GANGA EDUCATIONAL SOCIETY,NIZAMBAD vs. ITO, EXEMPTIONS WARD-1(1), HYDERABAD

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ITA 774/HYD/2026Status: DisposedITAT Hyderabad25 August 2026AY 2023-2414 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals before the CIT(A) as the assessee was pursuing alternative remedies. Since the CIT(A) had dismissed the appeals on limitation without adjudicating on merits, the matter was remanded back to the Assessing Officer.

What were the facts?

The assessee, a charitable institution, filed its return claiming exemption under Sections 11 and 12. The CPC processed the return under Section 143(1) and made an adjustment denying exemption under Section 10(23C). The assessee filed rectification applications which were dismissed, and subsequently filed appeals before the CIT(A).

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was caused by a sufficient cause, and whether the CIT(A) erred in dismissing the appeal in limine without deciding the substantive grounds on merits.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154,Section 249(3),Section 10(23C),Section 12A,Section 11,Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO

Pronounced: 25.08.2026

आयकर अपीलीय अिधकरण, हैदराबाद पीठ�, हैदराबाद INCOME TAX APPELLATE TRIBUNAL, HYDERABAD SMC-BENCH, HYDERABAD BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT ITA 773 & 774/HYD/2026 िनधा�रण वष�/Assessment Year 2023-2024 GANGA EDUCATIONAL SOCIETY ITO,, EXEMPTIONS WARD-1(1) KATRAPATI & ASSOCIATES, AAYAKAR BHAVAN, 1-1-298/2/B/3, OPP. L B STADIUM, SOWBHAGYA AVENUE BASHEERBAGH Vs. APTS, 1ST FLOOR HYDERABAD-500004, ASHOK NAGAR, STREET TELANGANA NO.1, HYDERABAD- 500020, TELANGANA अपीलाथ� Appellant ��थ� Respondent Permanent Account Number AAAAG5898B of Assessee: अपीलाथ� �ारा/Appellant represented by: CA K A Sai Prasad ��थ� �ारा/Respondent represented by: SR-AR B Laxmi Kanth सुनवाई की तारीख / Date of conclusion of hearing: 30.07.2026 घोषणा की तारीख / Date of pronouncement: 25.08.2026

2 ITA.Nos.773 & 774/Hyd./2026 आदेश / ORDER These two appeals by the Assessee are directed against two separate Orders of the Addl./JCIT(A), Panchakula, arising from Order passed u/sec.143(1) and u/sec.154 of the Income Tax Act [in short "the Act"], 1961, respectively, for the assessment year 2023-2024.

2.

There is a delay of 09 days in filing these appeals before the Tribunal. The assessee has filed petition for condonation of delay which is supported by the affidavit of the Authorised Representative/Chartered Accountant of the Assessee. The learned Authorised Representative of the Assessee has submitted that due to the trustee of the assessee was not having Digital Signature Certificate [in short “DSC"] required for signing and filing the appeal paper, his office was required to arrange the same. He has further pointed out that at the same time his wife had certain medical issues and was hospitalized in Hyderabad for a couple of days during the month of February 2026 and therefore, he could not attend to the matter. Thus, he was able to take the DSC along with challan only on 09.03.2026 and consequently, the

3 ITA.Nos.773 & 774/Hyd./2026 appeal was filed with delay of 09 days. Thus, the learned Authorised Representative of the Assessee has submitted that due to his personal difficulty he could not attend to the matter and filed the same in time. Hence, he has pleaded that the delay of 09 days in filing these appeals may be condoned.

3.

The learned DR has raised no objection to the condonation of delay of 09 days in filing the appeals.

4.

I have considered the rival submissions and carefully perused the reasons explained the learned Authorised Representative of the Assessee who has also filed medical record of his wife as undergoing the treatment in the hospital. By considering the reasons explained by the learned Authorised Representative of the Assessee, the delay of 09 days in filing these two appeals is condoned.

5.

In ITA.No.773/Hyd./2026 the assessee has raised the following grounds of appeal:

1.

“The order of the Hon'ble Addl/JCIT(A), Panchula U/s 250 of the Income Tax Act 1961 is erroneous, and contrary to the law and facts of the case.

