TaxTMI 
TaxTMI 
2019 (6) TMI 857
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....f money laundering and providing accommodation entry to different individuals and organisations. According to the survey team, accommodation entry was provided by way of (i) accepting donations and returning the same to the donors through web of financial transactions after retaining the commission; and (ii) accepting money by cash or through a web of financial transactions and giving donations after retaining the commission. According to Ld. CIT(E), it appears from records that in the financial year 2013-14 relevant to AY 2014-15, M/s. Shivlal Zadiadevi Jan-kalyan Nidhi the [assessee/appellant] paid bogus donations amounting to Rs. 5 lakhs to M/s. Govind Ram Goel Charitable Trust. According to Ld CIT(E), the Managing Trustee of M/s. Govind Ram Goel Charitable Trust, Shri Anand Agarwal accepted this fact in his sworn statement recorded u/s. 131 of the Act on 11.09.2015. In reply to Q.8 & Q.9, the Managing Trustee clearly stated the fact that he had given a pre-arranged accommodation entry in the form of bogus corpus donation. The Managing Trustee also admitted the fact that they paid to the accommodation entry operators in cash which was returned to them, through a web of financia....
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....d circumstances of the case. At the outset, the Ld. AR pleaded before us that registration of the trust has been cancelled only on the basis of statement of one Anand Agarwal who was Managing Trustee of Govind Ram Goel Charitable Trust recorded under section 133 A of the Act, who neither mentioned nor the statement contained the name of the Assessee Trust. According to him, the said statement cannot be relied up on by the Ld. CIT(E) as it was made at the time of survey u/s 133A as held by the Hon'ble Supreme Court in Khader Khan 352 ITR 480 (SC) and, therefore, it was stressed that it has no evidentiary value. Further, it was pointed out that this statement was retracted by the deponent (Shri Anand Agarwal) within 3 days of giving of deposition which has been noted by the coordinate bench of Tribunal in the case of Radharaman Behari Trust, ITA No. 29/Kol/2017 dated 15.09.2017. He also pleaded that no opportunity of cross-examination was given to the assessee in spite of several requests and visits at the appointed time of cross examination. According to Ld. AR, the same is now redundant in view of the fact that the statement was retracted by the party and moreover, the said person ....
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....e Tribunal canceled the impugned order of Ld. CIT(E). The Tribunal in Radharaman Behari Trust, supra held as under: "4. There was a survey operation carried out u/s 133A of the Act on 11.09.2015 in the premises of M/s Govind Ram Goel Charitable Trust (for short GRGCT). 5. In the course of survey operations the Authorized Officer carrying out the survey recorded the statement of Shri Anand Agarwal, Managing trustee of GRGCT u/s 131 of the Act, wherein it was admitted that it is engaged in money laundering activities by way of giving/ accepting donations which is basically accommodation entries. The relevant extract of the statement is reproduced below:- . Q8. On going through the books of account it is found that there is a quantum jump, as enumerated below for reference, in corpus donation has taken place in the AYs 2013-14 to AY 2015-16, in comparison with the AY 2008-09 to AY 2012-13. Offer your explanation. A.Y Corpus donation 2008-09 Rs. 11,000/- 2009-10 Rs. 21,91,000/- 2010-11 Rs. 2,55,000/- 2011-12 Rs. 34,88,000/- 2012-13 Rs. 25,73,000/- 2013-14 Rs. 3,86,37,002/- 2014-15 Rs. 3,34,56,101/- 2015-16 Rs. 2,80,34,000/- A8. The corpus donations ....
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.... of the trust. Q14. You are being shown the following documents found from your business premises, found during the course of survey operation. It is also brought to you notice the implication of Sec.292C of IT Act, 1961. Therefore, the onus is on you to explain the entries from in those paper, inventorised as GRG 4. a) A slip of paper, which shows different amounts of payments in coded text b) A 8 papers of print out showing expenses of "Sekhra Iron" in respect of some realty project at B.T. Road c) A blank Memorandum of Understanding between Mr. P.B and Mr. A.A and signed by only P.B. Please explain all. A14. All the above documents are a proposal for a realty project at B.T. road brought to us by some broker quite some time back. The entries in the above documents reflected the then status of investments by various stakeholders. We were informed that if we were interested to join the above projects as one of the stakeholder then may be one of the existing stakeholder would be interest to exist in our favour. However, we were negative to the proposal. The handwritten note stating Area and Payments to be made were given to us along with other proposal papers and the ha....
