BHAVNATH EDUCATION TRUST,BAVNAGAR vs. THE ITO(EXEMPTION) WARD, BHAVNAGAR

That I beg to submit that in accordance with the provisions of Section. 253(3) of the Act, the last date of filing the present appeal was 30/04/2025 however the appeal is being filed on 04.08.2025 i.e belated by 97 days.

That I beg to submit that since the old income tax portal and even after the implementation of the new income tax portal, the registered email address on its profile was that of its tax Education Trust vs. ITO(E)] A.Y. 2018-19 - 3 – consultants who would comply with the notice and communications with the income tax department with the IT authority. However, thereafter the new income tax portal had a limitation that not more than 5 assessees can have a common registered email address. As such the appellant Trust had then updated the email address on the income tax portal to omkarschool@yahoo.com' which is being operated by the impugned appellant trust.

At the very outset I beg to submit that the impugned Trust operates aa English medium school by the name of 'Omkar English Medium School' in the remote village of Ranghola of Bhavnagar district. The delay in filing the appeal is neither intentional nor deliberate but has occurred due to the following genuine and unavoidable circumstances: a. The trust operates in a rural and remote area, making it extremely difficult to attract and retain qualified and experienced administrative staff, particularly for accounting and statutory compliance work. b. That the above referred email address viz. omkarschool@yahoo.com' was being operated by the accountant of the appellant trust one Shree Ketanbhai Gohil. The said Shree Ketanbhai Gohil resigned from his job in November 2024 following which till date considering the remote location of the appellant trust, no responsible person well versed with computers and email access has been appointed. The appellant begs to reiterate that the resignation and departure of Shree Ketan Gohil was sudden and unplanned and consequent to non-appointment of a proper well-educated person well versed with email access, the above referred notices issued by the Ld. First Appellate Authority went uncomplied. c. The appellant only became aware of the said order of the Hon. First appellate Authority when the demand recovery notice was served on it on 27.07.2025, post which the management on recommendation from its tax advisors has preferred this appeal although with a delay of 97 days.

That I humbly beg to submit the delay was entirely due to an honest oversight and inadvertence and without any malafide intent to disregard the provisions of law and further that the disallowance made by the Ld. AO u/s 143(3) is prima facie devoid of merit and contrary to the provisions of the Act and hence the appeal may kindly be admitted and the delay of 97 days condoned for which act of kindness the appellant will forever pray.”

Besides demonstrating sufficient cause for the delay as above, Ld. Counsel for the assessee further pointed out that grave injustice would be caused to the assessee if the assessee’s appeal before us is not entertained on account of a mere technical consideration of delay. In this regard, he contended that the AO had passed the assessment order and made addition in the hands of the assessee in total disregard of both the facts and the submissions made by the assessee before him. He contended that even the Ld. CIT(A) while passing his ex parte appellate order had ignored all the facts on record while confirming the order of the AO. He pointed out from the assessment order that the assessee was a charitable trust running an educational institution/school and filed return of income for the impugned year declaring income of Rs.1,98,690/-. Thereafter, he drew my attention to the contents of the assessment order pointing out that the AO had made addition of Rs.40,03,428/- to the income of the assessee without any discussion regarding nature of the addition made or the basis for making the impugned addition. He pointed Education Trust vs. ITO(E)] A.Y. 2018-19 - 5 – out that while page 2 of the assessment order the AO mentioned the sources of income of the assessee amounting to in all to Rs.5,19,02,068/- at page 3 of the order, he merely mentioned the fact of notice being issued to the assessee alongwith the detailed questionnaire and reply being filed by the assessee. The AO thereafter, he pointed out, merely stated that the assessee did not correctly compute its total taxable income and proceeded thereafter to compute the taxable income amounting to Rs.40,03,428/-. The contents of the same at page 3 of the order are as under:

Ld. Counsel for the assessee clarified that the taxable income computed of the assessee at Rs.40,03,428/- included the income returned by the assessee of Rs.1,98,690/-. The balance amount of Rs.38,04,736/- added to the income of the assessee represented the utilization of its income for acquiring capital assets which was claimed by the assessee as allowable in terms of Section 11(1)(A) of the Act in the return of income filed by the assessee. My attention was drawn to the copy of return of income filed by the assessee placed in the paper book, more particularly, at page no.10 reflecting the fact of the assessee having claimed an amount of Rs.38,04,736/- as amount applied during the previous year in capital account.

