HARE KRISHNA MOVEMENT KOTA,KOTA V. CIT EXEMPTION, JAIPUR

ITA 210/JPR/2025

AI Insights

The case involves two appeals by Hare Krishna Movement against the orders of the CIT(Exemption), Jaipur, which denied registration under section 12AB and approval under section 80G of the Income Tax Act, 1961. The CIT(Exemption) had rejected the registration application citing non-genuineness of activities and business-oriented objects, while the 80G approval was denied on grounds that the trust's activities were religious in nature and expenditures were primarily for religious purposes. The tribunal found that the assessee was not given adequate opportunity to be heard and that the CIT(Exemption) had not properly examined the documents provided. Therefore, the matter was remanded back for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314154 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2023-2024
• Other Referred Cases: ACIT(Exemptions) vs Ahmedabad Urban Development Authority
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH OJHA
• Assessee Lawyers: SHRIANOOP BHATIA
• Keywords: Opportunity of being heard; Principle of natural justice; Charitable institution
• Section: 12A; 80G

Judgement Text

" vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;dlnL; ,oaJhjkBkSM+ deys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihyla-@ITA No.211&210/JPR/2025 u/s 12AB and 80G of the Act fu/kZkj.ko\"kZ@AssessmentYear : 2023-24 Hare Krishna Movement Plot No. 14, OCF, NH 27, Mukundra Vihar Kota – 324 007 cuke Vs. The CIT-Exemption, Jaipur. LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: ACBAS 3236 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :ShriAnoop Bhatia, CA jktLo dh vksjls@Revenue by: Shri Rajesh Ojha, CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 28/04/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 06/05/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These are two appeals filed by the assessee against two different orders of the ld.CIT (Exemption), Jaipur both dated 29-12- 2024 passed under section 12AB and 80G of the Income Tax Act, 1961 [ for short Act ]respectively. The grounds of appeal raised by the assessee in both the appeals are as under:- 2 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR ITA No. 211/JPR/2024 U/s 12AB of I.T. Act, 1961 ‘1. On the facts and circumstances of the case and in law, Id. CIT(Exemption) has grossly erred in rejecting the final registration application filed u/s 12AB of the Income Tax Act, 1961. Such denial of registration is invalid in law and facts hence deserves to be quashed. 2. On the facts and circumstances of the case and in law, the ld. CIT(Exemption) has further erred in rejecting the registration application on the ground of Non- Genuineness of Activities. However, the activities of the trust are completely genuine and explainable. Therefore, the denial of registration on this basis is completely irrational, illogical and against the principle of natural justice, hence deserves to be rolled back. 3. On the facts and circumstances of the case and in law, the Id. CIT(Exemption) has completely failed to understand that \"To deal in religious paraphernalia\" or \"To engage in business activity incidental to attainment of main objective\" doesn't tantamount to a for profit institution hence denying final registration on such ground is itself bad in law as well as facts. Therefore, such order of rejection of final registration deserves to quashed. 4. On the facts and circumstances of the case and in law, the Id CIT(Exemption) has further erred in cancelling the provisional registration earlier granted under section 12A of the Income Tax Act, 1961. Such cancellation being arbitrary in nature as well as unlawful hence deserves to be deleted.’’ ITA No. 210/JPR/2024 U/s 80G of I.T. Act, 1961 ‘’1. On the facts and circumstances of the case and in law. Id. CIT(Exemption) has grossly erred in rejecting the application for final approval u/s 80G-of the Income Tax Act, 1961. Such denial of approval is invalid in law as well as facts hence deserves to be quashed. 2. On the facts and circumstances of the case and in law, Id. CIT(Exemption) has completely mistaken in considering the activities of the trust being religious in nature. The order rejecting the final approval u/s 80G on such ground is completely illogical, irrelevant and arbitrary in nature hence deserves to be rolled back. 3 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR 3. On the facts and circumstances of the case and in law, Id. CIT(Exemption) has further erred in cancelling the provisional approval under section 80G of the Income Tax Act, 1961. Such cancellation being arbitrary in nature as well as bad in law hence deserves to be deleted. 2.1 Apropos to the ground so raised by the assessee in ITA No. 211/JPR/2024, the ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing as under:- ‘’(Page 6) – 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 and it's cannot be ascertained that activities are as per objects. Therefore, the applicant claim of registration u/s 12AB is also liable to be rejected on ground of not proving its genuineness of activities 03. Business Objects: 3.1 On perusal of document submitted by the applicant it is found from objects of applicant trust that following objects mentioned in the MOA/Deed are related to activities of commercial/business nature- \"5 (1) \"deal in religious paraphernalia like incense, picture, bhahan, CDs children books (g) To enter into any venture on its own or as a joint venture in the form or mode with any person, firm, company, society or trust or anyone to promote any of the objects or purely as incidental or supportive to the objects. 6. To engage in any business activity in so far as it is necessary and incidental and supportive to the attainment of above objects of the Trust and in such event separate books of accounts shall be maintained.