Institutional assessees must demonstrate reasonable diligence in tax matters, as significant delays without justifiable cause are grounds for dismissal under the Income Tax Act.

ORDER :

1. Heard Sri Percy J. Pardiwala, learned Senior Counsel representing Sri K. Pratik Reddy, learned counsel for petitioner, Smt. Bokaro Sapna Reddy, learned Senior Standing Counsel for Income-tax appearing for respondent Nos.1, 2 and 4 and Sri N. Bhujanga Rao, learned Senior Panel Counsel for Central Government appearing for respondent No.5.

2. Revision under Section 264 of the Income-tax Act, 1961 (for short ‘the Act’), is to be filed within a period of one year from the date on which the order in question i.e., the order passed on the petitioner’s application for rectification was rejected. The order of rejection is dated 01.12.2016. The revision application has been filed on 28.10.2024 before the Principal Commissioner of Income Tax-I, Hyderabad (PCIT). The same has been rejected by the impugned order dated 01.08.2025 on grounds of inordinate delay of 91 months, gross negligence and laches. The petitioner Trust manages the provident fund contributions of its employees and it is registered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. In respect of the return of income for the Assessment Year 2014-15, exemption under Section 10 (25) of the Act amounting to Rs.10,21,72,442/- was disallowed on 10.03.2016 and consequently, a demand of Rs.4,43,48,179/- was issued. Aggrieved against this, the assessee filed its rectification petition, which was rejected on 01.12.2016 impugned in revision before the learned Commissioner nearly after seven (7) years. The petitioner inter alia took the plea that it was not aware of the rejection of the rectification petition. When the concerned person of petitioner Trust logged into the Income Tax Portal for assessment proceedings of Assessment Year 2022-23, he came to know about the recovery notice dated 09.06.2023 for Assessment Year 2014-15 and based on that, the concerned person realized that the rectification request for non-allowing of exemption has been rejected on 01.12.2016. Such rejection was sent to Email I.D. of the erstwhile employee of M/s. Tata Projects Limited working in Human Resource Department. The assessee therefore pleaded unavoidable reason for the delay in filing the revision against rejection of its rectification application. According to the assessee, in earlier years as well as subsequent years, the exemption claimed by the Trust under Section 10 (25) of the Act was never disputed by the Department. In the recent order passed under Section 143(3) read with Section 260 of the Act for the Assessment Year 2022-23, the Assessing Officer had given a finding that the income of the petitioner Trust is exempted under Section 10 (25) of the Act. Therefore, in the application for condonation of delay under Section 264 (3) of the Act filed along with the revision petition, the petitioner prayed that delay has not been deliberate and contumacious. Relying upon certain decisions of the Apex Court as well as Bombay, Madras and Calcutta High Courts, the revisional authority by the impugned order upon consideration of the specific grounds raised by the petitioner held as under:

“6. The factual report submitted by the AO and Range head is perused. Further, as per the provisions vested u/s.264 of the INCOME TAX ACT , 1961, the records in the case of the assessee for the Asst. Year 2014-15 have been examined.

7. In the above context, before finalization by this office, the assessee was given an opportunity of being heard and the case was posted for hearing vide this office notice dated 01.07.2025.

In response to the notice issued, the AR of the assessee, Shri Jatin Kanabar appeared on 10.07.2025. The AR explained the matter and requested for condonation of delay in filing application u/s. 264 of the Act. The case was discussed. Further submissions were also filed by the assessee on 25.07