Sanand Agricultural Produce Market Committee Vs ITO (ITAT Ahmedabad)
The ITAT Ahmedabad addressed an appeal filed by the Agricultural Produce Market Committee (APMC) against the order of the CIT(A) for A.Y. 2021-22, which arose from an Intimation passed by the CPC under Section 143(1). The CPC had denied the APMC’s claimed exemption of ₹3,57,30,363/- under Section 10(26AAB), taxing the entire amount as income.
Initially, the Tribunal addressed the appeal’s 174-day delay, which the assessee attributed to the bona fide pursuit of alternate remedies, including rectification applications before the CPC and CIT(A), and a grievance application before the Assessing Officer (AO). The AO had candidly admitted that the CPC erred in denying the exemption but expressed inability to rectify the order due to the prior CIT(A) order. Citing the Supreme Court’s mandate that substantial justice must prevail over technicalities, and finding the assessee’s reasons genuine and not mala fide, the ITAT condoned the delay.
On the merits of the case, the CIT(A) had dismissed the APMC’s appeal summarily because the assessee failed to respond to multiple show-cause notices or provide substantive submissions, thereby confirming the CPC’s addition.
The ITAT acknowledged the assessee’s non-diligent conduct in failing to comply with notices and, critically, being unable to produce the audit report in Form 10B, which is a condition for claiming the exemption. However, the Tribunal also noted that the APMC had been consistently allowed the exemption in prior assessment years and that the AO’s grievance resolution acknowledged the CPC’s mistake. Furthermore, the Tribunal highlighted that even if the exemption were denied, the CPC and CIT(A) erred by taxing the gross receipts without allowing the legitimate expenditure incurred for the APMC’s statutory functions.
