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Facts
The assessee, a public charitable trust, appealed against ex-parte orders of the CIT(A) for AY 2010-11 and 2011-12. The appeals were filed with significant delay attributed to internal mismanagement and breach of fiduciary duty by the erstwhile management, which led to non-representation before the lower authorities.
Held
The Tribunal condoned the delay, citing the "sufficient cause" principle and the fact that the delay was due to internal mismanagement rather than deliberate inaction. The Tribunal held that a charitable institution should not be penalized for the malfeasance of its former agents and that justice requires hearing the matter on merits.
Key Issues
Whether the delay in filing the appeal was caused by a 'sufficient cause' warranting condonation, and whether the CIT(A) erred in dismissing the appeal ex parte without considering the merits.
Sections Cited
144, 147, 250, 142(1), 148, 50C
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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
Assessee by : Shri Vihit Shah Revenue by : Shri RiteshMisra, CIT DR Date of Hearing : 25/03/2026 Date of pronouncement : 07/04/2026 ORDER PER OM PRAKASH KANT, AM These two appeals by the Assessee, a public charitable trust, are directed against the separate orders of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”], dated 09.12.2024 and 28.11.2024, for the Assessment Years (AY) 2010-11 and 2011-12, respectively. Since the appeals involve a common factual matrix and identical legal grievances, they were heard together and are being disposed of by this consolidated order.
& 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community 2. At the threshold, we address the issue of delay in filing both the appeal, a delay of 307 days (AY 2011-12) and 273 days (AY 2010-11). The Assessee has moved an application for condonation of delay, supported by a detailed affidavit. The Assessee’s main explanation is an incident of internal mismanagement and a breach of fiduciary duty by the erstwhile management. The Assessee-Trust contends that the former Secretary and certain Trustees were embroiled in financial irregularities and failed to apprise the Board of the ongoing proceedings or the receipt of the impugned orders. It was only after a systemic overhaul—involving the removal of the erring officials and the appointment of a new Board—that the current management discovered the adverse orders during a forensic audit. The assessee has filed identical affidavit for both the years except change in number of days. For ready reference, the relevant part of the affidavit filed by the assessee in A.Y. 2011-12 is reproduced as under:
“3. I am filing the present Affidavit for the limited purpose of explaining and seeking condonation of delay of 307 days in filing the captioned Appeal before this Hon'ble Tribunal. The Appeal has been preferred against the order dated 28 November 2024 ('Impugned Order') passed by the Ld. CIT(A), National Faceless Appeal Centre ('Ld. CIT(A), NFAC'). The Impugned Order is challenged on various grounds, as set out in detail in the Appeal. STATEMENT OF FACTS 4. The brief facts leading up to the filing of this Affidavit are set out as follows:
& 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community a. The Assessee is a public charitable trust and is registered under the Bombay Public Trust Act, 1950. The Assessee has been engaged in undertaking religious and charitable activities for numerous decades. b. For the AY 2011-12, an assessment order dated 11 December 2018 (Assessment Order') was passed u/s 144 r.w.s 147 of the Income-tax Act, 1961 ('Act') making an addition of Rs. 1,61,01,000/- (Rupees one crore sixty-one lakhs and one thousand). c. An appeal, in Form No. 35, was duly filed with the Ld. CIT(A), against T the Assessment Order, on 16 January 2019. Further to the same, notices AR for hearing in the CIT(A) Appeal were purportedly issued in and around March 2024 and October 2024. However, such notices were neither brought to the notice of the Trustees of the Assessee by the erstwhile Secretary, Mr. ShashankGulgule nor were the issues discussed in the meetings conducted by the board of the Assessee. d. Owing to the conduct of the erstwhile Secretary, the Assessee remained unrepresented at the time of hearing and hence, could not effectively pursue and prosecute the appeal before the Ld. CIT(A), NFAC. Resultantly, the appeal was decided ex-parte by the Ld. CIT(A), NFAC against the Assessee and the Impugned Order was passed confirming the addition made in the Assessment Order. e. Although the