Trust's Registration Cancelled Retrospectively Due to Lack of Charitable Activities

The Tribunal upheld the Commissioner of Income-tax's decision to cancel a trust's registration under section 12A with retrospective effect, citing lack of genuine charitable activities. The Tribunal found the trust had not conducted activities since 2001 and leasing a building did not meet its objectives. It determined that the CIT had the power to cancel registration retrospectively under the Finance Act, 2010. The appeal by the trust was dismissed, affirming the cancellation of registration by the CIT.

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Issues:
1. Legality of the order passed by the CIT under sub-section (3) of section 12AA of the Income-tax Act, 1961.
2. Whether the CIT is empowered to cancel registration of a trust once registered under section 12A of the Act with retrospective effect.

Analysis:

Issue 1: Legality of the CIT's Order under Section 12AA(3)
The appeal was filed by the assessee-trust against the order of the Commissioner of Income-tax, Hubli, passed under section 12AA(3) of the Income-tax Act, 1961. The CIT initiated proceedings to cancel the registration granted under section 12A, citing reasons such as the society being formed only for the benefit of a specific community, lack of charitable activities, and collecting deposits from inmates. The CIT held that the activities of the assessee-society were not genuine and canceled the registration granted under section 12A with retrospective effect from 01/04/2004. The assessee contended that it had been carrying out charitable activities and that the power of withdrawal of registration was available only from 1/6/2010. However, the Tribunal found that the assessee had not carried out any activities since 2001, and leasing a building to another society did not fulfill the trust's objectives. The Tribunal upheld the CIT's decision to cancel the registration, emphasizing that the power to cancel registration with retrospective effect was conferred by the Finance Act, 2010.

Issue 2: Empowerment of CIT to Cancel Registration with Retrospective Effect
The Tribunal analyzed the legislative intent behind the provisions of sub-section (3) of section 12AA and the subsequent amendments introduced by the Finance Act, 2010. The Tribunal observed that the power to cancel registration granted under section 12A was incorporated by the Finance Act, 2010, with retrospective effect from 01/06/2010. The Tribunal held that the CIT was empowered to cancel the registration of a trust once registered under section 12A of the Act with retrospective effect. Referring to the decision of the Hon'ble Bombay High Court in a similar case, the Tribunal emphasized that interpreting the provisions in such a manner did not violate any vested rights. The Tribunal concluded that the appellant trust had not been carrying out any activities, failed to prove the genuineness of its objects, and thus upheld the CIT's decision to cancel the registration granted under section 12A.

In conclusion, the Tribunal dismissed the appeal filed by the assessee trust, affirming the CIT's decision to cancel the registration with retrospective effect.

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