PRATHNA CHARITABLE TRUST,AHMEDABAD V. THE ITO, WARD-2-EXEMP, AHMEDABAD

ITA 1028/AHD/2025

AI Insights

Prathna Charitable Trust appealed against the orders of the Additional/Joint Commissioner of Income Tax (A)-6, Mumbai, for the Assessment Years 2016-17 and 2018-19, which were both dated 26.03.2025. The primary contention was the incorrect treatment of gross receipts as income without allowing deductions for expenses incurred towards the charitable activities of the trust. The trust argued that they were unaware of the intimation under Section 143(1) due to non-receipt of the notice and lack of familiarity with the e-portal, leading to a significant delay in filing the appeals. The Tribunal, referencing the decision in Vareli Textile Industries vs. CIT, emphasized that a meritorious case should not be dismissed on the grounds of limitation, especially considering the charitable nature of the trust.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775632 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 08-05-2025
• Other Referred Cases: Vareli Textile Industries vs. CIT, 284 ITR 238 (Guj)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: URVASHI MANDHAN
• Assessee Lawyers: MAHESH CHHAJED
• Keywords: Set aside; Principle of natural justice; Charitable institution
• Section: 11; 12AA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA Nos.1027 & 1028/Ahd/2025 Assessment Years: 2016-17 & 2018-19 Prathna Charitable Trust, C/o. M.S. Chhajed & Co., “Kamal Shanti”, Nr. Sadar Paltel Statue, Naranpura, Ahmedabad – 380 014. (Gujarat). [PAN – AACTP 3058 M] Vs. Income Tax Officer, Ward – 2 Exemp, Aayakar Bhavan, Anandnagar-Prahladnagar Road, Ahmedabad – 380 015. (Gujarat). (Appellant) (Respondent) Assessee by Shri Mahesh Chhajed, AR Revenue by Ms. Urvashi Mandhan, Sr. DR Date of Hearing 03.09.2025 Date of Pronouncement 12.09.2025 O R D E R PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER: These two appeals are filed by the assessee against the order of the Additional/Joint Commissioner of Income Tax (A)-6 (in short “the JCIT(A)”), Mumbai, both dated 26.03.2025, for the Assessment Years (A.Ys.) 2016-17 & 2018-19 respectively. 2. The assessee has taken the following grounds of appeal: - ITA No.1027/Ahd/2025 for A.Y. 2016-17 “1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice. Printed from counselvise.com ITA Nos.1027 & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 2 of 5 2. The Id. CIT(A) has erred in law and on facts on dismissing appeal for want of delay though no explanation called for delay in notices issued u/s. 250 dated 14.02.2025,13.03.2025 & 20.03.2025. 3 The Ld. CIT(A) has erred in law and on facts in not adjudicating issues of disallowance of expenditure incurred for object of trust by CPC of Rs.6,99,755/-. 4. The Ld. CIT(A) has erred in law and on facts in not adjudicating grounds raised for allowing deduction of set apart u/s. 11 of the Act @15% of Rs.1,55,004/-. 5. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” ITA No.1028/Ahd/2025 for A.Y. 2018-19 “1. The order passed by the Ld. CIT(A) is against the law, equity and principle of natural justice. 2. The Id. CIT(A) has erred in law and on facts on dismissing appeal for want of delay though no explanation called for delay in notices issued u/s. 250 dated 14.02.2025,13.03.2025 & 20.03.2025. 3 The Ld. CIT(A) has erred in law and on facts in not adjudicating issues of disallowance of expenditure incurred for object of trust of Rs.6,99,505/- for object of trust. 4. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” 3. We will first take up the appeal in ITA No.1027/Ahd/2025 for the A.Y. 2016-17 for adjudication. ITA No.1027/Ahd/2025 : A.Y. 2016-17 4. Shri Mahesh Chhajed, Ld. AR of the assessee submitted that the assessee had filed the return of income for the A.Y. 2016-17 on 21.02.2018 declaring income of Rs.1,78,600/-. He explained that the Printed from counselvise.com ITA Nos.1027 & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 3 of 5 assessee is a charitable trust and engaged in charitable activities like sanitation, medical, women & child development etc. The assessee had made an application for registration under Section 12AA of the Act on 29.10.2014, which was rejected for technical reasons. The CPC while processing the return under Section 143(1) of the Act, has made adjustment and the gross receipt of Rs.10,33,362/- was brought to tax without