FATIMABAI HAJIMIYA KOKANI PVT TRUST.,NASHIK vs. ITO (EXEP) WARD 1, NASHIK

We have heard both the sides and gone through the averments made in the condonation application. Hon’ble courts in plethora of judgments observed that when consideration of an appeal on merits is pitted against the rejection of a meritorious claim on the technical ground of the bar of limitation, the Courts lean towards consideration on merits by adopting a liberal approach towards ‘sufficient cause’ to condone the delay. The Court considering an application under section 5 of the Limitation Act may also look into the prima facie merits of an appeal. A liberal approach, may adopted when some plausible cause for delay is shown. Hon’ble Supreme Court in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382) condoned delay of 1537 days sub-serving the cause of justice. It was held so while observing that the second appeal filed by the appellant was unintentional, much less due to any deliberate laches, and was well-explained by the State before the High Court. Hon’ble Court further held that in cases where the merits are significant, a more liberal approach may be adopted to allow for the examination of the case on its merits. Having gone through the averments made in the condonation application and considering the ratio laid down by the Hon’ble Court in the case of Inder Singh (supra), we are of the view that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. We therefore condone the delay of 107 days and admit the appeal for adjudication.

Brief facts of the case are that the assessee is a Private Trust claimed to be engaged in charitable activities providing Medical relief to the poor and for Educational Purposes. It furnished the return of income for A.Y. 2015-16 on 08.01.2016 declaring income of Rs.1,42,940/- and claimed refund of Rs.50,277/-. However, the said return was treated as invalid return u/s.139(9) of the Act by the CPC. Thereafter, assessee furnished another return on 20.03.2017 declaring same income and claiming same refund. However, the first return which was stated to be invalid by the CPC was processed u/s.143(1) of the Act on 27.03.2017 and the assessee’s claim of application of income for charitable purposes at Rs.3,79,402/- (expenses incurred during the year) was denied and income computed at Rs.52,234/-. Now the assessee challenged the said adjustment made by the CPC in its order dated 27.03.2017 before ld.CIT(A) by filing the appeal on 09.02.2023 with a delay of 2115 days. Even though assessee pleaded before ld.CIT(A) explaining the said delay but ld.CIT(A) did not condone the delay observing that the assesee has been consistently furnishing the income tax returns from A.Y. 2016-17 to 2023-24 and therefore there is no plausible reason for not filing the appeal in time.

Now the assessee is in appeal before this Tribunal by raising the following grounds :

Without prejudice to the above grounds, the learned CIT(A) erred in not appreciating that the CPC was apparently unjustified in taxing the entire gross receipts of Rs.5,22,341 as income of the appellant trust without allowing any deduction u/s 57 of Rs.3,79,401 towards expenditure incurred for the objects of the trust and hence, a liberal view to avoid miscarriage of justice ought to have been taken while considering the question of condonation of delay.

Further, Ld. Counsel for the assessee also submitted that even though the ld.CIT(A) has not passed a speaking order dealing with merits of the case, however, it has been consistently held by Hon’ble Courts that gross receipts cannot be taxed and the claim of expenditure should be allowed and for this purposes, he placed reliance on the judgment of Hon’ble Delhi High Court in the case of DDIT Vs. Petroleum Sports Promotion Board reported in 362 ITR 235 (Delhi HC) and the decision of Coordinate Bench, Hyderabad in the case of Sri Ramalingeswara Swamy Temple Vs. ADIT (Exemptions) reported in (2024) 159 taxmann.com 449 (Hyderabad Trib.).

Ld. Departmental Representative vehemently argued supporting the orders of the lowers authorities.

