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2025 Supreme(Online)(ITAT) 5970
INCOME TAX APPELLATE TRIBUNAL (KOLKATA BENCH)
RAKESH MISHRA, ACJ
M/S. SETH B D GOYAL CHARITABLE TRUST KOLKATA – Appellant
Versus
I.T.O. WARD - 1(3) EXEMPTION KOLKATA – Respondent
I.T.A. No.: 2267/KOL/2024
For the Appellants/Petitioners: Sunil Surana A.R.
For the Respondents: Madhumita Das, Addl. CIT, Sr. DR
Procedural compliance is crucial in tax assessments; failure to issue necessary notices invalidates disallowances.
Headnote:(A) Income Tax Act, 1961 - Sections 11 and 143(1)(a) - Appeal against the order of disallowance in processing return, where audit report filed late and proper notice not issued - Delay condoned for just cause - Tribunal remanded for adjudication on merits regarding the procedural compliance. (Paras 5.4, 8.1, 9)
(B) Appeals - Jurisdiction of appellate authority requires due process including issuance of notice before adjustments can be validly made. (Paras 5.7, 8.2)
Facts of the case:
The appellant is a Trust that filed a belated return after the due date, leading to the denial of claimed exemptions during processing. The appeal was dismissed for lack of timely filing and procedural errors.
Findings of Court:
The Tribunal found the prior intimation requirement was not met, potentially invalidating adjustments made. The case was remanded for further analysis of procedural compliance.
Issues: Key issues included whether the delay in filing justified condonation and whether necessary procedural notices were issued before adjustments could be validly made.
Ratio Decidendi: The Tribunal ruled that without the necessary notifications, disallowances could not be upheld, establishing the need for compliance with the legal requirement for notice issuance.
Result: Appeal allowed for statistical purposes.
| Table of Content |
|---|
| 1. late filing of audit report and its implications on claimed exemptions. (Para 2 , 3) |
| 2. necessity of procedural compliance for valid disallowance of exemptions. (Para 4 , 5 , 6) |
| 3. emphasis on prior notice issuance as a requisite for lawful adjustments. (Para 7 , 8 , 9) |
ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. ADDL/JCIT(A)-1, Surat [hereinafter referred to as “the Ld. Addl./Joint CIT(A)” passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2020-21dated 24.09.2024, which has been passed against the intimation order u/s 143(1) of the Act, dated 30.11.2021.
2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:
“1 For that the Ld. CIT(A) erred in not condoning the delay in filing the appeal even when reasonable cause for not filing the appeal within time was duly explained.
2. For that the Ld. CIT(A) erred in confirming the action of CPC in not issuing any prior intimation 143(1)(a) before making the impugned disallowance of application of income u/s 143(1) of the I.T. Act and therefore the disallowance is liable to be deleted and returned income be accepted.
3. For that the Ld. CIT(A) erred in confirming the action of CPC in disallowing the amount of Rs. 12,96,197/- on account of application of income during the year without assigning any specific reason.
4. For that the Ld. CIT(A) erred in confirming the action of CPC Bangalore in disallowing the claim of exemption u/s 11 in the intimation u/s 143(1) for delay in filing audit report in Form 10B when there was no mismatch of data uploaded in the audit report and the data contained in the return of income which was not disturbed by way of selection under scrutiny.
5. For that the Ld. CIT(A) erred in confirming the action of CPC Bangalore in disallowing the claim of exemption u/s 11 in the intimation u/s 143(1) for delay in filing audit report in Form 10B when the requirement was only directory and not mandatory and therefore the exemption should not be denied only for technical breach of law and procedural irregularities
6. For that the Ld. AO erred in disallowing the claim of exemption in the intimation u/s 143(1) when such adjustment was outside the purview of the section.”
3. Brief facts of the case are that the assessee is a Trust and had filed the return of income on 31.03.2016 showing total income of Rs. ‘NIL’ that is after the due date of filing i.e. 15.02.2021. The return was processed u/s 143(1) of the Act and the exemption claimed by the assessee u/s 11 of the Act was disallowed. Aggrieved with the intimation u/s 143(1)(a) of the Act, the assessee preferred an appeal before the Ld. Addl./Joint CIT(A) who, vide order dated 24.09.2024 dismissed the appeal. Before the Ld. Addl./Joint CIT(A), it was submitted that Form No. 10B was filed online on 09.06.2023, the return of income was filed belatedly on 31.03.2021 i.e. after the due date of 15.02.2021 while the intimation u/s 143(1) of the Act was issued on 30.11.2021. Before the Ld. Addl./Joint CIT(A), the assessee raised a ground that the CPC erred in not issuing any prior show cause notice u/s 143(1)(a) of the Act before making the impugned disallowance of application of income u/s 143(1) of the Act and therefore, the disallowance was liable to be deleted as the CPC erred in disallowing the amount of Rs. 12,96,197/- on account of application of income during the year without assigning any reason. The appeal was delayed and the request for condonation of delay was held to be not liable to be accepted and the appeal was liable to be dismissed on this ground only. The Ld. Addl./Joint CIT(A) further went through the submission and ‘disallowed’ the appeal by observing as under:
“5.1. However, notwithstanding with the above, for sake of natural justice, the appeal is adjudicated on merit also. The grounds of appeal are pertaining to making adjustment by way of disallowance of deductio
