CUTCHI MEMON JAMAT,MUMBAI vs. ITO (EXEM) WARD 1(2), MUMBAI

At the outset, it is noticed that both the appeals have been filed beyond the period of limitation prescribed under the Income-tax Act, 1961 ("the Act"). The orders under section 250 of the Act were passed on 25.10.2023, whereas the present appeals were filed before the Tribunal only on 26.02.2026, resulting in a delay of 795 days in each of the appeals. The assessee has filed an affidavit seeking condonation of the delay.

In the affidavit, the assessee has submitted that the delay in filing the appeals was neither deliberate nor intentional but was occasioned by sufficient cause. It has been stated that the assessee is a charitable and religious trust managed by trustees who discharge their duties on an honorary basis and are not conversant with the provisions of the Income- tax Act. Consequently, all income-tax compliances and litigation matters had been entrusted to the trust's Chartered Accountant, Shri Nahid Bhujwala, who had been associated with the trust for a considerable period. It has further been stated that during the period from June 2023 onwards, the said Chartered Accountant suffered from prolonged ill-health and was unable to attend to his professional assignments on a regular basis. Subsequently, he unfortunately passed away on 20.05.2024. According to the assessee, the trustees, acting under a bona fide belief, presumed that the necessary appellate proceedings had been initiated by the said Chartered Accountant against the orders passed by the Commissioner (Appeals). It was only after another Chartered Accountant was engaged to handle the tax matters of the trust that the trustees came to know that no appeals had been filed before the Tribunal. Thereafter, time was consumed in obtaining the relevant records and documents pertaining to the impugned assessment years from the office of the deceased Chartered Accountant, following which the present appeals were filed without any further delay. It has further been submitted that the assessee, being a charitable and non-profit organization, would suffer grave hardship and irreparable loss if the delay is not condoned and that the delay was bona fide, unintentional and occasioned by circumstances beyond its control.

During the course of hearing, the learned Authorised Representative (“ld. AR”) drew our attention to the order of the Coordinate Bench of the Tribunal in the assessee's own case in ITA Nos. 9055/Mum/2025 to 9058/Mum/2025 relating to Assessment Years 2013-14, 2014-15, 2015- 16 and 2018-19. It was submitted that in those appeals also there was a delay in filing the appeals on account of the illness and subsequent demise of the very same Chartered Accountant. After considering the explanation offered by the assessee, the Coordinate Bench had condoned the delay for the Assessment Year 2015-16 and the Assessment Year 2018-19 and restored the matters to the file of the Assessing Officer for fresh adjudication. The learned Departmental Representative (“ld. DR”), on the other hand, relied upon the orders of the lower authorities.

We have considered the rival submissions and perused the material available on record. The explanation furnished by the assessee for the delay is supported by an affidavit. The circumstances narrated therein indicate that the Chartered Accountant who had been handling all the tax matters of the assessee suffered prolonged illness and subsequently expired, resulting in the appeals not being filed within the prescribed period of limitation. There is nothing on record to indicate that the delay was deliberate or motivated by any mala fide intention. On the contrary, the material on record shows that immediately after the trustees became aware that no appeals had been filed, the newly engaged Chartered Accountant took necessary steps to file the present appeals. We also find that on identical facts and circumstances, the Coordinate Bench of the Tribunal in the assessee's own case for Assessment Year 2015-16 and Assessment Year 2018-19 had accepted the explanation offered by the assessee and condoned the delay. In the absence of any distinguishing feature brought to our notice by the Revenue, judicial consistency requires us to adopt the same view. Considering the totality of the facts and circumstances of the case, we are satisfied that the assessee was prevented by sufficient cause from filing the appeals within the prescribed period. Accordingly, the delay of 795 days in filing both the appeals is condoned and the appeals are admitted.

On merits, the facts reveal that the assessee is stated to be a charitable and religious trust. Information was received by the Assessing Officer that substantial cash deposits had been made in the bank accounts of the assessee during the relevant previous years. Based on such information, notices were issued for both the assessment years calling for the return of income, as no return was filed u/s 139(1) of the Act. The assessee, however, did not file the returns of income in response to the notices issued. Thereafter, the Assessing Officer issued several statutory notices calling upon the assessee to explain the source of the cash deposits and furnish the relevant documentary evidence. According to the Assessing Officer, there was no effective compliance to the notices issued. Ultimately, in response to the final show cause notice, the assessee submitted that the income of the trust had been spent towards its charitable objects and, therefore, the same was not liable to tax. The Assessing Officer rejected the explanation observing that no return of income had been filed and despite adequate opportunities, no documentary evidence had been produced in support of the expenditure claimed to have been incurred towards the objects of the trust, and although the assessee claimed to have been granted registration under section 12A of the Act vide Registration No. TR/3907 dated 02.06.1979, no copy of the registration certificate had been furnished despite repeated opportunities.

Accordingly, the Assessing Officer treated the aggregate bank deposits of ₹1,15,42,664 together with interest income of ₹15,76,578, aggregating to ₹1,31,19,242, as the gross receipts of the assessee for Assessment Year 2012-13. Out of the said gross receipts, the Assessing Officer allowed expenditure of ₹11,90,474 and brought the balance amount of ₹1,19,28,770 to tax by completing the assessment under section 144 r.w.s 147 of the Act.

Similarly, for Assessment Year 2017-18, the Assessing Officer treated the aggregate bank deposits and other credit entries, amounting to ₹1,57,77,591 as the gross receipts of the assessee. After allowing expenditure of ₹26,58,340, the Assessing Officer brought the balance amount of ₹1,31,19,251 to tax by completing the assessment under section 144 of the Act.

The Commissioner (Appeals) affirmed the action of the Assessing Officer.

Having considered the material available on record, we find that both the assessment orders as well as the orders of the Commissioner (Appeals) have substantially been passed ex parte owing to the failure of the assessee to furnish the requisite details and supporting evidence. At the same time, the assessee has consistently maintained that it is a charitable and religious trust duly registered under section 12A of the Act. If the assessee is, in fact, holding a valid registration under section 12A, its claim for exemption under sections 11 and 12 of the Act cannot be rejected without examining whether the income of the trust has been applied towards its charitable or religious objects in accordance with law. Such an examination necessarily requires verification of the registration certificate, books of account, audit report in Form No.10B, details of application of income, and other supporting evidence. None of these documents were available before the Assessing Officer or the Commissioner (Appeals), as admittedly the assessee failed to furnish the same during the assessment as well as appellate proceedings.

Having regard to the peculiar facts and circumstances of the case, particularly the illness and subsequent demise of the Chartered Accountant who had been entrusted with the responsibility of handling the tax affairs of the assessee, the ex parte nature of the proceedings before the authorities below, and the fact that in the assessee's own case for the adjoining assessment years 2015-16 and 2018-19 the Coordinate Bench has restored similar issues to the file of the Assessing Officer, we are of the considered view that the ends of justice would be adequately served by restoring the matter to the file of the Assessing Officer for fresh adjudication. We, therefore, set aside the impugned orders passed by the Commissioner (Appeals) for both the assessment years and restore the matters to the file of the Assessing Officer for de novo consideration. The Assessing Officer shall afford adequate and effective opportunity of being heard to the assessee. The assessee shall furnish the registration certificate under section 12A, the audit reports in Form No.10B, books of account, supporting vouchers, evidence regarding application of income and such other documents as may be necessary to substantiate its claim. The Assessing Officer shall thereafter examine the entire matter afresh and pass a speaking order in accordance with law after considering the material and submissions that may be placed on record. The assessee is also directed to extend full cooperation during the reassessment proceedings and shall not seek unnecessary adjournments.

In the result, the delay of 795 days in filing both the appeals is condoned. The impugned orders are set aside and the matters are restored to the file of the Assessing Officer for fresh adjudication in accordance with law. Hence, both the appeals filed by the assessee are accordingly allowed for statistical purposes.