February 26, 2026 : The Income Tax Appellate Tribunal has set aside an addition of ₹32.91 lakh made against Ganna Vikas Parishad, Nanauta, and restored the matter to the Assessing Officer for fresh adjudication, holding that the fundamental nature and activities of the assessee were not properly examined.

In its order dated 25 February 2026 in ITA No. 7788/Del/2025 (AY 2021–22), the Delhi Bench comprising Judicial Member C.N. Prasad observed that while the Commissioner of Income Tax (Appeals) had adopted a reasoned approach, the authorities below failed to scrutinize the constitution and functional character of the Parishad before denying exemption or deduction.

Ganna Vikas Parishad, constituted under Section 5 of the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, filed its return declaring nil income. During scrutiny, the Assessing Officer noted that the assessee had claimed deduction under Section 80P(2)(b) of the Income Tax Act.

Subsequently, through a letter dated 16 November 2022, the assessee stated that the claim under Section 80P was a clerical error and that it was instead eligible for exemption under Section 10(20) as a local authority.

The Assessing Officer rejected the Section 10(20) claim, holding that the provision applies only to specified local authorities such as Panchayats, Municipalities, District Boards and Cantonment Boards. The officer concluded that the Parishad did not fall within that definition and denied both the exemption and the deduction, making an addition of ₹32,91,119.

The CIT(A)/NFAC upheld the addition. It noted that in earlier years the assessee had claimed exemption or deduction under different provisions, including Section 57 and “Income from Sugar Mill.” For the relevant year, the assessee declared its status as “AOP/BOI” in its return, which, according to the appellate authority, was inconsistent with its claim of being a local authority.

The CIT(A) also observed that the assessee had not furnished adequate documentary evidence, including bank statements and details of income sources, and had not clearly explained how it arrived at the exempt amount of ₹32.91 lakh instead of claiming exemption for the entire reported surplus .

After examining the record, the Tribunal noted that neither the Assessing Officer nor the CIT(A) had examined the Parishad’s constitutional status, including whether it was registered under the Societies Registration Act or as a trust, or otherwise constituted under statute.

The Bench emphasized that the authorities had also not analyzed the actual activities carried out by the assessee to determine whether it was entitled to exemption or deduction under any provision of the Act.

Judicial Member C.N. Prasad observed that a proper determination of eligibility required scrutiny of the Parishad’s legal character and operational framework. Without such examination, the issue could not be conclusively decided.

Accordingly, the Tribunal restored the matter to the file of the Assessing Officer for fresh assessment after gathering necessary details and granting the assessee a reasonable opportunity of hearing. The assessee has been directed to cooperate and furnish all relevant documents to substantiate its claim. The appeal was allowed for statistical purposes.

Case Title: Ganna Vikas Parishad v. Assessment Unit, Income Tax Department
Case No.: ITA No. 7788/Del/2025
Assessment Year: 2021–22
Coram: Judicial Member C.N. Prasad

Counsels : For the assessee: Sh. J.N. Shukla, Advocate (through VC); for the respondent: Sh. Manoj Kumar, Sr. DR.