In Brief
A Trust registered for charitable purposes under Section 12AA of the Income Tax Act received a large donation allegedly made by collecting cash from the donor in exchange for retaining a commission—a practice suggesting money laundering rather than genuine charity. The Tax Commissioner cancelled the Trust's registration. The High Court quashed this cancellation, holding that a single bogus donation cannot prove the Trust's activities are not genuine. The Supreme Court reversed the High Court, holding that its reasoning contradicted Section 12AA(3). The Court emphasized that serious allegations of money laundering require merit-based reconsideration by the competent authority, with due process given to the Trust, not summary dismissal.
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