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Facts
The assessee, a charitable trust, filed its return of income for AY 2019-20 declaring 'Nil' income after claiming exemption u/s 11. The return was processed u/s 143(1) with a disallowance of expenses applied for charitable purposes, leading to an assessed income. The appeal before the CIT(A) was dismissed for delay and non-compliance.
Held
The Tribunal held that there was a reasonable cause for the delay in filing the appeal due to the previous CA's failure to inform the trustees of the order. Relying on Supreme Court judgments, the Tribunal decided to condone the delay and restore the issues to the CIT(A) for fresh adjudication.
Key Issues
The primary issue was whether the delay in filing the appeal before the CIT(A) was justified and should be condoned. Additionally, the appeal challenged the disallowance of charitable expenses and the consequential demand.
Sections Cited
143(1), 250, 11, 12A, 5 of the Limitation Act
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH
Before: SHRI PAVAN KUMAR GADALE & SHRI AMARJIT SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, “F” BENCH MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 2719/MUM/2024 (A.Y.2019-20) FancyRehabilitationTrust, Vs. I T O (Exem), Ward 2(3), Cumballa Hill,MTNL TE Sewri Cross Road, Near Building, PedderRoad, BDD Chawl No. 9, DrGopalrao D Marg, Sewri (W), Mumbai–400026. Mumbai-400015. PAN/GIR No. AAATF0598C (अपीलाथ�/Appellant) (��यथ�/Respondent)
Appellant by Shri S G Agarwal.AR Respondent by Ms. Rajeshwari Menon, Sr. DR
सुनवाई क� तार�ख/Date of Hearing 16.07.2024 घोषणा क� तार�ख/Date of Pronouncement 24.07.2024 ORDER PER PAVAN KUMAR GADALE, JM: “ The appeal is filed by the assesse against the order of the Joint Commissioner of Income Tax (Appeals)(JCIT)-1 Vadodara passed u/sec 143(1) and U/sec 250 of the Ac. The assessee has raised the following grounds of appeal:
Ground No. 1 In the facts and circumstances of the case and in law, the learned Joint C.I.T. (Appeal) has erred in dismissing the appeal and not condoning the delay in filing the appeal without appreciating the fact that: The appellant is a charitable trust The Assessing Officer has passed the order u/s 143 (1), disallowing the amount applied for charitable purpose Rs. 94,38,907/-.
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Ground No. 2
In the facts and circumstances of the case and in law, the learned Joint C.I.T. (Appeal) has erred in not considering the grounds on merit.
Ground No. 3 In the facts and circumstances of the case and in law, the learned Joint C.I.T. (Appeal) has erred in confirming the adjustment made by the A. O. u/s 143 (1) (a) of the Income Tax Act.
Ground No. 4 In the facts and circumstances of the case and in law, the learned Joint C.I.T. (Appeal) has erred in not allowing expenditure incurred on object of the trust Rs. 94,38,907/-, without appreciating the fact that expenditure is more than 85% of income and account accumulated or set apart from application to charitable purposes which is less than 15%
Ground No. 5
In the facts and circumstances of the case and in law, the learned Joint C.IT. (Appeal) has erred in not given any reason for disallowing and making addition of Rs. 94,38,907/-. No opportunity of being heard was given to the appellant.
Ground No. 6
In the facts and circumstances of the case and in law, the learned Joint C.I.T. (Appeal) has erred in ignoring the fact that the trust is registered u/s 12A of the income tax act since 01/04/2000. Trust's Registration Number is TR/35687.
The appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal
The brief facts of the case that, the assessee is a Public Charitable Trust registered u/sec12A of the Act. The assesse has filed the return of income for the A.Y 2019-20 on 30.08.2019 disclosing a total income of Rs. Nil after claiming exemption u/sec 11 of the Act. Whereas the return of income was processed under section 143(1) of the
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Act with the disallowance of expenses of Rs,94,38,907/- applied for the objects of the trust and the assessed income determined at Rs.97,61,630/- vide order dated 18-05-2020.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has issued notice and there was no proper compliance by the assessee and also there is a delay in filling the appeal, which remained unexplained. Therefore the CIT(A) has dismissed the assesse appeal as not maintainable. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal.
At the time of hearing, the Ld. AR submitted that the CIT(A) has not considered the facts that the assessee has received the A.O order u/sec143(1) the Act and has filed the appeal before appellate authorities and the delay was not wanton Act. Further the asssessee has filed a request application for condonation of delay. The Ld.AR emphasized that the assessee has good case on merits with supporting evidences which goes to roots of the case and play a vital role in the decision making and prayed for an opportunity to substantiate before the lower authorities. Per Contra, the Ld. DR relied on the order of the CIT(A).
