Loading judgment…
Facts
The assessee, KGK Foundation, filed appeals against two orders of the CIT(E) Jaipur, one rejecting its application for registration under Section 12AB and the other rejecting its application for approval under Section 80G of the Income Tax Act, 1961. The CIT(E) had rejected the applications primarily on the grounds of non-genuine activities and activities beyond the objects of charitable nature, and also due to alleged failure to provide adequate replies and documentary evidence.
Held
The Tribunal noted that the issues were interlinked and the assessee had claimed that it was not provided adequate opportunity to be heard. The Tribunal decided to restore the matters back to the file of the CIT(E) for fresh adjudication with a direction to the assessee to produce all desired documents. The Tribunal clarified that this decision would not reflect on the merits of the dispute.
Key Issues
Whether the denial of registration under Section 12AB and approval under Section 80G by the CIT(E) was justified on the grounds of non-genuine activities and activities beyond the objects of charitable nature, and if the assessee was provided adequate opportunity to present its case.
Sections Cited
12AB, 80G, 12A(1)(ac)(iii), 12A(1)(ac)(vi)(A), 80G(5), 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Both these appeals have been filed by the assessee against two different orders of the ld.CIT (Exemption), Jaipur dated 26-03- 2025 passed under section 12AB and 80G of the Income Tax Act, 1961 respectively. The grounds of appeal raised by the assessee in the above-mentioned appeals are as under: - & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR U/S 12AB of I.T. Act, 1961 ‘’1 That on the facts and in the circumstances of the case the impugned order passed by Id. CIT. Exemption u/s 12AB(1)(b)(ii)(B) of the IT Act, 1961 rejecting application of the appellant for registration u's 120(1)(ac)(iii) and cancelling carlier provisional registration granted u/s 12A(1)(ac)(vi)(A) of the IT Act, 1961 is wrong and bad in law
2. That without prejudice to the ground No. (1) above, on the facts and in the circumstances of the case the Id. CIT, Exemption while rejecting application u's 12AB(1)(b)(ii)(B) is grossly wrong, unjust and has erred in law in holding that activities of the appellant are allegedly non-genuine and are also allegedly beyond the objects of charitable nature even though full details of charitable activities carried by the appellant for furtherance of its object backed by documentary evidence were submitted before him. The finding so recorded by the Id. CIT(A) is wrong, arbitrary, unwarranted, based on misappreciation of facts, without any corroborative evidence and bad in law 3. That without prejudice to the ground No. (1) above, the Id. CIT. Exemption is also wrong and has grossly erred in law in cancelling provisional registration granted to appellant u/s 12(A)(1)(ac)(vi)(A) vide order dt 27-03-2024 on the account of finding recorded by him about alleged non genuineness of appellant's activities and that these activities were allegedly beyond object of charitable nature U/S 80G of I.T. Act, 1961 1. That on the facts and in the circumstances of the case the impugned order passed by Id. CIT, Exemption under second proviso to sec. 80G(5) of the IT Act, 1961 rejecting the application of the appellant for approval u/s 80G and also cancelling carlier order dt. 29.03.2024 granting provisional approval under clause (iv)(A) of first provise to sec. 80G(5) is wrong and bad in law. 2 That without prejudice to the ground No. (1) above, on the facts and in the circumstances of the case the Id. CIT, Exemption while rejecting application u/s 80G is grossly wrong, unjust and has erred in law in holding that appellant has allegedly failed to furnish any reply to show cause notices and therefore as held by him in order dt. 26.06.2025 u/s 12AB(1)(b)(ii)(B) of the IT Act, 1961 cancelling registration u/s 12AB that activities of the appellant are allegedly not genuine and are also beyond the objects of charitable nature. The finding so recorded by the Id. ст.
