What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in dismissing the appeal solely on delay without condoning it. It emphasized a liberal approach to condonation when substantial justice is at stake and the assessee provides a plausible explanation for the delay.

The assessee, a charitable trust engaged in educational activities, filed a return claiming exemption under Section 10(23C)(iiiad). The CPC issued an intimation under Section 143(1) raising a demand, but the assessee appealed this with a significant delay. The delay was attributed to the Managing Trustee's health issues and a claim that the intimation was not properly served.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) should be condoned, and whether the CIT(A) was justified in dismissing the appeal without adjudicating on merits.

Selvaraj Charitable Trust, Madurai vs ITO | ITAT Chennai 2026

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 16.06.2026Pronounced: 08.07.2026

आयकर अपीलीय अधिकरण, ‘डी’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI श्री जॉजज जॉजज के, उपाध्यक्ष एवं श्री एस.आर.रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 2099/Chny/2025 ननिाारण वर्ा / Assessment Year: 2015-16 Selvaraj Charitable Trust The Income Tax Officer 15B, Thirumangalam Main Road vs. Exemption Ward Thirunagar Madurai. Madurai – 625 006. [PAN: AAJTS7132G] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/Appellant by : Shri. C.V.Shankar, CA प्रत्यर्थी की ओर से/Respondent by : Shri. Manjunath H.S., Addl.CIT सुनवाई की तारीख/Date of Hearing : 16.06.2026 घोर्णा की तारीख/Date of Pronouncement : 08.07.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : The present appeal has been preferred by the Assessee against the order dated 11.06.2025 passed by the Learned Commissioner of Income Tax (Appeals) - 7, Delhi [hereinafter referred to as “the Ld.CIT(A)”], arising from the intimation order dated 25.03.2017 passed by the Central Processing Centre, Bengaluru [hereinafter referred to as “the AO”], u/s.143(1) of the Income Tax

:-2-:

Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Year (A.Y.) 2015-16. 2. The brief facts of the case as emanating from the records are that the assessee is a Trust, registered vide deed of declaration of Trust on 20.07.2010. The Trust was not registered u/s.12AA or 12AB of the Act, but engaged in the educational activities duly recognized by the Tamil Nadu State Government from the academic year 2013-14. During the assessment year 2015-16, the assessee filed the return of income along with audit report in Form 10B by showing gross receipt of Rs.26.69 lakhs and claimed deduction u/s. 10(23C)(iiiad) of the Act. The intimation u/s.143(1) dated 25.03.2017 was issued by raising a demand of Rs.8,85,700/- by taxing the entire gross receipt as income. However, the assessee filed an appeal before the ld.CIT(A) against the intimation u/s.143(1) of the Act with a delay of 2,336 days. The Managing Trustee of the assessee filed a petition for delay in filing the appeal, stating that he was the person in-charge of all the activities of the Trust and had a heart problem with an Atrial Fibrillation (blook pumping issue) and under the treatment at B.M.Hospital & Multi speciality, Madurai. On perusal of the submissions made by the assessee, the ld.CIT(A) dismissed the appeal of the assessee in limine without condoning the delay by passing an order dated 11.06.2025. 3. Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us. The ld.AR for the assessee submitted that the intimation u/s.143(1) of the Act was never served on the assessee. The assessee became aware of the intimation passed dated 25.03.2017 only on initiation of recovery proceedings of the demand raised. Therefore, the delay in filing the appeal before the ld.CIT(A) was not intentional. Hence, he prayed for providing one more opportunity to the assessee to present the case before the ld.CIT(A) by condoning the delay in filing the appeal before the first appellate authority. Further, the ld.AR relied on the decision of the Chennai Tribunal in the case of :-3-:

Cheshir Homes Inddia KATP v. CIT (Exemptions) (2026) 187 taxmann.com 426 (Chennai Tribunal) and submitted that the assessee is not aware of the intimation uploaded in the e-portal of the Revenue without serving the same to the assessee either through email or by physical post. 4. Further, the ld.AR argued that on merits also the assessee is not liable for tax on the income, as the gross collection of the Educational activity of the assessee has not crossed the limit fixed u/s.10(23C)(iiiad) of the Act. Hence, the ld.AR prayed for setting aside the order of the ld.CIT(A) by condoning the delay in filing the appeal before the ld.CIT(A). 4. Per contra, the ld.DR submitted that the exorbitant delay of 2,336 days cannot be condoned due to the negligence of the assessee, and hence, the order of the ld.CIT(A) needs to be upheld. 5. We have heard the rival submissions, perused the material available on record and carefully gone through the orders of the authorities below as well as the judicial precedents relied upon by the parties. 6. The solitary issue that arises for our consideration is whether the ld.CIT(A) was justified in dismissing the appeal in limine on the ground of delay of 2,336 days without condoning the delay and without adjudicating the issues raised by the assessee on merits. 7. The undisputed facts borne out from the records reveal that the assessee is a Trust constituted by a deed of declaration dated 20.07.2010 and is engaged in imparting education through an institution duly recognized by the Government of Tamil Nadu from the academic year 2013-14. For the assessment year under consideration, the assessee filed its return of income along with the audit report in Form No.10B claiming exemption u/s.10(23C)(iiiad) of the Act, since the gross annual receipts from the educational institution were admittedly below the statutory threshold prescribed under the said provision.

