Appeal granted: Registration under section 12A should not be canceled without meeting section 12AA(3) conditions.

The tribunal allowed the appeal of the assessee, emphasizing that the registration granted under section 12A should not be canceled solely based on the grounds presented. The judgment highlighted the importance of satisfying the conditions specified in section 12AA(3) before canceling the registration of a trust or institution.

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Issues:
Cancellation of registration granted to the assessee under section 12A by passing an order under section 12AA(3) of the Income Tax Act.

Analysis:
The appellant's appeal was against the order passed by the CIT-I, Lucknow under section 12A of the Income Tax Act, specifically challenging the cancellation of registration granted under section 12A. The appellant raised nine grounds, focusing on the cancellation of registration under section 12AA(3). The appellant argued that section 12AA(3) should not apply as the trust's activities were genuine and aligned with its objectives. The appellant highlighted the amendment in section 2(15) of the Act and referred to CBDT Circular No. 11 of 2008 to support the contention that while exemption could be disallowed, registration should not be canceled.

The Revenue's representative supported the CIT's order, leading to a detailed consideration by the tribunal. The tribunal examined the provisions of section 12AA(3), which state that if the CIT is satisfied that a trust's activities are not genuine or not in line with its objectives, registration can be canceled. The tribunal emphasized that for this provision to apply, it must be established that the trust's activities are not genuine or not aligned with its objectives. In this case, since the CIT did not establish either condition, the tribunal agreed with the appellant's argument that this aspect should be reviewed during assessment proceedings for exemption under section 11, but registration under section 12A should not be canceled solely based on this ground.

Consequently, the tribunal allowed the appeal of the assessee, emphasizing that the registration granted under section 12A should not be canceled based on the grounds presented. The judgment highlighted the importance of satisfying the conditions specified in section 12AA(3) before canceling the registration of a trust or institution.

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