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Facts
The assessee, a charitable trust, filed its Income Tax Return for AY 2020-21 belatedly under Section 139(4) of the Act. The CPC consequently denied the Section 11 exemption, leading to a significantly higher total income. The assessee's subsequent appeal to the Ld. First Appellate Authority (FAA) was dismissed ex-parte, prompting an appeal to the ITAT, which was filed with a delay of 242 days.
Held
The ITAT condoned the 242-day delay, citing a liberal approach in dealing with condonation applications. It noted that the Ld. FAA had dismissed the appeal ex-parte without adjudicating on merits, particularly a crucial ground concerning the deduction of revenue expenditure. Therefore, the ITAT set aside the FAA's order and remitted the matter for a de novo adjudication on merits, directing the FAA to provide the assessee a proper opportunity to be heard.
Key Issues
Condonation of delay in filing appeal; denial of Section 11 & 12 exemption due to belated return filing and audit report submission; ex-parte dismissal of appeal by FAA without considering merits; and applicability of interest/late fees under Sections 234A, B, C, and 234F.
Sections Cited
11, 12, 139(1), 139(4), 143(1), 234A, 234B, 234C, 234F
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Visakhapatnam “Division” Bench, Visakhapatnam
Before: Shri Ravish SoodShri Madhusudan Sawdia
(िनधा�रण वष�/Assessment Year: 2020-21) Sri Bhuvaneswari Nilayam Vs. Income Tax Officer TIRUMALA Ward 1(1) PAN:AAWTS0401P GUNTUR (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri Uday & Gopi, CA राज� व �ारा/Revenue by:: Dr. Aparna Villuri, SR-DR सुनवाई की तारीख/Date of hearing: 22/09/2025 घोषणा की तारीख/Pronouncement: 03/10/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by Sri Bhuvaneswari Nilayam (“the assessee”), feeling aggrieved by the order passed by the Learned ADDL/JCIT(A)-2,Ahmedabad (“Ld. First Appellate Authority”) dated 15/02/2024 for the A.Y 2020-21.
At the outset, it is noted that there is a delay of 242 days in filing the present appeal before this Tribunal. The assessee has filed a condonation petition accompanied by an affidavit explaining the reasons for such delay. In this regard, the Learned
Page 1 of 7 Authorised Representative (“Ld. AR”) submitted that the assessee had entrusted its income tax related matters to a Chartered Accountant located in Guntur, Andhra Pradesh. However, the said Chartered Accountant neither complied with the notices issued by the Ld. FAA nor informed the assessee about the proceedings. Consequently, the assessee remained unaware of the appellate order. It was only on 27.11.2024, when an intimation under section 143(1) of the Act was received by the assessee from CPC, then the assessee came to know about the order passed by the Ld. FAA. Immediately thereafter, the assessee engaged a new counsel and filed the present appeal before this Tribunal. The Ld. AR contended that the delay of 242 days was on account of sufficient and reasonable cause, which was neither deliberate nor intentional. Therefore, he prayed that the delay be condoned and the appeal be admitted for adjudication on merits.
Per contra, the Learned Departmental Representative (“Ld. DR”) objected to the condonation petition, contending that sufficient opportunity was available to the assessee before the lower authorities and the reasons cited did not justify such a long delay. Accordingly, she submitted that the delay should not be condoned.
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:
6. 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/-.
7. 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.
8. 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.
9. 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.
10. 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.