ASPTAL KALYAN SAMITI,RAMPUR BUSHAHR V. ADDL.COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 1114/CHANDI/2024

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The case involves Asptal Kalyan Samiti, a registered society providing concessional medical services, which appealed against the penalty imposed for late filing of its income tax return for the Assessment Year 2010-11. The society argued that the penalty was unjust as it had filed its return declaring nil income, claiming exemption under Section 12A, which was accepted in earlier assessments. The Assessing Officer had imposed a penalty citing a delay of 2,439 days in filing the return, and this was upheld by the CIT(A) in an ex-parte order. The tribunal, however, found the penalty to be time-barred and set aside the lower authorities' decisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360635 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Other Referred Cases: Sony Pictures Networks India Pvt. Ltd. vs. ITAT, Mumbai [2019] 411 ITR 447 (Bombay HC), Coca cola India P. Ltd. Vs. Assistant Registrar representing ITAT [2014] 52 taxmann.com 399 (Bombay HC), Microsoft India (R & D) Pvt. Ltd. vs. DCIT [2021] 431 ITR 483 (Delhi Hon'ble High Court)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: VISHAL MOHAN
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 148; 11; 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCHES, “SMC” CHANDIGARH HEARING THROUGH: HYBRID MODE BEFORE: SHRI. LALIET KUMAR, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 1114/Chd/2024 िनधाŊरण वषŊ / Assessment Year : 2010-11 Asptal Kalyan Samiti, Mahatma Gandhi Service Complex, Khaneri, Rampur Bushahr बनाम The Addl. CIT (E) Chandigarh ˕ायी लेखा सं./PAN NO: AABTA4822D अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Vishal Mohan, Sr. Advocate with Ms. Isha Sharma, Advocate (Virtual Mode) राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 07/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 19/05/2025 आदेश/Order PER LALIET KUMAR, J.M This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt. 15/12/2023 pertaining to Assessment Year 2010-11. 2. In the present appeal, it was noticed that the Ld. CIT(A) has passed the order on 15/12/2023 and thereafter the appeal was filed by the assessee on 08/11/2024. Thus there was a delay of 301 days in filing the appeal before the Tribunal. It was fairly submitted by the Ld. Sr. Advocate that inadvertently the assessee had wrongly mentioned the delay of 527 days in Form 36 and submitted that the delay in filing the appeal may kindly be condoned. 3. After perusing the record, I find that there is sufficient cause shown by the Assessee for delay in filing the present appeal. Therefore, the delay is condoned and appeal is admitted for adjudication. 2 4. In the present appeal, Assessee has raised the following grounds: A. That the Appellate Order dated 15/12/2023 passed u/s 250 of the Act by learned Commissioner of Income Tax (Appeals) as well as the Assessment Order dated 28/03/2019 are bad in law and facts. B. That the learned Commissioner of Income Tax (Appeals) issued notices of hearing through online portal only and passed the order on ex-parte basis, thereby not affording a proper opportunity of being heard to the appellant. Which is clearly violative of principles of natural justice. C. That the Ld. Authorities failed to appreciate the facts that the income of the appellant was accepted as exempted income u/s 12A of the Act by the of assessment order dated 08/12/2017. The Ld. Authorities wrongly ignore the fact that the appellant was not liable to pay any tax and income was accepted as nil by way of the said assessment order dated 08/12/2017. D. That the penalty imposed by the Ld. Assessing Officer and also confirmed by the Ld. Appellate Authority is bad in law, as the said authorities ignored the fact of the income tax return being filed u/s 148 of the Act. E. That the appellant reserves its right to add or amend grounds of appeal during the course of appellate proceedings. 5. Briefly the facts of the case are that the assessee is a registered society engaged in providing concessional medical services to patients at Government hospitals. For Assessment Year 2010-11, the society’s books were duly audited, and an audit report was obtained on 10.05.2010. Believing that its income was fully exempt under Section 12A of the Income Tax Act, 1961, and given that the society’s PAN was still in the old name, the assessee did not file an income tax return within the stipulated time. However, upon receiving notice under Section 148 dated 29.03.2017, the assessee filed its ITR on 05.06.2017 declaring nil income. The society’s gross receipts were below Rs.1 crore, and it claimed exemption under Section 12A, which was accepted by the AO in the assessment proceedings. 