4 ITA.Nos.773 & 774/Hyd./2026 2. The Ld. Addl./JCIT(A) erred in dismissing the appeal in limine by refusing to condone the delay of 284 days under section 249(3), despite the appellant having demonstrated sufficient and bona fide cause, thereby adopting an unduly technical and hyper-strict approach contrary to settled judicial principles. 3. The Ld. Addl./JCIT(A) failed to appreciate that the delay occurred on account of the appellant bona fide belief in pursuing the statutory remedy of rectification under section 154 against an erroneous CPC intimation u/s 143(1), and such bona fide pursuit of an alternate remedy constitutes "sufficient cause" for condonation of delay. 4. The Ld. Addl./JCIT(A) failed to consider that the adjustment under section 143(1), giving rise to the demand of Rs. 2,50,600/-, was prima facie illegal, having arisen from an erroneous system-driven classification of the return under section 10(23C)/13(10) instead of section 12A, despite the appellant holding valid registration under section 12AB. 5. The Ld. Addl./JCIT(A) erred in law in dismissing the appeal without adjudicating the substantive grounds on merits, thereby failing to exercise the appellate jurisdiction vested in him and causing grave miscarriage of justice. 6. The appellant craves leave to add, amend, modify, rescind, supplement or alter any or more grounds of appeal stated herein above either before or at the time of hearing of this appeal.”

5 ITA.Nos.773 & 774/Hyd./2026 6. The assessee is a charitable institution and registered u/sec.12A of the Act vide order dated 14.11.2022 for the assessment years 2023-2024 to 2025-2026. The assessee filed its return of income for the year under consideration on 29.11.2023 which was processed u/sec.143(1) of the Act by the CPC vide Order dated 29.10.2024. The CPC made adjustment by denying the claim of exemption u/sec.10(23C) of the Act. The assessee filed rectification applications u/sec.154 of the Act on 02.01.2025 with CPC as well as ITO on 07.01.2025 but the applications were dismissed by the CPC vide order dated 30.01.2025 and by ITO on 15.07.2025, respectively. Thereafter, the assessee filed appeals before the learned CIT(A) against the order passed u/sec.154 as well as against CPC Order u/sec.143(1) of the Act dated 29.10.2024 on 13.09.2025 and 08.09.2025 respectively. The learned CIT(A) dismissed the appeals filed by the assessee against the application filed u/sec.154 on the ground that no separate appeal lies when assessee has filed appeal against the order u/sec.143(1) of the Act. However, the appeal filed by the assessee against the CPC order passed

6 ITA.Nos.773 & 774/Hyd./2026 u/sec.143(1) of the Act was also dismissed by the learned CIT(A) in limine being barred by limitation.

7.

Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the assessee has explained cause of delay that the assessee was pursuing the alternative remedy by filing petition u/sec.154 of the act before the CPC as well as before the ITO, Exemption and only after the dismissal of the petition u/sec.154 by the ITO, Exemption, the assessee filed an appeal before the learned CIT(A) with a petition for condonation of delay. Thus, the learned Authorised Representative of the Assessee has submitted that the delay in filing the appeal was only due to the time consumed in pursuing the remedy u/sec.154 of the Act. The learned Authorised Representative of the Assessee has further submitted that the assessee is registered u/sec.12A of the Act and also claimed exemption u/secs.11 and 12 of the Act in the return of income and has not claimed any exemption u/sec.10(23C) of the Act whereas the CPC made the adjustment on the ground that the claim of exemption u/sec.10(23C) is not allowable. Thus, the learned

7 ITA.Nos.773 & 774/Hyd./2026 Authorised Representative of the Assessee has submitted that the assessee has filed petition u/sec.154 for rectification of the said mistake in the order passed u/sec.143(1) by the CPC by taking an abundant precaution the assessee has also filed application u/sec.154 of the Act before the ITO, Exemption. Only after dismissal of the petition by the ITO, Exemption on 15.07.2025, the assessee filed an appeal before the learned CIT(A) on 08.09.2025. Thus, the learned Authorised Representative of the Assessee has submitted that the delay in filing the appeal before the learned CIT(A) ought to have been condoned, and the appeal of the assessee should have been decided on merits instead of dismissing the same on technical ground of limitation. He has thus prayed that the delay of 284 days in filing the appeal before the learned CIT(A) may be condoned in the interest of justice.

