DR. B.G. MEMORIAL TRUST,KOLKATA vs. CIT, (EXEMPTION), KOLKATA, KOLKATA

आदेश /O R D E R

PER Waseem Ahmed, Accountant Member:-

2. For that the order of the Ld. Commissioner of Income Tax (Exemption) cancelling the registration u/s. 12AAA(3) without following the specific directions of the Hon'ble Income Tax Appellate Tribunal for examination and cross-examination of Sri Dinesh Agarwal as well as CA, Pradip Agarwal and CA, Ajay Agarwal.

3. For that the Ld. Commissioner of Income tax Exemption erred cancelling the registration simply relying on the statement of Dinesh Agarwal which was obtained in the proceedings u/s 133A which cannot be relied on as evidence without bringing on record any evidence to support the same.

4. For that on the facts and circumstances of the cases the Ld. CIT(Exemption) erred in cancelling the registration u/s.12AAA(3)/254 when the assessee was carrying on its activities in accordance with the objects, all Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 2 donations received were applied for education and charitable purpose and there was nothing on record to suggest that the activities were not carried on in accordance with the deed of settlement.

5. For that on the facts and circumstances of the case the order of the Commissioner of Income Tax (Exemption) cancelling the registration is not in accordance with law and the trust was entitled to continue its registration under the provisions of the IT Act, 1961.

6. For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing.”

Shri S.M. Surana, Ld. Advocate appeared on behalf of assessee and Shri G. Hangshing, Ld. Departmental Representative represented on behalf of Revenue.

3.1 A survey u/s 133A of the Act was conducted on 04.12.2015 at the premises of M/s Quadeye Securities Pvt. Ltd. (QSP for short). During the course of survey operation, a statement of the Director of QSP, Shri Dinesh Kumar Agarwal under oath was recorded. It was admitted that QSP is providing accommodation entries to various charitable trust in and outside Kolkata. Accordingly, Ld. CIT(Ex) show-caused the assessee for cancellation of registration certificate granted u/s. 12A of the Act. Ld. CIT (Ex) also requested the assessee to produce the following details:- a) Income and expenditure a/c and balance sheet for AYs 2011-12 to 2015-16. b) All certificate of registrations granted by the Income Tax Department. c) List of donations received along with details of donors from 01.04.2010 to 31.03.2015 Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 3 d) List of donations made along with details of done from 01.04.2010 to 31.03.2015 Ld. CIT(Ex) also provided the copy of the statement of Shri Dinesh Kumar Agarwal in the interest of natural justice and fair play.

In compliance thereto, the assessee made following submissions:- 1) Shri Dinesh Kumar Agarwal is a man of means and therefore any donation given out of philanthropic act cannot be disputed. 2) It was ascertained from the statement of Shri Dinesh Kumar Agarwal that the donation was made by assessee through the middleman namely, Pradip Agarwal and Ajay Agarwal but assessee denied to have any connection or interaction with these people. 3) The assessee also requested the Ld. CIT (Ex) for the cross- examination of Shri Dinesh Kumar Agarwal. Subsequently a proposal was received by Ld. CIT(Ex) from the Assessing Officer having jurisdiction over the assessee vide dated 25.01.2016 for the cancellation of registration on the ground that no charitable activity was carried on by assessee. The contents of the proposal give by Assessing Officer Ward-1(2), Kolkata stand as under:- “a) The assessee trust has an agreement with Alagappa University, Tamil Nadu for facilitating the running of distance learning programme of that university. b) It was seen from the terms and conditions that the assessee trust did not have any discretion. i) to decide the programme to be offered. ii) to prescribe the regulation and syllabi to conduct session or prepare material. iii) to prescribe fees etc. c) the only object of the assessee trust was to advertise, give publicity and conduct practice guidance to the teachers. The trust did not have any right even to admit or reject any student. Only activity of the assessee trust was to provide infrastructure and technical manpower to the university. The only expenses of the Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 4 assessee trust was administrative expenses and income were from the said university and various corpus donations received.”

