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Facts
The assessee, a charitable trust, inadvertently selected Section 10(23C) instead of 12AA while filing its return for AY 2018-19. This led to the disallowance of expenses amounting to Rs. 35,49,591/- by the CPC. The assessee's rectification applications were rejected, and its subsequent appeal to the CIT(A) was dismissed as time-barred.
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) was condonable due to inadvertence and the prevailing COVID-19 pandemic, which was further extended by Supreme Court orders. The Tribunal accepted the assessee's plea of inadvertence and restored the matter to the Assessing Officer.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was justifiable due to inadvertence and pandemic-related extensions, and whether the disallowance of expenses due to incorrect section selection is valid.
Sections Cited
143(1), 143(1)(a), 10(23C), 12A, 12AA, 12AB, 154, 11, 12, 254(1)
AI-generated summary — verify with the full judgment below
Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), ADDL/JCIT (A), Varanasi (in short, the ld. CIT(A)) dated 31/10/2025 for the Assessment Year (AY) 2018-19.The assessee has raised following grounds of appeal:
1. Ground No
1. 1. 1. 1. 1. 1. 1. The Hon'ble CIT(A) NFAC, has erred in rejecting the petition for condonation of delay & Dismissing the appeal as time barred without taking into consideration the extension of time allowed by The Taxation & Other Laws (Relaxation & Amendment of Certain Provisions) Act 2020 upto 31-05-2021 & ignoring the fact that the appeal was filed on 24-05-2021 before the last extension prescribed under TOLA i.e by 31-05-2021. Relief Claimed The appellant trust humbly request you honor to condone the delay and consider the fact that the appeal was filed on 24-05-2021 before the last (AY: 2018-19) The Bombay Hindu Burning and Burial Grounds Committee extended date mandated by the TOLA of 31-05-2021 and instruct the Hon'ble CIT(A) to decide the appeal on merits. II. Ground No 2 Without Prejudice to Ground No 1 Above, the Disallowance of Expenses while processing the return of income u/s 143(1) of Rs 3549591/- incurred by the Trust for its objects is invalid and bad in law as a)the said disallowance is not covered by the six permitted adjustment prescribed u/s 143(1)(a). b) The said disallowance of expenses which are exclusively and necessarily incurred for the object of the trust is against the real income theory. Relief Claimed The appellant trust, requests your good honor to quash the adjustment not permitted u/s 143(1)(a). III. Ground No 3 Without Prejudice to Ground No 1 Above, The Ld.AO [Deputy Commissioner, Income Tax (CPC)], while processing the return u/s 143(1) has erred in considering the trust to be registered u/s 10(23C) instead of the fact that the trust is registered u/s 12A vide registration no. TR674B. Relief Claimed The appellant trust, request your good honor to hold the trust to be registered u/s 12A.”
2. Rival submissions ofboth the parties have been heard and record perused. The learned Authorized Representative (AR) of the assessee submits that the assessee is a charitable trust registered under Bombay Charitable Trust Act, 1950 and also having registration under section 12AA/12AB. The main object of the trust is to provide facilities to perform last rites to human body after death at Chandanwadi, Marine Lines and Banganga Crematorium Ground, Walkeshwar, Mumbai – 400006. The assessee trust is in existence since 1915 and providing these services continuously for more than The Bombay Hindu Burning and Burial Grounds Committee years. While filing return for A.Y. 2018-19, due to inadvertence, the status of the trust was shown as section 10(23C) instead of 12AA. The return was processed by CPC and intimation order dated 10/11/2019 was issued, wherein the deduction of Rs. 35,49,591/- on account of various expenses were not allowed. The expenses of assessee trust is more than its gross receipt. The only basis for not allowing deduction of expenses is wrong copying/mentioning the provision of Section 10(23C) instead of 12AA. The assessee filed an application under section 154 before the CPC in December, 2019. Such application was dismissed/rejected on 02.01.2020. The assessee again filed second application for seeking rectification in the order. However, the same was again not allowed. In the meantime, there was a severe Covid-19 pandemic worldwide. The assessee filed appeal before ld. CIT(A) during Covid pandemic. First appeal before ld. CIT(A) filed on 24/05/2021. There was no intentional or deliberate delay. However, ld. CIT(A) dismissed the appeal of assessee by taking view that there was a delay of 531 days in filing appeal. The ld. AR of the assessee submits even at the worst, if it is considered that there was delay after rejection of applications under section 154, it was only of 70/80 days and that assessee was pursuing alternate remedy under bonafide belief. The delay before ld. CIT(A) may be condoned and matter may be restored back to the file of ld. CIT(A) to decide the appeal on merit. The ld. AR of the assessee submits that the assessee fulfilled all the condition to avail the benefit of application of income under section 11/12 of the Income Tax Act, 1961 (‘the Act’).
(AY: 2018-19) The Bombay Hindu Burning and Burial Grounds Committee 3. On the other hand, the ld. Senior Departmental Representative (SR. DR) for the revenue supported the order of ld. CIT(A).
We have considered the rival submissions of both the parties and have gone through the order of ld. CIT(A) carefully. We find that there is very limited dispute in the present appeal. The assessee while filing return of income, due to inadvertence selected inappropriate provision in showing the status of assessee and mentioned Section 10(23C) instead of 12AA. The CPC not allowed the application of income under section 11/12, thereby disallowing all the expenses. It is matter of record that assessee filed application under section 154. The application of assessee under section 154 of the Act was dismissed on 02/01/2020. Though, before us, the ld. AR of the assessee vehemently submitted that after dismissal of first application under section 154, the assessee filed second application under section 154. However, copy of such application is not available on record. Facts remains the same that after dismissal of application under section 154, the assessee filed appeal before the ld. CIT(A) on 24.05.2021. Considering the overall facts of the case, we find that assessee was bonafidely pursuing alternative remedy in filing application under section 154. Thus, there was no intentional or deliberate delay in filing appeal before ld. CIT(A). Even otherwise, it is a matter of fact that from 15/03/2020, there was a worldwide severe covid-19 pandemic. Hon'ble Apex Court in the Suo Moto Writ Petition No. 3 of 2020 has already condoned the delay for taking recourse of law upto 25/02/2 The Bombay Hindu Burning and Burial Grounds Committee and further 90 days grace period was also allowed. Thus, delay in filing appeal before ld. CIT(A) is condoned.
On merit, we find that case of assessee was not considered on merit, therefore, accepting the plea of assessee that due to inadvertence, the assessee opted/selected inappropriate section while filing return of income, therefore, the alternative claim of the assessee is accepted and the matter is restored back to the file of jurisdictional Assessing Officer to consider/correct the appropriate section as Section 12AA instead of 10(23C) and allow relief to the assessee on verification of facts. In the result, the grounds of appeal
raised by the assessee are allowed for statistical purpose.