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Facts
The assessee society reported a delay of 369 days in filing an appeal. The delay was attributed to the appellant's previous consultant's mistaken legal advice and negligence, and a desire to settle via the DTVS scheme. The assessee is a registered society providing skill-based education.
Held
The Tribunal condoned the delay and admitted the appeal. Considering the submissions and the need for substantive justice, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) to examine the justification of the additions.
Key Issues
Whether the delay in filing the appeal is to be condoned, and whether the additions made by the AO are justified, requiring examination by the CIT(A) on merits.
Sections Cited
250, 11, 12A, 10(23C), 12A(2)
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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA
Durgapur Steel City Society for Education, Edison Road B Zone, Durgapur Hospital, Durgapur, Bardhaman – 713205, [PAN: AABAD2378N] ……..…...…………….... Appellant vs. ITO Ward 2(1) (Exemption), Durgapur, Aayakar Bhavan, Aykar Bithi City, Durgapur - 713216 ................................ Respondent Appearances by: Assessee represented by : Shuvo Chakraborthy, Advocate Department represented by : Susanta Saha, Sr. DR. Addl. CIT Date of concluding the hearing : 13.08.2025 Date of pronouncing the order : 22.08.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER
In this case, the ITAT Registry has reported a delay in filing of the appeal of 369 days. The delay has been requested to be condoned as under:
“1. That the impugned first appellate order was passed on dt. 30/10/2023 by the Ld. CIT(A), NFAC and received on dt. 22/11/2023. The last due date of filing the impugned second appeal was dt. 21/01/2024 but it is being filed on by speed post on dt 31-01-2025 So there have been delays of 440 days. The honest and bonafide reason of said delays rest on the peculiarity of the fact of the instant case as being enumerated chronologically with documental support for the kind perusal of Honble Bench as: A That the appellant society is a registered society under the SOCIETY REGISTRATION ACT, 1860 and was formed to cater the skill based education like nursing training etc mainly among the marginalized women in the steel city, Durgapur, W,B.
Durgapur Steel City Society for Education B That the appellant society is an income tax assessee since it's inception and regularly filed return of income and it was assessed with huge addition as an AOP vide assessment order on dt. 29.12.2017 for not having registration u/s 12A which the appellant received in April, 2024. The copy of registration is annexed herewith. Appellant sociey thereafter filed the first appeal within the time limit on dt. 16/02/2018. Meanwhile appellant society was advised by it's previous consultant to settle the disputed tax through the DTVS scheme, 2020 for lack of merit in this appeal and therefore appellant filed FORM-1 in DTVS scheme on dt. 11/05/2020 and thereafter received F-2 and F-3 whereby per appellant disputed tax was Rs 549200 but per department with illegal interest claim it was Rs 1001527 and as a result the tax settlement was not materialized till 2021 and due to negligence of appellant previous consultant quantum appeal was not pursued keepig the appellant totally in dark. Thereafter on receipt of appellate order appellant was advised by the previous consultant not to contest the matter in Honble ITAT because of lack of merit and was further advised to avail the ongoing DTVS scheme, 2024. Meantime appellant some how came to contact with a reputed CA Sri Sugata Ganguly who in consultation with his ITAT advocate Sri Shuvo chakraborty found the full merit of this case in view of various settled judicial ductums and in view of said development instant appeal is being filed without a little delay. But due to said mistaken legal advice and gross negligence of the previous consultant the impugned delays have occurred which are inadvertent and for bonafide reason. Appellant is annexing all DTVS documents as well as to file affidavit and present consultant certificate before the Honble Bench at the time of hearing. C That aforesaid activities of appellant including settle the tax dispute is self speaking from the DTVS documents about the sincerity of the appellant society to see the end of this huge tax obligation upon it and appellant society being alive to it's tax liability. From these documents and appellant full compliance in assessment proceeding are also cogent evidence and the only reason for impugned delays due to mistaken legal advice by it's previous consultant about the total lack of merit of this case and genuinity of said averment before the Honble Bench is self proven from these DTVS documents which was pursued on bonafide beief by the appellant that the assessment order was correct and any challenge to it is not legally sustainable. So in view of said facts and circumstances and in view of Honble Apex court settled law in COLLECTOR OF LAND ACQUISITION VS MST. KATJI appellant society fervently pray to condone the said delay since it's case is full of merits and judicially covered and all the tax liability will not sustain at all if the Honble Bench kindly treat the case on merit angel and any rejection of appeal on delay point will perpetuate the grave injustice done by the department upo the appellant society.” 1.1 Considering the reasons given in the said petition, the delay is hereby condoned and the appeal is admitted for adjudication.
The present appeal arises from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”), passed by Ld. Commissioner of Income Tax (Appeals), [hereinafter “the Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order dated 30.10.2023.
