Cancellation of trust registration under section 12AA needs proof of non-genuine or object-contrary activities, not family trustees alone.

Registration granted to a trust under section 12AA can be cancelled only if, after registration, the trust's activities are found to be not genuine or not being carried out in accordance with its objects. Family members acting as trustees, by itself, does not establish that the trust is not public charitable in character, and a period of no activity does not automatically satisfy the statutory ground for cancellation. On the facts noted, no material justified withdrawal of registration, so the cancellation was not sustainable and was set aside in favour of the assessee.

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Issues: Whether registration granted to the assessee-trust under section 12AA could be cancelled under section 12AA(3) on the grounds that the trust had family members as trustees and had not carried out activities up to the relevant date.

Analysis: Section 12AA(3) permits cancellation only where, after grant of registration, the authority is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with its objects. The mere fact that the trustees were members of the same family did not by itself establish that the trust was not a public charitable trust. The absence of activities for a particular period also did not amount to a finding that the trust had ceased to be genuine or that its activities were contrary to its objects. No material was shown to justify cancellation on the statutory grounds.

Conclusion: The cancellation of registration was not sustainable and was set aside in favour of the assessee.

Final Conclusion: Registration under section 12AA could not be withdrawn on the facts found, as the statutory conditions for cancellation were not established.

Ratio Decidendi: Registration granted to a trust can be cancelled under section 12AA(3) only on a finding that its activities are not genuine or are not being carried out in accordance with its objects; absence of activity for a period or family composition of trustees, by itself, is insufficient.

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