KSHETRIYA SHRI GANDHI ASHRAM,GORAKHPUR vs. ACIT EXEMPTION CIRCLE, LUCKNOW

IN THE INCOME TAX APPELLATE TRIBUNAL VARANASI BENCH, VARANASI BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.144/VNS/2025 A.Y. 2017-18 Kshetriya Shri Gandhi Ashram, vs. Asstt. Commissioner of Opp Mangalam Tower Gandhi Exemption Circle, Income Tax Ashram, Golghar Gorakhpur- Department Lucknow 273001 PAN: AAATK6977A (Appellant) (Respondent) Assessee by: None Revenue by: Shri. Sudipta Paul, Sr. DR Date of hearing: 06.08.2026 Date of pronouncement: 31.08.2026 O R D E R PER NIKHIL CHOUDHARY, AM: This appeal has been filed by the assessee against the orders of the ld. CIT(A), NFAC dated 22.10.2024, wherein the ld. CIT(A) has dismissed the appeal of the assessee against the assessment framed under section 143(3) dated 24.12.2019, for the assessment year 2017-18. The grounds of appeal are as under: - “1. Because the assessment order dated 24.12.2019 passed under section 143(3) of the I.T Act 1961 at income of Rs. 1,78,63,154/-. 2. Because the Commissioner of Income Tax (Appeal) has Erred in Law on Facts in confirming the Assessment u/s 143(3) of the I.T act 1961 at income of Rs. 1,78,63,154/- vide order dated 22.10.2024. 3. Because the Commissioner of Income Tax (Appeal) has Erred in Law of Facts in Confirming the Addition of Rs 54,74,654/- on account of denied exemption claimed u/s 10(23B) of the I.T Act 1961. 4. Because the Commissioner of Income Tax (Appeal) has Erred in Law of Facts in Confirming the addition of Rs. 1,18,88,500/- on account of Cash deposits in bank account treating as unexplained money u/s. 69A of the I.T 1

ITA No. 144/VNS/2025 Kshetriya Shri Gandhi Ashram Act 1961 & treat the tax as per provision of u/s 115BBE of the I.T. Act 1961. (i.e. regarding cash deposited in bank from 08.11.2016 to 31.12.2016 during the demonetization period). 5. Because in view of factual and legal position no addition is called for and addition made by the AO is erroneous. 6. Because the order against in contrary to Law Facts and principals of Natural Justice. 7. Assessee may amend, Alter or add any Grounds of Appeal before or at the time of appeal.” 2. It is observed that the appeal for the assessment year 2017-18 is delayed by 181 days. The assessee has submitted a condonation application in which it has been submitted that it was not familiar with computerized faceless system of the Department and the counsel had also not informed it regarding the appeal order. The delay had arisen on this account and it was prayed that since the assessee was a charitable and non-profit making institute, in the interest of natural justice, this delay may kindly be condoned. On perusal of the Form No. 35, it is seen that before the ld. CIT(A) also, the assessee had taken a similar ground stating that since it only operated through post and did not use internet or computers for running the society. It was not able to make compliance to the various notices or was not aware of the passage of the assessment order. We observe that all the notices sent to the assessee both during the assessment and appeals, have been served through electronic mode and after considering the submission of the assessee that it was not well-versed with computers and thoroughly dependent upon its counsel for making of compliance or even awareness about the orders passed by the Department, we condone the delay in filing the appeal and admit the case for adjudication on merits. 3. The facts of the case are that the ld. Assessing Officer noticed from an examination of the assessee’s return that the assessee had deposited cash of Rs. 1,18,88,500/- in various banks during the demonetization period. He

ITA No. 144/VNS/2025 Kshetriya Shri Gandhi Ashram asked the assessee to explain the deposit of cash but as he did not receive any response to the notices, he added the sum of Rs. 1,18,88,500/- as unexplained money under section 69A. He also noticed on perusal of the return of income, that the assessee had claimed exemption under section 10(23B) of the Act but had not submitted any details in support of the claim of exemption under section 10(23B). In the absence of any details / documentary evidences the ld. AO denied the exemption under section 10(23B) and made a further addition of Rs. 59,74,654/- in the hands of the assessee society. 4. Aggrieved with the order of the ld. Assessing Officer, the assessee filed an appeal before ld. CIT(A) on 14.02.2020. This appeal was pending with the ld. CIT(A) for a long time. The ld. CIT(A) records that he gave multiple opportunities to the assessee to be heard and the assessee made submissions in response to these notices and therefore, after going through the documents and noticing that the appeal of the assessee was delayed, he rejected the explanation for the delay and dismissed the appeal of the assessee in limine. 5. The assessee is aggrieved with this in limine dismissal and has accordingly come before us in appeal. None appeared on behalf of the assessee to press the present appeal. 6. On the other hand, Sh. Sudipta Paul, Sr. DR pointed out that the assessee had been given a number of opportunities and was deliberately non-compliant with the notices. Therefore, the additions made by the lower authorities should be confirmed. 7. Though nobody appeared for the assessee on the appointed date of hearing, we notice from the statement of facts filed before the ld. CIT(A) that the assessee is a manufacturer of Textile (Khadi) which is not only registered

ITA No. 144/VNS/2025 Kshetriya Shri Gandhi Ashram under the Societies Registration Act but also registered with KVIC, Mumbai under section 10(23B) and section 10(23BB) of the Income Tax Act. It appears that for want of submission of proper details before the ld. Assessing Officer, the income of the assessee which may otherwise be exempt from tax, has been brought to tax and justice demands that the matter should be re- examined to determine whether the said deposits in the bank account arise from its Khadi and Village Industries business which is exempt under section 10(23B) and/or 10(23BB) of the Income Tax Act or whether the said deposits are unexplained and therefore, fall under the rigor of section 69A. Accordingly, we restore this matter back to the file of the ld. Assessing Officer with a direction to the assessee to make available the necessary documentation to the ld. Assessing Officer to demonstrate that the deposits in the said bank account, which had been added back by the ld. Assessing Officer are explained out of its income from Khad and Village Industries and that it is entitled for the said exemption as claimed in its return. 8. In the result, the appeal of the assessee is held to be allowed for statistical purpose. Orders pronounced on 31.08.2026 in the open Court. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31/08/2026 sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR, ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. 4