ASR EDUCATIONAL SOCIETY,TANUKU vs. INCOME TAX OFFICER, EXEMPTIONS, RAJAHMUNDRY

Facts

The Assessing Officer initiated re-assessment proceedings against ASR Educational Society for A.Y. 2013-14 for not accounting for bank interest, accepting nil income claiming Section 11 exemption. The Pr. CIT later observed a shortfall in the application of funds, issued a Show Cause Notice under Section 263 to revise the assessment, and passed an order the very next day. The assessee appealed, citing a 1016-day delay due to a technical error by their tax consultant and arguing that the SCN was served on the due date itself, denying adequate opportunity to respond.

Held

The Tribunal condoned the delay in filing the appeal, accepting it as a bona fide mistake by the tax consultant. On merits, the Tribunal quashed the Pr. CIT's order under Section 263, ruling that the assessee was not given sufficient opportunity to respond to the Show Cause Notice, which violated principles of natural justice (*audi alteram partem*). Consequently, the original assessment order passed by the A.O. under Section 143(3) read with Section 147 was restored.

Key Issues

1. Whether the significant delay in filing the appeal should be condoned. 2. Whether the Pr. CIT's order under Section 263 was valid, given the alleged lack of proper notice and opportunity for the assessee to be heard before the revision.