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Facts
The assessee, a Trust, filed its return for AY 2016-17 declaring NIL income after claiming deductions under Sections 11 & 12. The CPC disallowed these deductions, creating a demand. The assessee's subsequent rectification application under Section 154 was rejected by the AO, and the appeal to the CIT(A) was also dismissed.
Held
The Tribunal held that the delay in filing Form 10B was condoned by the CIT(E) and the AO was incorrect in rejecting the rectification application on this ground. The CIT(A) also erred by not adjudicating on merits.
Key Issues
Whether the rejection of rectification application by AO/CIT(A) on the ground of delay in filing Form 10B, when delay was condoned by CIT(E), is justified?
Sections Cited
11, 12, 12A, 143(1), 154
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
(Assessment Year: 2016-17) Shree Nityanandswami Education Vs. Assistant Commissioner of Trust, Income Tax (Exemption), Dharmaj Tarapur Road, Ahmedabad At And Post Nar Ta Petlad, Gujarat-388150 [PAN No.AADTS5891A] (Appellant) .. (Respondent) Appellant by : Shri Piyush Panchal, A.R. Respondent by: Shri R. N. Dsouza, CIT DR Date of Hearing 26.02.2025 Date of Pronouncement 06.03.2025 O R D E R
PER NARENDRA PRASAD SINHA, AM:
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (hereinafter referred as “CIT(A)”), Delhi dated 27.05.2024 for the A.Y. 2016-17.
The brief facts of the case are that the assessee is a Trust and had filed its return of income for A.Y. 2016-17 on 10.07.2016 declaring NIL income after claiming application of income as deduction under Section 11 & 12 r.w.s. 12A of the Act. The return of the assessee was processed under by the CPC under Section 143(1) of the Act and while processing the return the deduction claimed under Sections 11 & 12 of the Act was not allowed which resulted in total demand of Rs.1,48,95,066/-. Thereafter, the assessee had filed a rectification application under Section Shree Nityanandswami Education Trust vs. ACIT Asst. Year –2016-17 - 2– 154 of the Act on 22.02.2022 with the Assessing Officer which was rejected vide AO’s communication dated 16.06.2022.
Aggrieved with the order of Assessing Officer rejecting the application under Section 154 of the Act, the assessee had filed in appeal before the First Appellate Authority which was decided vide the impugned order and the appeal of the assessee was dismissed.
The assessee is now in second appeal before us. The following grounds have been taken in this appeal:
“(1) The NFAC has dismissed the appeal without considering the prayer of the assessee for delay in filing appeal and without providing opportunity to submit clarification by assessee with supporting proof. (2) The NFAC did not consider the appeal in merit. (3) The order issued u/s 154 of the Act for rejecting application of section 11 and 12 of the Act on ground of Form 10B filed beyond due date is not correct as CBDT has already condone the delay as per Para 4(i) of Circular 10/2019 dt. 22.05.2019. So it is requested to issue the order to jurisdictional officer to accept rectification as submitted by assessee and proceed computation of income after allowing the application of section 11 and 12 of the act. (4) The order issued u/s 154 of the act rejecting rectification application u/s 154 of the act on ground of there was no delay condoned is factually not correct because order of CIT (Exemption) dt. 24.04.2020 state that no delay condonation required in view of para 4(i) of Circular 10/2019 dt.22.05.2019. Therefore, order rejecting application u/s 154 of the Act on this ground is not justifiable in view Order issued by CIT (Exemption) dt. 24.04.2020. So it is requested to issue the order to jurisdictional officer to accept rectification as submitted by assessee and proceed computation of income after allowing the application of section 11 and 12 of the act. (5) The assessee craves the leave of this court to add, delete or alter any ground of appeal where it is required for just and equitable ground.”
5. Shri Piyush Panchal, Ld. A.R. of the assessee submitted that the Ld. CIT(A) did not adjudicate the matter on merits but had dismissed the Shree Nityanandswami Education Trust vs. ACIT Asst. Year –2016-17 - 3– appeal without condoning the delay of 91 days in filing of the appeal. He explained that the reason for delay was duly explained in Form No.
35. The assessee had filed the application under Section 154 online and the order under Section 154 was not communicated on the portal as an order. The assessee had only found a communication on the portal under the head “issue letter” which was misunderstood as a normal communication, but which, in fact, was the order rejecting the application under Section 154 of the assessee. The Ld. A.R. explained that since the order under Section 154 passed by the Assessing Officer was not communicated as a formal order but only in the form of “issue letter”, the communication was not correctly understood by the assessee, which had led to delay in filing of the appeal before the Ld. CIT(A). The Ld. A.R. further explained that the assessee had also filed an application for condonation of delay in filing Form 10B with the ld. CIT(Exemption), who vide order dated 24.04.2020 had condoned the delay. The Ld. A.R. submitted that since the delay in filing Form No. 10B was already condoned by Ld. CIT(E), the Assessing Officer was not correct in rejecting the 154 application of the assessee on the ground that Form 10B was not filed within the due date. He, therefore, requested that the matter may kindly be set-aside to the file of the Assessing Officer with a direction to re-examine the matter considering the condonation of delay in filing Form No. 10B, already granted by the Ld. CIT(E).
Shree Nityanandswami Education Trust vs. ACIT Asst. Year –2016-17 - 4– 6. Per contra, Shri R.N. Dsouza, the CIT-DR had no objection if the matter was set-aside to the file of the Assessing Officer in view of the condonation of delay as allowed by Ld. CIT(E).
We have carefully considered the rival submissions. It is found that the Assessing Officer vide communication dated 16.06.2022 had rejected the rectification application of the assessee on the ground that Form No. 10B was not filed within the due date and that no condonation was granted in this regard. The matter was not examined on merits by the Ld. CIT(A), who did not condone the delay of 91 days in filing of appeal by the assessee. As explained by the assessee the delay was caused for the reason that the order under Section 154 passed by the Assessing Officer was communicated on the portal under the caption “issue letter” which was misunderstood by the assessee. Be that as it may, the Hon’ble Gujarat High Court has held in the case of Vareli Textiles Ltd (284 ITR 238 (Guj)) that meritorious cases should not be thrown out on ground of limitation. Therefore, the Ld. CIT(E) was not correct in summarily rejecting the appeal on the ground of limitation without examining the merits of the case. It is found that the assessee had filed an application for condonation of delay in filing Form No. 10B. The Ld. CIT(E) vide order dated 24.04.2020 had condoned the delay by observing as under:
2. Your case for A.Y. 2016-17 is already covered under para 4(i) of circular no 10/2019 dated 22.05.2019. Therefore no separate Condonation is required by this office. Accordingly your application is treated as filed.
Thus, the delay in filing the Form No. 10B was duly condoned by the Ld. CIT(E). Under the circumstances the Assessing Officer was not Shree Nityanandswami Education Trust vs. ACIT Asst. Year –2016-17 - 5– correct in rejecting the rectification application of the assessee for the reason that delay in filing the Form No. 10B was not condoned. In the interest of justice, we, therefore, set-aside the matter to the file of Jurisdictional Assessing Officer with a direction to consider the condonation of delay already granted by the Ld. CIT(E) vide letter dated 24.04.2020 and thereafter re-adjudicate the rectification application of the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
This Order pronounced in Open Court on 06/03/2025
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA P. SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 06/03/2025 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,