TCPL FOUNDATION,MUMBAI vs. EXEM. WARD 2(4), MUMBAI , MUMBAI

Both the appeals pertain to the same assessee and arising out from a common issue related to delay in filing Form 10B as a result the rejection of deduction u/s. 11 of the Act during processing of return u/s. 143(1) of the Act. For the sake of convenience, both the appeals are taken together, heard together and disposed of by a common order. ITA 6890/Mum/2026 is taken as the lead case and the decisions rendered therein shall be applied mutatis mutandis to the other appeals.

The Ld. AR argued and filed a paper book comprising pages 1 to 28, which has been placed on record. The Ld. AR contended that in relation to assessment year 2020-21, relating to financial year 2019-20, the assessee was suffering the COVID period, so the delay in filing the appeal before the Ld. CIT(A) is duly covered by the order of the Hon'ble Supreme Court in Suo motu Writ Petition (C) No. 3 of 2020 dated 10.01.2022, the period from 15.03.2020 till 28.02.2022 is stand excluded in computing the periods of limitation. The Ld. AR contended that the return was processed u/s. 143(1) without allowing any reason to the assessee for rejecting the assessee's application applied towards the object. The assessee filed Form No. 10B with a delay for 12 days for AY 2020-21 and a delay for 25 days for AY 2022-23. The Ld. DR explained in details in filing of Form 10B as under: Sl. No. Particulars Due Date Filed from 10B 1. AY 2020-21 15.10.2021 27.11.2021 2. AY 2022-23 07.10.2022 01.11.2022

The assessee filed a notarized affidavit, duly sworn by Trustee, Mr. Sohan Gamanlal Nanavati on 24.04.2025, in support of the application seeking condonation of delay in filing the appeal before the Ld. CIT(A). The said affidavit was duly considered by the Ld. CIT(A) in the appellate order. However, the appeal of the assessee was dismissed on the ground of limitation. The Ld. AR contended that, although the assessment year under consideration, i.e., AY 2022-23, was not covered by the period of limitation extended on account of the COVID-19 pandemic, the assessee had furnished an application seeking condonation of an inordinate delay of 1,029 days in filing the appeal before the Ld. CIT(A), duly supported by a notarized affidavit explaining the circumstances leading to such delay. The Ld. AR further submitted that the return of income was processed under section 143(1) of the Act, resulting in the disputed adjustment on account of a marginal delay in filing Form No. 10B. It was contended that the substantive claim of the assessee ought not to be defeated merely on account of procedural lapses. Accordingly, the Ld. AR prayed that the matter be restored to the file of the Ld. CIT(A), with a direction to condone the delay in filing the appeal and adjudicate the issues raised therein on merits.

Per contra, the Ld. DR strongly supported the orders passed by the Revenue authorities. The Ld. DR submitted that the Ld. CIT(A) had rightly dismissed the appeal of the assessee as barred by limitation, since the assessee had failed to establish sufficient and reasonable cause for the inordinate delay of 1219 days & 1,029 days for AY 2020-21 & AY 2022-23 respectively in filing the appeals. It was further contended that the explanation furnished by the assessee, even when considered in the light of the notarized affidavit, did not satisfactorily justify such a prolonged delay. Accordingly, the Ld. DR submitted that no interference with the findings of the Ld. CIT(A) was warranted and prayed that the impugned appellate order be upheld.

We have heard the rival submissions and perused the materials available on record. We find that the assessee is a charitable trust duly registered under section 12A/12AA of the Act. The principal dispute in both the appeals arises from the disallowance of exemption claimed under section 11 of the Act while processing the returns of income under section 143(1), on account of delay in furnishing Form No. 10B. We further observe that the assessee filed Form No. 10B with a marginal delay, as explained by the Ld. AR, for the respective assessment years. However, the appeals filed before the Ld. CIT(A) were delayed by 1,219 days for AY 2020-21 and 1,029 days for AY 2022-23. The assessee had furnished applications seeking condonation of delay, duly supported by a notarized affidavit sworn by the trustee, Mr. Sohan Gamanlal Nanavati, explaining the circumstances which prevented the assessee from filing the appeals within the prescribed period. It is evident from the records that the assessee had initially pursued the alternative remedy of rectification under section 154 of the Act and, upon rejection of the rectification applications, approached the Ld. CIT(A). The Ld. CIT(A), however, declined to condone the delay and dismissed the appeals in limine without adjudicating the substantive issues on merits.

We further observe that the assessee had furnished an explanation for the delay, supported by an affidavit and the chronology of rectification proceedings. Although the remedies available under sections 154 and 246A of the Act are independent, the bona fide pursuit of an alternative statutory remedy is a relevant circumstance while examining the existence of sufficient cause under section 249(3) of the Act. The explanation furnished by the assessee, therefore, requires consideration in its entirety rather than merely with reference to the length of the delay. We also find that the substantive dispute concerns the denial of exemption under section 11 of the Act on account of a comparatively negligible delay in furnishing Form No. 10B. The question whether such delay warrants denial of the exemption claimed by the assessee requires examination on merits, having regard to the applicable statutory provisions and the relevant facts. In our considered view, the explanation furnished by the assessee regarding the delay in filing the appeals constitutes sufficient cause for the purpose of section 249(3) of the Act. Accordingly, in the interest of substantial justice, the delay in filing both appeals deserve to be condoned.

We are of the considered view that the substantive issues raised by the assessee ought to be examined on merits rather than remaining un-adjudicated solely on the ground of limitation. Accordingly, the matters are restored to the file of the Ld. CIT(A), with a direction to condone the delay in filing both appeals and adjudicate the grounds raised by the assessee afresh on merits, in accordance with law. The Ld. CIT(A) shall specifically examine the assessee's claim for exemption under section 11 of the Act, the circumstances relating to the delay in furnishing Form No. 10B, and the applicability of the relevant statutory provisions. The Ld. CIT(A) shall afford the assessee a reasonable and effective opportunity of being heard, consider the documentary evidence and submissions placed on record, and thereafter pass a reasoned and speaking order, dealing with each substantive ground raised in the appeals. Needless to say, the assessee shall extend necessary cooperation and furnish the requisite documents and explanations before the Ld. CIT(A). All issues relating to the merits of the claims are kept open for adjudication by the Ld. CIT(A).

In the result, the appeals of the assessee bearing ITA No. 6890 & 6891/Mum/2026 are allowed for statistical purposes. Order pronounced in the open court on 16th day of October 2026.