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Facts
The assessee filed its return of income declaring Nil income after claiming exemption u/s 11. Due to an inadvertent double reporting of an expenditure amount in Form No. 10BB, the AO (CPC) made an adjustment under section 143(1)(a)(ii), raising the total income to Rs. 11,88,030/-. The CIT(A) upheld this adjustment.
Held
The Tribunal held that the adjustment made by the AO (and confirmed by CIT(A)) under section 143(1)(a)(ii) was not justified as it was not an apparent incorrect claim but a reporting error. The AO has a duty to correct such mistakes.
Key Issues
Whether the adjustment made by the AO under section 143(1)(a)(ii) for a reporting error in Form 10BB, which was accepted as inadvertent, is justified without correcting the error and assessing income at Nil.
Sections Cited
11, 143(1), 143(1)(a)(ii), 250, 80G, 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 899/JPR/2025
vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. Addl/JCIT (A)-3, Chennai dated 24.04.2025 passed under section 250 of the I.T. Act, 1961, for the assessment year 2023-24. 2. The assessee has raised the following grounds of appeal :-
“1. The ld. CIT (A) has erred on facts and in law in upholding the action of AO (CPC) in making adjustment of Rs. 11,88,030/- while processing the return even after accepting the contention of assessee that application of income of Rs. 11,88,030/- has been incorrectly reported twice in Point No. 23 & Point No. 27(c) of Form No. 10BB for the Riddhi Siddhi Sewa Sansthan, Jaipur. reason that assessee has failed to file revised Form No. 10BB before completion of the processing u/s 143(1).
The appellant craves to alter, amend and modify any ground of appeal. 3.Necessary cost be awarded to the assessee.”
3. The brief facts of the case are that the assessee the assessee society is registered under Rajasthan Societies Registration Act, 1958. It is also registered u/s 12A & 80G of IT Act, 1961. It filed the return on 07.11.2023 declaring Nil income after claiming exemption u/s 11 of the Act. In the return of income, against donation receipt of Rs.13,35,100/-, expenditure of Rs.11,88,030/- was claimed as application of income and surplus of Rs.1,47,069/- was claimed exempt u/s 11 of the Act. However, in the audit report filed in Form No.10BB, the application of income of Rs.11,88,030/- was inadvertently reported twice in Point No.23(1) & Point No.27(c). Due to this mismatch in ITR 7 and Form No.10BB, the AO(CPC) processed the return u/s 143(1) wherein the total income of the assessee was determined at Rs.11,88,030/-. Being aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A). The Ld. CIT(A) upheld the action of AO(CPC) in making adjustment of Rs.11,88,030/- u/s 143(1)(a)(ii) while processing the return even after accepting the contention of assessee that application of income of Rs.11,88,030/- has been incorrectly reported twice in Point No.23 & Point No.27(c) of Form No.10BB for the reason that assessee has Riddhi Siddhi Sewa Sansthan, Jaipur. failed to file revised Form No.10BB before completion of the processing u/s 143(1). Now, aggrieved by the order of the ld. CIT (A), the assessee has come in appeal before the Tribunal on the grounds reproduced herein above.
At the time of hearing before us, the ld. AR of the assessee submitted his written submission as under :-
“ It is submitted that u/s 143(1)(a)(ii), adjustment for an incorrect claim can be made if such incorrect claim is apparent from any information in the return. The present case is not of incorrect claim but reporting of the same figure twice in Form No.10BB inadvertently. Further in the return of income there is no error. Hence the adjustment made do not fall within the purview of section 143(1)(a)(ii). Otherwise also, income is required to be computed as per the provisions of the Act. Even if there is any mistake in the audit report in Form No.10BB or in filing the return, it is the duty of the AO to correct such mistake. CBDT in Circular No. 14(XL-35) of 1955 dt. 11.04.1955 has also clarified the role of the tax officer in assisting the tax payers in following words:-
3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessee on whom it is imposed by law, officers should:- (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.
Reliance in this connection is further placed on the following cases:-
Rajesh RasikLal Shah VS DCIT (2010) 35 DTR 388 (Mum.)(Trib.) Even though there is mistake on part of assessee in offering capital gains, which is not taxable under the Act, but in respect of which, all the details including the detail of STT paid was shown in the return of income, the same should have been excluded by the AO as the entire information was available on record and it should not come under the technicalities of not filing the revised return.
Double Dot Finance Ltd. Vs. ACIT (2010) 38 DTR 220 (Mum.)(Trib.) Mere admission of income by the assessee does not give authority to the AO to tax the amount unless it comes within the purview of taxable income. Even if the assessee has inadvertently included a particular amount as income, the AO is supposed to determine the correct income by excluding the same- it is the basic function of the AO to find out the correct tax liability under the provisions of law that can be imposed and collected from the assessee. Thus, mere inclusion of the said amount in the return was of no consequence. In view of above, AO be directed to delete the addition and assess the total income of assessee at Nil.”
On the other hand, the ld. DR relied on the orders of the lower authorities.
We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities. On perusal of the record, we find that due to mismatch in ITR 7 and Form No.10BB, the AO(CPC) made adjustment and determined the total income at Rs.11,88,030/-. The Ld. CIT(A) upheld the action of AO(CPC) in making the adjustment u/s 143(1)(a)(ii) even after accepting the contention of assessee that application of income of Rs.11,88,030/- has been incorrectly reported twice in Point No.23 & Point No.27(c) of Form No.10BB for the reason that assessee has failed to file revised Form No.10BB before completion of the processing u/s 143(1). Thus, we are of the view that under section Riddhi Siddhi Sewa Sansthan, Jaipur. 143(1)(a)(ii), adjustment for an incorrect claim can be made if such incorrect claim is apparent from any information in the return. The present case is not of incorrect claim but reporting of the same figure twice in Form No.10BB inadvertently. Further, in the return of income there is no error. Hence the adjustment made do not fall within the purview of section 143(1)(a)(ii). Otherwise also, income is required to be computed as per the provisions of the Act. Even if there is any mistake in the audit report in Form No.10BB or in filing the return, it is the duty of the AO to correct such mistake. Hence, we do not find any merit in the adjustment made by the AO which is confirmed by the ld. CIT (Appeals) only for the reason that assessee has not filed the revised Form no. 10BB. In this view of the matter, the addition made by the AO and confirmed by the ld. CIT(Appeals) is deleted. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 15/09/2025. Sd/- Sd/- ¼ xxu xks;y ½ ¼MkWa-,l-lhrky{eh½ (Gagan Goyal) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 15/09/2025 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Riddhi Siddhi Sewa Sansthan, Jaipur. 1. 2. izR;FkhZ@ The Respondent- ITO, Ward-6(2), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत सहायक पंजीकार@Aेेजज. त्महपेजतंत