& 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR Exemption is wrong, arbitrary, unwarranted, based on misappreciation of facts. without any corroborative evidence and bad in law in as much detailed reply to show cause notices duly supported by documentary evidences were submitted to him. The cancellation of application for registration u/s 80G on the ground that application o's 12AB is rejected is therefore wrong and bad in law 3. That without prejudice to the ground No. (1) above, the Id. CTT, Exemption is also wrong and has grossly erred in law in cancelling provisional approval granted to it clause (iv)(A) of first proviso to sec. 80G(5) of the IT Act, 1961 vide order d 27.03.2024 on account of finding recorded by him in order dated 26.06.2025 12AB(1)(b)(ii)(B) about alleged non genuineness of appellant's activities and activities carried were allegedly beyond object of charitable nature 2.1 Apropos of the grounds so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing at page 22 of his order asunder:-
‘’ The applicant has not furnished complete details with documentary evidences as asked vide various notices. Hence, from the above, it is clear that the activities are not verifiable and it could not be determined whether the applicant is genuinely carrying out charitable activity. Therefore, the applicant claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activity. ‘’04. In view of above discussion assessee’s claim of registration section 12AB is liable to be rejected and thus being rejected on followinggrounds:- Genuineness of activities and activities beyond the objects of charitable nature.
Further 12AB (1)(b)(ii) (B) of the Income Tax Act, 1961 also state that if CIT is not satisfiedhas to pass order rejecting such application and also cancelling its earlier registration. Thus, it is clarified that applicant's provisional registration under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 dated 27.03.2024 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional registration, thus with this order provisional registration is also cancelled.’’ 2.2 Apropos of the grounds so raised by the assessee in the ld. CIT(E) rejected the assessee’s claim of exemption u/s 80G of the Act by observing at pages 1 & 2 of his order as under:- ‘’02. Approval u/s 80G cannot be granted without registration u/s 12AB 2.1. As per rule 11AA of the Income Tax Rule, 1962, the registration u/s 12A/12AB or notification u/s 10(23C) is a precondition for granting approval u/s 80G of the IT Act, 1961 Vide this office order No. ITBA/EXM/F/EXM45/2025- 26/1077870627(1) dated 26.06.2025, the application of the applicant for grant approval u/s 12A/12B was rejected. Also, during the present proceedings, the applicant has also failed to furnish any replies, thus, genuineness of activities and all the above issues remains same. Thus, genuineness of activities and all the issues remain same. Thus, the claim of the applicant u/s 80G is liable to rejected on this issue on following grounds Non Genuineness of Activities and activities beyond the objects of charitable nature. In view of above discussion, the application in form No. 10AB seeking exemption u/s 80G is liable to be rejected
03. In view of above discussion assessee's claim of approval u/s 80G is liable to be rejected and thus being rejected on following grounds: - -Approval u/s 80G cannot be granted without registration u/s 12AB
04. Further 2nd proviso to 80G(5) also state that if CIT is not satisfiedhas to pass order rejecting such application and also cancelling its earlier approval. Thus, it is clarified that applicant provisional approval under clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 dated29.03.2024 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional approval, thus with this order provisional approval is also lapsed and cancelled.’’ 2.3 In the course of hearing, the ld.AR of the assessee has submitted an application under rule 29 of the Income Tax Appellate Tribunal Rules, 1963 with the request to admit the following documents in support of the merits & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR of the disputes which the assessee could not place on record on earlier occasion :
1. 1. Copy of Registration Certificate issued by the Registrar of Society of NCT Delhi of the Teamwork Find Society (PB 1).
