Loading judgment…
Facts
The assessee, a charitable organization, filed a return of income for AY 2014-15 declaring Nil income. An intimation order under Section 143(1) was passed on 28.02.2016, demanding Rs.33,34,030/- due to an addition on account of Long Term Capital Gains. The assessee claimed the addition was due to an inadvertent mistake in reporting capital gains exemption.
Held
The Tribunal held that substantial justice should not be defeated due to procedural technicalities. Considering the assessee is a charitable organization, the inadvertent mistake in filing the ROI leading to the demand, and the COVID-19 pandemic, the Tribunal condoned the delay in filing the appeal.
Key Issues
Whether the delay in filing the appeal before the Ld.CIT(A) should be condoned on sympathetic grounds due to inadvertent mistake and pandemic situation, to decide the appeal on merits.
Sections Cited
143(1), 12A, 154, 11(1A), 54, 11, 250(6)
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-1, Delhi, (hereinafter referred to as “the Ld.CIT(A)”), dated 11.03.2025 for the Assessment Year (hereinafter referred to as "AY”) 2014-15.
At the outset, the Ld.AR of the assessee brought to our notice that the Ld.CIT(A) has passed the impugned order without going into the merits of the grounds of appeal raised by the assessee which was raised against the intimation order passed by the CPC u/s.143(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”). According to the Ld.AR, the Ld.CIT(A) didn’t condone the delay of ‘3,178’ days in filing of appeal before him and has rejected the appeal only on this ground.
According to the Ld.AR, the assessee is a Charitable Organization running a Hospital & Leprosy Centre and has been granted registration u/s.12A of the Act. The assessee filed its return of income (RoI) for AY 2014-15 on 15.09.2014 declaring ‘Nil’ income. However, when the intimation u/s.143(1) of the Act was passed on 28.02.2016, the assessee was surprised to note that there was a demand of Rs.33,34,030/- on account of an addition/adjustment made of Long Term Capital Gains (LTCG) of Rs.90,90,051/-. According to the assessee, there was a mistake apparent on record and therefore, as per advice given to it, assessee preferred rectification application u/s.154 of the Act before the CPC as early as on 19.02.2018 which found no response from the CPC. Therefore, the assessee expected rectification order to be passed by the CPC, but finding no relief from the CPC, filed revised RoI dated 14.11.2018 and simultaneously sought again legal opinion from the present Counsel who advised them to file appeal against the intimation passed by the CPC and by that time, thereafter, Covid-19 pandemic spread & restrictions were placed by the Govt, and therefore, the assessee couldn’t process the papers which led to huge delay in filing of appeal and thus, the assessee could file appeal only on 10.12.2024. According to the Ld.AR, if the Covid-19 period as well as the period utilized for filing rectification application before the CPC is removed, then the residual delay will be less. Having said so, he out-lined the case, and according to him, there is strong prima facie case and balance of convenience is in its favour and therefore, considering the fact that the assessee is a Charitable Organization serving the down trodden leprosy patients, pleads to condone the delay on sympathetic ground also.
Per contra, the Ld.DR doesn’t want us to condone the delay of more than 3000 days.
Having heard both the parties and after perusal of the records, we note that assessee is a Charitable Organization running Hospital mainly for down trodden leprosy patients and the competent authority has granted registration u/s.12A of the Act to the assessee. According to the assessee, it filed the RoI on 15.09.2014 declaring ‘Nil’ income after claiming exemption u/s.11 of the Act. According to the Ld.AR, in the relevant assessment year under consideration, assessee sold a property for Rs.1.10 Cr. invested the sale consideration in the fixed deposits of Nationalized bank and bought a property for Rs.97 lakhs (by exchanging the property for generating income) and ought to have claimed capital gains exemption u/s.11(1A) of the Act. However, due to inadvertent error in the computation of capital gains, the return filed by the assessee mistakenly reported under the head ‘capital gains’ and exemption was claimed u/s.54 of the Act [instead of u/s.11(1A) of the Act], because of which, the CPC passed intimation order u/s.143(1) dated 28.02.2016 making an addition of Rs.90,90,051/- as taxable income under the head ‘LTCG’ and raised total demand of Rs.33,34,030/-. According to the assessee, even if the sale consideration is included as gross income of the assessee, the total application of income during the year being much more, there is no income liable for taxation. According to the Ld.AR, even if for arguments sake, there is some income left, then also assessee is eligible for exemption u/s.11 of the Act. Having considered the materials on records, we note that assessee charitable society has made out a prima facie case and considering that the assessee is in to philanthropic activity of taking care of down trodden leprosy patients and also taking note that the assessee inadvertently filed the return making inadvertent mistake in its RoI which led to the CPC raising demand against the assessee; and the assessee on coming to know about the demand raised on advice given to it, has filed application for rectification which ultimately led to the delay in filing of appeal before the Ld.CIT(A). Further, it is noted that Covid-19 pandemic restrictions was also one of the main factors, because of which, delay happened. Considering the overall facts, we are of the view that substantial justice should not be defeated on account of procedure/technicalities. Only the right income should be brought to tax and due to mistake committed by the assessee in the RoI, the assessee’s opportunity to assail the same should not be denied and considering the entire facts, we are inclined to condone the delay in filing of appeal, for which, we rely on the following decisions: • CIT v. K.S.P. Shanmugavel Nadar – [1985] 153 ITR 596 (Madras) • Hosanna Ministries v. ITO – [2017] 80 taxmann.com 173 (Madras) 5. Having condone the delay of ‘3,178’ days in filing of appeal before the Ld.CIT(A), we reverse the order of the Ld.CIT(A) and restore the appeal back to the file of the Ld.CIT(A) for adjudication of grounds of appeal raised by the assessee as per sub-section (6) of section 250 of the Act. The assessee is directed to file all the relevant documents and written submissions in support of its grounds of appeal and the Ld.CIT(A)
to pass speaking order in accordance to law after hearing the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 18th day of June, 2025, in Chennai.