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Facts
The assessee, a registered charitable society, filed its return for AY 2017-18 late. The CPC processed the return without considering the exemption under Section 12AA, raising a demand. A rectification application was rejected, and an appeal to the CIT(A) was dismissed in limine due to delay.
Held
The Tribunal held that the CPC had prima facie not considered the exemption under Section 12AA, leading to a huge demand. The appeal to the CIT(A) was dismissed due to delay, despite reasonable causes. The Tribunal remanded the case back to the CIT(A) for deciding the issue on merit.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal due to delay without deciding the issue of exemption under Section 12AA on merit, and whether the CPC erred in not considering the exemption.
Sections Cited
12, 143(1), 12AA, 154
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the assessee against the order dated 26.11.2024 of Ld. Addl. / JCIT(A), Thane for A.Y. 2017-18. 2 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba
Grounds of appeal are as under:
1. Incorrect Computation of Tax Liability. That the learned Assessing Officer (CPC) erred in computing and demanding tax of Rs. 14,07,481 on the total receipts of the society. That the authorities erred in denying the exemption under Section 12 of the Income Tax Act, 1961, despite the appellant being a registered charitable society fulfilling all requisite conditions The ld. Assessing Officer has raised the demand due is income Tax portal problem.
2. Failure to Rectify Prima Facie Errors under Section 154 The authorities unjustly rejected the rectification application under Section 154 despite the evident errors in the intimation under 2 under Section 143(1), particularly concerning the non-consideration of the exemption under Section 12AA and the Ld. Assessing Officer has raised the demand due to Income Tax portal problem. 3 Violation of Principles of Natural Justice That fie CIT(A) dismissed the appeal without adequately addressing the appellant's submissions and without property considering the logistical and operational challenges faced due is jurisdictional shifts and portal issues, thereby violating principles of natural justice. The authorities ignored the documentary evidence and submissions 3 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba proving the appellant's entitlement to exemption under Section 12AA, thereby leading to an erroneous demand. 5. Condonation of Delay. The learned CIT(A) erred in not condoning the delay of 1324 days in filing the appeal, despite sufficient and reasonable causes provided, including jurisdictional changes, portal malfunctions, and geographical constraints faced by the appellant, located in a remote area. The Pangi Valley in Himachal Pradesh, India has an elevation of 7,000- 11,000 feet (2,100-3,400 meters) above sea level. The valley's higher ranges have mountains that are 18,000-21,0000 feet (5,500-6,400 meters) above sea level and income tax portal problems. Due to this the Ed. Assessing has calculated the wrong demand 5 Other Grounds. The appellant craves leave to add, amend, or alter grounds of appeal before or during the hearing.
6. Error in Issuing Intimation Order under Section 143(1). For Assessment Year 2017-18, the appellant filed its return of income on 27/10/2018 (Acknowledgement No. 349474050271018) after the due date of 31/07/2017. The return was processed by the Centralized Processing 4 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba Centre (CPC), and learned Assessing Officer (CPC) erred in issuing the intimation order under Section 143(1) of the Income Tax Act, 1961, as per DIN CPC /1718 / A7/1885980751 dated 03/09/2019, without considering the exemption granted under Section 12AA.
Brief facts of the case as per the order of the CIT(A) are as under: - That the appellant is a society, which is exempted u/s 12A of the Income Tax Act 1961 as per registration No. CIT(E)/Chd/12AA/2015-16/11007 dated 24/02/2016. The appellant society filed its return of income for AY 2017-18 on 27.10.2018 as against the due date 31.07.2017. The return was processed and Intimation u/s 143(1) was issued, wherein the exemption u/s 12AA was not considered with demand amounting to Rs.14,07,481/-, The appellant filed rectification application on 21.07.2020 u/s 154 of the Income Tax Act 1961, but the CPC rejected the same vide order dated 24.07.2020 with following remarks: "On Verification, it is seen that there is no prima facie error in the order which you have 5 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba sought to be rectified. Therefore, your application for Rectification under Sec. 154 is rejected, for the following reasons (if any). Your rectification request could not be considered at CPC the rectification rights, in your case are being transferred to your Assessing Officer."
At the very outset, the ld. Counsel for the Assessee submitted before the Bench that the Ld. Addl. CIT(A) has dismissed the appeal in limine. The Ld. Counsel stated that the appeal before the Ld. CIT(A) was a delayed one and for condonation of delay, an application was filed before the Addl. CIT(A) but the Ld. Addl. CIT(A) did not condone the delay in filing of the appeal on this ground.
During proceedings before us, the Ld. Counsel requested that the CPC, which processed the return of the Assessee, did not consider the exemption granted to the Assessee u/s 12AA of the Income Tax Act, 1961 (in short 'the Act'). Later on, when an application was moved for rectification that was also rejected by the CPC. When the 6 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba matter was brought to the Addl. CIT(A), he dismissed the appeal because there was a delay in filing of the appeal. The Ld. Counsel requested that the matter may be remanded back to the CIT(A) for adjudication and deciding the issue on merit.
We have considered the issue brought before the Bench by the ld. Counsel for the Assessee and we find that prima facie the CPC did not consider the exemption granted to the Assessee u/s 12AA of the Act and processed the return raising huge demand. The Assessee filed an application for rectification u/s 154 of the Act but that was also rejected by the CPC. When the matter was brought in appeal before the Ld. Addl. CIT(A), he dismissed the appeal in limine as there was a considerable delay in filing of the appeal.
Therefore, in the totality of facts and circumstances and everything in mind, we are of this considered view that somewhere the issue is to be decided on merit. Hence, keeping in view the element of natural justice to the 7 118-Chd-2025- Collective Efforts for Voluntary Action, Chamba Assessee and in the fitness of this, we remand this case back to the file of Ld. CIT(A) for deciding the issue on merit after giving due opportunity to the Assessee as required under the law and Ld. CIT(A) shall decide the matter by considering the submissions and documents produced by the Assessee and the relevant material available on record. The Assessee, no doubt, shall cooperate in the fresh proceedings before the CIT(A). All pleas available under the law shall remain so available to the assessee. Ordered accordingly.
In the result, Assessee’s appeal is allowed for Statistical Purposes.
Order pronounced on 13.10.2025 ( RAJPAL YADAV ) Accountant Member “आर.के.”