Registration scrutiny focuses on charitable objects and genuine activities, not alleged fund diversion alone at the initial stage.

Registration under Section 12AB(1)(b) is confined to examining whether an organisation has charitable objects, carries on genuine activities, and complies with applicable law. Operating an educational institution supports the charitable character of its objects and the genuineness of its activities. Alleged advances or loans to members and relatives concern the application or diversion of funds and may be examined when exemption is determined or in proceedings for specified violations. Such allegations alone do not show that the objects are non-charitable, the activities are not genuine, or that another law has been infringed; therefore, they cannot by themselves justify denying registration.

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Issues: Whether registration under Section 12A(1)(ac)(ii) could be denied under Section 12AB(1)(b) of the Income-tax Act, 1961 on the basis of alleged non-application or diversion of funds.

Analysis: At the registration stage, the inquiry is confined to the charitable nature of the objects, the genuineness of the activities, and infringement of any other law for the time being in force. The activity of running an educational institution established the charitable objects and genuineness of activities. Alleged advances or loans to members and relatives, without more, concerned application of funds and could be examined subsequently while determining exemption or in proceedings for specified violation; they did not establish that the objects were non-charitable, the activities were not genuine, or that applicable law had been violated.

Conclusion: Registration could not be denied solely on the basis of alleged non-application or diversion of funds at the registration stage.

Ratio Decidendi: Inquiry for registration under Section 12AB(1)(b) of the Income-tax Act, 1961 is limited to charitable objects, genuineness of activities, and compliance with applicable law; the application of funds is not by itself a ground to deny registration.

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