SATAVAHANA UNIVERSITY,KARIMNAGAR vs. INCOME TAX OFFICER, WARD-2, KARIMNAGAR

The Ld. CIT (Appeals) erred in concurring with the Id. A.O's view to treat the Bank Term Deposit as unexplained source Income and to be taxed U/Sec 69A of the Act read with Sec.115BBE, which is against the law and contrary to the facts and circumstances of the case.

Based on the above the appellant pleads for deletion of the Addition of Rs.7,44,39,182/-U/sec.69A for the Bank Fixed Deposit, made to the Nil Returned Income by the Ld.AO. and confirmed by CIT(Appeals), as it is against the principles of Law and Natural Justice.

The Appellant prays for adding, altering any other ground that will be taken up with the kind permission of the ITAT at the time of hearing.”

Succinctly stated, the AO based on information gathered as per Risk Management Strategy (RMS) formulated by the CBDT for AY 2016- 17, that the assessee who had made time deposits of Rs. 7,44,39,182/- during the subject year, i.e., AY 2016-17, had not filed its return of income for the said year under section 139 of the Act, reopened its case and passed an order under clause (d) of section 148A of the Act on 28/03/2023. Thereafter, the AO issued notice under section 148 of the Act, dated 30/03/2023. In compliance, the assessee filed its return of income for AY 2016-17y on 26/05/2023, declaring its income at Rs. NIL. 3. On perusal of the return of income, the AO observed that the assessee had, inter alia, raised a claim for exemption under section 10(23C) of the Act of Rs. 14,29,53,099/-.

As the assessee despite specific directions by the AO had failed to place on record supporting documentary evidence regarding its claim for exemption under section 10(23C) of the Act, and had also not filed any documentary evidence regarding the source of the time deposits made during the subject year, therefore, the AO in absence of any explanation forthcoming was constrained to treat the entire amount of time deposits of Rs.7,44,39,182/- made by the assessee in its bank account with State Bank of Hyderabad as its unexplained investment under section 69 of the Act. Accordingly, the AO vide his order under section 147 r.w.s 144B of the Act, dated 14/02/2024, determined the income of the assessee at Rs. 7,44,39,182/-.

Aggrieved, the assessee carried the matter in appeal before the CIT(A), who, finding no infirmity in the order passed by the AO, upheld the same and dismissed the appeal. For the sake of clarity, we deem it apposite to cull out the observations of the CIT(A), as under: “4. Finding and Decision

1 Ground no. 1- order passed by the learned Assessing Officer is contrary to the facts and circumstances of the case and against the law. The learned assessing officer has erred in going through the facts 4.1.1 In this case, information was available for A.Y. 2016-17 with the AO in accordance with the risk management strategy formulated by the Board on the Insight Portal of the Income Tax Department that the appellant had made time deposits of Rs. 7,44,39,182/- during the AY 2016-17. Despite the said high value transactions made by the appellant, the appellant had not filed return of income u/s 139 of the IT Act, 1961 for the year under consideration. Accordingly, the case of the appellant was reopened u/s 148/147 of the IT Act, 1961 by the passing order under clause (d) of section 148A of the income tax Act,1961 on 28.3.2023 and a notice under section 148 of the income tax Act, 1961 was also issued on 30.3.2023. During the assessment proceedings, the appellant has filed its return of income u/s 148 of the IT Act, 1961 on 19.07.2022 declaring total income of Rs. NIL. Accordingly, notice u/s 143(2) of the IT Act, 1961 was issued to the assessee on 06.08.2023. 4.1.2 During the assessment proceedings despite giving multiple opportunities the appellant had did not file complete details which were sought by the AO. Therefore, AO passed an order u/s 147 r.w.s 144B of the Act. In view of the above, it is very clear that the AO has rightly passed the said order as per law. Reliance is placed on the following case laws 1. CIT Vs. Rayala Corporation (P) Ltd. (Mad) 215 ITR 883 2. CIT Vs. P.P. Khader Haji (Ker) 234 ITR 461

1.3 Accordingly ground of appeal no. 1 raised by the appellant is hereby dismissed.

2 Ground no. 2 - Non granting of exemption claimed u/s 10(23C)(iiiab)of the Act 4.2.1 On perusal of the records it is seen that the appellant had neither filed return of income u/s 139(1) not 148. Therefore, exemption claimed by the appellant without filing the return of income is not correct. Reliance is placed the decision of Hon'ble SC in the case of Goetze (India) Ltd. Vs. CIT (SC) 284 ITR 323. Therefore, action taken by the AO is confirmed and accordingly ground no. 2 raised by the appellant is hereby dismissed.

3 Ground no.4&5 - Addition made u/s 69 and 69A of the Act.

3.1 During the assessment proceedings, the appellant neither submitted any supporting documentary evidences with respect to the exemption claimed u/s 10 nor any documentary evidences with respect to the source of time deposits and source of cash deposits made during the year before AO. Thus in absence of documents/evidences time deposits of Rs. 7,44,39,182/- is added to the income of the appellant by the AO. 4. “The Ld. A.O’s view to treat the Bank Term Deposit as unexplained source Income and to be taxed U/Sec 69A of Income Tax Act 1961, is against the law and contrary to the facts and circumstances of the case.

1. The Ld.AO. having seen the Sec.10(23C) (iiiab) Exemption Claimed Income, treated the Bank Term Deposit as Income U/sec. 69A. For disallowing the exemption reason given is that there is no production of documents. He assumed that the University is carrying on Business.

2. Here the Appellant is not a private person. It is a public Education Institution—University promoted & Managed by a State Govt. Thus the facts are entirely different. No unaccounted money goes into the hands of a Public Body which can be brought down as taxable income U/sec.69A. Sec.69A applies only when there is:

3. Only when the books of accounts are not reflecting such transactions Sec.69A shall Apply. Here as all the accounts are audited by Govt, treating as Unaccounted/unrecorded Income is against the provisions of the Law. May be with a predetermined biased view the Ld.AO has applied Sec.69A to rope in Sec.115BBE. Hence the Appellant prays the Ld.CIT (Appeals) to delete the total addition made in the Assessment and to categorically conclude that Sec.69A application is bad in law.

“Here merely for Applying Sec.115BBE, the Ld AO treated the impugned income as Sec.69A income, which is against the provisions of the Law.” 5.1. The application of Sec.69A itself is against the provisions of Law based on the facts and circumstances of the case. Having done so application of Sec.115BBE is also against the provisions of Law. Merely because the Sec.142(1) Notices are served to an email id of a Satavahana University vs. ITO