Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI AMIT SHUKLA
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC” NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
I.T.A. No.1013/DEL/2019 Assessment Year: 2014-15
Arya Samaj G.K.-II (Regd.) vs. ITO (Exemption), Ward-1(1), M-Block, Road No.1, Bangalore. Greater Kailash-II, New Delhi. TAN/PAN: AABTA6009L (Appellant) (Respondent)
Appellant by: Shri P.P. Gambhir, CA Respondent by: Shri Saras Kumar, Sr.D.R. Date of hearing: 10 12 2019 Date of pronouncement: 05 03 2020
O R D E R PER AMIT SHUKLA, JM
The aforesaid appeal has been filed by the assessee against the impugned order dated 20.12.2018, passed by Ld. Commissioner of Income Tax (Appeals)-XL, Delhi in relation to order passed u/s.154 for the Assessment Year 2014-15. In the grounds of appeal, the assessee has raised following grounds:- “1. That the order passed by the learned Commissioner of Income Tax (Appeals)-40 is bad at law, wrong in facts and against the principles of natural justice. 2. That the learned Commissioner of Income Tax has erred in not considering the objections raised by the Appellant that the Assessing Officer had no powers to make
2 I.T.A. No.1013/DEL/2019
additions/disallowances u/s 143(1) in respect of the deductions claimed u/s 11(1), 11(2) and 12A of Income Tax Act, 1961. 3. That the learned Commissioner of Income Tax (Appeals) has erred in not condoning the typographical mistakes due to human errors under Para C(i), 6, 7, 8 and 9(i) to 9(v), inspite of the fact that the Appellant Arya Samaj G.K.-II is a Registered Society u/s 12A/12A(a) of Income Tax Act, 1961. Similarly there is a typing mistake in the Audit Report of writing the figure of Rs. 804,772/- against para No. (4) relating to exemption u/s. 11(1)(c) instead of para No. (3) relating to amount of Accumulated or set apart for application to Charitable or Religious purposes, to the extent it does not exceed 15 percent of the income derived from property held under trust in part only for such purposes. 4. That the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of deduction of Rs. 700,000/- claimed u/s. 11(2) even though the same was rightly mentioned under para 9(vi). However, the Commissioner of Income Tax (Appeals) confirmed the disallowance on the ground that there is a typographical mistake/error of typing word ‘No’ against para C(i) instead of ‘Yes’, inspite of having explained the fact that the Society Arya Samaj G.K.-II is duly registered u/s 12A of Income Tax Act, 1961 vide Certificate No. DI(E)220/91/886 dated 28.06.1991. 5. That the Assessee declared an income of Rs. 318,428/-, which was claimed exempt u/s 12A of the Act but the Assessing Officer had wrongly included the said amount in the total income and computed the tax accordingly.”
3 I.T.A. No.1013/DEL/2019
Besides this, the assessee has also raised the following additional ground:- “6. That the learned Assessing Officer as well as the learned Commissioner of Income Tax (Appeals) have erred in including the income earned by the Appellant from donations and other sources used for Charitable and Religious purposes by the Appellant, which is as per provision of section 10(23C)(v) of the Income Tax Act, 1961 is not to be included in the total income of Appellant, as the Appellant is registered u/s 12A/12AA of Income Tax Act, 1961 vide Registration No. DI (E)220/91/886 dated 28.06.1991."”
The facts in brief are that the assessee is a charitable trust and is also registered u/s.12A vide registration dated 28.06.1991. The Trust has been regularly filing its return of income and for the Assessment Year 2014-15 it has filed its return of income online on 21.09.2014 declaring ‘Nil’ income after claiming deduction u/s.12A, 11(1) and 11(2). The said return was process u/s. 143(1) wherein deduction were disallowed, viz.; (i) Rs.8,04,742/- claimed u/s.11(1); (ii) Rs. 7 lac claimed u/s.11(2) and (iii) Rs.3,18,428/- u/s.12A.
The assessee filed an application u/s.154 dated 25.02.2016 for rectification of mistake and also filed form no.12A on 07.01.009 electronically claiming exemption of total income as not taxable seeking certain correction of the mistakes. The case of the assessee was that while filing the
4 I.T.A. No.1013/DEL/2019
various columns in the income tax return, certain errors and mistakes were committed while filing and uploading the ROI. Like, the information against columns of the return in Para C(i), 6, 7, 8 and 9(i) to 9(v) of the Income Tax Return relating to Registration of Trust u/s.12A, claim of deduction under Sections 11(1) and 11(2) of Income Tax Act, 1961 were incorrectly narrated. There was also a mistake of typing in column relating to Form No.10B, as word ‘No’ was typed against para No. C(i) relating to Registration of Trust u/s.12A/12AA, instead of word ‘Yes’ as the Trust was actually registered u/s.12A of the Income Tax Act, 1961. The ld. Assessing Officer vide order dated 22.04.2017 u/s.154 rejected the request for rectification stating that there is no prima facie error in the order on the ground that:-
i) Tax payer has not provided the Registration details u/s 12A/12AA of Income Tax Act, 1961 and these details are to be mentioned in Column C(i) of Schedule Part ‘A’- General (2) of ITR7, hence deduction of exemption u/s 11 is not allowed.
ii) Audit Report in Form No. 10B is not e-filed before filing the Return. iii) Only Trust registered u/s 12A/12AA are required to file ITR7.”
Before the Ld. CIT (A), the assessee submitted that there were certain mistakes and error in certain columns which were given in the following manner:
5 I.T.A. No.1013/DEL/2019
S.No. Para Particulars What was What was No. of typed to be IT erroneously typed Return correctly Part-A General of Return 1) C-(i) Whether Registered u/s 12A/12AA? No Yes
Part-B TI Statement of Income
2) 1. Income from house property [3c of NIL NIL Schedule HP] (enter nil if loss).
3) 2. Profits and gains of business or 159,214 NIL profession of business of profession [as per item no.E 35 of schedule BP].
4) 3. Income under the head Capital NIL NIL Gains 5) 4. Income from other sources [as per 1,663,658 NIL item no.4 of schedule OS]
6) 5. Voluntary Contributions (C of NIL 4,944,279 schedule VC).
7) 6. Gross Income 1,823,170 7,089,149
8) 7. Aggregate of income referred to in NIL 7,089,149 section u/s11 and 12 derived during the previous year to the extent that is included in 6 above 9) 8. Voluntary contribution forming NIL 1,724,200 part of corpus as per section 11(1)(d) [(Ai + Bi) of schedule VC]. 10) 9. Amount applied to charitable or NIL 3,499,789 religious purposes in India during the previous year – Revenue Account. 11) 9. Amount applied to charitable or NIL 41,990 religious purposes in India DURING THE PREVIOUS YEAR- Capital Account [Excluding application from Borrowed Funds and amount exempt u/s 11(1A)].
12) 9. Amount applied to charitable or NIL NIL religious purposes in India during
6 I.T.A. No.1013/DEL/2019
the previous year – Capital Account (Repayment of Loan). 13) 9. Amount deemed to have been 804,742 NIL applied to charitable or religious purposes in India during the previous year as per clause (2) of Explanation to section11(1). a) If (iv) above applicable whether No Yes option to be exercised in writing before due date to the Assessing Officer. 14) 9(v) Amount accumulated or set apart NIL 804,742 for applivation to charitable or religious purposes to the extent it does not exceed 15 per cent of income derived from property held in trust/institution under section 11(1)(a)/11(1)(b) [restricted to the maximum of 15% of (7-8) above]
15) 9(vi) Amount in addition to amount 700,000 700,000 referred to in (iv) above, accumulated or set apart for specified purposes if all the conditions in section 11(2) and 11(5) are fulfilled (fill out schedule I) 16) 9(vii) Amount in addition to amount NIL NIL referred to in (iv) above, accumulated or set apart for specified purposes if all the conditions in section 11(2) and 11(5) are fulfilled (fill out schedule I) 9(viii) Total [9i+9i i+9iii+ 9iv + 5,046,521 9v + 9vi + 9vii] 15,04,742 17) 10. Additions: i. Income chargeable under section NIL NIL 11(1B) ii. Income chargeable under section NIL NIL 11(3) iii. Income in respect of which NIL NIL exemption under section 11 is not
7 I.T.A. No.1013/DEL/2019
available by virtue of provisions of section 13. iv. Income chargeable under section NIL NIL 12(2). v. Total [10i +10ii+ 10iiia+ NIL NIL 18) 11. Income chargeable u/s 11(4) [as NIL NIL per item no. E36 of Schedule BP] 19) 12. Total (6-8- 9viii + 10v +11) 318,428 318,428
However, the Ld. CIT (A) rejected the assessee’s contention on the ground that there is no infirmity in the order of the CPC in rejecting the application u/s.154, because the mistake was on the part of the assessee in filling certain details in the return of income. The relevant observation and the findings of the Ld. CIT (A) are as under: “5.2.1 I have considered the intimation under section 143(1), the impugned order under section 154 and the submissions of the appellant. 1 have also perused the Income Tax Return, a copy of which was furnished as Annexure-2 vide submissions dated 07.12.2018. From the perusal of the return it is seen that in column - Ci, which pertains to whether registered under section 12A/12AA, the appellant has selected the option as 'No'. This means that the appellant has stated in its return that it is not registered under section 12A/12AA. As per section 12A(1), exemption under section 11 is allowable only if trust or institution is registered under section 12A/12AA. Since the appellant itself mentioned that the trust/institution was not registered under section 12A/12AA, exemption under section 11 would not have been allowable to it at the time of processing the return under section 143(1) since claim of exemption under section 11 would have been an incorrect claim in absence of
8 I.T.A. No.1013/DEL/2019
registration under section 12A. Hence, to that extent there was no infirmity in the order of the CPC in rejecting the application under section 154 by stating that exemption under section 11 is not allowed. Even, otherwise, when seen from the return of income, the deduction of Rs. 8,04,742/- has been claimed in column-9iv which pertains to amount deemed to have been applied to charitable or religious purposes in India during the previous year as per clause (2) of Explanation to section 11(1). Further, it has also been mentioned that no option for the same has been exercised in writing before the Assessing Officer. Hence, there is not infirmity in the CPC denying the said deduction, this being also an incorrect claim which is apparent from any information in the return. It is also noted that in the audit report in Form 10-B which was uploaded online, the said amount has been shown in the column pertaining to amount eligible from exemption under section 11(1)(c). Hence, there is not infirmity in the order of the CPC in not allowing exemption under section 11 on the basis of information available in the return. Grounds of appeal nos. 2 and 3 are dismissed. 5.3 Ground of appeal no.4 challenges the not allowing deduction of Rs. 7,00,000/- on account of accumulation in terms of section 11(2). 5.3.1 As discussed above, the appellant has mentioned in the return of income that it is not registered under section 12A/12AA in the return of income, consequent to which the CPC did not allow exemption under section 11. From the copy of the return of income filed as Annexure-2 vide submission dated 07.12.2018, it is seen that the appellant has claimed the deduction of Rs. 7,00,000/- in column 9vi on account of accumulation under
9 I.T.A. No.1013/DEL/2019
section 11(2). However, in schedule-1 the said amount has not filled in and it has also not been mentioned that the amount so accumulated has been invested or deposited in the modes specified in section 11(5). From the audit report in Form 10B also it is seen that even though the amount of Rs. 7,00,000/- has been shown as accumulated under section 11(2), it has even mentioned in column 6 of Form 10B that the amount of income accumulated has not been invested in the manner as laid down in section 11(2)(b). Hence, the claim under section 11(2), was also an incorrect claim since it was mentioned that the trust was not registered under section 12A/12AA and was hence not eligible for exemption under section 11. This was apparent from the information given in the return and in term of section 143(1)(a)(ii) was an incorrect claim. Hence, there is no infirmity7 in the order of the CPC in rejecting the claim made under section 11(2). Ground of appeal no. 4 is dismissed.”
Before us, the ld. counsel for the assessee submitted that assessee is still enjoying registration u/s.12A and all its income was liable to be computed u/s.11 to 13 of the Income Tax and said certificate u/s 12A and registration still holds. Apart from that, in the earlier year’s assessment have been computed u/s. 143(3) wherein benefit of Section 11 has been given. The disallowance of deduction claimed have been made by the CPC in processing the return was wholly on account of certain typographical mistakes in filling up the form which was purely clerical mistake and this was the first time assessee trust was filing on-line return electronically. Thus, benefit of Section 11 cannot be denied.
10 I.T.A. No.1013/DEL/2019
On the other hand, ld. DR strongly relied upon the order of the Ld. CIT (A) and submitted that whatever return of income has been filed, the same has been processed and there is no error either in the disallowance of deduction or in the order of the Ld. CIT(A).
After considering the aforesaid submissions and on perusal of the material placed on record, it is an undisputed fact that assessee is a charitable trust and looking to its charitable activities it was granted registration u/s.12A. The assessee has been complying with conditions laid down in Section 11 to 13 and in all the years benefit of Section 11 has been granted. While filing the return of income online electronically, certain mistakes were made in ticking of certain circle as highlighted in the foregoing paragraphs. For example, instead of clicking ‘yes’ whether assessee is registered u/s.12A/12AA, by mistake assessee has clicked ‘No’ and similarly from other typographical mistakes wherein assessee has either clicked the word ‘Nil’ or ‘No’ against certain column. Due to this mistake, deduction claimed has been disallowed while processing the return of income by the CPC. Once, the assessee has brought on record that not only it is registered u/s.12A but has also filed form 10B, then it is incumbent upon the Assessing Officer to allow the benefit of Section 11 and compute the income in accordance with law, when it brought to his notice. Certain clerical/typographical mistake in filing of return of income cannot deny the benefit which is otherwise available under the provisions of the Act,
11 I.T.A. No.1013/DEL/2019
especially when such defect or mistake is brought to the notice of the Assessing Officer. The reasoning given by the Ld. CIT(A) to deny the deduction simply on the ground that assessee itself has mentioned that it was not registered u/s.12A has filled up the columns wrongly cannot be upheld. A typographical mistake or minor procedural lapse cannot act as an estoppel to deny statutory benefit to the assessee unless statute lays down the condition for claiming benefit or deduction or there is statutory violation. Looking to the facts and circumstances of the case, we direct the Assessing Officer to verify the claim of the assessee and compute the income in accordance with law as contained in Sections 11 to 13 and grant exemption/benefit allowable to the assessee. Accordingly, the appeal of the assessee is treated as allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 5th March, 2020.
Sd/- [AMIT SHUKLA] JUDICIAL MEMBER DATED: 5th March, 2020 PKK: