GREEN PARK EDUCATIONAL TRUST,,DHARMAPURI vs. ITO, EXEMPTIONS WARD,, SALEM

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ITA 1506/CHNY/2026Status: DisposedITAT Kolkata26 October 2026AY 2019-207 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the return filed in ITR No. 7 was a defective return as per Section 139(9) of the Act, due to the mismatch in the form. The CPC should have noticed this defect. The Tribunal directed the Assessing Officer (AO) to accept the correct return in ITR No. 5. It was also held that a technical glitch regarding the Tax Audit Report in Form No. 10B should not be fatal to the assessee's exemption claim. Regarding the late filing of the return under Section 139(4A)/139(4C), the Tribunal directed the assessee to file an application under Section 119(2)(b) before the prescribed authority. If the delay is condoned, the exemption is to be restored. Furthermore, the Tribunal noted that the assessee had incurred a deficit of Rs. 82,21,859/-. Therefore, even if exemption was not allowed, the CPC should have considered the real accounting surplus/deficit and not taxed the entire gross receipt. The CPC was directed to consider this loss along with the order of delay condonation. The appeal was allowed for statistical purposes, and the delay in filing the appeal before the ITAT was condoned with a cost of Rs. 25,000/- to be deposited with the Tamil Nadu State Legal Service Authority.

What were the facts?

The assessee, Green Park Educational Trust, filed its return of income for Assessment Year 2019-20 on 30.11.2020, which was beyond the due date of 31.08.2019. The return was filed in ITR Form No. 7 instead of the prescribed ITR Form No. 5. The Central Processing Centre (CPC) processed the return under Section 143(1) of the Income Tax Act, 1961, bringing the entire receipts of Rs. 2,91,74,290/- to tax without allowing the claimed exemption. The assessee appealed this order, which was dismissed by the Additional/Joint CIT (Appeals)-3, Mumbai, without a proper hearing or reasoned order. The appeal before the ITAT was filed with a delay of 503 days. The assessee's total receipts were Rs. 2,91,74,290/- with expenditure of Rs. 3,73,96,149/-, resulting in a deficit of Rs. 82,21,859/-.

What were the issues?

1. Whether the CIT(A) erred in dismissing the appeal without properly appreciating the facts and submissions and without adjudicating the issue on merits, thereby failing to grant an effective opportunity of hearing and passing a reasoned order (mixed law and fact, turning on principles of natural justice and procedural fairness). 2. Whether the CIT(A) erred in holding that the relief sought by the assessee amounted to condonation of delay under Section 119(2)(b) and that he lacked jurisdiction, when the issue pertained to rectification of a bona fide mistake in filing an incorrect return form (mixed law and fact, turning on Section 119(2)(b) and the nature of the error). 3. Whether the CIT(A) erred in confirming the CPC's action of processing the return under Section 143(1) without granting an opportunity to correct the return form, leading to an incorrect assessment of income, and failing to appreciate that procedural defects should not defeat substantive rights (mixed law and fact, turning on Section 143(1) and principles of procedural fairness). 4. Whether the CIT(A) erred in not appreciating that the audit report (Form 10B) was duly filed along with the ROI, making the denial of exemption factually incorrect (mixed law and fact, turning on the filing of Form 10B and its impact on exemption). Assessee's contentions: The CIT(A) erred in dismissing the appeal without proper appreciation of facts and submissions, without effective opportunity of hearing, and without a reasoned order. The issue was a bona fide mistake in filing the return in the wrong form (ITR-7 instead of ITR-5) and a technical glitch regarding the audit report, not a request for condonation of delay under Section 119(2)(b). Procedural defects should not deny substantive rights. The audit report was filed. The revenue contended that the appeal was dismissed by the CIT(A) for valid reasons.

Which sections of the Income-tax Act were involved?

Section 139,Section 143(1),Section 119(2)(b),Section 139(9),Section 139(4A),Section 139(4C),Section 10(23)(c),Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: HONOURABLE SHRI ABY T. VARKEY & HONOURABLE SHRI GAGAN GOYAL

Hearing: 09.09.2026Pronounced: 26.10.2026

PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Addl / JCIT (A)-3 (hereinafter referred to as the ‘Ld. Addl / JCIT (A)-3’), Mumbai dated 28.08.2024 for the Assessment Year (hereinafter referred to as the ‘AY’) 2019-20. GROUDS OF APPEAL

1.

