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Facts
Peoples University, the assessee, faced an assessment where its income was treated as business income after its registration application Under Section 12A was rejected. The Assessing Officer made additions for festival/pooja expenses, ESI/EPF payments made after due date, and repairs/maintenance for lack of evidence. The CIT(A) partly allowed the appeal. Subsequently, the assessee obtained registration Under Section 12AA/12AB for the relevant assessment years, altering its tax status.
Held
The Tribunal condoned a delay of 2 and 19 days in filing the appeals. Considering the assessee's changed status due to granted registration Under Section 12AA/12AB, the Tribunal set aside the impugned assessment orders and remanded the case back to the Assessing Officer for a fresh de novo assessment to determine the correct total income, including all entitlements, and directed assistance for filing ITR-7 manually.
Key Issues
Whether the assessment treating the university's income as business income was valid given the subsequent grant of registration Under Section 12AA/12AB; and the validity of various additions made by the AO for festival/pooja expenses, ESI/EPF delays, and repairs/maintenance disallowance.
Sections Cited
253, 250, 144, 12A, 57, 143(3), 246A, 11, 12, 12AA, 12AB, 36(1)(va)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI & SHRI PARESH M. JOSHI
आदेश / O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by the order bearing Number ITBA/APL/S/250/2024- 25/1069670305(1) dated 15.10.2024 passed by the Ld. CIT(A) u/s 250 of the Act which is hereinafter referred to as the Page 1 of 9 A.Ys. 2016-17 & 2015-16 “Impugned order”. The relevant Assessment Year is 2016-17 and the corresponding previous year period is from 01.04.2015 to 31.03.2016.
FACTUAL MATRIX 2.1 That as and by way of an assessment order made u/s 144 of the Act, the total income of the assessee was computed and assessed at Rs.(-)4,69,26,275/-. The income shown as per Return of Income was at Rs. NIL. The assessee is a university running various educational institution. That the assessee university had applied for the registration u/s 12A but the same was rejected by the Ld. CIT (Exemption), Bhopal. Thus the assessee was not liable to fill the ITR-5. The assessee income was taken up as business income. The assessee case was selected for “limited scrutiny” through CASS for following reason:-
Large deduction claimed u/s 57
The Ld. A.O in the aforesaid assessment order has made addition of Rs.1,47,828/- on account of festival expenses and pooja expenses as it was found to be not related to the business of the assessee. Another addition of sum of Rs.48,32,489/- was Page 2 of 9 A.Ys. 2016-17 & 2015-16 made as basis audit report. It was found that the payments towards ESI & EPF funds were made after due date for payment under respective Acts. Another addition of Rs.13,93,382/- was made on account of repairs & maintenance for lack of documentary evidences. That the aforesaid assessment order bears No.ITBA/AST/S/143(3)/ 2018- 19/1014525284(1) and that the same is dated 24.12.2018 which is hereinafter referred to as the “impugned assessment order”.
2.2 That the assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has partly allowed the same.
2.3 That the assessee being aggrieved by the “impugned order” has preferred the instant second appeal before this tribunal and has raised following grounds of appeal in Form No.36 against the “impugned order” which are as under:-
“1. That on the facts and in the circumstances of the case and in law, the learned CIT(A) grossly erred in upholding the action of the AO in making additions in the appellant's income on various issues which were not the subject matter of the limited scrutiny and therefore, the assessment, being framed contrary to the CBDT Instructions, ought to have been quashed.
2. That, without prejudice to the above, the learned CIT(A) grossly erred in law in upholding the action of the AO in dismissing the appellant's claim for exemption under section 11
Page 3 of 9 A.Ys. 2016-17 & 2015-16 of the Income-tax Act, 1961, merely on extraneous considerations, without considering the material fact that the issue relating to grant of registration to the appellant society under the provisions of s. 12/12AA of the Act was sub-judice before the Hon'ble Income-Tax Appellate Tribunal, Indore Bench and had not attained finality.
3. That, without prejudice to the above, the learned CIT(A) grossly erred in law, in upholding the action of the AO in not giving a specific finding/direction to the effect that upon the eventual grant of registration to the appellant society under the provisions of section 12A/12AB of the Income-Tax Act, 1961, the income of the appellant society should be computed in accordance with the provisions of ss. 11 & 12 of the Income-Tax Act, 1961.
4. That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for determining the income of the appellant, for the relevant assessment year, at a loss of Rs.4,69,26,275/- as against the returned loss of Rs.5,32,99,974/- thereby making additions of Rs.63,73,699/- in the appellant's income, which is quite unjustified, unwarranted and bad-in-law.
That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for making an addition of Rs. 1,47,828/- in the appellant's income, merely on guess work, surmises and extraneous considerations, on account of disallowance of Festival & Pooja Expenses claimed by the appellant without properly considering the explanation of the appellant and as also, without considering the material fact that all the expenses claimed by the appellant were fully vouched, genuine and were incurred exclusively and necessarily for the purpose of objectives of the appellant society only.
That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for making an addition of Rs.48,32,489/- in the appellant's income, merely on guess work, surmises and extraneous considerations, on account of disallowance of Employees' Contribution to Provident Fund under the provisions of s.36(1) (va) of the Act without properly considering and appreciating the facts and circumstances of the case.
That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action
Page 4 of 9 A.Ys. 2016-17 & 2015-16 of the AO for making an addition of Rs. 13,93,382/- in the appellant's income, merely on guess work, surmises and extraneous considerations, on account of ad-hoc disallowance @10% of Repair & Maintenance Expenses claimed by the appellant without properly considering the explanation of the appellant and as also, without considering the material fact that all the expenses claimed by the appellant were fully vouched, genuine and were incurred exclusively and necessarily for the purpose of objectives of the appellant society only.
That, without prejudice to the above, the learned CIT(A) grossly erred, in law, in upholding the action of the Id. AO in assessing the income of the appellant under the head of business income without considering and appreciating the material fact that the appellant has not carried out any business activity and the appellant has duly been granted registration under s.12A/12AB of the Act for the year under consideration.
That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary”.
Record of Hearing 3.1 Since the issues raised by the assessee in both the appeals were common with consent of the parties they are being heard together and is being disposed off by this common order.
3.2 That the hearing in the matter took place before this Tribunal on 28.08.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia contended that there are two appeals of the assessee on being &
Page 5 of 9 A.Ys. 2016-17 & 2015-16 today. In so far as is concerned there is a delay of 2 days whereas the registry has pointed out the delay of 19 days in preferring the instant appeal. In so far as 19 days too as pointed out by the registry in preferring the instant appeal. The Ld. AR has placed on records of this Tribunal an affidavit dated 26.08.2025 of the Chancellor of the University wherein it was averred that last date for filing the two appeals (supra) was 31.12.2024 and on that date while the appeals were being uploaded on the tribunal’s portal, the OTP was not getting generated and hence delay of 2 days has happened. Reliance was placed on the screen shot. It was therefore prayed that delay was not deliberate and was a bonafide one. Per contra Ld. DR has stated that revenue has no objection if this tribunal condones the delay. We after hearing both the parties and after carefully perusing the affidavit so filed are of the considered opinion that the cause shown is sufficient and we condone the delay. The appeals are admitted and are taken up for the hearing.
Page 6 of 9 A.Ys. 2016-17 & 2015-16 3.3 The Ld. AR for the assessee then pointed out to us that the “impugned assessment order” is u/s 143(3) of the Act in respect of both the appeals.
3.4 The Ld. AR brought to our notice basis paper book page 1 & 2 that Ld. CIT(E) vide order dated 01.05.2024 by respectfully following the directions of Hon’ble ITAT, Indore Bench order wherein following was held. “Accordingly we set aside impugned order and direct the Commissioner of Income Tax/Commissioner of Income Tax (E) to grant registration u/s 12AA to the assessee on the application filed on 28.09.2012” has granted the assessee approval u/s 12AA/12AB of the Act with effect from Assessment Year 2013-14 to Assessment Year 2024-25.
The Assessment Year in is 2016-17 whereas the Assessment Year in is 2015- 16 and the said periods are now covered by the provision of Section 12AA/12AB of the Act and that all benefits flowing to the assessee under the Act should be granted in view of altered position. It was stated that correct ITR form is 7 which deals with exemption and assessee be permitted to file ITR 7 the Page 7 of 9 A.Ys. 2016-17 & 2015-16 correct form manually. Per contra Ld. DR stated that in view of the altered position of the assessee as aforesaid the revenue has no objection if the matter is relegated back to the file of Ld. A.O wherein the Ld.A.O can relook the entire gamut of the case afresh by passing a fresh order on denovo basis.
Observations & findings & conclusions 4.1 We now have to decide the legality, validity and proprietary of the “impugned order” basis records of the case and the contentions canvassed before us.
4.2 We have carefully perused the records of the case.
4.3 We basis records of the case and after hearing and upon examining the rival contentions are of the considered opinion that in view of the altered position of the assessee as recorded (supra) we set aside the “impugned order” and remand the case back to the file of Ld. Assessing Officer to determine the correct/compute total income of the assessee exigible to tax in accordance with law, including entitlements. We direct the Jurisdictional Assessing Officer to give suitable assistance only to assessee for the purpose of filing manually ITR-7.
Page 8 of 9 A.Ys. 2016-17 & 2015-16 5. Order 5.1 In the premises, we set aside the “Impugned Order” as and by way of remand back to the file of Ld. A.O on denovo basis.
5.2 The appeal of the assessee is allowed for statistical purpose. para 5.1 mutatis mutandis.
5.4 In result both the appeals of the assessee are allowed for statistical purpose.
Order pronounced in open court on 29.08.2025.