INCOME TAX OFFICER, NCW-22(4), TAMBARAM, TAMBARAM vs. ST MARYS GIRLS HIGHER SECONDARY SCHOOL, CHENGALPATTU

आयकर अपीलीय अधिकरण, ‘ए ’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI

श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.3406/Chny/2025 ननर्ाजरण वर्ज / Assessment Year: 2015-16 St.Marys Girls Higher Secondary The Income Tax Officer vs. School, Kancheepuram High NCW 22(4) Road, Chengalpattu, Tambaram. Kancheepuram – 603 002. (अपीलाथी/Appellant) [PAN: AALAS2952B] (प्रत्यथी/Respondent)

अपीलाथी की ओर से/Appellant by : Shri. H.Mahendran, JCIT प्रत्यथी की ओर से/Respondent by : Shri. Chennu Botla Kandi Botla, CA (Virtual) सुनवाई की तारीख/Date of Hearing : 28.04.2026 घोषणा की तारीख/Date of Pronouncement : 02.06.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : This appeal by the Revenue is arising out of the order dated 23.09.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2015-16 against the order of u/s.147 r.w.s 144B of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the Assessment Unit, Income Tax Department (AO), dated 25.03.2023.

:-2-: ITA. No:3406 /Chny/2025 school fees collected were initially deposited into a bank account linked with the PAN of the school, owing to an inadvertent error. Subsequently, upon noticing the mistake, the PAN linked to the said bank account was corrected and updated with the PAN of the society. Since no return of income had been filed in respect of the school PAN and the information available with the Department reflected deposits in the bank account linked to the said PAN, notice under Section 148 of the Act was issued. Thereafter, the PAN in the bank account was duly substituted with the PAN of the society in place of the school PAN. The school maintains separate books of account; however, its accounts are consolidated with the financial statements of the society. Further, the society had filed its return of income for the Assessment Year 2015–16 on 29.09.2015. The name of the school, namely St. Mary’s Girls Higher Secondary School, is also reflected in the ITR-7 filed by the society under the head “Projects/Institutions run by the Society.”

:-3-: ITA. No:3406 /Chny/2025 5. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A) on 14.04.2023. Before the ld.CIT(A), the assessee furnished the entire details of the school, which is a part or branch of the society and its transactions are consolidated with the books of the Society. Further the assessee submitted the following written submission before the ld.CIT(A):- “6. In response to these notice the appellant filed its reply dated 17.12.2024, which is reproduced as under: '1. St Mary's Girls Higher Secondary School (herein after referred to as the Appellant) is a branch of The Congregation Sisters of St. Ann of Providence Southern Province with PAN No.AAATT12348 (herein after referred to as Society) The appellant does not have any legal title other than the status of the branch of the "Society". 2. The appellant has applied for PAN for submitting to the bank for KYC purpose which were done due to ignorance and PAN has been allotted by the Department and the PAN number allotted is AALAS2952B. The appellant should have given the Society PAN number to the bank. 3. The appellant has received order u/s 148A on 30-3-2022 stating that as per the information available with the department there were cash deposits amounting to Rs. 4,73,05,000/-and a fit case to issue notice u/s 148, as the appellant has not filed any return of income. 4. Accordingly notice u/s 148 has been issued asking the appellant to file return of income within the stipulated time. 5. The appellant has missed the dead line of the stipulated time to file the return of income. However as the option to file the return of income online is disabled due to the expiry of time, the appellant has prepared the manual return and tried to file the same at the department but the department refused to accept the manual return. Hence the appellant has mailed the manual return to the mail address available in the notice u/s 148 on 2-5- 2022 declaring NIL income 6. Taking into consideration the return of income, the department has issued notice u/s 142(1) on 6-12-2022 and the appellant has replied to the said notice on 20th December, 2022 explaining in detail the nature of cash deposits and its source and the fact that the same were accounted and consolidated in the "Society" statement and returns were filed by the "Society" 7. In response to the said notice, the appellant has stated that the appellant is the branch of the "society" with PAN No.AAATT1234B and all the accounts of the appellant has been consolidated Into the "Society" account and return of income has been filed by the "Society for the assessment year 2015-16 8. The "Society" is registered u/s 12A of the Income Tax Act and is filing its return of income, consolidating all its branches accounts, regularly and scrutiny assessments also have been completed.