allowing the expenditure incurred by the assessee trust. The Ld. AR submitted that the intimation u/s 143(1) was not received by the assessee through post and the Trustees were not conversant with the Income Tax proceedings and couldn’t download the intimation from the e- portal of the Department. It was only much later when a demand notice was received that they became aware of the processing of the return & the resultant outstanding demand. Thereafter, they had filed an appeal before the first appellate authority wherein there was delay of 2250 days, which was not condoned by the Ld. JCIT (A) and the appeal of the assessee was dismissed without examining the merits of the case. The Ld. AR requested that, in the interest of justice, the matter may be set aside to the file of Ld. CIT(A) with a direction to allow deduction for expenses incurred by the assessee, as the CPC was not correct in treating the entire gross receipts as income of the assessee, without considering the expenses incurred. 5. Per contra, the Ld. Sr. DR supported the order of the Ld. CIT(A). 6. We have considered the submissions of the assessee. Though we are not convinced with the explanation of the assessee regarding inordinate delay in filing the appeal before the ld. CIT(A), the action of the CPC in treating the entire gross receipts as income of the assessee, Printed from counselvise.com ITA Nos.1027 & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 4 of 5 without allowing deduction for the actual expenditure incurred by the assessee towards the object of the trust, also cannot be justified. It is also not evident whether any opportunity was allowed to the assessee by the CPC before making the adjustments while processing the return. It has been held by the Hon’ble Gujarat High Court in the case of Vareli Textile Industries vs. CIT, 284 ITR 238 (Guj) that a meritorious case should not be thrown out on the ground of limitation. Considering the fact that the assessee is a Trust engaged in charitable activities, we deem it proper to set aside the matter to the file of the Ld. CIT(A) with a direction to condone the delay and, thereafter, adjudicate the matter on merits subject to payment of cost of Rs.5,000/- by the assessee which should be deposited to the Prime Minister’s National Relief Fund within a period of 15 days of receipt of this order. The assessee is also directed to make compliance before the Ld. CIT(A) and produce the evidences and details as required. In case the assessee does not make compliance, the Ld. CIT(A) will be free to decide the grounds taken by the assessee on merits, on the basis of the materials available on record. 7. In the result, appeal filed by the assessee being ITA No.1027/Ahd/2025 for the A.Y. 2016-17 is allowed for statistical purpose. ITA No.1028/Ahd/2025 : A.Y. 2018-19 8. The facts involved in this appeal are identical and the entire gross receipts of Rs.7,83,405/- was treated as income while processing the return under Section 143(1)(a) of the Act and the deduction for expenditure of Rs.6,99,505/- claimed by the assessee was ignored. In this year, there was a delay of 1800 days in filing the appeal before the Printed from counselvise.com ITA Nos.1027 & 1028/Ahd/2025 (Assessment Years: 2016-17 & 2018-19) Prathna Charitable Trust vs. ITO Page 5 of 5 Ld. CIT(A). Following the decision in ITA No.1027/Ahd/2025 for the A.Y. 2016-17, this matter is also set aside to the file of Ld. CIT(A) with a direction to condone the delay and adjudicate the matter on merits. The assessee is directed to pay a cost of Rs.10,000/- for this year which should be deposited to the Prime Minister’s National Relief Fund within a period of 15 days of receipt of this order. The direction to the assessee for necessary compliance in the set aside proceeding, is applicable to this year as well. 9. In the result, the appeal of the assessee in ITA No.1028/Ahd/2025 for the A.Y. 2018-19 also, is allowed for statistical purpose. 10. In the final result, both the appeals of the assessee are allowed for statistical purpose. Order pronounced in the open Court on this 12th September, 2025. Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Ahmedabad, the 12th September, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) The PCIT (4) The CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPYE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad Printed from counselvise.com "