PRATHNA CHARITABLE TRUST ,AHMEDABAD vs. THE ITO, WARD-2, EXEMP, AHMEDABAD

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

& 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 2 of 5 2. The Id. CIT(A) has erred in law and on facts on dismissing appeal for want of delay though no explanation called for delay in notices issued u/s. 250 dated 14.02.2025,13.03.2025 & 20.03.2025. 3 The Ld. CIT(A) has erred in law and on facts in not adjudicating issues of disallowance of expenditure incurred for object of trust by CPC of Rs.6,99,755/-.

4. The Ld. CIT(A) has erred in law and on facts in not adjudicating grounds raised

for allowing deduction of set apart u/s. 11 of the Act @15% of Rs.1,55,004/-.

5. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” for A.Y. 2018-19 “1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice.

2. The Id. CIT(A) has erred in law and on facts on dismissing appeal for want of delay though no explanation called for delay in notices issued u/s. 250 dated 14.02.2025,13.03.2025 & 20.03.2025. 3 The Ld. CIT(A) has erred in law and on facts in not adjudicating issues of disallowance of expenditure incurred for object of trust of Rs.6,99,505/- for object of trust.

4. Shri Mahesh Chhajed, Ld. AR of the assessee submitted that the assessee had filed the return of income for the A.Y. 2016-17 on 21.02.2018 declaring income of Rs.1,78,600/-. He explained that the & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 3 of 5 assessee is a charitable trust and engaged in charitable activities like sanitation, medical, women & child development etc. The assessee had made an application for registration under Section 12AA of the Act on 29.10.2014, which was rejected for technical reasons. The CPC while processing the return under Section 143(1) of the Act, has made adjustment and the gross receipt of Rs.10,33,362/- was brought to tax without allowing the expenditure incurred by the assessee trust. The Ld. AR submitted that the intimation u/s 143(1) was not received by the assessee through post and the Trustees were not conversant with the Income Tax proceedings and couldn’t download the intimation from the e- portal of the Department. It was only much later when a demand notice was received that they became aware of the processing of the return & the resultant outstanding demand. Thereafter, they had filed an appeal before the first appellate authority wherein there was delay of 2250 days, which was not condoned by the Ld. JCIT (A) and the appeal of the assessee was dismissed without examining the merits of the case. The Ld. AR requested that, in the interest of justice, the matter may be set aside to the file of Ld. CIT(A) with a direction to allow deduction for expenses incurred by the assessee, as the CPC was not correct in treating the entire gross receipts as income of the assessee, without considering the expenses incurred.

5. Per contra, the Ld. Sr. DR supported the order of the Ld. CIT(A).

6. We have considered the submissions of the assessee. Though we are not convinced with the explanation of the assessee regarding inordinate delay in filing the appeal before the ld. CIT(A), the action of the CPC in treating the entire gross receipts as income of the assessee, & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 4 of 5 without allowing deduction for the actual expenditure incurred by the assessee towards the object of the trust, also cannot be justified. It is also not evident whether any opportunity was allowed to the assessee by the CPC before making the adjustments while processing the return. It has been held by the Hon’ble Gujarat High Court in the case of Vareli Textile Industries vs. CIT, 284 ITR 238 (Guj) that a meritorious case should not be thrown out on the ground of limitation. Considering the fact that the assessee is a Trust engaged in charitable activities, we deem it proper to set aside the matter to the file of the Ld. CIT(A) with a direction to condone the delay and, thereafter, adjudicate the matter on merits subject to payment of cost of Rs.5,000/- by the assessee which should be deposited to the Prime Minister’s National Relief Fund within a period of 15 days of receipt of this order. The assessee is also directed to make compliance before the Ld. CIT(A) and produce the evidences and details as required. In case the assessee does not make compliance, the Ld. CIT(A) will be free to decide the grounds taken by the assessee on merits, on the basis of the materials available on record.

ITA No.1028/Ahd/2025 : A.Y. 2018-19

Order pronounced in the open Court on this 12th September, 2025.