SOCIETY FOR CREATION OF OPPORTUNITIES THROUGH PROFICIENCY IN ENGLISH (SCOPE),AHMEDABAD vs. THE ITO, WARD-1(EXEMPTIONS), AHMEDABAD

That on facts, in law, and on evidence on record, the learned Addl/JCIT (A)-5, Delhi ought to have considered the fact that the appellant ahs filed the return of income in the correct Form ITR-7 on 31/03/2013, which is a valid return, and the exemption ought to have been granted u/s 10(23C) (iiiab) of the Act as prayed for. Asst.Year –2012-13 - 2–

That in the alternate, and without prejudice to the above grounds of appeal, the CPC and Addl / JCIT(A)-5, Delhi has grievously erred in confirming the addition of gross receipts of Rs. 16,30,63,750/- without granting deduction of the expenses incurred by the appellant.

The appellant craves leave to add, alter, amend any ground of appeal.”

The brief facts of the case are that in the case of the assessee, the Assessing Officer CPC, raised a tax demand of ₹6,51,13,960/- by disallowing the exemption claimed under Section 10(23C)(iiiab) of the Income Tax Act, 1961 (Act) for A.Y. 2012–13. The cause for this disallowance was the assessee's failure to file its return in the correct statutory form. The assessee, though eligible for exemption as it was substantially financed by the Government of Gujarat, erroneously filed its return in Form ITR-5 instead of Form ITR-7, which is the prescribed form for entities claiming exemption under Section 10(23C) of the Act. In the return filed by the assessee on 31.03.2013, he declared total income as NIL after claiming exemption of ₹16,30,63,750/-. However, due to the incorrect form, the AO processed the return under Section 143(1) of the Act and treated the entire receipts as taxable income.

Before CIT(Appeals), the assessee contended that the error was inadvertent and caused by internal administrative issues which included frequent changes in staff and misplacement of documents. The assessee submitted that there was a delay in discovering the tax since the assessee did not receive copy of the intimation under Section 143(1) of the Act and the assessee came to know about denial of exemption only when the assessee received recovery letter dated 16.08.2018 towards recovery of outstanding demand. The assessee submitted that that it was substantially financed by the Government of Gujarat and was thus clearly entitled to exemption under Section 10(23C)(iiiab), read with Rule 2BBB of the Income Tax Rules, 1962. The assessee submitted supporting documents viz. Grant Orders, audited Asst.Year –2012-13 - 3–

The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee reiterated the submissions made before CIT(Appeals). In response, Ld. DR placed reliance on the observations made by the Assessing Officer and CIT(Appeals) in their respective orders.

We have heard the rival contentions and perused the material on record. We note that while dealing with identical set of facts, ITAT Pune in the case of Shahu Shikshan Prasarak Mandal vs. ACIT (Exmp.) [2025] 171 taxmann.com 346 (Pune-Trib.)[15-01-2025] held that where assessee, educational trust, filed its return in ITR-5 instead of ITR-7 but had evidently demonstrated that it was eligible for claim of exemption under section Society For Creation of Opportunities Through Asst.Year –2012-13 - 4–

In view of the foregoing, and having regard to the facts and circumstances of the case, it is evident that the assessee was substantially financed by the Government of Gujarat during the relevant assessment year and had duly satisfied the conditions for claiming exemption under Section 10(23C)(iiiab) read with Rule 2BBB of the Income Tax Rules, 1962. The only basis for denial of such exemption was the inadvertent filing of the return in Form ITR-5 instead of the prescribed Form ITR-7. The assessee had placed on record sufficient documentary evidence including audited financials and Government grant orders substantiating its eligibility for the Society For Creation of Opportunities Through Asst.Year –2012-13 - 5– [2025] 171 taxmann.com 346 (Pune-Trib.), Kathikode Charitable Trust vs. ITO [2024] 162 taxmann.com 866 (Cochin-Trib.), and Desh Bharti Public School Samiti vs. DCIT [2022] 139 taxmann.com 231 (Lucknow- Trib.), wherein the Hon'ble Tribunals have consistently held that technical errors in filing of returns should not override the legitimate entitlement of exemption under the Act, particularly when all conditions for such exemption stand duly satisfied. Accordingly, we are of the considered view that the exemption under Section 10(23C)(iiiab) ought to have been allowed to the assessee. The disallowance made by the Assessing Officer and upheld by the CIT(Appeals) is, therefore, not sustainable in law. The demand raised on the assessee on account of denial of exemption is hereby directed to be deleted.

In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 16/09/2025 (ANNAPURNA GUPTA) JUDICIAL MEMBER Ahmedabad; Dated 16/09/2025