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Facts
The assessee trust's registration under Section 12A was withdrawn, leading to an ex-parte assessment under Section 144 where donations were added to its income. The trust filed an appeal before the CIT(A) with a delay of 665 days, which the CIT(A) refused to condone, dismissing the appeal as time-barred.
Held
The ITAT, acknowledging the CIT(A)'s discretion under Section 249(3) and considering the charitable nature of the trust and reasons for delay (COVID Pandemic, unawareness of assessment order), held that a liberal approach should have been adopted. Citing a Supreme Court judgment, the ITAT remitted the matter back to the CIT(A) to condone the delay and dispose of the appeal on merits.
Key Issues
Whether the CIT(A) erred in not condoning a 665-day delay in filing the appeal, despite the assessee's charitable status and bonafide reasons including the COVID Pandemic.
Sections Cited
144, 143(2), 12A, 144B, 249(3)
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Income Tax Appellate Tribunal, Hyderabad ‘ SM-B ‘ Bench, Hyderabad
करदाता का "ितिनिध"/ : Shri V. Srinivas, CA Assessee Represented by राज" का "ितिनिध"/ : Shri Suresh Babu KN, Sr.AR Department Represented by सुनवाई समा" होने की ितिथ/ : 13.03.2025 Date of Conclusion of Hearing घोषणा की तारीख/ : 19.03.2025 Date of Pronouncement O R D E R "ित रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.
The present appeal filed by the assessee trust is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 17/01/2025, which in turn arises from the order passed by the A.O under Section 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 08/09/2021 for the assessment year 2019-20. 2. The assessee trust has assailed the impugned order on the following grounds of appeal before us:
“1. On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is erroneous, and bad in law.
The Ld. CIT(A) has failed to appreciate that the assessee is a non-profit organization and that there was a bona fide reason for the delay in filing the first appeal.
3. The Ld. CIT(A) ought to have condoned the delay in filing the first appeal and deposed of the same on merits.
4. The Ld. CIT(A) failed to appreciate that the issue in appeal is substantially legal in nature and ought to have considered the same on merits.
The Ld. CIT(A) ought to have held that the order passed by the Learned. Assessing Officer is erroneous and bad in law.
6. The Ld. Cit(A) ought to have held that the Learned. Assessing Officer grossly erred in treating the gross income / receipts of Rs. 4,16,821/- as income of the appellant without considering the related expenditure incurred.
7. On the facts and in the circumstances of the case, the Ld CIT(A) ought to have held that the Learned. Assessing Officer erred in not allowing the expenses incurred by the trust aggregating to Rs. 2,66,821/- for administrative and charitable purposes which are allowable under the provisions of the Act.
8. Without prejudice to the above, the Ld. CIT(A) ought to have held that the Ld. Assessing Officer erred in applying the maximum tax rate of 30% instead of individual slab rates applicable to the appellant.
The appellant craves leave to alter, amend or delete any of the grounds of appeal and / or to add any fresh ground(s) of the appeal at or before the hearing of the appeal.”
Succinctly stated, the assessee-trust had e-filed its return of income for the A.Y 2019-20 on 30/08/2019, declaring an income of Rs.2,07,470/-. Subsequently, the case of the assessee trust was selected for scrutiny assessment under Section 143(2) of the Act for the reason that the registration granted to it under Section 12A of the Act was withdrawn.
During the course of the assessment proceedings, the A.O. observed that the assessee-trust had during the subject year received donations of Rs. 3,36,853/-. Observing that the assessee-trust was declined registration under Section 12A of the Act, the A.O. called upon it to explain that as to why the amount of donations may not be added to its total income. As the assessee trust had failed to come forth with any explanation, therefore, the A.O. was constrained to proceed with and frame the assessment to the best of his judgment under Section 144 of the Act. Accordingly, the A.O. made an addition of Rs. 3,36,853/- to the income returned by the assessee and vide his order passed under Section 144 r.w.s 144B of the Act, dated 08/09/2021 determined its income at Rs. 4,16,820/-.
5. Aggrieved, the assessee trust carried the matter in appeal before the Ld. CIT(A). As the appeal filed by the assessee-trust involved a delay of 665 days, it had filed an application seeking condonation of the same. On a perusal of the CIT(A) order, it transpires that the assessee-trust has sought for the condonation of the delay, inter alia, for the reason that it was a small charitable organization and the in-house person in charge of the tax matters had remained unaware of the assessment order. It is further claimed that the assessee trust on having learnt about the assessment order, had filed the appeal involving no further loss of time. For the sake of clarity, the submissions of the assessee- trust regarding the reasons leading to the delay with a request for condonation of the same as was filed before the CIT(A) are culled out as under:
The appellant is a small organization and al the trustees are volunteers working without any remuneration, the appellant does not even have an official e-mail ID, the person in-charge were not even aware of the order passed and now the appeal is being filed as soon as the appellant has come to know the order passed. Further, the activities of the trust have also been temporarily put on hold since covid. Therefore, the appellant would like to request your goodself to kindly condone the delay of 665 days and admit the appeal as the demand raised has caused undue hardship on the appellant particularly when the appellant is functioning as a charitable and non-profit organization. Kindly take a sympathetic and lenient view, admit the appeal and adjudicate the same on merits.
