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Facts
The assessee, a public trust running educational institutions, filed its return claiming exemption under Section 10(23C)(iiiab). The AO denied the exemption and passed an ex-parte order as the assessee failed to comply with notices. The CIT(A) dismissed the appeal due to a delay in filing, attributing it to the Chartered Accountant's age and health.
Held
The Tribunal held that the delay in filing the appeal before the CIT(A) was not willful or deliberate but due to unavoidable reasons. Citing Supreme Court judgments, the Tribunal condoned the delay and restored the matter to the CIT(A) for decision on merits.
Key Issues
Whether the delay in filing the appeal before the CIT(A) was to be condoned, and if so, whether the appeal should be decided on merits by restoring it to the CIT(A).
Sections Cited
10(23C)(iiiab), 143(2), 143(1), 144, 12AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 14.06.2024 of the Ld. Commissioner of Income Tax (Appeals, NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2016-17.
2. There is a delay of 115 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. On perusal of the same, we are satisfied that the delay in filing of appeal is not intentional or deliberate but has occurred for the reasons mentioned in the affidavit. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339, condone the said delay and proceed to decide the appeal.
Briefly stated, the facts are that the assessee is a Public Trust constituted under the Bombay Public Trust Act, 1950 since 24.01.1968. The assessee trust is not registered u/s 12AA of the Income Tax Act, 1961 (the “Act”). The assessee is engaged solely in the educational activities and operating primary, secondary and higher secondary schools. For AY 2016-17, the assessee e-filed its return of income on 22.02.2017 declaring total income at Rs. Nil by claiming exemption u/s 10(23C)(iiiab) of the Act of Rs.1,58,69,835/-. The case of the assessee was selected for limited scrutiny assessment to verify “whether exemption claimed u/s 10(23C) is correct”. Hence, the Ld. Assessing Officer (“AO”) sought its explanation about the claim of exemption by issuing statutory notices under section 143(2)/143(1) of the Act. However, the assessee failed to comply with the said notices. Since the assessee could not substantiate its claim of exemption, the Ld. AO proceed to complete the assessment at the assessed income of 1,85,25,119/- denying the exemption and raising a demand of Rs.89,75,613/- along with interest by passing an ex-parte order u/s 144 of the Act on 22.12.2018.
Aggrieved with such order of the Ld. AO, the assessee carried the matter before the Ld. CIT(A)/NFAC. Before the Ld. CIT(A)/NFAC, the appeal was filed with a delay of 180 days. The assessee submitted an affidavit of the Chairman of the assessee trust citing the reasons for such delay which are reproduced below: “3. That due to the advanced age and deteriorating health of our Chartered Accountant, Mr. Jagoje, who is aged around 80 years, and has been handling the Trust's accounts for several years, he was unable to participate in the assessment proceedings and complete the required formalities in a timely manner. 4. That the delay in filing the appeal against the order under Section 144 was neither willful nor deliberate but was due to the aforesaid genuine and unavoidable reasons. The delay in filing this appeal is of 180 days, calculated from 21.01.2019 to 20.07.2019.”
4.1 The above stated reasons for condoning the delay were not found to be satisfactory by the Ld. CIT(A)/NFAC. He therefore rejected the condonation request of the assessee and confirmed the ex-parte order of the Ld. AO on merits, by observing as under: “1. The assessee's request for condonation of delay in filing the appeal is rejected as the reasons for condoning the delay is not satisfactory.
It is seen from the return of income filed that the assessee has claimed deduction of Rs. 18525119 u/s 10(23C)(iiiab). Since the assessee has not been able to substantiate its claim for exemption the same is denied and income is assessed at Rs. 18525119/- It is pertinent to note that the assessment was completed exparte u/s 144 due to non-cooperation and non-compliance of the assessee. The assessment of Rs. 18525119/- u/s 10(23C) (iiiab) is confirmed.”
Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal : “1) Ground No.
1. On the facts and circumstances of the case and in Law, the Ld. Assessing officer erred in not granting exemption to appellant U/s 10(23)(iiiab) when it is substantially financed by the government. 1.1) Appellant is Public charitable trust constituted under the Bombay Public trust Act 1950. Since 24-01-1968 the appellant has been engaged solely in the education activities. 1.2) During the year under consideration Gross receipts of the trust is Rs. 1,75,25,248/- it includes Grant received from Government of Rs. 1,67,98,911/- ( Government grant constitutes 96% of gross receipts). 1.3 Noteworthy fact is appellant had incurred deficit of Rs. 8,04,995/-. 1.4) Learned AO without considering this fact disallowed claim of Rs. 1,85,25,119/- u/s 10(23C)(iiiab) of the Income Tax Act.”
The Ld. AR submitted that the delay in filing the appeal before the Ld. CIT(A)/ NFAC was not intentional but owing to the reasons stated above which is supported by the affidavit filed by the assessee. But the Ld. CIT(A) being dissatisfied such reason has dismissed the appeal which is not justified. He submitted that the assessee has a strong case on merits and therefore, in the interest of justice, the matter may be restored to the file of the Ld. CIT(A) with a direction to condone the delay and decide the appeal on merits.
The Ld. DR supported the order of the Ld. AO and CIT(A)/ NFAC.
We have heard the Ld. Representatives of the parties and perused the material available on records. It is an admitted fact that due to non- compliance to the statutory notices issued by the Ld. AO, he was constrained to pass the order u/s 144 of the Act wherein he denied the assessee’s claim of exemption of Rs. 1,85,25,119/- u/s 10(23C)(iiiab) of the Act. Perusal of the appellate order of the Ld. CIT(A)/ NFAC reveals that the assessee filed the appeal before him with a delay and filed an affidavit explaining the reasons for such delay. However, not being satisfied with the reasons for delay in filing of the appeal, the Ld. CIT(A)/NFAC dismissed the appeal being barred by limitation. Further, on merits, the Ld. CIT(A)/NFAC has simply upheld the ex-parte order of the Ld. AO without himself dwelling into the merits of the case, the reasons of which have already been reproduced in the preceding paragraphs.
The assessee in his affidavit has stated that the delay was neither willful nor deliberate but attributable to the advanced age and deteriorating health of his chartered accountant who was then about 80 years of age due to which he could not attend the proceedings in the timely manner. The assessee therefore had genuine and unavoidable reasons. We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
Following the decision of Hon'ble Supreme Court cited above and considering the totality of the facts of the case and in the interest of justice, we are of the considered opinion that the Ld. CIT(A)/NFAC should have condoned the delay and decided the issue on merit. We, therefore, set aside the order of the Ld. CIT(A)/NFAC and restore the issue back to his file with a direction to condone the delay in filing of the appeal and decide the appeal on merit as per fact and law, after affording adequate opportunity of hearing to the parties. The assessee is also hereby directed to participate in the appeal proceedings and submit the requisite details before the Ld. CIT(A)/NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A)/NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 03rd September, 2025.