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2007 (11) TMI 348 - AT - Income TaxClaimed exemption u/s 11 - Addition made u/s 68 of the Act - Genuineness of the donations - Alleged Fake Donations - No opportunity of cross-examination - HELD THAT:- We are in agreement With the observations of learned CIT(A) when he says that exemption under s. 11 cannot be denied to the assessee on the basis of fake donations. The impugned claim of exemption can only be denied if (i) the activities of the trust are not genuine and (ii) its activities are not being carried out in accordance with the objects of the trust. Admittedly, no finding has been given by learned AO in this regard. He has not touched these ingredients, which are sine qua non for grant of impugned exemption. It is also a fact that registration granted under s. 12AA of the Act has not been withdrawn by CIT. None of the allegations contained in the assessment order for asst. yr. 2004-05 under consideration relates to the activities carried on by the society. Rather, the activities of the society are being carried out as per rules, stand confirmed from the evidences. It is a clear case that the AO did not make any enquiry in respect of the donations received from the trusts, companies and celebrities and other donors, which were received by account payee cheques/drafts. These donors are existing asses sees and have claimed deduction u/s 80G of the Act for the donation made to the assessee. Merely by recording statements of few persons on the back of the assessee, without producing them for cross-examination, the entire donations cannot be treated as bogus and as unexplained money of the society. The IT authorities cannot be allowed to take advantage of their own inaction to the prejudice of the assessee, in respect of the allegation that the assessee society has received donations from various trusts, well known companies and certain celebrities. The society has been working for the purpose of attaining its objects by carrying out various activities in the field of education. Therefore, there is nothing wrong to make donations to assessee society keeping in mind the charitable activity by it. Therefore, we confirm the impugned finding and dismiss the ground raised by the Revenue. As a result, the appeal of the Revenue is dismissed. As we have already observed while deciding the appeal of the Revenue that not providing the opportunity of cross-examination is a serious lacuna and not technical lapse an un scrutinised statement is not a statement at all and cannot be used against a person who was not given an opportunity to cross-examine the deponent in this case no such opportunity was given. Therefore, we amend the observations so made by the learned CIT(A) and allow this ground of cross-objection. In the result, the appeal of the Revenue is dismissed and the cross-objection is allowed.
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