Charitable organization should not be deprived of exemption benefit u/s 11 merely on technical lapses: ITAT

The Income Tax Appellate Tribunal (ITAT) in the matter of Shri Bhutakia Bhimasar vs Principal Commissioner of Income Tax (Exemptions) noted that the assessee is a charitable organization and should not be deprived of the benefit of exemption available to it u/s 11 of the Act, merely on the technical lapses.

Relevant Text:

On merit of the case, we note that the assessee being a charitable organization should not be deprived of the benefit of exemption available to it under section 11 of the Act, merely on the technical lapses, therefore we are setting aside the issue to the file of the Ld. CIT(Exemption) for de-novo adjudication. It is needless to mention that the assessee shall co-operate during the assessment proceedings before the Ld. CIT (Exemptions) and furnish necessary details without delay. In view of the above, the ground of appeal of the assessee is allowed for the statistical purposes.

At the outset, it was noticed that there was a delay in filing the appeal by the assessee for 1098 days. The assessee has filed the affidavit explaining the reason for the delay which is placed on record. In the affidavit it was submitted that the assessee is located in remote area where the advice from the tax practitioner was not available. Therefore, the order u/s 12AA of the Act remained unattended. Besides this, the trustees of the assessee were not aware of English language. Furthermore, the assessee has filed fresh application for registration u/s 12AA of the Act, in the subsequent year which was duly approved by the Ld. CIT(Exemptions) u/s 12AA of the Act. However, later the benefit of Exemption u/s 11 of the Act was denied in the assessment framed u/s 143(3) of the Act, on account of non-availability of registration for the AY 2018-19.

As a result, the tax demand was raised by the assessee. Thereafter, the assessee approached the tax consultant with respect to the demand raised by the assessee on account of non exemptions u/s 11 of the Act. At that point of time, it was advised to prefer an appeal before the ITAT against the rejection order passed u/s 12AA of the Act.

However, in this process, the delay occurred for 1098 days for filing the appeal before the ITAT.

The Ld. AR at the time of hearing also contended that the case of the assessee on merit is quite strong in its favour as the registration application for the subsequent year u/s 12AA of the Act was approved by the Ld. CIT(Exemptions). Thus, it was submitted that a meritorious case should not be dismissed on account of technical lapses. Thus, it was prayed by the Ld. AR to condone the delay and take the issue on merit.

The Ld. AR on merit of the case contended that the application for registration u/s 12AA of the Act, was rejected on account of non-submission of the relevant documents before the Ld. CIT (Exemption). Accordingly, the Ld. AR assured that the assessee shall furnish necessary documents if one more opportunity is extended. On the contrary the Ld. DR opposed for the condonation of delay as there was in-ordinate delay in filing the appeal by the assessee. However, on merit of the case, the Ld. DR left the issue at the discretion of the Bench.

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