Appeal filed after 1350 days without reasonable cause not condoned: ITAT Ahmedabad

Betalish Dash Vs CIT(Exemption) (ITAT Ahmedabad)

ITAT Ahmedabad held that assessee trust well aware of the denial of registration under section 12AB of the Income Tax Act will not be entitled to claim benefit of exemption under section 11 since appeal filed after delay of 1350 days which is not condoned.

Facts- The present appeal is filed by the assessee against the denial of registration under section 12AB of the Income Tax Act vide the order passed by the Commissioner of Income Tax (Exemption), Ahmedabad.

Conclusion- Held that the assessee trust has chosen to file the present appeal with a delay of 1350 days which in our considered opinion is not a “reasonable cause” to condone the delay. More particularly when the assessee has promptly participated in the assessment proceedings before the Assessing Officer during Covid-19 pandemic period is well aware of denial of registration u/s. 12AB, will not entitle it to claim the benefit of exemption u/s. 11 of the Act. Thus the Assessee trust which claims its income as exempt ought to have be vigilant in making its claim within statutory time limits as prescribed under the Act. Therefore the reasons stated in the above affidavit is not a “reasonable cause” and therefore the same is rejected.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

ITA No. 165/Ahd/2024 is filed by the Assessee as against the denial of registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide order dated 20.03.2020 passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred as CIT(E)].

2. The Registry has noted that there is a delay of 1350 days in filing the above appeal by the assessee. The assessee filed an Affidavit stating as follows:

“4. The deponent is filing the present affidavit in the capacity of trustee of Shri Betalish Dash Hummad Jain Chokhla Punch Sanchalit Keshavlal Manganlal (hereinafter referred to ‘The Appellant.

5. The Appellant had applied for the registration under 12AA before Ld. Commissioner of Income Tax (Exemption) by filing form no 10A electronically on 01/02/2019 bearing ACK Number Acknowledgement Number: 415953121010219. As the application for 12AA was filed during the FY 2018-19, exemption under section 11 was claimed in the original Income Tax Return Filed by the appellant.

6. As the appellant had applied for the 12AA on 01/02/2019 but did not receive any intimation/notice from the Income Tax Department in the e-mail or physically till 6 months from the end of the month in which application was received. As the appellant did not receive any communication from the department, it assumed deemed approval of the registration under 12AA and filed the income tax return on 30.09.2019.

7. When the appellant took a follow up for the status of Form 10A filed dated 01.02.2019, departmental officer checked through its system and conveyed orally that their application has been rejected. While filing form 35, it was stated by mistake that’ But when it logged onto income tax portal, it came to our notice that honourable CIT(E) have rejected our application on 27^th August 2019.

8. As the Appellant came to know that their application has been rejected, though, till date, the appellant is not in a possession of any document or evidence in this regard except that what is has learnt from the oral communication with the income tax department officer and what is stated in the assessment order under section 143(3) for which separate appeal has been filed before Hon Income Tax Appellate Tribunal bearing ITA Number ITA No. 165 /AHD /2024.

9. When the appellant came to know that their application in form No 10A has not been approved, they have made another application in form No 10A bearing ACK Number 188131501021019 dated 02.10.2019. On 20.03.2020, the said application has been rejected bearing order in the form 20/1026832394(1). This period is such when the COVID-19 wave has started in the country and the appellant assessee could not track such application. Subsequently. the new provisions relating to trust has been introduced in section 12AB of the Income Tax Act, 1961 and their application in form No 10A has approved vide registration in form 10AC bearing registration number AACTS8948ME20206 dated 27.05.2021. Thus, it assumed that their registration has been approved.

10. The appellant has filed appeal against the order No ITBA/EXM/S/EXM1/2019- 20/1026832394(1) dated 20.03.2020. The said order has been passed pursuant to application made by it for making application for registration under section 12AA of the Income Tax Act filed in Form No 10A bearing ACK Number 188131501021019 dated 02.10.2019.

11. The order No ITBA/EXM/S/EXM1/2019-20/1026832394(1) dated 20.03.2020 has been uploaded on the income tax portal. It is such a time when the COVID 19 outbreak has been there in the entire country.

12. That in terms of the provisions of the Income Tax Act, the appeal is required to be filed before the Hon ITAT within a period of 60 days from the date of communication of order.

13. That, on account of COVID 19 outbreak, Hon Supreme Court has stated that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purpose of limitation as may be prescribed under any general or special laws.

14. That there is a delay of 700 days in making the appeal before Hon ITAT against the order No ITBA/EXM/S/ EXM1/2019-20/1026832394(1) dated 20.03.2020.

15.That the existing committee members / trustee were not able to manage the affairs and were not able to devote the time, as a reason, the then existing body of managing committee / trustee have been dissolved and in its place, new body of trustees / managing committee have taken over the operations of the trust in the meeting dated 12.03.2023.

16. The new trustee / managing committee came to know about the rejection application under section 12AA when they came to know about the order of Ld Commissioner (A) for the FY 2018-19 for which the separate appeal is being filed before your good honour.

17. Without prejudice, assessee is a Trust running a Dharamshala and the activity of the assessee falls within the definition of charitable purposes since it has to be considered as providing the facility of Dharamshala with the object of providing general public utility.

18. It is humbly prayed that if the delay is not condoned, it will severely impact the functioning of the appellant.

19. The appellant begs your good honour to condone the delay in filing the appeal. For the above act of kindness, the appellant will remain highly obliged.”

3. Perusal of the records clearly shows that the following sequence of events:

4. Perusal of the above Affidavit filed by the assessee trust wherein delay of 1350 days in filing the appeal, the assessee is right in claiming 700 days delay to be deleted pursuant to Supreme Court direction due to Covid-19 outbreak situation. However during the assessment proceedings for the Asst. Year 2019-20, the assessee Trust participated in the proceedings before the Assessing Officer on 24-02-202 1 and 12-08-202 1 and passed the assessment order dated 07-09-2021 denying exemption u/s. 11 of the Act and taxed the income of the assessee Trust and demanded tax thereon, which is also part of Covid-19 Pandemic period.

4.1. Aggrieved against the assessment order, assessee filed statutory appeal before Ld. CIT(A) on 16-10-202 1 within statutory period of 30 days which is also Covid-19 Pandemic period. Whereas the assessee has not challenged the impugned order passed by Ld. CIT(E) denying registration. However when Ld. CIT(A) dismissed the assessee appeal for non-prosecution vide order dated 29-11-2023, the assessee trust has chosen to file the present appeal with a delay of 1350 days which in our considered opinion is not a “reasonable cause” to condone the delay. More particularly when the assessee has promptly participated in the assessment proceedings before the Assessing Officer during Covid-19 pandemic period is well aware of denial of registration u/s. 12AB, will not entitle it to claim the benefit of exemption u/s. 11 of the Act. Thus the Assessee trust which claims its income as exempt ought to have be vigilant in making its claim within statutory time limits as prescribed under the Act. Therefore the reasons stated in the above affidavit is not a “reasonable cause” and therefore the same is rejected.

5. In the result, the appeal filed by the assessee in ITA No. 165/Ahd/2024 is dismissed as in limine.

6. ITA No. 166/Ahd/2024 is filed by the assessee as against the exparte appellate order dated 29-11-2023 passed by Commissioner of Income Tax (Appeals) arising out of the assessment order passed u/s. 143(3) of the Act relating to the Asst. Year 2019-20. The assessee trust has made Alternate plea/Additional Grounds which reads as follows:

“1. In case the aforementioned grounds are not allowed, then, it is submitted to assess the assessee as an AOP as the exemption has been denied only for want of registration under section 12AA. The Ld Assessing officer has also stated the same, but the liability has not been quantified accordingly.

2. The AOP will be taxed as per section 167B of the Act.

3. The Ld assessing officer has disallowed Rs 17,56,003/- whereas it should have been only Rs 5,05,369.00.

4. The Ld Assessing officer has made assessed income of Rs. 35,71,443/- whereas tax has been counted on Rs 53,27,442.00 and thereby, also erred in addition to what is stated above.

7. Ld. CIT-DR has no serious objection on the alternative/additional ground raised by the assessee.

8. The alternative argument of the assessee when it is denied registration u/s. 12AB, it ought to be assessed as an AOP under section 167B of the Act, which is valid legal ground. Since the impugned order passed by Ld. CIT(E) is exparte order, we deem it fit to set aside the order passed by the Lower Authorities and remit the matter back to the file of Jurisdictional Assessing Officer to consider the Additional Ground and re-compute the income in accordance with the provisions of law by giving proper opportunity of hearing to the assessee trust. Needless to state, the assessee should cooperate with the Jurisdictional Assessing Officer to pass fresh assessment order by providing necessary details and evidences.

9. In the result, the appeal filed by the assessee in ITA No. 166/Ahd/2024 is allowed for statistical purpose.

Order pronounced in the open court on 22 -11-2024