1 The CIT(A) erred in dismissing the appeal without properly appreciating the facts and submissions of the Appellant and without adjudicating the issue on merits

1.

2 The CIT(A) erred in dismissing the appeal without granting effective opportunity of hearing and without passing a reasoned order on the issues raised by the Appellant.

2.

1 The CIT(A) erred in holding that relief sought by the Appellant amounts to condonation of delay u/s.119(2)(b) and that he had no jurisdiction to grant such relief, without appreciating that the issue relates only to rectification of a bona fide mistake in filing the incorrect return form.

2.

2 The CIT(A) failed to appreciate that the Appellant had inadvertently filed the return in Form ITR-7 instead of ITR-5 and the same being a technical error ought not to have resulted in denial of legitimate computation of income.

2.

3 The CIT(A) erred in confirming the action of CPC in processing the return u/s. 143(1) without granting an opportunity to correct the return form, resulting in an incorrect assessment of income.

2.

4 The CIT(A) failed to appreciate that procedural or technical defects in the return filing should not defeat substantive rights of the assessee.

2.

5 The CIT(A) erred in not appreciating that the audit report had in fact been duly filed along with the ROI, and therefore the denial of exemption on the ground that Form 10B was not filed is factually incorrect and unsustainable. 3 The Appellant craves leave to add, amend, alter or withdraw any of the above grounds of appeal at or before the time of hearing.

2.

The brief facts of the case are that the assessee trust filed its return of income on 30.11.2020 against the due date of filing of return u/s. 139 of the Act, i.e. 31.08.2019 in ITR Form No.

7.

Return of the assessee was processed u/s. 143(1) of the Act vide intimation dated: 02.02.2021 and entire receipts of Rs. 2,91,74,290/- was brought to tax without allowing the exemption claimed by the assessee. The assessee being aggrieved with the same preferred the present appeal before us with a delay of 503 days.

3.

We have gone through the intimation issued by the CPC, Bengaluru u/s. 143(1) of the Act, order of the Ld. Addl./JCIT (A)-3 Mumbai and submissions of the assessee alongwith grounds taken before us. It is observed that the main reason for disallowing the exemption claimed by the assessee was filing of ITR in wrong form, i.e. ITR No. 7 instead of ITR No. 5 and late filing of audit report in Form No. 10B (which was due for filing on 31.08.2019, actually filed on 30.11.2020). The relevant provisions as contained in section 139(4A) of the Act are reproduced below for better analysis of the issue under consideration: (4A) Every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes, or of income being voluntary contributions referred to in sub-clause (iia) of clause (24) of section 2, shall, if the total income in respect of which he is assessable as a representative assessee (the total income for this purpose being computed under this Act without giving effect to the provisions of sections 11 and 12) exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income

of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

(4C) Every— (a) research association] referred to in clause (21) of section 10; (b) news agency referred to in clause (22B) of section 10; (c) association or institution referred to in clause (23A) of section 10; (ca) person referred to in clause (23AAA) of section 10] (d) institution referred to in clause (23B) of section 10; (e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub- clause (iiiab) or sub-clause (iiiad) or sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (iiiac) or sub-clause (iiiae) or] sub-clause (via) of clause (23C) of section 10; (ea) Mutual Fund referred to in clause (23D) of section 10; (eb) securitisation trust referred to in clause (23DA) of section 10; (eba) Investor Protection Fund referred to in clause (23EC) or clause (23ED) of section 10; (ebb) Core Settlement Guarantee Fund referred to in clause (23EE) of section 10; (ec) venture capital company or venture capital fund referred to in clause (23FB) of section 10; (f) trade union referred to in sub-clause (a) or association referred to in sub-clause (b) of clause (24) of section 10; (fa) Board or Authority referred to in clause (29A) of section 10; (g) body or authority or Board or Trust or Commission (by whatever name called) referred to in clause (46) of section 10; (h) infrastructure debt fund referred to in clause (47) of section 10,

shall, if the total income in respect of which such research association, news agency, association or institution, person or fund or trust or university or other educational institution or any hospital or other medical institution or trade union or body or authority or Board or Trust or Commission or infrastructure debt fund or Mutual Fund or securitisation trust or venture capital company or venture capital fund]] is assessable, without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax, furnish a return of such income of the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and all the provisions of this Act shall, so far as may be, apply as if it were a return required to be furnished under sub-section (1).