3.2 Accordingly, Ld. CIT(Ex) again issued show cause notice for cancellation of registration certificate and fixed the date of hearing on 15.02.2016. The assessee failed to appear before Ld. CIT(Ex) and sent its reply by postal letter stating that it runs a school in the name of St. Peters School at 6/1 Sarat Chatterjee Avenue, Kolkata-29. Besides the above, Ld. CIT(ex) observed certain details as mentioned below:- Particulars Upto 31.03.11 Upto 3103.12 Upto 31.03.13 Corpus donation 2.85 crore 4.48 crore 5.23 lakh Fixed deposits 3.06 crore 4.73 crore 5.95 lakh Interest income 15.27 lakh 28.65 lakh 52 lakh Total receipts 9483 lakh 99.21 lakh 1.73 crore including fees i) The assessee has been receiving money through corpus donation and same has been utilized by parking in the bank account as fixed deposit. As such, there was no charitable activity carried out by assessee. Therefore, the assessee has misused the provision of Section 12AA and 80G of the Act. ii) Assessee’s activities are suggesting as if it is engaged in converting cash into cheque which is illegal in nature. iii) Donation received is merely an accommodation entry and in fact the assessee is converting its own cash in accounting form. The assessee avoided to avail the cross-examination opportunity of Shri Dinesh Kumar Agarwal. 3.3 In view of the above observation, registration certificate of assessee was cancelled by Ld. CIT(Ex) vide order dated. 22.02.2016. Subsequently assessee preferred an appeal before Hon'ble ITAT. During the hearing the Hon’ble ITAT made certain observation and thereafter disposed Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 5 off the appeal. The relevant observation and finding of the Hon’ble ITAT is reproduced below :- “a) There is pima facie ground to believe that the donation of Rs.50 lakhs given by M/s Quadeye Securities Private Ltd was not genuine. b) The assessee chose to avoid appearing before the respondent when the opportunity was provided to it. This conduct of the assessee was not justified. c) It is no doubt true that the statement of Sri Dinesh Kumar Agarwal without being subjected to cross-examination by the assessee and further corroborated by the evidence of person which was stated to have arranged for bogus gifts cannot be believed in toto. Nevertheless, the fact remains that there are grounds to believe that the donation received by the assessee had to be decided with regard to its genuineness. d) As rightly contended by the Learned DR if it is found that the assessee was accepting facts were only lead to inference that the activities of the trusts are not genuine or are not carried in accordance with the object of the trust. e) We therefore are of the view that it would be appropriate in the interest of justice to set aside the order of the respondent and remand the issue of the cancellation of registration to the respondent for fresh consideration. 2.13 Thereafter, the Hon'ble ITAT directed: a) Assessee should be provided opportunity to cross-examination Sri Dinesh Kumar Agarwal. b) Before cancelling the registration an opportunity must be provided to the assessee of being heard. c) If the CIT(Exemptions), Kolkata desires then he may also examine Sri Pradip Agarwal, Sri Ajay Agarwal but in that case the opportunity of cross- examination of the said persons should be provided to the assessee. d) Regarding the case laws cited by the assessee, the Tribunal observed that the facts of the cases are entirely different and hence not relevant.”

In consonance with the direction of Hon'ble ITAT vide order dated 14.10.2016 the case was fixed for hearing to facilitate cross-examination of Shri Dinesh Kumar Agarwal. Similarly, a summons was also issued to Shri Dinesh Kumar Agarwal for his personal appearance u/s 131 of the Act.

