AI Insights
The case involves ASR Educational Society appealing against the order of the Commissioner of Income Tax (Exemptions), Hyderabad, which set aside the original assessment order and directed a fresh examination of the assessment for the Assessment Year 2013-14. The original assessment accepted the society's return declaring nil income after claiming exemption under Section 11 of the Act. However, the Commissioner later found that the society did not apply 85% of its gross receipts towards charitable purposes, resulting in a shortfall. The Tribunal found that the society was not given a fair opportunity to respond to the Show Cause Notice, as it was issued with an impossible deadline, leading to a violation of the principles of natural justice.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 706024 (ITAT-VISAKHAPATNAM)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-07-2025
Appeal Filed By
Assessee
Order Result
Allowed
Assessment Year
2013-2014
Judgement Text
"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, I.T.A. No.95/Viz/2024 (निर्धारण वर्ा/ Assessment Year : 2013-14) ASR Educational Society, Tanuku. PAN : AAATA5121G Vs. The Income Tax Officer, Exemptions, Rajahmundry. (अपीलधर्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri Mohd. Afzal, Advocate. राजस्व का प्रतततितित्व/ Department Represented by : Dr. Satyasai Rath, CIT(DR) सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 02.07.2025 घोषणा की तारीख/ Date of Pronouncement : 04.07.2025 O R D E R प्रतत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee society is directed against the order passed by the Commissioner of Income-Tax (Exemptions), Hyderabad u/s 263 of the Income Tax Act, 1961 (for short, “the Act”), dated 31.03.2021, which in turn arises from the order passed by the 2 ITA No.95/Viz/2024 ASR Educational Society, Tanuku Assessing Officer (for short “A.O.”) u/s 143(3) r.w.s. 147 of the Act, dated 11.12.2018 for A.Y. 2013-14. 2. Succinctly stated, A.O., based on information that the assessee society had not accounted for the bank interest of Rs.10,69,390/- in its return of income for the subject year A.Y. 2013–14, initiated proceedings u/s 147 of the Act. Notice u/s 148 of the Act was issued to the assessee society. In compliance, the assessee filed its return of income on 02-12-2018, declaring nil income after claiming exemption u/s 11 of the Act. 3. The A.O. thereafter framed the assessment vide his order u/s 143(3) r.w.s. 147 of the Act, dated 11-12-2018, wherein the income returned by the assessee society was accepted as such. 4. The Principal Commissioner of Income Tax (for short “Pr. CIT”), after the culmination of the assessment proceedings called for the assessment records. 5. The Pr. CIT observed that, as per the consolidated accounts of the assessee society, it had receipts from its various institutes, against which it had claimed expenses, as under: 3 ITA No.95/Viz/2024 ASR Educational Society, Tanuku 6. On a perusal of the aforesaid details, the Pr. CIT was of the view that the assessee society had failed to apply 85% of its gross receipts, which, thus, resulted to a deficit/shortfall in the application of funds of Rs. 36,24,928/-, as under: 4 ITA No.95/Viz/2024 ASR Educational Society, Tanuku Accordingly, the Pr. CIT, vide his Show Cause Notice (SCN), dated 30- 03-2021, called upon the assessee society to explain why the aforesaid surplus of Rs. 36,92,928/- (supra) may not be brought to tax in its hands. 7. Ostensibly, as the assessee society had failed to comply with the notice issued by the CIT (Exemptions) u/s 263 of the Act, dated 30-03- 2021, therefore, he had after treating the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act, dated 11.12.2018 as erroneous insofar as it was prejudicial to the interests of the revenue, vide his order u/s 263 of the Act, dated 30-03-2021, set aside the same with a direction to examine the issue afresh and redo the assessment after necessary examination in accordance with law. 5 ITA No.95/Viz/2024 ASR Educational Society, Tanuku 8. The assessee society, being aggrieved with the order passed by the Pr. CIT u/s 263, dated 30.03.2021, has carried the matter in appeal before us. 9. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 10. Shri Mohd. Afzal, Advocate, the learned Authorized Representative (for short “Ld.AR”) for the assessee society, at the threshold of hearing of the appeal, submitted that there is a delay of 1016 days in filing the same. Elaborating on the reasons leading to the delay, the Ld. AR submitted that the assessee society, pursuant to the order passed by the CIT (Exemptions), Hyderabad, dated 31-03-2021 was required to file the appeal before the Tribunal on or before 30-05-2021. The Ld. AR submitted that though the appeal that was filed online by the tax consultant engaged by the assessee society, was well within the extended time i.e., 03-01-2022 i.e. (after excluding the period between 15.03.2020 to 28.02.2022, which, along with an additional period of 90 days from 28.02.2022 was as per the order of the Hon’ble Supreme 6 ITA No.95/Viz/2024 ASR Educational Society, Tanuku Court in MA No. 21 of 2022 to be excluded for purpose of reckoning the limitation allowed for the filing of any appeal). The Ld. AR submitted that, subsequent to the online filing of the appeal, the tax consultant of the assessee society had discovered that he had inadvertently omitted the physical filing of the appeal before the Tribunal, which thus, rendered the online filing as invalid. The Ld. AR submitted that after realizing this procedural lapse, the assessee society made necessary inquiries regarding the status of its appeal and discovered the aforementioned irregularity. It was submitted by him that, considering the aforesaid irregularity that had inadvertently crept in at the stage of filing of the appeal, the assessee society was left with no other option, but to file a fresh appeal, which by that time involved a delay of 1016 days. The Ld. AR submitted that as the delay in filing the present appeal was merely backed by a hyper-technical reason and was not on account of any lackadaisical conduct of the assessee society, which had, in a bona fide manner filed the appeal well within the prescribed period, therefore, the impugned delay involved in the filing of the appeal, in all fairness, be condoned. The Ld. AR to buttress his aforesaid contention, had relied upon the order of the ITAT, Mumbai in the case of All India Federation of Tax Practitioners Vs. ITO (Exemptions) (2018) 194 TTJ 0122 (Mumbai). The Ld. AR submitted that under identical 7 ITA No.95/Viz/2024 ASR Educational Society, Tanuku circumstances, the Tribunal in the said case had condoned the delay which had occurred due to the paper filing of the appeal by the assessee before the CIT(A), despite the e-filing of the appeal was made mandatory, as per Rule 45 of the Income Tax Rules, 1962. The Ld. AR based on his aforesaid contentions, submitted that the delay involved in the present case, too, in all fairness, be condoned. 11. Per contra, Dr. Satyasai Rath, CIT-Departmental Representative (for short “Ld. CIT-DR”) objected to the seeking of the condonation of the delay by the assessee society. Elaborating on his contention, Ld. CIT-DR submitted that, as the delay involved in filing the appeal was inordinate, the same thus does not merit to be condoned. 12. We have thoughtfully considered the reasons leading to the delay in filing of the present appeal in the backdrop of the contentions advanced by the learned Authorized Representatives of both parties. 13. Admittedly, it is a matter of fact borne from the record that the assessee society had filed the appeal online well within the prescribed timeline, i.e., on 03-01-2022. We say so, for the reason that, as the CIT (Exemptions) had passed the order u/s 263 of the Act, dated 31-03- 2021, therefore, after excluding the period between 15-03-2020 to 28- 02-2022 as per the order of the Hon’ble Apex Court in MA No. 21 of 8 ITA No.95/Viz/2024 ASR Educational Society, Tanuku 2022 along with an additional period of 90 days from 28.02.2022 for reckoning the period of limitation for filing of the appeal, the appeal filed by the assessee society on 03-01-2022 was well within the prescribed time limit. However, it was only for the reason that the tax consultant of the assessee society had inadvertently omitted the mandatory submission of the physical filing of the appeal before the Tribunal, that the online appeal so filed was rendered invalid. 14. At this stage, it would be apposite to observe that the delay in filing the appeal had occasioned on account of an inadvertent omission on the part of the tax consultant is not merely a claim supported by an “affidavit” filed by the Secretary/Correspondent of the assessee society, but is also supported by the “affidavit” of Shri Iragavarapu Srinivasa Bhanu Sankar, i.e the tax consultant of the assessee society, who had admitted that the delay involved in filing the appeal had occasioned due to an inadvertent mistake on his part. 15. Considering the aforesaid facts, we are of the firm conviction that now when the assessee society had filed the appeal well within the prescribed time limit; and the tax consultant engaged by the assessee society had deposed that the delay in filing the appeal had occasioned due to a bona fide mistake on his part, therefore, the assessee society 9 ITA No.95/Viz/2024 ASR Educational Society, Tanuku cannot be made to suffer dismissal of the appeal on the ground that the same is barred by limitation. We thus, based on our aforesaid deliberations, condone the delay involved in filing the appeal before us. 16. Apropos the merits of the case, the issue involved in the present appeal lies in a narrow compass, i.e., the sustainability of the order passed by the CIT (Exemptions), Hyderabad under Section 263 of the Act, dated 31.03.2021. 17. Shri Mohd. Afzal, Advocate, the learned Authorized Representative (for short “ld.AR”) for the assessee society, at the threshold of the hearing of the appeal, submitted that the “Show Cause Notice”(SCN), dated 30-03-2021 issued by the CIT (Exemptions), Hyderabad under Section 263 of the Act, calling upon the assessee society to put forth an explanation on or before 30-03-2021 itself that as to why the assessment order passed by the A.O. under Section 143(3) read with Section 147, dated 11-12-2018 be not revised under Section 263 of the Act, was served upon the assessee society only on 31-03-2021 (at 04:46 A.M.). The Ld. AR, to buttress his aforesaid claim, has placed on record the screenshot of the e-mail that was dropped in the e-mail account of the assessee society i.e. sankarclients@gmail.com. The Ld. AR submitted that it was incomprehensible that the CIT(Exemptions), 10 ITA No.95/Viz/2024 ASR Educational Society, Tanuku Hyderabad, vide his Show Cause Notice, dated 30-03-2021 that was dropped in the email account of the assessee society on 31-03-2021 (at 04:46 AM), had called him to put forth its explanation on or before 30- 03-2021, i.e., a date which had already lapsed a day before. The Ld. AR submitted that, as the assessee society was expected to do something impossible, therefore, it is a case where the CIT(Exemptions), Hyderabad had passed the order u/s 263 of the Act, dated 31-03-2021 without putting the assessee society to notice as required under the mandate of law. 18. Per contra, Dr. Satyasai Rath, Learned CIT-Departmental Representative (for short \"Ld. CIT-DR\") relied upon the order passed by the CIT(Exemptions). The Ld. CIT-DR submitted that it was incorrect for the assessee’s counsel to claim that the SCN, dated 30-03-2021 was served upon the assessee society for the first time on 31-03-2021 (at 04:46 A.M.). Elaborating on his contention, the Ld. CIT-DR submitted that the SCN, dated 30-03-2021, on its generation, would have automatically been dropped in the e-filing portal account of the assessee society. The Ld. CIT-DR submitted that the SCN was thereafter forwarded/dropped in the e-mail account provided by the assessee society. To sum up, the Ld. CIT-DR submitted that as the SCN, dated 30-03-2021 was served upon the assessee society at the very point of 11 ITA No.95/Viz/2024 ASR Educational Society, Tanuku its generation i.e. on 30.03.2021, therefore, it was incorrect on its part to claim that the same was served upon it for the first time on 31.03.2021. 19. We have thoughtfully considered the contentions advanced by the Ld. Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record. 