SRI JAMBUKESWARAR AKILANDESWARI TEMPLE,TRICHY vs. ACIT EXEMPTIONS, CBE, COIMBATORE

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ITA 262/CHNY/2026Status: DisposedITAT Chennai03 June 2026AY 2018-197 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found merit in the assessee's contention that its claim was not examined on merits. It set aside the orders of the lower authorities and restored the matter to the AO for fresh adjudication after considering all relevant documents and evidence.

What were the facts?

The assessee, a charitable trust, failed to provide necessary documents and explanations to the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) (CIT(A)) regarding its claim for exemption under Section 11. The AO disallowed the exemption and added interest income, which was confirmed by the CIT(A).

What were the issues?

Whether the denial of exemption under Section 11 and the addition of interest income were justified without a proper examination of the assessee's claims on merits, especially when the assessee offered to provide supporting documents.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(3),Section 142(1),Section 12A,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI S.S. VISWANETHRA RAVI & SHRI S. R. RAGHUNATHA

Hearing: 29.04.2026Pronounced: 03.06.2026

आयकर अपीलीय अधिकरण, ‘ C’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI श्री एस एस विश्वनेत्र रवि, न्याविक सदस्य एिं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं/.ITA No.262/Chny/2026 (ननिाारण वर्ा / Assessment Year: 2018-19 Sri Jambukeswarar Akilandeswari The Assistant Commissioner Temple vs. of Income-tax, 01, Thiruvanaikoil (Exemptions), Coimbatore. Trichy – 620 005. [PAN: AADTS0481J] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant)

अपीलार्थी की ओर से/Appellant by : Shri. N.V.Krishnan, Advocate प्रत्यर्थी की ओर से/Respondent by : Ms.Anitha, Addl.CIT सुनवाई की तारीख/Date of Hearing : 29.04.2026 घोर्णा की तारीख/Date of Pronouncement : 03.06.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal of the assessee is filed against the order of the learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short ‘ld.CIT(A)’) for the assessment year 2018-19, vide the order dated 29.11.2025 against the order passed by the Income Tax Department, National e-Assessment Centre, Delhi, (in shot “AO”) u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 26.02.2021.

2.

The assessee raised the following grounds of appeal:

:-2-: ITA. No:262/Chny/2026.

“1. The order of the Commissioner of Income Tax (Appeals) ["CIT(A)"] is against the law, the facts and circumstances of the case and the principles of equity and natural justice. 2. The assessment order is illegal and invalid as the same ought to have been passed under section 144 of the Income Tax Act, 1961 ["Act"] instead of section 143(3) of the Act, particularly when the assessment order has been passed ex- parte. 3. The learned CIT(A) erred in dismissing the appeal without considering the documents submitted by the Appellant without any reasons in gross violation of principles of natural justice. 4. The order of the CIT(A) is cryptic, non-speaking, and based on mere reiteration of the order of the Assessing Officer ["AO"]. 5. The CIT(A) erred in not adjudicating the appeal filed by the Appellant on merits and merely dismissed the appeal on technical grounds of not replying to the notices of the Assessing Officer even though the Appellant submitted the relevant documents before the CIT(A). 6. The notice under section 143(2) of the Act dated 23.09.2019 is not in accordance with binding instructions issued by the Central Board of Direct Tax in F.No.225/157/2017/ITA.II dated 23.06.2017. Therefore, the notice under section 143(2) of the Act dated 23.09.2019 and consequent assessment completed pursuant to the said notice are invalid and liable to be treated as non-est. 7. The CIT(A) erred in upholding the ex-parte assessment order passed during the COVID-19 pandemic, ignoring the Appellant's explanation that the temple remained closed and records were inaccessible during the said period. 8. The learned CIT(A) erred in upholding the addition made by the Assessing Officer without examining whether the income was applied or accumulated for religious purposes in accordance with law. 9. The learned CIT(A) erred in confirming the disallowance of application of income amounting to Rs. 2,79,61,551/-, solely on the ground that certain documents were not produced before the Assessing Officer, without examining the eligibility of the Appellant for exemption under section 11. 10. The CIT(A) and AO failed to appreciate that the exemption under section 11 of the Act cannot be disallowed when the Appellant was registered under section 12AA of the Act. 11. The CIT(A) and AO erred in not considering the fact that the Appellant has been consistently claiming exemption under section 11 for many years and the claim of the Appellant has been allowed in other years. 12. The CIT(A) and AO failed to appreciate that the amount applied by the Appellant during the previous year on Capital Account is eligible for exemption under section 11 of the Act and the same is supported by documentary evidence.