:-4-: ITA. No:3406 /Chny/2025 9. For the Assessment Year 2015-16 also the "Society" has filed its return of Income on 29- 09-2015 vide acknowledgment no 833638981290915 which includes the accounts of the appellant and other branches of the "Society". 10. The appellant strongly objects to the observation of the Ld. Assessing Officer that the cash deposits are unexplained. The fact remains that the appellant has sufficiently explained the source of cash deposits as the school fee collections and also explained that the said accounts of the school are consolidated with that of the "Society" and the "Society has filed its return of income well within time. 11. The Bank accounts of the appellant were originally linked to the PAN No. AALAS2952B After noticing the error the appellant has approached the banker and requested them to link the bank accounts to the "society" PAN Number. 12. The Ld. Assessing Officer has ignored the explanation and justification given by the appellant along with documentary evidences showing that the appellant is a branch of the "society" and the "Society" has filed its return of income including the branch accounts. 13. ITR 7 contains the details of projects and branches, wherein the appellant name has been duly disclosed at serial number 3 as "St. Mary's Higher Secondary School", which is a conclusive and documentary proof that the appellant is a branch of the "society" 14. The appellant strongly objects to the observation of the Ld. Assessing Officer in his assessment order stating that the name of the appellant has not been found in the 17 associated schools. Whereas the fact remains that the ITR 7 contains total 19 associated branches and not 17 as observed by the Ld. Assessing Officer and the name of the appellant is available at serial number 3 of the associated branches which includes educational institutions, hospitals etc... 15. Further the appellant has filed Auditor's Certificate stating and confirming that the appellant is a branch of the "Society" and the "Society" is registered u/s 12A of the Income Tax Act and the said certificate is valid during the assessment year 2015-16 and the cash deposits represents fee collections from students and are duly accounted in the accounts of the "society" and reported to the department 16. The appellant strongly objects to the observation of the Ld. Assessing Officer that the said cash deposits of Rs.4,73,05,000/- as unexplained cash deposits ignoring the total explanation given and the documentary evidences submitted. 17. The appellant hereby attaches the following documentary evidences in support of its claim that the appellant is the branch of the "Society" and the "Society has included its branch accounts, including the appellant, in its consolidated accounts which were filed before the Department for the assessment year 2015-16 and the "society" is registered u/s 12A of the Income Tax Act and enjoying exemption of its income u/s 11 of the Income Tax Act. The only error that has happened is that the bank accounts of the appellant were wrongly linked to the PAN of the appellant, which later rectified by the banker. The appellant does not have any legal status on its own.

:-5-: ITA. No:3406 /Chny/2025

a. 12A Certificate of the "Society" b. ITR 7 filed by the "Society" for the assessment year 2015-16 along with the ITR V c. Please refer to the serial number 3 of the ITR 7 wherein the name of appellant is clearly disclosed under the projects of the "Society" d. The Bank statement of South Indian Bank, bearing account No. 0457053000005948 also clearly mentions that" M/s St Mary's Girts HSS, unit of the Congregation of the Sis of St. Ann's of Providence". This also proves beyond doubt that the appellant is a branch of the "Society" and does not have any separate legal status. e. Auditor's Certificate that the appellant is a branch of the "Society" and is including the branch accounts in its consolidation and filing the return of income to the department and the cash deposits represents the school fee collections from the students. 1. "Society" Balance Sheet, Income and Expenditure Account and Receipts and Payments account is being attached herewith. g. Closing bank balances details of the "Society" where in you can see the bank accounts of the appellant were included. 18. The appellant has requested the Ld. Assessing Officer for a Video Conference on 14-3- 2023 to explain the things in detail and to clarify that the cash deposits represents fee collections from the students and the modus operandi of the fee collections and the error that took place in linking the bank accounts to the appellant PAN etc., and also to explain that the appellant is a branch of the "Society" and the "Society" is registered u/s 12A of the Income Tax Act and has filed return of income for the financial year 2014-15 relevant to the Assessment year 2015-16. However the Video Conference has not materialized due to technical problem from the department side and the said fact has been duly mentioned by the Ld. Assessing Officer in his assessment order also. 19. HENCE NOW WE ONCE AGAIN REQUEST THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR A VIDEO CONFERENCE FACILITY to explain in detail the facts and figures of the case. In the light of the above facts and the submission of documentary evidences, the appellant humbly prays the Ld. Commissioner of Income Tax (Appeals) to delete the addition made by the Ld. Assessing Officer amounting to Rs.4,73,05,000/- The appellant also prays for a video conference to further explain and bring clarity on the issue.'”