However, the CIT(A) did not find favor with the explanation of the assessee trust based on which it had sought for the condonation of delay of 665 days involved in the appeal filed before him. The CIT(A) held a conviction that the reason advanced by the assessee trust as regards the delay involved in the appeal filed before him was found to be insufficient, unsubstantiated and unreasonable, and, thus, rejected the same. Accordingly, the CIT(A) declined to condone the delay by refraining from exercising the discretion that was otherwise vested with him under sub-section (3) of section 249 of the Act and dismissed the appeal as barred by limitation.
The assessee-trust being aggrieved with the order of the CIT(A) has carried the matter in appeal before us.
We have heard the learned Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record.
9. Shri V. Srinivas, learned Authorized Representative (in short “ld.AR”) for the assessee trust, at the threshold of hearing, submitted that the CIT(A) had, without any justification, summarily declined to condone the delay that was involved in the appeal filed by the assessee- trust before him. Elaborating on his contention, the ld.AR submitted that the assessee-trust is a small organization that is engaged in charitable activities, viz., distribution of books at schools, donations at schools, annadanam programme for the poor, construction of Vasavi Mata Temple at Kodangal Town, Vikarabad, etc. The ld.AR submitted that as the delay involved in filing the appeal before the CIT(A) was for bonafide reasons, viz., (i) that the activities of the assessee-trust were temporarily put on hold during the CIVID Pandemic; and (ii) that the in-house person in charge of the tax affairs of the assessee trust had remained unaware of the assessment order passed in its case. Carrying his contention further, the ld.AR submitted that as the delay involved in filing the appeal before the CIT(A) was neither on account of any lackadaisical approach nor smacked of any malafide conduct on the part of the assessee trust, but was on account of a bonafide omission coupled with the compelling circumstances that had earlier prevailed during the COVID Pandemic, therefore, the CIT(A) in all fairness ought to have adopted a liberal approach and condoned the delay that was involved in the appeal before him.
Per contra, the Learned Departmental Representative (in short “Ld. DR”), submitted that as the delay involved in the appeal filed by the assessee trust before the CIT(A) was inordinate, therefore, the latter had rightly declined to exercise the discretion that was vested with him under sub-section (3) of Section 249 of the Act and refused to condone the same.
We have thoughtfully considered the contentions advanced by the Learned Authorized Representatives of both the parties qua the delay involved in filing the appeal by the assessee-trust before the CIT(A). We are principally in agreement with the CIT(A) that an inordinate delay was involved in the appeal filed by the assessee-trust before him. At the same time, we are of the firm conviction, that as the CIT(A), as per sub- section (3) of section 249 of the Act, was vested with the discretion to condone the delay involved in the appeal filed by the assessee-trust before him, therefore, considering the totality of the facts involved in the present case, he ought to have taken a sympathetic and lenient view, specifically when the present assessee trust is stated to be a small organization involved in the charitable activities, viz. distribution of books at schools, donations at schools, annadanam programme for the poor, construction of Vasavi Mata Temple at Kodangal Town, Vikarabad etc. Our aforesaid view that a liberal approach ought to have been adopted by the CIT(A) while considering the assessee’s request for condonation of the delay involved in the appeal filed before him is fortified by the judgment of Hon'ble Supreme Court in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Specia Leave Petition (Civil) Nos. 26310- 26311/2024, dated 31st January, 2025. The Hon'ble Apex Court, while setting aside the order of the Hon'ble High Court of Chhatisgarh, which had approved the declining of the condonation of delay of 166 days by the Income Tax Appellate Tribunal, Raipur Bench, had observed, that a justice-oriented and liberal approach should be adopted while considering the appellants request for condonation of delay involved in filing of the appeal. Accordingly, the delay of 166 days involved in the appeal was condoned by the Court.
We, thus, in terms of our aforesaid observations, are of the view that the CIT(A) ought to have condoned the delay that was involved in the appeal filed by the assessee-trust before him, and disposed off the same on merits. Accordingly, we herein restore the matter to the file of the CIT(A) with a direction to dispose off the appeal on merits. Needless to say, the CIT(A) shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee.
Resultantly, the appeal filed by the assessee trust is allowed for statistical purposes in terms of our aforesaid observations.