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

Citation: [2021] 8 S.C.R. 31 · Decided: 02-08-2021 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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COMMISSIONER OF INCOME
TAX (EXEMPTIONS), KOLKATA
v.
BATANAGAR EDUCATION AND RESEARCH TRUST
(Civil Appeal No. 4451 of 2021)
AUGUST 02, 2021
[UDAY UMESH LALIT AND AJAY RASTOGI, JJ.]
Income Tax Act, 1961: s.12AA – Cancellation of registration
of respondent Trust under s.12AA – Statement of the Managing Trust
of Trust showed 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
ss.12AA and 80G of the Act was completely being misused by the
Trust – An entity which is misusing the status conferred upon it by
s.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 ss.12AA and 80G of the Act.
Allowing the appeal, the Court
HELD: 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. [Para
11][38-D-F]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4451
of 2021.
From the Judgment and Order dated 09.10.2018 of the High Court
of Calcutta in ITA No. 116 of 2018.
[2021] 8 S.C.R. 31
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SUPREME COURT REPORTS
[2021] 8 S.C.R.
N. Venkataraman, ASG, Ms. Anil Katiyar, Arjun Garg, Ms. Vimla
Sinha, Advs. for the Appellant.
Rana Mukherjee, Sr. Adv., Abhijit Sengupta, Dibyadyuti Banerjee,
Advs. for the Respondent.
The Judgment of the Court was delivered:
UDAY UMESH LALIT, J.
1. 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.
2. 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.
3. 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.
4. In answer to the questionnaire issued by the Department, Shri
Rabindranath Lahiri, Managing Trustee of the Trust gave answers to
some of the questions as under:
 “Q.11. Please confirm the authenticity of the abovementioned
Corpus Donation.
Ans. A major part of the donations that were claimed exemption
u/s 11(1)(d) were not-genuine. The donation received in F.Ys.
2008-09, 2009-10 and 2010-11 were genuine Corpus Donation
received either from the Trustees or persons who were close to
the Trustees or persons who were close to the Trustees. In F.Y.
2011-12 and 2012-13 a part of the donation were genuine like the
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earlier years.  However, a major part of the donations received in
these two F.Ys. viz. 2011-12 and 2012-13, shown as Corpus
Donation, were in the nature of accommodation entries to facilitate
two things-
a) To procure loans from the Bank we had to show substantial
amount of Capital Reserve in our Balance Sheet.
b) We require funds for the expansion of our college.  The
fees received from the students along with genuine donations
from the Trustees and their contacts were not sufficient to run
the institution.
Q.12. Why are you saying that a major part of the donations
received were not genuine?
Ans. In those cases, which I admit as accommodation entries, a
part of the donation received was returned back to the donors
through intermediaries.
Q.
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