He contended that even during assessment proceedings, the assessee had been asked about the utilization of income claimed by it by acquiring capital assets. The assessee had submitted its reply furnishing copy of ledger account of capital assets acquired during the year alongwith the copies of bills of the assets so acquired. My attention was drawn first to the acknowledgement of e-proceedings conducted before the AO showing the fact of reply filed by the assessee on 5th of February, 2020 at paper book page nos. 65 to 67. My attention was, thereafter, drawn to the reply so filed dated 5th of February, 2020 mentioning the fact of Education Trust vs. ITO(E)] A.Y. 2018-19 - 8 – ledger and vouchers of application made towards the objective of the trust being enclosed at Annexure 7 placed at paper book page no.68. My attention, thereafter, was drawn to the copy of the ledger account enclosed with the said letter of the fixed assets reflecting the fact of assets acquired by the assessee to the tune of Rs.38,04,736/- during the impugned year placed at paper book page no.37. Thereafter, my attention was drawn to the paper book page nos.38 and 39 giving details of the parties from whom the said assets of their invoices number and date on which acquired. Attention was, thereafter, drawn to page nos. 40 to 64 being invoices of the capital assets so acquired by the assessee during the year. Ld. Counsel for the assessee contended that the AO had made addition of the utilization claimed by the assessee on account of capital assets acquired amounting to Rs.38.04 Lakhs that too without assigning any reasons for making the same and despite the fact that the assessee had clearly claimed the said exemption in its computation of income and also return of income and all the details and vouchers in relation to the same were furnished to the AO during assessment proceedings. Ld. Counsel for the assessee contented that all these facts being on record with the AO, even the Ld. CIT(A) had erred in ignoring them in the ex parte order passed by him and confirming the addition made by the AO. He pleaded, therefore, that the assessee having a clear- cut case in its favour, the non-condonation of delay in filing of the present appeal would result in grave injustice to the assessee. Accordingly, demonstrating sufficient cause for the delay and also pointing out that by not condoning the delay the assessee [Bhavnath Education Trust vs. ITO(E)] A.Y. 2018-19 - 9 – would suffer with grave injustice, Ld. Counsel for the assessee pleaded for the condonation of delay.

Ld. DR, on the other hand, conceded the fact that al the communications by the Ld. CIT(A) including the notices of hearing and also the service of order passed by him were sent on the incorrect email ID and not on the email ID mentioned by the assessee in Form No.35. She fairly agreed that the assessee had adduced sufficient cause in condoning the delay.

In view of the above, I have no hesitation in condoning the delay of 100 days in filing of the present appeal finding the assessee to have adduced sufficient cause for the delay as the order being served on an incorrect email ID by the appellate authority and also noting the fact that if the delay is not condoned, it would result in grave injustice to the assessee since, the Ld. Counsel for the assessee has sufficiently demonstrated that both the assessment order and the CIT(A) order has been passed ignoring all the facts on record before them including the submissions made by the assessee. The delay of 100 days in filing of the present appeal is, accordingly, condoned.

Taking up the appeal for hearing, the facts of the case and the issue having already been discussed in the earlier part of the order above, reiterating the same, addition of Rs.40,03,428/- has been made to the income of the assessee by the AO. The assessee has sufficiently demonstrated the fact of the assessee having returned taxable income of Rs.1,98,690/- which fact has been Education Trust vs. ITO(E)] A.Y. 2018-19 - 10 – noted by the AO also in his assessment order and as a result, the AO has made an addition of Rs.38,04,736/- to the income of the assessee. As rightly pointed out by the Ld. Counsel for the assessee, there is no discussion in the assessment order of the nature of income being added to the income of the assessee nor the reason for adding the same. I have gone through the entire assessment order and I find that there is no discussion at all by the AO while making the impugned addition. On this basis alone, the entire assessment order needs to be set aside. In fact, the impugned order does not qualify as an assessment order itself since it lacks the basic ingredients of an order, i.e discussion about the nature of addition being made to the income of the assessee. From the assessment order, nothing is discernable about the addition made to the income of the assessee,; its nature or/and under which section of the Act. Be that so, Ld. Counsel for the assessee has demonstrated before us that the addition of Rs.38.04 Lakhs made to the income of the assessee tallied with the amount of income claimed by the assessee to have been utilized for acquiring capital assets and claimed as exempt u/s.11(1)(A) of the Act. He has demonstrated this claim of the assessee through the computation of income filed before us placed at paper book page no.3 and the return of income of the assessee claiming the said exemption placed at paper book page no.10. He has also pointed out that during the assessment proceedings the assessee had furnished complete details of capital assets acquired by it by furnishing copy of ledger account of fixed assets and giving complete details of fixed assets acquired alongwith the copy of bills of the same placed before us [Bhavnath Education Trust vs. ITO(E)] A.Y. 2018-19 - 11 – at paper book page no.37 to 69. Ld. DR was unable to controvert any of the above facts. It is abundantly clear, therefore, though the assessment order does not talk about the nature of the addition made to the income of the assessee but considering the fact that the amount of addition tallies with the quantum of exemption claimed by the assessee u/s.11(1)(A) of the Act on account of utilization of income for acquiring capital assets therefore, the addition made can be assumed to be on account of disallowance of claim of the assessee to exemption u/s.11(1)(A) of the Act. Even if that be the case, I find no reason with the AO for making the impugned disallowance. The assessee has submitted all facts relating to its claim to the AO and the assessment order gives no reason at all for disallowing the said claim. I agree with the Ld. Counsel for the assessee that the Ld. CIT(A) had also erred in confirming the addition made by the AO when he was duty bound to have considered the facts on record before him which clearly demonstrated the assessee to have discharged its onus on proving its claim of exemption u/s.11(1)(A) of the Act.

In the light of the above, I hold that even on merits, there was no case at all for making addition of Rs.38.40 Lakhs to the income of the assessee.

I conclude, therefore, by holding that the order passed by the AO does not qualify as an assessment order since it neither mentions nature of addition made to the income of the assessee under which Section nor the reason for making the addition/disallowance. The order passed is, therefore, set aside Education Trust vs. ITO(E)] A.Y. 2018-19 - 12 – and the addition made to the income of the assessee directed to be deleted.

In the result, the appeal filed by the assessee is allowed.