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Income Tax Appellate Tribunal, H YDERABAD “A” BENCH: HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “A” BENCH: HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.826/Hyd./2025 Assessment Year 2018-2019 Telangana State Board of Intermediate Education, The Income Tax Officer, Nampally, Hyderabad. Exemption Ward-1(3), vs. PIN–500 001. Telangana. Hyderabad. PAN AAAJT2589D (Appellant) (Respondent) For Assessee : CA, Darshan Jakharia For Revenue : Sri Gurpreet Singh, Sr. AR Date of Hearing : 07.10.2025 Date of Pronouncement : 10.10.2025 ORDER PER MANJUNATHA, G.
This appeal has been filed by the assessee against the Order dated 13.03.2025 of the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre [in short “NFAC], Delhi, relating to assessment year 2018-2019.
Brief facts of the case are that, the assessee viz., ‘Telangana State Board of Intermediate Education’ was 2 ITA.No.826/Hyd./2025 initially established under the Andhra Pradesh Intermediate Education Act enacted by the legislature of the State of Andhra Pradesh in 1971. After bifurcation of the State into the State of Andhra Pradesh and State of Telangana, the said Act has been adapted by the Telangana State under section 101 of the Andhra Pradesh Re- organization Act, 2014 (Central Act No. 6 of 2014) vide Notification issued in G.O.Ms. No.21, Higher Education (IE) Department, dated 20.10.2014. Further, the Board has been established to regulate and supervise the system of Intermediate Education in the State of Telangana and to specify courses of study therefor and for matters connected therewith. Major functions performed by the Board in the exercise of the powers conferred upon it under the Statute by the State Government are that, (i) the Board makes regulations providing for courses of study and medium of instruction in the branches on intermediate Education (ii) It Provides affiliation to any college or other educational institution in the State to the Board as providing courses of study qualifying students for the intermediate examination
3 ITA.No.826/Hyd./2025 and provides recognition to any college or other educational institution for the purpose of admitting in to the privileges to be granted by the Board, and to withdraw such affiliation or recognition. (iii) Lays down the qualification criteria for teachers required to teach the subjects included in the courses of study. (iv) Formulates schemes for the conduct of intermediate examination and to admit candidates to such examination. (v) Conducts the Intermediate examination and takes all steps ancillary thereto and to publish the results thereof. (vi) Grants certificates to the candidates who have passed the intermediate examination. (vii) Co-ordinates and co-operates with the Universities and other authorities in the State in such manner and for such purposes as may be prescribed by the State Government. (vii) Directs inspection of junior colleges or other affiliated colleges, and takes all measures necessary to ensure that proper standards of instruction are maintained in them. (ix) All other functions as entrusted to it by the State Government by or under the Telangana State Intermediate Education Act
4 ITA.No.826/Hyd./2025 for regulating and supervising all aspects of the intermediate education in the Telangana State.
During the assessment year under consideration i.e., 2018-2019 the assessee had not filed it’s return of income. The case of the assessee has been selected for scrutiny on two grounds i.e., time deposits amounting to Rs.2370.28 lakhs and interest other than interest on securities amounting to Rs.518 lakhs. Since the above financial transaction remained unexplained, the Jurisdictional Assessing Officer [in short “JAO”] has issued notice u/sec.148A of the Act on 31.03.2022. However, the assessee has not complied with the said notice. In absence of any clarification from the assessee, the JAO has passed order u/sec.148A(d) of the Act on 31.03.2022 and concluded that, the above mentioned transaction remain unexplained in absence of return of income and any explanation from the assessee. Accordingly, notice u/sec. 148 was issued and duly served upon the assessee on 31.03.2022 through ITBA Portal. During the course of assessment proceedings, the Assessing Officer has issued
5 ITA.No.826/Hyd./2025 notices u/sec.142(1) of the Act on 09.05.2022, 13.10.2022, 20.01.2023 and show cause notice dated 10.02.2023 and 09.03.2023 calling the assessee to explain the source of deposits with supporting documentary evidences. In response to the above show cause notices, the assessee has furnished it’s reply on 14.02.2023 and 01.03.2023 contending, inter alia, by explaining it’s functions stated in para-2 hereinabove and submitted that the Board is under the full control of the Government and accordingly it is “State” as per Article-12 of the Constitution of India and therefore, entitled to immunity from Income Tax as per Article 289 of the Constitution and is not required to file it’s return of income. The Assessing Officer after considering the submissions of the assessee, assessed the income at Rs.5,18,78,078/- by making additions under the Head “Income from Other sources” amounting to Rs.5,18,00,478/- and unexplained expenditure amounting to Rs.77,600/- vide order dated 28.03.2023 passed u/sec.147 r.w.s.144 r.w.s.144B of the Income Tax Act, 1961 [in short “the Act”].
