Whether the cancellation of registration under section 12AA as a charitable trust on the basis of search conducted in the premises of the Secretary General of the assessee-trust and the statement recorded by him under section 132(4) is valid?


1.A search and seizure operation took place in the premises of the Secretary General of the assessee, that is, Uttar Pradesh Distillers Association.

2.During the search, the Secretary General’s statement was recorded u/s 132(4). The statement was retracted after two years.

3.In the meanwhile, the Commissioner of Income- tax (CIT) cancelled the assessee’s registration u/s 12AA(3) on the basis of the search operation and the statement made. The order was upheld by the Appellate Tribunal.

4. The assessee contended that Secretary General’s statement was made in the course of search in respect of his premises and not those of the assessee. Hence, the Secretary General’s statement was not attributable to the assessee nor could the materials indicated by him be the basis for cancellation of registration of the trust u/s 12AA


Sec.12AA(3) provides that where a trust or an institution has been granted registration u/s 12AA(1) and subsequently where the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, he shall pass an order in writing cancelling the registration of such trust or institution


1) The Court dismissed the appeal to hold that although the premises, in which the search u/s 132 took place, belonged to the Secretary General, he virtually ran the assessee-trust’s activities from the same premises.

2) The information which he provided in the course of the search pointed out to the activities of the assessee-trust and not to his own activities.


The Delhi High Court, accordingly, held that cancellation of the trust’s registration u/s 12AA on the basis of search conducted in the premises of the Secretary General and the statement recorded u/s 132(4) from him, is valid. The special leave petition filed against the aforementioned decision of the Delhi High Court was dismissed by the Supreme Court.

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