364 Days Delay in Filing Appeal Due to Pursuit of Alternative Remedy u/s 119 of Income Tax Act: ITAT Condones Delay [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) of Banglore in a recent case condoned a 364-day delay in filing appeal, noting that the delay was caused as a result of the assessee pursuing an alternative remedy under section 119 of the Income Tax Act 1961 ( ITA ) The appellant/ Assesssee, Sarva Deivatha Education Trust, is a charitable organization established in 1991 and engaged in educational activities.The assessee- trust had obtained registration under Section 12AA of ITA in 2020 and later under Section 12AB of the tax statute, effective from November 30, 2022, for the assessment years 2022-23 to 2026-27. Get a Copy of Income Tax Act, Click here For the assessment year 2022-23, the assessee-trust filed its income tax return on November 6, 2022, within the extended deadline under Section 139(4A) of the tax legislature. The return disclosed an income of ₹1,78,148, reflecting a shortfall in the application of income for charitable purposes. However, the audit report, required to be filed by October 7, 2022, was submitted on November 5, 2022, 29 days late. The return was processed, and an intimation under Section 143(1) of ITA was issued on March 31, 2023, denying the assessee’s Section 11 exemption claim without specifying a reason. The trust suspected that the delay in filing Form 10B caused the denial and filed a petition under Section 119 of ITA with the Central Board of Direct Taxes ( CBDT ) on May 22, 2023, seeking condonation for the delay. However, the CBDT rejected the petition on February 2, 2024, citing a lack of valid reasons for the delay. Get a Copy of Income Tax Act, Click here The assessee-trust subsequently appealed to the Commissioner of Income Tax (Appeals) on March 30, 2024, but this appeal was delayed by 364 days due to the time spent pursuing the alternative remedy. The CIT(A) dismissed the appeal on July 10, 2024, refusing to condone the delay for lack of sufficient cause, as required under Section 249(3) of the tax legislature. Aggrieved, the assessee appealed before ITAT. Before the tribunal the counsel for assessee argued that the delay in filing the appeal before CIT(A) was due to the pursuit of a legitimate alternative remedy under Section 119 of ITA. The appellant’s representative also pointed out that CBDT Circulars No. 2/2020 and No. 16/2022 allowed condonation of delays up to 365 days in filing Form 10B for assessment years 2018-19 and onwards, but these were not considered by the authorities. The bench, consisting of Ms. Beena Pillai and Mr. Ramit Kochar, after examining the facts of the case observed that the delay was in fact due to bona fide reasons, and noted the CBDT circulars should have been considered before dismissing the case. Citing Supreme Court's decision in Collector Land Acquisition vs. Mst. Katiji & Ors.(1987) 167 ITR 471, the ITAT condoned the delay, stating there was no evidence of malafide intent on the part of the trust. Get a Copy of Income Tax Act, Click here The Tribunal further observed that the filing of Form 10B was directory, not mandatory, and as long as the audit report was available at the time of the intimation under Section 143(1) of ITA, the exemption under section 11 of ITA could not be denied. Thus in the interest of justice, the ITAT remitted the case back to the Assessing Officer (AO) for reconsideration, directing the AO to verify the exemption claim and ensure fair opportunity for the trust to present its case. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

364 Days Delay in Filing Appeal Due to Pursuit of Alternative Remedy u/s 119 of Income Tax Act: ITAT Condones Delay [Read Order]

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364 Days Delay in Filing Appeal Due to Pursuit of Alternative Remedy u/s 119 of Income Tax Act: ITAT Condones Delay [Read Order]

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