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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
Date of hearing : 10.09.2024 Date of Pronouncement : 23.09.2024 O R D E R Per Laxmi Prasad Sahu, Accountant Member These appeals are filed by the assessee against the separate orders dated 17.5.2024 and 20.06.2024 of the Addl./Jt.CIT(Appeals)- 2, Jaipur, for the AYs 2017-18 & 2019-20.
The grounds raised are as under:-
“ 1. That the order of the learned Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant, is bad and erroneous in law and against the facts and circumstances of the case.
2. That the Commissioner of Income Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of video conferencing even after a specific request was made during the appellate proceedings and such action is in violation of principles of natural justice.
3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not condoning the delay in filing the appeal before CIT(A) even though there was sufficient and reasonable cause for such delay.
4. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not considering the appellant's response to the demand as action against the intimation issued u/s 143(1) of the Income-tax Act, 1961 ("the Act").
5. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not considering the COVID period in the period of delay as sufficient and reasonable cause.
6. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not deciding the case on merits 7. That the learned Commissioner of Income Tax (Appeals) ought to have allowed deduction u/s 11(1)(a) of the Act at 15% on gross receipts.
8. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not allowing the set off of brought forward deficit from earlier years against the current year surplus. Each of the above grounds is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal.”
Briefly stated the facts of the case are that the assessee filed return of income on 12.09.2019 declaring total income at Nil, agricultural income of Rs.1,84,770. The assessee claimed exemption u/s. section 11(1) Explanation 2 of Rs.13,50,099. The said return was processed on 09.03.2019 rejecting exemption claimed by the assessee and total income determined at Rs.13,50,099, resultantly there was a tax demand of Rs.3,39,633 and TDS of Rs.51,791 was adjusted against the tax demand in the intimation.
The assessee filed appeal before the First Appellate Authority (FAA) on 01.10.2019 with the reasons for delay and the ld. FAA noted that the Hon’ble Apex Court has extended time limit for the period from 15.03.2020 till 28.02.2022, in spite of this, the appeal should have been filed on or before 18.04.2019. He also noted that the appellant was waiting for response from the Jurisdictional Assessing Officer (JAO) on the said intimation order and therefore it got delayed. The FAA has noted that the appellant was unable to demonstrate sufficient cause or other hardships for the delay in filing appeal. Accordingly the delay was not condoned and the appeal of the assessee was dismissed. Aggrieved, the assessee is in appeal before the ITAT.
The ld. AR submitted that the assessee is a charitable trust registered u/s. 12A of the Act vide certificate dated 14.11.1975. During the impugned year, the assessee filed appeal within the due date and claimed exemption in terms of section 11(1) Explanation 2 of Rs.13,50,099 which was denied by the CPC without giving any reason.
The assessee only came to know when the demand was issued by the department and the assessee responded to the outstanding demand which is evident from page 4 of PB and it was assigned to JAO. Because of this, the assessee was awaiting response from the JAO. However there was no response. Accordingly the assessee filed the appeal before the FAA and it got delayed due to COVID-19 effect. Reasons were explained before the FAA, however, it was not accepted and dismissed the appeal of the assessee in limine.
On merits of the case, the ld. AR submitted that assessee claimed correct exemption, therefore the assessee was to be allowed exemption while processing the return of income u/s. 143(1). The CPC should have considered the exemption claimed by the assessee. He requested that the matter may be remitted back for fresh consideration. The assessee relied on the following 3 judgments:-
i) CIT (Exemption) v. Subros Educational Society [2018] 96 taxmann.com 652 (SC ii) CIT v. Programme for Community Organisation (2001) 116 Taxman 608 (SC) iii) Sri Shridevi Charitable Trust v. DCIT(E) in dated 10.6.2022.
The ld. DR relied on the order of the CIT(Appeals) and CPC. He submitted that the CIT(Appeals) has not condoned the delay is correct view. The assessee should have filed appeal within due date as per section 249(3) of the Act. The reasons for delay is also not reasonable cause for filing appeal late. Whenever intimation is generated it is immediately sent to the assessee by email. If the assessee was not satisfied from the processing of return, either he may approach for rectification u/s 154 or may appeal before the FAA. But, here the assessee filed appeal with delay which is not reasonable cause.
8. Considering the rival submissions, the ld. FAA has dismissed the appeal of the assessee by not considering the reasons of the assessee for condoning the delay. On going through the reasons, we note that the CPC has assigned the matter to the JAO which is clear from the page 4 of the PB. But it is interesting to note that there is no date when the matter was assigned to JAO. On going through the reasons and the documents produced by the assessee for delay, we note that there is reasonable cause for not filing the appeal within the due date. We note that the delay in filing the appeal before the Ld.CIT(A) amounts to 908 days including the COVID-19 days. However, on going through the submissions of the Ld.AR the application for condonation of delay, the delay cannot be considered to be the one caused due to any malafide intention. In fact, we find the reason submitted by the assessee that caused the delay is a mistake on behalf of assessee at the personal level We also note that, upon realising the mistake committed by the assessee, he immediately took necessary steps to represent his case before the authority. It is further emphasised that the assessee is not a continuous defaulter could also be attributed. The ld. CIT(Appeals) has not decided the issue on merits of the case and only dismissed the appeal without condoning the delay. In case of People Education & Economic Development Society Vs. ITO reported in 100 ITD 87 (TM) (Chen), it was held that; "when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non- deliberate delay".
The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not able to file the appeals within the period of limitation. The cause for the delay therefore deserves to be considered, when there exist a reasonable cause, and therefore the period of delay may not be relevant factor. In support, we rely on the decision o: Hon'ble Madras High Court in the case of CH vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Hon'ble Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 1000 to 2000 days cannot be considered to be inordinate or excessive.