20. Admittedly, there can be no denying of the fact that as per the SCN, dated 30-03-2021, issued by the CIT (Exemptions) u/s 263 of the Act, the assessee society was called upon to furnish its explanation on or before 30.03.2021 that as to why the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act, dated 11-12-2018 may not be revised, and the surplus of Rs.36.24 lacs (approx.) may not be added to its income. Also, we find that the CIT (Exemptions), Hyderabad, had thereafter passed the order on 31-03-2021, i.e., on the very next date. 21. Considering the peculiar facts involved in the present case before us, we are unable to comprehend how the CIT (Exemptions), Hyderabad, vide his Show Cause Notice, dated 30-03-2021, presumably dropped in the e-filing portal account of the assessee society on the same date), could have expected the assessee society to have filed its explanation with him on the same day, i.e., on 30-03-2021. Although 12 ITA No.95/Viz/2024 ASR Educational Society, Tanuku the Ld. AR had placed before us the screenshot of the email account of the assessee society, i.e., sankarclients@gmail.com which reveals that the SCN, dated 30-03-2021, calling upon the assessee society to furnish its explanation on the same date, i.e., 30-03-2021, was served upon the assessee society by dropping the same in its email account on 30-03- 2021( at 4:46 a.m.), but the Ld. CIT-DR had objected to the same on the ground that the same must have been preceded by the automatic dropping/ forwarding of the said SCN, dated 30-03-2021 in the e-filing portal account of the assessee society at the stage of its generation itself Although the Ld. CIT-DR had not placed before us any such material/evidence that would substantiate its claim that the SCN, dated 30-03-2021 was, at the stage of its generation, dropped/forwarded in the e-filing portal account of the assessee society, but even if that be so (for assumption) then also the same does not place the case of the revenue on any better footing. We say so, for the reason that it is incomprehensible that the dropping of the SCN, dated 30-03-2021 on the same date in the e-filing portal account of the assessee society, directing it to file its explanation on the said date itself, would in all probabilities not come to the notice of the assessee society on the said date itself. 13 ITA No.95/Viz/2024 ASR Educational Society, Tanuku 22. Considering the facts involved in the case before us, we are of the firm conviction that, as the CIT (Exemptions), Hyderabad, in the present case had passed the order u/s 263 of the Act, dated 31.03.2021 without allowing any sufficient opportunity to the assessee society to come forth with its explanation, based on which the assessment order passed by the A.O. u/s 147 r.w.s. 143(3) of the Act, dated 11.12.2018 was revised by him, therefore, the same being in gross violation of the principles of natural justice i.e. audi alteram partem cannot be sustained and is liable to be quashed for want of valid assumption of jurisdiction. 23. We thus, in terms of our aforesaid observations, quash the order passed by the CIT (Exemptions), dated 31.03.2021 and restore the order passed by the A.O. u/s 143(3) r.w.s. 147 of the Act, dated 11.12.2018. 24. Resultantly, the appeal filed by the assessee society is allowed in terms of our aforesaid observations. Order pronounced in the Open Court on 4th July, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखध सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यधनिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 04.07.2025. TYNM/sps 14 ITA No.95/Viz/2024 ASR Educational Society, Tanuku आदेशकी प्रतततिति अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/The Assessee : ASR Educational Society, 6-41, By Pass Road, Pydiparru, Tanuku, Andhra Pradesh – 534211. 2. राजस्व/ The Revenue : The Income Tax Officer (Exemptions), Rajahmundry. 3. The Principal Commissioner of Income Tax (Exemptions), Hyderabad. 4. तवभागीयप्रतततितर्, आयकर अिीिीय अतर्करण, / DR, ITAT, Visakhapatnam. 5. गार्ाफ़ाईि / Guard file आदेशािुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "
Other Referred Cases
All India Federation of Tax Practitioners Vs. ITO (Exemptions) (2018) 194 TTJ 0122 (Mumbai)
Laws Referred To
Income Tax Act, 1961
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