Loading judgment…
Facts
The assessee, Gujarat University, is a government-funded institution whose income is exempt under Section 10(23C)(iiiab). The Assessing Officer reopened the case based on third-party information and made an addition of Rs. 38,72,56,429/- under Section 69 for unexplained investments, primarily from Form 26AS and Insight Portal.
Held
The CIT(A) deleted the addition, finding that the information relied upon by the AO was incomplete and ambiguous. The AO failed to conduct independent verification, and the assessee provided confirmation from the State Bank of India that no such fixed deposits existed.
Key Issues
Whether the addition made by the Assessing Officer for unexplained investments was sustainable when based on incomplete and unverified information, and without proper independent inquiry.
Sections Cited
147, 148, 148A, 69, 10(23C)(iiiab), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, D BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-MS. SUCHITRA R. KAMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Revenue against the order passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)" for short] dated 23.04.2025, under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as "the Act" for short], for Assessment Year (AY) 2019-20.
The Revenue has raised the following grounds of appeal:-
“Whether on the facts and in circumstances of the case, Ld. CIT is justified in deleting the addition u/s 69 of the I.T. Act, 1961 of Rs.38,72,56,429/- being unexplained investment in time deposits.”
The brief facts of the case are that the assessee, Gujarat University, is a statutory body established under the Gujarat University Act, 1949, and is engaged in the field of higher education, research, and extension activities. It is ACIT Vs. Registrar, Gujarat University Asst. Year : 2019-20 - 2– substantially financed by the Government, and its income is exempt under section 10(23C)(iiiab) of the Act. For A.Y. 2019-20, the assessee did not file a return of income, contending that it had no taxable income, and that its entire income was exempt under the aforesaid section. However, based on third-party information available through Form 26AS, the case was reopened under section 148, citing escapement of income. A notice under section 148A(b) was issued on 15.03.2023, followed by notice under section 148 on 31.03.2023. The Assessing Officer, during the course of reassessment, made an addition of Rs. 38,72,56,429/- u/s 69 of the Act as unexplained investments, primarily based on data from Form 26AS, Insight Portal, and TDS returns filed by third parties.
Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after perusing the submissions and documents filed by the assessee, deleted the addition. The relevant part of the order of the Ld. CIT(A) reads as under:-
“…….
7.2 I have perused the assessment order, grounds of appeal, and submission filed by the appellant carefully. I find from the assessment proceedings that, the case was reopened u/s 147 rws 148A as per the amended provisions of Income tax Act with effect from 01/04/2021 on the basis of information received by the AO as per Risk Management Strategy formulated by the CBDT through insight portal under the head ‘RMS- Non filer of return'. According to the above information, the appellant had deposited cash of Rs.155.55 crores, made time deposits of Rs.36.76 crores and deposited cash of Rs.10.05 crores including bearer cheques. Since the appellant had not filed return of in spite of having done financial transactions of Rs.218.42 crores, an order u/s 148A(d) was passed on 29/03/2023. After examining the various submissions filed by the appellant, the AO noted that the source of the source of time deposits of Rs.38,72,56,429/- made with State of Bank of India was not explained with the help of convincing documentary evidences. Therefore, the AO made addition of Rs.38,72,56,429/- on account of unexplained investment.
ACIT Vs. Registrar, Gujarat University Asst. Year : 2019-20 - 3– During appellate proceedings, the appellant submitted that the details of FDs of Rs.38,72,56,429/- mentioned by the AO were incomplete and without mentioning the name of bank. Subsequent after the request made by the appellant, the AO had informed that the FDs are with State Bank of India. The appellant has submitted they have not made such FDs with State Bank of India. The appellant has submitted the confirmation from the State Bank of India stating no such FDs are made by the appellant during FY 2018-19.
I have considered the facts of the submission of the appellant carefully. I find that the information on the basis of which the AO has made the addition, is incomplete and ambiguous. I find that after the query raised by the appellant, the AO has not cross checked the correctness of the information with source agency and made addition ignoring the request of the appellant to provide correct details to enable the appellant to verify the same from the books of accounts or concerned bank and branch because the appellant was dealing voluminous transactions. During appellate proceedings, the appellant has submitted that they verified the books of accounts and bank accounts with concerned bank and no such FDs are found. The appellant has submitted the bank statement of SBI, confirmation from the SBI in support of its contention. Considering the facts of the case and submission filed by the appellant, I find that the information on the basis of which the AO had made addition is incorrect and no such FDs appears to have been made by the appellant in SBI. Therefore, the addition made by the AO is hereby deleted and grounds of appeal raised by the appellant are allowed.”
In a nutshell, the Ld. CIT(A) held that, • The information relied upon by the Assessing Officer was incomplete and ambiguous.
• The Assessing Officer failed to provide branch-wise or account-specific details of the alleged time deposits, despite repeated requests by the assessee.
• The assessee obtained a written confirmation from the State Bank of India, confirming that no such FDs existed in the assessee’s name during the relevant financial year.
• The Assessing Officer did not conduct any independent verification or make enquiries with the bank to substantiate the addition.
• Accordingly, the CIT(A) held that the addition was made on the basis of incorrect and unverified information, and thus, not sustainable.
Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before the Tribunal.
The Ld. DR relied upon the order of the Assessing Officer, whereas the Ld. AR supported the order of the Ld. CIT(A).
We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the assessee is a government-funded university whose income is exempt under section 10(23C)(iiiab) of the Act. There is no allegation of diversion of funds. The impugned addition is based solely on transactional data from the Insight Portal and Form 26AS. However, the Assessing Officer has failed to bring on record any direct evidence of such time deposits being held by the assessee, nor has he conducted any independent verification from the concerned bank. We find from the record that the assessee has furnished confirmation from the State Bank of India, categorically stating that no such FDs exist in the name of the assessee for the relevant year. The assessee also produced relevant bank statements and ledger extracts from its books of accounts. It is settled law that additions under section 69 can be made only when there is cogent material showing that the assessee has made investments which are not recorded in the books of account and for which no satisfactory explanation is offered. In the present case, the Assessing Officer neither established the factum of such investment nor disproved the assessee’s explanation. In light of these facts, we find no infirmity in the order passed by the Ld. CIT(A), which is well-reasoned and ACIT Vs. Registrar, Gujarat University Asst. Year : 2019-20 - 5– based on a proper appreciation of facts and law. We, therefore, uphold the order of the Ld. CIT(A) and dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.
The order is pronounced in the open Court on 09.10.2025.