NANDURBAR TALUKA VIDHAYAK SAMITEE,NANDURBAR vs. CIT(EXEMPTION), PUNE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1433/PUN/2025 िनधा�रण वष� / Assessment Year : 2018-19 Nandurbar Taluka Vidhayak Vs. CIT, Exemption, Pune. Samitee, G.T. Patil College Road, Nandurbar- 425412. PAN : AAATN2841A Appellant Respondent Assessee by : Shri Kishor B. Phadke Revenue by : Shri Amit Bobde Date of hearing : 07.05.2026 Date of pronouncement : 30.06.2026 आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 26.03.2025 passed by Ld. CIT, Exemption, Pune at Nashik [‘Ld. CIT, Exemption, Pune’] u/s 263 of the IT Act for the assessment year 2018-19. 2. The appellant has raised the following grounds of appeal :- “1. The learned CIT (Exemption), Pune erred in law and on facts in assuming jurisdiction u/s 263 of the ITA, 1961 on the analogy that the order passed by the learned AO u/s 147 r.w.s. 144B of the ITA, 1961

2 ITA No.1433/PUN/2025 dated 02/03/2023 was erroneous and prejudicial to the interest of the revenue, since: - the learned AO has not invoked provisions of section 68 r.w.s. 115BBE of the ITA, 1961 for cash deposits in various Bank A/c amounting to Rs. 1,54,68,128/-. - the learned AO has not initiated penalty u/s 271AAC of the ITA, 1961. 2. The learned CIT (Exemption), Pune ought to have appreciated that appellant's appeal against the order passed by the learned AO u/s 147 r.w.s. 144B of the ITA, 1961 was pending for adjudication before the learned CIT(A), NFAC. 3. The learned CIT (Exemption), Pune erred in law and on facts in directing the learned AO to invoke provisions of section 68 r.w.s. 115BBE of the ITA, 1961 on addition of Rs. 1,54,68,128/- for cash deposits in various Bank A/c. The learned CIT (Exemption), Pune ought to have appreciated that appellant during the reassessment proceeding, had duly explained the source of cash deposits in various Bank A/c. 4. The learned CIT (Exemption), Pune ought to have appreciated that every addition made by the learned AO by default does not attracts provisions of section 68 r.w.s. 115BBE of the ITA, 1961 and the learned AO has adopted one of the plausible views. 5. The learned CIT (Exemption), Pune ought to have appreciated that the order passed by the learned AO is not prejudicial to the interest of the revenue, as appellant's entire income is anyway exempt u/s 10(23C)(iiiab) of the ITA, 1961. 6. Appellant craves leave to add, alter, clarify, explain modify, delete any or all of the grounds of appeal, and to seek any just and fair relief.” 3. Facts of the case, in brief, are that the assessee is a trust engaged in running educational institution in more than 60 places and has not filed its return of income u/s 139 of the IT Act for assessment year 2018-19. The case of the assessee was reopened u/s 147 of the IT Act and order u/s 148A(d) was passed on

3 ITA No.1433/PUN/2025 29.03.2022 and notice u/s 148 of the IT Act was also issued on 29.03.2022. In response to above notice, the assessee furnished its return of income on 16.12.2022 declaring total income of Rs.Nil after claiming exemption u/s 10(23C)(iiiab) of the IT Act, since more than 90% of its receipt were from Government Grants. Subsequently, notices u/s 142(1) and 143(3) respectively were issued to the assessee. After considering the reply and submissions of the assessee, the Assessing Officer vide order dated 02.03.2023 completed the assessment proceedings u/s 147 r.w.s. 144B of the IT Act by determining total income of Rs.1,54,68,128/- as against the Nil income returned by the assessee. The above assessed income includes addition of Rs.1,54,68,128/- being unexplained cash deposits in various bank accounts. Subsequently, Ld. CIT, Exemption, Pune after examining the assessment records vide order dated 26.03.2023 passed u/s 263 of the IT Act was of the opinion that the Assessing Officer should have had invoked the provisions of section 68 r.w.s. 115BBE of the IT Act while making the addition of Rs.1,54,68,128/-. Accordingly, the assessment order dated 02.03.2023 was set-aside and the Assessing Officer was