8.

On the other hand, the learned DR has objected to the condonation of delay before the learned CIT(A) and submitted that the assessee has filed two appeals before the learned CIT(A) as well as before the Tribunal whereas no appeal lies against the Order passed u/sec.154 when

8 ITA.Nos.773 & 774/Hyd./2026 assessee has challenged the order u/sec.143(1) of the Act. He has relied upon the Orders of the authorities below.

9.

I have considered the rival submissions as well as relevant material on record. As it is apparent from the facts and record that the assessee in the return of income claimed exemption u/secs.11 and 12 of the Act as the assessee was granted registration u/sec.12A of the Act. However, the CPC while processing the return of income and passing an order u/sec.143(1) on 29.10.2024 has made an adjustment by giving the reasons as under:

9.1. Thus, the CPC has stated in the order that as per the return of income filed, 22nd proviso to sec.10(23C) or sec.13(10) are applicable in the case. The assessee is required

9 ITA.Nos.773 & 774/Hyd./2026 to fill Part-B3 of Schedule Part-BTI. Since the assessee has not filled Part-B3, the total contribution of Schedule-VC and Serial no.10 of Schedule-AI has been taken to arrive at the total income of the previous year. Thus, the CPC has declined the benefit of exemption and made the adjustment on the ground that the assessee has not complied with the provisions of sec.10(23C) and particularly, the 22nd proviso to sec.10(23C) of the Act. The assessee has filed petition u/sec.154 pointing out that the assessee has not claimed any exemption u/sec.10(23C) and therefore, making the adjustment on this ground is an error in the order which requires rectification. The CPC rejected the said petition of the assessee. In the meantime, the assessee by taking an abundant precaution also filed a petition u/sec.154 before the ITO-(Exemption), Ward-1(1), Hyderabad on 07.01.2025 which was also rejected by the ITO on 15.07.2025 on the ground that the audit report has been filed belatedly. Thus, it is clear that the ITO has added one more reason to the controversy while passing the order u/sec.154 of the Act. Thereafter, the assessee filed appeals before the learned

10 ITA.Nos.773 & 774/Hyd./2026 CIT(A) against the order passed u/sec.143(1) as well as the order passed u/sec.154 of the Act. The assessee has also filed petition for condonation of delay in respect of the appeals filed against the order passed u/sec.143(1) giving reasons that the assessee was pursuing alternative remedy u/sec.154 of the Act and only after rejection of the said petitions, the assessee filed the appeals. The learned CIT(A) has not accepted the said explanation and cause of delay in filing the appeals and dismissed the same in limine being barred by limitation. Thus, it is clear that the learned CIT(A) has failed to consider the undisputed facts that the assessee was pursuing the alternative remedy u/sec.154 of the Act by filing petition before the CPC as well as before the ITO (Exemption), Ward- 1(1), Hyderabad and only after rejection of the petitions by both the authorities, the assessee has filed the appeals before the learned CIT(A). Considering the facts and circumstances of the case, when the delay is caused due to pursuing the alternative remedy then, the reasons explained by the assessee are considered to be ‘sufficient cause’ for the delay

11 ITA.Nos.773 & 774/Hyd./2026 in filing the appeals. Hence, the delay in filing the appeals before the learned CIT(A) is condoned.

9.2. Since the learned CIT(A) has not decided the appeals on merits therefore, the impugned order of the learned CIT(A) is set aside and the matter is remanded to the record of the Assessing Officer for considering the claim of the assessee u/secs.11 and 12 of the Act after verification and examination of the relevant record as well as giving an opportunity of being heard to the assessee.

10.

In the appeal ITA.No.774/Hyd./2026 arising from the order passed u/sec.154 of the Act, the assessee has raised the following grounds of appeal:

1.

“The order of the Hon'ble Addl/JCIT(A), Panchula U/s 250 of the Income Tax Act 1961 is erroneous, and contrary to the law and facts of the case. 2. The learned Addl./JCIT(A) erred in law and on facts in upholding the rejection of rectification under section 154, without appreciating that the rectification sought pertained to a patent and self-evident mistake apparent from record, namely, processing of the return under an incorrect statutory provision, resulting in denial of lawful exemption.

12 ITA.Nos.773 & 774/Hyd./2026 3. The learned Addl./JCIT(A)failed to appreciate that treating the Appellant as governed by Sections 10(23C)/13(10) instead of Section 12A, despite valid and subsisting registration under Section 12AB and correct selection in the return of income, constitutes a manifest mistake apparent from record, squarely rectifiable under section 154.

4.

The learned Addl./JCIT(A)erred in holding that rectification under section 154 is impermissible merely because there was no change in the assessed income, ignoring that wrong denial of exemption and consequential tax computation itself constitutes a rectifiable mistake, irrespective of arithmetical variation.

5.

The learned Addl./JCIT(A)erred in relying on decisions rendered in materially distinguishable facts, where no apparent mistake existed on record, and failed to appreciate that the present case involves a system-driven misclassification contrary to documents already on record, rendering such reliance wholly misplaced.

6.

The learned Addl./JCIT(A)erred in law in observing that the Appellant ought to have contested the intimation under section 143(1) alone, and in holding that rectification under section 154 is not maintainable, ignoring the settled position that sections 143(1) and 154 operate in distinct and independent spheres.

7.

a) The learned Addl./JCIT(A) failed to consider settled judicial principles that belated filing of Form 10BB, when the audit

13 ITA.Nos.773 & 774/Hyd./2026 report is available on record prior to processing, is a procedural lapse and cannot be a ground for denial of exemption under sections 11 and 12.

b) The learned Addl./JCIT(A) failed to appreciate that the rectification order under section 154 was passed without issuing any show-cause notice or affording an opportunity of being heard, resulting in prejudice to the Appellant, and is therefore vitiated for violation of the principles of natural justice. 8. The appellant craves leave to add, amend, modify, rescind, supplement or alter any or more grounds of appeal stated herein above either before or at the time of hearing of this appeal.”

11.

The grievance of the assessee in both the appeals is same as claim of exemption u/secs.11 and 12 of the Act. Therefore, in view of the finding/observation in the appeal arising from order passed u/sec.143(1) the Order passed by the Assessing Officer u/sec.154 of the Act would not survive and the same is set aside. Hence, the matter is also remanded to the record of the Assessing Officer for deciding the same afresh for allowing the claim of the assessee u/secs.11 and 12 of the Act. Therefore, no separate directions are required in the appeal arising from order passed u/sec.154 of the Act.

14 ITA.Nos.773 & 774/Hyd./2026 12. In the result, ITA.No.773/Hyd./2026 of the assessee is allowed and ITA.No.774/Hyd./2026 of the Assessee become infructuous. A copy of this common order be placed in the respective case files

Order pronounced in the open court on 25.08.2026.

Sd/- VIJAY PAL RAO VICE PRESIDENT Hyderabad, Dated 25th day of August, 2026 VBP Copy to: GANGA EDUCATIONAL SOCIETY, KATRAPATI & ASSOCIATES, 1-1-298/2/B/3, SOWBHAGYA 1 AVENUE APTS, 1ST FLOOR ASHOK NAGAR, STREET NO.1, HYDERABAD-500020, TELANGANA INCOME TAX OFFICER-(EXEMPTIONS), WARD-1(1), AAYAKAR 2 BHAVAN, OPP. L B STADIUM, BASHEERBAGH, HYDERABAD- 500004, TELANGANA 3 THE PR. CIT, HYDERABAD. 4 THE D.R., ITAT, HYDERABAD SMC-BENCH, HYDERABAD. 5 GUARD FILE TRUE COPY Digitally signed VADREVU by VADREVU PRASADA RAO PRASADA Date: ASSISTANT REGISTRAR / RAO I.T.A.T., HYDERABAD 2026.08.25 12:32:50 +05'30'

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