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Facts
The assessee filed its return of income claiming exemptions under sections 11(2) and 11(5). The claim was denied during processing, and a demand was raised. The assessee filed rectification requests and grievances, which were either rejected or not properly adjudicated. This led to a significant delay in filing an appeal before the CIT(A).
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A), finding merit in the assessee's submission that it was not fully aware of the rejection of its rectification requests and grievances. The matter was remitted back to the jurisdictional AO for fresh decision.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was justifiable, and if so, whether the matter should be remanded to the AO for a fresh decision.
Sections Cited
11(2), 11(5), 249(3), 143(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This appeal is filed by the assessee against the Order passed bythe CIT(A) vide DIN and Order No.ITBA/APL/M/250/2024-25/1073936229(1) dated 03.03.2025 dismissing the appeal by not condoning the delay of 2658 days.
Briefly stated, the facts of the case are that assessee filed return of income on 17.09.2016 declaring income of Rs.13,56,238/- and claimed exemption under sections 11(2) and 11(5) of the Act of Rs.1,10,000/-. Assessee had shown taxable income of Rs.2,44,542/- and claimed refund of Rs.9,400/-. While processing return on 27.04.2017, claim made under sections 11(2) and 11(5) of the Act was denied to the assessee. Accordingly, taxable income was determined at Rs.11,57,070/- and raised demand of Rs.1,95,910/-. Against the above intimation assessee filed rectification request on 17.05.2017 bearing reference No.776027980170517 and the same was rejected on 28.07.2017. Assessee filed again new rectification on 02.04.2025. Assessee also furnished grievance on 15.10.2022 vide grievance acknowledgment No.8966393 and the grievance was resolved on 29.02.2024 with remark “grievance resolution – Nil”. Assessee filed appeal before the learned CIT(A) on 05.09.2024. The learned CIT(A) noted that there is inordinate delay of 2658 days in filing the appeal before the learned CIT(A). The learned CIT(A) noted that there is inordinate delay of 2658 days in filing the appeal which is not in accordance with section 249(3) of the Act and there is no reasonable cause and he dismissed the appeal of the assessee.
Aggrieved from the above Order, assessee filed appeal before the Tribunal. The learned Counsel submitted that learned CIT(A) has not condoned the delay in filing appeal before him. He has reiterated the grounds of appeal which is attached with Form 36 and submitted that before making addition, the CPC did not send any intimation to the assessee and no demand notice has been sent to the assessee. Therefore, the entire addition made is bad in law. Assessee, after receipt of intimation, immediately filed rectification request which was rejected without giving any reason and assessee also filed grievance in the income tax portal which is also not adjudicated properly. He further submitted that assessee could not comply with the provisions of section 11(2) of the Act within stipulated time for the utilization of set apart amount and it offered to tax in the Assessment Year 2022-23 and paid due tax thereon. Assessee has also not received any notice regarding disallowance of section 11(2) of the Act nor under section 143(1) of the Act. Only after raising grievance vide acknowledgment No.8966393 dated 29.02.2024 assessee was made available information under section 143(1) of the Act and the assessee was informed that the grievance was closed.
However, nature of resolution was not mentioned. Therefore, assessee was not aware whether error pointed out in the rectification request was honoured or not. Even the rectification Order passed by the CPC was not received by the assessee and second rectification request is also not resolved till date. Assessee is still not aware about the rejection of rectification request. This is the sole reason for not filing appeal within due date and the reason for delay is also mentioned in Form 35 at Sl. No.15. However the learned CIT(A) has not accepted and without going into merits of the case, dismissed appeal of the assessee by not condoning delay.
On the other hand, the learned DR relied on the Order of the CIT(A) and strongly submitted that assessee was not vigilant about the income tax proceedings, and is filing income tax returns every year, this is very strange. Before filing income tax returns, assessee must have checked outcome of earlier proceedings. In the income tax web portal the entire information is available and he further submitted that before making any addition by the CPC an intimation with reason is sent to the assessee to the registered email ID. Assessee might have not seen the reason sent by the CPC and he supported the Order of learned CIT(A).
Considering the rival submissions and perusing the entire material available on record and Order of the authorities below, we noted that assessee filed its return of income on 17.09.2017 declaring gross income of Rs.13,50,238/- and claimed exemption under sections 11(2) and 11(5) of the Act of Rs.9,10,000/- which has not been allowed by CPC while processing return. Later the assessee filed rectification application as mentioned above which was rejected without passing detailed Order. As per the submission of the assessee, we noted that assessee received copy of 143(1) only after filing of grievance letter as mentioned above. After receipt of intimation he filed rectification u/s 154 which was rejected. Thereafter assessee filed appeal before the CIT(A). The learned CIT(A) rejected the appeal as there was inordinate belay of 2658 days which is not as per provision of section 249(3) of the Act and he dismissed appeal of the assessee.
Considering the reasons mentioned in the appeal set and arguments advanced by the learned Counsel and relying on the judgment of the Co- ordinate Bench in the case of Yashodha Puttaraju Vs. ITO in Order dated 28.06.2024 we condone the delay. Accordingly, we remit this issue back to the file of jurisdictional AO for fresh decision as per law with a cost of Rs.5,000/- to the assessee. Before taking up the case by the jurisdictional AO, assessee has to show the cost of payment of Rs.5,000/- to the jurisdictional AO and jurisdictional AO is directed to give 3 effective opportunities to the assessee and assessee is directed to produce necessary documents for substantiating its case and not seek unnecessary adjournments, for early disposal of the case. In case of failure, no second leniency shall be granted to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.