Ritnand Balved Education Foundation, New Delhi vs Circle Exemption 2(1), New Delhi

PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [hereinafter referred to as “NFAC”] vide order dated 21.08.2025 pertaining to A.Y. 2023-24 arising out the assessment order dated 18.03.2025 passed u/s.143(3) of the Income-tax Act, 1961, (in short ‘the Act’) by the Assessment Unit, Income Tax Department.

Ld. AR for the assessee has only pressed the following ground of appeal:-

We have heard the rival contentions and perused the records. Before us, Ld. Counsel for the assessee submitted that Ld. CIT(A) erred in not deleting the addition of Rs. 2,82,08,435/- made under section 40(a)(ia) of the Act, being 30% of the payment of Rs. 9,40,28,115/-, which represented payments made by the appellant on behalf of the Educational Service Organisation is concerned, it was submitted by the Ld. AR that payments were made to discharge any liability or expenditure of the assessee. Instead, the assessee acted merely as a conduit or an intermediary, facilitating payments to various third parties purely on behalf of, at the instance of, and for the ultimate benefit of Education Service Organisation. The transaction, in its substance, is one of principal-to-principal between the education service organization and the ultimate third party vendors. It was further submitted that the assessee had no underlying contractual or statutory obligations towards the third party payees. It was further submitted that the said amounts have been consistently recorded as receivables and the ledger reflects a running receivable balance recoverable by RBEF from ESO, substantiating that the payments were made purely on behalf of ESO. Thus, the sum of Rs. 9,40,28,115/- was never claimed by the assessee as its own expenditure or as an application of income, but has been consistently and correctly treated as recoverable dues, thereby reflecting its true nature as pass through payments. Ld. DR relied upon the order of the CIT(A). In view of the factual matrix, we are of the considered view that the aforesaid aspect of the ld. Counsel for the assessee needs to be verified/examined at the level of the AO, accordingly, we deem it fit and proper to remit back the issues to the file of the AO for fresh adjudication, after giving adequate opportunity of being heard to the assessee, in accordance with law. We hold and direct accordingly.

In the result the appeal of the assessee is allowed for statistical purposes.