VADODARA URBAN DEVELOPMENT AUTHORITY,VADODARA V. THE ACIT, CIRCLE-2, EXEMP, AHMEDABAD

ITA 2074/AHD/2024

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The case involves the Vadodara Urban Development Authority (the assessee) appealing against the order of the National Faceless Appeal Centre, Delhi, which had confirmed the disallowance of exemption under sections 11 and 12 of the Income Tax Act, 1961 for the Assessment Year 2021-22. The primary issues revolved around the assessee's failure to comply with procedural requirements, such as filing the audit report in Form 10B within the due date, and the interpretation of its activities under the definition of 'charitable purpose' as per section 2(15) of the Act. The Tribunal noted the assessee's lack of compliance at various stages but decided to set aside the matter for a detailed examination on merits, given the recurring nature of the issues in previous assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361156 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: ITA Nos. 333 to 335/Ahd/2023, ITA Nos. 342 to 344/Ahd/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Assessee Lawyers: HARDIK VORA
• Keywords: Condonation of delay; Set aside; Charitable institution
• Section: 143(3); 11; 12; 10B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2074/Ahd/2024 (िनधा\u0005रण वष\u0005 / Assessment Year: 2021-22) Vadodara Urban Development Authority 00, Vuda Bhavan, L&T Circle, Karelibaug, Vadodara Gujarat - 390018 बनाम/ Vs. ACIT, Circle-2, Exemption Ahmedabad. थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAABV0141M (Appellant) .. (Respondent) अपीलाथ\u0012 ओर से /Appellant by : Shri Hardik Vora, AR \u0014\u0015थ\u0012 की ओर से/Respondent by : Shri A P Singh CIT-DR Date of Hearing 13/05/2025 Date of Pronouncement 21/05/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of National Faceless Appeal Centre, Delhi, (in short ‘the CIT(A)’), dated 30.04.2024 for the Assessment Year (A.Y.) 2021-22. 2. There was a delay of 162 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It has been submitted that the assessee, Vadodara Urban Development Authority, is engaged in various development activities both within the city and in its outer skirts. It was ITA No.2074/Ahd/2024 [Vadodara Urban Development Authority vs. ACIT] - 2 – explained that there was frequent transfer of the key personnel including Chief Executive Authority, internal accounting team and supporting clerical staff which had disrupted the flow of information and continuity of communication. The assessee has detailed the transfer of the Chief Executive Authority, whose charge was held as additional charge by someone else. For this reason, there was delay in filing the present appeal. The assessee has submitted that the delay in the filing of the present appeal was not intentional and that there was no mala-fide intention on the part of the assessee. The ld. CIT-DR, on the other hand, submitted that the condonation of delay may be decided on its merit. 2.1 We have considered the explanation of the assessee. It is found that the assessee is an autonomous body established under Gujarat Town Planning and Area Development Act. As explained, the delay was due to frequent transfer of the concerned personals. Further it was dependent upon the professionals to make compliance before the lower authorities and also for their advice for filing further appeal. It is found that no compliance was made before the lower authorities and the disallowance of exemption under section 11 and 12 of the Income Tax Act, 1961 (hereinafter “the Act”) was not examined on merits. Though the assessee should have remained vigilant for the timely action on its part, the fact remains that the merit of the disallowance made by the AO was examined by the CIT(A) without the input of the assessee. If the delay is not condoned and the matter is not examined on merits after obtaining the rejoinder of the assessee ITA No.2074/Ahd/2024 [Vadodara Urban Development Authority vs. ACIT] - 3 – on the remand report of the AO, it will cause injustice to the assessee. Therefore, the delay in filing the present appeal is condoned. 3. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2021-22 on 15.03.2022 declaring income of Rs. NIL. The case was selected for scrutiny to examine large receipts reported by the assessee Trust for charitable purposes. In the course of assessment, no compliance was made by the assessee. The AO had required the assessee to explain as to how its activities were covered in the definition of charitable purpose u/s 2(15) of the Act, which was not complied. Further the AO had noticed that the assessee did not furnish the audit report in Form number 10B within the due date and, therefore, the exemption claimed u/s 11 of the Act was not admissible. Accordingly, the AO had denied the exemption u/s 11/12 of the Act and completed the assessment u/s 143(3) r.w.s. 144B of the Act on 29.12.2022 at total income of Rs.88,74,03,926/-. 