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The High Court completely erred in entertaining the appeal under section 260A of the act: SC

The High Court completely erred in entertaining the appeal under Section 260A of the Act. It did not even attempt to deal with the answers to the questions as aforesaid and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid. (Para 12)



COMMISSIONER OF INCOME TAX (EXEMPTIONS), KOLKATA V. BATANAGAR EDUCATION AND RESEARCH TRUST

Civil Appeal No.4451 of 2021

2nd August 2021


The Divisional Bench of Supreme Court consisting of Justice Uday Umesh Lalit and Justice Ajay Rastogi set-aside the judgment and order presently under challenge, allowed this appeal and restored the order passed by the CIT and the Tribunal.


This appeal challenges the judgment and order dated 09-10-2018 passed by the High Court at Calcutta in ITA No.116 of 2018 setting aside (i) the order dated 25.02.2016 passed by Commissioner of Income Tax (Exemption) (“CIT” for short) canceling registration of the respondent Trust (“Trust”, for short) under Section 12AA of the Income Tax Act, 1961 (“the Act” for short); and (ii) the order dated 13.09.2017 passed by the Income Tax Appellate Tribunal (“the Tribunal”, for short) dismissing appeals arising therefrom.


The Trust was registered under Section 12AA of the Act vide order dated 06.08.2010 and was also accorded approval under Section 80G(vi) of the Act.


In a survey conducted on an entity named School of Human Genetics and Population Health, Kolkata under Section 133A of the Act, it was prima facie observed that the Trust was not carrying out its activities in accordance with the objects of the Trust. A show cause notice was, therefore, issued by the CIT on 04.12.2015, invoked the provisions of Section 12AA (3) of the Act and cancelled the registration granted under Section 12AA of the Act w.e.f. 01.04.2012. Consequently, the approval granted to the Trust under Section 80G of the Act was also cancelled.


The matter was carried in appeal by the Trust by filing Income Tax Appeal Nos.756 & 912 /Kol/2016 before the Tribunal but the appeals preferred by the Trust were dismissed.


The Trust being aggrieved, filed Income Tax Appeal No.116 of 2018 before the High Court. After considering submissions by its order dated 09-10-2018 contended that:

The order of cancellation of the registration of the trust is set aside. The respondent is directed to restore its registration within three weeks of communication of this order. Subsequently, the appeal was allowed. (Para 9)

In this appeal, the court have heard Mr. N. Venkataraman, learned ASG in support of the appeal and Mr. Rana Mukherjee, learned Senior Advocate for the Trust.


It is submitted by the learned ASG that the answers given to the questionnaire clearly show a definite tendency on part of the Trust to return in cash, the donation it received from several entities.


Mr. Mukherjee learned Senior Advocate appearing for the Trust submitted that the conclusions drawn by the High Court were quite correct and did not call for any interference. The answers given to the questionnaire by the Managing Trustee of the Trust show the extent of misuse of the status enjoyed by the Trust by virtue of registration under Section 12AA of the Act. These answers also show that donations were received by way of cheques out of which substantial money was ploughed back or returned to the donors in cash. The facts thus clearly show that those were bogus donations and that the registration conferred upon it under Sections 12AA and 80G of the Act was completely being misused by the Trust. An entity which is misusing the status conferred upon it by Section 12AA of the Act is not entitled to retain and enjoy said status. The authorities were therefore, right and justified in cancelling the registration under Sections 12AA and 80G of the Act.


After hearing the submissions of the parties, the court reached to a conclusion that:

The High Court completely erred in entertaining the appeal under Section 260A of the Act. It did not even attempt to deal with the answers to the questions as aforesaid and whether the conclusions drawn by the CIT and the Tribunal were in any way incorrect or invalid. (Para 12)


Therefore, allowed the appeal.



Swadheen Singh

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