N M WADIA CHARITIES,MUMBAI vs. INCOME TAX OFFICER - EXEMPTION WARD 2(1), MUMBAI

This appeal filed by the assessee is directed against the order dated 23.01.2026 passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“CIT(A)”], under section 250 of the Income-tax Act, 1961 (“the Act”), arising from the assessment order dated 26.12.2016 passed by the Assessing Officer under section 143(3) of the Act for the assessment year 2014-15.

The assessee has raised grounds challenging the ex parte order passed by the learned CIT(A) without considering the submissions and supporting evidence stated to have been furnished by the assessee. The assessee has also challenged, on merits, the addition of long-term capital gain of Rs.5,23,95,090 made by invoking section 50C of the Act and the denial of exemption under section 11(1A) of the Act.

Briefly stated, the assessee is a charitable trust registered under section 12A of the Act. It filed its return of income declaring Nil income. During the year under consideration, the assessee transferred leasehold rights in a property for a consideration of Rs.5,00,00,001. The Assessing Officer adopted the stamp duty valuation of Rs.6,21,73,500 under section 50C of the Act and computed the long-term capital gain at Rs.5,23,95,090. The claim of exemption under section 11(1A) was also rejected. The assessment was accordingly completed at a total income of Rs.4,39,38,450.

Aggrieved, the assessee preferred an appeal before the learned CIT(A) on 24.01.2017. The learned CIT(A) observed that notices dated 18.03.2020, 01.02.2021 and 23.06.2025 were issued to the assessee, but no response was received. He, therefore, proceeded ex parte and confirmed the assessment order.

The learned Authorised Representative submitted that the first two notices were issued during the Covid-19 pandemic and the next notice was issued only on 23.06.2025, after a gap of more than four years. It was submitted that the learned CIT(A) did not grant an effective and reasonable opportunity to the assessee and confirmed the addition without examining the grounds, submissions and supporting evidence on merits. He, therefore, prayed that the appeal be restored to the learned CIT(A) for fresh consideration. 2

The learned Departmental Representative relied upon the orders of the authorities below. However, he had no serious objection to the matter being restored to the learned CIT(A) for adjudication on merits.

We have heard the rival submissions and perused the material available on record. The appeal before the learned CIT(A) was pending from January 2017. The first two notices were issued on 18.03.2020 and 01.02.2021, during the period affected by the Covid-19 pandemic. Thereafter, no notice appears to have been issued for more than four years, and the next notice was issued only on 23.06.2025. In these circumstances, we are of the considered view that the assessee did not receive an effective and reasonable opportunity to present its case.

We further find that the learned CIT(A) confirmed the assessment substantially on account of the absence of compliance by the assessee. The substantive issues relating to the applicability of section 50C to the transfer of leasehold rights and the assessee’s claim of exemption under section 11(1A) of the Act have not been examined in detail. The learned CIT(A), being the first appellate authority, is required to dispose of the appeal on merits by a speaking order in accordance with section 250(6) of the Act.

Considering the facts and in the interest of substantial justice, we set aside the impugned order and restore the entire appeal to the file of the learned CIT(A) for fresh adjudication on merits, after considering the submissions and evidence furnished by the assessee and after granting a reasonable opportunity of being heard. The assessee is directed to cooperate in the appellate proceedings and comply with the notices issued by the learned CIT(A), without seeking unnecessary adjournments.

We have not expressed any opinion on the merits of the grounds raised by the assessee. All the grounds are left open for adjudication by the learned CIT(A).

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