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2026 Supreme(Online)(ITAT) 4725
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
Sonjoy Sarma, Judicial Member, Rakesh Mishra, Accountant Member
Jermel’s Accademy – Appellant
Versus
ITO, Ward-2(2), Exemp, Siliguri – Respondent
ITA No(s).: 2748/KOL/2025 | 2749/KOL/2025 | 2750/KOL/2025
For the Appellants/Petitioners: Deep Agarwal, AR
For the Respondents: Satyajit Mandal, CIT, DR
Tribunal remands ex parte unexplained cash deposit addition u/s 69A to AO for de novo assessment, requiring assessee to prove fee receipts source with evidence; sets aside consequential penalties.
Headnote:(A) Income Tax Act, 1961 - Sections 69A, 11, 12A(2) proviso, 139(4A), 271B, 271AAC(1), 44AB - Charitable trust running educational institution without registration u/s 12AA/12AB - Cash deposits during demonetization period treated as unexplained u/s 69A - Tribunal remands matter to AO for de novo assessment as assessee failed to substantiate source with cogent evidence during original proceedings but seeks fresh opportunity - Appellate proceedings distinguished from assessment proceedings; provisional registration does not extend retrospective exemption benefit u/s 11 via 12A(2) proviso - Penalty u/s 271B for audit failure and u/s 271AAC set aside as consequential to quantum remand. (Paras 3, 6, 7)
(B) Assessment - Scope of remand - Ex parte best judgment assessment u/s 144 set aside where assessee claims cash deposits from fee receipts but lacked opportunity to present evidence; AO to grant hearing, verify evidences linking deposits to genuine collections, avoiding unnecessary adjournments. (Para 6)
Facts of the case:
Assessee trust running school deposited cash during demonetization without registration u/s 12AA/12AB or return filing; AO added deposits as unexplained u/s 69A, treated activities as business, levied audit penalty u/s 271B and search penalty u/s 271AAC; CIT(A) upheld; Tribunal intervenes for justice.
Findings of Court:
Matter remitted to AO for fresh assessment verifying source of deposits; penalties deleted as following quantum.
Issues: Whether cash deposits explained as fee receipts; eligibility for exemption u/s 11 sans registration; nature of activities as charitable or business; validity of penalties.
Ratio Decidendi: Assessee bears onus to prove cash source with verifiable evidence like reconciliations, student-wise records; lack thereof justifies addition u/s 69A; remand warranted for fair hearing where original assessment ex parte; appellate stage not continuation of assessment for registration proviso applicability.
Result: Appeals partly allowed for statistical purposes; remanded to AO.
| Table of Content |
|---|
| 1. assessee's grounds of appeal against assessment and penalties (Para 1 , 2) |
| 2. factual background of trust's educational activities and cash deposits (Para 3) |
| 3. remand to ao for de novo assessment and setting aside penalties (Para 5 , 6 , 7 , 8) |
ORDER
PER BENCH:
These appeals filed by the Assessee are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2017-18 dated 02.09.2025 and 03.09.2025.
2. The Assessee is in appeal before the Tribunal raising the following grounds of appeal:
I. ITA No. 2748/KOL/2025:
“1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have held that the order passed by the Ld. A.O u/s 144 is bad in law and liable to be quashed.
2. For that on the facts and in the circumstances of the case, that the Ld. CIT(A) has erred in sustaining the addition of ₹50,14,820/- made u/s 69A of the Income Tax Act, 1961 by treating the cash deposits during the period 09.11.2016 to 30.12.2016 as unexplained, without appreciating that the said deposits represented genuine fees collections from students and school building fund contributions.
3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the appellant is a charitable trust engaged in education, which is per se a charitable purpose u/s 2(15) of the Income Tax Act, and the receipts were applied towards its educational objects; hence the addition sustained is unjustified.
4. For that on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that non-availability of registration u/s 12AA/12AB or u/s 10(23C) at the relevant time automatically renders the institution a business concern, without appreciating that the objects and activities were charitable in nature being in the nature of educational activities, and that the trust has since been granted provisional registration u/s 12A(1)(ac).
5. For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have held that the income of the assessee was eligible for exemption u/s 11 in view of the proviso to Sec. 12A(2) of the Act.
6. For that on the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the finding of the Assessing Officer that filing of return of income u/s 139 was mandatory for AY 2017-18, ignoring the fact that the appellant had deficit of income and there was no taxable income, and further overlooking that section 12A(1)(ba) making return filing a condition was inserted only from AY 2018-19.
7. For that on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining the assessment without addressing the specific documentary evidences submitted.
8. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal.”
II. ITA No. 2749/KOL/2025:
“1. For that the Ld. CIT(A) ought to have held that the order passed u/s 271B is bad in law and is liable to be quashed.
2. For that on the facts and in the circumstances of the case, the Ld. CIT (Appeals) erred in law and in facts in confirming the penalty of 1,50,000/- levied under section 271B of the Income Tax Act, 1961.
3. For that on the facts and in the circumstances of the case, has erred in confirming the penalty of ₹1,50,000/- levied u/s 271B of the Act, without appreciating that the appellant is a charitable trust running an educational institution and not engaged in any business activity so as to attract the provisions of section 44AB.
4. That the appellant craves leave to add, alter or delete all or any of the grounds of appeal.”
III. ITA No. 2750/KOL/2025:
“1. (a) For that the Ld. CIT(A) ought to have held that the penalty order passed u/s 271AAC(1) dated 03.03.2025 is bad in law and is liable to be quashed.
(b) For that the Ld. CIT(A) ought to have quashed the said penalty order on the gro
