SADHUBELLA EDUCATION SOCIETY ,MUMBAI V. ITO EXEMPTION 2(3), MUMBAI

ITA 3106/MUM/2025

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The case involves Sadhubella Education Society, a charitable trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had dismissed their earlier appeal due to non-prosecution. The original assessment under Section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2010-2011, had disallowed an exemption under section 11, leading to an addition of Rs.48,90,400. The CIT(A) dismissed the appeal ex-parte as the trust failed to appear, attributed to issues with their new auditor and technical problems with email access. The Tribunal found that the CIT(A) had dismissed the appeal without addressing the merits and accepted the reasons for the delay in filing the appeal, citing substantial justice over technical considerations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711295 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2010-2011
• Other Referred Cases: Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Bonafide belief; Charitable institution
• Section: 143(3); 11; 12AA; 12A; 12

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “H (SMC)” BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.3106/MUM/2025 (Assessment Year: 2010-2011) Sadhubella Education Society Near Govt. Dispensary, Ulhasnagar, Thane - 421001, Maharashtra. [PAN:AAATS0753L] …………. Appellant Income Tax Officer Exemption 2(3), Mumbai Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Ms. Deepa Khare Shri Pravin Salunkhe Date Conclusion of hearing Pronouncement of order : : 17.07.2025 22.07.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 23/01/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 26/12/2017, passed under Section 143(3) of the Act for the Assessment Year 2010-2011. 2. The Assessee has raised following grounds of appeal : “1. On facts and under circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs.48,90,400/- by disallowing the exemption under section 11 on the ground that the registration under section 12AA has been granted w.e.f. FY 2016-17. Printed from counselvise.com ITA No.3106/Mum/2025 Assessment Year 2010-2011 2 2. Whether the appellant having been granted registration u/s.12AA of the Income Tax Act, would be entitled to exemption u/s.11 of the Act for the year under consideration in view of the Proviso to Section 12A Sub-section (2) and the provisions of Section 11 and 12 would apply accordingly.” 3. The relevant facts in brief are that assessment under Section 143(3) of the Act was framed on the Assessee vide Assessment, Order dated 26/12/2017. The appeal preferred by the Assessee was dismissed by the CIT(A) as the Assessee was proceeded ex-parte vide Order, dated 23/01/2024. Being aggrieved, the Assessee has preferred the present appeal before the Tribunal after delay of 403 days. 4. We have heard both the sides and have perused the material on record. 5. It was submitted by the Learned Authorized Representative for the Assessee is a Charitable Trust and its affairs were being managed by Trustee, about 64 years of age, who was depending upon the auditor/chartered accountant for tax matters. After the institution of appeal before the CIT(A) on 27/01/2018, the said auditor resigned with effect from 01/04/2018 and the new auditor who was appointed was young chartered accountant. Since she was not experienced, the affairs of the trust could not be managed well and there was also communication gap in view of which the new auditor was under bonafide belief that the aforesaid appeal instituted by the previous auditor/chartered accountant before the CIT(A) would be taken up by the said auditor/chartered accountant. The email relating to notice of hearing before the CIT(A) were also sent on the email address of the trustee. The storage capacity of the email address/ID was full and therefore, the trustee could not locate the notices. Further, the trustee could not access the email on account of technical reasons faced while accessing the said email. In the aforesaid circumstances proper representation could not be made Printed from counselvise.com ITA No.3106/Mum/2025 Assessment Year 2010-2011 3 before the CIT(A) and the appeal preferred by the Assessee before the CIT(A) was disposed off on 23/01/2024. The trustee got the knowledge of the impugned order having been passed by CIT(A) subsequently. The trustee immediately took steps to file appeal before this Tribunal. However, in the meanwhile the lime limit for filing appeal before the Tribunal had lapsed and the appeal could be filed only after a delay of 403 days. The Learned Authorized Representative for the Assessee submitted that the delay in filing the appeal was beyond the control of the Assessee/trust. The Assessee and its trustee was under bonafide belief that the appellate proceedings would be attended to by the auditors/chartered accountant(s). She further submitted that for the Assessment Year 2015-2016, in the identical facts and circumstances, the Tribunal has vide order, dated 16/06/2025, passed in ITA No. 3147/Mum/2025, condoned the delay in filing the appeal accepting identical reasons. 6. Per contra it was the contention of the learned Departmental Representative is that the Assessee has been negligent in conducting its affairs. For a period of 403 days the Assessee and its trustees had failed to access the email. Therefore, the delay in filing the present appeal should not be condoned. 7. We have thoughtful consideration to the rival submissions and have perused the material on record. It emerges that the Learned CIT(A) has dismissed the appeal preferred by the Assessee on account of non-prosecution without addressing the issue on merits. Further, we are of the view that the Assessee has explained reasons for not making representation before the CIT(A) and for delay in filing the present appeal by way of an affidavit sworn by the trustee. We have no reasons to doubt the bonafides of the explanation offered by the Assessee. In the case of Collector of Land Acquisition Vs. Mst. Katiji & others AIR 1987 1353 (SC) the Hon’ble Supreme Court Printed from counselvise.com ITA No.3106/Mum/2025 Assessment Year 2010-2011 4 has, while dealing with the issue of condonation of delay, emphasized that substantial justice should prevail over technical considerations. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. Having regard to totality of facts and circumstances of the present case including the fact that the Assessee is a charitable Trust and the CIT(A) had disposed off the appeal without adjudication the issues raised on merits, we deemed it appropriate to grant another opportunity to the Assessee to make out the case on merits before CIT(A). We also find that explanation offered by the Assessee for delay in filing the appeal is reasonable and hold that the Assessee is prevented by the reasonable cause in filing the present appeal. Accordingly, we condoned the delay in filing the appeal subject to the Assessee paying cost of INR.10,000/- to be deposited in the Prime Minister Relief Fund within 15 days of the passing of the present order. Subject to the compliance of the aforesaid, the Order, dated 23/01/2024, passed by the CIT(A) is set aside and the Learned CIT(A) is directed to adjudicate the grounds raised by the Assessee in appeal on merits as per law after granting Assessee an opportunity of being heard. 8. In terms of the above, the appeal preferred by the Assessee is allowed for statistical purpose. Order pronounced on 22.07.2025. Sd/- Sd/- (Om Prakash Kant) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated : 22.07.2025 Milan,LDC Printed from counselvise.com ITA No.3106/Mum/2025 Assessment Year 2010-2011 5 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai Printed from counselvise.com "