National P.G. College Bhongaon Vs ITO (ITAT Agra)
Educational Institution’s Tax Exemption Cannot Be Denied for Typographical Error in Return; ITAT Allows Correction of Wrong Income Disclosure That Triggered ₹3.84 Crore Tax Demand; System-Generated Tax Demand Set Aside After ITAT Finds Exempt Income Wrongly Reported; ITAT Holds Clerical Mistake in ITR Does Not Override Exemption Under Section 10(23C)(iiiab).
The Income Tax Appellate Tribunal (ITAT), Agra Bench, allowed an appeal filed by an educational institution against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2016-17. The dispute arose after a tax demand of Rs.3.84 crore was generated despite the Assessing Officer not drawing any adverse inference during reassessment proceedings.
The case was reopened under Section 148 based on information flagged through the ITBA system and Insight Portal regarding cash deposits. In response, the assessee filed a return declaring nil income and submitted explanations, bank statements, fee registers, ITC details, and related documents. After examining the records, the Assessing Officer found the submissions satisfactory and finalized the assessment without adverse findings. However, while issuing the tax demand under Section 156, a demand of Rs.3,84,45,459 was raised.
Before the CIT(A), the assessee submitted that while filing the return under Section 148, a mistake occurred whereby exempt income under Section 10(23C)(iiiab) amounting to Rs.3.97 crore was wrongly disclosed under “income from other sources” along with actual income from other sources of Rs.6.81 lakh. The assessee contended that this was a typographical error. The CIT(A) rejected the claim on the grounds that the assessee had not filed an original return under Section 139(1), had not filed a revised return, and had not brought the mistake to the notice of the Assessing Officer during assessment proceedings. Reliance was also placed on the Supreme Court decision in Goetze (India) Ltd. vs. CIT.
