2025 (3) TMI 408 - AT - Income Tax

Tribunal Overturns Rejection, Orders Reconsideration of Assessee Trust's Rectification Application; Emphasizes Merits Over Procedure.

Shree Nityanandswami Education Trust Versus Assistant Commissioner of Income Tax (Exemption), Ahmedabad

The Appellate Tribunal allowed the appeal filed by the assessee Trust, setting aside the previous orders and directing the Assessing Officer to reconsider ... Deductions u/s 11 & 12 - Rejection of rectification application of the assessee on the ground that Form No. 10B was not filed within the due date and that no condonation was granted in this regard - HELD THAT:- The matter was not examined on merits by the Ld. CIT(A), who did not condone the delay of 91 days in filing of appeal by the assessee. As explained by the assessee the delay was caused for the reason that the order u/s 154 passed by the AO was communicated on the portal under the caption “issue letter” which was misunderstood by the assessee. Be that as it may, as held in the case of Vareli Textiles Ltd. [2006 (2) TMI 102 - GUJARAT HIGH COURT] that meritorious cases should not be thrown out on ground of limitation. CIT(E) was not correct in summarily rejecting the appeal on the ground of limitation without examining the merits of the case. It is found that the assessee had filed an application for condonation of delay in filing Form No. 10B. Delay in filing the Form No. 10B was duly condoned by the Ld. CIT(E). AO was not correct in rejecting the rectification application of the assessee for the reason that delay in filing the Form No. 10B was not condoned. In the interest of justice, we, therefore, set-aside the matter to the file of JAO with a direction to consider the condonation of delay already granted by the CIT(E) and thereafter re-adjudicate the rectification application of the assessee. Appeal of the assessee is allowed for statistical purposes. The appeal in this case was filed by the assessee against the order of the National Faceless Appeal Centre (referred to as 'CIT(A)'), Delhi dated 27.05.2024 for the Assessment Year 2016-17. The brief facts of the case are that the assessee, a Trust, filed its income tax return for A.Y. 2016-17 declaring NIL income after claiming deductions under Section 11 & 12 r.w.s. 12A of the Act. The return was processed by the CPC under Section 143(1) of the Act, and the claimed deductions were disallowed, resulting in a demand of Rs. 1,48,95,066/-. The assessee filed a rectification application under Section 154 of the Act, which was rejected by the Assessing Officer. The First Appellate Authority also dismissed the appeal.The grounds of appeal in the second appeal before the Appellate Tribunal included issues related to the dismissal of the appeal without considering the delay in filing, failure to consider the appeal on merit, and rejection of the rectification application under Section 154 of the Act based on the timing of filing Form 10B.The assessee argued that the delay in filing the appeal was due to a misunderstanding of the communication regarding the rejection of the application under Section 154, as it was not communicated as a formal order. The assessee also highlighted that the delay in filing Form 10B had been condoned by the CIT(Exemption). The CIT-DR had no objection to setting aside the matter to re-examine the condonation of delay.The Tribunal considered the submissions and found that the rejection of the rectification application by the Assessing Officer and the dismissal of the appeal by the CIT(A) without condoning the delay were not justified. Citing the decision in Vareli Textiles Ltd, the Tribunal emphasized that meritorious cases should not be dismissed solely on the grounds of limitation. It noted that the delay in filing Form 10B had been condoned by the CIT(E) and directed the Assessing Officer to reconsider the rectification application in light of the condonation of delay.Ultimately, the Tribunal allowed the appeal of the assessee for statistical purposes, setting aside the matter for re-examination by the Assessing Officer. The decision was pronounced in Open Court on 06/03/2025.In summary, the key issues considered in this judgment revolved around the rejection of the rectification application, delay in filing the appeal, and the condonation of delay in filing Form 10B. The Tribunal emphasized the importance of not dismissing meritorious cases based solely on procedural grounds and directed a re-examination of the rectification application in light of the condonation of delay.