Recording of satisfaction is mandatory before cancellation of trust's registration: HC

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Recording of satisfaction is mandatory before cancellation of trust's registration: HC
The assessee was an educational institution registered under section 12AA and was running a school. Ninety-five per cent of students admitted in school were non-Christians. After the lapse of more than 26 years, the commissioner (CIT) served a show cause notice on the assessee for cancelling its registration on the ground that the assessee was, in fact, espousing the cause of religion, in particular, i.e., Christians. It was not open for the benefit of the other communities. The CIT rejected the assessee’s registration. ITAT confirmed the order passed by the CIT.
The Patna HC held that a plain reading of the impugned order confirmed that the Commissioner had got mixed up in between the stipulations warranting exercise under section 12AA(3) and section 13(1) (b) in so far as it disentitles a trust to the exclusion from the total income of the previous year, any income, if the same is used for the benefit of any particular religious community or caste.
It was correctly canvassed by the assessee that any such issue can be a subject matter of assessment proceeding but certainly couldn’t lay a foundation for cancellation of registration of the institution altogether unless the two prerequisites as present in sub-section 3 of section 12AA were satisfied.
Thus, there was no doubt to hold that the order of the ITAT in confirming the order of the CIT to cancel the registration dehors the statutory provisions of section 12AA(3). Since there was no satisfaction recorded by the CIT either that the activities of the petitioner were not genuine or that it was not being carried in accordance with its objects, the conclusion drawn by the authorities was a confirmation of perversity.

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