TaxTMI 
TaxTMI 
2018 (2) TMI 1080
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....other institutions, libraries, reading room etc., health for the poor and needy people, etc. 3. The Ld. CIT(E) took note of the survey operation carried out u/s. 133A of the Act on 27.01.2015 at the premises of M/s. Herbicure Healthcare Bio-Herbal Research Foundation (in short "M/s. Herbicure") wherein the statement of the founder Director Shri Swapan Ranjan Dasgupta was recorded on oath, wherein he has stated that they had been accepting donations on behalf of M/s. Herbicure and returned the same to the donor after retaining the commission and likewise, M/s. Herbicure accepts money by cash and thereafter disburse the donation through cheque after retaining the commission. The Ld. CIT(E) noted that the assessee Trust in AY 2011-12 had received a donation of Rs. 2,90,000/- from M/s. Herbicure, therefore, he issued notice to the Trust on 02.12.2015 to explain as to why the registration granted u/s. 12A of the Act shall not be cancelled/withdrawn u/s. 12AA(3) of the Act for indulging in bogus activities. Pursuant to the said notice of the Ld. CIT(E), the assessee filed submission on 21.12.2015 excerpts of the same was reproduced by the Ld. CIT(E) and thereafter, he after referring ....
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.... taken the statement of Shri Swapan Ranjan Dasgupta recorded on oath during survey conducted u/s. 133A of the Act and mainly the answer to the question nos. 23 which have been reproduced by ld CIT(E) is reproduced again below: "Q. 23. Please explain in detail the modus operandi of giving the accommodation entries by way of accepting donations to different beneficiaries, Also state who is the/are the broker/brokers (while giving his mobile no. and address) through which you have given accommodation entries in the form of bogus donations on commission? Please also state what are the commission charged by you and broker concerned for providing accommodation entries to different beneficiaries. Ans. The entire accommodation entries of bogus donations are facilitated by Mr. Kishan Bhawasingka having his mobile nos. 9830087866&9883051515 who lives somewhere in Bhawanipore near Netaji Subhas Metro Station. The modus is like this. The information is given to us by Mr. Kishan Bhawsingka as to bogus donation entry is needed by a particular party. Sometimes we come to know about the accommodation entry being given to a party when we directly receive communication fro....
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....nd produced the documents sought by the Ld. CIT(E) vide letter 21.12.2015 wherein the assessee has clearly refuted the allegation of accepting donation and returning the same in lieu of cash; and also have clearly explained with documents that Rs. 2.90 lacs which was donated by M/s. Herbicure has been applied and utilized for the objective for which it was established. The assessee Trust stoutly denied the allegation of money laundering and asked the Ld. CIT(E) to provide to it any material/document for making such allegation against the assessee Trust; and also asked for a copy of the statement of Shri Swapan Ranjan Dasgupta. Later, we note that the statement of Shri Swapan Ranjan Dasgupta was handed over to the assessee Trust. After perusal of the same, the assessee Trust pointed out to Ld. CIT(E) that nowhere in the statement recorded that is to question nos. 1 to 24, the assessee Trust's name never surfaced or any allegation has been imputed against the assessee Trust. The assessee Trust also pointed out to the Ld. CIT(E) that since the entire case of the ld. CIT(E) was based on the sworn statement of Shri Swapan Ranjan Dasgupta recorded during survey cannot be the sole basis f....
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.... it and asked M/s. Herbicure to return the donation to some other Trusts. It was stated in the letter that M/s. Herbicure made donation from the donation it received from brokers. It was stated that the brokers collected the cash from whom the donations were made by M/s. Herbicure and it was certified that the donations to the Trusts were made as per the direction of the broker which letter also has been signed by the Director of M/s. Herbicure Shri Swapan Ranjan Dasgupta. After perusal of the statement recorded on oath as well as the letter, the ld. CIT(E) was of the opinion that since the assessee Trust has received donation to the tune of Rs. 2.90 lacs from M/s. Herbicure in AY 2011-12, the assessee had received donation in lieu of cash and, therefore, it was engaged in the money laundering which, according to him, is an ingenuine activity and so the said activity is not in consonance with the objects of the Trust, therefore, he cancelled the 12AA registration. We do not uphold the impugned action of the Ld. CIT(E). Right from the notice given by the ld. CIT(E) the assessee pleaded that the assessee had utilized Rs. 2.90 lacs donated by M/s. Herbicure was applied for the objecti....
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....ose 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. Their Lordships noted that in that case the impugned order of the ld. CIT(E) was based upon the statement given by two witnesses and even when the assessee disputed the correctness of the statement and wanted the cross examine, the adjudicating authority did not grant this opportunity to the assessee. In such a scenario, the Hon'ble Apex Court held that when the testimony of these two witnesses got discarded there was no material with the department on the basis of which it could justify this action and the additions were deleted. We note that in the present case, the assessee was not offered an opportunity to cross-examine Shri Swapan Ranjan Dasgupta and Shri Kishan Bhawasingka which makes the order fragile for violation of natural justice and, therefore, the sole basis for the impugned action is infirm and not legally sustainable. 6. Moreover, we note that the donation it received from M/s. Herbicure to the tune of Rs. 2.90 lacs has been applied for the....