CIT(E) can’t cancel trust’s registration relying upon statement of another trust: HC

Case Details: Commissioner of Income-tax (Exemptions) v. Vidya Bharati Society for Educational & Scientific Advancement - [2022] 136 taxmann.com 88 (Calcutta)

Judiciary and Counsel Details

• • T.S. Sivagnanam and Hiranmay Bhattacharyya, JJ.
  • Tilak Mitra, Adv. for the Appellant. 
  • J.P. Khaitan, Sr. Adv., Pratyush Jhunjhunwala, Ms. Swapna Das and Siddhartha Das, Advs. for the Respondent.

Facts of the Case

Assessee-trust was running three schools, and the first of such schools was established in 1965. The three schools were stated to have more than 3,400 students on their roll. The schools are recognised by the West Bengal Higher Secondary Board of Education, Government of West Bengal.

The Commissioner of Income-tax [CIT(E)] cancelled the assessee’s registration on the grounds that its name appeared in the bogus donor list in the statement recorded from one Sri Rabindranath Lahiri, managing trustee of Batanagar Education and Research Trust.

On appeal, the Tribunal found that there was no case made out for invoking the power under section 12AA(3) to cancel trust registration. Aggrieved-CIT(E) filed the instant appeal before the Calcutta High Court.

High Court Held

The High Court held that the Tribunal rightly pointed out that the CIT(E) had not brought on record any statement made by Mr Lahiri which was adverse to the assessee’s interest.
There was no document or material available with the CIT(E) to hold that the assessee had donated to the Batanagar Education and Research Trust during the relevant year in question.

Thus, in the absence of any material, the allegations against the trust based on which registration was cancelled were all bald allegations with nothing specific against the assessee. Accordingly, order cancelling registration was to be set aside.

Case Review

Vidya Bharati Society for Educational & Scientific Advancement v. CIT [IT Appeal No. 1456 (Kol.) of 2016, dated 6-9-2017] (para 5) affirmed.

List of Cases Referred to

• • CIT v. Apeejay Education Society [2015] 59 taxmann.com 102/232 Taxman 619 (Punj. & Har.) (para 4)
  • CIT v. Islamic Academy of Education [2015] 54 taxmann.com 255/229 Taxman 274 (Kar.) (para 4),
  • Jha Educational Trust v. CIT (Exemption) [IT Appeal Nos. 931-933 (Kol.) of 2016, dated 17-3-2017] (para 4)
  • CIT v. Jha Educational Trust [ITAT 228 of 2018, dated 28-1-2019] (para 5).