SHRI JAGANNATH EDUCATIONAL INSTITUTE,KOLKATA vs. INCOME TAX OFFICER, WARD 1(3), EXEMPTION, KOLKATA, KOLKATA

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ITA 1422/KOL/2026Status: DisposedITAT Kolkata21 July 2026AY 2016-175 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the revision order under Section 263, which formed the basis for the revised assessment, had already been quashed by the ITAT, the consequential assessment order was also rendered void. Therefore, the appeal of the assessee was allowed.

What were the facts?

The assessee claimed exemption under Section 10(23C)(iiiad) for AY 2016-17. The CIT initiated revision proceedings under Section 263, leading to a revised assessment order denying the exemption. The assessee appealed this order.

What were the issues?

Whether the CIT(A) erred in dismissing the appeal on merits when the underlying revisionary order and consequential assessment order had been quashed by the ITAT.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH AT KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AY 2016-17 dated 11.02.2026. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

"1. (a) For that on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in adjudicating and dismissing the appeal on merits without appreciating that the assessment order dated 27.12.2019 passed u/s 143(3) r.w.s. 263 of the Income-tax Act, 1961 had already been quashed by the Hon'ble ITAT, Kolkata vide order dated 04.01.2023. (b) For that on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the very foundation of the impugned assessment order, being the revisionary order dated Shri Jagannath Educational Institute. 05.03.2019 passed u/s 263 of the Act, has been quashed by the Hon'ble ITAT, and therefore, the consequential assessment order framed u/s 143(3) r.w.s. 263 had no legs to stand on and thus stood rendered non est and void ab initio. (c) For that on the facts and in the circumstances of the case, the order of the Ld. CIT(A) being arbitrary, contrary to the law and therefore deserves to be quashed.

2.

(a) For that on the facts and in the circumstances of the case and without prejudice to the preceding grounds, the Ld. CIT(A) erred in confirming the action of the lower authorities denying the benefit of exemption claimed u/s 10(23C)(iiiad) of the Act. (b) For that on the facts and in the circumstances of the case and in law, the lower authorities failed to appreciate that the appellant was indeed maintaining and aiding education institutions and it existed solely for educational purposes without any motive for profit and as its annual receipts did not exceed the limit of Rs.1 crore, it had rightly claimed exemption u/s 10(23C)(iiiad) of the Act.

3.

For that the assessee craves leave to submit additional grounds and/or amend or alter the grounds already taken either at the time of hearing of the appeal or before."

3.

Brief facts of the case are that the assessee had filed the return of income for the AY 2016-17 on 07.06.2016 declaring the total income at ₹NIL. The original assessment was completed u/s 143(3) of the Act on 29.10.2018 assessing the total income at ₹NIL. Subsequently, the Ld. CIT (Exemption), Kolkata initiated revision proceedings u/s 263 of the Act and passed an order dated 05.03.2019 directing the Ld. AO to compute the income without allowing the exemption claimed u/s 10(23C)(iiiad) of the Act. In order to give effect to the revision order, the Ld. AO assessed the total income at ₹79,66,090/- after observing that the assessee had derived income from dividend, interest, and surplus on investments, and had a huge surplus indicating the profit motive rather than existing solely for educational purposes. Aggrieved with the assessment order, the ITA No(s). 1422/KOL/2026 Assessment Year(s) 2016-17 Shri Jagannath Educational Institute. assessee filed an appeal before the Ld. CIT(A) who observed that the assessee had failed to file the requisite audit report in Form No. 10B electronically as mandated u/s 12A(b) of the Act and also noted that no income was received from any educational activity, making the provisions of Section 10(23C)(iiiad) of the Act inapplicable. Accordingly, the Ld. CIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

4.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted at the outset that the Ld. CIT (Exemption) had revised the assessment order and had issued certain directions vide order u/s 263 of the Act dated 05.03.2019. The assessee filed an appeal before the Tribunal and the Tribunal had quashed the order u/s 263 of the Act vide their order dated 04.01.2023 in ITA No. 852/KOL/2019 for A.Y. 2016-17. It was stated that the consequential order passed by the Ld. AO giving effect to the directions of the Ld. CIT (Exemption) has no legs to stand and the same also deserves to be quashed. The Ld. DR could not rebut this contention of the Ld. AR.

6.

We have considered the facts of the case, the submissions made and the documents filed. Since the revision order u/s 263 of the Act dated 05.03.2019, on the basis of which the revised assessment was made, has itself been quashed by the Tribunal on 04.01.2023, the consequential order u/s 143(3) r.w.s. 263 of the Act dated 27.12.2019 passed in order to give effect to the findings/directions of the Ld. CIT Shri Jagannath Educational Institute. (Exemption) vide the order u/s 263 of the Act is also quashed as it has no legs to stand and the appeal of the assessee is allowed.

7.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 21st July, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 21.07.2026 Bidhan (Sr. P.S.)

Shri Jagannath Educational Institute. Copy of the order forwarded to:

1.

Shri Jagannath Educational Institute, 78, Syed Amir Ali Avenue, Ballygunge, Kolkata, West Bengal, 700019. 2. Income Tax Officer, Ward-1(3), Exemption, Kolkata, 10B, Middleton Row, Kolkata, West Bengal, 700071. 3. CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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