We have heard the rival submissions and perused the record placed before us. We note that assesseee filed the original return on 08.01.2016 which was initially found to be invalid by the CPC. Assessee furnished another return on 20.03.2017 which was belated but was a valid return. However, CPC rather than processing the valid return filed on 20.03.2017 has processed the previous return filed on 08.01.2016. Even the processing order of this return was not available on the income-tax portal. Copy of the screenshot is placed on page 8 of the paper book. Assessee was also unaware about passing of such intimation order u/s.143(1) of the Act. It is also noticed that after the filing of the return on 08.01.2016 Fatimabai Hajimiya Kokani, main trustee expired on 16.08.2016 and subsequent to that the valid return was filed on 20.03.2017. Since the order of processing of the defective return was not appearing on income-tax portal assessee had no information about passing of the same. However, assessee trust has been filing the returns regularly for the subsequent years and also claimed the refund, the same was being adjusted against the demand for A.Y. 2015- 16. Affidavit in support of the same has also been placed on record. When the assessee’s refunds got adjusted against the refund due for A.Y. 2015-16 assessee requested ACIT, Circle- 1, Nashik to provide with a copy of intimation u/s.143(1) of the Act since it was not appearing on the income-tax portal. The details explaining these facts have been placed in the paper book running into 34 pages. At this juncture, assessee came to know that when the return for A.Y. 2015-16 was filed claiming refund, then how come the refund of the subsequent years are adjusted against the demand for A.Y. 2015-16. Based on this information assessee filed a letter dated 06.01.2023 before the ACIT, Circle-1, Nashik seeking copy of intimation order u/s.143(1) of the Act and after receiving the letter, ld. AO through its e-mail dated 21.02.2023 supplied the copy of intimation order u/s.143(1) to the assessee and immediately thereafter appeal before the ld.CIT(A) has been filed.

As regards the condonation of delay, we have gone through the order of this Tribunal in the case of M.K. Hotels and Resorts Ltd.(supra). Hon’ble Tribunal after considering the judgments of Hon’ble Supreme Court in the case of Senior Bhosale Estate (HUF) vs. ACIT reported in (2019) 112 taxmann.com 134 (SC), Shakuntala Devi Jain vs. Kuntal Kumari and others reported in AIR 1969 SC 575 and in the State of West Bengal Vs. Administrator reported in 1972 AIR 749, condoned the delay of 9 years and remitted the matter to the file of ld.CIT(A) to decide on merits as the ld.CIT(A) had dismissed the appeal in limine. While condoning the delay, Hon’ble Tribunal held that Revenue authorities failed to submit proof for any other mode of service of Intimation to the assessee. For the sake of brevity, we would like to reproduce the finding of Hon’ble Tribunal and the same reads as follows :

From going through the above order, we find that facts of the above case are identical and all these chronology of events of the instant case clearly indicate that the delay was not intentional and there were certain technical glitches on the income-tax portal. On one hand the original return filed by the assessee has been treated as defective and on the other hand CPC still processed the defective return filed on 08.01.2016 vide order dated 27.03.2017 eventhough the assessee has filed another valid return on 20.03.2017 and there being no information about processing of the return by CPC on income-tax portal. In the assessee’s case before us, intimation u/s.143(1) of the Act passed on 27.03.2017 and Revenue authorities have failed to demonstrate that the said intimation order is served on the assessee.

Albeit we concur with the arguments putforth by the ld. Counsel for the assessee and the fact remains that in the past assessee has filed adjournment applications stating that it wants to opt to Vivad Se Vishwas Scheme but later on assessee has not opted for Vivad Se Vishwas Scheme. It is the prayer of the Ld. Counsel for the assessee that the issue on merits be remitted to the file of ld.CIT(A). Further, it is also a fact emanating from the impugned order that ld.CIT(A) has not dealt with merits of the case and the appeal was dismissed on account of delay in filing of the appeal by 2115 days. On the first look, the delay of 2115 seems to be large but when during the course of hearing before us Ld. Counsel for the assessee has explained each and every aspect which led to the inordinate delay along with submissions and documentary evidence. We therefore condone the delay in filing of appeal before ld.CIT(A). We also observe that in such type of cases costs are imposed on the assessee, however, in the instant case, assessee is a private charitable trust and is providing medical relief to the poor, therefore, we are not inclined to impose any costs on the assessee.

Considering the peculiar facts and circumstance of the case and in the larger interest of justice, we deem it proper to restore the issues on merits to the file of ld.CIT(A) for necessary adjudication. Assessee is directed to provide latest email id and contact detail to the department for receiving the notices from ITBA portal. Assessee is also directed to remain vigilant and not to take unnecessary adjournment unless otherwise required for reasonable cause. Impugned order is set aside and the grounds of appeal raised by the assessee are allowed for statistical purposes.

In the result, appeal of the assessee is allowed for statistical purposes.