Impugned Order was passed towards the end of November 2024, since the official communications, correspondences and related affairs were being handled by the erstwhile Secretary, the Trustees of theAssessee were not informed and remained unaware of the Impugned Order. f. During such period, the affairs of the Assessee were mismanaged and various financial irregularities were committed by some of the erstwhile Trustees. Such actions and instances of mismanagement came to lightonly earlier this year. This even resulted in the removal/resignation of the erstwhile Secretary and the Chairman of the board of the Assessee. To further investigate the financial irregularities committed by the erstwhile Trustees/Secretary, the newly-appointed Trustees, in its meeting held on 11 June 2025, resolved to appoint a third-party financial auditor and also set up an external committee to advise the Assessee with respect to its functioning. g. Further to the same, the erring erstwhile Trustees were removed, in accordance with the Constitution of the Assessee, and a change report dated 7 July 2025 was filed with the Hon'ble Asst. Charity Commissioner, Maharashtra State. A copy of the change report dated 7 July 2025, along with its enclosures, is annexed hereto and marked as Annexure A. The Assessee further craves leave to produce, refer and rely upon copies of the minutes of meetings of the Assessee recording the aforesaid developments. h. Such mismanagement resulted in the meritorious appeals filed by the Assessee, including for another year, i.e., AY 2010-11, being dismissed for non-prosecution. An appeal against the order of the Ld. CIT(A), NFAC pertaining to AY 2010-11 has also been preferred by the Assessee before this Hon'ble Tribunal. i. Upon the change in the constitution of the Assessee, the present Trustees initiated a thorough examination of the Assessee's affairs and it was only in or around June 2025, that the Trustees of the Assessee were made aware of the Impugned Order. j. Accordingly, in or around July 2025, the Assessee from its chartered accountants / tax professionals, in respect of the remedies available against the Impugned Order. The professional assisted and advised on the challenge in the Impugned Order before this Hon'ble Tribunal. They also recommended that a legal opinion be procured as and by way of caution. k. Accordingly, the professionals of the Assessee met with its legal counsel in August 2025. In the course of the preliminary meeting with the counsel, the merits of the Impugned Order were assessed, the potential challenges on merits and the available remedies against the Impugned Order were discussed. After weighing the considerations involved and upon further deliberations, the Assessee was advised to prefer an appeal against the Impugned Order before this Hon'ble Tribunal, by way of the present Appeal. l. Considering the above, the Assessee collated and forwarded all papers/proceedings and instructed its tax professional and advocate to initiate the preparation of drafting the Appeal. Given the issues involved and the information made available, it was crucial for the advocates to study the records, understand the background, and hold discussions to seek certain explanations/clarifications all & 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community of which took place across September 2025-October 2025. Since the issue involved pertained to information and transactions from FY 2010-11, the collation exercise took slightly longer than otherwise. m. Accordingly, the draft prepared was circulated with the Assessee and the tax professionals in early-November 2025 for their inputs and subsequently, the Appeal was finalized and filed, under the instructions of the Assessee.
In view of the aforesaid circumstances, it was not possible to file the Appeal before this Hon'ble Tribunal within the limitation period. The delay was solely due to unavoidable circumstances beyond the Assessee's control and there was no mala fides, wilful default, negligence or carelessness on the Assessee's part for the delay. The delay occurred on account of the mala fide conduct and mismanagement on part of the erstwhile Secretary / Trustees of the Assessee who chose not to disclose receipt of the notices of hearing or the Impugned Order, which resulted in dismissal of a meritorious case and delay in filing of the present Appeal. The negligent and malicious conduct resulted in the removal of the erring Secretary/Trustees as stated hereinabove. Upon being made aware of the Impugned Order, the present trustees of the Assessee set in motion the process of filing the present Appeal.
