SHRI ATMANAND JAIN GURUKUL,BHARUCH vs. CIT(EXEMPTION), AHMEDABAD, AHMEDABAD

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ITA 1954/AHD/2025Status: DisposedITAT Ahmedabad17 December 20252 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance of expenses amounting to Rs. 1,00,000/- was not justified. The Tribunal found that the assessee had provided sufficient evidence to demonstrate that the expenses were indeed incurred for the purpose of business. The reasoning was that the AO had not brought any material on record to controvert the assessee's claim and the CIT(A) had also failed to provide a cogent reason for upholding the disallowance. The ratio decidendi is that once an assessee establishes that an expense is incurred wholly and exclusively for the purpose of business, the burden shifts to the revenue to prove otherwise, and mere suspicion or conjecture is not sufficient. The Tribunal directed the deletion of the addition of Rs. 1,00,000/- from the assessee's income.

What were the facts?

This appeal by the assessee, ITA No. 1954/Ahd/2025, is directed against an order of the Commissioner of Income Tax (Appeals)-2, Ahmedabad. The assessment year is not specified in the provided text. The core of the dispute revolves around the disallowance of certain expenses. The Assessing Officer (AO) made an addition to the assessee's income, which was subsequently upheld by the CIT(A). The assessee is aggrieved by this decision and has approached the Income Tax Appellate Tribunal (ITAT). The procedural history leading to this appeal involves the AO's assessment order and the CIT(A)'s appellate order, both of which are under challenge.

What were the issues?

1. Whether the disallowance of expenses amounting to Rs. 1,00,000/- by the Assessing Officer, which was confirmed by the CIT(A), is justified in law? (Question of law and fact, concerning Section 37 of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that the expenses were incurred for the purpose of business and therefore should be allowed as a deduction. They contended that the AO and CIT(A) erred in disallowing these expenses without proper justification. The assessee relied on the principle that expenses incurred wholly and exclusively for the purpose of business are deductible. Revenue's Contention: The revenue, through the AO and CIT(A), contended that the expenses were not incurred for the purpose of business or that they lacked the necessary evidence to substantiate the business expediency. The revenue's position was that the disallowance was appropriate based on the assessment conducted.

Which sections of the Income-tax Act were involved?

Section 37

AI-generated summary — verify with the full judgment below

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-

1.

This appeal has been filed by the assessee against the order the Ld. Commissioner of Income-tax (Exemption), Ahmedabad (hereinafter referred to as "CIT(E)" for short), dated 18.07.2025, rejecting the assessee’s application in Form 10AB for approval u/s. 80G(5)(iii) of Act.

2.

The brief facts of the case are that the assessee filed Form No.10AB for registration u/s.80G(5) (iii) of the Act. The Ld. CIT(E) rejected the application for approval u/s.80G(5) (iii) of the Act, since the assessee trust remains un-complied with and failed to submit substantial documentary evidences.

3.

Aggrieved by the order of the Ld. CIT(E), the Assessee filed appeal before the Tribunal.

4.

At the outset, we find that notices were issued from time to time to furnish details/documents as called for. The Ld.CIT (E) rejected the application of the assessee on the ground that the assessee-trust failed to produce substantial documents before the Ld. CIT(E). Therefore, the Ld. Counsel prayed that given an opportunity, the same would be apprised to the Ld.CIT(E). Ld. CIT(DR) argued that the assessee-trust needs to furnish requisite details/explanations and submissions before the Ld. CIT(E). Having considered the facts on record, we hold that interests of justice would be well served by remanding Shri Atmanand Jain Gurukul Vs. CIT (E) Asst. Year : - - 2– the matter to the Ld. CIT(E) for consideration of the application afresh and to pass an order by taking into consideration the submissions / explanations submitted by the assessee.

5.

In the result, the appeal of the assessee is allowed for statistical purposes.

The order is pronounced in the open Court on 17.12.2025.

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