GRASIM INDUSTRIES LIMITED EMPLOYEES PROVIDENT FUND,MAHARASHTRA vs. INCOME TAX OFFICER - 20(1)(1), MAHARASHTRA

Facts

The appellant, Grasim Industries Limited Employees Provident Fund, is challenging an order by the CIT(A) which dismissed its appeal against an Assessing Officer's (AO) demand of Rs. 13,84,670 for Assessment Year 2013-14. The appellant, an approved Provident Fund, claims its entire income is exempt under Section 10(25)(ii) of the Income Tax Act, 1961. The AO issued an intimation under Section 143(1) on 09.03.2015, refusing the exemption claim. The appellant claims this intimation was never served and it only became aware of the demand when downloading a computation sheet from the Income Tax portal. After attempts to obtain the intimation failed, the appellant filed an appeal with the CIT(A) on 06.07.2023, which was dismissed for being time-barred due to an alleged delay of over 3000 days.

Held

The Tribunal held that the appeal filed before the CIT(A) was not barred by limitation. The Tribunal noted that while the ITD system reflected the processing date of the return as 09.03.2015 and the service date as 19.03.2015, there was no documentary evidence or acknowledgement produced by the Revenue to prove the actual service of the Section 143(1) intimation on the appellant. Citing the Bombay High Court's decision in Paresh M. Shetti vs. Principal Commissioner of Income-tax, the Tribunal emphasized that service of an adverse order or demand is a prerequisite for the commencement of the limitation period. In the absence of proof of service, the Tribunal concluded that the limitation period could not be said to have commenced, or at least, any delay was liable to be condoned. The Tribunal did not delve into the merits of the exemption claim under Section 10(25)(ii). The impugned order of the CIT(A) was set aside, and the appeal was restored to the CIT(A) for disposal on merits after granting an opportunity of hearing to the appellant. Delay, if any, was condoned.

Key Issues

1. Whether the appeal filed before the CIT(A) was barred by limitation, considering the appellant's claim that the Section 143(1) intimation was never served. Assessee's Contention: The appellant argued that the limitation period for filing an appeal under Section 249(2)(c) of the Income Tax Act, 1961, cannot commence without the actual service of the intimation. They relied on the Bombay High Court decision in Paresh M. Shetti vs. Principal Commissioner of Income-tax, [2026] 187 taxmann.com 166 (Bombay), which held that a demand cannot legally subsist without proof of service of the Section 143(1) intimation. Revenue's Contention: The Revenue supported the CIT(A)'s order, submitting that there was an inordinate delay in filing the appeal, which was rightly not condoned. The Revenue's argument was based on the CIT(A)'s finding of a delay exceeding 3000 days and reliance on Supreme Court decisions like Chennai Metropolitan Water Supply and Sewerage Board vs T.T. Murali Babu.