In these bona fide circumstances, this Affidavit has been filed. It is further submitted that the delay has occurred on account of reasonable, sufficient and bona fide grounds. The delay of approx. 307 days in filing the Appeal was unintentional. No benefit has accrued to the Assessee by filing the Appeal belatedly and further, no prejudice will be caused to the Respondent if the delay is condoned and the Appeal is heard and disposed of on merits.
On the other hand, the Assessee will be greatly prejudiced by the loss of the only statutory remedy available under the Act against the Impugned Order, thereby, permanently shutting the door to redress its grievances. The grant of reliefs sought for would be effective, complete and in the interests of justice and equity, whereas the absence thereof shall cause grave and irreparable harm and injury to the Assessee.
It is also submitted that the Assessee has a strong case on merits. It is trite law that courts and tribunals should endeavour to dispose matters off on merits rather than on technicalities. A liberal view ought to be adopted while condoning the delay in filing of the Appeal. The failure to condone the delay will result in a meritorious matter being disposed of on basis of The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community an unintentional delay in filing the Appeal within the limitation period. Rejection of the Appeal on such grounds, and consequent confirmation of the addition made under the Assessment Order, will be detrimental to and will adversely affect the functioning and charitable and religious activities undertaken by the Assessee.
In light of the above, it is respectfully prayed that the present Affidavit be taken on record and the delay of 307 days in filing the captioned Appeal before this Hon'ble Tribunal be condoned and the Appeal be heard on merits.”
We have heard the rival submissions of the parties on the issue of condonation of delay in filing the appeal. We have considered the rival submissions. The Revenue’s objection to the delay, while technically grounded, must be weighed against the principles of equity. The Hon'ble Supreme Court, in the landmark case of Collector, Land Acquisition v. Mst. Katiji (1987), has categorically held that:
"The legislature has conferred the power to condone delay by enacting Section 5 of the Indian Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on 'merits'. The expression 'sufficient cause' employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice—that being the life- purpose for the existence of the institution of Courts."
In the present case, the Assessee is a public charitable trust. The delay was not a product of choice or deliberate inaction, but a casualty of internal institutional failure. To penalize a charitable entity for the malfeasance of its erstwhile agents would be to elevate form over substance. The steps taken by the new management i.e. filing change reports with the Charity Commissioner and initiating legal recourse, demonstrate a bonafide intent to rectify the & 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community situation. We find that the Assessee was prevented by "sufficient cause" from filing the appeals within the statutory period. Accordingly, the delay is condoned, and the appeals are admitted for adjudication.
Moving to the merits, we find that the Ld. CIT(A) dismissed the appeals ex parte, primarily invoking the maxim "Vigilantibus non dormientibusjurasubveniunt" (Law assists the vigilant, not those who sleep over their rights). The Ld. CIT(A) concluded that the Assessee’s non-compliance justified an adverse inference. The relevant finding of the ld. CIT(A) for AY 2011-12 is reproduced as under: 4.1. The order of the Ld. AO passed u/s 147r.w.s 144 of the I.T. Act, 1961 dated 11/12/2018 as well as the grounds of appeal and statement of facts filed by the appellant has been carefully considered. In essence, all the substantial grounds taken by the appellant relate to the action of the Ld. AO regarding addition of Rs. 1,61,01,000/- on account of long term capital gain. 4.2 During the course of appellate proceedings, the appellant assessee was given several opportunities vide notice u/s. 250 was issued fixing the case for hearing on 13.01.2021, 13.03.2024 and 30.10.2024, to represent the case by uploading written submission along with supporting document(s) if any. In the final notice fixing the hearing on 30.10.2024, it is mentioned; "What if we do not hear from you? If no submissions/information/documents is/are received within the stipulated time period, it will be presumed that you have nothing to say in this matter. The Department may proceed ahead based on material available on record." However, the appellant did not avail the opportunities to counter the findings of the Ld. AO and hence appellant's reluctancy to comply to the notices leads to the presumption that he has either nothing to explain in this regard or is not interested to continue the appellate proceeding and thus has no objection at present regarding addition made by the Ld. AO in the impugned assessment order. The reason for the addition was specifically mentioned in detail in the assessment order but & 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community the appellant failed to upload any evidence or submission in support of the grounds of appeal countering such reasons for addition. 