INCOME TAX OFFICER, WARD-1(1)(3), DEHRADUN, DEHRADUN vs. UTTARANCHAL BAHU UDDESHIYA VITT AVAM VIKAS NIGAM LIMITED, DEHRADUN

ITA 200/DDN/2025Status: DisposedITAT Dehradun08 April 2026AY 2019-205 pages

AI SummaryDismissed

Facts

The Revenue appealed against the deletion of additions made to the income of Uttaranchal Bahu Uddeshiya Vitt Avam Vikas Nigam Ltd. for AY 2019-20. The assessee, a government company, had not filed its return of income. The Assessing Officer (AO) made additions for unexplained deposits and interest income.

Held

The Tribunal held that the assessee is a government company established by the State of Uttarakhand and is eligible for exemption under section 10(26B) of the Act. The Tribunal respectfully followed a previous order of a co-ordinate bench in the assessee's own case for AY 2018-19, finding no error in the CIT(A)'s deletion of additions.

Income Tax Appellate Tribunal, DEHRADUN “DB” BENCH: DEHRADUN

Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL

For Appellant: Shri Rajiv Sahni, CA

For Respondent: Shri A.S.Rana, Sr.DR, Shri Rajiv Sahni, CA

Hearing: 15.01.2026Pronounced: 08.04.2026

ORDER

PER MANISH AGARWAL, AM :

The present appeal is filed by the Revenue against the order dated 11.08.2025 by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld. CIT(A)”] in Appeal No. NFAC/2018-19/10400781 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 04.03.2024 passed u/s 147 r.w.s. 144 r.w.s. 144B of the Act pertaining to Assessment Year 2019-20.

Brief facts of the case are that the assessee is a company and had not filed its return of income for the year under appeal.

Information was received on insight portal as per the risk management strategy that the assessee has carried out transactions of INR 27,75,56,079/- in different bank accounts including cash deposit of INR 27,74,17,196/- therefore, the case of the assessee was re-opened u/s 147 of the Act after following procedure as prescribed u/s 148A of the Act. The notice was issued u/s 148 of the Act on 30.03.2023, however, not no return was filed by the assessee. Thereafter, as the assessee had not made compliance to any notice issued during the course of assessment proceedings, AO passed the re-assessment order dated 04.03.2024 wherein addition of INR 27,74,17,196/- was made towards the deposits as unexplained and further addition of INR 1,38,883/- was made as interest income under the head “Income from Other Sources”. Accordingly, total income of the assessee was assessed at INR 27,75,56,079/-.

Against the said order, assessee filed appeal before Ld. CIT(A) wherein it is claimed that assessee is a Government Company registered as a “Company” wholly and exclusively controlled by the State Government through the Governor who has power to appoint and remove the Directors. Accordingly, the company is eligible for exemption u/s 10(26B) of the Act. In view of these facts, no return of income was filed. It is further submitted before Ld. CIT(A) that in AY 2016-17, the assessee was held as eligible for exemption u/s 10(26B) of the Act by Ld. CIT(A). Thereafter, in AY 2017-18, exemption u/s 10(26B) was denied by the Revenue which was restored by the Co- ordinate Bench of Tribunal in & Others vide order dated 23.07.2025. Accordingly, Ld. CIT(A) allowed the appeal of the assessee by following the order of the Tribunal and treated it as Government company eligible for exemption u/s 10(26B) of the Act.

Aggrieved by the said order, the Revenue has filed the present appeal by taking following Grounds of appeal:- 1. “Ground No.1-On facts and circumstances of the case and in law, whether the CIT (A) is justified in deleting the addition of Rs.27,74,17,196/- made u/s 69A of the LT. Act, 1961 without appreciating the fact that the assessee has not co-operated in the scrutiny proceedings and as such failed to explain the nature and source of time deposit of Rs. 25,70,05,445/- and cash deposit of Rs. 2,04,11,751/- as laid down in section 69A of the I.T. Act, 1961.

2. Ground No. 2-On facts and circumstances of the case and in law, whether the CIT (A) is justified in deleting the addition of Rs.1,38,883/- made by the AO under the head income from other sources on account of undisclosed interest income without appreciating the fact that the assessee has not co-operated in the scrutiny proceedings and failed to offer any explanation about taxability of the said income.

3. Ground No. 3-On facts and circumstances of the case and in law, whether the CIT (A) is justified in deleting the entire addition of Rs. 27,74,17,196/- made by the AO relying on the decision of ITAT in the case of assessee for AY 2017-18 and also applying the principle of res-judicata for allowing exemption U/s 10(26B) of the I.T.Act, 1961 without 3 appreciating the fact that the assessee has not co-operated in the assessment proceedings and failed to furnish any supporting documentation to explain the nature and source of the investment made in time deposit and cash deposit in the bank accounts and as such the assessee has been miserably failed to discharge its onus in view of the provisions of section 69A of the I.T.Act, 1961.

4. Ground No. 4-On facts and circumstances of the case, Ld. CIT(A) has failed to appreciate the fact that the AO has allowed the exemption U/s 10(26B) of the Act in the AY 2002-03, 2005-06 and 2020-21 having been satisfied the nature and source of 4 the time deposit and cash deposit, whereas for the year under consideration i.e. AY 2019- 20, the assessee has not co-operated in the scrutiny proceedings and as such nature and source of time of deposit and cash deposit made by the assessee remained unexplained to the satisfaction of the AO.

5. Ground No. 5- That, the appellant craves leave to add OR amend any other more ground of appeal as stated above as and when needs for doing so may arise.”

Heard the contentions of both the parties at length and perused the material available on record. At the outset, it is seen that assessee is a company incorporated by the Government of Uttarakhand and the Governor of Uttarakhand has the sole power to appoint or remove the Directors of the company. The assessee has also filed the Certificate of Incorporation and Memorandum & Articles of Association of Company which are placed at pages 23 to 40 of Paper Book as per which the company is formed under section 617 of the Companies Act, 1956 by Uttarakhand Government.

Since the Co-ordinate Bench of the Tribunal in ITA 177/DDN/2024 in the case of the assessee vide order dated 23.07.2025 has held that the assessee company is established by the State of Uttarakhand and therefore, is a Government Company and is eligible for exemption u/s 10(26B) of the Act. Ld. CIT(A) by following the said order, has deleted the additions made and treated the income of the assessee as exempt u/s 10(26B) of the Act.

Before us, such observations of the Ld. CIT(A) have not been controverted by the Revenue and simply argued that principal of res-judicata is not applicable to income tax proceedings. Having considered the facts and looking to the Certificate of Incorporation and Memorandum & Article of Association of the Company, it is observed that assessee is a company established by State of Uttarakhand and is a Government Company and therefore, eligible for exemption u/s 10(26B) of the Act. Accordingly, by respectfully following the order of Co-ordinate Bench in assessee’s own case for 2018-19, we find no error in the order of Ld. CIT(A) in deleting the additions made by holding the same as exempt u/s 10(26B) of the Act.

In view of these facts, all the Grounds of appeal raised by the Revenue are dismissed.

In the result, appeal of the Revenue is dismissed.

Order pronounced in the open Court on 08.04.2026.