The main legal point established in the judgment is the requirement for evidence to support allegations, the importance of procedural fairness, and the need for consistency between allegations and findings.

JUDGMENT

T. S. Sivagananam, J. - This appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 (the 'Act' in brevity) is directed against the order dated 3rd May, 2017 passed by the Income Tax Appellate Tribunal, Kolkata 'C' Bench (the 'Tribunal' in short) in ITA No.1165/Kol/2016.

2. The revenue has raised for the following substantial questions of law for consideration:

'(1) Whether on the facts and in the circumstances of the case, the Learned Tribunal is justified in law in quashing the order of cancellation of registration under section 12AA(3) of the Income Tax Act, 1961 ignoring the money laundering activities conducted by the assessee trust with school of Human Genetics and Population Health and such activities has been established in other instances?

(2) Whether on the facts and in the circumstances of the case, the Learned Tribunal is justified in law in quashing the order of the commissioner of Income Tax (Exemption) on the basis of perceived procedural lapses ignoring the truthfulness of facts?

(3) Whether on the facts and circumstances of the case, the Learned Tribunal is justified in law to pronounce an order to be quashed whereas orders have been set aside for fresh adjudication in several cases by the higher Courts including apex court in similar instances.?'

3. We have heard Mr. P.K. Bhowmick, learned standing counsel appearing for the appellant/revenue and Mr. J.P. Khaitan, learned senior counsel assisted by Mr. Ananda Sen, learned advocate appearing for the respondent/assessee.

4. The assessee is a trust registered under Section 12A of the Act, by order dated 23rd March, 1991 an approval under Section 80G(VI) was also granted by order dated 31st August, 2010. The objects of the trust were charitable in nature and in particular to build, maintain and operate guest house for the comfortable stay of pilgrims and visitors to Sreedham Mayapur amongst other objects. The Commissioner of Income Tax (Exemptions), Kolkata (CIT(E) issued show cause notice dated 4th December, 2015 based upon a survey conducted under Section 133A of the Act on School of Human Genetics & Population Health, Kolkata during January, 2015.

5. It was stated that during the survey, statement of the treasurer of the said school was recorded and in that statement they had admitted that they have been providing entries to different individuals and organisations. The entries were provided in two ways: (i) accepting donations and returning the same through web of financial transactions after retaining the commission; and, (ii) accepting money by cash or through web of financial transactions and making donations after retaining the commission.

6. The show cause notice further stated that the assessee had received donation amounting to Rs.18,00,000/- in the assessment year 2013-14 from the said organisation and therefore, it was evident that by accepting donation and then returning the money the assessee had indulged in money laundering which is illegal, not genuine or not in accordance with the objects of the assessee trust. With this allegation, the assessee was requested to explain why the registration granted under Section 12A should not be cancelled by invoking Section 12AA(3) of the Act. The assessee submitted their reply dated 4th December, 2015 stating that they are a public charitable trust engaged in providing accommodation facilities to the visitors and pilgrims at Sreedham Mayapur that they had sent a letter to the organisation on 5th December, 2012 seeking their help and support for expansion of the accommodation facilities at Sreedham Mayapur and they received donation of Rs.18,00,000/- on 22nd December, 2012 by way of bank transfer. The assessee specifically denied the allegation that they had given cash to the donor and subsequently received donation by RTGS as being false, incorrect, malicious and vexatious.

7. The CIT(E) by order dated 17th March, 2016 cancelled the registration granted in favour of the assessee. Aggrieved by