ITAT: 2855-Day Delay Condoned Where Assessee Acted on Bona Fide Belief Due to Conflicting CPC Communications

The assessee, National Welfare Foundation, a charitable trust, filed its return declaring income and claimed deduction under Section 24 and exemption under Section 11(2) supported by audit report and Form 10. While Form 10 was initially filed physically and later electronically, CPC disallowed the claims in intimation under Section 143(1). The assessee filed a rectification application under Section 154 which remained unattended.

Thereafter, multiple communications from the department reflected contradictory positions, at times showing that demand stood nullified and at other times reflecting it as collectible. Based on these communications, the assessee believed that the issue had been resolved and did not pursue appeal. It later discovered the subsisting demand while accessing the portal and filed appeal before CIT(A) with a delay of 2855 days.

The CIT(A) refused to condone the delay and dismissed the appeal in limine.

Issue Raised: Whether delay of 2855 days in filing appeal can be condoned when caused due to bona fide belief arising from inconsistent and contradictory communications from the tax department.

ITAT Held: The Tribunal held that the delay was caused due to bona fide belief formed on account of inconsistent communications issued by the CPC regarding the subsistence of demand. The assessee reasonably believed that the issue stood resolved, and there was no deliberate inaction or negligence.

It was observed that such circumstances constitute sufficient cause for condonation of delay and technical considerations should not defeat substantial justice. The Tribunal condoned the delay and set aside the order of CIT(A).

The matter was restored to the file of CIT(A) for fresh adjudication on merits after providing an adequate opportunity of being heard.

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