MARY SABINA EDUCATIONAL TRUST,MUMBAI vs. EXEM- WARD 2(1), MUMBAI

On the facts and circumstances of the case and law, the Ld CIT(A) erred in not condoning the delay in filing appeal by merely mentioning that there was no sufficient cause for delay and thus appeal cannot be condoned without considering the affidavit and petition filed by the appellant for condoning the delay.

On the facts and circumstances of the case and law, the Ld CIT(A) erred in not condoning the delay by not considering the medical reports of the administrative officer Mrs Juliana Pias who was solely responsible for accounts and other administration of the trust.

On the facts and circumstances of the case and law, the Ld CIT(A) erred in not condoning the delay by not considering the fact that another Chartered Accountant of the appellant trust was appointed during that time which resulted into loss of sight by the appellant.

On the facts and circumstances of the case and law, the Ld CIT(A) erred in not adjudicating the actual and correct income of the appellant by referring to the provisions of Income Tax Law and Rules made thereunder.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in charging interest u/s 234A,234B and 234C of the Income Tax Act, 1961.”

The assessee is a public charitable trust found on 15.06.1979, registered under section 12A of the Income Tax Act, 1961 (the Act) and is engaged in providing educational services. For the year under consideration the assessee filed the return of income on 28.10.2019 declaring a total income of NIL. The return was processed under section 143(1) of the Act wherein the amount declared by the assessee as application and the amount accumulated were not allowed under section 11 of the Act and in the intimation under section 143(1) a demand of Rs. 2,29,11,783/- was raised against the assessee. Aggrieved the assessee filed further appeal before the CIT(A) contending that in the return of income the counsel of the assessee has in advertently failed to fill up the amount applied for charitable 11 has been denied to the assessee in the intimation under section 143(1) of the Act. There was a delay of more than 27 months in filing the appeal before the CIT(A) and the assessee submitted the petition for condoning the delay. The CIT(A) however, did not accept the reasons stated by the assessee in the petition for condoning the delay and accordingly passed an order dismissing the appeal in limine. The assessee is in appeal before the Tribunal against the order of the CIT(A).

The ld. AR submitted that the income of the assessee for the year under consideration was 5,21,96,777/- and that the assessee out of the said income has applied a sum of Rs. 5,00,51,534/- towards the objects of the trust. The ld AR further submitted that the assessee has declared a Nil income after claiming the exemption under section 11 of the Act since the surplus after the application is less than 15%. The ld AR also submitted that the professional who filed the return of income has made an inadvertent error while filling up the return of income due to which the application of the income of the assessee to the tune of Rs. 5,00,51,534/- has not been correctly filled. In the intimation under section 143(1) of the Act the entire application has not been considered by the CPC thereby resulting in the entire income to the tune of Rs. 5,21,96,777/- has been treated as the income of the assessee. The ld. AR further submitted that the assessee has filed a petition for rectification before the AO on 19.01.2023 and the same has been rejected by the AO vide order dated 01.02.2023. With regard to the delay in filing the appeal before the CIT(A) the ld. AR stated that the key personnel and the assessee-trust had severe with issues due to which the communication between the assessee and the professional who was handling the tax matters could not be conducted properly. The ld. AR further submitted that the assessee was also exploring the delay in filing the appeal before the CIT(A). Accordingly, the ld. AR submitted that there is a reasonable cause for the delay and that the CIT(A) is not correct in dismissing the appeal in limine. The ld. AR prayed that considering the merits of the issues that there has been inadvertent error in the return of income, the direction may be given to the AO to verify and allow the deduction which the assessee is lawfully entitled to.

We heard the parties and perused the material on record. During the year under consideration, the assessee has earned an income of Rs. 5,21,96,777/-. Out of the said income the assessee has applied a sum of Rs. 5,00,51,534/- towards the objects of the Trust and the balance being less than 15% is being claimed as exempt under section 11 of the Act. Accordingly, the assessee while filing the return of income has declared Nil income. However, there has been an arithmetical error committed while filling up the ITR-7 and the ld. AR during the course of hearing took the bench through the error committed. The relevant extracts of the ITR-7 in this regard are extracted below: 5. From the combined perusal of the above, it is clear that while filling Part B- T1 the details with regard to the application of income has not been filled in by the assessee inadvertently though the same has been mentioned the Schedule-ER. Therefore, we see merit in the submission of the ld. AR that the benefit under section 11 has been denied due to the inadvertent mistake in filling the ITR. We have also perused the petition filed by the assessee before the CIT(A) for condoning the delay. We are of the view that the assessee has a reasonable cause for the delay such as Covid Pandemic, change in the Counsel, non-availability of key personnel and also that the assessee was exploring the alternate remedy by filing the rectification petition. Therefore, in our considered view the CIT(A) is not correct in dismissing the appeal in limine without condoning the delay. Considering the facts peculiar to assessee's case in the interest of natural justice and fair play we are remitting the appeal back to the AO with a direction to consider the application of funds which was inadvertently omitted to the filled in the return of income and allow the deduction in accordance with law. Needless to say that the assessee be given a proper opportunity of being heard.

In result, the appeal of the assessee is allowed for statistical purposes.