PROFESSIONAL EDUCATIONAL TRUST,PALLADAM vs. ACIT, COIMBATORE

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2274/Chny/2026 ननिाारण वर्ा /Assessment Years: 2018-19 Professional Educational Trust, v. Assistant Commissioner of No.166, 167, Professional Nagar, Income Tax, Trichy Road, K.N. Puram Post, Coimbatore. Palladam, Tamil Nadu-641 662. [PAN: AABTP6867F] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. Girish Kumar S, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Guru Bashyam, CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 18.06.2026 घोषणाकीतारीख /Date of Pronouncement : 29.06.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / NFAC, (hereinafter referred as the ‘Ld. CIT(A)’) dated 10.09.2025, for the Assessment Year (hereinafter referred as the ‘AY’) 2018- 19.

GROUNDS OF APPEAL 1. The order of the NFAC, Delhi dated 10.09.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1080522828(1) for the above-mentioned Assessment Year is contrary to law, fact and in circumstances of the case. 2. The NFAC, Delhi erred in dismissing the appeal ex-parte and ought to have appreciated that any order passed in gross violation of principles of natural justice should be reckoned as nullity in law. 3. The NFAC, Delhi failed to appreciate that the provisions of Section 250(6) of the Act were not followed in passing the impugned order and hence ought to have appreciated that ex-parte

Page 1 of 5

ITA No.2274/Chny/2026 (2018-19) Professional Educational Trust. order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The NFAC, Delhi erred in impliedly confirming the assumption of jurisdiction under Section 147 of the Act and consequently erred in impliedly confirming the passing of the re- assessment order under Section 147 of the Act without assigning proper reasons and justification. 5. The NFAC, Delhi failed to appreciate that the re-assessment order was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 6. The NFAC, Delhi failed to appreciate that the assumption of jurisdiction under Section 147 of the Act was without sanction of law and ought to have appreciated that the consequential re- assessment order accordingly should be reckoned as bad in law. 7. The NFAC, Delhi failed to appreciate that having not followed the prescription of law/procedure for framing the re-assessment, the consequential re-assessment order passed should be reckoned as nullity in law for want of jurisdiction. 8. The NFAC, Delhi failed to appreciate that the passing of the order under Section 148A(d) of the Act by the JAO as against the passing of the such order by the FAO would completely defy the prescription of law / procedure in relation thereto and hence ought to have appreciated that in the absence of valid foundation for issuance of notice under Section 148 of the Act in view of issuance of such notice by JAO instead of FAO, the consequential re- assessment should be considered as nullity in law. 9. The NFAC, Delhi failed to appreciate that the proposal made in the Finance Bill, 2026 forming part of the Budget documents by inserting a new Section 147A of the Income Tax Act, 1961 by creating two stages in the process of commencing and completing re-assessments, even if it is approved by both the houses as well getting the Presidential assent, the action taken earlier by the JAO in initiating the re-assessment could not be cured, while on the contrary to be reckoned as fatal to the proceedings of re-assessment. 10. The NFAC, Delhi erred in sustaining the disallowance of claim of tax exemption computation benefit in terms of Section 11 of the Act to the tune of Rs. 12, 61, 14,986/- and consequently erred in sustaining the addition of such sums being the gross receipts as taxable total income of the appellant in the computation of taxable total income without assigning proper reasons and justification. 11. The NFAC, Delhi failed to appreciate that the presumption of non-availability of tax exemption benefit was wholly unjustified and hence ought to have appreciated that the assessment of gross income should be considered as nullity in law. 12. The NFAC, Delhi failed to appreciate that the mere delay in filing of tax audit report in Form No. 10B/return of income within the stipulated time could not automatically result in taxation of the entire gross receipts, thereby vitiating the passing of the impugned order. 13. The NFAC, Delhi failed to appreciate that the conditions prescribed in relation to filing of tax audit report in Form No. 10B/return of income were only directory and not mandatory and further ought to have appreciated that the delay in filing the said Form / return of income was neither willful nor deliberate but due to reasons beyond the control of the appellant, there by vitiating the impugned order passed in its entirety. 14. The NFAC, Delhi failed to appreciate that in any event, the action in adding back the entire receipts earned / received during the assessment without taking into consideration the related expenditure incurred in relation to earning of such receipt, i.e. surplus / deficit as per the

