PUBLIC HEALTH RESEARCH INSTITUTE OF INDIA(PHRII) TRUST ,MYSURU vs. INCOME TAX OFFICER, EXEMPTION, WARD-1 , MYSURU
Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEYAssessment Year: 2018-19
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order passed by the NFAC,
Delhi vide order dated
17/03/2025
in DIN
No.ITBA/NFAC/S/250/2024-25/1074590716(1) for the assessment year
2018-19. 2. The assessee is a charitable trust registered under section 12AA of the Act. For the year under consideration, it filed its return of income declaring Nil income. The case was selected for scrutiny on the issue of Page 2 of 4
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accumulation and application of income. The Assessing Officer noticed that the assessee had shown total expenditure of ₹1,61,28,787 as against total income of ₹44,70,224. Since the source of excess expenditure amounting to ₹1,16,58,563 was not explained to his satisfaction, the AO treated it as unexplained expenditure under section 69C of the Act and denied exemption under section 11 of the Act.
On appeal, the ld. CIT(A) confirmed the order of the AO mainly on the ground that the assessee had not furnished proper reconciliation, donor agreements or proof that the funds were tied-up for specific purposes.
Being aggrieved by the order of learned CIT-A, the assessee is in appeal before us.
The learned Authorised Representative (AR) submitted that the addition arose mainly because of a reporting error in ITR. The tied-up funds from earlier year (AY 2017-18) were wrongly shown as income in the ITR for AY 2018-19. To this effect, a reconciliation statement and fund-flow chart for FY 2017-18 to FY 2018-19 has now been prepared, showing that the so-called “unexplained expenditure” was actually met out of earlier year’s funds. The trust had maintained separate books for domestic and FCRA accounts which were duly audited. Therefore, the addition under section 69C of the Act was not justified.
On the other hand, the learned Departmental Representative (DR) supported the orders of the lower authorities. He submitted that despite several opportunities, the assessee did not file proper details before the Page 3 of 4
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AO. Only at this stage before the Tribunal, additional reconciliation is being filed. He contended that the matter may be remanded back to the AO for verification, if the Bench thinks fit.
We have carefully considered the rival submissions. It is seen that the main reason for the addition is the mismatch between income declared and expenditure claimed. The assessee has now filed a reconciliation statement and fund flow showing that the expenditure was incurred out of earlier year’s available funds. These details were not properly verified by the AO. Thus, in the interest of justice, we are of the view that the matter requires fresh examination. The AO shall verify whether the funds carried forward from AY 2017-18 were available for application in AY 2018-19. Whether such funds were correctly reflected in the books and audited statements, and whether the expenditure claimed is duly supported by documentary evidence.
1 We make it clear that the assessee shall place all necessary reconciliation, financials, and supporting documents before the AO, and the AO shall decide the issue afresh after giving due opportunity of hearing to the assessee. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in court on 19th day of September, 2025 (KESHAV DUBEY) Accountant Member Bangalore Dated, 19th September, 2025
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Copy to:
The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file
By order
Asst.