Loading judgment…
Facts
The appeal relates to AY 2017-18 concerning the disallowance of provision for gratuity as an application of income. The CIT(A) dismissed the appeal without issuing a notice to the appellant, resulting in a delay in filing the present appeal.
Held
The Tribunal condoned the delay in filing the appeal, finding sufficient cause. The Tribunal held that the CIT(A)'s order was passed in breach of the principles of natural justice as the appellant was not heard. Therefore, the impugned order was set aside.
Key Issues
Whether the CIT(A) order passed without affording an opportunity of hearing to the appellant is sustainable and whether the delay in filing the appeal should be condoned.
Sections Cited
12A, 11(1)(a), 11(2), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCHES “G”, MUMBAI
Before: Justice (Retd.) C V Bhadang, Hon’ble & Ms. Padmavathy S, Hon’ble
Per Justice (Retd.) C V Bhadang, President:
1. This appeal can be disposed of on a short count. The appeal relates to A.Y. 2017-18. The appellant-assessee is a Public Charitable Trust holding registration u/s. 12A of the Income Tax Act, 1961. For the relevant assessment year the learned Assessing Officer made certain disallowances/additions. In particular the issue was relating to disallowance of provision for gratuity as an application of income u/s. 11(1)(a) of the Act.
2. Before the CIT(A) an alternate claim was made for granting accumulation u/s. 11(2) as quantified in the revised Form No.10 by the assessee.
ITA 4444/Mum/2025 Goenka & Associates Educational Trust
3. The CIT(A) has dismissed the appeal by the impugned order dated 27.05.2024. The record indicates that the appeal was dismissed even without issuing a notice to the appellant.
We have heard parties. Perused record.
There is a delay of 343 days in filing the appeal. The appellant has filed an affidavit dated 07.07.2025 of Mr. Mayooranathan Iyer, who is working as Accounts Manager with the appellant. It is contended that earlier, the income tax matters of the appellant were looked after by Late Mr. Ashwani Sharma, who was working with the appellant as an Accounts Manager and his email id was registered on the income tax portal. Mr. Ashwani Sharma passed away in April 2021 after which Mr. Iyer took over as Accounts Manager. Accordingly, the email id of Mr. Iyer was registered on income tax portal. However, the impugned order passed by the learned CIT(A) having been passed prior to April 2021 was sent on the email ID of Late Shri Ashwani Sharma, which went unnoticed resulting into the delay.
We find that the appellant has made out sufficient cause for not filing the appeal within time and the delay deserves to be condoned. The delay is accordingly condoned and the appeal is taken up for hearing on merits.
It is apparent from the impugned order that the appellant was not heard or even noticed. The impugned order passed by the CIT(A) reads as under:
“The appeal is filed against the order of ACIT, Exemption, Circle-1, Mumbai passed u/s 143(3) of the IT Act 1961, dated 15.12.2019.
Ground no.1 objects to denying deduction of Rs.33995248 representing provision for gratuity made in the accounts for the year on accrual basis payable in future as application of income.
ITA 4444/Mum/2025 Goenka & Associates Educational Trust
Provision for gratuity is provision made for future expenses and hence not eligible to apply as application of income for the relevant FY. Provisions for gratuity made by the assessee is not actual utilisation made by the assessee and it is merely suggestive of only future application which does not have validation of the Act. The income cannot be deemed to be applied in ways otherwise than under section 11(1)(2) or 11(2) of the Act. However as the correct amount of provision for gratuity is Rs.33995248 made by the assessee, the AO rightly disallowed the same. The surplus for the year computed at Rs.33995248 is confirmed.
The last ground is general in nature and hence does not require any separate adjudication.
4. The appeal filed by the assesse is dismissed.”
We therefore find that the impugned order having been passed in clear breach of principles of natural justice cannot be sustained. The appeal is accordingly allowed. The impugned order is set aside. The appeal filed by the appellant is restored to the file of the CIT(A) for disposal according to law. Needless to mention that the learned CIT(A) shall grant an opportunity of hearing to the appellant before deciding the appeal.
The appeal is disposed of in the aforesaid terms.
Order pronounced in the open court on 10th September,2025.