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.... providing the opportunity of cross examination with the managing trustee of GRGCT Shri Anand Agarwal and as well as Shri Gaurav Agarwal who was acting as conduit in the transactions of bogus donations. 10. However the C.I.T.(Exemptions), Kolkata proceeded to pass an order u/s 12AA(3) of the Act by observing as under:- The A/R of the society also requested for cross examination of Shri Anand Agarwl, managing Trustee of M/s Govind Ram Goel Charitable Trust. Kind reference may be made to the order of the Hon'ble Bombay High Curt in the case of GTC Industries, Vs. Assistant Commissioner of Income Tax (1998) 60 TTJ Mumbai 308 wherein the Hon'ble High Court has made some observations, exerpts of which are as-here-in under:- ' In our opinion, right to cross-examine the witness who made adverse report, is not an invariable attribute of the requirement of the dictum, audi alteram partem. The principles of natural justice do not require formal cross-examination. Formal cross-examination is a part of procedural justice. It is governed by the rules of evidence, and is the creation of court. It is part of legal and statutory justice, and not a part of natural justice, therefore, ....
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....o AY 2014-15, as the violation took place in the FY 2013-14." 11. Aggrieved by the order of Ld. CIT(Ex), Kolkata the assessee has preferred the present appeal before the Tribunal. 12. The ld. Counsel for the assessee before us filed a paper book which is running from pages 1 to 19 and submitted that the registration certificate under section 12AA of the Act has been cancelled merely on the basis of the statement furnished by the managing trustee of the GRGCT obtained during the course of survey under section 131 of the Act wherein it was admitted by the managing trustee of the GRGCT that it is involved in bogus donations. It is important to note that the statement given by the managing trustee of the GRGCT was subsequently retracted as evident from the order of Hon'ble ITAT of Kolkata in the case of Gobind Ram Goel Charitable Trust vs. CIT (Exemptions) in ITA Nos. 728 & 729/Kol/2016 vide order dated 18.8.2017. The relevant extract of the order is reproduced below:- "6.1 The ld. DR strongly placed reliance on this statement of the managing trustee and also stated that there is no other better person than the managing trustee of the trust to give a statement on behalf of the tr....
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....rned AR in support of his claim has relied on the order of special bench of Hon'ble Bombay Tribunal in the case of GTC Industries Ltd versus ACIT in ITA No. 5996/Mum/1993 & 1055 & 1056/Bom/1994 where it was held as under:- "...Thus, the mandate of the Hon'ble High Court is that, this Tribunal should decide the entire appeal on merits. So far as the issue of violation of principles of Natural Justice is concerned, the same has been duly complied with in terms of directions contained in the earlier orders of the Tribunal which has been finally settled in several rounds of litigation before this Special Bench. As per the direction of the Tribunal, finally, the Revenue was required to provide certain material and cross-examination of certain witness." The ld. Counsel for the assessee placed strong reliance on the decision of ITAT, Kolkata Bench rendered in the case of Sri Mayapur Dham Pilgrim and Visitors Trust Nadia vs C.I.T.(Exemptions), Kolkata in ITA No.1165/Kol/2016 order dated 03.05.2017. 13.2 The ld. Counsel for the assessee also relied on the 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 SC....
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....hatsoever brought on record to show that the cash was received by the assessee from GRGCT against the donation. 15.1 We also observe that the name of the assessee is not appearing in the statement furnished by the managing trustee of GRGCT. Therefore in such situation the opportunity of cross examination was very much required in the presence of assessee and managing trustee of GRGCT as well as the middle man namely Shri Gaurav Agarwal. Thus the ld. CIT(Ex) in the instant case erred in not giving the opportunity of cross examination. Thus, the cases laws cited by the ld. AR for the opportunity of cross examination is very much applicable to the instant case. 15.2 In this connection we also rely in the case CIT Vs. S. Khader Khan Son reported in 352 ITR 480 where the Hon'ble Supreme Court has held that : "Section 133A does not empower any IT authority 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" In 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 Anadama....
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....l Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation given by the assessee to GRGCT was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (supra) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. 16. Apart from the above, the grounds for cancellation for registration u/s 12AA(3) of th....