We heard the rival submissions and perused the material on record. Prima-facie, the CIT(A) has passed the
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order considering the fact that there is no proper compliance by the assessee in spite of providing adequate opportunity of hearing and the delay in filling the appeal was not explained with the reasonable cause. Whereas the assessee has raised grounds of appeal challenging disallowance of expenditure incurred on the objects of the trust The Ld. AR emphasized that there are genuine reasons and the delay was not a wanton Act. The assessee has filed the application/affidavit for condonation of delay placed at page 1 to 6 of the paper book read as under:
“I Sebastian Anthrajan, founder trustee of "Fancy Rehabilitation Trust" aged about 72 years, residing at 32/603, Seawood Estate, NRI Complex, Nerul, Navi Mumbai 400 614, hereby solemnly affirm and state as under: I am founder, trustee of "Fancy Rehabilitation Trust". The trust is non- profit organization. The above trust is engaged in making the physically challenged, mentally retarded persons and other less fortunate self employed and self sufficient and provide education and medical facilities to absolute needy people. The trust is registered u/s 12A having serial number - TR / 35687 w.e.f. 01/04/2000 The intimation dated 18/05/2020 was issued during the COVID-19 time. At that time Mr. Maharajan Naidu CA, who was handling Income Tax and Audit and his Email id was registered, who has not informed the order passed u/s 143 (1) A to the trustees. The trustees came to know about the demand when they have received the notice for paying the demand in the month of August 2023. The trustees have immediately appoint the another CA and he has filed an appeal. The delay in filing the appeal is due to the fact that the earlier CA has not intimated about the intimation to the trustees and he has not taken any action to file the appeal. Therefore there is delay in filing an appeal due to mistake of the earlier CA Mr. Naidu. Return was filed on 30.08.2019
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Intimation u/s 143 (1) Date of order 18.05.2020 Due date of filing an appeal Before C.I.T. (Appeal) 17/06/2020 Appeal filed on 04/09/2023 Delay in filing an appeal 1187 days Delay for the period 15th March 2020 to 28th Feb. 2022, To be excluded as per the Order of the Hon'ble Supreme Court, dated-10/01/2022 715 days Delay 472 days The Hon'ble J.C.I.T. (Appeal) Vadodara has dismissed the appeal and not condone the delay in filing the appeal. In the intimation, amount applied for charitable purpose Rs. 94,38,907/- was disallowed. Since CA Mr. Maharajan Naidu who has filed the return at that time, in the return 12A registration number is not mentioned. Therefore CPC has not allowed the exemption. Intimation u/s 143 (1) was passed and raising the demand of Rs. 38,43,442/-. The trust is non-profit making charitable organization, the CPC has raised the demand. Since the 12A registration number was not mentioned in the return of income. If the delay was not condoned, it would amount to legalise an illegal and unconstitutional order. The power given to the Tribunal is not to legalise an injustice on technical ground but to do substantial justice by removing the injustice. Hence the delay by us was not intentional. Thus the late filing was due to the reasons totally beyond my control. Looking at the fact that my erstwhile counsel has not taken necessary steps, please take a lenient view and condone the delay. This delay is wholly unintentional and beyond the control of the appellant. The word 'Sufficient Cause' has been liberal in the case of: construed qute liberal in the case of R. J. Pratap Singh [100 ITR 698 S. C.] S. N. Ghorpade [48 ITR 54 Mumbai]
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The word 'Sufficient Cause' is used in section 5 of the Limitation Act, hence equally important relevance is attached to it. The Supreme Court has interpreted this phrase which is binding on all courts and Quasi- judicial authorities that decide Condonation of delay on sufficient cause being shown. Section 5 of the Limitation Act gives the court discretion to be exercised upon the principles which are well understood by the words 'Sufficient Cause', which receive a liberal construction so as to advance substantial justice when no negligence or want of bonafide is imputable to the appellant [Shakuntala Jain AIR 69 S. C.] It is the duty of the Court to see it that justice should be done between the parties. In the case of MST Katji (167 ITR 471 S. C.), the S. C. enunciated the following principles: Ordinarily a litigant does not stand to benefit by lodging an appeal late. Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated as against this, when the delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. The doctrine must be applied in a rational, common sense and pragmatic manner. When substantial justice and technical consideration are pitted against each other cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done, because of a non-deliberate delay. There is no presumptive that delay is occasioned deliberately or on account of culpable negligence or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. It must be grasped that judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. We therefore request your Honour to kindly condone the delay in filing the appeal before the C.I.T. (Appeal). I Sebastian Anthrajan hereby declare that whatever stated hereinabove is true and correct to the best of my knowledge and belief.". 6. We considering the facts, provisions and the contents of the condonation application/affidavit found that there
