Appeal granted, registration reinstated under Section 12AA(3) of Income Tax Act.

The Tribunal allowed the assessee's appeal, quashing the Commissioner of Income Tax (Exemptions)'s cancellation of registration under Section 12AA(3) of the Income Tax Act, 1961. The Tribunal found insufficient evidence to support allegations of money laundering and bogus donations, distinguishing the case from others where such admissions were made. The registration was reinstated, and the order was pronounced on 14/02/2018.

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Issues Involved:
1. Cancellation of registration under Section 12AA(3) of the Income Tax Act, 1961.
2. Allegation of money laundering and bogus donations.
3. Evaluation of evidence and statements recorded under Section 133A.

Detailed Analysis:

1. Cancellation of Registration under Section 12AA(3):
The primary issue revolves around the cancellation of the registration certificate granted to the assessee under Section 12AA of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemptions) [CIT(Ex)] cancelled the registration on the grounds that the activities of the assessee were not genuine and were not being carried out in accordance with the objects of the trust.

2. Allegation of Money Laundering and Bogus Donations:
The CIT(Ex) based the cancellation on a survey operation conducted under Section 133A on Herbicure Healthcare Bio-Herbal Research Foundation (HHBHRF). During the survey, the Director of HHBHRF admitted that the foundation was involved in providing/accepting bogus donations through intermediaries. The assessee received a donation of Rs. 25 lakh from HHBHRF in the financial year 2010-11, which the CIT(Ex) deemed as part of money laundering activities. The CIT(Ex) issued a show cause notice to the assessee, who contended that there was no evidence to suggest that the donation was bogus and that it was received through a banking channel and duly accounted for in the books.

3. Evaluation of Evidence and Statements Recorded under Section 133A:
The CIT(Ex) disregarded the assessee’s contentions, emphasizing that the assessee failed to cross-examine the Director of HHBHRF and did not provide sufficient evidence to establish the genuineness of the donation. The CIT(Ex) concluded that the assessee was engaged in converting unaccounted money into accounted money through bogus corpus donations, thus violating the trust's objectives.

Tribunal’s Observations and Judgment:

1. Analysis of Previous Tribunal Decisions:
The Tribunal noted that in similar cases, such as Vishwaroopa Charity Trust vs. CIT(Ex), it had ruled in favor of the assessee. The Tribunal emphasized that the statement recorded under Section 133A did not specifically implicate the assessee in receiving bogus donations before the financial year 2011-12. The donation in question was received in the financial year 2010-11, prior to the period mentioned in the statement.

2. Lack of Corroborative Evidence:
The Tribunal observed that there was no corroborative evidence to show that the assessee paid cash to HHBHRF, which was then returned as a donation. The statement recorded under Section 133A was considered insufficient to conclude that the assessee was involved in money laundering.

3. Conditions for Cancellation under Section 12AA(3):
The Tribunal reiterated that for cancellation under Section 12AA(3), it must be established that the activities of the trust are not genuine or not carried out in accordance with its objects. The Tribunal found no evidence to support either condition in the case of the assessee.

4. Distinguishing from Other Cases:
The Tribunal distinguished the present case from others, such as Batanagar Education And Research vs. CIT(Ex), where there was an admission of receiving donations against cash during a survey. In the present case, no such admission was made by the assessee.

Conclusion:
The Tribunal concluded that the cancellation of the registration under Section 12AA(3) by the CIT(Ex) was not sustainable. The appeal of the assessee was allowed, and the order of the CIT(Ex) was quashed.

Result:
The assessee’s appeal was allowed, and the registration under Section 12AA was reinstated. The Tribunal pronounced the order in the open court on 14/02/2018.

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