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Before: Shri V. Durga Rao
आदेश /O R D E R This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 17.06.2022 relevant to the assessment year 2016-17.
The appeal filed by the assessee is delayed by 321 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay in support of an affidavit by stating as under: PETITION FOR THE CONDONATION OF DELAY IN FILING THE APPEAL The appeal against the impugned order dated 17.06.2022 ought to have been appealed against within the stipulated time period prescribed under the Act. However, the captioned appeal was filed belatedly on 03.07.2023 with a delay of 321 days. The delay of 321 days in filing the appeal was neither willful nor deliberate but due to circumstances beyond the control of the Petitioner /Appellant. The Petitioner/ Appellant had filed against the order of the assessment dated 26.11.2018, framed by the Respondent, wherein the claim of accumulation of funds in terms of Section 11(2) of the Act was disallowed on the ground of belated filing of Form No.
The Petitioner / Appellant had then filed the condonation petition in terms of Section 119 (2) (b) of the Act before the Office of the Principal Commissioner of Income Tax, Madurai -2 on 31.12.2018 and the same was forwarded to the Commissioner of Income Tax (Exemptions), Chennai in C No. 109/PCIT -2/MDU/2018-19 vide their letter dated 20.02.2019. The Petitioner / Appellant during the course of the appellate proceedings had brought on record the pendency of the condonation petition filed for the delay in Form No. 10 before the Commissioner of Income Tax (Exemptions) in their last response filed in response to the hearing notice dated 18.05.2022 vide Acknowledgement No. 624051051190522. Moreover, the Petitioner / Appellant was under the bonafide impression that the First Appellate Authority was also a competent authority to condone the delay in filing the Form No. 10 and accordingly the Petitioner/ Appellant had also filed the condonation petition before the First Appellate Authority in the e-response dated 18.05.2022. The relevant screenshot of the said response filed before is extracted herein below: Accordingly, a request was made to the Commissioner of Income tax for condoning the delay in filing the Form 10 on 26.12.2018, which had been forwarded to the Commissioner of Income tax (Exemption), Chennai, along with enclosures by the office of Pr. Commissioner of Income tax, Madurai. When contacting their office at Chennai, it was informed that since there is an appeal for this case before the Commissioner of Income tax, the condonation may be given by the CIT(Appeal) himself. It is submitted that the fund has been deposited to the bank which is one of the specified mode mentioned in Section 11(5) of the Income tax Act. Therefore it is requested that the delay in filing the Form 10 may please be condoned and the appeal may be allowed. Copy of the request for the condonation filed along with enclosure is also submitted herewith. Copy of the relevant Departmental Circular is also enclosed for ready reference. For M. Lakshman & Co., Chartered Accountants,
Sd/- (with seal) [M Lakshmanan] Partner However, the impugned order was passed on 17.06.2022 in dismissing the appeal preferred before them in stating that the Petitioner / Appellant had not filed any evidence of the filing of the condonation petition before the appropriate authority and had held that the First Appellate Authority was not competent to entertain the petition filed in this regard by overlooking the pendency of the said application of condonation of delay before the CIT(Exemptions) at Chennai vide the letter dated 20.02.2019. Subsequently, the Commissioner of Income (Exemptions) had condoned the delay in filing return of income and Form No. 10 for the assessment year: 2016 - 17 vide DIN & Order No. ITBA/COM/F/17/2022-23/1044549117(1) dated 08.08.2022. The Petitioner/Assessee hereafter was on the bonafide impression that the jurisdictional Assessing Officer would give effect to the condonation order passed under Section 119(2) (b) of the Act in reversing the demand payable for the assessment year under consideration. However, the same is not given effect to. The office of the ITO, Exemptions Ward Madurai had issued a letter dated 13.06.2023 vide DIN & Letter No. ITBA/COM/F/17/2023-24/1053681565 (1) to the Petitioner/Appellant, wherein the outstanding demand for the assessment year under consideration was quantified along with a check list, in asking for details regarding the pendency of any condonation petition filed for the Petitioner / Appellant Trust. In the above circumstances, the Petitioner / Appellant had not challenged the dismissal order of the First Appellate Authority / impugned order before this bench on the bonafide understanding of the resolution of the dispute in the event of passing effect giving order, which was not forth coming, as evident from the letter issued by the ITO, Exemptions Ward, Madurai dated 13.06.2023 for the recovery of the demand. In the light of the revenue not giving effect to the order of the CIT(Exemptions) dated 08.08.2022, the Petitioner / Appellant was advised to file an appeal immediately with a condonation on 03.07.2023 thereafter. The Supreme Court in the case reported in 419 ITR 732 had condoned 1754 days of delay in filing the appeal before the High Court in consequence to the listing of the assessee's property for auction in the recovery proceedings initiated by the Income Tax Department for the arrears of the total taxable payable by them after the adverse decision passed by the Appellate Tribunal. In this context, the Supreme Court has held as follows: 4. Soon thereafter, the appellant(s) filed appeal(s) accompanied by the subject application(s) on 19.07.2008. Notably, the respondent(s) did not expressly refute the stand taken by the appellant (s) - that they had no knowledge about passing of order dated 29. 12.2003 until June, 2008. Unless that fact was to be refuted, the question of disbelieving the stand taken by the appellant (s) on affidavit, cannot arise and for which reason, the High Court should have shown indulgence to the appellant(s) by condoning the delay in filing the concerned appeal(s). This aspect has been glossed over by the High Court.
