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Facts
The assessee, a charitable trust, filed a nil return, but the AO added Rs. 2,30,00,000/- under Section 68 for unexplained unsecured loans. The CIT(A) deleted this addition, allowing the assessee the benefit of exemption under Section 11. The revenue appealed this decision.
Held
The Tribunal held that the CIT(A) erred in allowing the exemption under Section 11 on unexplained unsecured loans, as income taxed under Section 68 cannot be treated as income eligible for such exemption. The Tribunal found the CIT(A) did not adequately address the issue of bogus/fictitious loans.
Key Issues
The key legal issue was whether a charitable trust is entitled to exemption under Section 11 of the Act for unexplained unsecured loans added under Section 68.
Sections Cited
Section 68, Section 11, Section 12A, Section 250, Section 143, Section 148, Section 56
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Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI S. RIFAUR RAHMAN & SHRI SUNIL KUMAR SINGH
ORDER PER SUNIL KUMAR SINGH, JUDICIAL MEMBER Both these appeals have been preferred by the revenue against the impugned orders each dated 28.02.2017 passed in appeal No. 67/CIT(A)- 2/Agra/ITO(Exemption)/Agra/2015-16 & appeal No. 122/CIT(A)-2/Agra/ITO- (Exemption)/Agra/2015-16 by Ld. CIT(A)-2, Agra respectively. [hereinafter referred to as the “CIT(A)”] u/s. 250 of the Income tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2012-13 each, wherein learned CIT(A) has allowed assessee’s appeals.
The facts and issues related to the appeals under consideration are almost similar, hence, both the appeals are being decided by this common order.
3. Briefly stating, assessee filed the return of Income at Rs. Nil (Net deficit as per income and expenditure account of Rs. (-) 1,75,19,408/- an amount of Rs. 2,30,00,000/- was added by AO u/s 68 of the Act, vide assessment order dated 18.03.2015 u/s 143/148 of the Act, and assessed the taxable income of Rs. 54,80,590/- (Rs.2,30,00,000/- - Rs.1,75,19,408/-, which was deleted by the Ld. CIT(A)-2, Agra vide order dated 28.02.2017. The appeal filed by the revenue against the order of the Ld. CIT(A) was dismissed vide order dated 28.08.2018 passed by the Tribunal in & 246/Agr/2017 on low tax effect (not exceeding 20 lacs). On revenue’s misc. application no. 06/Agr/2019, this Tribunal, vide order dated 30.06.2025, allowed revenue misc. application, holding the tax effect on the addition of Rs. 2,30,00,000/- as Rs. 71,70,000/-. Hence, the revival of revenue’s appeal.
Appellant revenue has preferred this appeal on the ground that Ld. CIT(A) has erred in allowing the said exemption u/s 11 of the Act, in respect of unexplained unsecured loans, ignoring the fact that once unsecured loans are held as bogus/fictitious/unexplained cash credit u/s 68 of the Act, assessee was not entitled for the said exemption, which was neither claimed in the return nor during the assessment proceedings.
Appellant revenue is represented by the Ld. Sr. DR. None responded for the respondent assessee. Perused records and heard Ld. DR for the appellant revenue.
The main point for determination under appeal is as to whether Ld. CIT(A) has erred in allowing assessee, the benefit of exemption u/s 11 of the Act by deleting the additions made by Assessing officer? 7. We note that Tribunal, vide order dated 28.08.2018, dismissed assessee’s appeal on low tax effect i.e. not exceeding 20 lacs. However, on revenue’s misc. application, the tax effect on the addition of Rs. 2,30,00,000/- was found to be Rs. 71,70,000/- by this Tribunal, vide its order dated 30.06.2025 passed in M.A. No. 06/Agr/2019. The revenue’s appeal, thus, deserves to be disposed off on merit.
We notice that Ld. CIT(A) has deleted the said addition of Rs. 2,30,00,000/- on the ground that the appellant trust continues to enjoy the ITO-Exemption CIT (Exemption), Agra v M/s. Hardayal Charitable and Educational Trust, Shikhobad registration and benefit of exemption u/s 12A and section 11 of the Act, by holding that the assessee was entitled for the exemption on income determined