On the basis of above discussion, Ld. CIT(Ex) made following observations:- 1) To prove a transactions as genuine there has to be three ingredients:- a) Existence of the party b) Creditworthiness of the party c) Genuineness of transactions 2) Ld. CIT(Ex) accepted the existence and creditworthiness of the party but denied the genuineness of the said transaction. 3) Ld. CIT(Ex) also observed that the principle of natural justice do not require formerly cross-examination as per law as cross-examined is a part of procedure. Therefore the order of any authority cannot be held invalid in the absence of cross-examination. In this connection Ld. CIT(Ex) relied on the following judgments:- a) GTC Industries vs. ACIT (1998) 60 TTJ Mumbai b) Manindra Nath Chatterjee vs. Collector of Central Excise & Another Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 8 c) M.K. Thomas Vs. State of Kerala 40 STC 278 (Kel) d) K.T. Shaduli vs. State of Kerala 39 STC 478 (SC) From the above facts, it is transpired that QSP has made a declaration of income under IDS scheme 2016 which proves that QSP has made the donation to the assessee through cheque and received cash from the assessee-trust. The cash which was available with QSP was declared under IDS scheme, 2016. The assessee has received most of its donation in corpus form which has in turn being parked with the bank as fixed deposit. There are no details available for suggesting that assessee has invested a corpus fund in some immovable properties. In view of above Ld. CIT(Ex) concluded that the activities of assessee/trust are not charitable in nature and accordingly cancelled the registration certificate issued u/s 12A of the Act by observing as under:- “5.1. The Hon'ble ITAT, Kolkata had already observed that the facts of the case clearly indicate that the donation received was bogus and therefore the trust had involved itself in ingenuine activities. The order was set aside by the Hou'ble Tribunal for providing the assessee with another opportunity to cross- examine Sri Dinesh Kurnar Agarwal. As narrated in Para 3 of this Order that despite several attempts, the cross-examination could not take place. However, Sri Dinesh Kumar Agarwal had submitted a letter wherein he has stood by his statement made before the Income Tax Authorities. He had also stated that the bogus donation made to the assessee trust has been declared by him under Income Declaration Scheme, 2016. Taxes on such declaration had already been paid. This fact leads to the inescapable conclusion that the donation made by M/s. Quadeye Securities Private Ltd. to the assessee Trust by cheque has ill fact CI)J11e back to the chest of M/s. Quadeye Securities Private Ltd. in form of cash. Now who in the world will return the cash other than the assessee trust or the trustees of the assessee trust itself? All income tax proceedings are guided by the principle of preponderance of human probabilities. Going by that very principle, the fact of the case leads to the inescapable conclusion that the assessee trust has parked unaccounted money of its trustees in the garb of corpus donation. 5.2. It must be understood (hat charitable trusts that enjoy the benefit u/s. 12AA arc, by its very nature, akin to public institutions. It runs on public money and for the welfare of the general public. The exemption u/s 11 etc. is allowed as such organisations are supposed to perform a role that the Government, because of different constraints, cannot. So for all practice purposes, the activities or the trust which is registered u/s. 12AA and enjoying benefits of section 11 must have probity and adhere to transparent, genuine, legal and Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 9 welfare activities like any other public institutions. It will not be out of context to compare money laundering by charitable trust with corruption by the public servants. In a very recent case of State of Karnataka vis. Selvi J. Jayalalita. Honble Supreme Court stated the following: “Any interpretation of the provisions of such law has to be essentially purposive in furtherance of its mission and not in retrogression thereof. Innovative nuances of evidential inadequacies processual infirmities and interpretational subtleties artfully advance in defence, otherwise intangible and in a consequential ought to be conscientiously cast aside with moral maturity and singular sensitivity to uphold the statutory sanctity, lest the coveted cause of justice is causality.” It has been seen in recent times that many entities registered u/s 12A / 12AA of the Act have misused and abused the legal provision to do money laundering and saved themselves from cancellation by methods as is stated by the Hon'ble Supreme Court, mentioned above. In the same judgement the Hon 'ble Supreme Court further observed: "A collective, committed and courageous turnaround is thus the present day imperative to free the civil order front the suffocative throttle of this deadly affliction." So it is duty of all concerned to put in their best to eradicate the state from the vices of money laundering and corruption, In this instant case the only issue under consideration was arrangement of cross examination of Shri Dinesh Kumar Agarwal by the Shri Goutam Ghosh managing trustee of the assessee trust. It has already been discussed that such cross examination could not take place but the declaration by M/s. Quadeye Securities Private Ltd. under Income Declaration Scheme. 2016 and its written submission before the undersigned unambiguously proves that the donation received by the assessee trust was bogus. 5.3 In view of all above, I hereby invoke the provision of section 12AA(3) of the Act to cancel the registration u/s 12A that was granted to the assessee vide Memo, NO,DIT(E)/T-, 41/301/02-03 dated) 7.07.2003.”

