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Facts
The assessee, a trust managing a Provident Fund, filed its return declaring 'Nil' income for AY 2018-19. The AO made an addition of Rs.1,09,05,220/- for claiming exemption without submitting the required audit report, passing an ex-parte order. The assessee filed an appeal before the CIT(A) with a significant delay.
Held
The Tribunal condoned the delay in filing the appeal before the CIT(A) and set aside the CIT(A)'s order. The matter was remitted back to the AO to frame a fresh assessment order after providing a reasonable opportunity to the assessee.
Key Issues
Whether the assessee's delay in filing appeal before CIT(A) was condonable, and if so, whether the matter should be remanded to the AO for fresh assessment.
Sections Cited
144, 144B, 10(25)(ii), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
आदेश / O R D E R
PER S.R.RAGHUNATHA, AM:
This appeal by the assessee is arising out of the order dated 02.07.2025, passed by the Learned Commissioner of Income Tax (Appeal), NFAC, Delhi (in short “ld.CIT(A)”) for the assessment year (A.Y) 2018-19 against the order u/s.144 r.w.s 144B of the Income Tax Act, 1961 (hereinafter the ‘Act’) passed by the AO dated 26.05.2021.
Brief facts of the case are that the assessee is a trust formed for the purpose of managing the Provident Fund and has filed its return of income on 31.10.2018 for A.Y.2018-19, declaring total income of ‘Nil’ and processed u/s.143(1) on 18.03.2020 by arriving at a total income of Rs.72,14,830/- raising refund of Rs.10,38,345/-. The case was selected for ‘Complete Scrutiny’ under CASS to verify Form 10B filing compliance and statutory notices were issued to the assessee to furnish the trust deed and state in detail the nature of activity carried out during F.Y.2017-18 and provide the details of bank accounts held by the trust. The assessee did not participate in the assessment proceedings. On verification of the Schedule-AI and Part B-TI of the ITR, the Assessing Officer found that the assessee had received income from other sources of Rs.1,09,05,220/- and had claimed exemption u/s.10(25)(ii) of the Act. Further, the Assessing Officer observed that the assessee failed to submit audit report in Form 10B for the A.Y.2018-19 along with Return of Income under Rule 17B of the Income Tax Rules, hence the assessee was not eligible for any exemption. Therefore, the Assessing Officer denied the claim of exemption of Rs.1,09,05,220/- for the A.Y. 2018-19 and made an addition of Rs.1,09,05,220/- treated as total assessed income and passed an order u/s.144 r.w.s 144B of the Act dated 26.05.2021.
Aggrieved by the order of the AO, the assessee preferred an appeal before the ld.CIT(A), NFAC, Delhi on 05.05.2025 with a delay in filing the appeal.
At the outset, we observed that ld.CIT(A) dismissed the appeal filed by the assessee in liminie due to an inordinate delay of 1161 days from 01.03.2022 to 05.05.2025 excluding COVID-19 pandamic period. Aggrieved by the impugned order of the Ld.CIT(A), the assessee is in appeal before us.
The ld.AR submitted that the email in which the notices were delivered was inactive and the assessee was unaware of the proceedings till the copy of the order was delivered. Hence, the appeal was not prosecuted before the ld.CIT(A) within the time limit due to unprecedented disruption caused by the COVID-19 pandemic and significant change in the top management of trust and changes of Chartered Accountant appointed for auditing and advisory services and administrative personnel of the trust were not having knowledge of tax compliances, even the assessment order was passed exparte u/s.144 of the Act by the AO. Therefore, ld.AR prayed for one more opportunity to be provided to the assessee to represent his case before the AO in the interest of natural justice. Further, the ld.AR assured the bench that he will undertake to represent on behalf of the assessee before the AO, in case one more opportunity is provided.
Per contra, the ld.DR submitted that both the Assessing Officer and the ld.CIT(A) provided sufficient opportunity to appear before them. However, the assessee has been negligent in responding to the statutory notices and hence, prayed for confirming the order of the ld.CIT(A).
We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. We note that the Assessing Officer has passed an exparte order by considering the information available with the department and the same has been dismissed by the ld.CIT(A), NFAC, Delhi due to the assessee failing to furnish the documentary evidence to delay in filing of appeal file. The assessee failed to file an appeal before the ld.CIT(A) within the time limit due to bona fide reasons beyond the control of the assessee, including significant change in the top management and Chartered Accountant. We note that the AO has passed an order by making an addition of Rs.1,09,05,220/- as total income of the assessee based on material available on records and the same has been upheld by the ld.CIT(A)-NFAC due to non-participation of the assessee before the Assessing Officer as well as the first appellate authority. Since the assessee has failed to participate both before the Assessing Officer as well as the appellate authority, we levy the cost of Rs.50,000/- to be paid to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order.
Therefore, in the present facts and circumstances of the case and to meet the ends of justice, we deem it fit to provide one more opportunity for the assessee.
Therefore, we condone the delay in filing the appeal before ld.CIT(A) as the assessee had filed the condonation of delay in his form 35 itself and hence, we set aside the order of ld.CIT(A) and remit the matter back to the file of AO and direct the AO to de novo frame the assessment order in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, the assessee to be diligent and file written submissions and relevant documents if advised so.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 02nd December, 2025 at Chennai.