Delays & Non-Compliance Before Lower Authorities Warrant Sympathetic View: ITAT Pune

Gourishankar Education Society Vs ITO Exemption (ITAT Pune)

In a consolidated order dated 12th June 2024, the Income Tax Appellate Tribunal (ITAT), Pune Bench “A”, comprising Shri R.K. Panda (Vice President) and Shri Satbeer Singh Godara (Judicial Member), adjudicated upon eight appeals filed by Gourishankar Education Society for Assessment Years 2013-14 to 2016-17 (ITA Nos. 1405 to 1412/PUN/2023). The appeals comprised four quantum matters under section 147 read with section 144 (for A.Ys. 2013-14 to 2016-17) and four corresponding penalty matters under section 271(1)(c). The assessee contended that the assessments were framed ex-parte due to disputes within its managing committee, which led to communication gaps between the society’s office, auditors, and counsel. As a result, there were delays in filing appeals and non-compliance before the lower authorities. The CIT(A)/NFAC had not only refused to condone the delays in filing appeals but had also upheld the ex-parte assessment orders on merits. The assessee, through its counsel Shri Kishor B. Phadke, sought one more opportunity to present its case before the lower authorities. The Revenue, represented by Shri Ramnath P. Murkunde, defended the ex-parte proceedings, citing the assessee’s persistent non-appearance. Upon hearing both sides and examining the case records, the Tribunal held that in the interest of substantial justice, especially in light of the Supreme Court’s landmark judgment in Collector Land Acquisition v. Mst. Katiji (1987) 167 ITR 471 (SC), procedural technicalities should not override the cause of justice. Accordingly, the Tribunal restored the four quantum appeals (ITA Nos. 1405, 1407, 1409 & 1411/PUN/2023) to the CIT(A)/NFAC for fresh adjudication in accordance with section 250(6) of the Act. The assessee was granted three effective opportunities to substantiate its case. Since the penalty appeals (ITA Nos. 1406, 1408, 1410 & 1412/PUN/2023) were consequential to the quantum proceedings, they were also allowed for statistical purposes. The Tribunal made it clear that no other grounds were argued, and a copy of the common order was directed to be placed in each appeal file.

The case was represented by CA Kishor Phadke (Assisted by CA Saurabh Jadhav)

FULL TEXT OF THE ORDER OF ITAT PUNE

The instant batch of eight appeals pertains to a single assessee having Gourishankar Education Society. All other relevant details stand duly tabulated hereunder :

Heard both the parties at length. Case files perused.

2. The assessee submits at the outset that the learned CIT(A)’s four orders under challenge herein in ITA Nos. 1405, 1407, 1409 & 1411/PUN/2023 had refused to condone the corresponding delay(s) on the one hand and at the same time, they have upheld the assessing authority’s action making corresponding quantum addition(s) involving varying sums. Mr. Phadke further states very fairly that the assessment(s) in question herein have also been framed ex-parte on account of the disputes arising in the managing committee of the assessee trust during the relevant period which culminated in various communications gaps amongst its office, auditors and the arguing counsel’s level. He lastly undertakes to plead and prove all the relevant facts if granted one more effective innings before the learned lower authorities.

3. Mr. Murkunde on the other hand vehemently supported the learned lower authority’s action inter alia proceedings ex-parte against the assessee on account of its non-appearance all along.

4. We have given our thoughtful consideration to the forgoing rival stand and are of the considered view with larger interest of justice would be met in case the learned CIT(A)/NFAC reexamines the assessee’s case(s) on merits keeping in mind the fact that foregoing reasons of the communication gaps at various levels could not be altogether ruled out in such an instance. Mr. Murkunde sought to highlight the fact that the CIT(A)/NFAC has further refused to condone the delay(s) as well as once the assessee had instituted its lower appeal(s) on 18.03.2023 against the assessment(s) order dated 16.03.2022. He fails to rebut the fact that the Assessing Officer had framed ex-parte assessment(s) herein which could not be taken to the logical conclusion on account of the management issues in assessee’s governing body. Be that as it may, hon’ble apex court’s landmark decision in Collector Land Acquisition Vs. MST Katiji (1987) 167 ITR 471 (SC) has settled the law long back that all such procedural aspects must make way for the cause of substantial justice. We accordingly restore the assessee’s instant four quantum appeals in ITA Nos. 1405, 1407, 1409 & 1411/PUN/2023 back to the CIT(A)/NFAC for its appropriate adjudication as per law u/s. 250(6) of the Act requiring it to frame points of determination followed by a detailed adjudication thereof. It is made clear that it shall be assessee’s risk and responsibility only to plead and prove all the relevant facts in consequential proceedings within three effective opportunities of hearing. Ordered accordingly.

5. The assessee’s penalty appeals in ITA Nos. 1406, 1408, 1410 & 1412/PUN/2023 follow the suit being consequential in nature. They are also allowed for statistical purposes in very terms.

6. No other ground or arguments has been pressed before us at either parties at this stage.

7. These assessee’s eight appeals are allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.

Order pronounced in the open court on 12^th June, 2024.