TaxTMI 
TaxTMI 
2026 (2) TMI 929
X X X X Extracts X X X X
X X X X Extracts X X X X
....deration are involved for all the years under consideration, all five appeals filed by the assessee are being taken up together. We shall first discuss the assessee's appeal in ITA No. 2612/Ahd/2025 (quantum additions) and ITA No. 2613/Ahd/2025 for A.Y. 2015-16 (appeal against imposition of penalty under Section 271(1)(c) of the Act) 2. The assessee has taken the following grounds of appeal: ITA No. 2612/Ahd/2025(A.Y.2015-16) "1. The learned CIT(A) erred in dismissing the appeal as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by filling an affidavit along with appeal papers before him. It is submitted that there being reasonable cause on the part of the appellant in filling appeal beyond statutory time limit such delay should have been condoned and learned CIT(A) should have adjudicated appeal on merits and should not have dismissed the same in limine. 2. (a) The learned CIT(A) erred in law and on facts in confirming additions of Rs.4,89,85,09,303/- comprising of foll....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (iv) Income from other sources of Rs.30,01,31,143/- It is submitted that in the facts and circumstances of the case, provisions of section 271(1)(c) of the Act are not at all applicable to the Appellant since there was no concealment of income on the part of the appellant, and therefore, the consequential penalty levied by the learned Assessing Officer u/s.271(1)(c) of the Act for Rs.166,50,03,312/- also cannot be sustained. It is submitted that it be so held now and the penalty levied by the learned Assessing Officer of Rs.166,50,03,312/- and confirmed by learned CIT(A) be deleted. 2. The learned CIT(A) has grossly erred in law and on facts in upholding the learned Assessing Officer's decision in levying penalty of Rs.166,50,03,312/- under section 271(1)(c) of the Act despite the fact that the appellant is eligible for exemption under sections 10(23C)(iiiab) of the Act and 10(23C)(iiiac) of the Act, and therefore no addition could be made to its income as such addition even if made, remains exempt and hence, no penalty is leviable u/s. 271(1)(c) of the Act. 3. The learned CIT(A) also erred in dismissing the quantum appeal filed before him as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e from the side of the assessee. 4. In the absence of any response or documentary evidence, the Assessing Officer completed the reassessment ex parte under section 147 read with sections 144 and 144B of the Act on 24.03.2023 and treated cash deposits aggregating to Rs.186,78,95,978/- as unexplained money under section 69A of the Act, time deposits of Rs.272,59,22,944/- as unexplained investments under section 69 of the Act, foreign remittance of Rs.45,59,238/- towards purchase of medical equipment as unexplained expenditure under section 69C of the Act, and assessed rental and interest receipts amounting to Rs.30,01,31,143/- as income from other sources. Thus, the Assessing Officer made total additions of Rs.4,89,85,09,303/- and the same were subjected to tax, including application of section 115BBE of the Act, wherever applicable. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act. The assessment order was admittedly served on the assessee on 24.03.2023. 5. Aggrieved, the assessee filed an appeal before the CIT(Appeals) on 04.01.2024, which was delayed by 257 days, along with a request for condonation of delay. Before the CIT(Appeals)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed entirely on the additions made in the assessment order dated 24.03.2023. Since the quantum appeal itself had been dismissed as time-barred and the assessment order had attained finality, the CIT(Appeals) held that there was no independent basis to interfere with the penalty. Accordingly, the CIT(Appeals) upheld the penalty of Rs.1,66,50,03,312/- being 100% of the tax sought to be evaded and dismissed the penalty appeal as well. 9. Thus, the CIT(Appeals) dismissed both the quantum appeal for Assessment Year 2015-16 and the connected penalty appeal under section 271(1)(c). 10. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. 11. Before us, the ld. counsel for the assessee reiterated the submissions made before CIT(Appeals), which are to the effect that the assessee is a Govt. funded Trust wherein over 90% of the finance of its operations is funded by the State Government. The ld. counsel for the assessee further submitted that CIT(Appeals) erred in not appreciating that for assessment year 2015-16, the assessee was not under an obligation to file return of income in the first instance and CIT(Appeals) dis....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... matters so as to advance substantial justice and that technical considerations should not prevail over the cause of justice. Further, in State of Punjab v. Shyamalal Murari & Sons [(1976) 1 SCC 719], it has been held that rules of procedure are intended to be handmaid of justice and not its mistress. The Hon'ble jurisdictional High Court in CIT v. Gujarat Oil and Allied Industries [(1993) 201 ITR 325 (Guj)] has also observed that matters should ordinarily be decided on merits rather than on technicalities. 16. In the present case, the additions made by the Assessing Officer are substantial and arise primarily on account of non-furnishing of details and explanations by the assessee. The assessee has consistently taken a stand that its income is exempt under section 10(23C)(iiiab)/(iiiac) of the Act and that the transactions appearing in its bank accounts are duly explained and relatable to its charitable and Government-funded activities. In our considered opinion, the issues involved require proper verification of facts, examination of documentary evidence and adjudication on merits, which has not taken place either at the assessment stage or at the first appellate stage. 17.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ITA No. 2613/Ahd/2025 relating to penalty proceedings under section 271(1)(c) of the Act is also set aside to the file of the Assessing Officer, who shall decide the same afresh, if in accordance with law after completion of the de-novo assessment proceedings. 21. In the result, the appeal of the assessee in ITA relating to the quantum assessment for Assessment Year 2015-16 is allowed for statistical purposes subject to the above observations and directions, and the appeal relating to penalty under section 271(1)(c) of the Act is also allowed for statistical purposes. 22. The assessee has taken the following grounds of appeal for A.Y. 2018-19: ITA No. 2614/Ahd/2025 (A.Y. 2018-19) "1. The Learned CIT(A) also erred in dismissing the appeal as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by filling an affidavit along with appeal papers before him. It is submitted that there being reasonable cause on the part of the appellant in filling appeal beyond statutory time limit such dela....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and circumstances of the case such interest is. not liable and hence be deleted. Your Appellant reserves the right to add, alter, amend and / or withdraw any of the above Grounds of Appeal." ITA No. 2615/Ahd/2025 (A.Y. 2018-19) "1. The learned CIT(A) erred in law and on facts in upholding the Assessing Officer's order to treat the following incomes assessed by him u/s. 69A and 69B of the Act as underreported income: (i) Contractual receipt Rs. 96,177/-. (ii) Rental income Rs.17,41,119/-. (iii) Interest income Rs. 14,90,03,857/-. (iv) Fees for technical/ professional services Rs.1,34,29,294/-. It is submitted that in the facts and circumstances of the case, provisions of section 270A of the Act are not at all applicable to the Appellant, and therefore, the penalty imposed by the Assessing Officer u/s.270A of the Act for Rs.2,91,86,805/- and confirmed by the learned CIT(A) is unsustainable and deserves to be deleted. 2. The learned CIT(A) erred in law and on facts in upholding the learned Assessing Officer's order in levying penalty of Rs.2,91,86,805/- u/s.270A of the Act despite the fact that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., provisions of section 69A and 69B are not at all applicable to the Appellant, and therefore, the consequential penalty imposed by the learned Assessing Officer and confirmed by the learned CIT(A) is unsustainable and deserves to be deleted. 3. The learned CIT(A) also erred in dismissing the quantum appeal filed before him as time-barred without appreciating that the delay was due to bona fide belief of exemption under section 10(23C)(iiiab)/(iiiac) of the Act and absence of tax consultant, constituting reasonable cause which was brought to his notice by an affidavit filed with the appeal papers before him and further erred in holding that once quantum appeal is dismissed, penalty has to be confirmed on amount of addition sustained in quantum appeal solely on the basis that quantum appeal of the appellant is dismissed inspite of the settled judicial position that different considerations apply while deciding penalty even if the quantum appeal is decided against the appellant. It is submitted mat it be so held now and penalty levied by learned. AO and confirmed by CIT(A) u/s. 270AAC(1) of the Act for Rs. 1,88,35,119/-be deleted. 4. Without prejudice to the above, ....