Non- compliance to Notice cannot be a Reason to Disallow Retention of Income to Charitable Organisation : ITAT Orders Readjudication of Exparte Order [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) held that non- compliance to the notice by the assessee cannot be a reason to disallow 15 % retention of income to charitable organization and  thus ordered the First Appellate Authority to readjudicate the matter.

The assessee Smt. Dakuben Saremalji Sancheti Nadol Charitable Trust is a public charitable trust and filed its return of income for the year and the relevant forms prescribed under the Income Tax Rules i.e. Form No. 10B in Form 10 in relation to accumulation of income were not filed by the assessee before the due date of the filing of the return of income.

While processing the return of income under Section 143(1) of the Income-tax Act, 1961 the Central Processing Centre (CPC) computed income of Rs.1,20,11,455 taxable without giving any benefit of the application of the income to the extent of 15% of the income accumulated or said part for specific purposes under Section 11(2) of the Income Tax Act.

Aggrieved by the computation of income tax by CPC, the assessee filed an appeal before Commissioner of Income Tax (Appeals) [CIT (A)]. In the appeal, despite of several notices issued no compliance was made by the assessee. The CIT (A) thereafter upheld the disallowance by the CPC due to non-compliance of the filing of the prescribed form before the due date.

The Counsel of the assessee submitted that due to technical problems of computer software at the end of the assessee trust no compliance of the notices could be made and further added that it was a period of the Covid Pandemic and thus  no compliance could be made of the notices issued by the CIT(A).

The Counsel submitted that the assessee is willing to co- operate in proceedings before the CIT(A) and requested to restored the appeal back to CIT(A) for deciding afresh.

The Bench comprising of Shri Aby T Varkey (Judicial Member) and Shri Om Prakash Kant (Accountant Member) observed that the appeal has been decided ex-parte without taking into consideration the submission of the assessee and the assessee is willing to co-operate, therefore in the interest of substantial justice it is appropriate to restore back the appeal to the CIT(A) for readjudication of the case.

To Read the full text of the Order CLICK HERE

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