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Facts
The assessee trust filed an appeal against an order of the CIT(A) which dismissed its first appeal solely on the grounds of delay. The assessee explained that the delay was due to the nationwide lockdown caused by the COVID-19 pandemic, which prevented them from receiving and acting upon the intimation from the CPC.
Held
The Tribunal held that the assessee had shown sufficient cause for the delay due to the unprecedented pandemic situation and the disruption it caused to normal functioning. The Tribunal condoned the delay and restored the matter to the CIT(A) for adjudication on merits.
Key Issues
Whether the delay in filing the appeal caused by the COVID-19 pandemic lockdown is a sufficient cause for condonation, and if the CIT(A) erred in dismissing the appeal without considering the merits.
Sections Cited
143(1), 11(3), 28
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Income Tax Appellate Tribunal, ‘D’ BENCH
Before: SHRI AMIT SHUKLA & SMT RENU JAUHRI
आदेश / O R D E R PER AMIT SHUKLA (J.M): The present appeal has been preferred by the assessee, Rotary Club of Bombay North Island Charitable Trust, against the order dated 31 July 2025 passed by the Additional or Joint Commissioner of Income Tax (Appeals)–2, Lucknow, arising from the intimation issued under section 143(1) of the Income Tax Act for Assessment Year 2017–18.
Rotary Club of Bombay North Island Charitable Trust 2. The grievance raised before us is directed against the dismissal of the first appeal solely on the ground of delay, the learned first appellate authority having declined to condone the same despite a detailed affidavit setting out reasons which, according to the assessee, constituted a reasonable and bona fide explanation.
We have carefully examined the factual matrix as placed before us. The reasons for delay, as incorporated in the appellate order and further substantiated by the affidavit of the authorised trustee, emerge in a unified continuum. The assessee had filed its original return on 30 October 2017 declaring nil income in view of its charitable objects. The revised return filed on 27 February 2019 also declared nil income. Therefore, there was no infraction or apathy in the statutory compliances at the inception. Thereafter the Central Processing Centre processed the return and issued an intimation under section 143(1) dated 17 March 2020 determining the total income at Rs 51,89,334 by treating Rs 24,17,036 as business income and Rs 3,55,262 as voluntary contribution. These communications from the CPC were dispatched immediately before the onset of the nationwide lockdown triggered by the Covid nineteen pandemic. It has been categorically explained that owing to the total disruption caused by the lockdown, no staff was attending the assessee’s office, the trustees themselves were restricted from movement, and the emails containing the intimation and earlier notices went unnoticed during that unprecedented period.
3.1. The assessee became aware of the adverse intimation only when subsequent refunds were unexpectedly adjusted against the outstanding demand. This discovery prompted the trustees to immediately engage their Chartered Accountant to take corrective steps. The tax professional sought necessary documents, the assessee provided them, and thereafter Form Number Thirty Five accompanied by grounds of appeal was prepared and submitted after obtaining signatures. It has been explained that the limitation for filing the appeal expired on 18. March 2020, a date falling squarely within the period of administrative paralysis caused by the pandemic. The delay is stated to have arisen only because the order was not known to the assessee, the notices had not been effectively served in a manner that could be acted upon in those extreme circumstances, and corrective steps were initiated with promptitude as soon as the assessee gained knowledge. The affidavit further avers that the assessee trust, being engaged entirely in charitable activities, had no taxable income at all, yet was confronted with a demand of Rs 13,81,799. This circumstance underscores the absence of any mala fide intention and evidences genuine hardship that would ordinarily guide a judicial mind to adopt a liberal approach in matters of condonation when reasonable explanation exists.
The learned Commissioner of Income Tax (Appeals), however, despite noting these reasons at considerable length, has declined to condone the delay and dismissed the appeal Rotary Club of Bombay North Island Charitable Trust in limine. The reasoning proceeds on a strict reading of limitation without extending the equitable approach that the law of limitation, especially after the decisions of the Hon’ble Supreme Court concerning Covid nineteen extension of limitation, enjoins upon quasi judicial authorities.
Having considered the rival submissions and perused the entire record, we note that the intimation under section 143(1) was issued on 17 March 2020 assessing a total income of Rs 51,89,334 as against the nil income declared. The denial of exemption under section 11(3) and the addition under section 28 aggregating Rs 48,34,072 formed the core of the adjustment. It is beyond dispute that this period coincided with the onset of the national Covid nineteen lockdown, when physical offices were shut, staff movement was impossible, and even personal access to email accounts remained severely constrained for many entities. In the present case, the intimation, though technically served by email, could not in the natural course come to the notice of the trustees as the entire administrative functioning had collapsed during that phase. It is only upon witnessing adjustment of refunds at a later stage that the assessee realised that a demand stood raised. Immediately thereafter they approached their Chartered Accountant and began the process of filing an appeal. This sequence, in our considered view, represents a natural, logical, and bona fide chain of events.
5.1. The delay of 967 days, when viewed in isolation, may appear substantial, but once the entire period of limitation Rotary Club of Bombay North Island Charitable Trust suspended by the orders of the Hon’ble Supreme Court is excluded, the residual delay is tangibly explained. The Apex Court has unequivocally extended the period of limitation for all judicial and quasi judicial proceedings until 28 February 2022 and directed that the entire period commencing 15 March 2020 shall stand excluded for computing limitation. This binding direction cannot be applied selectively. When the very foundation of the assessee’s explanation rests on non service in practical terms during the Covid nineteen period, the approach of the learned first appellate authority in mechanically rejecting condonation is, with respect, unsustainable.
5.2. In matters involving charitable institutions as assessees, where there is genuinely no intention to profit and where activities are conducted on a not for profit basis, delay is seldom deliberate. The conduct of the assessee in the present case does not indicate any casualness. On the contrary, the chronology reveals prompt action once they became aware of the demand. Such conduct deserves to be appreciated rather than penalised.
5.3. In the totality of circumstances, and mindful of the overarching principle that substantial justice should prevail over technicalities, we hold that the assessee has shown sufficient cause for delay. The explanation is bona fide, supported by facts, and consistent with the reality of the unprecedented pandemic period. Accordingly we condone the delay in the interest of justice.
Rotary Club of Bombay North Island Charitable Trust 5.4. Having condoned the delay, and noting that the learned Commissioner of Income Tax (Appeals) has not adjudicated the appeal on merits, we deem it appropriate to restore the matter to his file with a direction to decide the issues raised in the appeal afresh and strictly in accordance with law after affording adequate opportunity of hearing to the assessee. We express no opinion on the merits of the additions or disallowances.
In the result, the appeal is treated as allowed for statistical purposes.
Order pronounced on 26th November, 2025.