GUJARAT MEDICAL EDUCATION AND RESEARCH SOCIETY AHMEDABAD,GANDHINAGAR V. THE DY.CIT, CIRCLE-1, EXEMP, AHMEDABAD

ITA 2616/AHD/2025

AI Insights

The case involves the Gujarat Medical Education and Research Society, a trust funded by the State Government, which faced substantial additions and penalties for the Assessment Years 2015-16 and 2018-19. The Assessing Officer made additions based on unexplained cash deposits, investments, and other income, treating them as unexplained under various sections of the Income Tax Act. The CIT(Appeals) dismissed the appeals as time-barred without adjudicating on merits, leading to the assessee's appeal to the Income Tax Appellate Tribunal. The Tribunal found that the assessee was not given a fair opportunity to present its case and thus restored the matter for a fresh assessment.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837969 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 26-12-2025
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji & Ors., State of Punjab v. Shyamalal Murari & Sons, CIT v. Gujarat Oil and Allied Industries, Tin Box Company v. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: SANJAY R SHAH
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Unexplained expenditure; Unexplained investment; Bonafide belief
• Section: 147; 148; 144; 142(1); 271(1)(c); 69; 69C; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. Nos.2612 to 2616/Ahd/2025 (Assessment Years: 2015-16 & 2018-19) Gujarat Medical Education and Research Society Ahmedabad, 6th Floor, Nhm Bhavan, Sector 12, (Gandhinagar) Sector 17 S.O. Gandhinagar-382016 Vs. Deputy Commissioner of Income Tax, Circle-1 (Exemp)., Ahmedabad [PAN No.AABTG5514C] (Appellant) .. (Respondent) Appellant by : Shri Sanjay R Shah, AR Respondent by: Shri Rignesh Das, CIT-DR Date of Hearing 12.02.2026 Date of Pronouncement 17.02.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: These are five appeals for A.Y. 2015-16 and 2018-19 filed by the assessee before us. Two appeals of the assessee relate to A.Y. 2015-16; ITA No. 2612/Ahd/2025 relates to quantum additions, ITA No. 2613/Ahd/2025 relates to appeal against penalty imposed under Section 271(1)(c) of the Act, ITA No. 2614/Ahd/2025 relates to quantum addition for A.Y. 2018-19, ITA No. 2615/Ahd/2025 relates to appeal against penalty imposed under Section 270A of the Act for A.Y. 2018-19 and ITA No. 2616/Ahd/2025 relates to appeal against imposition of penalty under Section 271AAC(1) of the Act for A.Y. 2018-19. Since common facts and issues for consideration are involved for all the years under consideration, all five appeals filed by the assessee are being taken up together. Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 2– We shall first discuss the assessee’s appeal in ITA No. 2612/Ahd/2025 (quantum additions) and ITA No. 2613/Ahd/2025 for A.Y. 2015-16 (appeal against imposition of penalty under Section 271(1)(c) of the Act) 2. The assessee has taken the following grounds of appeal: ITA No. 2612/Ahd/2025(A.Y.2015-16) “1. The learned CIT(A) erred in dismissing the appeal as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by filling an affidavit along with appeal papers before him. It is submitted that there being reasonable cause on the part of the appellant in filling appeal beyond statutory time limit such delay should have been condoned and learned CIT(A) should have adjudicated appeal on merits and should not have dismissed the same in limine. 2. (a) The learned CIT(A) erred in law and on facts in confirming additions of Rs.4,89,85,09,303/- comprising of following items in the assessment order: (i) Unexplained cash deposits 1,86,78,95,978/- (ii) Unexplained Investments 2,72,59,22,944/- (iii) Unexplained expenditure 45,59,238/- (iv) Income from other sources 30,01,31,143/- ------------------ Total Rs. 4,89,85,09,303/- ---------------------- The learned CIT(A) further failed to appreciate that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, being a Trust financed more than 50% by the State Government and run by the State Government. Since the income of the Trust is exempt, the additions sustained by the learned CIT(A) are unjustified and liable to be deleted. (b) Without prejudice to the above, the learned CIT(A) erred in sustaining additions under sections 69 A to 69C r.w.s. 115BBE of the Act, despite the fact that the alleged cash deposits, investments, and expenditure are fully explainable and cannot be assessed under these deeming provisions. 3. Without prejudice to the foregoings, the learned CIT(A) erred in confirming the addition made by the learned AO, since any addition is required to be made, the same can be made not in respect of the gross receipt as has been done by the learned Assessing Officer but can only be made in respect of net income of the Trust, and that too, after allowing the benefit of telescoping of the investment made against the income Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 3– assessed by the learned Assessing Officer. Accordingly, the addition sustained by the learned CIT(A) is unjustified and deserves to be deleted. 