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is a reasonable cause explained and there is no benefit is derived in causing delay in filing appeal before the CIT(A). The Hon’ble Supreme Court in the case of B. Madhuri Goud vs. B. Damodar Reddy (2012) 12 SCC 693, has held that the following principles must be kept in mind while considering the application for condonation of delay;
(i) There should be a liberal, pragmatic, justice oriented, non-pedantic approach while dealing with an application for condonation of delay, for the courts are not supposed to legalise injustice but are obliged to remove injustice. (ii) The terms “sufficient cause” should be understood in their proper spirit, philosophy and purpose regard being had to the fact that these terms are basically elastic and are to be applied in proper perspective to the obtaining fact-situation. (iii) Substantial justice being paramount and pivotal the technical considerations should not be given undue and uncalled for emphasis. (iv) No presumption can be attached to deliberate cause of delay but, gross negligence on the part of the counsel or litigant is to be taken note of. (v) Lack of bona fides imputable to a party seeking condonation of delay is a significant and relevant fact. (vi) It is to be kept in mind that adherence to strict proof should not affect public justice and cause public mischief because the courts are required to be vigilant so that in the ultimate eventuate there is no real failure of justice. (vii) The concept of liberal approach has to encapsulate the conception of reasonableness and it cannot be allowed a totally unfettered free play. (viii)There is a distinction between inordinate delay and a delay of short duration or few days, for to
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the former doctrine of prejudice is attracted whereas to the latter it may not be attracted. That apart, the first one warrants strict approach whereas the second calls for a liberal delineation. (ix) The conduct, behaviour and attitude of a party relating to its inaction or negligence are relevant factors to be taken into consideration. It is so as the fundamental principle is that the courts are required to weigh the scale of balance of justice in respect of both parties and the said principle cannot be given a total go by in the name of liberal approach. (x) If the explanation offered is concocted or the grounds urged in the application are fanciful, the courts should be vigilant not to expose the other side unnecessarily to face such litigation. (xi) It is to be borne in mind that no one gets away with fraud, is representation or interpolation by taking recourse to the technicalities of law of limitation. (xii) The entire gamut of facts are to be carefully scrutinized and the approach should be based on the paradigm of judicial discretion which is founded on objective reasoning and not on individual perception. (xiii) The State or a public body or an entity representing a collective cause should be given some acceptable latitude.” 7. The Hon'ble supreme court in the case of Collector, Land Acquisition Vs. MST Katiji & others (167 ITR 471) (SC) has observed as under :
“ The legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the Courts to do substantial justice to parties by disposing of matters on "merits". The expression "sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner
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which subserves the ends of justice—that being the life- purpose of the existence of the institution of Courts. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the "State" is the applicant praying for condonation of delay. In fact, experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherent bureaucratic methodology imbued with the note-making, file- pushing, and passing-on-the-buck ethos, delay on its part is less difficult to understand though more difficult to approve. In any event, the State which represents the collective cause of the community does not deserve a litigant non grata status. The Courts, therefore, have to be informed of the spirit and philosophy of the provision in the course of the interpretation of the expression "sufficient cause". So also the same approach has to be evidenced in its application to matters at hand with the end in view to do even-handed justice on merits in preference to the approach which scuttles a decision on merits.”
We respectfully follow the observations and ratio of the decisions of Hon’ble Supreme Court and find that the delay in filing the appeal before the CIT (Appeals) by the assessee is supported with sufficient cause and pragmatic approach should be considered for the condonation of delay and accordingly the delay is condoned. Further there could be various reasons for non submission of details which cannot be overruled. Hence considering the principles of natural justice and to meet the ends of justice, we shall provide with one more opportunity of hearing to the assessee to substantiate the case along with the evidences. Accordingly, set aside the order of the CIT(A) and restore the disputed issues to the
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file of the CIT(A) to adjudicate afresh on merits and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information and comply with appeal filling rules. Accordingly, we allow the grounds of appeal of the assessee for statistical purposes. 9. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 24.07.2024.
Sd/- Sd/- (AMARJIT SINGH) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 24/07/2024 KRK Copy of the Order forwarded to: 1. The Appellant, 2. The Respondent 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file.
//True Copy//
BY ORDER, (Dy./Asstt. Registrar)ITAT, Mumbai