THE SOCIETY OF HELPER OF MARY,MUMBAI vs. ASSESSING OFFICER, MUMBAI

PER SMT. BEENA PILLAI, JUDICIAL MEMBER: Present appeal is filed by the assessee against the order dated 26/09/2025 passed by the National Faceless Appeal Centre, Delhi [“Ld. CIT(A)”], for A.Y. 2016-17, on the following grounds of appeal:-

“1. General Ground On the facts and in the circumstances of the case and in law, the order passed by the learned CIT(A) is bad in law, contrary to the facts of the case, and is in gross violation of the principles of natural justice. The same is liable to be set aside or quashed. 2. Dismissal without adjudication 2.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dismissing the appeal for alleged non-prosecution, without passing a speaking order on the merits of the case. 2.2 The Appellant submits that under Section 250(6) of the Income-tax Act, 1961, the CIT(A) is under a statutory obligation to state the points for determination, the decision thereon, and the reasons for the decision. 2.3 Reliance is placed on following judicial decisions: • Kasi Viswanath Gupta Chalamcharla Vs. ITO (ITA No. 1506/PUN/2024, Order dated 30.12.2024, ITAT Pune): the Hon'ble ITAT Pune held that where the Ld. CIT(A)/NFAC dismisses an appeal simply for want of prosecution and fails to decide the issue on merit, such an order is legally unsustainable. The Tribunal ruled that the mandate of Section 250(6) requires adjudication on merits, and consequently restored the issue to the file of the CIT(A) with a direction to grant one last opportunity to the assessee. • CIT vs. Premkumar Arjundas Luthra (HUF) [(2016) 240 Taxman 133 (Bombay)]: The Hon’ble High Court held that the CIT(A) has no power to dismiss an appeal for non-attendance; the appeal must be decided on merits based on the material available on record. 3. Violation of Principles of Natural Justice and Arbitrary Assessment 3.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has grossly erred in confirming the assessment order without appreciating that the additions themselves arose due to denial of adequate and reasonable opportunity during the assessment proceedings, thereby violating the settled principles of natural justice. 3.2 The assessment order itself records that the Appellant had been participating in the assessment proceedings and that various details called for during the course of assessment had been furnished and examined by the Assessing Officer. However, towards the fag end of the limitation period, a show cause notice dated 02.12.2018 was issued seeking extensive details relating to: • donations of Rs.2,94,55,835/- given to other charitable trusts; and • complete supporting details of expenditure aggregating to Rs.7,78,07,581/- claimed towards the objects of the trust.

