TaxTMI 
TaxTMI 
2026 (4) TMI 1491
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.... Trust was conducted under Section 132 of the Act on 05.10.2006 and later, a survey was also conducted. The evidence gathered disclosed the following violations of the Trust Deed:- 1. Trust funds are invested in the Proprietorship Concerns of the Managing Trustee. 2. Rent advance of Rs. 3,05,24,800/- has been taken from the Trust, though the total value of assets of the Managing Trustee was less than that value. 3. The Managing Trustee was caught with Rs. 1 crore at Chennai Airport and agreed that amount is taken from corpus fund of the rent. 4. By touching the corpus, the Trustees maligned the sacred concept of the Trust and breached the concept of Trust (Breach of Trust) invested by the donors in the Trust and therefore, the Trust is not entitled for approval under Section 80G of the Income Tax Act. 5. Sale of educational Institutions at Natham for a consideration of Rs. 1,82,00,000/-. 6. Compulsory donations such as capitation fees is collected and not accounted for. There are evidences to show that in the form of letters from students asking for refund of capitation fees as they could not join the course. So the claim of cor....
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....e Registration, the Authority shall record its satisfaction that the activities of the Trust are not genuine and the activities are not being carried out, in accordance with the objects of the Trust. The Tribunal, referring to the show cause notice, dated 27.02.2009, which has not spelt explicitly to the effect that the activities of the Assessee Trust are not genuine and not carried out in conformity with the objects of the Trust, has held that the action of cancellation of the Registration, pursuant to the show cause notice, which is bereft of details, cannot be sustained. The operative portion of the impugned order is extracted below, for better understanding and appreciation:- "10. In our considered opinion, the show cause notice issued in this case is not a valid show cause notice and deserved to be quashed. Even if various irregularities were found to have been committed by the Managing Trustee, it is the duty of the ld. CIT to give show cause notice of specific proposed grounds to the Assessee Trust and only after considering the explanation given by the Trust, he could have come to any conclusion based on the facts and law in those circumstances. But, in this case,....
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....me Tax Appellate Tribunal was right in disregarding the various violations of the conditions for being recognised as a Charitable Trust, given in detail in the order of the Commissioner of Income Tax under Section 12AA(3)? 7. For our consideration, it is necessary to examine the show cause notice first, whether it carries necessary ingredients to initiate action for cancellation of the Registration, granted to the Respondent Trust and hence, the contents of the show cause notice are extracted below:- "Registration under Section 12AA of the Income Tax Act, was granted to your Trust by order of the then Commissioner of Income Tax, Tiruchirappalli on 02.12.1998. A search under Section 132 of the Income Tax Act conducted on 05.10.2006 in the case of Sri.P.Murugesan, Managing Trustee and consequent survey under Section 133A conducted in your case and evidences gathered in this regard reveal various gross violations of the Trust Deed. The above violations have also led to the completion of your Income Tax assessments for the assessment years 2001-02 to 2007-08 in the status of AOP and taxation at the maximum marginal rate. Your have also not cooperated and complied with the v....
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....he Tribunal, in its entirety, bristles with infirmities and non-application of mind. 11.The learned counsel for the Respondent would submit that introduction of Section 12AA(3) with effect from 01.10.2004 will not have any adverse consequence in respect of the Respondent, when there is no specific allegation of ingenuity of the Trust, which is a primordial requirement for cancellation of the Registration of the Trust already granted. 12.Further, the learned counsel for the Respondent would contend that the subsequent amendment to the Act, particularly, pre-amended Section 12AA, read with amended Section 12AA as well as the Circulars issued by the Department would go to show that though power for cancellation of the Registration is conferred to the Authorities, certainly it cannot be exercised with retrospective effect and further, if at all, there is any violation or deviation of the funds of the Trust, only to that extent, exemption given to the Trust is to be revoked and not in entirety the certification be cancelled. 13.Though the argument of the learned counsel for the Respondent is, prima facie, impressive, if such an argument is accepted and given the seal of approva....