Trust Wins Appeal as ITAT Condones Delay, Blames Unchecked Email for Missed Deadline [Read Order]

The Income Tax Appellate Tribunal (ITAT) Surat Bench has condoned a 52-day delay in filing an appeal, accepting the argument that the managing trustee was unaware of a critical order because he did not regularly check the official email or the Income Tax Business Application (ITBA) portal. The tribunal bench set aside the order passed by the Commissioner of Income-Tax (Exemption) and restored the trust's application for registration for a fresh hearing.

Shah Manilal Motilal Khadayta Chhatralay and Bhuvan Mandal Gurjar Faliya, had filed an appeal against the order dated June 27, 2024. In that order, the CIT(E) in Ahmedabad had rejected the trust's application for registration under Section 12A(1)(ac)(iii) of the Income-tax Act. The rejection was primarily because the trust had failed to respond to two notices issued by the CIT(E), leading to an ex-parte decision against them.

The trust's authorized representative explained to the tribunal that the order was passed in June, but the managing trustee only became aware of it in the first week of October 2024 when his chartered accountant checked the ITBA portal. It was then discovered that their application had already been dismissed. The appeal was subsequently filed on October 18, 2024. The representative argued that the delay was neither intentional nor deliberate and pleaded for condonation, emphasizing that the trust had a strong case on its merits and was prepared to submit all required documents if given another chance.

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The revenue's representative, the CIT-DR, relied on the original order but did not object to the matter being sent back to the CIT(E) for a fresh look. On the issue of the delay, he left it to the tribunal's discretion.

After considering the submissions from both sides, the ITAT bench agreed to condone the delay. They found that the lapse was not intentional. On the merits of the case, the tribunal observed that the CIT(E) had decided the matter without the trust's participation due to non-compliance with the notices. Stressing the importance of the principles of natural justice, which require that an affected party be given a sufficient opportunity to be heard, the bench decided to grant the trust one final chance to present its case.

They set aside the CIT(E)'s order and sent the matter back with a direction to pass a fresh order after giving the trust a reasonable opportunity of hearing. The tribunal also cautioned the trust to be more vigilant and cooperative in the future, advising against seeking adjournments without valid reasons.

The order was pronounced by a bench comprising Pawan Singh (Judicial Member) and Bijayananda Pruseth (Accountant Member). The appeal was allowed for statistical purposes, providing the trust with a crucial opportunity to secure its registration.

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