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Facts
The assessee, a registered charitable trust running a school, claimed exemption under Section 10(23C)(iiiad). The Assessing Officer initiated proceedings under Section 148, treated bank deposits of Rs.1,00,74,714 as unexplained income under Section 69A, and consequently disallowed the exemption. The Ld. CIT(Appeals) subsequently upheld the Assessing Officer's order.
Held
The Tribunal observed that the assessee failed to fully substantiate its claims with complete documentation during both assessment and appellate proceedings. To ensure justice and fair play, the Tribunal remanded the matter back to the Assessing Officer for re-examination, directing that the assessee be given a fair opportunity to present all necessary documents.
Key Issues
Whether the disallowance of exemption and treatment of bank deposits as unexplained income were justified due to insufficient documentation, and if the assessee should be granted a fresh opportunity to furnish evidence.
Sections Cited
12A, 10(23C)(iiiad), 148, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Sonjoy Sarma JM This appeal is filed by the assessee against the order dated 31.01.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as ‘CIT(Appeals)’]for the Assessment Year 2018–19. 2. Brief facts of the case are that the assessee is a registered charitable trust engaged in educational activities and running a Kuriakose Elias Carmel Educational and Charitable Trust school in a village of Kuttanadu in Kerala. It was granted registration under Section 12A of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] vide order dated 26.09.2018 effective from AY 2018–19 onwards .As the assessee’s gross receipts were below Rs. 1 crore, it claimed exemption under Section 10(23C) (iiiad). For AY 2018–19, the gross income was Rs.7874445 and revenue expenditure was Rs.9481356. No return was filed under the belief that income was exempt. However, based on certain bank information, the Assessing Officer initiated proceedings under Section 148, and in compliance to the same the assessee submitted Form 10B, computation, audit reports, case books, ledgers, bank statements, etc. Despite this, the AO held that the total bank deposits of Rs.1,00,74,714 constituted as unexplained income under Section 69A of the Act and disallowed the exemption claimed by the assessee and computed the total income accordingly and a penalty and raising a demand of Rs.1,58,94,019.
Aggrieved by the above order, the assessee preferred an appeal before the ld. CIT(Appeals) and ld. CIT(Appeals) upheld the AO’s order.
Dissatisfied with the above order, the assessee is in appeal before this tribunal. The learned AR for the assessee contended that the assessee could not produce certain supporting documents during assessment proceeding as well as appellate proceedings due to genuine hardship which was beyond the control of the assessee. Therefore, the AR prayed for one more opportunity to substantiate the claim with proper evidence before the Assessing Officer.
Kuriakose Elias Carmel Educational and Charitable Trust 5. On the other hand, the Ld. Departmental Representative (DR) supported the orders of the authorities below.
We have heard both sides and perused the material available on record. It is evident that the assessee was unable to fully substantiate its claim during the assessment proceedings due to lack of complete documentation. Given the nature of the assessee’s activities and the claim of exemption under Section 10(23C)(iiiad), it is essential that the matter be re-examined after giving the assessee a fair opportunity to furnish all necessary documents. Therefore, in the interest of justice and fair play, we deem it proper to remand the matter back to the file of the Assessing Officer with direction to re-examine the issue afresh after affording a reasonable opportunity of being heard.The assessee is also directed to cooperate fully and submit all required documentary evidences to substantiate its claims.
In view of the above, the present appeal is allowed for statistical purposes.
Order pronounced in the open court on 3rd June, 2025. Sd/- Sd/- (INTURI RAMA RAO) (SONJOY SARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin, Dated: 3rd June, 2025