in accordance with the objective of the trust when the object are being carried on accordance with the objects and there was no such finding except that the assessee paid the alleged bogus donations 4. For that the Ld.C.I.T(Exemption) erred in cancelling the registration u/s.12AA(3) only on the around that the assessee received cash in exchange donation without any evidence that the assessee had received cash for payment donation. 5. For that the Ld. C.I.T(Exemption) erred in applying the provisions sec. 12AA(3) ignoring various evidences on assessment records where from it, evident that the assessee Trust was engaged in charitable activities, the donation even if treated as bogus may not have been treated as application of income but on that registration cannot ....
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....nations were received from different donors including persons associated with our group concern. From AY 2013-14 to AY 2015-16 the unaccounted profit earned by different concerns of our group as mentioned in Ans 3 was pumped in, in the form of corpus donation. In the three (3) years from AY 2013-14 to A.Y 2015-16 the entire donation of quantum of Rs. 10,01,27,103/- (Rupees ten crore one lakh twenty seven thousand and hundred and three) was pumped in form the unaccounted income of our group concerns. Q9. How was the process of such bogus corpus donation managed by you? A9. Sri Gaurav Agarwal, M:9830283320, approached us for providing accommodation entry so that the unaccounted income of the different concerns of our group could be pumped in the trust in form of corpus donation. We paid in cash and received the money through cheque. For this we have to pay a commission of 1% of the corpus donation to Shri Gaurav Agarwal and don't know the address of Shri Gaurav Agarwal. Q.10. Do you know or ever met any of the alleged Donors? A10. I neither know any of the donor nor had ever met any of them. Q11. It is seen from the documents that you rece....
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....s along with other proposal papers and the handwriting does not belong to us. Q15. D you want to add or alter anything, stated above? A15. No. This statement is given by me voluntarily and without any threat, force or coercion and are true to the best of my knowledge and belief. 6. The gist of the statement as recorded above is that donation received from AY 2008-09 to 2012-13 was genuine but subsequently from AY 2013 to 2015-16 it received bogus donation of Rs. 10,01,27,103.00 and return the same to the beneficiary in the form of cash through the web of financial transaction after retaining its commission. Such activity of GRGCT is nothing but an activity of money laundry. 7. The assessee had given a donation of Rs. 6,00,000/- to GRGCT during the financial year 2013-14. Since the assessee had given donations to GRGCT, the CIT(Ex) Kolkata was of the view that the assessee had also indulged in money laundering and therefore the registration granted to the assessee u/s 12AA of the Act deserves to be cancelled by invoking the powers of Ld. CIT(Ex), Kolkata vested u/s 12AA(3) of the Act which reads as follows :- "12AA (3) Where a trust or an institution....
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.... part of legal and statutory justice, and not a part of natural justice, therefore, it cannot be laid down as a general proposition of law that the Revenue cannot rely on any evidence which has not been subjected to cross-examination.' The view of Hon'ble Calcutta High Court in the case of Manidra Nath Chatterjee Vs. Collector of Central Excise & Another (supra) is whether in a particular case the particular party should have the right to cross-examine or not depends upon the facts and circumstances of a particular case. This is so, because the right to cross-examine is not necessarily a part of reasonable opportunity." Similar judgements were also pronounced by the Hon'ble Keala High Court in the case of M.K. Thomas Vs. State of Kerala [40 STC 278] in view of the decision of Hon'ble Supreme Court in the case of K.T. Shaduli vs. State of Kerala [39 STC 478 SC ] All these judgemeknts/decisions lead to one conclusion that right to crossexamine the witness, who made adverse reports, is not an invariable attribute of the requirement of the dictum,audi alterant partem'. It is pertinent to mention here that the case law mentioned by the assessee tru....
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....so stated that there is no other better person than the managing trustee of the trust to give a statement on behalf of the trust. In this regard, we find that the trust had immediately retracted within 3 days of the date of statement (statement recorded on 11.9.15 retracted on 14.9.15) stating that the contents of the deposition were not known to the managing trustee and that the same were recorded under huge pressure In any case, we find that the last line of the answer to question no. 13 cannot be read in isolation, wherein he had stated that Rs. 1001 crores may be treated as income in the hands of the trust. In our considered opinion, the statement of Shri Anand Agarwal had to be read in total wherein he had categorically stated that his group concerns had derived unaccounted income from its various business concerns to the tune of Rs. 10.01 crores which were pumped in, in the form of donations back to the trust. The trust cannot be faulted at all in this regard. In fact it is the undisclosed income of certain business concerns which had found its way into the coffers of the trust in the form of donations. If at all there is any fault, it is only in the hands of the business con....
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....he judgment of Hon'ble Apex Court in the case of State of Kerala Vs. K.T. Shaduli Yusuff etc. (1977) reported in AIR 1627, 1977 SCR (3) 233 wherein it was held as under:- "... .. Such an issue can only be determined after examination of the accounts of both the parties and after affording the assessee the right to cross-examine the wholesale dealers concerned, particularly when the assessee makes a specific prayer to this effect." According to the ld. AR the statement recorded at the time of survey based on which the impugned order was passed was not incriminating, so far the assessee is concerned. According to him therefore the very basis on which the impugned order has been passed by the Ld.CIT(Ex), Kolkata is unsustainable. His next submission was that there was no other incriminating material on the basis of which it can be concluded that the assessee got back the amount of donation of Rs. 6 lakh and it was the assessee who arranged through the brokers for providing such bogus donations. It was also his submission that there is no evidence of the assessee having indulged in money launderings. 13.3 According to the ld. AR, the ld. CIT(Ex), Kolkata has no direct ev....
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....n the absence of the cross examination of the statement the impugned addition cannot stand as held by the Hon'ble Supreme Court in the case of Anadaman Timber Industries in civil appeal no. 4228 of 2006. The relevant extract of the judgment reads as under:- "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adj....