2. Copy of Memorandum of Association of the Teamwork Fine Art Society (PB 2-30).
3. Copy of Letter-cum-Undertaking provided by the Team Work Fine Art Society for application for donation given by M/s. KGK Foundation towards its aim and objects (PB 31-32) 4. Copy of Form No 10BE being a certificate of donation under clause (IX) to sub-section 5 of Section 80G of the I.T. Act, 1961 (PB 33). The ld. AR further submitted that above mentioned documents are important in deciding the grounds of appeal raised by the assessee for which the ld. DR objected by submitting that the assessee, even though given opportunity, failed to support his contention. The Bench noted that the documents called for were not available and therefore, the assessee could not place it on record. Considering the overall facts and circumstances as argued by the ld. DR, the Bench considers the above documents relevant for adjudication of the issue of registration of the assessee trust. 2.4 Further, it is pertinent to mention that in order to support the grounds of appeal raised by the assessee in the matter of Section 12AB and 80G of & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR the Act, the ld. AR of the assessee has filed following submissions before the Bench: Ref : M/s KGK Foundation, Jaipur PAN:AAKCK5948C, Appeals No. ITA 1104/JPR/2025 and ITA 1105/JPR/2025 Hearing on 08.09.2025 ______________________________________________________ Hon’ble Sirs, In the matter of above appeals, we are to submit as under:-
1. Facts : 1(i) The issues involved in above Appeals No. ITA 1104 and 1105 are identical, inextricably interlinked or in fact interwoven and the facts and circumstances are common, therefore, common submissions are made.The appellant KGK Foundation is a registered company under section 8 of the Company’s Act 2013 and one of the forms of charitable institute / trust under section 8 of the Company’s Act 2013.The Central Government has authorized to operate for the welfare of public at large and the KGK Foundation is incorporatedon 23.10.2003 for Public Charitable purposes to achieve the said aims of the Government. The particulars of main objects as per clause 3(a) of Memorandum of Association (MoA) are as follows :- Clause No. 3(a)(1) - To promote, encourage, support, assist, aid, impart education, training including vocational training, skills research and development and advance education activities by promoting schools, colleges, university(s) for preprimary, primary, secondary, undergraduate, post-graduate, doctoral, post-doctoral, vocational or otherwise in various branches or fields of education. Clause No. 3(a)(2) - To undertake, carry out, promote and sponsor development of life in every aspect in rural and urban areas and to promote, encourage, support, assist and protect the arts, music and culture. Clause No. 3(1)(3) to 3(a)(6), a copy of Memorandum of Association is enclosed.
& 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR 1(ii) From the said objects, it is evident and verifiable that objects of the Trust are for charitable in nature and not for any profit.A reference is also therein Clause No. 3(a)(8) at Page No. 2 of the Memorandum of Association. However, for ready reference, the said clause is reproduced here in below :- “No objects of the company will be carried out on commercial basis” 1(iii) As per above facts, which are duly supported by the documentary evidences, the Foundation is a Public Charitable Institute / Trust and fulfills all other requirements as per provision of Section 12AB and 80G of the IT Act, 1961.The appellant submitted an application in Form No. 10AB on 12.12.2024 for seeking permanent registration u/s 12A(1)(ac)(iii) of the IT Act, 1961 after obtaining provisional registration u/s 12A(1)(ac)(iv)-A on 23.03.2024. After that with reference to the said application, the learned CIT (E) issued a letter / notice raising various queries and also required to furnish the documents on 21.02.2025 and on other dates as referred in the order passed on 26.06.2025. The appellant submitted all the required details from time to time.After considering the replies / explanations and documents, the learned CIT rejected the application of the appellant and also cancelled the provisional registration granted under clause (iv) of clause (ac) of sub section (1) of section 12A of the IT Act, 1961. The learned CIT (E) has also rejected the application filed for seeking exemption under second proviso to 80G(5) of the IT Act, 1961 and cancelled the earlier provisional approval granted on 19.03.2024 under clause (iv)(A) of first proviso to section 80G(5) of the IT Act, 1961 for the following reasons :- (a) The donation given to “The Teamwork Fine Art Society” being a charitable trust having valid registration u/s 12AB and 80G5 of the IT Act, 1961 having similar objects to the foundation is not a charitable purpose. (b) The Teamwork Fine Art Society (TWFAS) has organized an event in the name of The Jaigarh Heritage Festival which was not opened for the general public and placing logo KGK Group on all banners and pamphlets, etc. (c) The appellant failed to submit copy of letter received from the organizers requesting for the sponsorship of the event. (d) The appellant failed to establish that the objects of the TWFAS and the appellant are similar to each other. Aggrieved by the above said action of the learned CIT (E), the appellant filed an appeal before your honours raising the following grounds of appeals.
