Registration of trust was governed by Section 12A of the Act prior to the introduction of Section – 12AA vide Finance Act, 2007.
Section – 12AA(3) empowers the commissioner to cancel the registration of trust, if the registration is granted u/s. 12AA. However, the provision is silent for cancellation of registration, where the registration is granted u/s. 12A.
This was unintended omission of powers of the CIT to cancel registration. Taking advantage of this loophole, many judicial pronouncements were decided against the revenue authorities ruling that Commissioner has no power to cancel the registration granted u/s 12A even if the activities of the trust or institution are found to be non-genuine. This stand was taken in the cases of: (a) Bharati Vidyapeeth V. Income Tax Officer (2008), and (b) Sri Chaitanya Educational Committee V. Commissioner of Income-tax (2007).
I t is, therefore, proposed to amend section 12AA so as to provide that the Commissioner can also cancel the registration obtained u/s 12A.
This change is proposed w.e.f. 1st June 2010.