ITAT: Delay in Filing Appeal Should Be Condoned When Assessee Faces Genuine Procedural Difficulties; APMC Income Fully Exempted

The assessee, M/s Agricultural Produce Marketing Committee (APMC), Gundlupet, is a statutory body regulated by the Karnataka Government and engaged in facilitating agricultural produce trading. For Assessment Years 2015-16, 2016-17, 2018-19, and 2019-20, it did not file returns of income under the bona fide belief that its income was fully exempt under Section 10(26AAB). However, due to an inadvertent classification of its PAN as a “trust”, it was unable to file returns correctly, as ITR-7 did not accommodate its exemption claim.

The Assessing Officer initiated reassessment proceedings u/s 147 based on cash deposits reflected in bank accounts and treated the income as taxable. The CIT(A) dismissed the assessee’s appeals in limine due to the delay of 84 days without condoning the same.

Issue Before Tribunal: Whether delay in filing appeal can be condoned when caused by genuine procedural difficulties and whether APMC is entitled to exemption u/s 10(26AAB) despite incorrect PAN classification.

ITAT’s Decision: The Tribunal held that the delay of 84 days in filing the appeals was due to genuine and reasonable cause, namely, confusion arising from incorrect PAN status and inability to file returns claiming exemption. It was observed that the CIT(A) adopted a hyper-technical approach in refusing condonation.

The Tribunal held that the assessee, being an Agricultural Produce Marketing Committee, is statutorily entitled to exemption under Section 10(26AAB). Mere incorrect PAN classification as a trust cannot deprive the assessee of such exemption. Therefore, all assessment orders were set aside, and the AO was directed to treat total income as NIL for all years.

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