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Facts
The assessee, a Trust, filed its return claiming exemption under Section 11. The CPC processed the return under Section 143(1), denying the exemption and creating a demand. The assessee filed a rectification application under Section 154, which was allowed, granting the exemption and entitling the assessee to a refund. However, the First Appellate Authority dismissed the assessee's appeal due to non-compliance.
Held
The Tribunal held that the order of the First Appellate Authority had become infructuous because the rectification application under Section 154 had already been allowed by the CPC, Bangalore. Consequently, the appeal of the assessee was allowed, setting aside the order of the First Appellate Authority.
Key Issues
Whether the order of the First Appellate Authority should be set aside as infructuous when a subsequent rectification order under Section 154 allowed the exemption claimed by the assessee.
Sections Cited
12A, 11, 143(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2020-21 Hematology Foundation v. The CIT(Exemption) I-Block, Hematology Office Lucknow SGPGI, Raebareily Road Lucknow TAN/PAN:AABTH3096C (Appellant) (Respondent) Appellant by: Ms. Shweta Mittal, C.A. Respondent by: Shri Sunil Kumar Rajwanshi, D.R. O R D E R This appeal has been preferred by the Assessee against order dated 05.03.2024, passed by the Learned Addl/JCIT(A)-1, Nashik for Assessment Year 2020-21.
2.0 The brief facts of the case are that the assessee is a Trust registered under section 12A of the Income Tax Act, 1961 (hereinafter called “the Act’). The assessee-trust filed its return of income for the year under consideration on 11.01.2021, declaring Nil income, after claiming exemption under section 11 of the Act. The Centralized Processing Centre (CPC), Bangalore processed the return under section 143(1) of the Act, determining the total income of the assessee at Rs.18,28,596/-, thereby raising a demand of Rs.4,30,120/-.
3.0 Aggrieved, the Assessee preferred an appeal before the ld. Ld. First Appellate Authority, who dismissed the appeal of the assessee for the reason of non-compliance.
4.0 Now, the assessee has approached this Tribunal challenging the order of the ld. Addl/JCIT(A)-1, Nashik by raising the following grounds of appeal:
1. The Commissioner of Income Tax (Appeal) has erred in law and on facts in passing the order which is illegal, improper and against the principles of natural justice.
2. The Commissioner of Income Tax (Appeal) has erred in law and on facts in passing the order without giving adequate opportunity of being heard.
The Commissioner of Income Tax (Appeal) has erred in law and on facts in confirming addition of Rs18,28,596//-made by CPC in the intimation order which was later deleted by CPC, BENGALURU vide order u/s 154 r.w.s.143(1) dated 17.02.2022 only for the appellant being non responsive 4. The Commissioner of Income Tax (Appeal) has erred in law and on facts in passing appellate order which is contrary to the facts and law. 5. The appellant craves leave to add, amend, alter or withdraw any grounds of appeal or raise any new ground appeal during the pendency of appeal.
5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the assessee had filed the return of income for the captioned assessment year on 11.01.2021. There were certain mistakes which had crept into the return due to technical glitches in the software being used by the Counsel filing the Income Tax Return. It was submitted that the return was processed by the CPC, Bangalore under section 143(1) of the Act, vide Intimation dated 23.11.2021, whereby, a demand of Rs.4,30,120/- was created after denying assessee’s claim of exemption under section 11 of the Act. Thereafter, the assessee filed an application under section 154 of the Act seeking rectification with the CPC, Bangalore and also filed an appeal before the Ld. First Appellate Authority. It was further submitted that the rectification order was passed by the CPC, Bangalore on 17.02.2022, wherein, exemption denied earlier was allowed. A copy of the rectification order passed under section 154 of the Act by the CPC, Bangalore on 17.02.2022 was also placed on record, wherein, the assessee was held to be entitled to a refund of Rs.33,090/-. It was further submitted that, however, the assessee was under the impression that since the original Intimation had been rectified by the CPC, Bangalore, no further action was pending at its end. However, the Ld. First Appellate Authority passed an ex-parte order on 05.03.2024, upholding the disallowance (against which the assessee had originally appealed) made under original Intimation under section 143(1) of the Act.
The Ld. A.R. prayed that the order of the Ld. First Appellate Authority may be dismissed as having become infructuous and the rectification order dated 17.02.2022 may be directed to be reinstated.
6.0 Per contra, the Ld. Sr. D.R. opposed the prayer of the assessee and submitted that these facts could have been brought to the knowledge of the Ld. First Appellate Authority by the assessee and since the Ld. First Appellate Authority was not aware of the fact of such rectification order having been passed by the CPC, Bangalore, due to non-compliance by the assessee, the appeal had rightly been dismissed by the Ld. First Appellate Authority.
7.0 I have heard the rival submissions and have also perused the material on record. I have also gone through the rectification order dated 17.02.2022 passed under section 154 of the Act. Although there is no denial to the fact that the assessee was negligent in properly responding to the notices issued by the Ld. First Appellate Authority from time to time and it should have apprised the Ld. First Appellate Authority of the rectification have already been allowed to the assessee and also should have withdrawn its appeal filed before the Ld. First Appellate Authority, however, it is also true that the CPC, Bangalore has in effect accepted assessee’s rectification application under section 154 of the Act and has allowed the benefit of exemption under section 11 of the Act to the assessee after considering various facts which would have been submitted in the rectification application moved by the assessee. Therefore, on peculiar facts of this case, I set aside the order of the Ld. First Appellate Authority as having become infructuous in view of rectification application already having been allowed by the CPC, Bangalore for the captioned assessment year. The AO is directed to duly consider the order dated 17.02.2022 under section 154 of the Act issued by the CPC, Bangalore and completely ignore the impugned order, i.e., order dated 05.03.2024passed by the Ld. First Appellate Authority.