2024 (9) TMI 531 - AT - Income Tax

Denying the exemption u/s 11 - assessee s return was processed u/s 143(3) - Assessee contended that despite the fact of the assessee having been granted registration u/s 12AA of the Act and the said fact being on the record of the Department, the assessee has been denied the benefit of exemption u/s 11 - HELD THAT - We have noted the facts, as pointed out by the assessee as being granted registration u/s 12AA of the Act by the Department. CIT(A) is directed to take note of the same, and consider it while dealing with the assessee s appeal against intimation under section 143(1) of the Act denying the benefit of exemption of its income under section 11 of the Act.

Summary

Issues:
- Denial of exemption claimed by the assessee under section 11 of the Income Tax Act for Asst. Year 2013-14 and 2015-16.
- Dismissal of the appeal by the ld.CIT(A) due to substantial delay in filing.

Analysis:

Issue 1: Denial of Exemption
1. The appeals pertained to the denial of exemption claimed by the assessee under section 11 of the Income Tax Act for Asst. Year 2013-14 and 2015-16. In both years, the assessee had shown application of income for charitable purposes but was denied the benefit of exemption by the intimation under section 143(1) of the Act.
2. The ld.counsel for the assessee argued that despite the assessee's compliance with the provisions of section 11 and application of income for charitable purposes, the entire income was treated as taxable. The ld.CIT(A) dismissed the appeals without considering the bona fide reasons for the delay in filing.
3. The Tribunal directed the ld.CIT(A) to reconsider the appeals and pass a speaking order, taking into account the registration under section 12AA of the Act granted to the assessee and the compliance with exemption provisions.

Issue 2: Dismissal of Appeal due to Delay
1. The ld.CIT(A) dismissed the appeals as non-maintainable due to substantial delays in filing, without addressing the reasons provided by the assessee. The delays were attributed to the non-processing of rectification applications filed by the assessee promptly after receiving intimation under section 143(1) of the Act.
2. The Tribunal found the reasons for delay reasonable, as the rectification applications were pending without any action from the tax authorities. The appeals were directed to be restored to the ld.CIT(A) for reconsideration after addressing the delay issue and subsequently evaluating the merits of the case if the appeals were deemed maintainable.

Conclusion:
The Tribunal allowed both appeals for statistical purposes, emphasizing the need for the ld.CIT(A) to re-examine the denial of exemption and the dismissal of the appeals based on delay. The Tribunal highlighted the importance of considering the registration under section 12AA and the reasons for delay in filing before making a final decision.