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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
O R D E R
PER Ms. MADHUMITA ROY - JM:
The instant appeal filed at the instance of the assessee is directed against the order dated 05.09.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi, arising out of the order dated 13.09.2021 passed by the AO, NFAC, Delhi, under Section 143(3) of the Income Tax Act, 1961, (hereinafter referred to as ‘the Act’), raising a demand of Rs.2,30,409/- for Assessment Year 2018-19, whereby and whereunder the appeal filed by the Pragati Mandal vs. ITO(E)] A.Y.– 2018-19 - 2 – appellant stood dismissed, since, the appellant failed to justify the delay in filing such appeal before the First Appellate Authority.
2. The brief facts leading to this case is this that the appellant, a trust, registered under Section 12A of the Act vide Registration No. DIT/E/12AA/82/2008-09 dated 21.10.2008 and is also entitled to exemption/deduction under Section 11 & 12 of the Act. The appellant is further having registered under Section 80G(5) of the Act and its approval vide Registration Number DIT/E/80G(5)/949/08-2009 dated 19.08.2009. The main activity of the Trust is to impart education provided to the poor and needy people of the villages of different parts of Gujarat claimed to have exempted under the Act and filing income tax return every year claiming exemption due to having activity as mentioned hereinabove. In the year under consideration, the appellant filed its return of income on 31.10.2018 declaring total loss at Rs.3,80,621/-. After claiming deduction towards application for charitable purpose of amount of Rs.63,55,375/-, out of this 15% of total income amounting of Rs.8,96,213/- was disallowed by the Ld. AO due to return was filed in Form No.5 instead of Form No.7. The AO, thus, considered the appellant as AOP and disallowed accumulated set apart 15% of total income of Rs.8,96,213/- and added the same to the total income of the appellant. He has further applied the interest under Section 234B, 234C & 234D of the Act. Against the same, the appellant preferred appeal before the First Appellate Authority, admittedly, which was barred by limitation for 313 days. Such appeal stood Pragati Mandal vs. ITO(E)] A.Y.– 2018-19 - 3 – dismissed on the premise that the appellant failed to show “sufficient cause” which could justify the delay which occurred from last day of filing of appeal as per statutory provision of the Act. Needless to mention that the matter was not finalized by the Ld. CIT(A) on merit as appeal was not found to be maintainable. Hence, the instant appeal before us.
At the time of hearing of the instant appeal, the Ld. Counsel appearing for the assessee has drawn our attention to an affidavit affirmed by one Mr. Bhupendrabhai K. Patel, the trustee, in support of the delay in filing the application before the First Appellate Authority in addition to the explanation already rendered by the appellant before the said authority. The contents of the affidavit is as under:
“1. That the assessment order was passed u/s. 143 (3) of I. T. act and was served on assesses to email id address of the Trust. The said assessment order handed over to assistant accountant for further action for filing Appeal before Honorable CIT (A).
Suddenly, the assistant accountant was left the job and without informing the pending matter for filing of Appeal against the assessment order.
3. The Trust has received demand notice for payment against the demand of assessment order u/s. 143 (3) of I. T. act.
4. The assistant accountant could not filed Appeal against the assessment order and I immediately connected to Tax consultants for filing Appeal before Honorable CIT (A).
The Appeal was filed delay of 312 days due to accountant fault.
6. That the assesses is a Trust and carried on education activity in small village at place Idar. The Trust is also having register under the 12AA of I. T. act and also having 80 G approval. So, Trust Income is totally exempted under the Income Tax Act.
Pragati Mandal vs. ITO(E)] A.Y.– 2018-19 - 4 – 7. The delay of filing Appeal before Honorable CIT (A) due to fault of accountant and not inform properly to me and also left the job without any intimation about pending works.
That, I had no intension to jeopardize the interest of the revenue by delaying the filing of the Appeals.
That your good self is empowered u/s. 249 (3) of the Act to condone delay in filing Appeal.”
The appellant further filed a salary slip dated 17.04.2017 in respect of the said employee being the Assistant Accountant who left the assessee without informing the pending matter for filing of appeal against the order passed by the Ld. AO. We have carefully considered the contents of the affidavit affirmed by the trustee and the supporting document being the salary slip as mentioned hereinabove justifying that the Assistant Accountant was in fact with the appellant who was initially handed over that assessment order for further action of filing appeal before the Ld. CIT(A), which seems to be genuine and could be treated as ‘sufficient cause’ justifying the delay occurred in preferring the appeal before the First Appellate Authority. In that view of the matter, we having been satisfied with the ‘sufficient cause’ shown by the appellant in not being able to file the appeal in time before the First Appellate Authority, which in fact ought to have been considered in its proper perspective by the Ld. CIT(A), condone the delay in preferring the appeal before the First Appellate Authority.
5. So far as the merit of the matter is concerned, we find that as the appellant is a trust requires to file return of income in ITR-7 and needs to claim the 15% set apart under Section 11(1)(a) of the Pragati Mandal vs. ITO(E)] A.Y.– 2018-19 - 5 – Act instead of filing ITR-5 which was not as per the provision of IT Act to claim benefit of exemption under Section 11 & 12 of the Act. A bare appreciation of the reply filed by the appellant before the Ld. AO, one cannot overlook sight of the fact that the appellant conceded that by mistake the appellant filed ITR-5 instead of ITR-7 as having a charitable trust. However, the same was not considered by the Ld. AO and order was passed treating the same as AOP upon making disallowance of accumulated set apart 15% of total income. We find that the appellant is a registered trust under Section 12AA of the Act, entitled to exemption/deduction under Section 11 & 12 of the Act and also having registration under Section 80G(5) of the Act. Neither it was pointed out by the Revenue that the appellant ever made a mistake in filing ITR-5 instead of ITR-7 as per provision of law. Therefore, it could be construed as genuine and inadvertent mistake by the appellant in filing ITR-5 instead of ITR-7 as a trust which needs to be considered in its proper prospective, particularly taking into consideration the activities rendered by the appellant trust having social impact. We also note that had the appellant filed ITR-7 instead of ITR-5, the appellant would have been allowed deduction under the Act by the Ld. AO as claimed for. Having regard to this particular fact and circumstances of the matter, we find it fit and proper to give a further chance to appellant to get the relief as claimed for by remanding the issue to the file of the Ld. AO. However, as the appellant already filed ITR-5 instead of ITR-7, we also grant liberty to the appellant to apply before the concerned authority being the Board under Pragati Mandal vs. ITO(E)] A.Y.– 2018-19 - 6 – Section 119(2)(b) of the Act for approval to file ITR-7 within 15 days from the date of passing of this order. The Ld. AO is also directed to keep the assessment proceeding in abeyance till the finalization of such application to be made by the appellant before the CBDT for a maximum period of 8 months and then to finalize the issue ultimately strictly in accordance with law upon giving an opportunity of being heard to the appellant and upon considering the evidence on record and any other evidence which the appellant may choose to file at the time of hearing of the matter. The ld. AO, is, therefore, directed to pass a reasoned order complying all the formalities indicated hereinabove.
In the result, appeal preferred by the appellant is allowed for statistical purposes.
This Order pronounced on 23/02/2024
Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/02/2024 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,