:-4-:

The CPC issued an intimation u/s.143(1) of the Act on 25.03.2017, whereby the entire gross receipts of the Trust were subjected to tax, resulting in a demand of Rs.8,85,700/-. The assessee preferred an appeal before the ld.CIT(A) along with a petition seeking condonation of delay explaining that the Managing Trustee, who was solely looking after the affairs of the Trust, had been suffering from serious cardiac ailments, namely Atrial Fibrillation, and was undergoing continuous medical treatment. It was also specifically contended that the intimation u/s. 143(1) was never served upon the assessee and that the existence of the demand came to its knowledge only upon initiation of recovery proceedings. 9. The ld.CIT(A), however, rejected the condonation petition and dismissed the appeal solely on the ground of delay without examining either the explanation furnished by the assessee or the merits of the claim. In our considered opinion, the approach adopted by the ld.CIT(A) cannot be sustained. 10. It is a settled proposition of law that while considering an application for condonation of delay, the appellate authority is required to adopt a liberal and justice-oriented approach, particularly where refusal to condone the delay would result in denial of the statutory right of appeal. The object of the law of limitation is not to destroy substantive rights but to ensure that legal remedies are pursued within a reasonable period. At the same time, where an assessee demonstrates sufficient cause explaining the delay and there is no material to establish deliberate negligence or mala fide conduct, the cause of substantial justice deserves to prevail over technical considerations. 11. In the present case, the explanation furnished by the assessee cannot be said to be either fanciful or inherently improbable. The Managing Trustee has placed on record that he was suffering from a serious cardiac ailment requiring prolonged medical treatment. More importantly, the assessee has consistently maintained that the intimation u/s.143(1) was never served upon it and that the :-5-:

demand came to its knowledge only upon commencement of recovery proceedings. Except for relying upon the period of delay, the Revenue has not brought any material on record to establish that the intimation was in fact duly served upon the assessee in accordance with law or that the assessee had knowledge of the order much earlier. 12. We also find considerable force in the submission of the ld.AR that mere uploading of an intimation on the income-tax portal, in the absence of proper communication to the assessee through the prescribed modes, cannot automatically lead to the inference that the assessee had effective knowledge of the order. The Chennai Bench of the Tribunal in the case of Cheshir Homes India KATP v. CIT (Exemptions) (2026) 187 taxmann.com 426 has observed that where an assessee establishes that the order uploaded on the e-portal was not effectively communicated and the appeal was filed immediately upon acquiring knowledge of the order, a liberal approach in condoning the delay is warranted to advance substantial justice. The ratio laid down therein squarely supports the case of the present assessee. 13. Another significant aspect which cannot be lost sight of is that the assessee has raised a substantial claim u/s.10(23C)(iiiad) of the Act. According to the assessee, the educational institution was duly recognized by the State Government and its annual gross receipts during the relevant previous year were admittedly within the monetary limit prescribed under the said provision. If the claim is ultimately found to be correct, the entire demand raised through processing u/s.143(1) may not survive. Thus, the issues involved are substantial in nature and cannot be shut out merely on technical grounds without affording the assessee an effective opportunity of hearing. 14. The Hon'ble Supreme Court has consistently held that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. The right of appeal being a valuable statutory right, it ought not to be defeated on hyper-technical considerations,

:-6-:

particularly when the explanation offered by the assessee is plausible and there is no element of deliberate inaction or lack of bona fides. 15. Having regard to the totality of the facts and circumstances of the case, we are satisfied that the assessee has shown sufficient cause for the delay in filing the appeal before the ld.CIT(A). In our considered view, the ld.CIT(A) ought to have exercised the discretion vested in him judiciously by condoning the delay and adjudicating the appeal on merits instead of dismissing the same in limine. 16. Accordingly, in the interest of substantial justice, we condone the delay of 2,336 days in filing the appeal before the ld.CIT(A), set aside the impugned order passed by the ld.CIT(A) and restore the matter to his file with a direction to admit the appeal and dispose of the same afresh on merits, in accordance with law, after affording adequate opportunity of being heard to the assessee. We make it clear that we have not expressed any opinion on the merits of the claim u/s.10(23C)(iiiad) of the Act, which shall be examined independently by the ld.CIT(A). 17. Accordingly, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the court on 08th July, 2026 at Chennai. (जॉजा जॉजा के) (एस. आर. रघुनार्था) (GEORGE GEORGE K) (S.R.RAGHUNATHA) उपाध्यक्ष /VICE PRESIDENT लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनांक/Dated, the 08th July, 2026. Devadas

:-7-:

आदेश की प्रनतललपप अग्रेपर्त/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. पवभागीय प्रनतननधि/DR 5. गाडा फाईल/GF DEVADAS Digitally signed by DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.07.09 17:25:03 +05'30'

SELVARAJ CHARITABLE TRUST,MADURAI vs. ITO, EXEMPTIONS WARD,, MADURAI

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Latest GST High Court judgments