ITAT grants major relief to HAU in ₹23-crore tax penalty case
In a significant relief to Chaudhary Charan Singh Haryana Agricultural University (HAU), Hisar, the Income Tax Appellate Tribunal (ITAT), Delhi Bench, has allowed the university’s claim for tax exemption worth Rs 25.47 crore for the assessment year 2018–19, setting aside the penalty imposed for delayed return filing.
The Income Tax Department had earlier imposed a total liability of Rs 22.93 crore on the university, including Rs 7.64 crore in tax and Rs 15.29 crore in penalties, citing under-reporting and misreporting of income and failure to file the return within the prescribed deadline under Section 139(1) of the Income Tax Act, 1961.
The tax authority also rejected HAU’s claim for exemption under Section 10(23C)(iiiab), which provides relief to government-funded educational institutions. The Commissioner of Income Tax (Appeals) [CIT(A)] had upheld the assessment officer’s order.
However, in a judgment dated May 14, a copy of which is with The Tribune, the ITAT ruled in favour of HAU, declaring the denial of exemption and imposition of penalties as legally untenable.
In its appeal, the university argued that it is a government-funded institution established under an Act of Parliament in 1970 and functions solely for educational purposes. It pointed out that there is no explicit provision under Section 10(23C)(iiiab) or Section 139(4C)(e) that makes timely return filing a mandatory precondition for exemption.
Agreeing with the university’s position, the ITAT held that HAU fulfilled both conditions required for exemption: It exists solely for educational purposes and is wholly or substantially funded by the government.
“Neither Section 10(23C)(iiiab) nor Section 139(4C)(e) makes timely filing of return a mandatory condition for exemption,” the tribunal ruled.
The Bench further observed that HAU had satisfactorily discharged the burden of proving its eligibility, and the denial by tax authorities stemmed from a misinterpretation of the law.
Accordingly, the ITAT allowed the university’s appeal and deleted the addition of Rs 25,47,64,090 from the assessed income.
The ruling was pronounced by Judicial Member Madhumita Roy and Accountant Member Brajesh Kumar Singh.
Haryana Tribune