4. The learned CIT(A) also erred in confirming levy of interest u/s. 234A and 234B of the Act for Rs. 9,07,92,905/- and Rs. 9,79,33,920/-, respectively. It is submitted that in the facts and circumstances of the case such interest is not liable and hence be deleted. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” ITA No. 2613/Ahd/2025 (A.Y. 2015-16) “1. The learned CIT(A) erred in law and on facts in upholding the learned Assessing Officer's order to treat the following incomes assessed by him u/s. 69 to 69C of the Act as concealed income: (i) Unexplained cash deposits of Rs.186,78,95,978/- (ii) Unexplained investments of Rs.2,72,59,22,9447- (iii) Unexplained expenditure of Rs,45,59,238/- (iv) Income from other sources of Rs.30,01,31,143/- It is submitted that in the facts and circumstances of the case, provisions of section 271(1)(c) of the Act are not at all applicable to the Appellant since there was no concealment of income on the part of the appellant, and therefore, the consequential penalty levied by the learned Assessing Officer u/s.271(1)(c) of the Act for Rs.166,50,03,312/- also cannot be sustained. It is submitted that it be so held now and the penalty levied by the learned Assessing Officer of Rs.166,50,03,312/- and confirmed by learned CIT(A) be deleted. 2. The learned CIT(A) has grossly erred in law and on facts in upholding the learned Assessing Officer's decision in levying penalty of Rs.166,50,03,312/- under section 271(1)(c) of the Act despite the fact that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, and therefore no addition could be made to its income as such addition even if made, remains exempt and hence, no penalty is leviable u/s. 271(1)(c) of the Act. 3. The learned CIT(A) also erred in dismissing the quantum appeal filed before him as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by an affidavit filed with the appeal papers before him and further erred in holding that once quantum appeal is dismissed, penalty has to be confirmed on amount of addition sustained in quantum appeal solely on the basis that quantum appeal of the appellant is dismissed inspite of the settled judicial position that different considerations apply while deciding penalty even if the quantum appeal is decided against the appellant. It is submitted that it be so held now and penalty levied by learned AO and confirmed by CIT(A) u/s. 271(l)(c) of the Act for Rs.166,50,03,312 be deleted. Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 4– 4. Without prejudice to the above, the learned CIT(A) has also erred in upholding the penalty under section 271(1)(c) of the Act merely relying on the order passed by the learned Assessing Officer, without independently verifying the facts as well as the merits of the case. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” 3. The brief facts of the case are that the assessee, Gujarat Medical Education and Research Society, Ahmedabad (GMERS), is a trust established by the Government of Gujarat in the year 2009 for running medical colleges and hospitals. For the Assessment Year 2015-16, the assessee did not file its return of income under section 139(1) of the Income-tax Act, 1961 (\"the Act\"), under the belief that its income was wholly exempt under section 10(23C)(iiiab)/(iiiac)of the Act as it was substantially financed by the State Government. On the basis of information available in the Non-filers Monitoring System (NMS) and other data reflected in the ITBA system, the Assessing Officer noticed substantial bank transactions, interest income, rental receipts, cash deposits and time deposits during the relevant previous year. Since no return of income was filed by the assessee for the impugned assessment year, the Assessing Officer initiated proceedings under section 147 of the Act and notice under section 148 was issued on 29.03.2022. Despite issuance of several notices under sections 148A(b), 142(1) and show cause notices under section 144 of the Act, there was no compliance from the side of the assessee. 4. In the absence of any response or documentary evidence, the Assessing Officer completed the reassessment ex parte under section 147 read with sections 144 and 144B of the Act on 24.03.2023 and treated cash deposits aggregating to Rs.186,78,95,978/- as unexplained money under section 69A Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 5– of the Act, time deposits of Rs.272,59,22,944/- as unexplained investments under section 69 of the Act, foreign remittance of Rs.45,59,238/- towards purchase of medical equipment as unexplained expenditure under section 69C of the Act, and assessed rental and interest receipts amounting to Rs.30,01,31,143/- as income from other sources. Thus, the Assessing Officer made total additions of Rs.4,89,85,09,303/- and the same were subjected to tax, including application of section 115BBE of the Act, wherever applicable. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act. The assessment order was admittedly served on the assessee on 24.03.2023. 