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Facts
The assessee trust filed an appeal against the order of the CIT(Appeals)/NFAC. The appeal was delayed by 279 days due to non-communication between the assessee and its chartered accountant. The tribunal condoned the delay after noting a liberal approach is required when merits of the case warrant it.
Held
The Tribunal condoned the delay of 279 days in filing the appeal. The matter was restored to the file of the CIT(Appeals)/NFAC for fresh adjudication on merits, after affording the assessee an opportunity of being heard, concerning the disallowance of expenditure and the denial of exemption under Section 12AA.
Key Issues
Whether the delay in filing the appeal should be condoned? Whether the disallowance of expenditure and denial of exemption were justified and if the matter needs to be set aside for re-adjudication.
Sections Cited
250, 12AA, 143(1), 234B, 234C
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Income Tax Appellate Tribunal, “J(SMC
Before: SHRI AMIT SHUKLA & SHRI ARUN KHODPIA
आदेश / ORDER
PER ARUN KHODPIA, AM:
The present appeal filed by the assessee trust is directed against the order passed by the Ld. CIT(Appeals)/NFAC, dated 31.05.2024 for the assessment year 2020-21 as per the following grounds of appeal:
At the very outset, the Ld. Counsel for the assessee submitted that the appeal is time barred by 279 days. Explaining the reasons leading to the said delay, the Ld. Counsel has filed condonation petition a/w. affidavit. It was submitted by the Ld. Counsel that the erstwhile chartered accountant of the assessee did not inform assessee, whilst the assessee trust is fully dependent on him regarding income tax matters. The Ld. Counsel submitted that when the assessee had logged in the income tax portal for some other work then it came to know about the order of the Ld. CIT(Appeals)/NFAC. It was submitted by the Ld. Counsel that there was no deliberate or malafide conduct on the part of the assessee in causing such delay, therefore, the impugned delay may be condoned.
The Ld. Sr. DR did not raise any objection as regards the delay involved in appeal and fairly conceded to the submissions of the Ld. Counsel for the assessee as regards the said delay.
Having heard the parties herein, we are of the considered view that the delay involved in the present appeal was caused due to non communication of the assessee and its Chartered Accountant and therefore was no deliberate or malafide conduct on the part of the assessee in causing such delay. The Ld. Sr. DR could not place on record any evidence showing malafide or lackadaisical approach on the part of the assessee. In so far the delay is concerned, it would be relevant to point out that the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos……………../2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025, had observed that a justice oriented and liberal approach ought to be adopted while considering the aspect of condoning the delay involved in filing of the appeal. Also, the Hon’ble High Court of Chhattisgarh in the case of Jagdish Prasad Singhania Vs. Additional Commissioner of Income Tax (TDS), Raipur (C.G.), TAX Case No.17/2025, dated 24.02.2025, after relying on the judgment of the Hon’ble Supreme Court in the case of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur (supra) had held that a justice oriented and liberal approach be adopted while considering the application filed by the assessee for condonation of delay.
That in the recent judgment of the Hon’ble Supreme Court in the 5. case of Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025, the Hon’ble Apex Court while interpreting Section 5 of the Limitation Act, 1963 regarding the condonation of delay in respect of case of land acquisition has observed and held on the aspect of delay that although the delay cannot be condoned without sufficient cause, the merits of the case could not be discarded solely on the ground of delay. A liberal approach, therefore, should be taken in condoning the delay when limitation ground undermines the merits of the case and obstructs the substantial justice. In other words, the objective of the court should be to deliver substantial justice coupled with liberal and judicious approach while deciding the issue of limitation and whenever it is found that the case has merits which needs to be addressed substantially, in such case, the delay should be condoned. Accordingly, the said delay of 279 days involved in the present appeal is condoned.
The Ld. Counsel for the assessee trust further explained that the assessee trust was not allowed benefit of exemption u/s. 12AA of the Income Tax Act, 1961 (for short ‘the Act’), accordinglythe entire expenditure of the assessee trust was disallowedwhile processing the return of assessee u/s. 143(1) of the Act, whereas, the since the issue is debatable such adjustment are beyond the scope of section 143(1) of the Act. It is submitted that such action of the revenue is contrary to the principles of real income theory and hence, the intimation u/s. 143(1) of the Act is liable to be quashed.
The Ld. Counsel further drew our attention to the order of the ITAT, Mumbai in assessee’s own case in dated 12.06.2025 for AY 2014-15, wherein similar issue has been deliberated upon with an observation that the issue is debatable one and therefore, same needs re-adjudication by the first appellate authority after considering response of the assessee. Accordingly, it is requested by the counsel of the assessee trust that the matter may be set aside to the file of the Ld. CIT(Appeals)/NFAC for denovo adjudication.
On the other hand, the Ld. Sr. DR though supported the order of the Ld. CIT(Appeals)/NFAC, however, fairly agreed to the request of assessee, if the matter is set aside to the file of the Ld. CIT(Appeals) to decide the issue afresh on merits after hearing the assessee trust.
We have heard the rival contentions of the parties herein and perused the material available on record a/w. the decision of the ITAT, Mumbai in assessee’s own case for AY 2014-15 (supra). Admittedly, exemption u/s. 12AAwas not granted to the assessee by the CPC/A.O while issuing intimation u/s. 143(1) of the Act, however as per real income theory the expenditure incurred by the assessee trust would be allowed subject to verification, while determining its taxable income, therefore, such crucial aspect needs verification and adjudication on the facts of the matter. Accordingly, we restore the matter to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication on merits after affording reasonable opportunity of being heard to the assessee trust.
In the result, appeal of the assessee trust is allowed for statistical 10. purposes as per our aforesaid observations. Order pronounced in the open court on 21st August, 2025.