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Facts
The assessee, claiming to be a charitable trust, filed its return which was processed under Section 143(1) by the CPC, classifying it as an Association of Persons (AOP) and denying exemptions, leading to a demand. The assessee's appeal to the CIT(A) was delayed due to the trustees' limited education and digital access. Although the delay was condoned, the CIT(A) dismissed the appeal for non-prosecution due to the assessee's failure to respond to notices.
Held
The ITAT acknowledged the plausible reasons for delay and the assessee's charitable trust status. It set aside the CIT(A)'s order, restoring the matter for de-novo adjudication, granting the assessee a fresh opportunity to present its case and documents. Both appeals were allowed for statistical purposes, implying a remand for reconsideration on merits.
Key Issues
Whether the assessee should be treated as a charitable trust or an Association of Persons (AOP) for tax purposes; the validity of the CIT(A)'s dismissal for non-prosecution after condoning the delay in filing the appeal; and the denial of exemptions.
Sections Cited
143(1), 250
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
These appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-1, Nashik vide orders dated 28.01.2025 passed for A.Ys. 2016- 17 & 2018-19 respectively. Since common facts and issues are involved for both the years under consideration, both the cases are taken up together.
We shall first discuss the facts for A.Y. 2016-17 (ITA No. 661/Ahd/2025) and our observations for this year shall apply to A.Y. 2018-19 as well
The assessee has raised the following grounds of appeal:
“1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice.
ITA Nos. 661&662/Ahd/2025 Asst. Years –2016-17 & 2018-19 - 2–
The Ld. CIT(A) has erred in law and on facts in levying tax on the income as it does not exceed basic threshold limit for tax liability.
The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final hearing.”
The brief facts of the case are that the assessee, a charitable trust, filed its return of income for A.Y. 2016-17 on 03.11.2017 declaring a total income of Rs. 2,36,490/-. The return was processed by the CPC, Bengaluru under section 143(1) of the Income-tax Act (Act) on 30.04.2018, and a demand of Rs. 37,110/- was raised. The Department treated the assessee as an Association of Persons (AOP) instead of a charitable trust, and taxed the full income without allowing any exemption.
the assessee filed appeal before CIT(A) against the aforesaid intimation order. There was a delay in filing of appeal by the assessee before CIT(Appeals), and the contention of the assessee was that the trustees, were sweepers in the local body and were not conversant with digital communication. Therefore, since the trustess were unaware of the processing of return of income by CPC and the consequent demand, there was a delay in filing of appeal before CIT(Appeals). Upon discovering the demand, the assessee filed an appeal before CIT(Appeals) on 15.08.2024, which was after the statutory time-line of filing of appeal before first appellate authority. The delay in filing of appeal was condoned by the CIT(A) considering the reasons cited by the assessee. However, CIT(Appeals) observed that during the appeal proceedings, he had issued several notices of hearing to the assessee under section 250 of the Act, but the assessee failed to respond and nor did the assessee submit any written arguments or supporting documents. Despite being given multiple opportunities; no submission was made by the assessee which indicated that there was a lack of interest in pursuing the matter at appellate stage by the assessee. The CIT(A)
ITA Nos. 661&662/Ahd/2025 Asst. Years –2016-17 & 2018-19 - 3– considered the grounds of appeal of the assessee but did not find any merit in them due to the absence of any supporting evidence by the assessee. The CIT(Appeals) was of the view that the assessee’s claim that income was wrongly taxed as AOP and that the Department erred in not allowing exemption was not verifiable. The CIT(A) placed reliance of various legal precedents to hold that merely filing an appeal by the assessee is not sufficient, and active participation by the assessee is equally necessary. Therefore, based on the available records and non-compliance by the assessee, the CIT(A) dismissed the appeal on merits and for non-prosecution.
The assessee is in appeal before us against the order passed by CIT(Appeals). In view of the facts and circumstances of the case, and after considering the submissions and the assessment history of the assessee, it is observed that the CIT(Appeals) dismissed the assessee's appeal primarily on the ground of non-prosecution, despite having condoned the delay in filing the appeal. The reasons cited by the assessee for the delay namely, the limited educational background and lack of digital access by the trustees who are sweepers in the local body have already been accepted by the CIT(A) and were found by Ld. CIT(A) to be plausible and deserving of leniency. Further, it is seen that the assessee is a charitable trust and the return of income was processed under section 143(1) of the Act by treating the assessee as an AOP and taxing the entire income without allowing any basic exemption or considering the nature of the assessee’s activities. Considering the nature of the case and the status of the assessee as a charitable trust, and in the interest of justice, we are of the view that the matter requires a fresh examination and de-novo consideration of the assessee’s claim by the CIT(Appeals). Accordingly, the impugned order passed by the CIT(Appeals) is set aside and the matter is ITA Nos. 661&662/Ahd/2025 Asst. Years –2016-17 & 2018-19 - 4– restored to the file of the CIT(Appeals) for de-novo adjudication after giving the assessee a reasonable opportunity of being heard and to submit the necessary documents in support of its claim. The assessee is also directed to cooperate with the proceedings and file the requisite submissions within the time allowed.
Thus, the appeal is allowed for statistical purposes.
Now we come to ITA No. 662/Ahd/2025 for A.Y. 2018-19 The assessee has raised the following grounds of appeal: 7. “1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice.
The Ld. CIT(A) has erred in law and on facts in upholding order of CPC of not allowing expense incurred of Rs. 23,86,601/-.
The Ld. CIT(A) has erred in law and on facts in upholding tax at maximum marginal rate.
The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.”
We observe that the facts and issues for consideration for A.Y. 2018-19 are identical to A.Y. 2016-17 and accordingly, the appeal of the assessee is also allowed for statistical purposes for A.Y. 2018-19 as well.
In the combined result, both the appeals of the assesse are allowed for statistical purposes. This Order pronounced in Open Court on 25/08/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 25/08/2025 TANMAY, Sr. PSITA Nos. 661&662/Ahd/2025 Asst. Years –2016-17 & 2018-19 - 5–
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""थ" / The Respondent. संबंिधत आयकर आयु" / Concerned CIT 3. 4. आयकर आयु"(अपील) / The CIT(A)- 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt.