Case Law Details
Vivekananda Seva Trust Vs ACIT Exemptions (ITAT Chennai)
Introduction: This article discusses the recent ITAT Chennai order concerning Vivekananda Seva Trust’s appeal against the denial of deduction under Section 11 as applicable to a registered charitable trust. The denial was due to inadvertent errors in filling up certain columns in the Income Tax Return forms.
Analysis: Vivekananda Seva Trust filed its Income Tax Return using ITR-7, inadvertently filling up a business-related column from Schedule-BP, leading to the denial of the deduction. The CPC processed the return, treating gross receipts as business income. The trust sought rectification, which was also denied, as the time limit to file a revised return was over.
The ITAT Chennai observed that the trust holds valid registration as a charitable trust and the deduction denial resulted from inadvertent errors in the return forms. No fresh claim was made, and the mistake shouldn’t prejudice the trust’s valid claim. Therefore, the ITAT directed the AO to verify the claim and recompute the income of the trust.
Conclusion: The ITAT Chennai allowed the appeal of Vivekananda Seva Trust, directing the re-computation of its income due to inadvertent errors in the Income Tax Return forms.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. The grievance of the assessee for captioned Assessment Year (AY) is denial of deduction u/s 11 as applicable to a registered charitable trust. ITA No.379/Chny/2023 arise out of impugned order passed by learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 25.01.2023 against intimation dated 20.03.2018 issued by CPC, Bengaluru whereas ITA No.380/Chny/2023 arises out of the impugned order passed by same authority against rectification order passed by CPC, Bengaluru u/s 154 on 20.06.2018. In an intimation issued u/s 143(1), the assessee has been denied impugned deduction. The assessee sought rectification of the intimation wherein the said deduction has again been denied in rectification order passed u/s 154. The Ld. AR has submitted that the deduction has been denied only because of inadvertent error in filling up certain column in Income Tax Return forms. The Ld. AR placed on record copy of ITR-7. The Ld. Sr. DR submitted that the time limit to file revised return of income was already over and therefore, the assessee should seek condonation of delay from appropriate authority. Having heard rival submissions and upon perusal of case records, the appeals are disposed-off as under.
2. Upon perusal of ITR-7 as filed by the assessee, it could be seen that the assessee has inadvertently filled up column of Schedule-BP which are applicable only if the assessee carries on any business. The CPC has processed the return of income and taken gross receipts as the business income. The Ld. CIT(A) upheld the same on the ground that the assessee did not furnish return u/s 139(5) correcting the wrong entries in the original return of income. The new claim could not be entertained without revised return of income.
3. The assessee has filed rectification application with CPC on 08.05.2018 which got rejected vide order dated 20.06.2018. The Ld. CIT(A) confirmed the same on the same reasoning. Aggrieved as aforesaid, the assessee is in further appeal before us.
4. From the case records, it is evident that the assessee is holding valid registration as applicable to a charitable trust. The impugned deduction has been denied only due to the fact that there was inadvertent error while filling up the schedules in Income Tax Return forms. The assessee sought rectification but the same was also denied. It could be noted that there is no fresh or new claim by the assessee but the error has occurred only due to wrong filling of columns / schedule in Income Tax Return forms. The ignorance / mistake of the assessee could not jeopardize a valid claim of the assessee. The object of the assessment is to determine correct income of the assessee and revenue could not gain out of errors committed by the assessee. Therefore, we set aside both the impugned orders and direct Ld. AO to verify the claim of the assessee within the framework of Sec.143(1) and re-compute the income of the assessee.
Both the appeals stand allowed for statistical purposes. Order pronounced on 12th July,2023.
