SRI BHUVANESWARI NILAYAM,TIRUMALA vs. INCOME TAX OFFICER, WARD-1(1), GUNTUR

We have heard the rival submissions and perused the material available on record. The delay in filing the appeal is 242 days. On going through the affidavit and condonation petition, we find that the explanation offered by the assessee is bonafide and supported by circumstances beyond its control. The default of the earlier Chartered Accountant in not complying with notices or Page 2 of 7 informing the assessee cannot be held against the assessee. Further, we find that the Hon’ble Supreme Court, in the case of Vidya Shankar Jaiswal vs. The Income Tax Officer, Ward-2, Ambikapur in Special Leave Petition (Civil) Nos. 26310- 26311/2024, dated 31st January, 2025, has held that a justice-oriented and liberal approach should be taken while dealing with the application filed by an appellant seeking condonation of the delay in filing of the appeal. Accordingly, taking a judicial and liberal approach, we condone the delay of 242 days in filing the appeal and admit the same for adjudication on merits.

The assessee has raised the following grounds of appeal:

The brief facts of the case are that, the assessee is a Charitable Trust, filed its return of income for A.Y. 2020-21 on 31.10.2019, declaring total income of Rs.3,36,110/-. The CPC, Bangalore processed the return of the assessee under section Page 4 of 7 143(1) of the Income Tax Act, 1961 (“the Act”) on 23.11.2021, wherein exemption claimed under section 11 of the Act, amounting to Rs.48,92,233/- was denied on the ground that the return was filed belatedly. Consequently, total income of the assessee was determined by the CPC at Rs.52,28,343/-.

Aggrieved with the order of the CPC, the assessee filed appeal before the Ld. FAA. However, the assessee neither appeared nor responded to the notices issued by the Ld. FAA. Consequently, the Ld. FAA dismissed the appeal ex parte, thereby sustaining the CPC’s action.

Aggrieved with the order of the Ld. FAA, the assessee filed appeal before this Tribunal. Initially, this Tribunal, vide its order dated 20.02.2025, had dismissed the appeal of the assessee for want affidavit in support of condonation of delay. Later on vide Miscellaneous Application No.15/Viz/2025, this Tribunal recalled its order on 08.08.2025. During the proceedings before us, the Authorised Representative (“Ld. AR”) submitted that the assessee could not appear before the Ld. FAA due to reasons already explained in the affidavit filed for condonation of delay. It was further submitted that one of the grounds raised before the Ld. FAA was that even if exemption under sections 11 and 12 of the Act is denied, revenue expenditure has to be reduced from gross receipts, as only net income is chargeable to tax under the Act. However, the Ld. CIT (A) failed to adjudicate on the same. Finally, the Ld. AR prayed before the Bench, in the interest of justice, since the appeal before the Ld. FAA was dismissed ex parte, the Page 5 of 7 matter may be remitted back to the Ld. FAA for de novo adjudication on merits, after providing adequate opportunity.

Per contra, the Departmental Representative (Ld. DR) opposed the prayer for restoration, contending that sufficient opportunity had already been provided by the Ld. FAA which the assessee failed to avail. Therefore, according to the Ld. DR, no further opportunity should be given.

We have considered rival submissions and gone through the material available on record. It is undisputed that the appeal before the Ld. FAA was dismissed ex parte without adjudication on merits. On perusal of the order of the Ld. FAA, we found that one of the grounds raised before the Ld. FAA was that even if exemption under sections 11 and 12 of the Act is denied, revenue expenditure has to be reduced from gross receipts, as only net income is chargeable to tax under the Act. However, the Ld. CIT (A) failed to adjudicate on the same. In our considered view, the Ld. FAA, being the first appellate authority, is duty- bound to adjudicate the appeal on merits, even in the absence of the assessee, based on material available on record. Since this has not been done, the order of the Ld. FAA cannot be sustained. We therefore hold that the appeal needs to be restored to the file of the Ld. FAA for de novo adjudication on merits. Accordingly, we set aside the impugned order and remit the matter to the file of the Ld. FAA with the direction to decide the appeal afresh, after providing due opportunity of being heard to the assessee. The assessee is directed to cooperate in the appellate proceedings and Page 6 of 7 to file all necessary evidence and explanations in support of its claim, without seeking any unnecessary adjournments.

In the result, the appeal of the assessee is allowed for statistical purposes.