:-3-: ITA. No:262/Chny/2026. 13. The CIT(A) and AO failed to appreciate that the Appellant is eligible for exemption under section 11 of the Act to the extent of amount accumulated for religious purposes to the extent it exceeds fifteen percent of the Appellant's income, particularly when the Appellant has filed Form 10 specifying the purpose of accumulation. 14. The CIT(A) erred in confirming the addition of Rs.5,49,328/- towards interest income, without appreciating that such income formed part of the Appellant's receipts and was already disclosed by the Appellant in its Income and Expenditure Account and the addition has resulted in double taxation. 15. Without prejudice to the above grounds, the addition in respect of interest income, if any, could have been made only to the extent of eighty five per cent of the said interest amount. 16. The appellant craves the leave of the Hon'ble Tribunal to raise additional grounds before and during the course of hearing of this appeal.”

3.

The brief facts of the case emanating from the records are that the assessee is a charitable trust, filed its return of income for the Assessment Year 2018-19 on 28.09.2018 declaring Rs.Nil income. The case was selected for complete scrutiny under CASS to examine the accumulation of income by the trust. During the course of assessment proceedings, the AO issued notices u/s.143(2) and 142(1) of the Act, along with detailed questionnaires. However, despite several opportunities afforded through hearings fixed on 08.10.2019, 11.12.2020, 22.12.2020, 04.01.2021 and 15.01.2021, the assessee failed to furnish any response or supporting documents. Consequently, the assessment was completed ex parte based on the material available on record.

4.

The AO observed that the assessee had claimed application/deduction of income amounting to Rs.2,79,61,551/- towards charitable and religious purposes u/s.11 of the Act, including application through capital expenditure, accumulation u/s.11(1)(a), and accumulation u/s.11(2) of the Act. However, the assessee did not furnish the trust deed, registration certificate u/s.12A of the Act, approval u/s.80G of the Act, or any other documentary evidence to substantiate its claim for exemption despite repeated opportunities. In the absence of supporting evidence, the AO disallowed the entire claim of Rs.2,79,61,551/- and added the same to the total income. Further, on

:-4-: ITA. No:262/Chny/2026. verification of Form 26AS, the AO noticed interest income of Rs.5,49,328/- received from banks, which had not been offered to tax in the return of income. As no reconciliation or explanation was furnished by the assessee, the said amount was treated as undisclosed income and added to the total income. Accordingly, the total income of the assessee was assessed at Rs.2,85,10,880/- as against the returned income of nil by passing an order dated 26.02.2021.

5.

Aggrieved by the order of the AO the assessee filed an appeal before the ld.CIT(A) on 26.04.2021. The assessee raised a various grounds of appeal before the ld.CIT(A) like the AO ought to have appreciated that the assessee is a temple under the control of HR &CE, Govt. of Tamilnadu, the income of the temple is completely outside the purview of income tax as it is eligible for exemption u/s.11 of the Act and the non-compliance is due to COVID 19 impact, however the assessee did not substantiate the exempt income by providing any documentary evidence. On perusal of the grounds and submissions of the assessee, the ld.CIT(A) confirmed the additions made by the AO by holding as under: “7. Conclusion: After careful consideration of the facts of the case, assessment order, submissions made by the appellant, and applicable provisions of Income Tax Act, 1961, I find that the appellant has failed to substantiate any of the grounds of appeal raised. The explanation offered by the appellant lacks merit. Accordingly, the appeal is dismissed, and the assessment order passed by the Assessing officer under section 143(3) r.w.s. 143(3A) and 143(3B) for the A.Y. 2018-19 is confirmed.” 6. Aggrieved by the order of the ld.CIT(A) the assessee is in appeal before us.

