Navsari Malesar Behdin Anjuman, Navsari V. Income Tax Officer, Exemption Ward, Surat

ITA 336/SRT/2023

AI Insights

The case involves Navsari Malesar Behdin Anjuman, a trust, which appealed against a penalty imposed by the Income Tax Officer under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2013-14. The penalty was based on disallowances made in the quantum assessment regarding exemption under section 11 and certain expenses. The Tribunal had previously deleted these disallowances in a separate appeal. The main contention in the penalty appeal was the alleged delay in filing due to non-receipt of the penalty order, which the assessee claimed was only discovered upon accessing the ITBA portal on 13.05.2021. The Tribunal found merit in the assessee's arguments, noting that the penalty order was not properly served, and thus, the delay in filing the appeal was condoned.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134664 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 09-05-2023
• Other Referred Cases: SNDP Yogam vs. ADIT (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Period of limitation; Benefit of exemption; Condonation of delay; Set aside
• Section: 271(1)(c); 11; 143(3); 12A; 12AA; 274

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.336/SRT/2023 (AY 2013-14) (Hearing in Virtual Court) Navsari Malesar Behdin Anjuman, Agary Street, Malesar, Navsari-396445 PAN No. AAATN 6124 C Vs Income Tax Officer, (Exemption) Ward, Room No.105, 1 st Floor, Anavil Business Centre, Aayakar Bhavan, Adajan Hazira Road, Adajan, Surat-395007 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Hiren R. Vepari, C.A राजˢ की ओर से /Revenue by Shri Vinod Kumar, Sr-DR अपील पंजीकरण/Appeal instituted on 10.05.2023 सुनवाई की तारीख/Date of hearing 11.07.2023 उद्घोषणा की तारीख/Date of pronouncement 14.08.2023 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [for short to as “NFAC)/Ld. CIT(A)”] dated 28.04.2022 for the assessment year 2013-14, which in turn arises against the penalty levied under section 271(1)(c) of Income Tax Act, 1961 (‘the Act’) on 29.03.2019. 2. At the outset of hearing, Ld. Authorized Representative (Ld. AR) for the assessee submits that grounds of appeal raised by the assessee are squarely covered in favour of assessee ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 2 and against the Revenue by the decision of this Tribunal in assessee’s own case for assessment year 2013-14 in ITA No.272/SRT/2018 decided on 07.02.2020, wherein the addition in quantum assessment, on account of disallowance / denial of exemption under section 11 and disallowances of expenses was deleted. Therefore, the penalty levied by Assessing Officer and confirmed by NFAC/Ld. CIT(A) will not survive. The Ld. AR for the assessee submits that he has filed the copy of said decision of Hon'ble Co-ordinate Bench of this Tribunal (supra). 3. The ld AR for the assessee further submitted that ld CIT(A) while deciding the appeal of the assessee held that there was delay in filing appeal before him. In fact, there was no delay in filing appeal before Ld. CIT(A). The assessee has filed an affidavit one of the trustee-assessee confirming the fact that impugned order of penalty under section 271(1)(c) dated 29.03.2019 was not served on the assessee. The assessee downloaded the order of penalty only on 13.05.2021. The assessee in Form-35 (appeal form) before NFAC/Ld. CIT(A) has clearly stated that penalty was order was received only on 13.05.2021 and appeal was filed on 31.05.2021 i.e., within ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 3 period of limitation. The Ld. AR for the assessee invited our attention on the affidavit of the trustee, wherein it was categorically contended that no physical copy or through e- mail of the impugned penalty order was received. The assessee came to know only on13.05.2021 on making/ logging on the portal of ITBA and realised that there was outstanding demand raised on 29.03.2019 and found that there was penalty order under section 271(1)(c) of the Act. Thus, the assessee was not having any knowledge about the passing of impugned penalty order. The Ld. AR for the assessee further submits that e-mail address on behalf of assessee on portal at the time of filing of return was [e-mail], on which email, no order notice of penalty was received. During the hearing of the penalty proceedings, the assessee was served notice through the same email, which was duly responded by assessee, however, neither the final order under section 271(1)(c) nor demand notice under section 156 was ever sent on the said registered e-mail of assessee. The Ld. AR for the assessee submits that he has already filed screenshot of the inbox of email of [e-mail] at page No.26-28 ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 4 of paper book. The Ld. AR for the assessee submits that assessee was contesting all proceedings, either in quantum assessment or in appeal before CIT(A) or Tribunal and assessee also contested penalty proceedings and there was no reason for the assessee, not to file the appeal in time, particularly when the assessee has succeeded in quantum assessment. Had the penalty order dated 29.03.2019 been served upon the assessee, the assessee certainly would have filed appeal. The Ld. AR for the assessee submits that there were sufficient and bona fide reasons, which was explained at the time of filing appeal before Ld. CIT(A) and the appeal of the assessee was liable to be succeeds. 4. On the other hand, Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue after going through the submission of Ld. AR for the assessee and the decision of this Tribunal in quantum assessment submits that he relied upon the order of lower authorities. The Ld. Sr-DR for the Revenue submits that there was delay in filing of assessee’s appeal before NFAC/Ld. CIT(A) and NFAC/Ld. CIT(A) has on appreciation of fact has not condoned the delay in filing ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 5 appeal before him. The ld Sr DR for the revenue prayed for dismissal of appeal. 5. We have considered the submissions of both the parties and have gone through the order of lower authorities carefully. We find that the quantum assessment under section 143(3) of the Act was completed on 15.03.2016. The Assessing Officer while passing the assessment order has not allowed the exemption under section 11 for the want of registration under section 12AA of the Act. The assessing officer also disallowed expenses. On appeal before Ld. CIT(A), both the additions/ disallowances were upheld, however, on further appeal before Tribunal, the disallowance / addition made by the Assessing Officer in quantum assessment was deleted by this Bench of this in ITA No.272/SRT/2018 dated 07.02.2020. 