Trust registration cancellation overturned for minor deed amendments not communicated within 30 days under section 12AB

ITAT Chennai-AT allowed the appeal and directed CIT(E) to grant registration to the trust. The registration was cancelled under section 12AB(1)(b)(ii)(B) for failure to intimate trust deed amendments within 30 days. The tribunal held that amendments were minor without affecting the substance and spirit of original charitable objects. Non-communication of amendments was mere irregularity, not grounds for cancellation. CIT(E) erred by cancelling registration without finding deviation in trust activities or questioning genuineness of operations as required under section 12AB(1)(b).

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Issues:
1. Rejection and cancellation of registration of a charitable trust under Section 12AB(1)(b)(ii)(B) by the Commissioner of Income Tax (Exemptions).

Detailed Analysis:

Issue 1: Rejection and Cancellation of Registration
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Exemptions) rejecting and canceling the registration of the assessee under Section 12AB(1)(b)(ii)(B). The assessee, a charitable trust, applied for registration under Section 12AB of the Act by filing an online application in form No.10AB. The Commissioner noted that the trust deed had been amended, and the trust did not obtain re-registration within the specified period as per the conditions mentioned in the registration certificate. The Commissioner rejected and canceled the registration based on the amendment to the trust deed, which was not intimated to the department within the required timeframe.

Issue 2: Grounds of Appeal
The sole ground of appeal by the assessee was that the Commissioner erred in passing the order under Section 12AB(1)(b)(ii)(B) by rejecting the approval and canceling the registration of the assessee. The assessee contended that the amendments made to the trust deed were to enhance the effectiveness in implementing the existing objects of the Trust without changing any of the objects per se. The assessee argued that the changes made were minor and did not affect the substance and spirit of the original deed.

Issue 3: Legal Provisions
The legal provision of Section 12AB(1)(b) empowers the Principal Commissioner or the Commissioner of Income Tax to call for necessary documents to satisfy themselves about the genuineness of activities of the trust or institution. The provision allows for inquiries to be made to ensure the objects of the trust or institution and the genuineness of its activities. The Commissioner erred in canceling the registration without finding any deviation in the trust activities or commenting on the genuineness of the activities, as required by the provisions of Section 12AB(1)(b) of the Act.

Conclusion
After considering the facts and the reliance on a precedent case, the Tribunal quashed the impugned order of the Commissioner and allowed the appeal of the assessee. The Tribunal directed the Commissioner to grant registration to the trust, stating that non-communication of the amendment in the trust deed was a mere irregularity and not a ground for cancellation of registration. The appeal filed by the assessee was allowed for statistical purposes, and the order was pronounced in the open court on 3rd July 2024 at Chennai.

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