7.

The ld.AR for the assessee assailing the action of the ld.CIT(A) submitted that the ld.CIT(A) has just confirmed the order of the AO without considering any of the submissions made by the assessee. The ld.AR drew our attention to the paragraph Nos.6.2.3 and 6.2.4 of the ld.CIT(A) order and stated that the ld.CIT(A) has observed that the assessee has not submitted the evidence for having claimed exemption u/s.11 of the Act before the AO. In view of the same,

:-5-: ITA. No:262/Chny/2026. the ld.AR prayed for giving one more opportunity before the AO to furnish the relevant information / documents in support of the exemption claimed in the return of income.

8.

The ld.DR supported the orders of the authorities and prayed for confirming the same as the AO had given sufficient opportunities before concluding the assessment order.

9.

We have heard the rival submissions and perused the material available on record. The undisputed facts reveal that the assessment was completed ex parte u/s.143(3) of the Act since the assessee failed to respond to the notices issued by the AO during the course of assessment proceedings. Consequently, the AO disallowed the claim of exemption/application of income u/s.11 of the Act amounting to Rs.2,79,61,551/- and further added interest income of Rs.5,49,328/- on the ground that the assessee had not furnished the requisite documents and explanations in support of its claim.

10.

From the orders of the lower authorities, we notice that the assessee has consistently contended that it is a temple functioning under the control of the Hindu Religious and Charitable Endowments (HR & CE) Department, Government of Tamil Nadu, and is entitled to claim exemption u/s.11 of the Act. However, neither before the AO nor before the ld.CIT(A) were the relevant documents such as the trust deed/statutory constitution documents, registration certificate u/s.12A/12AA, details of application of income, accumulation of income, and other supporting records placed on record for proper verification. At the same time, we also find merit in the contention of the ld.AR that the authorities below have not examined the assessee's claim on merits in the light of the documentary evidence which the assessee now proposes to furnish. It is a settled principle of law that substantial justice should prevail over technical considerations and that a legitimate claim should not be denied merely on account of non-compliance, particularly when such claim requires factual

:-6-: ITA. No:262/Chny/2026. verification. The assessee's eligibility for exemption u/s.11 of the Act and the consequential taxability of the income can be determined only after examining the relevant records and supporting evidence. In the absence of such examination, the issue cannot be adjudicated conclusively at this stage.

11.

Considering the totality of facts and circumstances of the case, in the interest of justice, we deem it appropriate to set aside the orders of the lower authorities on the issues relating to the denial of exemption u/s.11 of the Act and the addition of interest income of Rs.5,49,328/- and restore the matter to the file of the AO for fresh adjudication. The AO shall examine the claim of the assessee afresh after considering all the relevant documents, evidences and explanations that may be furnished by the assessee in support of its claim. The assessee is also directed to extend full cooperation and furnish all requisite details and evidences without seeking unnecessary adjournments. Accordingly, the impugned order of the ld.CIT(A) is set aside and the matter is remitted to the file of the AO for de novo adjudication in accordance with law after providing adequate opportunity of being heard to the assessee. The grounds raised by the assessee are allowed for statistical purposes.

12.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the court on 03rd June, 2026 at Chennai.

Sd/- Sd/- (एस एस विश्वनेत्र रवि) (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) (S.S. VISWANETHRA RAVI) लेखा सदस्य/Accountant Member न्याविक सदस्य/Judicial Member चेन्नई/Chennai, दिनांक/Dated, the 03rd June, 2026. Devadas

:-7-: ITA. No:262/Chny/2026.

आिेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.06.08 16:24:59 +05'30'

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