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(iii) Donation of Rs. 50,00,000/- has been received from Udodas Mundhra Seva Sansthan. Since the assessee was reluctant in providing any details of corpus donations received by it, third party enquiry was conducted on test check basis. On a commission sent to ADIT(Inv.)- 2(4) Kolkata it was found that the registered office of Udodas Mundhra Seva Sansthan at 1st Floor, Yamuna Bhawan, 55 Ezra Street, Kolkata is an address of many companies/firms which as per the report of ADIT(Inv.)-2(4) Kolkata is identical to typical jama-kharchi entity. Upon summon of the ADIT (lnv.)- 2(4) Kolkata no one attended nor any reply was filed. The facts unearthed during the course of search and seizure action under Section 132 of the Act reveal that the - Trust did not act in a fair manner and collected donations from parties who are found to be nonexistent. The eligibility of registration is not only based on objects of the trust, but also on the genuineness of activities of the trust. Though the trust objects are charitable in nature, its activities are not carried out in accordance with its objects which is evident from the facts gathered during search and post search investigation as mentioned above.

21. So for cancellation of registration of trust or institution PCIT/CIT needs to be satisfied that the activities of such trust institution or are not being carrying out in accordance with the objects. Going through the show cause notice we find that the only Chirayu Charitable Foundation allegation mentioned is with regard to genuineness of donation received by the trust. There is no mention about any charge against the trust/institution showing that its activities are not being carried out for charitable purpose or its activities are beyond the scope provided in the aims and objects provided in the trust. It is noteworthy that the assessee society is running various hospitals and colleges namely "Chirayu Meical College and Hospital", Bhopal, "Chirayu College of Nursing", "Chirayu College of Para Medical" and "Chirayu Cancer Hospital" which apart from running 750 bedded multi specialty hospital is also imparting education to around 2000 students in various colleges having courses of MBBS, MD, B.Sc Nursing. Post B.Sc. Nursing. GNM, MSc. Nursing, and various courses under paramedical college like DMIT, BMLT and physiotherapy etc. Ld. PCIT has not made any observation nor any concrete finding with necessary investigation and information about any of these colleges and hospitals run by the assessee trust of not carrying out for charitable activities of imparting education and medical relief. The sole issue raised in the show cause notice is about the genuineness of donors. Receiving of donation through banking channel from various entities is the source of income or Chirayu Charitable Foundation fund which is subsequently used for application of the same for achieving the objects of the trust. Once the funds are received then they are utilised for carrying out charitable activities. Unless and until there is any evidence to show that the assessee trust is not carrying out the activities as per its objects which are not charitable in nature then there remains no scope/reason with Ld. PCIT to cancel the registration u/s 12AA of the Act. Certainly during the course of assessment proceedings the additions can be made by the Ld. A.O if he is of the opinion that the funds received are not genuine or the funds have been diverted as provided in Section 13 of the Act which can thus give rise to additions to be made in the hands of the assessee.

(v)The decision of Krupanidhi Educational Trust Vs. DIT (E)

- 152 TTJ 673, wherein it is held as under :-

The DIT(E) in the order u/s 12AA(3) of the Act, do not make out any case, which can show the activities of the assessee are not genuine or that the activities of the assessee are not being carried out in accordance with the objects of the trust or institution. The fact that the Assessee was paying commission to persons who solicit students for studying in the Assessee's institution cannot lead to the conclusion that the Assessee is not imparting education. Similarly purchase of a BMW car, borrowing of loans from Sindhi Financiers, non maintenance of regular books of accounts, violations of provisions of Sec.13(1)( c) of the Act in as much as the trustees were paid enormous salary are all by way of passing reference having Chirayu Charitable Foundation norelevance to whether or not the Assessee was pursuing education as its main object. There are no facts brought out in the impugned order regarding the genuineness of the activities of the trust or as to whether the object of education was not pursued by the Assessee as its main and predominant activity. In fact, the order of the DIT(E) does not anywhere show that the assessee is not imparting education. The complaint of the revenue seems to be that education is being imparted but on commercial lines. The definition of Charitable Purpose is given in Sec.2(15) of the Act. The same refers to "relief to poor, medical relief, education and the advancement of any other object of general public utility". The proviso to Sec.2(15) of the Act introduced by the Finance Act, 2008 w.e.f. 1.4.2008 regarding excluding organizations where there is profit motive from the definition of charitable purpose applies only to the category of trusts which has as its object, the object of "advancement of any other object of general public utility". It does not apply to the other categories of charitable purpose viz., "relief to poor, education and medical relief". As rightly pointed out by the learned counsel for the assessee, eleemosynary element is not essential element of charity. It is also not a necessary element in a charitable purpose that it should provide something for nothing or for less than it costs or for less than the ordinary price. The surplus generated, if it is held for charitable purpose and applied for charitable purpose of the assesse, and then the Assessee has to be considered as existing for a charitable purpose. There are enough safeguards provided in Sec.12 and 13 of the Act to ensure that personal benefits of thepersons in control of the trusts are not treated as having applied for charitable purpose and for being brought to tax like provisions of Sec.13(1) (c ) of the Act which restricts unreasonable and excessive payments to certain category of persons connected with a trust or Chirayu Charitable Foundation other institution. In such circumstances, the order u/s 12AA(3) of the Act, cannot be sustained.

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard."

The provisions of section 12AA of the Act, deals with procedure for registration of trust/institutions. As per said section, the Commissioner shall look into the objects of the trust and its activities and satisfy himself about that the objects of the trust are charitable in nature and its activities are genuine and such activities are carried out in accordance with its objects. Sub-section (3) inserted with effect from 1st Oct., 2004 empowers the Commissioner to cancel the registration of a trust or institution granted under clause (b) of sub-section (1) when subsequent to grant of registration the Commissioner is satisfied that activities of trust or institution are not genuine or are not being carried out in accordance Chirayu Charitable Foundation with objects of the trust or institution.Basic purpose of s. 12AA(3) is to check misuse of exemption under pretext of carrying out charitable activities when the same are not so. The CIT has to make out clear case for exercising powers u/s. 12AA(3). In this case, so far as object of trust is concerned, it is nowhere disputed that assessee is engaged in imparting education. Once an institution came within the phrase "exists solely for educational purpose and not for profit" no other condition like application of income was required to be complied with. The mere existence of profit/surplus did not disqualify the institution. Breach of the conditions of the trust deed would not disentitle the institution from getting the benefit which the institution had been granted earlier being a charitable trust. Nowhere in her order, the CIT has taken any objection to the charitable and educational nature of the institution. In fact, the objects of the institution as declared in the trust deed do reflect that all are philanthropic or benevolent in nature, precisely, for the purpose of imparting education. Strange enough, there is no finding recorded by the CIT contrary to this fact.Rather, this is also not the case of the CIT that the institution is doing some other activity of earning profit other than the activity of running educational institutions. The established factual position is that the institution is not doing any other activity except running educational institutions. In such circumstances, the action of cancellation of registration cannot be upheld. As far as the object of the assessee is concerned, this is not the case of the Revenue that the assessee was not imparting education. Since the question about the imparting of education has not been doubted or challenged by the Revenue, the impugned order passed by the CIT is unsustainable in law. Strange enough again, there is nothing on record to prove even sightlessly that the purpose of imparting education was not fulfilled by this institute, thus the Revenue Department has failed to establish that there was any illegal activity or infringement of law so as to doubt the genuineness of the activities.