Summary
The Court restored cancellation of a trust’s tax registration and charitable-donation approval after its managing trustee admitted receiving accommodation donations and returning substantial amounts to donors. The evidence showed misuse of the trust’s registered status rather than merely questionable activities of outside donors. The High Court had failed to address those admissions or demonstrate an error in the Commissioner’s and Tribunal’s conclusions. The Revenue’s appeal was allowed without costs.
Issues
- Whether admitted accommodation donations and return of funds justified cancellation of the trust’s registered status.
Provisions considered
- Section 12AA(3), as applicable to the cancellation proceedings, Income-tax Act, 1961The trust’s admitted misuse and non-genuine activities justified cancellation of its registration under the then-applicable provision. (¶¶ 4, 5, 6, 11, 12, 13)
Held
- The managing trustee’s answers disclosed that purported corpus donations included accommodation entries and that substantial sums received were returned through intermediaries. The case therefore involved the trust’s own conduct and misuse of its registered status. (¶¶ 4, 5, 6, 11)
- A trust misusing the status conferred by registration was not entitled to retain its benefits. On the recorded evidence, cancellation under Section 12AA and the consequential cancellation of Section 80G approval were justified. (¶¶ 5, 11)
- The High Court failed to engage with the trustee’s answers or identify why the Commissioner’s and Tribunal’s conclusions were incorrect or invalid. Its interference under Section 260A could not stand; those authorities’ orders were restored. (¶¶ 12, 13)
Result
Revenue’s appeal allowed without costs; High Court judgment set aside and the Commissioner’s and Tribunal’s orders restored.