6 ITA.No.826/Hyd./2025 4. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), despite issuance of notices u/sec.250 of the Act on 5 occasions i.e., on 01.01.2024, 18.10.2024, 24.12.2024, 30.01.2025 and 27.02.2025, the assessee did not file any submissions to substantiate it’s case. Therefore, the learned CIT(A) by respectfully following the Judgment of Hon’ble Supreme Court in the case of BN Bhattacharjee and Another [1977] 118 ITR 461 (SC) dismissed the appeal of the assessee for non-prosecution.
Aggrieved by the Order of the learned CIT(A), the assessee is now, in appeal before the Tribunal.
CA, Darshan Jakharia, Learned Counsel for the Assessee submitted that, during the course of assessment proceedings, although, the assessee has furnished requisite information with supporting documentary evidences, the Assessing Officer without appreciating the relevant facts, has made the impugned additions and in appeal, the learned CIT(A) has dismissed the appeal of the assessee without deciding the issue on merits. He submitted that, as 7 ITA.No.826/Hyd./2025 per the provisions of the Income Tax Act, the learned CIT(A) is duty bound to decide the appeal/issues on merits, even if the assessee did not appear before him during the course of appellate proceedings. He, therefore, submitted that, the matter may be set aside to the file of learned CIT(A) for afresh adjudication, by providing reasonable opportunity of hearing to the assessee.
Sri Gurpreet Singh, learned Sr. AR for the Revenue, on the other hand, heavily relied on the Order of the learned CIT(A). He submitted that, the learned CIT(A) has issued notices u/sec.250 of the Act on 5 occasions which is evident from the order of the learned CIT(A). However, the assessee did not chose to respond to any of the notices to substantiate it’s case. Therefore, the learned CIT(A) has rightly sustained the additions made by the Assessing Officer by following the settled principles of law. He, accordingly, pleaded that the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and the orders of the authorities below.
8 ITA.No.826/Hyd./2025 We find that, there is no dispute between the parties that, the assessee had not filed it’s return of income during the assessment year 2018-2019 under consideration. During the course of assessment proceedings, although, the assessee has furnished certain information as called-for by the Assessing Officer with supporting documentary evidences, the Assessing Officer has made the additions under the Head “Income from Other Sources” amounting to Rs.5,18,00,478/- and unexplained expenditure amounting to Rs.77,600/-. During the course of appellate proceedings, admittedly, the assessee did not respond to any of the notices issued by the learned CIT(A). Therefore, the learned CIT(A) sustained the additions made by the Assessing Officer. We find that, as per the provisions of the Income Tax Act, 1961, the learned CIT(A) is duty bound to decide the appeal/issues on merits during the course of appellate proceedings, even if the assessee did not appear before him. Since, in the instant appeal, the learned CIT(A) has dismissed the appeal for non prosecution without deciding the issues on merits, we deem it fit and appropriate to remit
9 ITA.No.826/Hyd./2025 the issues back to the file of learned CIT(A) with a direction to re-decide the issues on merits, by providing reasonable opportunity of hearing to the assessee. Needless to say, the assessee is directed to provide the information as called for by the learned CIT(A) during the course of hearing of the appeal. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, appeal of the Assessee allowed for statistical purposes.
Order pronounced in the open Court on 10.10.2025.