2023 (2) TMI 985 - AT - Income Tax

ITAT allows Assessee's appeals, remands for fresh adjudication. Justified delay, benefits under sections 11 & 12 emphasized.

Shiksha Foundation Versus DCIT CPC, Bangalore

The Income Tax Appellate Tribunal (ITAT) allowed both appeals filed by the Assessee for statistical purposes, setting aside the issues to the Assessing ... Delay in filing the appeal before the CIT(A) for 561 days - Delay attributable to the advice of the consultant being a chartered accountant - whether the assessee acting on behalf of the professional advice can be held guilty for defiance of any provision of law? - assessee was advised by the chartered accountant to wait and watch like the other assessee who were also facing the same problems - HELD THAT:- The assessee has acted and reacted on the advice of the chartered accountant who is a professional person for tax matters. This fact has nowhere been doubted by the learned CIT(A) in his order. Whether the assessee acting on behalf of the professional advice can be held guilty for defiance of any provision of law. The answer certainly goes in favour of the assessee. It is for the reason that the assessee, who was under the bona fide belief upon the advice of the professional, did not prefer any appeal before the learned CIT(A). However, at the same time the assessee upon the initiation of the recovery by the Department immediately approached to another consultant who advised to file the appeal before the learned CIT(A). CIT(A) in his order has made the remark that the consultant being the chartered accountant is expected to know the procedure in such matters as reproduced above. The above finding of the learned CIT(A) justifies the stand of the assessee that it was the mistake of the consultant and not the assessee. Assessee just followed the advice of the expert. Thus, the assessee should not be facing any hardship on account of the advice of the 3rd party, who was the expert of the subject. In such facts and circumstances, we also note that the Hon’ble Madras High Court in the case of Hosanna Ministries [2017 (3) TMI 1387 - MADRAS HIGH COURT] has condoned the delay which was attributable to the advice of the consultant being a chartered accountant. Exemption u/s 11 - We note that the assessee was not registered under section 12A of the Act for the year under consideration but it got registered in the later year as on 30 July 2018. Admittedly, the assessment proceedings are pending before the ITAT and therefore it appears to us that the assessee is eligible for the benefit granted under section 11 of the Act for the year under consideration. We are making such observation for the reason to highlight the fact that it appears to us that the assessee has got meritorious case and therefore, the case of the assessee should not be rejected on account of technical lapses. Income of the assessee should not be over assessed even there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income. To our understanding, the learned CIT(A) should have condoned the delay in filing the appeal by the assessee by deciding the issue on merit. As such, the case of the assessee deserves to be condoned and to be decided on merit. Issues:- Appeal against order of CIT(A) under section 143(1) of the Income Tax Act, 1961- Delay in filing appeal before CIT(A)- Non-condonation of delay by CIT(A)- Eligibility for basic exemption under section 12A- Merits of the case and technical lapsesAnalysis:1. The primary issue in this case pertains to the appeal filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) under section 143(1) of the Income Tax Act, 1961 for the Assessment Years 2013-14 and 2014-15.2. The Assessee raised several grounds of appeal, challenging the adjustments made by the Assessing Officer and the disallowance of expenditure without basis. Additionally, the Assessee questioned the application of slab rate of tax, the denial of basic exemption available to a Charitable Trust, and the delay in filing the first appeal.3. The key contention raised by the Assessee was the failure of the CIT(A) to allow the basic exemption of Rs. 2 lakhs while confirming the adjustment made by the AO under section 143(1) of the Act.4. The Assessee, a trust engaged in education, was treated as a private discretionary trust by the AO due to non-registration under section 12AA of the Act. Consequently, the AO disallowed the exemption claimed by the Assessee and added it back to the total income.5. The Assessee sought condonation of the delay in filing the appeal before the CIT(A) on the grounds of professional advice received from a chartered accountant. The delay of 561 days was attributed to the advice to 'wait and watch' before filing the appeal.6. Despite the Assessee's explanation regarding the delay, the CIT(A) denied condonation, citing negligent and casual behavior. The Assessee argued that the delay was not due to negligence but reliance on professional advice.7. The ITAT observed that the Assessee acted on the advice of a professional chartered accountant, which justified the delay in filing the appeal. The ITAT referred to a similar case where delay was condoned due to advice from a consultant.8. The ITAT highlighted the provision under section 12A(2) of the Act, indicating that the Assessee, now registered under section 12AA, may be eligible for benefits under sections 11 and 12 for preceding assessment years.9. Referring to legal precedents, the ITAT emphasized that legitimate deductions should be allowed even in cases of Assessee's mistakes to prevent over-assessment.10. Considering the merits of the case and technical lapses, the ITAT set aside the issue to the AO for fresh adjudication based on the provisions of law, as none of the authorities had examined the case on its merits.11. Ultimately, the ITAT allowed both appeals filed by the Assessee for statistical purposes, following a similar decision made in a previous year's case.This comprehensive analysis of the judgment covers the key issues raised by the Assessee and the decision rendered by the ITAT regarding each issue, ensuring a detailed understanding of the legal proceedings.