4 ITA No.1433/PUN/2025 directed to reframe the assessment as per provisions of law after providing reasonable opportunity of hearing to the assessee. 4. Being aggrieved with the above order passed u/s 263 of the IT Act, the assessee is now in appeal before this Tribunal. 5. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book as well as copy of case laws furnished by both the parties. In this regard, we find that admittedly the assessee is engaged in providing educational facilities to various students and also registered u/s 12A of the IT Act, Bombay Public Trust Act & also registered under the Societies Registration Act since long. The assessee is in receipt of government grant of Rs.54,83,45,070/- which is 93.19% of its gross receipts which are Rs.58,83,96,756/-. We further find that notice u/s 148 of the IT Act was also issued for assessment year 2020-21 on the identical grounds of cash deposit in various bank accounts and non-filing of income tax return u/s 139 of the IT Act, and the claim of exemption made by the assessee u/s 10(23C)(iiiab) of the IT Act was allowed by the Assessing Officer for assessment year 2020-21 vide order dated 21.02.2025 and neither any addition was made nor the order was subject to any 263 proceedings by Ld. CIT,

5 ITA No.1433/PUN/2025 Exemption, Pune. Accordingly, we find that under identical facts and similar situation the Revenue is giving different kind of treatment to the same assessee, at one hand Ld. CIT, Exemption, Pune is proposing to make the addition u/s 68 r.w.s. 115BBE of the IT Act and for another assessment year no such action is taken by Ld. CIT, Exemption, Pune. We further find that the assessee is maintaining regular books of accounts which were produced before the Assessing Officer and complete details of all its bank accounts were also produced before the Assessing Officer. We also find that the addition of Rs.1,54,68,128/- was only due to the fact that admittedly the assessee could not produce the details of fees collected from 50/60 students, therefore, the Assessing Officer disallowed the same and added to the income of the assessee. However, we find that the assessee has submitted the details of the students from whom the impugned fees was received before Ld. CIT, Exemption, Pune, as well as before us also, therefore the addition cannot be made u/s 68 of the IT Act. 6. We have considered the case laws relied on by both the parties. However, we find support from order passed by Hon’ble High Court of Gujrat in the case of Principal Commissioner of

6 ITA No.1433/PUN/2025 Income-tax vs. Vijay Anandbhai Chavada [2025] 176 taxmann.com 924 (Gujarat) [28-08-2023] {against which SLP was also dismissed by Hon’ble Supreme Court in the case of Principal Commissioner of Income -tax vs. Vijay Anandbhai Chavada [2025] 177 taxmann.com 283 (SC) [25-07-2025]} wherein Hon’ble Court under identical facts dismissed the appeal filed by the Revenue by observing as under :- “3.3. The Principal Commissioner of Income Tax-1, Rajkot (for short 'the PCIT') on examination of Assessment Records observed that though Assessing Officer has made addition on account of unexplained sundry creditors and bogus liabilities, failed to apply provisions of Section 115BBE of the Act to tax the same at 60% with applicable surcharge of 25% of such tax by not making the addition under Section 68 of the Act. The CIT (Appeals) therefore passed an order under Section 263 of the Act dated 1st March, 2022 on the ground that the assessment order is erroneous and prejudicial to the interest of Revenue cancelling the same with a direction to make a fresh assessment. 3.4. Being aggrieved, the assessee preferred an appeal before the Tribunal who vide impugned order dated 21st April, 2023 set aside the order passed by the PCIT under Section 263 of the Act. 3.5. The Tribunal considered the records and submissions made by the assessee that the creditors represent the trading liabilities and therefore cannot be taxed under Section 68 of the Act. 3.6. The assessee contended before the Tribunal that the increase in balance advances from customers in the year under consideration was only on account of one party i.e., M/s. Bajrang Cotton and the rest are only opening balances. It was submitted by the assessee that the genuineness of M/s. Bajrang Cotton is established from the evidences like ledger account of M/s Bajrang Cotton from the books of the assessee, contra confirmation, return of income, computation of income, audited accounts, bank statement of M/s Bajrang Cotton and thereby, the initial burden onus on the assessee under Section 68 of the Act has been discharged. The assessee has also submitted that the funds advanced by M/s.Bajrang Cotton were from realisation of its debtors namely M/ s. Parents Cot Spin and M/s. Asha Cotton Co. whose ledger accounts from the books of M/s Bajrang Cotton were also