2. Grounds of Appeal for u/s 12AB(1)(b)(ii)(B)
& 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR (i) That on the facts and in the circumstances of the case the impugned order passed by ld. CIT, Exemption u/s 12AB(1)(b)(ii)(B) of the IT Act, 1961 rejecting application of the appellant for registration u/s 12A(1)(ac)(iii) and cancelling earlier provisional registration granted u/s 12A(1)(ac)(vi)(A) of the IT Act, 1961 is wrong and bad in law. (ii) That without prejudice to the ground No. (1) above, on the facts and in the circumstances of the case the ld. CIT, Exemption while rejecting application u/s 12AB(1)(b)(ii)(B) is grossly wrong, unjust and has erred in law in holding that activities of the appellant are allegedly non-genuine and are also allegedly beyond the objects of charitable nature even though full details of charitable activities carried by the appellant for furtherance of its object backed by documentary evidence were submitted before him. The finding so recorded by the ld. CIT(A) is wrong, arbitrary, unwarranted, based on misappreciation of facts, without any corroborative evidence and bad in law. (iii) That without prejudice to the ground No.(1) above, the ld. CIT, Exemption is also wrong and has grossly erred in law in cancelling provisional registration granted to appellant u/s 12(A)(1)(ac)(vi)(A) vie order dt. 27.03.2024 on the account of finding recorded by him about alleged non- genuineness of appellant’s activities and that these activities were allegedly beyond object of charitable nature. (iv) That the appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them.
3. Grounds of Appeal for u/s 80G(5) (i) That on the facts and in the circumstances of the impugned order passed by ld. CIT, Exemption under second proviso to sec. 80G(5) of the IT Act, 1961 rejecting the application of the appellant for approval u/s 80G and also cancelling earlier order dt. 29.03.2024 granting provisional approval under clause (iv)(A) of first proviso to sec. 80G(5) is wrong and bad in law. (ii) That without prejudice to the ground No. (1) above, on the facts and in the circumstances of the case the ld. CIT,Exemption while rejecting application u/s 80G is grossly wrong, unjust and has erred in law in holding that appellant has allegedly failed to furnish any reply to show cause notices and therefore as held by him in order dt. 26.06.2025 u/s 12AB(1)(b)(ii)(B) of the IT Act, 1961 cancelling registration u/s 12AB that activities of the appellant are allegedly not genuine and are also beyond the objects of charitable nature. The finding so recorded by the ld. CIT, Exemption is wrong, arbitrary, unwarranted, based on misappreciation of facts, without any corroborative evidence and bad in law in as much detailed reply to show cause notices duly supported by documentary evidences were submitted to him. The cancellation & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR of application for registration u/s 80G on the ground that application u/s 12AB is rejected is therefore wrong and bad in law. (iii) That without prejudice to the ground No. (1) above, the ld. CIT, Exemption is also wrong and has grossly erred in law in cancelling provisional approval granted to it clause (iv)(A) of first proviso to sec. 80G(5) of the IT Act, 1961 vide order dt. 27.03.2024 on account of finding recorded by him in order dated 26.06.2025 u/s 12AB(1)(b)(ii)(B) about alleged non genuineness of appellant’s activities and activities carried were allegedly beyond object of charitable nature. (iv) That the appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them.
4. The ground wise submissions of the appellants are as follows :- First Ground of both the Appeals : 4(i) First ground of both the appeals is challenging, the action of the learned CIT(E) rejecting the application of the appellant u/s 12AB(1)(b)(ii)(B) of the IT Act, 1961, cancellation the earlier provisional registration granted u/s 12A(1)(ac)(vi)(A) of the IT Act, 1961 and the order passed under second proviso to Section 80G(5) of the IT Act, 1961 cancelling the earlier order dated 29.03.2024 granting provisional approval under clause (iv)(A) of first proviso of Section 80G(5). The learned CIT(E) cancel the registration and rejected the 80G exemption for the reasons that the TWFAS has organized an event in the name of The Jaigarh Heritage Festival. He further mentioned that the organizers charged Rs. 30,000/- Rs. 50,000 and Rs. 80,000/- in individual, couple and family respectively. He further mentioned that the event has a normally entry ticket of Rs. 200/-. The learned CIT(E) further mentioned that the Jaigarh Heritage Festival was organized by the Royal Family, Jaipur as the name of royal family mentioned as host in the ticket image. The learned CIT(E) further observed that the appellant has not explained that what enquiries were made before making contribution of Rs. 15,00,000/-. Healso of the view that tofavour the royal family and personal benefits of Directors of the KGK Group the above donation was given. Further in drawing adverse view, the learned CIT has also mentioned that being attendees are affluent people and the KGK brand had good advertising platform. Ultimately, the learned CIT(E) held that due to non-submission of request letter for sponsorship of the event, KGK Group have benefited from event and the TWFAS is only anevent management entity. In this regard, it is submitted that the findings of the CIT(E) as well as the adverse inference drawn on the legs of the said findings are without any basis & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR and / or any corroborative evidences. It is also evident from the order itself that the adverse inference is drawn without taking into consideration the objects of the trust. As submitted above the objects of both the trusts KGK and TWFAS, which are evident from the object clauses of KGK Foundation and TWFAS are the same and are for public charitable purposes. Inthis connection it is worthwhile to submit here that Ld. CIT (E) has not pointed out any non-charitable purpose object of the appellant in the impugned order passed. The appellant places reliance on the recent judgment of Hon’ble Supreme Court of India reported in 171 Taxmann.Com 575 (2025) in which the Hon’ble Apex Court held that the commissioner is required to restrict himself to the objects of the trust. 4(ii) Further, the activities carried out by the TWFAS are genuine and in the sense that they are in the line with the objects of the trust. It is pertinent to submit here that the definition of charitable purposes given in Section 2(15) of the IT Act, 1961 includes preservation of monuments or places or objects of artistic or historical interest and the advancement of any other objects of general public utility. Thus, the inference drawn by the learned CIT(E) that the donation given by the appellant to the TWFAS is not for charitable purposes is against his own findings and also against the legal documentary evidences available on record.
5. Second and Third Grounds of both the Appeals : 5(i) The issues involved in Second and Third grounds of both the appeals are identical, inextricably interlinked or in fact interwoven and the facts and circumstances are common, therefore, common submissions are made.The said grounds of appeal
are challenging, the action of the learned CIT(E) in rejecting the application of the appellant u/s 12AB(1)(b)(ii)(B) on account of allegedly non genuine and beyond objects of the charitable nature and also rejecting the application u/s 80G(5) on the similar ground. In this connection, the appellant submits that the reasons given by the learned CIT(E) are of presumptive nature, without any supporting corroborative evidencesand also in contravention to the supporting documentary evidences filed by the appellant before the learned CIT(E). For better understanding and easy to explain the appellant submits comparative chart having reasons of the learned CIT(E) on account of same he rejected above said supra application(s) of the appellant and the reply of the appellant thereof :- S.No. Reasons of the learned Reply of the Appellant CIT(E)
1. Appellant failed to explain the Complete details of the objects of objects of the KGK the KGK Foundation are given in & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR Foundation are similar with Memorandum of Association and TWFAS. as per Clause No. 3(a)(2) i.e. “To undertake, carry out, promote and sponsor development of life in every aspect in rural and urban areas and to promote, encourage, support, assist and protect the arts, music and culture.” And TWFAS vide Clause No. 3(a)– “To promote all kinds of fine arts and cultural activities e.g. art, culture, fine arts, painting, music, film making, puppetry, theatre, dance, drama, writing, voice overs, dubbing etc. amongst the general public.”Copy of Memorandum of Association of TWFAS is submitted as an additional evidence under rule 29 of ITAT Rules, 1963. Copy of the Memorandum of Association of the Appellant is enclosed herewith.
2. Entry ticket charges Rs. 200/- The appellant is absolutely of Jaigarh Fort. unconnected with the said charges and also not participating in the management of Jaigarh Fort which is owned by the royal family. Further, the TWFAS is also not having any control over the said entry ticket charges. The organizers of Jaigarh Fort Heritage Festival have charged Rs. 30,000/- , Rs. 50,000/- and Rs. 80,000/- for individual, couple and family respectively. As evident from the order of the learned CIT(E) that the appellant is not connected or related with the above said charges and no amount is received out of the said charges by & 1105/JP/2025 KGK FOUNDATION, JAIPUR VS CIT (E), JAIPUR the appellant. In this regard, it is also submitted that the Jaigarh Fort is a world heritage site and icon of Rajasthan, India. Further the said fort is spread inmorethan 100 acres, at the time of its occupancy about 35000 persons living there. The owners of the fort are royal family which manages the said historical monument and tokencharges/fees fee is fixed Rs.200 to protect the historical place from unsocial element and security purposes in all 365 days of the year. The Jaigarh Heritage Festival, etc. are organized every year by the Royal family for about a week or more than that to attract the tourists. But the appellant is not concerned with the said activities at all. Further the TWFAS has only use the said Jaigarh Fort as a venue to promote fine arts and cultural activities for limited hours.