Loading judgment…
Facts
An educational trust filed its Return of Income for AY 2019-20 along with Form 10B. The CPC denied exemption under section 11, leading to a tax demand and rejection of a rectification petition. The subsequent appeal filed before the CIT(A) was dismissed due to a 350-day delay in filing.
Held
The ITAT observed that the Audit Report in Form 10B was filed timely but the CPC did not consider it while denying the exemption. Invoking principles of natural justice, the ITAT set aside the matter and remanded it to the Jurisdictional Assessing Officer to reconsider the Audit Report and decide the exemption claim on merits, after providing the assessee another opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal for delay, and if the CPC erred in denying exemption without considering the timely filed Form 10B, violating principles of natural justice.
Sections Cited
154, 11, 12A, 12AA, 143(1), 10(23C)(vi), 10(23C)(iiiad)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: DR. BRR Kumar & Shri T. R. Senthil Kumar
ST. Josephs Education The ITO, Trust (Exemption), Post Box No:6, Vs Palanpur, Abu P.O. Mehana Vijapur, Highway, Gujarat-382870 Dist: Banaskantha Gujarat, India Gujarat PAN: AAATS6955Q (Appellant) (Respondent) Assessee Represented: Shri Jaimin Shah, A.R. Revenue Represented: Shri Alpesh Parmar, CIT-DR Date of hearing : 25-02-2026 Date of pronouncement : 03-03-2026 आदेश/ORDER PER: T.R. SENTHIL KUMAR, JUDICIAL MEMBER
This appeal is filed by the Assessee as against the appellate order dated 01-01-2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the rectification order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2019-20 refusing to condone the delay of 350 days in filing the appeal before Ld. CIT(A).
Brief facts of the case is that the assessee is a Trust engaged in education activities with registration 12A/12AA of the Act vide approval from 04-02-1998. For the Asst. Year 2019-20, the assessee Trust filed its Return of Income on 25-10-2019 with Audit Report in Form 10B filed on 22-10-2019. The return was processed by CPC, however rejected the claim of exemption u/s. 11 of the Act and demanded tax of Rs.1,17,27,056/-. Assessee filed rectification petition, the same was also rejected that no rectification required.
Aggrieved against the rectification order, assessee filed an appeal before Ld. CIT(A) which was also dismissed on the ground not to condone the delay of 350 days in deleted filing of the appeal.
Aggrieved against the appellate order, the assessee is in appeal before us raising the following Grounds of Appeal:
The learned CIT(Appeals) / NATIONAL FACELESS APPEAL CENTRE [NFAC] has grievously erred both in law and on facts in dismissing the meritorious appeal of the appellant in limine on the ground of delay in preferring appeal when the facts regarding appellant perusing remedies of rectification and filing of grievance petition was brought to his notice and evidences therefore were also furnished. There being reasonable and sufficient causes for the delay and no fault of appellant, the appeal ought to be admitted and also decided on merits. It be so held now.
2. Without prejudice to the above ground, the Id CIT(A)/NFAC erred in law and on facts in not appreciating that there were bonfide reasons as appellant was inclined to get proper and fair relief by prosecuting the proceedings before the various forums and which took time and kept appellant waiting to see that rectification is done and erroneous huge demand by not allowing the application for the purpose of the educational institution at Rs. 5,04, 51,497/- was not given by Id CPC on technical ground as against gross receipt of Rs. 5,10,43,883/- [Fees Rs.4,60,20,878/ only] which was not justified considering all the past and subsequent assessment/order. It be so held now and appeal be allowed by directing to consider the grounds on merits.
3. Without prejudice to the above grounds, the Id CIT(A)/ NFAC erred in law and on facts in not appreciating that the CPC patently erred in passing an illegal intimation u/s 143(1) on the mere ground that Registration number details was not mentioned in the Return Form by oversight of the Authorised representative of the appellant trust/institution and when Form No: 10B was already filed on 25.10.2019 The same being within the custody of the Income tax Department and such omission was later corrected by filing Revised return, the intimation making entire disallowance of amount applied/ expended as per Audited accounts and as per very same Return which is processed 4. Without prejudice to the above grounds, the appellant education institution being also approved u/s 10(23C)(vi) of the IT Act vide No: M.D./1/32/(5.7)/87-88-A R and exemption was being allowed year after year, the huge adjustment of Rs.5,04,51,497/- disallowing entire application/ expenses for the purpose of the education institute u/s 143(1) was is patently wrong and untenable and hence rectification ought to be allowed. It be so held no and the order of Id NFAC be set aside and deduction of Rs. 5,04,51,497/- be directed to be allowed now. 5. Without prejudice to the above grounds EVEN AS PER AUDITED ACCOUNTS THE GROSS RECEIPTS FROM EDUCATION INSTITUTION DID NOT EXCEED Rupees five crores hence income was also exempt u/s 10(23C) (iiiad) of the IT Act and hence no any adjustment ought to be made by ld CPC. It be so held now. 6. The Id CIT(A)/NFAC also erred in not appreciating on merits, that the Id CPC had made adjustment without properly following the mandatory requirements of first proviso to section 143(1) and hence such an illegal intimation ought to be held to be invalid and rectification ought to be allowed and appeal accepted as per grounds of appeal
on merit without dismissing it in limine. It be so held now.
7. The appeal ought to be allowed in toto by Id CIT(A)/NFAC computing income at Nil as returned It be so directed to be allowed now.
8. The Order passed by Id CIT(A)/NFAC in violation of principles of natural justice and audi alterem partem deserves to be set aside. It be set aside now.
9. The appellant craves leave to add, alter, modify or delete any of the grounds at the time of hearing.
Heard rival submissions and perused the materials available on record. It is undisputed fact that Audit Report in Form 10B was filed by the assessee on 22-10-2019 well before filing the Return of Income. Without considering the same, CPC denied the benefit of claim of exemption u/s. 11 of the Act to the assessee Trust even in the rectification proceedings. Therefore in the interest of Principle of Natural Justice, we deem it fit to set-aside the matter back to the file of Jurisdictional Assessing Officer to look into the Audit Report in Form 10B filed by the Assessee Trust and decide the case on merits, whether the claim made by the Assessee Trust are well within the provisions of law, by giving one more opportunity of hearing to the Assessee Trust.
In the result, the appeal filed by the Assessee is treated as allowed for statistical purpose.