The Pune Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal for an unexplained delay of over 4000 days (nearly nine years) in filing. The tribunal rejected the trust’s argument that negligence by its tax consultant justified the delay, ruling that ignorance of tax laws and procedural lapses cannot excuse inordinate inaction.
Indrayani Seva Samiti Nyas, a charitable trust, the assessee challenged the addition of Rs. 11,00,000 under Section 56(2) of the Income Tax Act, 1961, which was treated as taxable income instead of a capital receipt towards the construction of a hostel for orphan girls. The trust failed to appeal the assessment order for nearly nine years, finally filing an appeal before CIT(A) on 30.10.2021 against the order passed on 30.11.2012.
The trust’s counsel argued that frequent trustee changes, lack of knowledge about legal remedies, and poor guidance from its former tax consultant as reasons for the delay. The department argued that tax laws require diligence and that even after appointing a new consultant in March 2021, the trust took another seven months to file the appeal, failing to provide any convincing reason for the extended delay.
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The CIT(A) dismissed the appeal, ruling that the inordinate delay of 3226 days (claimed as 4077 days by the trust) was unexplained and unjustifiable.
Before the ITAT, the trust’s counsel argued that its lack of legal awareness and reliance on incorrect advice constituted a reasonable cause for the delay. They also argued that its registration under Section 12AA (granted in May 2011) should apply retrospectively, making it eligible for exemption under Section 11 for the relevant assessment year.
The two-member bench comprising Dr. Dipak P. Ripote (Accountant Member) and Vinay Bhamore (Judicial Member) rejected the trust’s arguments, explaining that each day of delay must be sufficiently explained. The tribunal referenced Supreme Court and High Court rulings holding that negligence, lack of knowledge, or inaction are not valid grounds for condoning delays.
The tribunal also found that the trust’s trustees were well-educated professionals, including a retired bank officer, undermining their claim of complete ignorance. The tribunal upheld the CIT(A)’s decision to dismiss the appeal without examining its merits. The appeal was dismissed on procedural grounds and the tribunal did not rule on the taxability of Rs. 11,00,000 or the retrospective application of Section 12AA registration.
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