5. Aggrieved, the assessee filed an appeal before the CIT(Appeals) on 04.01.2024, which was delayed by 257 days, along with a request for condonation of delay. Before the CIT(Appeals), the assessee raised grounds challenging the additions made by the Assessing Officer, contending that the entire income was exempt under section 10(23C)(iiiab)/(iiiac), that the additions under sections 69 to 69C read with section 115BBE were unjustified as the transactions were from explainable sources, and, without prejudice, that even otherwise only net income could be assessed after allowing telescoping. The assessee also submitted that that the delay in filing the appeal was on account of its bona fide belief of being exempt from tax and non-appointment of a tax consultant. 6. The CIT(Appeals), after considering the assessment order, grounds of appeal, written submissions and material on record, first dealt with the issue of condonation of delay. The CIT(Appeals) held that the assessee had failed to establish any sufficient cause for the inordinate delay of 257 days in filing Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 6– of appeal. The CIT(Appeals) rejected the plea of bona fide belief regarding exemption under section 10(23C) of the Act on the ground that no documentary evidence or quantitative details, such as total receipts and extent of Government funding, were furnished either before the Assessing Officer or during appellate proceedings. The CIT(Appeals) further noted that section 139(1) of the Act mandates filing of return of income where total income exceeds the basic exemption limit and that mere assertion of exemption does not dispense with the statutory obligation to file a return. He also observed that the assessee was already aware of income-tax proceedings in earlier years, including scrutiny assessment and appeal for Assessment Year 2017- 18, and therefore the explanation of ignorance or absence of tax consultant was not acceptable. Accordingly, the CIT(Appeals) held that the delay in filing the appeal was attributable to negligence and non-compliance on part of the assessee, and he rejected the request for condonation of delay. 7. Having declined to condone the delay, the CIT(Appeals) dismissed the quantum appeal in limine as time-barred without adjudicating the merits of the additions relating to unexplained cash deposits, unexplained investments, unexplained expenditure and income from other sources raised in the respective grounds of appeal. 8. In respect of the separate appeal against penalty levied under section 271(1)(c), the CIT(Appeals) noted that the penalty was based entirely on the additions made in the assessment order dated 24.03.2023. Since the quantum appeal itself had been dismissed as time-barred and the assessment order had attained finality, the CIT(Appeals) held that there was no independent basis to interfere with the penalty. Accordingly, the CIT(Appeals) upheld the Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 7– penalty of Rs.1,66,50,03,312/- being 100% of the tax sought to be evaded and dismissed the penalty appeal as well. 9. Thus, the CIT(Appeals) dismissed both the quantum appeal for Assessment Year 2015-16 and the connected penalty appeal under section 271(1)(c). 10. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 11. Before us, the ld. counsel for the assessee reiterated the submissions made before CIT(Appeals), which are to the effect that the assessee is a Govt. funded Trust wherein over 90% of the finance of its operations is funded by the State Government. The ld. counsel for the assessee further submitted that CIT(Appeals) erred in not appreciating that for assessment year 2015-16, the assessee was not under an obligation to file return of income in the first instance and CIT(Appeals) dismissed the appeal of the assessee, without going into the moot question that the assessee was not under an obligation to file return of income for the impugned assessment year under question. Further, the ld. counsel for the assessee submitted that that assessment order was passed ex-parte and CIT(Appeals) did not condone the delay of 257 days which were due to genuine and bona-fide reasons considering the assessee’s set of facts. The ld. counsel for the assessee submitted that the assessee is engaged in running of State Government Hospitals and Medical Colleges and is largely funded by the State Government. However, the CIT(Appeals) did not take into consideration all these aspects while dismissing the appeal of the assessee on account delay of 257 days in filing of appeal. Accordingly, Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 8– the ld. counsel for the assessee submitted that that the assessee deserves opportunity of hearing on merits, taking into consideration all the above facts and contentions of the assessee. 12. In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order. 13. We have heard the rival contentions and perused the material on record. 