Cancellation of charitable registration requires statutory non-genuineness or breach of objects; denial of exemption alone is insufficient.

Registration under Section 12-AA(3) can be cancelled only if the Commissioner finds that the trust's activities are not genuine or are not being carried out in accordance with its objects. Mere lack of exclusive charitable activity does not meet that threshold, and denial of exemption under Section 10(23-C)(vi) does not by itself justify cancellation of registration. On the stated facts, the cancellation rested only on the view that the society did not exist solely for charitable purposes, without the statutory findings required for cancellation, so the cancellation was not sustainable.

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Issues: Whether registration under Section 12-AA(3) of the Income-tax Act, 1961 could be cancelled merely because the institution was not solely engaged in charitable activities or was denied exemption under Section 10(23-C)(vi) of the Income-tax Act, 1961.

Analysis: Section 12-AA(3) permits cancellation of registration only when the Commissioner is satisfied that the activities of the trust or institution are not genuine or are not being carried out in accordance with its objects. The mere fact that some activities are not exclusively charitable does not satisfy that statutory threshold. A refusal or denial of exemption under Section 10(23-C)(vi) stands on a different footing and cannot, by itself, justify cancellation of registration under Section 12-AA. On the facts, the cancellation order rested only on the view that the Society did not exist solely for charitable purposes, without any finding that the statutory conditions for cancellation were met.

Conclusion: The cancellation of registration was not sustainable, and the appeal was rightly rejected.

Final Conclusion: Registration under Section 12-AA could not be cancelled on the ground relied upon by the Department, and no substantial question of law arose for interference.

Ratio Decidendi: Cancellation of registration under Section 12-AA(3) is permissible only on a finding that the activities of the trust or institution are not genuine or are not being carried out in accordance with its objects; denial of exemption under Section 10(23-C)(vi) or lack of exclusivity in charitable activity is not enough.

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