ITAT Condones Delay and Grants Exemption Under Section 11, Overturning CPC’s Denial:

ITAT Condones Delay and Grants Exemption Under Section 11, Overturning CPC’s Denial The present appeal has been filed by a company named M/s Fig Tree Foundation (Appellant) against the Income Tax Officer (ITO) [Exemptions], Ward – 01, Bengaluru (Respondent), in the Income Tax Appellate Tribunal (ITAT) ‘SMC’ Bench, Bangalore, before Shri Waseem Ahmed (Accountant Member). The case is related to the assessment year 2021-22 and was decided on November 03, 2025. The assessee challenged an order dated September 25, 2024, passed by the Addl/JCIT(A)-11, Delhi. The present appeal has been filed 216 days late. To explain the reason behind the delay, the assessee submitted an affidavit seeking condonation of the delay, wherein it explained that the order passed by CIT(A) was shared through email ID; however, the same went to SPAM and because of this reason, the assessee was not aware of the order and hence, could not timely file a reply to it.

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The assessee got to know about the CIT(A)'s order when it received a recovery notice dated December 06, 2024. Thereafter, the assessee immediately started searching for a new tax consultant, as the previous consultant who appeared before the CIT(A) was disengaged. The assessee engaged with the new consultant in July 2025, and just after that, filed an appeal. This process took 216 days and was not in control of the assessee. Hence, the assessee urged for condonation of delay. The representative of the department opposed the prayed condonation of the delay by the assessee. Said the assessee is not honest and hence, the appeal should be dismissed. When the tribunal analysed the arguments of both sides, it noted that the assessee could timely file a reply to the order for two reasons: one is the delay attributable on account of serving of the order in the SPAM folder, and the second is searching for a new tax consultant, which has taken nearly 6 months' time.

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The tribunal found the first reason genuine but not the second one. The assessee took 6 months to search for a new consultant when, nowadays, digital communication is so advanced that it gets the desired information very easily. Hence, it was the negligence of the assessee to pursue the matter to the ITAT. Therefore, the tribunal directed the assessee to deposit a cost of Rs. 1000 to the Prime Minister Relief Fund on account of his negligent approach. With the aforesaid directions, the tribunal condoned the delay. On the present matter, the tribunal noted on merits that the relief under Section 11 of the Act has been denied by CPC because the assessee did not submit the details of the registration under Section 12AB of the Act in the return of income. When the assessee took the matter before CIT(A), it dismissed the appeal filed by the assessee on the grounds that, under law, it is the duty of the assessee to fill out all relevant and key details of having registration under Section 12 AB of the Act while filing an income tax return (ITR).

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The assessee argued that they had already registered under Section 12AB and that the Income Tax Department already had this information. They also pointed out that the gross receipts should not be taxed without considering the claimed application of income (expenses). The aggrieved assessee then filed an appeal before the ITAT Bangalore. The tribunal analysed the arguments of both sides and made the following findings: While the assessee should have provided the necessary details in their tax return, the CIT(A) should have rectified the error, as the assessee brought it to the attention of the authorities. The tribunal noted that the revenue was wrong in treating the gross receipts as taxable income, ignoring the expenses (application of income) shown by the assessee, which fully offset the gross receipts. In the final decision, the tribunal allowed the appeal, instructed the Assessing Officer (AO) to delete the addition made to the income of the assessee and clarified that the assessee is entitled to enjoy the exemption under Section 11 as long as it fulfils the necessary conditions.