Ajay Rastogi JUDGMENT
U.U. 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 Under Section 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 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. 13. Who were the intermediaries and what were the modes of returning the money?
Ans. We were instructed to transfer funds through RTGS to the following seven (7) persons:
1. Santwana Syndicate
2. P.C. Sales Corporation
3. Kalyani Enterprises
4. Riya Enterprises
5. Laxmi Narayan Traders
6. Hanuman Traders
7. Rani Sati Trade cum Pvt. Limited
These payments were booked as