Being aggrieved, assessee preferred an appeal before us.

In the instant case, Ld. CIT(Ex) has accepted the identity and creditworthiness of the donor but rejected the genuineness of the transactions though the transactions was made through banking channel. Thus, the genuineness of the transactions cannot be doubted. No statement of Dinesh Kumar Agarwal was recorded when he appeared before Ld. CIT(Ex). The donation made by Shri Dinesh Kumar Agarwal to other charitable organizations as recorded in question No.37 of the statement was duly accepted. Thus, it is clear that Shri Dinesh Kumar Agarwal was a man of philanthropic. On the other hand the ld. DR submitted that the opportunity for cross- examination has not been provided to the assessee. Therefore, matter should be restored back to the file of Ld. CIT(Ex) for fresh adjudication. In rejoinder Ld. AR submitted that order of Ld. CIT(Ex) does not stand in the absence of cross-examination of the parties. Ld. AR in this connection, relied on the order of Special Bench of Mumbai in the case of M/s GTC Industries Ltd. vs. ACIT in 1055/Bom/1994 & ITA No.1056/Bom/1994 dated 07.03.2017, wherein it was held as under : “… … So far as the issue of violation of principles of natural justice is concerned, the same has been duly complied with in terms of directions contained in the earlier orders of the Tribunal which has been finally settled in several rounds of litigation before this Special Bench. As per the direction of the Tribunal, finally, the Revenue was required to provide certain material and cross-examination of certain witnesses. In ITA No.516/Kol/2017 Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 11 compliance thereof, the Revenue has provided the opportunity to cross- examine in the case of five persons as per the list given by the assessee. ….”

6.2 In the absence of the cross examination of the statement the impugned addition cannot stand as held by the Hon’ble Supreme Court in the case of Anadaman Timber Industries in civil appeal no. 4228 of 2006. The relevant extract of the judgment reads as under : "According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 12 aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross- examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." There is no evidence brought on record to show any connection between those brokers and the assessee. In the absence of such corroborative evidence, it is not possible to come to any conclusion that the assessee indulged in money laundering and that the donation received by it was a bogus donation. In fact on identical facts this Tribunal in the case of Sri Mayapur Dham Pilgrim and Visitors Trust (supra) came to the conclusion that cancellation of registration u/s 12AA cannot be sustained. Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 13 7. Apart from the above, the grounds for cancellation for registration u/s 12AA(3) of the Act is that the activities of the trust should not be genuine or the activities of the trust are not being carried out in accordance with the objects of the trust. There is neither an allegation in the impugned order nor finding that any of the aforesaid conditions exist in the case of the assessee. We therefore are of the view that the cancellation of registration granted to the assessee u/s 12A of the Act cannot be sustained and the impugned order is hereby quashed. The appeal of the assessee is accordingly allowed.