7 ITA No.1433/PUN/2025 placed on record. The assessee also filed the relevant copies of relevant ledger accounts of the said parties from the books of M/s.Bajrang Cotton. 3.7. The Tribunal after considering the aforesaid evidence produced on record before the PCIT as well as the Tribunal came to the conclusion that the assessee has been able to demonstrate the fact that the said amount of addition represented opening balances/trade creditors. The Tribunal also referred to and relied upon the following decisions to hold that such addition cannot be made under Section 68 of the Act: (i) Manoj Aggarwal v. Dy. CIT [2008] 113 ITD 377 (Delhi). (ii) Ravindra Arunachala Nadar v. ACIT [2021] 129 taxmann.com 275/191 ITD 520 (Chennai - Trib.). (iii) CIT v. Pancham Dass Jain [2006] 156 Taxman 507 (Allahabad). (iv) Pr. CIT v. Kulwinder Singh [2018] 99 taxmann.com 449 (Punjab & Haryana) (v) Zazsons Exports Limited. v. CIT [2017] 88 taxmann.com 617/397 ITR 40 (Allahabad). 3.8. Considering the above decisions, the Tribunal held as under: "5.5 In the instant facts, in our considered view, the PCIT has not controverted the factual assertions made the assessee that the amount represented opening balances from earlier years/trade creditors of the assessee. Further, the assessee also placed on record substantial evidences in 263 proceedings to prove the source and genuineness of the trade creditor. The PCIT has not controverted the facts placed on record by the assessee that the amounts represented opening balances from earlier years or the evidence placed on record in support of genuineness of the party M/s Bajrang Cotton. Accordingly, in our considered view, the PCIT has erred in the instant facts in holding that the Ld. Assessing Officer has erred in facts and in law in not invoking the provisions of section 68 r.w.s 115BBE of the Act in the instant set of facts. In the result, the order passed by the PCIT u/ s 263 of the Act is hereby dismissed." 4. From the above findings of fact arrived at by the Tribunal to the effect that the PCIT did not controvert the factual assertion made by the assessee that amount represented opening balances from earlier years and from trade creditors of the assessee and the evidence placed on record by the assessee in support thereof by proving the source and genuineness of the trade creditors the amount cannot be said that the assessee has failed to discharge the onus of proving the genuineness of

8 ITA No.1433/PUN/2025 such trade creditors of M/s.Bajrang Cotton which is required under Section 68 of the Act which reads as under : "68. Cash credits.—Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year: [Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10." 5. On perusal of the provisions of Section 68 of the Act, it cannot be said that the assessee has failed to discharge the burden of showing the identity and genuineness of the trade creditors namely the M/s.Bajrang Cotton as found by the Tribunal and not controverted by the PCIT and therefore, the Tribunal has rightly held that there is no error in the assessment order to invoke Section 263 of the Act as the assessment order is neither erroneous or prejudicial to the interest of the revenue. 6. In view of the foregoing reasons, we are of the opinion that no question of law much-less any substantial question of law arises from the impugned judgment and order of the Tribunal. The Appeal is accordingly dismissed.” 7. Considering the totality of the facts of the case and in view of our above discussion, & also in the light of above decision passed in the case of Vijay Anandbhai Chavada (supra), we are of the considered opinion that the order passed by the Assessing Officer is

9 ITA No.1433/PUN/2025 neither erroneous nor prejudicial to the interest of the Revenue, since the Assessing Officer has not doubted the activity carried on by the assessee and the exemption claimed u/s 10(23C)(iiiab) of the IT Act was not only allowed during the period under consideration but for Assessment Year 2020-21 also, the exemption u/s 10(23C)(iiiab) of the IT Act was allowed under 143(3) proceedings. According to us, the Assessing Officer applied his mind and after proper enquiry consciously chose, not to invoke section 68 r.w.s. 115BBE of the IT Act, since according to him, the activity from which the cash was generated & later deposited in the bank accounts was known & acceptable to the Assessing Officer however, the addition was made due to the reason of failure of the assessee to furnish details of 50/60 students as desired by the Assessing Officer. Accordingly, the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue since under the facts & in the circumstances of the case & also in the light of judgement passed by Honble High Court of Gujrat in the case of Vijay Anandbhai Chavada (supra) the Assessing Officer was not required to tax the addition u/s 68 r.w.s. 115BBE of the IT Act. Accordingly, we deem it appropriate to quash the proceedings

10 ITA No.1433/PUN/2025 initiated u/s 263 of the IT Act and also quash the order dated 26.03.2025 passed u/s 263 of the IT Act by Ld. CIT, Exemption, Pune. Thus, the grounds of appeal raised by the assessee are allowed. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 30th day of June, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 30th June, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.06.30 14:29:55 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT, Exemption, Pune at Nashik. 4. The Pr.CIT/CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.