Durgapur Steel City Society for Education 1.1 In this case, the Ld. AO made several additions on account of messing charges, bank interest, and rent paid. Aggrieved with this action, the assessee approached the Ld. CIT(A), where apparently, he could not make any compliance to the notices issued from his office. This fact is recorded in para 4 at page 2 of the impugned order. In the face of non- compliance by the assessee the Ld. CIT(A) has recorded a brief finding as under:
“The AO highlighted the above issues in the assessment order before arriving at his decision, which is apparently for valid reasons. However, in their only submission dated 16.03.2020 appellant has not made any effort to counter the observation s of the AO. During the course of appellate proceeding, appellant has not showed any seriousness in defending their stand. On the contrary, appellant sought adjournments number of times which have been allowed. In the last submission they wanted to file there submission by 16.10.2023, but so far, they have not furnished any representation. It appears, the appellant does not have any strong ground to defend their stand. It is also apparent that appellant is not eligible for the exemption u/s 11 of the IT Act, as they are not approved for benefit u/s 12A or u/s 10(23C) of the IT Act. So, AO was correct in limiting their claim of exemption and treating the appellant as an AOP. In the given fact and circumstances there is hardly any reason to deviated from the stand taken by the AO in this case. Therefore, the order of the AO is upheld. However, on the issue of non-deduction of TDS while making payment to SAIL, appellant submits that as it a Government organization, they have not deducted TDS. It is a fact that the SAIL is a Government of India enterprises, working under Ministry of Steel. Therefore, I am convinced that non-deductions of TDS has no impact in respect to the recipient. So, the disallowance made by the AO on the issue is deleted.” 2.1 Aggrieved with this action, the assessee has approached the ITAT with the following grounds:
“1 For that confirmation of entire assessed addition amount by the CIT(A), NFAC is bad in law and unjust and non compliance of hearing notices by the appellant society was due to gross negligence of appellant society previous consultant for giving mistaken legal advice not to pursue the filed appeal for lack of merits in the case and rather to avail the DTVS SCHEME, 2020 to settle the tax dispute instead of contesting the additions on merits... 2 For that while disposing the impugned appeal on merit Ld. CIT(A) did not considered one of the crucial legal issue which is the retrospective application of amended u/s 12A(2) w.e.f 01.04.20014 in appellant society case whereby appellant society is fully entitled to exemption of it's total income u/s 11 and 12 contrary to the A.O's wrongful and incorrect assessment of appellant Durgapur Steel City Society for Education society as an AOP by treating it as an unregistered society u/s 12A by making multiple additions and denying the benefit of u/s 11 and 12.. 3 For that appellant society is fully entitled to the benefit of amended u/s 12A(2) with retrospective effect from AY 2015-16 which is the issue in present appeal for the reason of it's first appeal was pending before the NFAC on the date of granting registration (dt. 04-04-2022) as the purported first appeal was instituted on dt. 16/02/2018 and it was disposed on vide appellate order passed on dt. 30/10/2023 apart from being fully covered by the jurisdictional Honble ITAT decision in SILIGURI RAMKRISHNA SAMITY VS DCIT, CIR-2, SILIGURI on identical question of law. 4 For that although the assessment order was passed on 29.12.2017 but as per settled law of Honble Gurat High Court in Commissioner Of Income-Tax vs Mayur Foundation on 29 December, 2004 and being followed by Honble Amritsar ITAT in M/S. SHIV MANDIR SANT SEWA VS. INCOME TAX OFFICER, ASHRAM CHARITABLE TRUST, WARD 1(3), JAMMU. JAMMU on basis of Honble Apex court settled law in Asgarali Nazarali v. State of Bombay, AIR 1957 SC 503 that the term pending assessment covers also the pending any proceeding and appeal in the appellate hierarchy including the ITAT. Therefore NFAC being the first appellate authority, appellant case is fully covered by the all aforesaid decisions being a pending assessment. 5 For that all the grounds no. (2), (3), (4) being pure legal grounds, appellant is fully entitled to raise these grounds before the Honble ITAT first time in view of Honble Apex court settled law in CIT VS NTPC LTD and JUTE CORP. OF INDIA VS CIT.”
For that appellant may modify the grounds: 3. Before us, the Ld. AR vehemently argued on the merits of the case and stated that all the facts were before the Ld. AO to have arrived at a correct decision. The Ld. AR stated that due to a communication gap between the assessee and the tax consultant, no compliance could be made before the Ld. CIT(A). The Ld. AR prayed for one more chance to present the facts at first appeal stage.
3.1 The Ld. DR relied on the orders of authorities below.
We have carefully considered the submissions before us and have heard the Ld. AR/DR. We find that the assessee is required to present the full gamut of facts before the Ld. CIT(A) so that at least factually the issues are thrashed out. Thus, in the interests of substantive justice, we set aside the impugned order and remand the same back to the file of Ld. CIT(A) for examination of whether the impugned additions are justified on the peculiar facts of the case or not.
Order pronounced on 22.08.2025