3.3 The Appellant submits that the said details pertained to voluminous records relating to charitable activities carried out across multiple projects and locations, including donations to several registered charitable entities and expenditure incurred for humanitarian and welfare activities. The compilation, verification and organization of such extensive records required reasonable time. 3.4 However, without granting adequate and effective opportunity to furnish the said details, and within an extremely short span, the Assessing Officer proceeded to complete the assessment on 15.12.2018, whereby: • the entire donation of Rs.2,94,55,835/- made to other charitable trusts was disallowed; and • 25% of the remaining expenditure was disallowed on an ad hoc basis without identifying any specific defect, discrepancy, or non-genuine expenditure. 3.5 The additions have thus been made not on account of any finding that the expenditure or donations were non-genuine or not incurred for charitable purposes, but merely on the technical ground that supporting documents could not be furnished within the limited time available. The Appellant is legally entitled to claim the said amounts as application of income under Section 11 of the Act and substantive exemption cannot be denied merely due to procedural or technical lapses. 3.6 The learned CIT(A), instead of examining this serious procedural infirmity, mechanically confirmed the additions and dismissed the appeal, thereby perpetuating the violation of natural justice. 3.7 It is a settled position in law that quasi-judicial authorities are bound to provide adequate opportunity and adjudicate matters on merits. The denial of proper opportunity vitiates the assessment itself. 3.8 In view of the above, the impugned assessment is liable to be set aside, and the matter deserves to be restored for fresh adjudication after granting reasonable and effective opportunity to the Appellant to furnish evidences and substantiate its claims on merits. 4. Erroneous Disallowance of Donation (Application of Income u/s 11) 4.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance of donations amounting to Rs.2,94,55,835/- made by the Appellant to other charitable trusts. 4.2 The Appellant, being registered under Section 12A of the Act, made bona fide donations to other duly registered charitable institutions carrying out similar objects. Such donations squarely constitute a valid “application of income” under Section 11(1)(a) of the Act. 4.3 The learned lower authorities erred in disallowing the claim merely because the complete details and supporting documents could not be furnished during the assessment/appellate proceedings. A substantive statutory exemption cannot be denied solely due to a procedural lapse or delayed submission of evidence, especially when the Appellant is now ready to furnish all verifiable proofs (registration certificates of recipient trusts, confirmations, and bank statements). 4.4 Reliance is placed on the following judicial precedents: • CIT vs. Thanthi Trust (Supreme Court) [2001] 247 ITR 785; • CIT vs. Trustees of Jadi Trust (Bombay High Court) [1982] 133 ITR 494; • CIT vs. Nirmala Bakubhai Foundation (Gujarat High Court) [1996] 226 ITR 394; • CIT vs. Sarladevi Sarabhai Trust [(1988) 172 ITR 698 (Guj)]; and • S.R. Koshti vs. CIT [(2005) 276 ITR 165 (Guj)]. 4.5 In the present case, the Appellant is legally entitled to claim the said amount as application of income in accordance with the provisions of the Act. The disallowance has been made solely on technical and procedural grounds, namely alleged non-submission of supporting documents during the proceedings, and not on account of any infirmity in the nature or allowability of the claim. It is a settled position of law that substantive benefits cannot be denied on mere technical lapses, and therefore, the additions so made are unsustainable in law and liable to be deleted. 5. Arbitrary and Ad-hoc Disallowance of 25% of Expenses 5.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming an ad-hoc disallowance of 25% of the total expenses claimed by the Appellant. 5.2 It is submitted that the Appellant’s books of account are duly audited, and an audit report in Form 10B has been filed. The expenses were incurred wholly and exclusively for the charitable objects of the trust. 5.3 The Assessing Officer made the disallowance purely on an estimation and guesswork basis without rejecting the books of account under Section 145(3) of the Act, and without pointing out any specific, non-genuine, or unvouched expenditure. Reliance is placed on: • Dhakeswari Cotton Mills Ltd. vs. CIT [(1954) 26 ITR 775 (SC)]; • CIT vs. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC);

• CIT vs. A. Krishnaswami Mudaliar [1964] 53 ITR 122 (SC); and • CIT vs. Paradise Holidays [(2010) 325 ITR 13 (Delhi)]. 6. Invalid Rectification u/s 154 for Applicability of Section 167B 6.1 On the facts and in the circumstances of the case and in law, the Assessing Officer erred in invoking the provisions of Section 154 to apply the Maximum Marginal Rate (MMR) of tax under Section 167B(1) of the Act. 6.2 Orders under Section 154 of the Income Tax Act can be rectified when there is a clear and obvious mistake of fact or law that is readily apparent from the record. The rectification process allows for corrections in cases where the error is so evident that it can be identified without the need for extended analysis or debate. Debatable issues cannot be rectified under Section 154. 6.3 The applicability of Section 167B involves a complex determination of whether the shares of the beneficiaries are indeterminate or unknown. This requires interpretation of the trust deed and legal arguments, making it a highly debatable issue. 6.4 A debatable issue cannot, by definition, be termed as a “mistake apparent from the record” to justify the assumption of jurisdiction under Section 154. 6.5 Reliance is placed on T.S. Balaram, ITO vs. Volkart Brothers [(1971) 82 ITR 50 (SC)]. 7. Unjustified Levy of Interest under Sections 234B and 234C 7.1 The learned authorities below erred in levying interest under Sections 234B and 234C of the Act. The levy of such interest is purely consequential in nature and must be deleted or recomputed in accordance with the final determination of the total income upon giving effect to this appeal. 7.2 Without prejudice to the above, no advance tax was payable by the Appellant under a bona fide belief that its income was exempt under Section 11, and the current liability arises solely due to artificial disallowances made during the assessment. 8. Prayer for Admission of Additional Evidence 8.1 The Appellant craves leave to submit additional evidence for the expenditure incurred (including details of recipient trusts, their registration certificates, confirmations, and mode of payment) under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963.

8.2 The Appellant was prevented by sufficient and reasonable cause from submitting these documents before the lower authorities, and their admission is crucial for determining the substantive truth and rendering complete justice. 9. General Right to Amend The Appellant craves leave to add, alter, amend, modify, or delete any or all of the above grounds of appeal at or before the time of the hearing.” 2. At the outset, we find that there is a delay of 132 days in filing the present appeal before this Tribunal. The assessee has filed a petition seeking condonation of the said delay. In the petition, it has been stated that the delay was neither wilful nor deliberate but occurred due to bona fide circumstances beyond the control of the assessee. The assessee is stated to be a charitable society managed by social workers and nuns engaged in various humanitarian activities including running old-age homes, caring for children placed under the Juvenile Justice framework, providing skill- development courses, running dispensaries, balwadis, Self Help Groups and hospitals. It is stated that the persons managing the assessee are primarily engaged in social service and are not conversant with the technical and procedural requirements under the Income Tax Act.

2.1. It is further stated that the assessee had entrusted its tax matters, including assessment and appellate proceedings, to a qualified Chartered Accountant who regularly represented the assessee before the Income-tax authorities. According to the assessee, all necessary records were handed to the said professional and the assessee remained under a bona fide belief that the proceedings, including the filing of further appeal, are being duly attended to.

2.2. The assessee submitted that, due to inadvertent inaction and non-response on the part of the concerned professional, the appeal could not be filed within the prescribed period. It is stated that the assessee became aware of the lapse subsequently and, immediately upon gaining knowledge thereof, took steps to file the present appeal. It has also been specifically pleaded that no benefit or advantage was derived by the assessee on account of the delay. 2.3. The Ld.AR submitted that the delay was occasioned on account of circumstances explained in the condonation petition and that the assessee should not be deprived of adjudication on merits merely on account of an inadvertent procedural lapse. He relied upon the decisions of the Hon’ble Supreme Court in Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors. reported in [1987] 167 ITR 471 (SC), N. Balakrishnan v. M. Krishnamurthy reported in [(1998) 7 SCC 123] and Rafiq & Anr. v. Munshilal & Anr. reported in [(1981) 2 SCC 788]. 2.4. The Ld DR opposed the condonation and relied upon the impugned order. We have considered the submissions advanced by both sides and perused the petition filed by the assessee. 2.5. It is well settled that the expression “sufficient cause” employed in provisions governing condonation of delay is required to be construed in a manner that advances substantial justice. In Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors. (supra), the Hon’ble Supreme Court emphasised that ordinarily a litigant does not stand to benefit by filing an appeal belatedly and that a liberal and justice-oriented approach ought to be adopted where there is no deliberate or mala fide inaction. 2.6. In N. Balakrishnan v. M. Krishnamurthy (supra), the Hon’ble Supreme Court explained that the length of the delay is not, by itself, decisive. What is material is the acceptability of the explanation furnished for the delay. Where the explanation does not disclose mala fides or an attempt to gain an undue advantage, the Court should ordinarily lean in favour of adjudicating the dispute on merits. 2.7. We also find support from the decision of the Hon’ble Supreme Court in Rafiq & Anr. v. Munshilal & Anr. (supra), wherein it was observed, in the context of lapse on the part of a legal representative, that a litigant who has entrusted the conduct of a matter to a professional should not ordinarily be made to suffer solely on account of the default attributable to such professional. 2.8. Further, in Improvement Trust, Ludhiana v. Ujagar Singh & Ors. [(2010) 6 SCC 786], the Hon’ble Supreme Court reiterated that unless mala fides, deliberate negligence or an attempt to abuse the process is attributable to the litigant, a pragmatic approach ought to be adopted so that substantial rights are not defeated on technical considerations. 2.9. Applying the aforesaid principles to the facts before us, we note that the delay is of 132 days. The assessee has placed a specific explanation on record that its tax matters had been entrusted to a Chartered Accountant and that it was under the bona fide belief that the requisite appellate proceedings were being duly attended to. The assessee has further stated that immediately upon becoming aware of the lapse, corrective steps were taken and the present appeal was filed. The explanation is supported by the circumstances narrated in the petition and there is nothing before us to suggest that the delay was deliberate, mala fide or designed to secure any advantage. 2.10. It is also relevant that the issues raised in the appeal involve substantial additions in the case of a charitable organisation, including disallowance of donation of Rs.2,94,55,835/- made to other public trusts and an ad hoc disallowance of Rs.72,52,762/- out of expenditure claimed towards the objects of the trust. Dismissing the appeal at the threshold without examining the substantive dispute, despite the explanation furnished for the delay, would not advance the cause of substantial justice. 2.11. Considering the totality of the circumstances and respectfully following the principles laid down in the decisions referred to hereinabove, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed period. Accordingly, the delay of 132 days is condoned and the appeal is admitted for adjudication. 4. Coming to the merits of the case, brief facts are that the assessee is registered u/s. 12A of the Act and had filed its return of income for A.Y. 2016-17 on 01/10/2016 declaring Nil income. During the assessment proceedings, the Ld. AO noticed that the assessee had claimed donation of Rs.2,94,55,835/- given to other public trusts as application of income and had also claimed expenditure towards its charitable objects. According to the assessment order, the details called for towards the end of the proceedings were not furnished and, consequently, the Ld. AO disallowed the donation of Rs.2,94,55,835/- and further made an ad hoc disallowance of Rs.72,52,762/-, being 25% of the balance expenditure. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). 4.1. The impugned order records that notices u/s. 250 were issued on various dates. On certain occasions there was no response, while on two occasions the assessee sought adjournment. The Ld. CIT(A), observing that no written submissions or supporting evidences were ultimately furnished, proceeded to decide the appeal on the basis of the material available on record. 4.2. The Ld. CIT(A) thereafter observed that, in the absence of supporting evidences and effective prosecution of the appeal, there was no reason to interfere with the findings of the Ld. AO and accordingly dismissed the appeal. 5. Before us, the Ld. AR submitted that the assessee could not effectively represent the matter before the Ld. CIT(A) and that substantial documentary evidences relating to donations made to other charitable institutions and the expenditure incurred towards charitable activities require consideration. It was submitted that the matter may therefore be restored to the Ld. CIT(A) for fresh adjudication on merits.

5.1. The Ld. DR relied upon the orders passed by the authorities below. We have perused the submissions advanced by both sides in light of the record placed before us. 6. We note that though the Ld. CIT(A) has referred to the issues on merits, the appeal has effectively been disposed of in the absence of any substantive representation or supporting evidences from the assessee. The additions under consideration relate to substantial claims of application of income by a charitable organisation and require examination of the relevant evidences before arriving at a conclusion on merits. 6.1. Section 250(6) of the Act mandates that the order of the Ld. CIT(A) shall state the points for determination, the decision thereon and the reasons for the decision. The first appellate authority is therefore required to adjudicate the grounds before it on merits and cannot dispose of the substantive controversy merely on account of absence or non-prosecution. 6.2. In the facts of the present case, and considering that the assessee has sought an opportunity to place the relevant supporting evidences before the first appellate authority, we are of the considered opinion that the ends of substantial justice would be met by granting one more effective opportunity to the assessee. 6.3. We thus set aside the impugned order and restore the entire appeal to the file of the Ld.CIT(A) for de novo adjudication on merits, in accordance with law, after considering the submissions and documentary evidences that may be furnished by the assessee.

The Ld.CIT(A) shall grant reasonable and effective opportunity of being heard to the assessee before deciding the appeal. The assessee is directed to furnish all necessary details, documentary evidences and explanations in support of the grounds raised and to cooperate in the appellate proceedings without seeking unnecessary adjournments.

Accordingly, the grounds raised by the assessee stands allowed for statistical purposes.

In the result, the appeal filed by the assessee stands allowed for statistical purposes.

Order pronounced in the open court on 11-09-2026.

Sd/- Sd/- PRABHASH SHANKAR BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 11-09-2026 Shamik Sr. P.S.

Copy to: THE SOCIETY OF HELPER OF MARY, SHRADDHA VIHAR, VEERA DESAI 1 ROAD, ANDHERI WEST, MUMBAI-400058, MAHARASHTRA

ASSESSING OFFICER, 2 EXEM, CIRCLE 2, MUMBAI, MUMBAI-400026, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE TRUE COPY

ASSISTANT REGISTRAR / SR. PRIVATE SECRETARY I.T.A.T., MUMBAI