ITAT restores trust registration and approval after finding cancellation based on inadmissible evidence without cross-examination

ITAT Raipur set aside CIT(E)'s order cancelling trust's registration under section 12AA and approval under section 10(23C)(vi). The cancellation was based on alleged bogus donations from three entities, but ITAT found the evidence inadmissible as statements were not supplied to the assessee nor was cross-examination allowed. The department subsequently granted fresh registration under sections 12A(1)(ac)(vi) and 80G(5)(iv) in 2022, indicating acceptance of genuine activities. ITAT directed restoration of both registration and approval, noting no change in trust's activities, bylaws, or objects.

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Issues Involved:
1. Revocation of registration granted under section 12A.
2. Cancellation of approval granted under section 10(23C)(vi).

Issue-wise Detailed Analysis:

1. Revocation of Registration Granted Under Section 12A:
The assessee, a trust registered under section 12A since 07.03.2003, faced revocation of its registration by the Commissioner of Income Tax (Exemption) [CIT(E)], Bhopal, effective from 1st April 2010. The primary allegation was that the trust was involved in money laundering through bogus donations, which was deemed not in accordance with its objectives. The CIT(E) relied on reports from CIT(E), Kolkata, and statements from various entities to support the revocation.

The assessee contended that the revocation was based on unsubstantiated allegations and statements that were not corroborated by tangible evidence. The assessee argued that no specific evidence was provided to show that cash was exchanged between it and the donor trusts. Additionally, the statements relied upon did not specifically implicate the assessee. The assessee emphasized that its activities were genuine and aligned with its objectives, as evidenced by the re-registration under sections 12A and 80G granted on 10.03.2022.

The Tribunal found merit in the assessee's arguments, noting that the department failed to provide concrete evidence against the assessee. The Tribunal also observed that the re-registration granted to the assessee indicated the department's acceptance of the trust's genuine activities. Consequently, the Tribunal set aside the CIT(E)'s order and directed the restoration of the registration under section 12A.

2. Cancellation of Approval Granted Under Section 10(23C)(vi):
Following the revocation of registration under section 12A, the CIT(E) also canceled the approval granted to the assessee under section 10(23C)(vi) based on similar allegations of receiving bogus donations. The CIT(E) issued a show-cause notice and, after considering the assessee's submissions, concluded that the activities of the assessee were not genuine.

The assessee reiterated its earlier arguments, asserting that the cancellation was based on unverified statements and lacked substantive evidence. The Tribunal, considering its earlier decision to restore the registration under section 12A, found that the activities of the assessee were indeed genuine. The Tribunal noted that the provisional registration under sections 12AA(i)(ac)(vi) and 80G(v)(iv) granted on 10.03.2022 further substantiated the genuineness of the assessee's activities.

In light of these observations, the Tribunal set aside the CIT(E)'s order canceling the approval under section 10(23C)(vi) and directed the restoration of the approval to the assessee.

Conclusion:
The Tribunal allowed both appeals filed by the assessee, restoring the registration under section 12A and the approval under section 10(23C)(vi). The Tribunal emphasized the lack of concrete evidence against the assessee and the subsequent re-registration granted by the department as indicative of the genuineness of the assessee's activities.

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