SRI SOMESHWARA LAXMI NARASIMHA SWAMY TEMPLE PALAKURTHY,WARANGAL vs. CIT (EXEMPTIONS), HYDERABAD

On the other hand, the Ld.DR has vehemently opposed to the condonation of delay in filing the appeals before the Ld.CIT(A) and submitted that the assessee has not disputed the delay in filing the appeals, but, there was no application for condonation of delay filed by the assessee before the Ld.CIT(A). He has further submitted that in the absence of any application for condonation of delay as well as non-compliance to the notices issued by the Ld.CIT(A), the appeals of the assessee filed belatedly were not maintainable and accordingly dismissed by the Ld.CIT(A) as not maintainable. He has relied upon the impugned orders of the Ld.CIT(A).

We have considered the rival submissions as well as the material on record. There is no dispute that there was delay of 11 to 14 days in filing these appeals before the Ld.CIT(A). The Ld.CIT(A) has given reasons for dismissal of the appeals, being barred by limitation in para 2.2 to 2.5 and 2.12 as under :

Identical reasons have been given by the Ld.CIT(A), while passing all the three impugned orders. Thus, it is clear that the Ld.CIT(A) has issued the notice to the assessee dated 27.09.2024, pointing out the discrepancy of delay in filing the appeals and when there was no response on behalf of the assessee to the said notice, the appeals of the assessee were dismissed, being barred by limitation. The assessee has explained the cause of delay as due to urgent temple administrative work connected with year- end rituals and unavoidable official commitments of the Executive Officer, the appeals could not be filed within the limitation period and therefore, there was delay of 11 to 14 days in filing these three appeals before the Ld.CIT(A). Having considered the facts and circumstances and particularly, when the assessee temple is managed by the administrator appointed by the Government under the Endowment Act and the Ld.CIT(A) has given only one opportunity to the assessee to explain the delay in filing these appeals, we are satisfied that the assessee was having a reasonable cause for delay and therefore, in the interest of justice, we condone the delay of 13 days, 11 days and 14 days in filing these appeals before the Ld.CIT(A) for the A.Y. 2015-16, 2016-17 and 2018-19 respectively.

On the merits of the issue, the Ld.AR of the assessee has submitted that the AO has assessed the entire hundi collection/donations, without allowing the corresponding expenditure incurred by the assessee and therefore, the assessment framed by the AO u/s 147 r.w.s.144B is highly arbitrary and unjustified. He has pointed out that for all the three years, the AO has made addition of the entire amount of hundi donation, without allowing expenditure/deductions, whereas, the AO ought to have assessed the correct income in the hand of the assessee. In support of his contention, he has relied upon the decision of this Tribunal dated 06.05.2025 in the case of the Zoos and Parks Authority of Telangana Vs. DCIT in to 118/Hyd/2025.

On the other hand, the Ld.DR has submitted that the assessee has not filed the return of income for all these three assessment years and the AO has reopened the assessment by issue of notice u/s 148A of the Act and when there was no response on behalf of the assessee to the notice issued u/s 148A, the AO then issued notice u/s 148 on 28.04.2022 and framed the assessment by considering the donation received by the assessee during the respective assessment years. Thus, he has submitted that the decision relied upon by the Ld.AR in the case of Zoos and Parks Authority of Telangana (supra) is distinguishable on facts. He has relied upon the orders of the authorities below.

In the rejoinder, the Ld.AR has submitted that the assessee was under the impression that after the administration of the assessee temple was taken over by the Government under the Endowment Act, the income of the assessee is not liable to tax, in view of the provisions of section 10(23BBA) of the Act, and therefore, the assessee did not file the return of income for these assessment years.

We have considered the rival submissions as well as the relevant material on record. The AO has assessed the entire donations received by the assessee to tax, without allowing any expenditure or deduction. The AO has also considered the provisions of section 10(23BBA), which shows that even the Revenue is not denying this aspect that the income is exempt u/s 10(23BBA) in respect of the temple/Trust, whose administration is under the control of the Government as per the Endowment Act. The AO has made the addition on the ground that the assessee has not filed any record to show that the assessee is a public/religious/charitable Trust falling under the provisions of section 10(23BBA) of the Act. The relevant observation of the AO is as under :