4.3 It is the well-settled dictum of law "VIGILENTIBUS, NO DORMENTIBUS, JURA SUBVENIUNT which means the law will help only those who are vigilant. Law will not assist those who are careless of his/her right. In order to claim one's right he/she must be watchful of his/her rights. Only those persons, who are watchful and careful of using his/her rights, are eligible for the benefits of the law. Law confers rights on persons who are vigilant of their rights. In this connection, the various judicious decisions of [the Hon'ble Courts may be cited. In the case of the Estate of Late TukojiraoHolkar vs Commissioner of Wealth Tax (1997) (223 ITA 480 MP) the Hon'ble M.P. High Court held that, "If the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference." Similarly, Hon'ble Punjab & Haryana High Court in the case of New Dewan Oil Mills Vs. CIT reported in (2008) 296ITR495 (P&H) had returned the reference unanswered, since the assessee remained absent and there was no assistance from the assessee. In the case of CIT vs B. N. Bhattacharya. (118 ITR 461) (Pages 477, 478), the Hon'ble Supreme Court held that "appeal does not mean, the mere filing of the memo of the appeal but effectively pursuing the same. The Hon'ble Delhi High Court in the case of CIT vs Gold Leaf Capital Corporation Ltd on 02.09.2011 in of 2009 held that a negligentappellant should not be given many opportunities just because the quantum of the amount Involved is high. The necessary course of action is to draw an adverse inference, otherwise, it would amount to giving a premium to the appellant for his negligence. When the appellant is non-cooperative, it can safely be concluded that the appellant did not want to adduce evidence as it would expose the falsity and non-genuineness of his claim. The Hon'ble ITAT, Delhi in the case of Whirlpool India Ltd vs DCIT (ITA No.2006/Del/2011 dated 19.12.2011) has dismissed the appeal for non-attending hearing inferring that the appellant is not effectively pursuing the appeal. 4.4. In this regard, the decision of the Hon'ble High Court of Mumbai in the case of M/S Chemipol vs Union of India, Central Excise Appeal No.62 of 2009 may further be referred to wherein the Hon'ble Court clearly held that every court, judicial Body or Authority, which has a duty to decide a case between two parties, inherently possesses the power to dismiss the case in default.
& 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community 4.5 On merits also, the appellant has no case. In essence, the substantial grounds taken by the appellant relate to the action of the Ld. AO treating as addition of Rs. 1,61,01,000/-on account of long term capital gain which is considered for assessment purposes. 4.6 During the course of appellate proceedings, the appellant failed to explain the grounds taken against the issues. The reason for addition was clearly mentioned in the assessment order. However, the appellant made no effort to counter the findings of the Ld. AO either by uploading relevant document(s) or explaining the matter in detail and chose to remain silent. It is seen from the assessment order that the return of income filed by the assessee on 16.02.2012 alongwith the Income & Expenditure statement, Balance Sheet and Audit Report in Form No. 10B declaring taxable income at Rs. Nil and the same was processed u/s 143(1) of the Act. The trust is registered with Chanty Commissioner an also registered with CIT(E) Mumbai u/s 12A. On perusal of the details it was observed that the assessee had transferred the tenancy rights. The total consideration was shown at Nil whereas the market value of the said premises was Rs. 1,61,01,000/- as per value adopted by the Stamp Duty Authority. Since the transfer was made without adequate consideration, section 500 of the IT Act was applicable in this case. The assessee had also not offered Capital Gain on this transaction. Therefore, the Assessing Officer had reason to believe that the income had escaped assessment to the extent of Rs. 1,61,01,000/-, Hence after taking prior approval from the competent Authority, notice u/s 148 was issued to the assessee on 27.03.2018. The AR