“Under Section 12AA of the Act, the Commissioner, at the relevant time in the year 1999 had called for all documents and information from the respondent- assessee to satisfy himself about the genuineness of the activities of the institution and after making enquires had passed the order registering the said institution and giving it the benefit under Section 12A of the Act, which made the institution eligible for exemption from the provisions of Sections 11 and 12 of the Act. Under Section 12AA(3) of the Act, the Commissioner was to be satisfied about the activities of the said institution and if they were not genuine and the same were not being carried out in accordance with the objects of the institution he could pass the order cancelling the registration. It cannot be disputed that the respondent-assessee is engaged in carrying out its objects and the genuineness of the same has never been doubted. The allegation is regarding the alleged supply of the installation of the software and whether the same was done by M/s. WSL or not. Merely because Sh. Sanjay D. Sonawani had given a statement, the Commissioner as such is not justified in cancelling the registration granted on 13.05.1999 w.e.f. the assessment year 2004-05. The assessee had placed various materials before the Tribunal to Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 14 show that software modules purchased were installed between 2004 to 2011 and the assessee had incurred as much as 91.71% of the receipts for the assessment year 2004-05. Accordingly, keeping in view the peculiar facts and circumstances as noticed above, High Court are of the opinion that the Commissioner of Income Tax was not justified in passing the impugned order for withdrawing the exemption as admittedly, the respondent-assessee is carrying out educational activities by running a large number of educational institutions all over the country and, therefore, the questions of law sought to be raised do not arise.” 8.1 The facts of the above case are similar to the instant case before us. In the instant case the assessee is a charitable trust duly constituted as Charitable Trust under a Deed of Trust as a Public Charitable Trust for imparting education which is a “Charitable Purpose” u/s. 2(15) of the Income Tax Act. The trust duly applied for registration u/s. 12AA of the IT Act before the Director of Income Tax (Exemption) in conformity with rule 17A and submitted Form No. 10A together with other requisite documents. The Director of Income Tax (Exemption) after verification of documents and after being satisfied about the object of the trust and genuineness of its activities granted registration effective from 01.03.2003 vide Registration No. DIT(E)/T- 41/8E/391/02-03 dated 27.03.2003.

Similarly, we also rely in the judgment of Hon’ble High Court of Karnataka in the case of CIT Vs. Islamic Academy of Education reported in 59 taxmann.com 102 wherein it was held as under:-

“If trustees were misappropriating funds and were maintaining false accounts, it was open to authorities to deny benefit under Section 11 of the Income Tax Act, but that could not be ground for cancelation of registration itself.” 8.2 Applying the above ratio laid down by the Hon’ble High Court of Karnataka in the case of Islamic Academy of Education (Supra), it can be concluded that even the donation is proved to be bogus then also the registration u/s 12AA of the Act cannot be cancelled but the said amount of donation will not be eligible for exemption u/s 11 of the Act.

Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 15 The provisions of section 12AA of the Act prescribe conditions for registration of trust and make obligatory to the trust or the institution to seek registration under section 12AA of the Act, if such trust or institution intends to have the benefit of the provisions of section 11 and 12 of the Act. These provisions thus make it clear that if the trust or the institution is not registered under section 12AA of the Act, it would not be able to claim any exemption or exclusion of its income from the total income of the previous year, even if such income is otherwise liable to be excluded under any of the clauses of section 11 of the Act. Thus, in a case where registration is refused, the trust or the institution would not be allowed to claim any such exemption or exclusion of its income from the total income of the previous year. The Income-tax Act through section 12AA has made it obligatory for charitable trusts and institutions to get themselves registered with the income-tax authorities failing which the benefit of exemption from income-tax would be denied. The requirement of registration being procedural is prescribed u/s 12AA of the Act which reads as under:-

“Procedure for registration. 12AA. (1) The [***] [Principal Commissioner of] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of sub-section (1)] of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant;”

From the above provisions, it is clear that the ld CIT(Exemption) before granting the registration certificate shall conduct necessary enquiries as he thinks fit in order to satisfy himself about the genuineness of activities of the trust. Once the ld CIT(Exemption) is satisfied with the genuineness of the Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 16 activities then he will grant the registration certificate. In the instant case before us, we find that the activities of the trust have not been doubted except the donation received by the assessee from two parties. Thus in our view at the most the exemption u/s 11 of the Act will be denied to such donation. Thus, in such circumstances the registration u/s 12A of the Act cannot be cancelled. In this regard, we rely in the principles laid down by the Hon’ble Allahabad High Court in the case of CIT Vs. Red Rose School (2007) 212 CTR 394 (All). The relevant extract of the judgment is extracted below:-