Therefore, only because of non-representation of the assessee and non-compliance to the notice issued by the AO on the part of the assessee, the AO assessed the entire donation to tax. The AO has not given the finding that the provisions of section 10(23BBA) are not appliable on the income of the assessee. Even otherwise, the AO is duty bound to assess the correct income of the assessee, while framing the assessment on best judgment basis and cannot assess the income of the assessee in arbitrary manner. The coordinate Bench of this Tribunal in the case of Zoos and Parks Authority of Telangana Vs. DCIT (supra) has also considered this issue in para 9 as under : “9. Having said so, let us come back to the assessment of income of the assessee society. The Assessing Officer having rejected the exemption u/sec.11 of the Act has considered gross receipts of the assessee society for the purpose of taxation. It was the argument of the Learned Counsel for the Assessee that, in case exemption is denied u/sec.11 of the Act, then, income of any trust or institution or society should be considered under normal provisions of the Act and ought to have allowed the expenditure/ deduction and only net income as per the financial statements should be brought to tax. In this case, the Assessing Officer after rejecting exemption u/sec.11 of the Act has taxed gross receipts without allowing deduction towards expenditure. It is well settled principle of law that, once the income of any Trust/Institution or Society is considered as AOP and assessed under normal provisions of the Act, then, all permissible deductions including expenditure incurred out of said income should be allowed as deduction. This view is supported by the decision of ITAT-C-Bench, Chennai in the case of Kingston Educational Trust vs., DCIT (supra) where the Tribunal after considering certain judicial precedents in light of Judgment of Hon’ble Madhya Pradesh High Court in the case of Kaluram Ganeshram (HUF) vs., CIT [1988] 172 ITR 154 (MP) held that, only net income needs to be taxed. Therefore, we are of the considered view that, the Assessing Officer and the learned CIT(A) are erred in taxing gross receipts of the assessee society instead of net income as per the financial statements. However, fact remains that since the assessment order is u/sec.143(1), the Assessing Officer does not have an occasion to verify the correctness of various

Accordingly, in the facts and circumstances of the case, the impugned order of the Ld.CIT(A) is set aside and the matter is remanded to the record of the AO for fresh adjudication, after giving one more opportunity of hearing to the assessee.

There is a delay of 275 days in filing the appeal before the Tribunal. The assessee has filed a petition for condonation of delay, which is supported by the affidavit of the Executive Officer of the assessee temple. The Ld.AR of the assessee has submitted that the notice as well as the impugned order was sent to the e- mail ID of the assessee temple, however, there was no facility with the assessee temple for log in into the e-mail ID as there is no facility of computer or internet connection in the premises of the assessee temple. He has further submitted that the Executive Officer was also not aware about the notice issued to the e-mail ID of the assessee temple and therefore, he could not notice the impugned order passed by the Ld.CIT(E), rejecting the application for registration u/s 10AB of the Act. The Ld.AR has thus submitted that the delay in filing the appeal is neither deliberate nor willful, but due to lack of knowledge of the impugned order passed by the Ld.CIT(E) and until when the return of income for the A.Y.2024-25 was filed for claiming exemption u/s 11 and 12 of the Act. The Chartered Accountant of the assessee verified about the registration u/s 12AB of the Act and then found the impugned order passed by the Ld.CIT(E). Thus, the Ld.AR has submitted that immediately thereafter, the present appeal has been filed belatedly. He has thus prayed that the delay of 275 days in filing the present appeal may be condoned as the Ld.CIT(E) has rejected the application of the assessee on the ground that there was no compliance to the notice issued to the assessee and not decided the matter on merits.

On the other hand, the Ld.DR has opposed to the condonation of delay and submitted that it is a case of negligence on the part of the assessee, as after granting the provisional registration, the assessee filed the present application, but did not pursue the same before the Ld.CIT(E) and further, the present appeal was not filed within the limitation period and there is abnormal delay of 275 days in filing the present appeal. Thus, the Ld.DR has contended that the assessee does not deserve condonation of delay in filing the appeal.

We have considered the rival submissions as well as perused the impugned order passed by the Ld.CIT(E). We have also gone through the contents of the affidavit filed by the Executive Officer, which is reproduced as under :

Since the application of the assessee for registration u/s 12AB was rejected due to non-filing of the relevant details on record and non-compliance of notice issued by the Ld.CIT(E), therefore, in the facts and circumstances of the case, when the assessee temple is managed by the administrator/Executive Officer appointed by the Government under the Endowment Act and delay in filing the appeal has occurred due to the confusion between the Executive Officer and temple staff about the impugned order sent to the e-mail ID of the assessee temple, then taking the lenient view, we condone the delay of 275 days in filing the present appeal, subject to cost of Rs.1,000/- to be deposited in the Prime Minister National Relief Fund, within a period of one month from the date of this order. It is made clear that the cost to be paid by the Executive Officer, who is responsible for the delay in filing the present appeal.

The assessee has raised the following grounds of appeal:

We have heard the Ld.AR as well as the Ld.DR and carefully perused the impugned order passed by the Ld.CIT(E). The Ld.CIT(E) has rejected the application of the assessee for want of non-compliance on behalf of the assessee to the notice issued by the Ld.CIT(E). Accordingly, in the facts and circumstances of the case as discussed while condoning the delay and in the interest of justice, the impugned order of the Ld.CIT(E) is set aside and the matter is remanded to the record of the Ld.CIT(E) for reconsideration of the application of the assessee for registration u/s 12AB of the Act after verification and examination of the relevant record to be filed by the assessee as well as after giving an appropriate opportunity of hearing to the assessee.

In the result, all the four appeals of the assessee are allowed for statistical purpose.