Trust's Registration Cancelled for Violating Trust Deeds and Land Sale Justification

The Tribunal upheld the cancellation of registration under section 12AA of the Income Tax Act due to violations of trust deeds and objects, supported by the failure to justify the sale of trust land for development. The appeal was dismissed as the trust was found to have violated the original trust deeds and transferred property against the founder's wishes, leading to the conclusion that the trust's activities were not genuine.

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Issues:
Cancellation of registration granted under section 12AA of the Income Tax Act based on violation of trust deed and objects of the trust.

Analysis:
The appeal was filed against the order cancelling the registration granted under section 12AA of the Income Tax Act. The Assessee argued that the registration was granted based on a new trust deed in 2005, rendering earlier deeds irrelevant. The Assessee contended that there was no violation of law in executing a new trust deed and authorizing the sale of trust land. The Assessee cited a Supreme Court judgment to support their case, emphasizing that the cancellation was unjustified.

The Revenue, represented by the CIT (DR), argued that the cancellation was justified as the trust violated the original trust deed by changing it in 1987 and 2005 without informing the department. The Revenue highlighted that the trust sold land belonging to the Deity, leading to legal actions against the trust. The Revenue contended that the registration was rightly cancelled due to violations of the trust's objects.

The Tribunal noted the Supreme Court's judgment dismissing a related investigation order. The main issue was whether the CIT(E) was right in cancelling the registration. The Tribunal observed that the Income Tax Officer recommended cancellation based on the creation of a new trust deed in 2005 against the founder's wishes and unauthorized sale of trust land. The Assessee's justification for the land sale was deemed insufficient. The Tribunal found no evidence that the sale proceeds were used for trust development, supporting the CIT(E)'s decision to cancel the registration.

In conclusion, the Tribunal upheld the cancellation of registration, stating that the trust violated the original trust deeds and transferred property against the founder's wishes. The Tribunal found the trust's activities not genuine, leading to the dismissal of the appeal.

In summary, the Tribunal affirmed the cancellation of registration under section 12AA of the Income Tax Act due to violations of trust deeds and objects, supported by the failure to justify the sale of trust land for development.

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