2025 (2) TMI 1077 - AT - Income Tax

Denial of Exemption u/s 11 - delay in filing the report - HELD THAT - We note that the assessee filed a condonation petition u/s 119(2)(b) before the CIT(Exemption) for failing to meet the timeline specified in Section 12A(ba) of the Act. Assessee also pursued an alternative remedy by filing an appeal before the ITAT. In its appeal order CIT(A) held that the issue should be remitted back to the jurisdictional AO instructing him to treat the assessee as not being in default of tax until the petition for condonation u/s 119(2)(b) is resolved by the Ld. CIT(Exemption). Additionally the assessee contended that no reasonable opportunity was provided u/s 143(1) of the Act during the processing of the intimation. We find that the assessee has indeed taken an alternative remedy. Therefore we direct the AO to consider the assessee as not being in default of tax until the petition for condonation u/s 119(2)(b) is disposed of by the CIT(E). Accordingly the matter is remitted back to the file of the AO with the above instruction. Appeal of the assessee allowed for statistical purpose.

Summary

The issues presented and considered in the legal judgment are as follows:1. Failure of the CIT(A) to allow exemption under section 11 of the Income-tax Act.2. Unauthorized adjustment under section 143(1) without issuing notice.3. Failure to deduct expenditure from income.4. Dismissal of appeal without adjudicating certain grounds.5. Assessment of total income.6. Alleged serious violation of natural justice.7. Levy of interest under sections 234B and 234C.Issue-Wise Detailed Analysis:1. The assessee appealed against the CIT(A)'s order regarding the denial of exemption under section 11 of the Act. The appellant argued that the exemption should be allowed as the necessary audit report was on record, and there was a delay in filing the report. The ITAT directed the AO to consider the assessee as not in default of tax until the condonation petition is resolved.2. The appellant contested an unauthorized adjustment made by the AO under section 143(1) without issuing a notice. The ITAT found in favor of the appellant and directed the AO to consider the matter in accordance with the law.3. The appellant challenged the AO's failure to deduct certain expenditure from the income, resulting in an addition to the total income. The ITAT directed the AO to consider the expenditure incurred for earning income as per general principles of taxation.4. The appellant raised grounds in the appeal that were not adjudicated by the CIT(A). The ITAT directed the CIT(A) to consider and adjudicate these grounds after hearing the appellant.5. The appellant disputed the assessment of total income by the AO, alleging an addition/disallowance to the returned income. The ITAT directed for the deletion of the addition made by the AO and granted exemption under section 11 of the Act.6. The appellant alleged a serious violation of natural justice by the AO in passing an order without providing an opportunity to be heard. The ITAT directed the quashing of the order passed in violation of natural justice.7. The appellant contested the levy of interest under sections 234B and 234C, claiming no liability for payment. The ITAT directed the deletion of interest charged, citing a violation of natural justice.Significant Holdings:The ITAT allowed the appeal of the assessee for statistical purposes, directing the AO to consider the assessee as not in default of tax until the condonation petition is resolved. The ITAT also directed the AO to reconsider certain matters in accordance with the law, including the deduction of expenditure and the deletion of interest charged.End of Analysis.