:-6-: ITA. No:3406 /Chny/2025 a branch of the society, which has been registered u/s.12A of the Act and has filed the return of income for the AY 2015-16 including the fee collections deposited into the bank account of Rs.4,73,05,000/-, and hence deleted the additions made by the AO by passing an order dated 23.09.2025 by holding as under:-

“The AO treated the entire cash deposit as unexplained solely on the ground that in the ITR of the Society (PAN: AAATT12348), the name of the appellant school was not traceable, and the specific cash deposits were not identifiable The appellant has produced the following evidence which wer produced before the AO 1. Certificate of registration of the Society u/s 12A. 2. Copy of ITR-7 of the Society for A.Y. 2015-16 (Ackn, No. 833638981290915 dated 29.09.2015) 3. Annexure of ITR-7 showing the appellant's name at St. No. 3 under "Institutions/Projects run by the Society". 4. Auditor's certificate confirming that the appellant is a branch of the Society and its accounts are consolidated. 5. Bank statement of South Indian Bank clearly describing the appellant as "unit of Congregation Sisters of St. Ann of Providence". 6. Consolidated Balance Sheet and Receipts & Payments Account of the Society including appellant's bank balances. On perusal of these documents, it is clear that: The appellant school has no independent legal existence and is only a branch of the Society. The Society, being a registered charitable organization u/s 12A, is the person chargeable to tax and has filed return of income for A.Y. 2015- 16, incorporating receipts of all its branches including the appellant. The cash deposits represented fee collections from students, which are duly recorded in the Society's books and audited. The AO's observation that the appellant's name was not found among 17 institutions is factually incorrect, as the ITR annexure discloses 19 branches, including the appellant at Sl. No. 3. Further, once it is established that the Society has disclosed the income, there is no escapement of income in terms of section 147. The same income cannot be taxed again in the hands of a non-entity branch merely because of a technical error in bank KYC linking. In the present case the conclusion drawn by the AO is quite contrary to the factual position of the case where the appellant has successfully demonstrated that the impugned amount of cash deposited to its bank account was accumulated fees received from its student in cash and the same was

:-7-: ITA. No:3406 /Chny/2025 included in the income and expenditure account of controlling society THE CONGREGATION SISTERS OF ST. ANN OF PROVIDENCE SOUTHERN PROVIDENCE (PAN: AAATT1234B) therefore no addition was required to be made in the hands of assessee when the source and its use along with its accumulation and disclosure to the Department by THE CONGREGATION SISTERS OF ST. ANN OF PROVIDENCE SOUTHERN PROVIDENCE (PAN: AAATT1234B) has been successfully establish by the assessee once income is disclosed in the hands of the registered society, taxing the same in hands of its unit would lead to double taxation and is unjustified. The addition of Rs 4,73,05,000/- is deleted. Grounds 3 to 8 are allowed.” 7. Aggrieved by the order of the ld.CIT(A), the Revenue is in appeal before us by raising following grounds of appeal:-

“1. The order of the CIT(A) is contrary to law, facts and circumstances of the case. 2. The Ld.CIT(A) has erred in considering that assessee has no independent legal existence, however the assessee applied for independent PAN:AALAS2952B and opened the bank accounts by using the PAN. 3. The Ld.CIT(A) has erred in deleting the additions made by the AO even though the assessee has not demonstrated how the cash deposit in its bank account is accounted in the books of the society Congregation Sisters St. Ann of Providence, PAN:AAATT1234B. 4. The Ld.CIT(A) has erred in law by not considering the fact that The society- Congregation Sisters St. Ann of Providence has declared fees collection of Rs.9,13,51,497/- in its ITR for the Α.Υ. 2015-16, the total credits in assessee's (M/s St. Mary's Girls Higher Secondary School) bank account alone are Rs.4,73,05,000/- and it is claimed during the appellant proceedings that cash deposits are fees collection only. However, the society has 19 educational institutions then the ratio of fees collection in assessee's school of Rs.4,73,05,000/- and remaining 18 other institution of Rs. 4,40,46,497/- only, seems to be not in line or not properly accounted. 5. The Ld.CIT(A) has erred in law by not considering the fact that in the ITR of The society-Congregation Sisters St. Ann of Providence, PAN:AAATT1234B for A.Y. 2015-16 in bank account details, the bank accounts of the assessee were not included. It clearly demonstrates fees receipt of the assessee were not accounted in The society-Congregation Sisters St. Ann of Providence books as claimed by assessee. 6. The Ld.CIT(A) has erred in law by not taking cognizance of the fact that much of the amount from the bank account of the assessee is transferred to one Mr.Senthil Kumar instead of withdrawal towards regular school/administration expenses.

