Trust registration once granted can’t be cancelled based on same set of provisions that were examined earlier: HC

Case Details: Sri. Ramjanki Tapovan Mandir v. CIT (Exemptions) - [2022] 144 taxmann.com 183 (Jharkhand)

Judiciary and Counsel Details

• • Aparesh Kumar Singh & Deepak Roshan, JJ.
  • Sumeet Gadodia, Mrs Shilpi Sandil Gadodia & Aakansha Mittal, Advs. for the Appellant.
  • Ratnesh Nandan Sahay, Adv. for the Respondent.

Facts of the Case

“Whether the registration once granted under Section 12AA could be cancelled based on the same set of provisions of the Trust which were examined earlier?”

High Court Held

The High Court held that Section 12AA(3) provides the circumstances under which registration granted under Section 12A to a Trust or Institution can be cancelled. A bare perusal of the said section reveals that Section 12AA(3) contemplates the existence of two contingencies for cancellation of the registration already granted, namely:

a) If the activities of the Trust are not genuine; or
b) are not being carried out in accordance with the objects of the trust.

In the assessee’s case, the registration was granted to the assessee-trust based on the Trust Deed dated 20-09-2005. Based on the same trust deed, an exemption was granted to the trust. However, a notice was issued and later, CIT(exemption) passed an order cancelling registration granted to the assessee. Later, the Tribunal also upheld the order of CIT(E).

The High Court held the CIT(Exemptions) traveled beyond the scope of inquiry as contemplated under section 12AA(3) for declaring that the activities of the Trust are not genuine. It CIT(E) proceeded to cancel the registration by recording that the Trust Deed was contrary to the wishes of the founder of the Trust and the earlier instruments of the Trust.

Once registration has been granted to a trust under section 12AA after satisfying the genuineness of the activities of the Trust, the same cannot be cancelled based on the same set of provisions of the Trust which were examined earlier.