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Facts
The assessee, a charitable organization working in a slum area, filed its return of income claiming exemption under Section 11 of the Act, despite not being registered under Section 12AA. The AO disallowed the exemption and raised a demand. The assessee claimed ignorance of this demand due to their Chartered Accountant's failure to inform them, leading to a significant delay in filing appeals before the CIT(A).
Held
The Tribunal acknowledged the admitted fact of the assessee being a charitable organization and the contention that the demand raised by the AO was not communicated to the assessee by their Chartered Accountant. The Tribunal held that the assessee should not be penalized for the mistake of their Chartered Accountant and that condoning the delay is appropriate.
Key Issues
Whether the delay in filing the appeal before the CIT(A) should be condoned due to the assessee's claim of ignorance of the demand, caused by their Chartered Accountant's failure to inform them.
Sections Cited
11, 12AA, 143(1)
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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI DUVVURU RL REDDY(KZ) & RAJESH KUMAR
The present appeals are directed at the instance of assessee against the order of ld. Addl/JCIT (A)-5, Mumbai, dated 26/03/2025 in Appeal Nos. ADL/JCIT (A)-5 MUMBAI/10001/2013-14 and ADDL/JCIT (A)-5 MUMBAI/10003/2014-15 passed for Assessment Year 2014-15 and 2015-16.
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At the time of hearing, ld AR of the assessee submitted that the assessee is a charitable organisation registered under Indian Trust Act, 1882 and the assessee is working in slum area of Cuttack.The assessee filed return of income on 12th January, 2016. The assessee was not registered under section 12AA of the I.T.act during the years under appeal. The C.A. had wrongly claimed exemption under section 11 of the Act while filing ITR 7 and the AO passed order u/s.143(1) of the Act and made demand of Rs.96,770/-. He submitted that the assessee had no knowledge about the demand as the C.A. did not inform the assessee. He submitted that when the jurisdictional Tax officer asked the assessee to pay the income tax demand, the demand raised against the assessee came to the knowledge of the assessee. Thereafter, the assessee consulted the tax consultant to take remedy and the appeals were filed against the assessment orders with a delay of 2822 days for the assessment year 2014-15 and delay of 2820 days for the assessment year 2015-16. Ld AR submitted that the assessee had filed condonation petition with affidavit for condoning the delay as the delay was not intentional or deliberate. He submitted that the assessee is working in slum area for betterment of the downtrodden people. He submitted that the Addl/JCIT(A)-5, Mumbai did not condone the delay and rejected the appeals. It is prayed that the delay in filing the appeals before the first appellate authority be condoned the matter be restored to the file of the first appellate authority for adjudication on merits. Ld AR submitted that the assessee has fair chance for winning the case on merits.
On the other hand, ld Sr DR opposed the prayer of the assessee and submitted that inordinate delay has occurred in this case and, the reason given by the assessee is not plausible to condone the delay.
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We have heard the rival submissions and perused the record of the case. It is an admitted fact that the assessee is a charitable organization working for the downtrodden people in the city of Cuttack. As the assessee was not registered u/s.12AA of the Act, the claim of exemption u/s.11 of the Act was not allowed by the Assessing Officer and demand was raised against the assessee. It is the contention of ld AR that the demand raised by the AO was not informed to the assessee by his Chartered Accountant and any remedial measures to be taken. Only when, the assessee came to know about the demand, he consulted the counsel to file appeal before the ld CIT(A), which has resulted inordinate delay, as contemplated in the impugned orders. Only because the Chartered Accountant has done the mistake, the assessee should not be penalized. Be that as it may, since by delaying the appeals, the assessee would not get any benefit, we deem it proper to condone the delay in filing the appeals before the first appellate authority and restore the issue to the file of the first appellate authority for fresh adjudication after affording reasonable opportunity to the assessee and also on merits.
In the result, appeals of the assessee stand allowed for statistical purposes.
Order dictated and pronounced in the open court on 03/07/2025.
Sd/- Sd/- (RAJESH KUMAR) (DUVVURU RL REDDY) ACCOUNTANT MEMBER VICE PRESIDENT
Cuttack, 03/07/2025 B.K.Parida, Sr. PS (OS)
P a g e 3 | 4 Copy of the Order forwarded to : 1. The Appellant : New Inspiration Rejuvenation Movement and Assistance Network Sutahhat Christan Sahi, Buxi Bazar, Cuttack, 753001
The Respondent : ITO, Exemption, Cuttack 3. The CIT(A)- Addl/JCIT (A)-5, Mumbai 4. Pr.CIT- 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order Assistant Registrar, Itat, Cuttack
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