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2020 (2) TMI 329 - HC - Income TaxExemption u/s 11 - cancellation of registration of the respondent by the Director of Income Tax (Exemptions) under Section 12AA(3) - Charitable objects of the assessee - Tribunal quashing the order passed by the Director of Income Tax (Exemptions) cancelling the registration under Section 12AA(3) - HELD THAT:- Tribunal recorded the finding that order of the Director of Income Tax (Exemptions) did not disclose which activity of the respondent was not genuine or that the respondent was not genuine. Tribunal also recorded that there was no material in the said order explaining that activities of the respondent are not being carried out in accordance with its objects. On careful reading of the order passed by the Director of Income Tax (Exemptions) as well as the order passed by the Tribunal, we do not find any error or infirmity in the view taken by the Tribunal. In so far the view taken by the Director is concerned that respondent is directly hit by the proviso to Section 2(15) of the Act, we are of the view that such satisfaction may lead to denial of exemption to the respondent in the assessment proceeding for the relevant assessment year but certainly cannot be a ground for cancellation of registration under Section 12AA(3). The competent authority under Section 12AA(3) must be satisfied that the activities of the Trust are not genuine or that the activities are not being carried out in accordance with the objects of the Trust or the Institution. Such satisfaction must be recorded as a matter of fact on the basis of specific materials on record. Merely saying that the activities of the respondent is hit by the proviso to Section 2(15) of the Act, would not lead to automatic cancellation of registration as that is not a ground provided under Section 12AA(3) of the Act for cancellation of registration. A perusal of the order passed by the Director would go to show that no such finding was recorded by the Director that the activities of the respondent Trust are not genuine or that the activities are not being carried out in accordance with the objects of the respondent Trust. What the Director had done was that he took the view that the respondent was hit by the proviso to Section 2(15) of the Act and therefore, it was deemed that respondent Trust had become non-genuine. Such a view is wholly untenable being contrary to the mandate of Section 12AA(3) of the Act and was rightly interfered with by the Tribunal. There is no error or infirmity in the order passed by the Tribunal. - Decided against revenue.
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