Hon'ble Madras High Court in the case of Sreenivas Charitable Trust reported in 280 ITR 357 held that, no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Hon'ble Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression sufficient cause" should receive a liberal construction. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression "sufficient cause" should receive a liberal construction. In opinion of this Tribunal, this decision of Hon'ble Madras High Court is applicable to the present facts of the case. A similar view was taken by Hon'ble Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
Hon'ble Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) reported in 277 ITR 1 condoned the delay of 180 days when, the appeal was filed after the pronouncement of the Judgment of the Hon'ble Supreme Court. It is also to be noted that the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Hon'ble Supreme Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi reported in AIR 1978 SC 537 held that, non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by Hon'ble Supreme Court, there is sufficient cause for condonation of delay. Hon'ble Supreme Court also observed that; "It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. Condonation of delay is the discretion of the Court/Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay deserves to be condoned, irrespective of the duration/period.
11. With the above observations, following the above judgments, in our considered opinion, there exists sufficient cause in the reasons stated by the assessee for the delay in filing appeals and we condone the delay in filing the appeal before the CIT(Appeals). The CIT(Appeals) is directed to decide the appeal afresh as per law. The assessee is directed to update its email id, communication address and other details and file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
The assessee has raised the grounds of appeal as under:-
“1. That the order of the learned Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant, is bad and erroneous in law and against the facts and circumstances of the case.
2. That the Commissioner of Income Tax (Appeals) erred in law and on facts in not providing an opportunity of being heard by way of video conferencing even after a specific request was made during the appellate proceedings and such action is in violation of principles of natural justice.
3. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not allowing exemption u/s 11 and 12 of the Income-tax Act, 1961 ("the Act") on the grounds that Form 10B was not filed within time even though it was filed within the due date.
4. That the learned Commissioner of Income Tax (Appeals) ought to have appreciated that the exemption u/s 11 and 12 of the Act was denied on the ground that registration u/s 12A of the Act was not disclosed in return of income and therefore, ought to have verified the same.
5. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not providing the deduction u/s 11(1)(a) of the Act at 15% of gross receipts.
6. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not providing deduction towards revenue application.
7. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not providing deduction towards capital application. Each of the above grounds is without prejudice to one another and the appellant craves leave of the Hon'ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal.”
Briefly stated the facts of the case are that the assessee filed return of income on 18.9.2019 and claimed exemption u/s.
While processing the return of income on 18.05.2020 the exemption claimed by the assessee was not accepted and aggregate income was determined at Rs.54,00,480. Accordingly after adjusting TDS, the tax demand was determined at Rs.22,03,397. Against this order, the assessee filed appeal before the First Appellate Authority (FAA) .
The ld. FAA noticed that assessee filed Form 10B on 16.09.2019 and return was filed on 18.09.2019, but on verification it was gathered that Form 10B was not submitted in the e-filing portal till date of the order of the FAA. However as per screenshot it is showing 16.09.2019 and ‘submitted’ and Form 10B was not shown in the e-filing portal. Even the registration of trust u/s. 12/12A was not filled by the appellant in its return of income for claiming exemption. Considering the entire facts, the ld. CIT(Appeals) confirmed the order of CPC and dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before the ITAT.
The ld. AR submitted that Form 10B was duly filed by the assessee before filing return of income and it has been digitally signed on 16.09.2019 which is evident from Form 10B placed in PB page 4. Without filing Form 10B it is not possible for signing digitally and copy of Form 10B is placed at page 4 of PB. He also submitted that the screenshot in the order of CIT(A) is also showing the date 16.09.2019, but how Form 10B is not displaying at the time of verification by the ld. FAA and it still shows ‘download’. As per e- filing portal, ack. No. also is appearing. Therefore this is not the mistake of the assessee. The assessee discharged its primary liability in complying the provisions of the Act for filing Form 10B. Therefore, he requested that the matter may be sent back to the CIT(Appeals) for fresh consideration.
The ld. DR relied on the order of the FAA and the CPC. He further submitted that in the return of income the details of registration u/s. 12/12A was not provided by the assessee and this may be one of the reason for not allowing the claim of the assessee by CPC.
Considering the rival submissions, we note from the documents that assessee is a registered society noted above. However, while filing return of income, the details of registration were not provided in the income tax return. The CPC has not granted exemption to the assessee. We note from the intimation that as per return furnished, the assessee is not registered u/s. 12A/12AA or approval u/s. 10(23C)(iv), (v), (vi) or (via) for claiming exemption as made by the assessee in sl. No.4(i) to (viii) of Schedule Part B-T1. These fields are mandatory for claim of exemption u/s. 11 or 10(23C)(v) or 10(23C)(vi) or 10(23C)(via). Hence exemption was not allowed by the CPC. We also note from Form 10B digitally signed on 16.09.2019 which shows that Form 10B was filed by the assessee, but how it does not appear in e-filing portal is best known to the department. Considering the totality of facts and circumstances of the case and in the interest of justice, we remit the issue back to the file of CIT(Appeals) for fresh consideration and decision as per law. The assessee is directed to file necessary documents that would be essential and required for substantiating his case and for proper adjudication by the revenue authorities. Needless to say that reasonable opportunity of being heard be given to the assessee. The assessee is directed to cooperate with the proceedings and in case of further default, the assessee shall not be entitled to any leniency.
In the result, both the appeals are allowed for statistical purposes.
Pronounced in the open court on this 23rd day of September, 2024.