The Hindu Business Line : I-T dept may get powers to proceed against erring trusts

The Finance Bill 2004 introduced in the Lok Sabha on Thursday seeks to specifically empower a Commissioner of Income-Tax to cancel the registration of a trust or an institution if satisfied that the trusts' activities are not genuine or are not being carried out in accordance with the purpose for which it was formed and registered with the department.

Sources said that the tax authorities had been unable to take prompt action against erring trusts and institutions on many occasions on account of the absence of specific powers of cancellation under the Income-Tax Act.

The procedure for registration of a trust or institution by the Commissioner of Income-Tax is currently provided under Section 12 AA of the Income Tax Act.

While the income-tax department held that the power of cancellation of registration flows from the power to register, there were others who maintained that the department did not enjoy specific power of cancellation of registration of trusts registered with the department.

"This situation is sought to be remedied through specific provision of power of cancellation in the Income-Tax Act," the sources said.

If empowered by law, a Commissioner of Income-Tax can cancel the registration (granted under Section 12 AA) by passing an order in writing.

This can be done only after giving an opportunity of being heard to the trust or institution concerned.

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I-T dept may get powers to proceed against erring trusts