“A reading of provisions of sub-cls. (a) and (b) of s. 12AA makes it clear that the CIT has to satisfy himself about the genuineness of the activities of the trust or institution and also about the objects of the trust or the institution. On being satisfied about the genuineness of the activities of the trust or the institution and also about its objects, the CIT would either grant the certificate or would reject the prayer. In order to satisfy himself about the genuineness of the activities of the trust or the institution, he can call for such documents or information from the trust or the institution, as he thinks necessary and he is also empowered to make such enquiries as he may deem necessary in this behalf. The objects of the trust can be had from the bye-laws or the deed of trust, as the case may be and unless, of course, the objects of the trust apparently make out that they were not in consonance with the public policy or that they were not the objects of any charitable purpose, registration cannot be refused accordingly on this ground. In regard to the genuineness of the activities of the trust or the institution, whose objects do not run contrary to public policy and are, in fact, related to charitable purposes, the CIT is again empowered to make enquiries as he thinks fit. In case the activities are not genuine and they are not being carried out in accordance with the objects of the trust/society or the institution, of course, the registration can again be refused. But on mere presumptions and on surmises that income derived by the trust or the institution is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any charitable purpose, rejection cannot be made. Sec. 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit. The language used in the section only requires that activities of the trust or the institution must be genuine, which accordingly would mean, they are in consonance with the objects of the trust/institution, and are not mere camouflage but are real, pure and sincere, nor against the proposed objects. The profit earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. It is significant to mention that registration under s. 12AA does not necessarily entitle the assessee to get the income excluded Dr. B.G. Memoriala Trust Vs. CIT(Ex) Kol. Page 17 from the income of the previous year for the purpose of determination of tax liability but it only entitles the assessee to claim such exemption, which otherwise could not be claimed in the absence of registration. The enquiry by the CIT shall remain restricted to the examination, as to whether the assessee, who has moved the application for registration under s. 12A, is actually in the activities which are genuine. Genuineness of the activities of the trust or the institution has to be seen, keeping in mind the objects thereof, which necessarily means that the CIT shall satisfy himself about the fact that the activities are genuine and in consonance with the objects of the trust or the institution. In other words, if establishing and running a school is the object of the society, as given in its bye-laws, it has to be satisfied that the society has established the school, where education is being imparted as per rules and the factum of establishment and running school is a genuine activity. The enquiry regarding genuineness of the activities cannot be stretched beyond this. Sufficient safeguards having been given in ss. 11, 12 and 13 for assessing the income which has not been applied to the purpose of the trust or the institution, the intention of the law maker and the scope and purport of the provision is apparent while considering the question of registration.”

In view of above precedent, we find that the activities of the trust in relation to its education activities have not been doubted and on the basis of same activities registration u/s 12AA of the Act was awarded to the assessee. Simply the assessee has received donation from some parties which are involved in the bogus transactions cannot be the basis for the denial of the registration certificates as discussed above.

We are also in disagreement with the finding of ld. CIT(Ex) that the QSP gave its accounted money through bank to the assessee and received the same in cash from the assessee and subsequently the cash was offered to tax under IDS. It is because why a prudent man will convert the accounted money into unaccounted form and thereafter he will offer the same to tax under IDS. There is no documentary evidence available in support of the above finding of the ld. CIT(Ex) which is based on his surmise & conjuncture. Therefore we disagree with the finding of ld. CIT(Ex). In view of above, we have no hesitation in reversing the order of ld. CIT(Ex) and accordingly the appeal of the assessee is allowed.