INSTITUTE OF ENTREPRENEURSHIP DEVELOPMENT, UP,LUCKNOW vs. ASSESSMENT UNIT (NFAC)/DCIT/ACIT (EXEMPTION), LUCKNOW

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ITA 237/LKW/2026Status: DisposedITAT Lucknow31 July 2026AY 2021-20225 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the delay in filing the appeal before the CIT(A) was due to sufficient cause, considering the complexities and efforts made by the assessee. The Tribunal set aside the CIT(A)'s order and restored the appeal to the CIT(A) for a decision on merits.

What were the facts?

The assessee, an educational institution registered under Section 12A, inadvertently failed to mention its 12A registration details in its income tax return for AY 2021-22. The CPC processed the return under Section 143(1) and taxed the entire receipts. The assessee's appeal before the CIT(A) was dismissed due to a delay of 404 days.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was justifiable, and whether the CIT(A) erred in dismissing the appeal on technical grounds without considering the merits of the case regarding Section 11 exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW

Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY

आयकर अपीलीय अधिकरण ‘बी’ न्यायपीठ, लखनऊ। IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “B”, LUCKNOW श्री कुल भारत, उपाध्यक्ष एवं श्री ननखखल चौिरी, लेखा सदस्य के समछ BEFORE SHRI KUL BHARAT, VICE PRESIDENT AND SHRI NIKHIL CHOUDHARY, ACCOUNTANT MEMBER आयकर अपील सं/ ITA No.237/LKW/2026 ननिाारण वर्ा/ Assessment Year: 2021-22 Institute of Entrepreneurship v. Assessment Unit Development, UP (NFAC)/DCIT/ACIT A-1, 2 Sarojini Nagar, Kanpur (Exemption) Road, Industrial Area, Pratyaksh Kar Bhawan, Lucknow-226008. 57 Ram Tirath Marg, Lucknow-226001. PAN: AAATI1575J अपीलार्थी/(Appellant) प्रत्यर्थी/(Respondent) अपीलार्थी कक और से/Appellant by: Shri B. P Yadav, Advocate प्रत्यर्थी कक और से /Respondent by: Shri Atesham Ansari, CIT(DR) सुनवाई कक तारीख / Date of hearing: 28 07 2026 घोर्णा कक तारीख/ Date of 31 07 2026 pronouncement: O R D E R PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)-3, Lucknow dated 27.12.2025 pertaining to the assessment year 2021-22. The assessee has raised the following grounds of appeal: - “1. The Learned Commissioner of Income Tax (Appeals), NFAC (hereinafter referred to as the "Ld. CIT-A] has erred on facts and in law in dismissing the appeal of the appellant on the sole reason that the appeal filed before him was belated ignoring the fact that there was sufficient cause behind filing the appeal belatedly.

ITA No.237/LKW/2026 Page 2 of 5 2. The Ld. CIT-A has erred on facts and in law in not appreciating the law that when substantial justice and technical breach of law is pitted against each other, substantial justice prevails upon the technical breach of law. 3. The Ld. CIT-A has erred on facts and in law in confirming the action of the Ld. A.O. in creating a tax demand of Rs. 23,01,94,330/-against the appellant by way of not allowing the deduction claimed by the appellant u/s 11 of the I.T.Act, 1961 [hereinafter referred to as the "Act"] and taxing the whole of receipts of Rs.58,34,34,444/-with the observation that the appellant is not registered u/s 12A of the Act, by grossly ignoring the fact that the appellant is very much registered u/s 12A of the Act vide Registration no. 47/97-98 dated 29.01.1998 issued by the office of the Commissioner of Income Tax, Lucknow. 4. The Ld. CIT-A has erred on facts and in law in not appreciating the law that when registration under section 12A of the Act is granted in subsequent years, then exemption cannot be refused in earlier years merely for registration under section 12A of the Act in terms of amended section 12A of Income Tax Act. 5. On the facts stated in the statement of facts, the Ld. A.O. was not at all justified in not allowing the deduction claimed by the assessee u/s 11 of the Act and taxing the whole of receipts of Rs.58,34,34,444/-. 6. The Ld. CIT-A has erred on facts and in law by ignoring the fact that the Ld. A.O. did not provide any opportunity/intimation to the appellant as provided under the FIRST PROVISO to section 143(1)(a) of the Act before going for withdrawing the deduction claimed by the appellant u/s 11 of the Act. 7. The appellant reserves its right to advance such other grounds before or at the hearing, which it may consider fit and appropriate, for which it craves leave to amend, alter or otherwise modify the grounds.” 2. Briefly stated, the facts are that the assessee is an instrumentality of the State of Uttar Pradesh and is engaged in providing education, it is duly registered u/s 12A of the Income Tax Act, 1961 (“Act”, for short). During the year under appeal, the assessee declared total receipts of Rs.58,34,34,444/- claimed to have been earned in the form of fee and interest earned on bank deposits. The books of account of the assessee are duly audited. It is stated by the assessee that, inadvertently, the details of the registration granted u/s 12A of the Act were not mentioned in the relevant column of the return of income, although the assessee was duly in possession of the valid registration certificate u/s 12A of the Act at the time of filing the

