INCOME-TAX OFFICER(EXEMPTION), WARD-1, AHMEDABAD V. ASLALI KELAVNI MANDAL, AHMEDABAD

ITA 1591/AHD/2025

AI Insights

The case involves appeals by the Income Tax Officer (Exemption), Ward-1, Ahmedabad against the order of the Commissioner of Income Tax (Appeals), which had allowed the exemption claimed by Aslali Kelavni Mandal under section 10(23C)(iiiab) for the assessment years 2018-19 and 2019-20. The Centralized Processing Centre (CPC) had initially disallowed the exemption, leading to the Department's appeal. The CIT(Appeals) found that the CPC had denied the exemption without proper reasoning and factual verification, relying on a previous ITAT decision. The Department contested this decision, leading to the current appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787148 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 19-08-2025
• Other Referred Cases: Packers (India) v. ITO (99 ITD 383)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ARTI N SHAH
• Assessee Lawyers: RAMESHWAR P MEENA
• Keywords: Set aside; Charitable institution
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. Nos.1591 & 1622/Ahd/2025 (Assessment Years: 2018-19 & 2019-20) Income Tax Officer (Exemption), Ward-1, Ahmedabad Vs. Aslali Kelavni Mandal, C/o. U.L. Patel High School, Aslali, Dascroi, Ahmedabad-382425 [PAN No.AAATA5869R] (Appellant) .. (Respondent) Appellant by : Ms. Arti N Shah, AR Respondent by: Shri Rameshwar P Meena, Sr. DR Date of Hearing 06.11.2025 Date of Pronouncement 17.11.2025 O R D E R PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER: These appeals have been filed by the Department against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-10, Mumbai vide order dated 26.06.2025 passed for A.Ys. 2018-19 & 2019-20. 2. The Department has raised the following grounds of appeal: ITA No. 1591/Ahd/2025 (A.Y. 2018-19) “1. Whether on the facts and in circumstances of the case, Ld. Jt. CIT(A), NFAC is justified in deleting the addition of Rs.1,40,13,226/- made by the CPC on account of disallowance of exemption u/s.10(23C)(iiiab) of the I.T. Act, 1961.” 3. The brief facts of the case are that the assessee, Aslali Kelavani Mandal, a public charitable trust engaged solely in the field of education, filed its return of income for A.Y. 2018-19 declaring Nil income after Printed from counselvise.com ITA Nos. 1591&1622/Ahd/2025 ITO(E) Vs. Aslali Kelavni Mandal Asst. Years–2018-19 & 2019-20 - 2– claiming exemption of ₹1,40,13,226/- under section 10(23C)(iiiab) of the Income-tax Act, 1961 (the “Act”). The return of income filed by the assessee was processed by the Centralized Processing Centre (CPC) under section 143(1) of the Act on 30.09.2019 wherein the CPC made an adjustment by disallowing the exemption claimed under section 10(23C)(iiiab) of the Act. As a result, the entire gross income of ₹1,40,13,226 was brought to tax and a demand of ₹61,22,172/- was raised. 4. Before the CIT(Appeals), the assessee filed detailed written submissions explaining that more than 71% of its income was received as grants from Government of Gujarat and hence it was substantially financed by the Government, satisfying the requirements of section 10(23C)(iiiab). It was further contended that CPC could not have made an adjustment under section 143(1)(a) in respect of such a debatable claim and that the adjustment made was beyond the scope of the said provision. The assessee submitted that the assessment order of CPC contained no reasoning for the disallowance and merely proceeded to deny the exemption claimed in the return. The assessee, a trust registered under the Bombay Public Trusts Act and also holding registration under section 12AA, had consistently been allowed exemption under section 10(23C) in earlier years, including in assessments completed u/s 143(3) for A.Y. 2016-17 and u/s 143(1) for A.Y. 2017-18. The assessee, therefore, filed an appeal before the CIT(Appeals). The assessee submitted audited accounts, grants statements, registration certificates and past assessment orders to Printed from counselvise.com ITA Nos. 1591&1622/Ahd/2025 ITO(E) Vs. Aslali Kelavni Mandal Asst. Years–2018-19 & 2019-20 - 3– substantiate that it was solely an educational institution and had always been treated as eligible for exemption under section 10(23C) of the Act. 5. The CIT(Appeals), after considering the submissions, held that CPC had mechanically denied the exemption without assigning any reason. Relying on the decision of the Hon’ble ITAT Ahmedabad Bench in Packers (India) v. ITO (99 ITD 383), the CIT(A) held that powers under section 143(1) are restricted to making prima facie adjustments and that a claim of exemption under section 10(23C) could not be denied without factual verification. The CIT(A) therefore allowed the appeal of the assessee and directed the Assessing Officer to grant exemption under section 10(23C)(iiiab) as claimed in the return. 6. The Department is in appeal before us against the order passed by the CIT(Appeals) allowing the appeal of the assessee. 7. We have heard the rival contentions and perused the material on record. Before us, Ld. DR contended that the CIT(Appeals) has erred in summarily allowing the exemption under section 10(23C)(iiiab) of the Act without proper verification of the facts and without calling for a remand report from the jurisdictional Assessing Officer. On the other hand, the Counsel for the assessee relied upon its past assessments and the documentary evidence furnished before the CIT(A). 8. On examination of the appellate order, we find that although the CIT(Appeals) has referred to the written submissions of the assessee and Printed from counselvise.com ITA Nos. 1591&1622/Ahd/2025 ITO(E) Vs. Aslali Kelavni Mandal Asst. Years–2018-19 & 2019-20 - 4– the decision of the Hon’ble ITAT Ahmedabad in Packers (India) v. ITO, the relief has been granted without a factual verification of whether the assessee was substantially financed by the Government during the year under consideration, whether more than 50% of the receipts are Government Grants and whether the assessee has satisfied the conditions prescribed under section 10(23C)(iiiab) of the Act . We are of the considered view these are matters of factual determination, which could not have been adjudicated without calling for a remand report or making independent inquiries. 9. In the interest of justice, we deem it appropriate to set aside the order of the CIT(Appeals) and restore the matter to the file of the jurisdictional Assessing Officer. The Assessing Officer shall verify the factual aspects relating to Government financing, the nature of activities carried out by the assessee, and its eligibility under section 10(23C)(iiiab) of the Act, after providing adequate opportunity of hearing to the assessee. 10. In the result, the appeal of the Department is allowed for statistical purposes. Now we shall come to the Department’s appeal in ITA No. 1622/Ahd/2025 for A.Y. 2019-20 11. The Department has raised the following grounds of appeal: ITA No. 1622/Ahd/2025 (A.Y. 2019-20) Printed from counselvise.com ITA Nos. 1591&1622/Ahd/2025 ITO(E) Vs. Aslali Kelavni Mandal Asst. Years–2018-19 & 2019-20 - 5– “1. Whether on the facts and in circumstances of the case, Ld. CIT(A)-10, Mumbai is justified in deleting the addition of Rs. 1,53,21,639/- made by the CPC on account of disallowance of exemption u/s. 10(23C)(iiiab) of the I.T. Act, 1961.” 12. Since common facts and issues for consideration are involved for both the years under consideration before us, the appeal of the Department is allowed for statistical purposes for both the assessment years before us. 13. In the combined result, the appeals filed by the Department are allowed for statistical purposes for both the assessment year under consideration. This Order pronounced in Open Court on 17/11/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 17/11/2025 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 17.11.2025 (Hon’ble Member dictated on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 17.11.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 17.11.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 18.11.2025 7. Date on which the file goes to the Bench Clerk 18.11.2025 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 "