6. We find that during the pendency of appeal in quantum assessment before Tribunal, the Assessing Officer started penalty proceedings. The assessing officer issued show cause notice under section 274 r.w.s 271(1)(c) of the Act on 04.03.2019 and directed the assessee to file reply on or before 19.03.2019. Though, we find that assessing officer recorded that assessee has not filed any submission, yet he recorded ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 6 that there was no provision in the Act to keep the impugned penalty proceedings in abeyance till the decision of Tribunal in quantum assessment. Such facts clearly suggest that the assessee responded to the show cause notice for proposed penalty and brought the facts in the notice of assessing officer that appeal in quantum assessment is pending before Tribunal. We find that the assessing officer levied the penalty by invoking Explanation-1 to Section 271(1)(c) i.e., deemed concealment of income and levied penalty of Rs.6,34,621/- being 100% of tax sought to be evaded, on the disallowance of exemption under section 11(1)(d) of Rs.18,58,668/- and disallowance of expenses of Rs.7,61,790/-, respectively. 7. We find that Ld. CIT(A) dismissed the appeal of assessee vide impugned order dated 28.04.2023 by holding that impugned penalty order was issued and served by Assessing Officer through ITBA portal on electronic mode as per due procedure on the designated e-mail/e-filing portal on the appellant trust, and that contention of assessee is factually incorrect that they were not served penalty order and/ or that came to know about the impugned penalty order only on 13.05.2021. The Ld. CIT(A) also held that it is the duty of assessee to see ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 7 and check such statutory e-proceedings of income tax from time to time on the designated e-filing portal. And concluded that the claim of assessee that no serve of penalty order. it was concluded that the assessee filed appeal after delay of 25 months. 8. We find that assessee has filed copy of screenshot of the inbox of email of [e-mail], on careful perusal of such screenshot, we find that it shows only mail received from [e-mail] is about the show cause notice and there is no mail regarding order under section 271(1)(c) of the Act. We find that the Ld. CIT(A) has neither verified the facts pleaded by the assessee in his application of condonation of delay nor sought comment of assessing officer nor he verified the fact from e-mail of assessing officer, whether the impugned order was sent on registered e-mail or not. Thus, in absence of contrary evidence, we do not find any justification in rejecting the application for condonation of delay and in dismissing the appeal unadmitted. 9. We further find that merit in the submission of Ld. AR for the assessee that assessee-trust were contesting all the ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 8 proceedings in quantum assessment and ultimately succeeded. Therefore, there was no justification in dismissing the application of condonation of delay when the assessee has filed affidavit of one of the trustee deposing on oath that they never came to know about passing the impugned penalty order prior to 13.05.2021. We find one more reason that assessee ultimately succeeded in quantum assessment, much before filing appeal in penalty proceedings. In such peculiar situation the order of Ld. CIT(A) in dismissing the application for condonation of delay is set aside. 10. Now adverting to the merit of the case, we find that in appeal for quantum assessment, the addition on account of disallowance for exemption under section 11 as well as disallowance of expenses was deleted and the appeal of assessee was allowed by this Tribunal in in ITA No.272/SRT/2018 (supra) by passing the following: “10. We have also gone through the decision of Co-ordinate Bench of ITAT Cochin Bench, in SNDP Yogam vs. ADIT (Exemption) [2016] 68 taxmann.com 152 (Cochin Tribunal) and other cases as relied upon by the assessee in his written submission. From the totality of the facts and circumstances as enumerated above, we hold that since the only reason for denial of exemption u/s 11 of the Act to the ae was absence of registration u/s 12AA [which was granted to the assessee on 28.,03.2016] for the relevant assessment year ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 9 and on no other ground. The benefit of change in law as above by Finance Act, 2014 should be available and for the year under consideration, the benefit of exemption should be available on the date of registration as the assessment of the year was pending because as per chronology of events the assessee had already applied for registration u/s 12A on 03.03.2016 and the assessment order was passed on 15.03.2016. However, the registration u/s 12AA of the Act was granted on 28.03.2016 and the same was also produced during the First Appellate Authority. After having given the thoughtful consideration to the aforesaid facts and circumstances and also the observations of the Co- ordinate Bench of Tribunal, we are in agreement with the view taken therein by the Co-ordinate Benches. Thus, we find no reason to take different view, therefore, we are of the considered view that the first proviso of section 12A(2) as had been made available to the statute vide the Finance Act,No.2[2014], being a beneficial provision intended to mitigate the hardship in case of charitable institutions, thus find ourselves to be in agreement with the view taken by the Tribunal in ethe aforesaid appeals. We, therefore, are of the considered view that first proviso of section 12A(2) would be applicable to the case of the present assessee. Therefore, we set- aside the order of the ld. CIT(A), consequently deleted the additions. Therefore, this ground raised by the assessee is allowed and other grounds raised by the assessee are consequential in nature and same were also allowed in terms of our aforesaid observations. 11. In the result, appeal of the assessee is allowed in terms of our aforesaid observations.” 11. In view of the aforesaid factual and legal discussion and keeping in view the fact that when entire addition / disallowance made in quantum assessment was deleted by ITA No.336/SRT/2023 (A.Y 13-14) Navsari Malesar Behdin Anjuman 10 predecessor of this Bench (supra), therefore, the impugned penalty under section 271(1)(c) would not survive. In the result, the grounds of appeal raised by the assessee is allowed. 12. In the result, appeal of the assessee is allowed Order pronounced in the open court on 14/08/2023. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 14/08/2023 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat True copy/