5.1 Despite this, penalty proceedings were separately initiated under Section 272A(2)(e) for late filing of return, resulting in a penalty order dated 28.03.2019 3 imposing a penalty of Rs.2,43,900/-. The assessee appealed before the CIT(A), which was dismissed ex parte on 15.12.2023 due to non-compliance. 5.2 The AO, while passing the assessment order, had observed that the return of income was filed with a delay of 2,439 days beyond the due date of 30.09.2010, as required under Section 139(1). As per Section 139(4A), the assessee was mandatorily required to file the return, and failure to do so attracted penalty under Section 272A(2)(e). Show-cause notices were issued, and based on the assessee’s admission of default, the AO imposed a penalty of Rs.2,43,900, calculating Rs.100 per day for the delay. 6. Feeling aggrieved by the order passed by the Ld. Assessing Officer the assessee preferred the appeal before the Ld. CIT(A). 7. Before CIT(A), NFAC, had issued several notices of hearing under Section 250 but recorded non-compliance from the assessee. Consequently, the appeal was decided ex parte on the basis of the material available on record. The CIT(A) upheld the AO’s penalty order, noting that the delay in filing the return was substantial (2,439 days) and that the provisions of Section 139(4A) required timely filing of returns by entities claiming exemption under Sections 11 and 12. The CIT(A) concluded that the AO had rightly levied the penalty under Section 272A(2)(e), and thus the appeal was dismissed. 8. Feeling aggrieved by the order passed by the CIT(A), the assessee is in appeal before us on the ground mentioned hereinabove. 9. The learned Senior Advocate submitted that in the present case, the assessment order was passed on 08/12/2017, wherein the Assessing Officer (AO) had recorded that penalty proceedings under section 272A (2)(e) were to be separately initiated for late filing of the return of income. Subsequently, the AO issued a show-cause notice on 05/12/2018 to impose the penalty and ultimately passed the impugned penalty order on 28/03/2019. The learned Senior 4 Advocate contended that section 275 of the Income Tax Act provides the statutory time limits for imposing a penalty. Attention was specifically drawn to section 275(1)(c), which stipulates that “No penalty order shall be passed after the expiry of the financial year in which the proceedings for penalty were initiated, or after six months from the end of the month in which the action for imposing the penalty was initiated, whichever expires later.” 10. The learned Advocate argued that, examining the matter from both angles, the penalty order dated 28/03/2019 is barred by limitation. It was further submitted that the non-appearance of the assessee before the learned Commissioner of Income Tax (Appeals) ought not to operate as an impediment for this Hon’ble Tribunal to adjudicate the matter on merits, as the issue involved is purely legal and does not warrant remanding the matter to the lower authorities. 11. On the other hand, Ld. DR relied upon the orders passed by the lower authorities. 12. I have heard the rival contentions and perused the material available on record. Admittedly, the show-cause notice for delay in filing the return was premised on the assessment order dated 08/12/2017, and the show-cause notice for imposing the penalty was issued on 05/12/2018. Notably, section 275(1)(c) provides that the limitation for passing the penalty order is either up to the end of the financial year in which the proceedings were initiated i.e., 31/03/2018 ( since proceedings were commenced on 08/12/2017 after passing of the order) or within six months from the end of the month in which action for imposition of penalty was initiated (i.e., up to 30/06/2019, since the notice was issued on 05/12/2018). 13. In the present case, the penalty order was passed on 28/03/2019. Therefore, it falls outside the permissible time frame under section 275(1)(c) as 5 discussed above and therefore the order passed by the Assessing Officer is barred by limitation. Though the assessee was non-compliant before the CIT(A), this Tribunal is not precluded from deciding the issue on merits, particularly when a pure legal question is involved and no factual verification is necessary at the hands of the lower authorities. For the above-mentioned purposes I rely upon the following decisions: I. Sony Pictures Networks India Pvt. Ltd. vs. ITAT, Mumbai [2019] 411 ITR 447 (Bombay HC). II. Coca cola India P. Ltd. Vs. Assistant Registrar representing ITAT [2014] 52 taxmann.com 399 (Bombay HC). III. Microsoft India (R & D) Pvt. Ltd. vs. DCIT [2021] 431 ITR 483 (Delhi Hon'ble High Court) 14. In view of the above, the appeal of the assessee is allowed and the order of the Assessing Officer and the CIT(A) are set aside. 15. In light of the above, the assessees appeal is allowed. Order pronounced in the open Court on 19/05/2025 Sd/- ( LALIET KUMAR) JUDICIAL MEMBER AG Date: आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "