SHETH H.P. ARTS AND S.M. COMMERCE COLLEGE,TALOD vs. THE ITO, WARD- 4, HIMATNAGAR

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ITA 799/AHD/2026Status: DisposedITAT Ahmedabad13 August 2026AY 2015-20165 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the assessee was substantially financed by the government and was entitled to exemption under Section 10(23C)(iiiab). The audited accounts also explained the source of cash deposits as tuition fees, making the addition unsustainable.

What were the facts?

The assessee, an educational institution, did not file an income tax return for AY 2015-16. The AO received information about unexplained cash deposits of Rs. 81,19,880/- in the assessee's bank account. The assessee claimed exemption under Section 10(23C)(iiiab) of the Act, stating it was substantially financed by the government and the deposits were from tuition fees.

What were the issues?

Whether the assessee, an educational institution substantially financed by the government, is eligible for exemption under Section 10(23C)(iiiab) and if the cash deposits were adequately explained.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 250,Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SMT. ANNAPURNA GUPTA

For Appellant: Shri Dhinal Shah, A.R, Shri Rameshwar P Meena, Sr.DR
For Respondent: Shri Rameshwar P Meena, Sr.DR
Hearing: 18/05/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD

BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 799/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2015-16) बनाम Sheth H. P. Arts and S. M. The ITO / Commerce College Ward-4, Himatnagar Vs. College Campus, Savarkundla, Gujarat- 383215 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAABS5828C (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Dhinal Shah, A.R. ��यथ� क� ओर से/Respondent by : Shri Rameshwar P Meena, Sr.DR

Date of Hearing 18/05/2026 13/08/2026 Date of Pronouncement

(आदेश)/ORDER Per Sanjay Garg, Judicial Member:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”), dated 17.02.2026 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2015-16.

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2.

The assessee in this appeal is aggrieved by the action of the Ld. CIT(A) in confirming the addition of Rs.81,19,880/- on account of unexplained cash deposits in the bank account of the assessee.

3.

The brief facts of the case are that the assessee is an educational Institution. It did not file any return of income for the assessment year under consideration i.e. A.Y. 2015-16. The Assessing Officer (in short ‘the AO’) received information that there was a huge cash deposit of Rs.81,19,880/- in the bank account of the assessee. Since, the assessee had not filed any return of income and the source of the said cash deposits was not explained, the AO, therefore, reopened the assessment u/s 147 of the Act. Even, in response to notice u/s148 of the Act, the assessee did not file return of income stating that the entire income of the assessee was exempt u/s 10(23C)(iiiab) of the Act and, therefore, the assessee was not required to file the income tax return. It was further explained that the assessee was substantially financed by the Government as more than 50% of its receipts were in the form of grants from the Government. The assessee further explained that during the year, the total receipts of the assessee were of Rs.4,70,87,063/-, out of which, grants were of Rs.3,62,66,802/-, which were about 77.02% of the total receipts.

3.1 So far as the cash deposit of Rs.81,19,880/- in the bank account of the assessee was concerned, it was explained that the same were out of the tuition fees received in cash, which was

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subsequently deposited in the bank account. The assessee furnished the copy of its bank account, income and expenditure account and other relevant documents.

3.2 The AO, however, observed that the assessee did not furnish the fee register, cash book, bank book (if maintained) and cash flow statement in support of its claim and explanation of source of said cash deposits. Further, the AO observed that the assessee had also not furnished the details and evidences in support of its claim and explanation of source of receipts of Rs.3,62,66,802/- as Government grants. The AO, therefore, held that the assessee was not entitled to claim exempt u/s 10(23C)(iiiab) of the Act. The assessee alternatively claimed that the assessee college was being run by C.D. Patel Maha Vidhya Mandal and that the income of the assessee college was exempt u/s10(23C)(vi) of the Act and the income of the college has been considered / included in the income of the C.D. Patel Maha Vidhya Mandal and, therefore, the assessee college was not required to file separate return of income. The AO, in this respect, issued notice u/s 133(6) of the Act to C.D. Patel Maha Vidhya Mandal, which, in its reply dated 03.02.2023 stated that income of the assessee college was not included in their accounts for A.Y. 2015-16 and further that the income of the assessee college were included in the income of the said Trust from A.Y. 2016-17 onwards. The AO, therefore, rejected the claim of the assessee for exemption u/s 10(23C)(vi) of the Act also and ultimately made the addition of Rs.81,19,880/- into the

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income of the assessee on account of unexplained cash deposits in the bank account of the assessee.

4.

The Ld. CIT(A) confirmed the addition so made by the AO.

5.

We have heard the rival contentions and gone through the record. The Ld. Counsel for the assessee has submitted that the assessee college is substantially financed by the Government and its income is exempt u/s. 10(23C)(iiiab) of the Act and further that the assessee college was not required to file the return of income. He has made alternate submission that the accounts of the assessee were duly considered and its income duly included in the income of C.D. Patel Maha Vidhya Mandal. He, in this respect, has relied upon page no.4 of the paper book, which is a computation of income of C.D. Patel Maha Vidhya Mandal for the assessment year under consideration, wherein, income of the assessee college is also found included. The Ld. Counsel for the assessee has also relied upon the audited accounts of the assessee college for F.Y. 2014-15.

6.

After considering the rival submissions of the Ld. Representative of the parties and going through the record, we find that as per the P&L account and balance sheet, the assessee has received substantial grants from the Government and is substantially financed by the Government. The assessee being an educational institute is entitled to exemption u/s10(23C)(iiiab) of

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the Act. Further, the assessee has furnished its audited accounts for the relevant year showing that the assessee had received tuition fees to the extent of Rs.1,07,32,817/-, therefore, the source of the cash deposits is explained. Therefore, the impugned addition is not sustainable and the same is ordered to be deleted.

7.

In the result, the appeal of the assessee stands allowed.

This Order pronounced on 13/08/2026 under Rule 34(4) of the ITAT Rules, 1963

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 13/08/2026 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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