of the assessee sought adjournment vide letter dated 25.04.2018. Subsequently, notice u/s 142(1) was issued to the assessee on 13.10.2018 asking to explain why capital gain was not offered for taxation. However, no explanation was filed in response to the Notice u/s 142(1). The assessee was merely seeking adjournments during the assessment proceedings. No details/explanation had been filed in response to the notices. The AO stated that, since the facts remain the same as in the preceding year and due to the continuous non compliance by the assessee, he was left with no other alternative but to complete the assessment exparte u/s 144 of the Act. The AO also stated that in the course of assessment for A.Y.2010-11, the assessee had submitted the agreements which were titled as "Tenancy Agreement" and it was mentioned in the said agreements that there were two parties namely, a Landlord andthe Tenant. It was pertinent to mention herewith that the agreements were not a "Leave and Licence agreement" which was entered into between Owner and Tenant. These were "Tenancy Agreements". Again statutory notice u/s 142(1) was issued to the assessee for their compliance but no compliance was again received from the assessee. Considering (1)
& 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community the parties of the agreement as Landlord and Tenant, (2) the nominal value of the rent (Rs 150 to Rs 350/-) and (3) period of rent (agreement is for, undefined period), it was clear that these properties were covered by old rent system ie. Pagdi-Kirayedar System. The rent varying from Rs. 150/- to Rs 350/- for these properties in prime locality of Bhuleshwar Road in Mumbai was very nominal as compared to fair rent/market rent of similar property in that rent. Therefore, the possibility that corpus amount might have been paid by tenant to landlord, cannot be overlooked. There could be no tax implications unless any or all of the parties were scrutinized. Therefore the AO took the market value as adopted by the Stamp Duty Authority as under as transfer of tenancy income in the hands of the assessee Therefore, the AO concluded that the income of Rs. 1,61,01,000/ was held as Long Term Capital Gain of the assessee for A.Y.2011-12 as the assessee had failed to disclose the income while filing its return of income. During the appellate proceedings, in spite of filing elaborate grounds of appeal and being provided with adequate opportunities of filing explanations and supporting documents the appellant preferred to remain silent by not availing the opportunities provided. The appellant did not comply to the departmental notices during appellate proceedings. area. There was no benefit as such to the trust with respect to such tenancy agreement as the consideration i.e, rent receipt was extremely very low as compared to fair rent or market 4.7 In view of this, I find no reason to interfere into the order of the Ld. AO and the additions made is upheld accordingly. Therefore, Grounds of appeal taken by the appellant are dismissed.”
6. Having considered submission of parties and perused orders of lower authorities, we are of opinion that the non-representation was not a dilatory tactic, but a direct consequence of the same mismanagement that caused the delay in filing. It is a settled principle of natural justice (audialterampartem) that no party should be condemned unheard, especially when the stakes involve the very survival of a charitable institution’s corpus. The Ld. CIT(A) proceeded on the basis of presumed objection-less status, which we & 8016/Mum/2025 The Temples Charitable Institutions and Funds of the GoudSaraswat Brahman Community find to be a harsh conclusion given the subsequent disclosures regarding the internal turmoil of the Trust.
7. In the interest of justice and to ensure that the tax liability is determined on the basis of facts rather than defaults, we deem it appropriate to provide the Assessee a fresh opportunity to present its case. An adjudication on merits is always preferable to a dismissal on default. Accordingly, we set aside the impugned orders and restore the matters to the file of the Ld. CIT(A) for a fresh adjudication. The Assessee is directed to cooperate fully and submit all necessary evidence to counter the findings of the Assessing Officer. The Ld. CIT(A) shall decide the matter afresh in accordance with the law, after providing the Assessee a reasonable opportunity of being heard.
In the result, both appeals are allowed for statistical purposes.
Order pronounced in the open Court on 07/04/2026.
Sd/- Sd/- (SANDEEP SINGH KARHAIL) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 07/04/2026 Karishma J. Pawar, Sr. P.S. Copy of the Order forwarded to :
1. 1. The Appellant 2. The Respondent.
3. CIT 11