The Income Tax Appellate Tribunal (ITAT), Mumbai, has restored an income tax appeal involving a delay of 1,292 days to the Commissioner of Income Tax (Appeals), holding that the assessee had not been effectively provided a reasonable opportunity to substantiate the reasons for the delay.

The Tribunal directed the CIT(A) to reconsider the limitation issue judiciously after accounting for the benefit available under the Supreme Court’s directions extending and excluding limitation periods during the COVID-19 pandemic.

The Mumbai Bench comprising Accountant Member Om Prakash Kant and Judicial Member Anikesh Banerjee passed the order in an appeal filed by Rise India Foundation for Assessment Year 2020-21.

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The assessee is a charitable trust or Association of Persons engaged in social-welfare activities. It filed its income tax return in Form ITR-7, which is generally prescribed for charitable trusts claiming exemption under Sections 11 and 12 of the Income Tax Act, 1961.

According to the assessee, the return should instead have been filed in Form ITR-5, applicable to an Association of Persons. It maintained that the incorrect form was selected because of an inadvertent error committed by the tax professional engaged by it.

The assessee was not registered under Section 12AB during the relevant assessment year and had neither claimed nor intended to claim an exemption under Section 11.

However, after the return was filed in ITR-7, the Centralised Processing Centre (CPC), Bengaluru, processed it as a return filed by a charitable trust seeking exemption under Sections 11 and 12. The CPC consequently disallowed revenue expenditure of ₹2,32,834 incurred towards the assessee’s stated charitable objects.

This resulted in the income being determined at ₹2,37,437, as against the assessee’s claimed actual surplus of ₹4,600. A tax demand of ₹92,620 was consequently raised through an intimation issued under Section 143(1) on November 30, 2021.

The assessee filed an appeal before the CIT(A) on July 14, 2025, resulting in a delay of 1,292 days. It also submitted a petition seeking condonation of the delay.

The CIT(A), however, declined to admit the appeal. The appellate authority observed that the appeal had been filed more than three-and-a-half years after the intimation was received, even though Section 249(2) required it to be filed within the prescribed period.

The CIT(A) held that negligence by a legal or tax professional does not automatically constitute “sufficient cause” for condoning an inordinate delay, particularly when the taxpayer fails to establish that it exercised due diligence.

Finding the assessee’s conduct to be grossly and persistently negligent, the CIT(A) concluded that no cogent and evidence-supported explanation covering the entire period of delay had been furnished. The appeal was therefore treated as not admitted under Section 249(3) of the Income Tax Act.

Before the ITAT, the assessee relied upon the Supreme Court’s January 10, 2022 order in Suo Motu Writ Petition (Civil) No. 3 of 2020, under which limitation periods were extended or excluded in view of the COVID-19 pandemic.

Although no one appeared for the assessee when the matter was called for hearing, the Tribunal examined the material available on record, including a paper book comprising 48 pages, and heard the Departmental Representative. The appeal was thereafter decided ex parte qua the assessee.

The Tribunal observed that the assessee was partly covered by the Supreme Court’s directions concerning limitation during the COVID-19 period. It further noted that the CIT(A) had rejected the appeal solely on account of the delay of 1,292 days.

“In our considered view, we find that the Ld. CIT(A) had duly rejected the appeal only considering the delay of 1292 days for filing of appeal before him,” the Tribunal observed.

The ITAT found that the assessee had not been effectively granted a reasonable opportunity to substantiate its explanation for the delay. Considering the facts and circumstances, the Bench held that one more opportunity of hearing should be provided.

Accordingly, the Tribunal restored the matter to the CIT(A) with a direction to reconsider the limitation issue judiciously. The CIT(A) was directed to take into account the Supreme Court’s COVID-19 limitation order and provide the assessee with a reasonable and adequate opportunity of hearing.

The assessee, in turn, was directed to submit a proper explanation along with a detailed calculation of the delay after considering the limitation benefit available under the Supreme Court’s order.

The CIT(A) must thereafter pass a reasoned and speaking order in accordance with law and consider any documents submitted by the assessee during the remand proceedings.

The Tribunal clarified that it had not expressed any opinion on the merits of the tax adjustment or the assessee’s challenge to the demand. The remand was confined to ensuring a proper reconsideration of the limitation question.

At the same time, the ITAT directed the assessee to remain diligent and cooperate with the appellate proceedings without seeking repetitive adjournments.

The appeal was allowed for statistical purposes.

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