Kathikode Charitable Trust Vs ITO (ITAT Cochin)
The ITAT Cochin bench has set aside a massive tax demand raised against the Kathikode Charitable Trust, a charitable trust working in education since 2009. The Income Tax Department had initially processed the trust’s returns for the assessment years 2014-15 and 2015-16, raising demands of Rs. 28.47 lakhs and Rs. 37.75 lakhs, respectively, based on a denial of an exemption under Section 11(1)(a) of the Income-tax Act, 1961. The trust had initially reported a deficit (loss) for both years.
The trust’s appeal was first dismissed by the Commissioner of Income Tax (Appeals) due to a significant delay in filing. The CIT(A) found no sufficient cause to condone the delay of over two years, citing gross negligence. The ITAT upheld this decision, noting that the trust provided no plausible reason for the delay. The bench clarified that the rectification of an order for a “mistake apparent from the record” does not apply to a full-scale review of a case, and the power to rectify a mistake is not meant to be used for a full-scale review of a case. This was based on the landmark Supreme Court decision in Kapurchand Shrimal v. CIT, which affirmed that an appellate authority has the duty to correct all errors in the proceedings.
