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2016 (11) TMI 1466 - AT - Income TaxCancelling the Registration certificate granted u/s 12A - providing providing bogus donation - name of the assessee was reflecting in the list of bogus donors as provided by the Managing trustee of the BERT in his statement - activities of the assessee are not in accordance with the objects for which it was established - Held that:- We find that the investment was made by the assessee trust within the mode as specified. The ld. AR has produced the list of investments for the years ending 31.3.2012, 31.3.2013, 31.3.2014, 31.3.2015 which were not questioned in any of the income tax proceedings and it can be inferred that these were accepted as investment within the specified mode. The ld. DR has also not brought anything contrary to the arguments of ld. AR. Therefore, this cannot be reasons for cancelling the registration certificate u/s 12A of the Act. Besides the above we also find that the ld. CIT(E) has not given any finding that the investment has been made assessee in contravention to the provisions of Section 11(5) of the Act. Merely the money invested in the modes specified u/s 11(5) of the Act and trust carrying no charitable activity cannot be a ground for the cancellation of registration. the assessee has been giving donation in every year which has been duly accepted by the Revenue as evidenced from the income & expenditure account of the assessee of the financial statements which are placed on pages 91 to 130 of the paper book. The amount of donation given by the assessee trust over the several years to the other trust is very much charitable activities. There is also no adverse remark in the audit report about the investment made by the assessee. We also find that the notice for the cancellation of the registration certificate was issued under section 12AA(3). However, Ld. CIT(E) has also invoked the provisions of section 12AA(4) of the Act for cancelling the registration certificate which in our considered view against the principal of natural justice. The ld. CIT(E) before invoking the provisions of Section 12AA(4) should have issued the show cause notice. Therefore, we find that the proper opportunity to the assessee has not been furnished. We also find that the lower authority should have issued summon u/s 131 of the Act for the cross examination but from the facts we find that the no such summon has been issued. We also find that assessee has given the detailed profile of the donee along with the correspondence. The transaction for the donation was made through banking channel and the department failed to bring anything on record that the donation given by the assessee has come back to it in the form of the cash. - As per question no. 14 of the statement of the managing trustee of BERT, it is clear that SGP was the only party to arrange all the bogus donations but his statement is missing which was crucial to crack the chain of bogus donation - Decided in favour of assessee.
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