Facts of the Case

The assessee, a charitable trust registered under Sections 12A and 80G of the Income-tax Act, filed its return of income for Assessment Year 2016-17 on 15.10.2016. The return was processed under Section 143(1), wherein exemption under Section 11 was denied.

The assessee filed a rectification application under Section 154 on 05.04.2018, which was rejected by the CPC on 06.05.2018. Subsequently, the assessee preferred an appeal before the CIT(A). The CIT(A) noted that although Form No. 35 was filed, the statement of facts was not submitted. Notices were issued through the ITBA system, but there was no compliance from the assessee.

Accordingly, the CIT(A) dismissed the appeal for non-prosecution and also on merits due to lack of supporting evidence.

The assessee then filed a second appeal before the ITAT. During the proceedings, it was noticed that the appeal fee paid was deficient, which was later deposited by the assessee. The Department raised no objection to remanding the matter for fresh adjudication.

Issues Involved

  1. Whether the CIT(A) was justified in dismissing the appeal ex-parte without adjudicating the issues on merits.
  2. Whether denial of exemption under Section 11 due to delayed electronic filing of Form 10B was sustainable.
  3. Whether the order of CIT(A) complied with the statutory requirement of a speaking order under Section 250(6).

Petitioner’s Arguments (Assessee)

  • The trust is duly registered under Sections 12A and 80G.
  • Return of income and audit report were filed within time.
  • Form 10B was filed along with the return in physical form, and online filing was not mandatory for the relevant year.
  • Denial of exemption merely due to technical delay in uploading Form 10B is unjustified.
  • The appeal was decided without providing reasonable opportunity of hearing.

 Respondent’s Arguments (Revenue)

  • The assessee failed to respond to notices issued during appellate proceedings.
  • No submissions or evidence were furnished before the CIT(A).
  • Therefore, dismissal for non-prosecution was justified.
  • However, before the Tribunal, the Department did not object to restoration of the matter to the CIT(A) for fresh adjudication

 Court Order / Findings (ITAT Allahabad)

The Tribunal observed that the CIT(A) had passed an ex-parte order dismissing the appeal without discussing the merits of the case. Section 250(6) mandates that appellate orders must contain reasons and adjudicate the issues involved.

It was noted that the CIT(A) could have called for assessment records, remand report from the Assessing Officer, or conducted necessary enquiries before deciding the appeal. Failure to do so amounted to non-compliance with statutory obligations.

Accordingly, the Tribunal set aside the order of the CIT(A) and restored the matter for fresh adjudication on merits in accordance with law, after providing adequate opportunity to both parties. The appeal was allowed for statistical purposes.

Important Clarification

  • The Tribunal clarified that it had not expressed any opinion on the merits of the case.
  • All issues and contentions were kept open for fresh consideration.
  • The CIT(A) must pass a speaking order in compliance with Section 250(6).
  • The assessee was directed to furnish all necessary explanations and evidence during the fresh proceedings.
  • The powers of the CIT(A) are co-terminus with those of the Assessing Officer.

Link to download the order -  https://itat.gov.in/public/files/upload/1694675704-ITA%20No.%2058%20Alld%202023%20Acharya%20Dharamchandradeo%20Medical.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.