ITAT Delhi Sets Aside Ex-Parte Order; Remands Section 12A Exemption and ₹96.75 Lakh Addition for Fresh Adjudication

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, has set aside the ex-parte order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] and remanded the matter to the Assessing Officer (AO) for fresh adjudication in the case of School of Engineering and Applied Sciences for Assessment Year 2020–21. The assessee had filed a return declaring nil income. The case was selected for scrutiny on the issue of eligibility for exemption in the absence of valid registration under Section 12A. During assessment proceedings, the AO made three additions, including denial of exemption under Sections 11 and 12, addition of ₹1.44 lakh as undisclosed interest income based on Form 26AS, and addition of ₹96.75 lakh under Section 69A on account of unexplained time deposits.

The AO observed that the assessee failed to furnish requisite details and proof of valid registration under Section 12A(1)(ab). The CIT(A) subsequently dismissed the appeal ex parte due to alleged non-compliance with notices. Before the Tribunal, the assessee submitted that it possessed valid registration under Section 12A since 2002 and that relevant documents were either submitted or could be produced. It was further pointed out that renewed registration under Section 12AB had been granted subsequently, though not placed before the AO during assessment. The Tribunal noted that material evidence relating to registration and other issues had not been adequately considered. In the interest of justice, it set aside the impugned order and restored the matter to the AO, directing fresh adjudication after examining all relevant documents. The assessee was directed to present its case within 60 days.

Legal Analysis

The Tribunal emphasized that denial of exemption under Sections 11 and 12 must be based on proper verification of registration status and supporting evidence. Where such material exists but has not been considered, adjudication cannot be sustained. It also highlighted that ex-parte dismissal by the CIT(A), particularly in cases involving substantive claims, warrants reconsideration where the assessee demonstrates existence of relevant evidence.

The decision reinforces that additions under Section 69A and reliance on Form 26AS entries must be examined in light of explanations and supporting records. The Tribunal’s remand underscores the necessity of adjudicating matters on merits after affording adequate opportunity to the assessee.