ITA No.237/LKW/2026 Page 3 of 5 return. The CPC while processing the return u/s 143(1) of the Act had assessed the total income at Rs.58,34,34,444/-. Aggrieved against this, the assessee preferred an appeal before the Ld. CIT(A) who dismissed the appeal on the ground of the delay. Now, the assessee is in appeal before this Tribunal.

3.

Apropos the grounds of appeal, the Ld. Counsel, Shri B. P. Yadav, Advocate, at the outset, prayed that the matter may be restored to the file of the Ld. CIT(A). He further submitted that the delay occurred in filing the appeal before the Ld. CIT(A) may be condoned and the Ld. CIT(A) be directed to decide the appeal on the merits of the case. The Ld. Counsel drew our attention to the fact that the assessee is duly registered under section 12A of the Income-tax Act. However, due to an inadvertent mistake while filing the return of income, the factum of such registration under section 12A of the Act could not be reflected in the appropriate column of the return of income.

4.

On the other hand, the Ld. Departmental Representative for the Revenue opposed the submissions of the assessee and contended that there was no sufficient cause for condoning the delay in filing the appeal. He submitted that the assessee, being an arm of the State, is expected to act diligently and in accordance with the law. Therefore, in the absence of any reasonable and satisfactory explanation for the delay, the same was rightly rejected by the Ld. CIT(A).

5.

Heard the Ld. Representatives of the parties and perused the materials available on record. We find that the Ld. CIT(A) has reproduced the chronology of events in the impugned order but did not accept the explanation offered by the assessee for the

ITA No.237/LKW/2026 Page 4 of 5 delay in filing the appeal. It is an undisputed fact that there was a delay of 404 days in filing the appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal purely on the ground of the limitation without looking to the merits of the case. It is well settled law that the right of a litigant for filing an appeal cannot be closed purely on the technical grounds. In this case, the reason for delay is stated that the order passed u/s 143(1) of the Act was not duly served upon the assessee. The assessee, in its submissions before the Ld. CIT(A), categorically stated that the appeal in Form No. 35 was filed on 02.02.2024 along with an application seeking condonation of the delay. Thereafter, made efforts for filing application seeking rectification of order which could ultimately be filed only on 29.05.2024. The assessee had also filed a grievance application against the rejection of the application filed under section 154 of the Act. The basis for rejection of the application under section 154 of the Act, vide order dated 07.01.2024, was that the registration granted under section 12A of the Act was effective only from Assessment Year 2022-23 to Assessment Year 2026-27. It is the case of the assessee that once registration u/s 12A of the Act has been granted, the benefit thereof would also be available in respect of the preceding assessment years as well, subject to the provisions of the Act. Therefore, looking to the fact of the present case and the material placed before us, we are of the considered view that there was sufficient cause for delay in filing the appeal. The Ld. CIT(A) ought to have taken a liberal view and condoned the delay and decided the grounds of appeal on merit. Therefore, the order of the Ld. CIT(A) is hereby set aside and the grounds of appeal are restored to the file of the Ld. CIT(A) to decide afresh on merit.

ITA No.237/LKW/2026 Page 5 of 5 The grounds raised in the appeal are partly allowed for statistical purposes. 6. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 31/07/2026.

Sd/- Sd/- [ननखखल चौिरी] [कुल भारत] [NIKHIL CHOUDHARY] [KUL BHARAT] लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष/VICE PRESIDENT DATED: 31/07/2026 Vijay Pal Singh, (Sr. PS) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DR 5. Guard File By Order Sr. Private Secretary //True Copy//

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