4. Aggrieved with the order of the Assessing Officer, the assessee had filed an appeal before the First Appellate Authority which was decided vide the impugned order and appeal of the assessee was dismissed. 5. The assessee is now in second appeal before us. The following grounds have been taken in this appeal: - “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming disallowance of exemption uls. 11 and 12 of the Act by invoking the proviso to section 2(15) of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT (Appeals) has erred in confirming denial of benefit u/s ITA No.2074/Ahd/2024 [Vadodara Urban Development Authority vs. ACIT] - 4 – 11(2) of the Act without considering that filing of Form 10 and 10B is merely a procedural formality. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(Appeals) has erred in passing ex-parte order without providing sufficient opportunities of being heard. 4. It is therefore prayed that the above addition/disallowance made by the assessing officer may please be deleted.” 6. Shri Hardik Vora, Ld. AR of the assessee submitted that the Ld. CIT(A) had dismissed the appeal of the assessee without examining the merits of the addition. He explained that no compliance could be made by the assessee before the Ld. CIT(A) and for this reason the appeal was dismissed. He, therefore, requested that the assessee may be allowed another opportunity to explain the nature of its charitable activities and the matter may be set aside to the file of the Assessing Officer. 7. Per contra, Shri A P Singh, Ld. CIT-DR submitted that the assessee neither made compliance before the Assessing Officer nor before the ld. CIT(A). He further submitted that the ld. CIT(A) had allowed six opportunities to the assesses but no compliance was made by the assessee on any of these occasions. The Ld. CIT-DR explained that on the evidences filed by the assessee along with the appeal paper, the ld. CIT(A) had obtained remand report from the AO and thereafter the assessee was allowed multiple opportunities to submit its rejoinder on the remand report, which was not complied. Further that the ld. CIT(A) had also examined the merits of the case and given his findings on merits as well. The ld. CIT-DR, however, had no objection if the matter was set aside to the ld. CIT(A) for allowing another opportunity to the assessee to submit its rejoinder on the remand report of the AO and thereafter re-decide the matter. ITA No.2074/Ahd/2024 [Vadodara Urban Development Authority vs. ACIT] - 5 – 8. We have considered the rival submissions. The undisputed fact is that the assessee neither complied before the Assessing Officer nor before the Ld. CIT(A). We, therefore, deem it proper to impose a cost of Rs.10,000/- on the assessee which should be paid to the Prime Minister National Relief Fund within 15 days of the receipt of this order. We are also of the opinion that the issue involved in the case is a recurring issue. As pointed out by the ld. AR of the assessee, identical issues were adjudicated in assessee’s own case for the A.Ys. 2016-17 to 2018-19 by the Coordinate Bench of this Tribunal in ITA Nos. 333 to 335/Ahd/2023 and ITA Nos. 342 to 344/Ahd/2023 dated 29.02.2024. We, therefore, deem it proper to set aside the matter to the file of the ld. CIT(A) with a direction to allow another opportunity to the assessee to explain the nature of its charitable activities and to submit its rejoinder on the remand report of the AO and thereafter decide the matter on merits. The assessee is also directed to comply before the ld. CIT(A) and not to seek adjournment without any pressing reason. 9. In the result, the appeal of the assessee is allowed for statistical purpose. This Order pronounced on 21/05/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/05/2025 ITA No.2074/Ahd/2024 [Vadodara Urban Development Authority vs. ACIT] - 6 – आदेश की \u0013ितिलिप अ\u0018ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0012 / The Appellant 2. \u0014\u0015थ\u0012 / The Respondent. 3. संबंिधत आयकर आयु\u001b / Concerned CIT 4. आयकर आयु\u001b(अपील) / The CIT(A)- 5. िवभागीय \u0014ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड% फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "