FOREVER TRUST,CHENNAI vs. EXEMPTIOM WARD-1, CHENNAI

आयकर अपीलीय अधिकरण ‘सी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI माननीय श्री एबी टी. वर्की, न्याययक सदस्य एवं श्री गगन गोयल लेखा सदस्य के समक्ष BEFORE HONOURABLE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2178/Chny/2026 ननिाारण वर्ा /Assessment Years: 2020-21 Forever Trust, v. Income Tax Officer, No.18, Egmore High Road, Egmore, Exemption Ward-1, Chennai- 600 008. Chennai. [PAN: AAATF2672B] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Mr. J. Vignesh, Advocate, Ld. AR प्रत्यर्थी की ओर से /Revenue by : Mr. Chilaka Marthi Vijay Raju, Addl. CIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 18.06.2026 घोषणाकीतारीख /Date of Pronouncement : 16.07.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (A) / Addl. / JCIT (A)-1, (hereinafter referred as the ‘Ld. CIT(A)’), Chandigarh dated 28.03.2026, for the Assessment Year (hereinafter referred as the ‘AY’) 2020-21.

GROUNDS OF APPEAL 1. The order passed by the learned Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case and is liable to be set aside. 2. The learned CIT (A) erred in dismissing the appeal in limine solely on the ground of delay, without appreciating that the Appellant was prevented by sufficient and bona fide cause from filing the appeal within the prescribed time. 3. The learned CIT (A) failed to appreciate that the delay of 1514 days was neither intentional nor due to negligence, but was caused by genuine and unavoidable circumstances including technical issues on the income tax portal and the demise of the Statutory Auditor.

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ITA No.2178/Chny/2026 (2020-21) Forever Trust. 4. The learned CIT (A) erred in not exercising the discretionary powers under Section 249(3) judiciously and in accordance with settled principles of law which mandate liberal interpretation of "sufficient cause to advance substantial justice. 5. The learned CIT (A) failed to appreciate that refusal to condone delay has resulted in denial of justice without adjudicating the case on merits, which is against the principles of natural justice 6. The learned CIT (A) ought to have appreciated that the Appellant has a strong case on merits and therefore the delay deserved to be condoned in the interest of justice. 7. Without prejudice, the learned CIT (A) erred in not adjudicating the issue relating to denial of exemption under Sections 11 and 12. 8. The learned authorities erred in denying exemption under Sections 11 and 12 on the alleged ground of delay in filing Form 10B, without appreciating that the Audit Report was filed within the extended due date notified by the Government. 9. The action of the processing authority under Section 143(1) in disallowing application of income is arbitrary, unjustified and contrary to law. 10. The learned authorities failed to appreciate that during the relevant assessment year, the Appellant had no taxable income and had incurred excess of expenditure over income, and therefore no tax liability could arise even otherwise. 11. The creation of outstanding demand and its accrued interest is artificial, erroneous and liable to be deleted in toto. 12. The Appellant craves leave to add, amend, alter or withdraw any ground at the time of hearing Prayer In light of the facts stated above and the legal submissions made in the Grounds of Appeal, the Appellant most 1. Condone the delay in filing the appeal before the learned CIT (A) as well as before this Hon'ble Tribunal in the interest of substantial justice, 2. Set aside the impugned order passed by the learned CIT (A), 3. Restore the matter to the file of the learned CIT (A) with a direction to adjudicate the appeal on merits; 4. Adjudicate the issue on merits and grant exemption under Sections 11 and 12 to the Appellant, 5. Delete the entire outstanding demand and its accrued interest raised under Section 143(1); 6. Pass such other order as this Hon'ble Tribunal may deem fit in the interest of justice and equity.

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ITA No.2178/Chny/2026 (2020-21) Forever Trust. 2. The brief facts of the case are that the assessee trust filed its return of income on 11.03.2021 as against the due date of filing of return, i.e. 15.02.2021 u/s. 139 of the Act. The return of the assessee was processed u/s. 143(1) of the Act without considering the information as contained in Form No. 10B as the same was filed belatedly. Consequently, ignoring the application of receipts, gross total receipts of the assessee was considered for the purposes of taxation considering status of a local authority. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A) with a delay of 1514 days. The assessee being further aggrieved preferred the present appeal before us.

“Under section 254, the Tribunal may after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is, thus, expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. There is no reason why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. In the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688, the Court, while dealing with the powers of the AAC observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested

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ITA No.2178/Chny/2026 (2020-21) Forever Trust. with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the AAC in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the ITO. The Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The AAC must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The AAC should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. The Tribunal has, therefore, jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on the tax liability of the assessee.” 4. In view of the above, as the facts are there on records before us, which explicitly confirms that in the case of the assessee, both the receipts as well as application of the same was there on record before the CPC, Bengaluru, only the real income can be taxed while proceedings are being carried out in section 143(1) of the Act. No doubt, benefit of section 11 and 12 of the Act can be denied to the assessee as the return was filed late and no condonation of delay also seek, but the theory of taxability of real income still prevails. If the department wants to withdraw the benefits of section 11 and 12 of the Act, that’s a separate issue to be discussed if required, but taxability has to be fastened only in right status, Body of Individuals (BOI) and on real income, i.e. receipts minus application.

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ITA No.2178/Chny/2026 (2020-21) Forever Trust. 6. In the result, the appeal of the assessee is allowed in above terms and observations. Order pronounced on the 16th day of July, 2026, in Chennai.

Sd/- Sd/- (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 16th July, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.07.27 10:51:24 +05'30'

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