Since on the facts of the present case, the revenue cannot refute the non implementation of the order of the CIT(Exemptions), Chennai in condoning the delay in filing Form No. 10 and ROI, which would have direct impact on the computation in terms of Section 11 of the Act as evident from the recovery notice issued in the month of June 2023, the delay of 321 days of delay deserves to be condoned by directing the jurisdictional Assessing Officer to pass the final order by reckoning the order passed by the CIT(Exemptions), Chennai dated 08.08.2022. In such circumstances, it is prayed for the condonation of 321 days in filing the captioned appeal and thus render justice. Further, it is prayed for a direction to the Jurisdictional Assessing Officer to pass the final assessment order by recomputing the tax exemption computation under Section 11 of the Act for the assessment year: 2016 -17 in the interest of justice. By referring to the above petition, the ld. Counsel for the assessee has submitted that there was reasonable cause for the delay and the delay in filing the appeal is neither wilful nor wanton and prayed for condonation of delay and to admit the appeal for adjudication. Against the above submissions, the ld. DR has not raised any serious objection. Considering the petition filed in support of an affidavit for condonation of delay, the delay stands condoned and admits the appeal for adjudication.
Brief facts of the case are that the assessee has filed its return of income for the assessment year 2016-17 on 20.10.2016 admitting NIL income. The assessee, M/s. Nephrology Association created on 12.06.2013 and was registered under section 12AA of the Income Tax Act, 1961 [“Act” in short] with effect from 01.04.2015 by the ld. CIT(E) vide order dated 28.03.2016. The case was selected for scrutiny and against the statutory notices, the assessee furnished the details. During the financial year 2015-16 relevant to the assessment year 2016-17, the assessee trust has declared a gross receipts of ₹.90,78,952/- and claimed application towards charitable purposes of ₹.49,43,579/- and out of the balance receipts, the assessee accumulated ₹.30,00,000/- under section 11(2) of the Act. The assessee filed Form No. 10 electronically only on 12.09.2018 for accumulation under section 11(2) of the Act, whereas, the return of income was filed on 20.10.2016. The Assessing Officer, during the course of assessment proceedings, enquired this discrepancy vis-a-vis filing of Form No. 10 much after the due date of filing of return of income under section 139 of the Act. The assessee has not given satisfactory explanation before the Assessing Officer. Therefore, by rejecting Form No. 10 filed by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 26.11.2018 disallowing balance accumulation of receipts of ₹.30,00,000/-. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has filed application for condonation of delay of late filing of Form 10 before the ld. CIT(E) and the ld. CIT(E) passed an order dated 08.08.2022 condoning the delay. It was further submissions that the ld. CIT(A) had no opportunity to consider the order passed by the ld. CIT(E) dated 08.08.2022 since the appellate order was passed by the ld. CIT(A) on 17.06.2022. Thus, the ld. Counsel prayed for remitting the matter back to the Assessing Officer to decide the disallowance afresh in accordance with law.
On the other hand, the ld. DR fairly conceded the submissions of the ld. Counsel for the assessee.
Heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, since there was delay in filing Form No. 10 under section 11(2) of the Act, much after the due date of filing of return of income under section 139(1) of the Act, the Assessing Officer disallowed ₹.30,00,000/- of accumulation under section 11(2) of the Act. In the absence of condonation of delay in filing Form No. 10, the ld. CIT(A) confirmed the order passed by the Assessing Officer. Before the ld. CIT(A), the assessee made written submission for condoning the delay in filing Form No. 10. In turn, the ld. CIT(A) informed the assessee that the authority for condonation of delay in filing Form No. 10 rests only with jurisdictional CIT(Exemptions). The ld. CIT(E) passed an order dated 08.08.2022 in condoning the delay and the ld. CIT(A) had no opportunity to consider the order passed by the ld. CIT(E) dated 08.08.2022 since the appellate order was passed by the ld. CIT(A) on 17.06.2022. Thus, it is opined that as of now, the delay in filing the Form No. 10 has been condoned by the jurisdictional ld. CIT(E), the Assessing Officer has to decide the issue of disallowance of ₹.30,00,000/- of accumulation under section 11(2) of the Act afresh in accordance with law. Accordingly, the order of the ld. CIT(A) is set aside and remit the matter back to the file of the Assessing Officer to decide the issue afresh by taking into account the order of the ld. CIT(E) in condoning the delay in filing Form No. 10 by affording an opportunity of being heard to the assessee.