Vimala Hospital Vs ITO (Exemption) (Kerala High Court)
Error in Return Must Be Corrected by Revised Return – Rectification Plea Can’t Substitute Revised Return – No Relief to Charitable Hospital: Kerala HC
The appellant, Vimala Hospital, a charitable trust hospital registered u/s 12A, filed return of income for AY 2017-18 declaring nil income after claiming exemption u/s 11. In its return, it erroneously disclosed Rs.10.42 lakh as anonymous donations under Column 22. The CPC processed the return u/s 143(1) & taxed the said figure as anonymous donations.
The appellant contended before CIT(A) that the figure was wrongly entered & in fact, no anonymous donations were received. It also pointed to TDS reflected in Form 26AS that was not given credit. However, CIT(A) dismissed the appeal holding that such mistakes could only be corrected through a revised return, which the assessee had not filed.
On further appeal, ITAT upheld the CIT(A)’s reasoning & dismissed the appeal on 12.02.2025.
Before the High Court, the assessee argued that since a rectification petition u/s 154 was pending, the error should have been treated as a human mistake & the Tribunal erred in rejecting relief.
The Division Bench dismissed the appeal. It held that there was no substantial question of law since the error in return could only have been corrected by filing a revised return within statutory time limits. It is not in dispute that the appellant did not seek to correct the error in the first return by filing a revised return within the time permitted under the Income Tax Act. Having failed to do so, the assessee could not fault the CPC or appellate authorities for completing the assessment on the basis of the voluntary return filed by the appellant & taxing the voluntarily declared anonymous donations. The Court thus upheld the Tribunal’s order & dismissed the appeal.