\" Above mentioned objects are primarily commercial or for-profit making rather than charitable activities, Charitable trusts are typically established for specific chantable objects/activities that benefit the public at large, and their resources are generally intended to be used exclusively for those purposes. Thus, these objects are not charitable in the light of section 2(15) of the Income Tax act. Supreme Court in its decision in the case of ACIT(Exemptions) versus Ahmedabad 4 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR Urban Development Authonty in Civil appeal no. 21762 of 2017 dated 19.10.2022 has opined the following ‘’A.1 It is clarified that an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration (\"cess, or fee, or any other consideration)’’ Therefore, it is clear that, the activities mentioned in the impugned objects are business activities as discussed in 2.1 above, these objects cannot be held as charitable within the meaning of section 2(15) of the Income Tax Act, 1961 and hence, the application of the applicant for registration u/s 12A is liable to be rejected In view of the above, the present application filed in Form No. 10AB is liable to be rejected 04. In view of above discussion applicant's application for registration u/s 12AB is liable to be rejected and thus being rejected on following grounds: -  Genuineness of Activities.  Business Objects 5. 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 applicationand 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 10.12.2022 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 to the ground so raised by the assessee in ITA No. 210/JP/2025, the ld. CIT(E) rejected the assessee’s claim of exemption u/s 80G of the Act by observing as under:- ‘’The reply of the assessee is considered on record but no found tenable. The assessee claimed various exp. like Administration and other expenses, Folk 5 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR niwasexp., Ashram and volunteer Exp. etc which are more than 81% of the total receipt. Thus, it is clear that the applicant is actually a religious trust. In view of the above discussion, it is clear that applicant is making expenditure of religious nature and violating section 80G(5B) of the Act. Therefore, the assessee is not eligible for approval u/s 80G. 04 In view of abovediscussion assessee's claim of approval under section 80G(5) is liable to be rejected and thus being rejected on following grounds:  Approval u/s 80G cannot be granted without registration u/s 12AB  Religious Trust are not eligible u/s 80G(5)(ii)  Expenditure incurred for religious purposes 80G(5B) 5. 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 dated 10.12.2022 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 During the course of hearing, the ld. AR of the assessee in both the appeals mainly submitted that the assessee was not provided with an adequate opportunity of being heard by the ld. CIT(E) and thus both the orders should be quashed being against the principles of natural justice, as only two notices were issued. Further, it is submitted by the ld. AR of the assessee he has submitted all the required documents as desired by the ld. CIT(E) but the ld. CIT(E) without dealing with material placed on record decided that the assessee is enaged in 6 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR the business activities and in fact it is not so based on the decision of Ahemedaand Urban Development Authority (AUDA) as decided by the apex court. The ld.ARof the assessee also submitted that the assessee trust is a charitable Sanstha and not religious and this should be re-examined based on the broad concept. Conclusively, he prayed that he should be given one more chance to contest the case before the ld. CIT(E) to resolve the issue and also to apprise him about the documents already produced by the Trust for registration u/s 12AB of the Act. 2.4. Per contra, the ld. DR relied on the order of the ld. CIT(E). 2.5 After hearing both parties and perusing the materials available on record, we noticed that an application for registration u/s 12AB of the Act was rejected by the ld CIT(E) on following grounds/ * Genuineness of activities * Business objects In the course of hearing of the case, it is requested by the ld.AR of the assessee that he had complied with the instructions of the ld. CIT(E) and supplied all the documents demanded by the ld. CIT(E) 7 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR but it appears that the same has not been properly examined by the ld CIT(E) and the assessee was given only two notices. He submitted that from the records it can be seen the genuineness of the activities of the trust and alsoits objects. He prayed that one more chance should be given to the assessee trust to re-submit or argue the case before the ld. CIT(E) so that he will be in a position reappraise the case to the ld. CIT(A). The Bench adopts the lenient view and feels that the assessee should be given one more opportunity to advance the documents before the ld. CIT(E) as to registration of the trust u/s 12AB of the Act. Hence, in view of all the facts and circumstances of the case, the matter is restored to the file of the ld CIT(E) for afresh adjudication by providing adequate opportunity of being heard and the assessee is also required to submit the documents as demanded by the ld. CIT(E) with regard to registration of the Trust u/s 12AB of the Act. Thus, this appeal of the assessee is allowed for statistical purposes. 2.6 Since we have restored the appeal of the assessee with regard to the registration u/s 12AB of the Act to the file of the ld. CIT(E) for 8 ITA NOS. 211 & 210/JPR/2025 HARE KRISHNA MOVEMENT VS CIT (E), JAIPUR afresh adjudication, therefore, the outcome of appeal of the assessee u/s 80G of the Act is consequential in nature and is also restored to the file of the ld. CIT(E). 3.0 In the result, the appeals of the assessee are allowed for statistical purposes Order pronounced in the open court on 06/05/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 06/ 05/2025 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Hare Krishna Movement, Kota 2. izR;FkhZ@The Respondent- The CIT (E). 3. vk;djvk;qDr@CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 5. xkMZQkbZy@Guard File {ITA No. 211 & 210/JPR/2025} vkns'kkuqlkj@By order lgk;diathdkj@Asst. Registrar "