:-8-: ITA. No:3406 /Chny/2025 7. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld.CIT(A) may be set aside and that of Assessing officer be restored.”

:-9-: ITA. No:3406 /Chny/2025 10. We have heard the rival submissions, perused the orders of the lower authorities and carefully gone through the material available on record including the paper book filed by the assessee. The solitary issue arising for consideration in the present appeal is whether the ld.CIT(A) was justified in deleting the addition of Rs.4,73,05,000/- made by the AO towards cash deposits treated as unexplained income in the hands of the assessee-school. 11. On a careful consideration of the facts placed before us, it emerges that the assessee, M/s.St. Mary’s Girls Higher Secondary School, is not an independent entity carrying on activities in its own right, but is only a unit/branch functioning under the umbrella of the society namely “The Congregation Sisters of St. Ann of Providence Southern Province”, which is duly registered u/s.12A of the Act. The documentary evidences placed on record clearly establish that the educational institution is one among the institutions administered by the said society and its financial affairs are integrated with the consolidated accounts of the society. The primary basis on which the AO proceeded to make the impugned addition was that substantial cash deposits amounting to Rs.4,73,05,000/- were found in the bank account linked with the PAN of the assessee-school and no return of income had been filed in the said PAN. However, the assessee consistently explained before the lower authorities that the PAN was obtained only for banking and KYC purposes due to an inadvertent mistake and that subsequently the bank account was corrected by linking it with the PAN of the parent society. The assessee further demonstrated that the cash deposits represented school fee collections which were duly accounted for in the consolidated books of the society and disclosed in the return of income filed by the society for the relevant assessment year.

:-10-: ITA. No:3406 /Chny/2025 Certificate categorically certifies that the assessee-school is only a branch of the society and that its accounts are consolidated with the accounts of the society. The bank statement itself describes the account holder as “M/s.St.Mary’s Girls HSS, unit of the Congregation Sisters of St.Ann of Providence”, thereby corroborating the stand of the assessee that the school was never functioning as an independent taxable entity.

:-11-: ITA. No:3406 /Chny/2025 Revenue has not carried out any meaningful verification to disprove the same. No discrepancy has been pointed out in the audited accounts of the society nor has any material been brought on record to establish that the impugned deposits represented unexplained or unaccounted money outside the books of the society. 16. The objection raised by the Revenue regarding the proportion of fee collections attributed to the assessee-school vis-à-vis other institutions is merely based on suspicion and conjecture. In the absence of any comparative analysis, investigation or contrary evidence, no adverse inference can be drawn merely because one institution had higher fee collections than others. Educational institutions may vary significantly in strength of students, infrastructure, courses offered and fee structure, and therefore the quantum of fee collection by itself cannot constitute a valid ground for sustaining an addition. Similarly, the allegation regarding certain transfers made to one Mr.Senthil Kumar also does not advance the case of the Revenue. The AO has neither conducted any enquiry regarding the nature of such transfers nor established that the same represented diversion of unaccounted income for non-educational purposes. In the absence of any cogent material, the addition made solely on the basis of bank deposits cannot be sustained.

:-12-: ITA. No:3406 /Chny/2025 infirmity in the said factual findings. The Revenue has failed to place any material before us to rebut the conclusions arrived at by the ld.CIT(A).

Order pronounced in the court on 02nd June, 2025 at Chennai.

Sd/- Sd/- (जॉजज जॉजज के) (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) (GEORGE GEORGE K) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष /VICE PRESIDENT

चेन्नई/Chennai, ददनांक/Dated, the 02nd June, 2026. Devadas आदेश की प्रतितलतप अग्रेतिि/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– NFAC 4. तिभागीय प्रतितनति/DR 5. गार्ज फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.06.08 14:34:23 +05'30'