TNSTC MADURAI LIMITED EFG TRUST,MADURAI vs. DCIT, CORPORATE CIRCLE,, MADURAI

Q: Which sections of the Income-tax Act were involved?

Section 143(1), Section 250, Section 10(23AAA)

ITA 2808/CHNY/2026Status: DisposedITAT Chennai04 August 2026AY 2019-204 pages

AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal before the CIT(A), finding the reasons to be bonafide and constituting a sufficient cause. The Tribunal remitted the appeal back to the CIT(A) for fresh consideration on merits, emphasizing substantial justice over technicalities.

What were the facts?

The assessee, a trust registered under Section 10(23AAA), filed a return declaring Nil income. The processing under Section 143(1) recomputed the income at Rs. 1,00,31,217/-. The assessee appealed to the CIT(A) but faced a significant delay of 1929 days, which the CIT(A) dismissed in limine.

What were the issues?

Whether the delay in filing the appeal before the CIT(A) was sufficiently explained to warrant condonation, and whether the appeal should be adjudicated on merits.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 250,Section 10(23AAA)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE K & MS. PADMAVATHY.S

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A), Aurangabad (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 31.03.2026 for Assessment Year (AY) 2019-20.

The assessee is a trust constituted by the employees of the Tamil Nadu State Transport Corporation (TNSTC), Madurai Division. One of the objectives of the assessee-trust is to receive money, open bank accounts, deposit money, invest such sums in approved securities and withdraw from

ITA No.2808/Chny/2026 TNSTC Madurai Ltd. EFG Trust :- 2 -: such deposits for the purpose of paying gratuity to the employees of TNSTC, Madurai Division. The assessee is registered in terms of Section 10(23AAA) of the Act with the office of Commissioner of Income-tax vide order dated 12.08.2005 bearing Registration No.476. The assessee filed a return of income for AY 2019-20 on 29.08.2019 declaring Nil income. The return was processed u/s. 143(1) where the income of the assessee is recomputed at Rs.1,00,31,217/- as against the nil income declared by the assessee. Aggrieved, the assessee filed further appeal before the CIT(A). There was a delay of 1929 days in filing the appeal before the CIT(A). The CIT(A) did not accept the submissions made by the assessee stating that the reasons for delay is not intentional and beyond control of the assessee. Accordingly, the CIT(A) dismissed the appeal in limine. The assessee is in appeal before the Tribunal against the order of the CIT(A).

The ld AR submitted that assessee is formed for managing the gratuity benefits to be provided to the employees of TNSTC and is not managed by professionals. The ld AR further submitted that the delay is due to the mishandling of the professional for which the assessee could not loose the benefit which is legally available to the assessee. The ld AR also stated that in the case of similar Trust formed for the PF benefits of employees of TNSTC, the JCIT(A) has condoned the delay and has allowed the appeal. Accordingly it was argued that even on the principle of consistency the CIT(A) ought to have condoned the delay.

We heard the parties and perused the material on record. The Hon’ble Supreme Court, in the case of Mst. Katiji (supra), has explained the principles that need to be kept in mind while considering an application for condonation

ITA No.2808/Chny/2026 TNSTC Madurai Ltd. EFG Trust :- 3 -: of delay. The Hon’ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day’s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. In the case of Shakuntala Hegde, L/R of R.K. Hegde v. ACIT, ITA No.2785/Bang/2004 for the A.Y. 1993-94, the Tribunal condoned the delay of about 1331 days in filing the appeal wherein the plea of delay in filing appeal due to advice given by a new counsel was accepted as sufficient. The Hon’ble Karnataka High Court in the case of CIT v. ISRO Satellite Centre, ITA No. 532/2008 dated 28.10.2011 has condoned the delay of five years in filing appeal before them which was explained due to delay in getting legal advice from its legal advisors and getting approval from Department of Science and PMO. In the aforesaid decision, the Hon’ble Court found that the very liability of the assessee was non-existent and therefore condoned the delay in filing appeal. It is stated that in condoning the delay in filing the appeals, the expression ‘sufficient cause’ should receive liberal construction and advancement of substantial justice is of prime importance. It is further stated that the discretion of condoning the delay has to be exercised on the facts of each case.

Keeping in mind the aforesaid principles, we find that the explanation of the assessee for delay in filing the appeals put forth before the CIT(Appeals) are bonafide and genuine reasons which constitute ‘sufficient cause’ for the delay. The number of days of delay cannot be looked in isolation and the reasons or explanation of the assessee for the delay have to be considered in the light of the test of bonafide reasons constituting sufficient cause for the delay in a pragmatic manner. In our opinion, the CIT(Appeals)

ITA No.2808/Chny/2026 TNSTC Madurai Ltd. EFG Trust :- 4 -: ought to have condoned the delay in the instant case and adjudicated the appeals on merits. Further the assessee is registered in terms of Section 10(23AAA) of the Act and according to the ld AR, the addition is made due to the error in the details furnished in the return of income. Therefore applying the aforesaid legal principles we condone the delay in filing the appeal before the CIT(Appeals). Since the contention of the assessee that the addition is made due to error in the disclosure made in the return, we are of the considered view that the said contention needs to factually be examined. According we remit the appeal back to the CIT(A) for consideration afresh the contentions of the assessee and the claim that the income of the assessee is exempt u/s.10(23AAA) of the Act. Needless to say that the assessee be given a reasonable opportunity of being heard. It is ordered accordingly.

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

Order pronounced on 04th day of August, 2026 at Chennai.

Sd/ Sd/ (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा सद�य सद�य /Accountant Member लेखा लेखा लेखा सद�य सद�य चे�नई/Chennai, �दनांक/Dated: 04th August, 2026. EDN, Sr. P.S EJTADA Digitally signed by आदेश क� �ितिल�प अ�े�षत/Copy to: EJTADA DURGA NARESH DURGA Date: 2026.08.07 1. अपीलाथ�/Appellant NARESH 18:02:20 +05'30' 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

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