14. After having carefully considered the rival submissions, perused the material placed on record and in the totality of the facts and circumstances of the case, we are of the considered view that the assessee deserves one final opportunity of being heard on merits. It is an undisputed fact that the assessment for the year under consideration was framed ex parte under section 147 read with sections 144 and 144B of the Act due to complete non- compliance on the part of the assessee to the statutory notices issued by the Assessing Officer. It is also evident that the learned CIT(Appeals) dismissed the appeal of the assessee in limine on account of delay of 257 days in filing the appeal and, consequently, did not adjudicate the issues arising from the additions made by the Assessing Officer on merits. 15. At the same time, it cannot be ignored that the assessee is a trust engaged in running as many as eight medical colleges and nine medical hospitals in the State of Gujarat and is largely financed by the State Government. The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Ors. [(1987) 167 ITR 471 (SC)] has held that a liberal Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 9– approach should be adopted while dealing with procedural matters so as to advance substantial justice and that technical considerations should not prevail over the cause of justice. Further, in State of Punjab v. Shyamalal Murari & Sons [(1976) 1 SCC 719], it has been held that rules of procedure are intended to be handmaid of justice and not its mistress. The Hon’ble jurisdictional High Court in CIT v. Gujarat Oil and Allied Industries [(1993) 201 ITR 325 (Guj)] has also observed that matters should ordinarily be decided on merits rather than on technicalities. 16. In the present case, the additions made by the Assessing Officer are substantial and arise primarily on account of non-furnishing of details and explanations by the assessee. The assessee has consistently taken a stand that its income is exempt under section 10(23C)(iiiab)/(iiiac) of the Act and that the transactions appearing in its bank accounts are duly explained and relatable to its charitable and Government-funded activities. In our considered opinion, the issues involved require proper verification of facts, examination of documentary evidence and adjudication on merits, which has not taken place either at the assessment stage or at the first appellate stage. 17. Accordingly, in the interest of substantial justice and following the ratio laid down by the Hon’ble Supreme Court in Tin Box Company v. CIT [(2001) 249 ITR 216 (SC)], wherein it was held that when an assessee has not been afforded a proper opportunity of being heard, the matter should be restored for fresh adjudication, we deem it appropriate to set aside the impugned assessment order as well as the order of the learned CIT(Appeals) on the quantum issues and restore the matter to the file of the Assessing Officer for de-novo consideration in accordance with law. The Assessing Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 10– Officer shall afford due opportunity of being heard to the assessee and shall examine all claims, contentions and evidences that may be furnished by the assessee, including its claim of exemption under section 10(23C)(iiiab)/(iiiac) of the Act, strictly in accordance with law. 18. However, before parting, we consider it necessary to observe that the assessee is not an ordinary small taxpayer but a large organization running eight medical colleges and nine medical hospitals. Such an assessee is expected to act with a higher degree of responsibility and diligence in complying with statutory notices issued by the Income Tax Department. Even if the assessee is of the view that its income is exempt from tax or that it is not mandatorily required to file a return of income, it is under a legal obligation to respond to notices issued by the Assessing Officer and to furnish necessary books of account, documents and explanations when called upon to do so during assessment proceedings. Repeated and complete non- compliance cannot be countenanced. 19. Therefore, while restoring the matter to the file of the Assessing Officer, we impose a cost of Rs.10,000/- (Rupees Ten Thousand only) on the assessee for Assessment Year 2015-16 for its failure to comply with statutory notices during the assessment proceedings. The said cost shall be deposited by the assessee with the Income-tax Department within the time to be specified by the Assessing Officer and compliance thereof shall be ensured before completion of the set aside proceedings. 20. Since the quantum assessment itself is being set aside for de-novo consideration, the penalty proceedings under section 271(1)(c) of the Act, Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 11– which are entirely dependent upon the outcome of the quantum proceedings, cannot survive at this stage. Accordingly, ITA No. 2613/Ahd/2025 relating to penalty proceedings under section 271(1)(c) of the Act is also set aside to the file of the Assessing Officer, who shall decide the same afresh, if in accordance with law after completion of the de-novo assessment proceedings. 