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Facts
The assessee preferred an appeal against an order that dismissed their appeal due to a delay. The assessee had filed a revised return and a rectification application under Section 154 of the Income Tax Act, 1961, which remained undecided for over four years.
Held
The Tribunal held that while there is a limitation period for rectification, a pending application creates a bona fide belief for the assessee. The Tribunal condoned the delay and restored the issue to the CIT(A) for a fresh decision on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) can be condoned when a rectification application was pending for an extended period.
Sections Cited
143(1), 154, 10(23C)(iiad)
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Income Tax Appellate Tribunal, DELHI BENCHES: E : NEW DELHI
Before: SHRI S. RIFAUR RAHMAN & SHRI ANUBHAV SHARMA
Assessment Year: 2014-15 The Shiv Shakti Educational Vs ITO, Society, Exemption, Mehlana Road, Rohtak. Sonepat, Haryana – 131 001. PAN: AADAT7095C (Appellant) (Respondent) Assessee by : Shri Priyanshu Singhal, CA & Ms Mansi Jain, CA Revenue by : Shri Amit Katoch, Sr. DR Date of Hearing : 22.04.2025 Date of Pronouncement : 22.04.2025 ORDER
PER ANUBHAV SHARMA, JM:
This appeal is preferred by the Assessee against the order dated 19.01.2024 of the Commissioner of Income-tax (Appeals), Visakhapatnam (hereinafter referred to as ‘the Ld. FAA’, for short), in Appeal No.NFAC/2013- 14/10223639 arising out of the appeal before it against the order dated 16.03.2016 passed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the DCIT, Centralized Processing Centre, Bengaluru (hereinafter referred to as the Ld. AO).
On hearing both the sides, we find that the assessee has primarily raised grounds No.1 and 2 on the basis that the appeal of the assessee was dismissed by the ld.CIT(A) by not condoning the delay. The ld. DR has submitted that the delay was of extremely long and unjustified period of seven years. The ld. AR has defended the same submitting that the assessee was diligently contesting the issue by way of filing a rectification application.
We find that the assessee had filed a revised return of income and an application u/s 154 of the Act before the competent authority. The appellant society is an educational society having gross receipt of less than Rs.1 crore and, as such, exemption u/s 10(23C)(iiad) of the Act is claimed by the assessee. It was submitted before the ld.CIT(A) that under the bona fide belief the assessee has filed revised return and has also filed a rectification application for deleting the demand, the appeal was not preferred. Admittedly, as per the order of the ld.CIT(A), the rectification application was not decided even after four years. In the instant case, order u/s 143(1) was passed on 16.03.2016. Thus, the four year period from the end of relevant financial year ended on 30.03.2020. The ld.CIT(A) admites that no order u/s 154 of the Act can be passed after the expiry of four years but for that ld. CIT(A) somehow holds assessee at prejudice by observing that assessee should have not waited for its disposal till limitation or thereafter.
We are of the considered view that this limitation period is a sort of embargo on the powers of the assessing authority, so that rectification is not carried out after four years. However, where a rectification application is filed by the assessee then that certainly required to be adjudicated in a reasonable time. Keeping it pending certainly gives the assessee a bona fide belief that the grievance raised is under consideration and will be redressed at the level of rectification only.
Thus, in the facts and circumstances, though the appeal was delayed by almost seven years, but, certainly the indulgence was required by the ld.CIT(A) to ensure that the ends of justice are met by taking cognizance of the bona fide belief of the assessee society. Thus, in the facts and circumstances, we are inclined to allow the grounds No.1 and 2 and restore the issue on merits to the files of the ld.CIT(A) with a direction to condone the delay and decide the issue afresh giving due opportunity of hearing to the assessee. The appeal is allowed for statistical purposes. Order pronounced in the open court on 22.04.2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 22nd April, 2025.