Page 2 of 5

ITA No.2274/Chny/2026 (2018-19) Professional Educational Trust. receipts and payments account, the consequential re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 15. The NFAC, Delhi failed to appreciate that in any event, the Form No. 10B / ROI was made available at the first appellate proceedings, which proceedings is the continuation of assessment proceedings and hence ought to have appreciated that the action in disallowing the claim of tax exemption computation under Section 11 of the Act, which claim is otherwise eligible was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 16. The NFAC, Delhi failed to appreciate that condonation petition filed before the CIT(Exemptions), Chennai in terms of Section 119(2)(b) of the Act seeking condonation of delay in filing the Form No. 10B / Return of income in pending for adjudication in F. No. CIT (E) / ROI/2019-20/77, thereby vitiating the sustenance of the disputed claim of exemption in its entirety. 17. The NFAC, Delhi erred in sustaining the disallowance of claim of expenditure incurred in cash to the tune of Rs. 11, 62,026/- alleged to have made in excess of threshold limit prescribed in terms of Section 40A (3) of the Act and consequently erred in sustaining the addition of such sum in the computation of taxable total income without assigning proper reasons and justification. 18. The NFAC, Delhi failed to appreciate that provisions of Section 40A (3) of the Act had no application to the present facts of the case and ought to have appreciated that the said provisions should not be applied mechanically inasmuch as further ought to have appreciated that the exceptions mainly, the commercial expediency theory were completely overlooked and brushed aside, thereby vitiating the disputed disallowance in its entirety. 19. The NFAC, Delhi failed to appreciate that in any event the proviso below Section 40A(3A) of the Act, which proviso carving out the exceptions including the transactions in cash exceeding the threshold limit under commercial expediency was completely overlooked and brushed aside, thereby vitiating the disputed disallowance in its entirety. 20. The NFAC, Delhi failed to appreciate that the genuineness of the alleged transaction in question being not doubted, the purposive legislation of Section 40A (3) of the Act was completely overlooked and brushed aside, thereby vitiating the related findings. 21. The NFAC, Delhi failed to appreciate that the entire re-computation of taxable total income was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 22. The NFAC, Delhi failed to appreciate that having not adhered to the prescription of faceless regime, the consequential re-assessment and appellate order passed should be reckoned as bad in law. 23. The NFAC, Delhi failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 24. The Appellant craves leave to file additional grounds/arguments at the time of hearing.

Page 3 of 5

ITA No.2274/Chny/2026 (2018-19) Professional Educational Trust. relating to the assessment year 2018-19. Case deposits in IDBI Bank Ltd. Rs. 2,43,22,740/-, Cash withdrawals in IDBI Bank Ltd. Rs, 23,24,052/-, TDS on payments to contracts (section 194C) in Perfect IT Solutions, Erode, Rs. 13,02,610/-, cash deposits in Central Bank of India, Rs. 3,50,00,000/-, TDS on interest other than interest on securities, Rs. 7,41,567/- (Section 194A) in Central Bank of India. The above information was flagged by the CBDT in accordance with the Risk Management Strategy. The assessee being a Trust, was statutorily required to file the return of income for the year if its income exceeds the maximum amount not chargeable to tax, without giving effect to the provisions of Section 11 and 12 of the Act. It is found that though the assessee had income chargeable to tax as per the above information, the assessee has failed to furnish its return of income. In view of this a notice u/s. 148 of the Act was issued on 31.03.2022. In response to the same a return u/s. 148 of the Act was filed on 26.04.2022 and an amount of Rs. 12, 61, 14,986/- claimed as deduction/exemption. Ultimately, the return of the assessee was assessed by making addition u/s. 40A (3) of the Act amounting to Rs. 11, 62,026/- and Rs. 12, 61, 14,986 after disallowance of exemption claimed u/s. 11 of the Act.

Page 4 of 5

ITA No.2274/Chny/2026 (2018-19) Professional Educational Trust. view of this, the matter of the assessee is restored back to the file of the Ld. CIT (A) for re-adjudication after giving the assessee a proper opportunity of being heard and the assessee is directed to be cooperative and vigilant enough this time while participating in the proceedings before the Ld. CIT (A) without fail and seeking any adjournment. In the result, grounds taken by the assessee are allowed for statistical purposes.

Order pronounced on the 29th day of June, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 29th June, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem K 4. पवभागीय प्रयतयनधि/DR Digitally signed by K BABU Date: 5. गार्ड फाईल/GF BABU 2026.07.01 09:17:07 +05'30'

Page 5 of 5