21. In the result, the appeal of the assessee in ITA relating to the quantum assessment for Assessment Year 2015-16 is allowed for statistical purposes subject to the above observations and directions, and the appeal relating to penalty under section 271(1)(c) of the Act is also allowed for statistical purposes. 22. The assessee has taken the following grounds of appeal for A.Y. 2018-19: ITA No. 2614/Ahd/2025 (A.Y. 2018-19) “1. The Learned CIT(A) also erred in dismissing the appeal as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by filling an affidavit along with appeal papers before him. It is submitted that there being reasonable cause on the part of the appellant in filling appeal beyond statutory time limit such delay should have been condoned and learned CIT(A) should have adjudicated appeal on merits and should not have dismissed the same in limine. 2. (a) The learned CIT(A) erred in law and on facts in upholding the learned Assessing Officer's order in confirming additions of Rs.47,81,89,398/- comprising of following items in the assessment order. Rs. (i) Contractual Receipts 96,177/- (ii) Rental Income 17,41,119/- (iii) Cash Deposit 30,54,18,651/- (iv) Interest Income 14,90,03,857/- (v) Fees for Technical/Professional Services 1,34,29,294/- (vi) Time Deposit 85,00,000/- Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 12– The learned CIT(A) further failed to appreciate that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, being a Trust financed more than 50% by the State Government and run by the State Government. Since the income of the Trust is exempt, the additions sustained by the learned CIT(A) are unjustified and liable to be deleted. In any case such income of the nature mentioned at Sr. No. (i) to (v) are already considered while filling return of income and hence they cannot be again added while computing income in the assessment order. (b) Without prejudice to the above, the learned CIT(A) erred in sustaining additions under sections 69A to 69B r.w.s. 115BBE of the Act, despite the fact that the alleged cash deposits and time deposit of Rs.30,54,18,651/- and Rs.85,00,000/-, respectively are fully explainable and cannot be assessed under these deeming provisions. 3. Without prejudice to the foregoings, the learned CIT(A) also erred in confirming the addition made by the learned Assessing Officer, since any addition is required to be made, the same can be made not in respect of the gross receipt as has been done by the learned Assessing Officer but can only be made in respect of net income of the Trust, and that too, after allowing the benefit of telescoping of the investment made against the income assessed by the learned Assessing Officer. Accordingly, the addition sustained by the learned CIT(A) is unjustified and deserves to be deleted. 4. The learned CIT(A) also erred in confirming levy of interest u/s. 234A and 234B of the Act for Rs.14,59,90,764/- and Rs.17,17,53,840/-, respectively. It is submitted that in the facts and circumstances of the case such interest is. not liable and hence be deleted. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” ITA No. 2615/Ahd/2025 (A.Y. 2018-19) “1. The learned CIT(A) erred in law and on facts in upholding the Assessing Officer's order to treat the following incomes assessed by him u/s. 69A and 69B of the Act as underreported income: (i) Contractual receipt Rs. 96,177/-. (ii) Rental income Rs.17,41,119/-. (iii) Interest income Rs. 14,90,03,857/-. (iv) Fees for technical/ professional services Rs.1,34,29,294/-. It is submitted that in the facts and circumstances of the case, provisions of section 270A of the Act are not at all applicable to the Appellant, and therefore, the penalty imposed by the Assessing Officer u/s.270A of the Act for Rs.2,91,86,805/- and confirmed by the learned CIT(A) is unsustainable and deserves to be deleted. 2. The learned CIT(A) erred in law and on facts in upholding the learned Assessing Officer's order in levying penalty of Rs.2,91,86,805/- u/s.270A of the Act despite the fact that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, and therefore no addition could be to its income as such addition even if made, remains exempt and hence, no penalty is leviable u/s. 270A of the Act. Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 13– 3. The learned CIT(A) also erred in dismissing the quantum appeal as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by an affidavit filed with the appeal papers before him and further erred in holding that once quantum appeal is dismissed, penalty has to be confirmed on amount of addition sustained in quantum appeal solely on the basis that quantum appeal of the appellant is dismissed inspite of the settled judicial position that different considerations apply while deciding penalty even if the quantum appeal is decided against the appellant. It is submitted that it be so held now and penalty levied by learned AO and confirmed by CIT(A) u/s. 270A of the Act for Rs. 2,91,86,805/- be deleted. 4. Without prejudice to the above, the learned CIT(A) has also erred in upholding the penalty under section 270A of the Act merely relying on the order passed by the learned Assessing Officer, without independently verifying the facts as well as the merits of the case. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” ITA No. 2616/Ahd/2025 (A.Y. 2018-19) “1. The learned CIT(A) erred in law and on facts in upholding the learned Assessing Officer's decision in levying penalty of Rs.1,88,35,119/- u/s.271AAC(1) of the Act despite the fact that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, and therefore no addition could be made to its income as such addition even if made, remains exempt and hence, no penalty is leviable u/s. 270AAC(1) of the Act. 2. The learned CIT(A) erred in law and on facts in upholding the Assessing Officer's order in taxing unexplained time deposit of Rs.85,00,000/- and Rs.30,54,18,6517-being cash deposits in various banks u/s.69B and section 69A respectively of the Act. It. is submitted that in the facts and circumstances of the case, provisions of section 69A and 69B are not at all applicable to the Appellant, and therefore, the consequential penalty imposed by the learned Assessing Officer and confirmed by the learned CIT(A) is unsustainable and deserves to be deleted. 3. The learned CIT(A) also erred in dismissing the quantum appeal filed before him as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by an affidavit filed with the appeal papers before him and further erred in holding that once quantum appeal is dismissed, penalty has to be confirmed on amount of addition sustained in quantum appeal solely on the basis that quantum appeal of the appellant is dismissed inspite of the settled judicial position that different considerations apply while deciding penalty even if the quantum appeal is decided against the appellant. It is submitted mat it be so held now and penalty levied by learned. AO and confirmed by CIT(A) u/s. 270AAC(1) of the Act for Rs. 1,88,35,119/-be deleted. 4. Without prejudice to the above, the learned CIT(A) has also erred in upholding the penalty under section 271AAC(1) of the Act merely relying on the order passed by the Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 14– learned Assessing Officer, without independently verifying the facts as well as the merits of the case. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal.” 23. For A.Y. 2018-19, admittedly there has been non-compliance by the assessee for the impugned assessment year since the assessee was under a legal obligation to filed return of income, but there was an admitted omission on the part of the assessee since the assessee was under a mistaken belief that it was not required to file return of income for the impugned assessment year. The Counsel for the assessee submitted that this omission was on account of genuine and bonafide belief, albeit incorrect that the assessee was not under obligation to file return of income for A.Y. 2018-19. The Counsel for the assessee submitted before us that this was owing to the fact that the assessee had not consulted the consultant at the relevant time and it was due to this reason that there was non-compliance on part of the assessee. 24. We observe that the facts and issues for consideration are largely as that of the previous assessment year before us for A.Y. 2018-19 as well, wherein the CIT(A) refused to condone the delay of 258 days in filing of appeal before him and accordingly, dismissed the appeal of the assesee without going into the merits of the case. Consequently, Ld. CIT(A) also upheld a levy of penalty under Sectio271AAC(1) of the Act and under Section 270A of the Act. 25. In our considered view, looking into the substantial amount of additions made in the hands of the assessee, in the interest of justice, we are of the considered view that the assessee deserves one more opportunity of Printed from counselvise.com ITA Nos. 2612 to 2616/Ahd/2025 Gujarat Medical Education and Research Society Ahmedabad vs. DCIT Asst. Years –2015-16 & 2018-19 - 15– hearing to substantiate it’s case on merits and therefore, the matter is hereby restored to the file of Assessing Officer for de-novo consideration subject to payment a cost of Rs. 10,000/- for A.Y. 2018-19 as well. Since the quantum assessment itself is being set-aside for de-novo consideration, the penalty proceedings under Section 270A and 271AAC(1) of the Act are also hereby set-aside to the file of Assessing Officer for de-novo consideration. 26. In the result, the appeals of the assessee for A.Y. 2018-19 are allowed for statistical purposes. 27. In the combined result, all the appeals of the assessee are allowed for statistical purposes. This Order is pronounced in the Open Court on 17/02/2026 Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 17/02/2026 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 16.02.2026 (Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 16.02.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 16.02.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 17.02.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 17.02.2026 7. Date on which the file goes to the Bench Clerk 17.02.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "