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Facts
The assessee, Gujarat State Agriculture Marketing Board, had reassessment proceedings initiated under Section 147 for AY 2016-17 based on interest income in Form 26AS. The Assessing Officer made an addition of Rs. 38,57,588/- under Section 69A, treating it as unexplained money, and the CIT(A) dismissed the appeal ex-parte. The assessee contended its income is unconditionally exempt under Section 10(26AAB) as per CBDT Circular No. 18/2017, and thus it was not required to file an income tax return.
Held
The Tribunal held that the assessee's income is unconditionally exempt under Section 10(26AAB) as clarified by CBDT Circular No. 18/2017, and it was not statutorily required to file a return of income. Therefore, the Assessing Officer was not justified in treating the interest from 26AS as unexplained money under Section 69A, especially when the department had previously accepted the assessee's exempt status in other assessment years with similar facts.
Key Issues
Whether interest income reflected in Form 26AS of an Agricultural Marketing Board, exempt under Section 10(26AAB) and not required to file an ITR, can be treated as unexplained money under Section 69A following a reassessment under Section 147.
Sections Cited
250, 10(26AAB), 147, 69A, 10(20), 139
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA R. KAMBLE
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER & 1317/Ahd/2025 (Assessment Year: 2016-17 & 2017-18) Gujarat State Agriculture Income-Tax Officer, Vs. Marketing Board, Ward-1, 2nd Floor, Block No. 12, Gandhinagar Dr. Jivraj Mehta Bhavan, Section 10, Gandhinagar-382010 [PAN :AAAAG 1417 G] (Appellant) .. (Respondent) Appellant by : Shri Alpesh Shah, AR Respondent by: Shri Abhijit, Sr DR Date of Hearing 22.09.2025 Date of Pronouncement 26.11.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
Delay Condoned These two appeals have been filed by the Assessee against the separate orders dated 20.11.2024 and 28.10.2024, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “Ld. CIT(A)”], under Section 250 of the Income-tax Act, 1961 (‘the Act’ in short) relating to the Assessment Years 2016-17 & 2017-18.
Since common issues are involved in both the appeals, these were heard together and are being disposed of by this consolidated order for the sake of convenience.
The assessee has taken following grounds of appeal:-
1. The learned A.O. has erred in law and on facts in making addition of Rs.38,57,519/-. Total addition of Rs.38,57,519/-made by adopting the interest amount from 26AS and treated it as unexplained money.
& 1317/Ahd/2025 – Gujarat State Agriculture Mktg Board Vs. ITO Asst. Year : 2016-17 & 2017-18 - 2–
2. The learned A.O. has erred in law and on facts in not considering the facts that the Income of assessee is exempt u/s 10(26AAB) of the Act.
3. The learned assessing officer has erred in law and on facts as states that assessee had not filed return for the relevant Assessment Year ignoring the fact that the assessee is not required to file its return of income according to the Circular No.18/2017 [F.NO.385/01/2015-IT(B)), dated 29.05.2017.
4. The entire addition made u/s 69A is unwarranted of facts and required to be deleted.”
The brief facts in respect of this year are that the assessee is an Agricultural Marketing Board recognized by the Government of Gujarat. Its primary functions include implementation of Central and State Government schemes and disbursement of subsidies to traders and farmers. As per CBDT Circular No. 18/2017 dated 29.05.2017, income of entities covered u/s 10 of the Act, including Agricultural Produce Marketing Committees / Boards referred to in section 10(26AAB), is unconditionally exempt, and such entities are also not required to file their return of income. The Circular further clarifies that no TDS is required to be deducted on payments made to such Boards.
4.1 For A.Y. 2014-15 and 2018-19, the Department accepted the assessee’s exempt status and passed orders accordingly.
4.2 For A.Y. 2016-17, reassessment proceedings were initiated u/s 147, based on information available in Form 26AS/AIR regarding interest income from Union Bank of India. The Assessing Officer completed the reassessment by making an addition of Rs. 38,57,588/- under section 69A of the Act.
The Ld. CIT(A) dismissed the appeal ex-parte, observing that no compliance was made by the assessee despite multiple opportunities.
5.1 Ld. Counsel for the assessee submitted that the assessee was entitled not to file return of income as the income of the assessee was treated as exempt u/s & 1317/Ahd/2025 – Gujarat State Agriculture Mktg Board Vs. ITO Asst. Year : 2016-17 & 2017-18 - 3– 10(20) of the Act. On the other hand, Ld. DR referred to the judgment of the Hon’ble Supreme Court in the case of APMC Vs. CIT, 173 taxman 115 dated 21.08.2008 and argued that the AMCs are not entitled to exemption u/s. 10(20) of the 1961 Act after insertion of the said Explanation vide Finance Act, 2002 with effect from 01.04.2003.
We have heard both the parties and perused the material available on record.
6.1 The assessee is an Agricultural Marketing Board, whose income is exempt u/s10(26AAB) of the Act. The CBDT Circular No. 18/2017 clarified that the Agricultural Produce Marketing Committees/Boards covered u/s 10(26AAB) enjoy unconditional exemption, are not required to file returns of income, and no TDS is required to be deducted on payments made to them. The relevant paragraph of the said Circular reads as under:-
"4. Accordingly, it has been decided that in case of below mentioned funds or authorities or Boards or bodies, by whatever name called, referred to in section 10 of the Income-tax Act, whose income is unconditionally exempt under that section and who are also statutorily not required to file return of section 139 of the Income-tax Act, there would be no requirement for tax deduction at source, since their income is anyway exempt under the Income-tax Act - (i)....
(ii)....
(iii)…
(xiii) Agricultural Produce Marketing Committee referred to in clause (26AAB); ......."
In view of the above, the Assessing Officer was not justified in treating the non-filing of return as a ground to consider the interest reflected in Form 26AS as & 1317/Ahd/2025 – Gujarat State Agriculture Mktg Board Vs. ITO Asst. Year : 2016-17 & 2017-18 - 4– unexplained u/s 69A, particularly when the assessee was legally not required to file a return, and when the Department has already accepted this exempt status in the assessee’s own cases for A.Ys. 2014-15 and 2018-19 with no change in facts or law being brought on record, and accordingly the very basis of the addition fails.
In the result, the appeal of the assessee is allowed.
: AY 2017-18 8. The facts and issues involved in this year are identical to those in A.Y. 2016- 17. Following our decision in , the addition made in this year is also directed to be deleted.
In the result, both the appeals of the assessee are allowed.
The order is pronounced in the open Court on 26.11.2025. (SUCHITRA R. KAMBLE) VICE-PRESIDENT Ahmedabad; Dated 26.11.2025 **btk