Case Law Details
AKR Academy Vs CIT (Exemption) (Madras High Court)
The Madras High Court addressed a writ petition filed by AKR Academy, a public charitable trust, against the rejection of its revision petition under Section 264 of the Income-tax Act. The Trust, which runs AKR Academy School, had been granted approval under Section 10(23C)(vi) in 2013. In its assessment for the year 2018-19, the Trust made an inadvertent error in its income tax return by entering ‘0’ in the exemption column, despite the entire income being applied to the Trust’s objectives as per the audit report. The Trust sought rectification from the Centralized Processing Centre (CPC), which was denied in May 2022. A revision application was then filed but rejected in March 2024. The Trust subsequently challenged this decision in the Madras High Court.
The Court noted that the Trust had consistently claimed exemption in previous years and argued that the error was inadvertent. It also highlighted the broad powers vested in the Commissioner of Income Tax (CIT) under Section 264, which allows for the reconsideration of such matters, especially when no appeal had been filed against the original order. The Court found that the CIT had prematurely rejected the application for revision without thoroughly examining the merits and instead based the rejection on procedural errors and delay. Consequently, the Court set aside the impugned order and remanded the matter back to the CIT for reconsideration, directing a fresh order to be issued within three months. The writ petition was disposed of without any cost, and the connected miscellaneous petitions were also closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 18.03.2024 rejecting a revision petition under Section 264 of the Income-tax Act, 1961, is challenged in this writ petition.
2. The petitioner is a public charitable trust (the Trust). The Trust was granted approval under Section 10(23C)(vi) of the Income-tax Act on 17.06.2013. The Trust runs the AKR Academy School and has a large number of students. In respect of assessment year 2018-19, the petitioner had filed the return of income on 31.10.2018. While filling up the said return, the petitioner states that an inadvertent error occurred by mentioning ‘0’ in the column relating to exemption. By pointing out that the audit report in Form 10BD establishes that the entire income of Rs.1 1,00,19,963/- was applied wholly for the objects of the Trust, the petitioner approached the CPC for rectification. Since such request was d by order dated 11.05.2022, the revision application was filed on 09.06.2022. Since such revision application was rejected by order dated 18.03 .2024, the present writ petition was filed.
3. Learned counsel for the petitioner submits that the Trust was granted approval in the year 2013 and has consistently claimed exemption in each assessment year. Merely on account of an inadvertent error while filing Form ITR-VII, he submits that the petitioner had been denied the benefit of exemption. Learned counsel further submits that the CIT has wide powers under Section 264 of the Income-tax Act as recognized by this Court in several judgments.
4. S.Premalatha, learned senior counsel, accepts for the respondents. By referring to the impugned order, she points out that the first respondent recorded cogent reasons for rejecting the revision application. In particular, she points out that the petitioner failed to rectify the error upon receipt of intimation under Section 143(1) and that the petitioner filed defective returns in other assessment years also.
5. In the affidavit in support of this writ petition, the petitioner has stated that the Trust was set up with the object of promoting education. The Trust was granted approval under Section 10(23 C) of the Income-tax Act in the year 2013. The impugned order does not contain any indication that the Trust is not entitled to exemption. Indeed, the first respondent has examined the returns of income of the petitioner for assessment years 2017-18 and 2019-20. Those returns of income would clearly indicate whether the assessee claimed exemption during those years. After examining those returns of income, the only observation of the first respondent is that the petitioner made errors while filing returns in respect of those years also. As correctly submitted by learned counsel for the petitioner, wide powers are conferred under Section 264 provided the party concerned has not filed an appeal against the relevant order. Without examining the petitioner’s request on merits, the first respondent has rejected the application on the ground of delay. Therefore, the matter requires reconsideration.
6. For reasons set out above, the impugned order dated 18.03.2024 is set aside and the matter is remanded to the first respondent for ideration. The first respondent is directed to reconsider the matter by taking into account the observations set out in this order and issue a fresh order within three months from the date of receipt of a copy of this order.
7. W.P.No.14990 of 2024 is disposed of on the above terms without any order as to costs. Consequently, the connected miscellaneous petitions are also closed.
Author Bio