4.

In both the situations, whether the assessee in claiming exemption u/s. 12A of the Act or section 10(23)(c) of the Act, due date for filing of the return is, as prescribed in section 139(1) of the Act. As in this case the return was filed beyond the due date as prescribed in relevant sections, apparently, the denial of exemption is correct, but that is always subject to the provisions of section 119(2)(b) of the Act, which authorises the CBDT to condone the delay in filing of the return. In addition to the above, the provisions of section 143(1) of the Act are also deemed fit to be considered as below:

Assessment.

143.

(1) Where a return has been made under section 139, or in response to a notice under sub- section (1) of section 142, such return shall be processed in the following manner, namely: —

(a) the total income or loss shall be computed after making the following adjustments, namely: — (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iia) any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under section 10AA or under any of the provisions of Chapter VI-A under the heading “C.—Deductions in respect of certain incomes”, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018; (b) the tax, interest and fee, if any, shall be computed on the basis of the total income computed under clause (a); (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after

adjustment of the tax, interest and fee, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under section 89, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax , interest or fee; (d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:

Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax, interest or fee is payable by, or no refund is due to, him: Provided further that no intimation under this sub-section shall be sent after the expiry of nine months from the end of the financial year in which the return is made. Explanation. —For the purposes of this sub-section, —

(a) “An incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return, — (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).

5.

Considering the provisions of section 143(1) of the Act and facts of the case, it is observed that the return wrongly filed by the assessee in ITR No. 7, certainly falls in the category of defective return as defined in section 139(9) of the Act, as the information contained in the return vis-à-vis ITR Form filed by the assessee has apparent mis-match and comes in the purview of section 139(9) of the Act to be noticed by the CPC, Bengaluru. But as observed nothing of that sort is there on record. In the result, we declare the return filed by the assessee in ITR No. 7 as defective return and JAO is directed to accept the correct return in ITR No. 5 (as prescribed in the Rules), further, a technical glitch, i.e. Tax Audit Report in Form No. 10B also can’t be fatal for exemption claim of the assessee. Now the only issue left

is w.r.t. late filing of return u/s. 139(4A)/139(4C) of the Act. On this issue, we direct the assessee to file an application u/s. 119(2)(b) of the Act before the prescribed authority and if the delay is condoned, the exemption is directed to be restored to the assessee.

6.

Notwithstanding the above legal discussions and observations, it is observed through the ITR filed by the assessee and the same is produced before us, that the total revenue receipts of the assessee were Rs. 2,91,74,290/-, against this the expenditure claimed by the assessee was Rs. 3,73,96,149/-. Meaning thereby a deficit of Rs. (-) 82,21,859/-. In view of this, even if it is assumed that the assessee is not eligible for exemption as claimed, still, only real accounting surplus/deficit can be considered by the CPC and whole gross receipt can’t be made taxable, as done in this matter. The CPC is directed to consider this loss of the assessee as declared in audited financial results alongwith order of delay condonation, if any filed by the assessee. Resultantly, the appeal of the assessee is allowed for statistical purposes only and delay in filing of appeal before us is also condoned, as the affidavit and application for condonation of delay filed before us is found to be in order with a cost of Rs. 25,000/- (Rs. Twenty-Five Thousand Only) to be deposited with the Tamilnadu State Legal Service Authority within 15 days of receiving this order and receipt of the same is to be produced before the Registry for record and verification purposes.

7.

In the result, the appeal of the assessee is allowed for statistical purposes only.

Order pronounced on the 26th day of October 2026 in Chennai. (एबी टी. वर्की) (गगन गोयल) (ABY T. VARKEY) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 26th October 2026. KB

आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF K BABU Date: 2026.10.29 10:12:49 +05'30'

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