SUMAN EDUCATION TRUST,MUMBAI V. ITO (EXEMPTION)-2(3), MUMBAI

ITA 8998/MUM/2025

AI Insights

The case involves Suman Educational Trust, a charitable organization, appealing against the order of the National Faceless Appeal Centre (NFAC), which sustained the additions and disallowances made by the Assessing Officer for the assessment year 2020-21. The primary issues in dispute were the disallowance of depreciation and the treatment of loans as unexplained cash credits under section 68 of the Income Tax Act. The Tribunal found that the assessee was not given a fair opportunity to present its case at the appellate stage and that the evidence provided was not properly considered. Consequently, the Tribunal restored the matter to the A.O. for a fresh examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 843369 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Appeal Filed On: 23-12-2025
• Other Referred Cases: ITO vs. Rajasthan and Gujarati Charitable Foundation Poona (2017)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ANKIT TIWARI
• Assessee Lawyers: PRAKASH JOTWANI
• Keywords: Opportunity of being heard; Corroborative evidences; Unexplained cash credit; Depreciation; Tax effect; Principle of natural justice; Charitable institution
• Section: 11; 68; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.8998/Mum/2025 (Assessment Year:2020-21) Suman Educational Trust 39-A, 3rd Floor, Maker Tower-F, Cuff Parade, Colaba, Mumbai-400 005 Vs. Income Tax Officer (Exemption)- 2(3), 6th Floor, MTNL Building, Cumballa Hills, Pedder Road, Mumbai-400 026 PAN/GIR No. AAHTS 1944 E (Appellant) : (Respondent) Appellant by : Shri Prakash Jotwani Respondent by : Shri Ankit Tiwari Date of Hearing : 04.03.2026 Date of Pronouncement : 06.03.2026 O R D E R Per Saktijit Dey, Vice President: This is an appeal by the assessee, challenging the order dated 10.10.2025, passed by National Faceless Appeal Centre (‘NFAC’ for short), Delhi for the assessment year (A.Y. for short) 2020-21. The grounds raised by the assessee are as under: 1. A) The ld. CIT(A) erred in not allowing the appellant an opportunity of being heard on two grounds of appeal for which the Appellant specifically requested for time vide letter dated 17.09.2025 and without providing any reasons the ld. CIT(A) has passed an order on these two grounds which is in clear violation of natural justice. 2. A) The ld. CIT(A) erred in confirming the disallowance of Rs.2,06,97,193/- on account of depreciation u/s. 11(6) of the Act. B) The ld. CIT(A) erred in not considering that section 11(6) is inserted by way of amendment of Finance (No.2) Act, 2014 and the said amendment is to be applied prospectively. C) The ld. CIT(A) failed to appreciate the settled position laid down by the Hon’ble Supreme Court that section 11(6) of the Income-tax Act, 1961 operates prospectively, and therefore does not restrict the allowance of depreciation in respect of assets acquired prior to the insertion of section 11(6), which continues to be allowable on a perpectual basis. (ITO vs. Rajasthan and Gujarati Charitable Foundation Poona (2017). Rs.62,09,158/- Printed from counselvise.com 2 ITA No. 8998/Mum/2025 (A.Y. 2020-21) Suman Educational Trust 3. The ld. CIT(A) erred in confirming the addition u/s. 68 of the Income Tax Act, 1961 with regards to unsecured loan of Rs.1,72,94,552/- despite the claim of the appellant that the loans was received from its own trustees. Rs.51,88,366/- Total tax effect Rs.1,13,97,524/- 2. Briefly the facts are, the assessee is a charitable trust, primarily engaged in imparting education to children of all communities irrespective of their race, religion, caste or creed. The assessee is also registered u/s. 12A of the Act. For the assessment year under dispute, the assessee filed its return of income on 05.02.2021, declaring Nil income after claiming exemption u/s. 11 of the Act. The return of income was selected for limited scrutiny to examine the following issues: i. Expenditure for charitable or religious purpose ii. Depreciation claimed iii. Borrowed fund 3. In course of assessment proceeding, the Assessing Officer (‘A.O.’ for short) conducted enquiry on the issues selected for scrutiny by calling upon the assessee to furnish the relevant details. As alleged by the A.O., the assessee did not furnish the requisite details. Therefore, the A.O. proceeded to complete the assessment vide order dated 23.09.2022, making the following additions: i. Disallowance of depreciation – Rs.2,06,97,193/- ii. Loans treated as unexplained cash credit u/s. 68 of the Act – Rs.1,72,94,552/- 4. Contesting the additions, the assessee preferred an appeal before ld. First appellate authority. However, vide impugned order, ld. First appellate authority sustained the addition/disallowances. 5. Before us, ld. Counsel appearing for the assessee submitted that in course of assessment proceeding, though the assessee furnished the requisite details and supporting evidences on scrutiny issues, however, without properly examining them, the A.O. has Printed from counselvise.com 3 ITA No. 8998/Mum/2025 (A.Y. 2020-21) Suman Educational Trust made the additions/disallowances. He submitted, in course of proceedings before ld. First appellate authority, the assessee had specifically submitted to allow time for furnishing detailed submissions on the additions/disallowances made with supporting evidences. He submitted, without considering the request of the assessee, ld. First appellate authority has dismissed the grounds in a summary manner stating that the assessee failed to furnish requisite evidences. In this context, ld. Counsel drew our attention to the submissions dated 17.09.2025 furnished before ld. First appellate authority. To demonstrate that requisite details in support of claim of depreciation and loan availed were furnished before the A.O., ld. Counsel took us through the documentary evidences placed in the paper book. Thus, he submitted, the departmental authorities having failed to provide reasonable opportunity of being heard to the assessee, the issues may be restored back to the A.O. for de novo adjudication. 6. The ld. Departmental Representative (‘ld. DR’ for short) submitted, despite availing sufficient opportunity, the assessee did not furnish the requisite details before the A.O., hence, additions were made. 7. We have considered rival submissions and perused the materials available on record. The fact that the assessee is a charitable organization, eligible for exemption u/s. 11 of the Act, cannot be disputed. It is evident, assessee’s case was selected for scrutiny to examine the claim of depreciation and loans availed. The A.O. while completing the assessment has disallowed the deprecation claimed and has also treated the loans availed as unexplained cash credit, alleging lack of supporting evidence furnished by the assessee. However, materials on record demonstrate that in course of assessment proceeding, the assessee did furnish submissions and supporting evidences justifying its claim of Printed from counselvise.com 4 ITA No. 8998/Mum/2025 (A.Y. 2020-21) Suman Educational Trust depreciation, as also the genuineness of the loan transaction. Though, before ld. first appellate authority, the assessee has raised specific grounds, challenging the disputed additions and in course of appellate proceedings, the assessee through submission dated 17.09.2025 had specifically requested the ld. First appellate authority to allow 10 days’ time to file detailed submissions with supporting evidences on the issues on which additions were made by the A.O., however, ignoring the request/submission of the assessee, ld. First appellate authority has dismissed the grounds in a summary manner with general observations that the assessee failed to furnish evidence in its support. Thus, in our view, the assessee has been deprived of a fair opportunity of being heard at the first appellate stage. Even, the submissions and evidences furnished by the assessee before the A.O., in our view, were not properly appreciated. Thus, keeping in view the aforesaid facts, we are inclined to restore the issues raised in grounds no. 2 and 3 (supra) to the A.O. for de novo adjudication after providing due and reasonable opportunity of being heard to the assessee. It is made clear, the A.O. cannot travel beyond the issues restored back to him for de novo adjudication. It is open to the assessee to furnish further supporting evidences, if any, to justify its claim. Grounds are allowed for statistical purpose. 8. In the result, the appeal is allowed for statistical purpose. Order pronounced in the open court on 06.03.2026 Sd/- Sd/- (Makarand V Mahadeokar) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 06.03.2026 Roshani, Sr. PS Printed from counselvise.com 5 ITA No. 8998/Mum/2025 (A.Y. 2020-21) Suman Educational Trust Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "