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Facts
The assessee, a Section 12A registered society, filed a Nil income return for AY 2015-16, claiming Section 11 deduction, which the AO initially accepted. Subsequently, the AO initiated rectification proceedings under Section 154, alleging a discrepancy in the application of income for charitable purposes based on Form 10B, and confirmed the rectification despite the assessee's objections.
Held
The Tribunal held that the AO was justified in initiating Section 154 proceedings as the Form 10B discrepancy constituted a mistake apparent from record. However, the matter was remanded to the AO with a direction to redetermine the correct amount of income applied for charitable purposes, considering all evidence and not relying solely on the audit report.
Key Issues
Whether an assessment can be rectified under Section 154 solely based on a discrepancy in Form 10B regarding income applied for charitable purposes, without considering other evidence presented by the assessee.
Sections Cited
12A, 11, 154
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24.02.2025 for Assessment Year (AY) 2015-16.
Brief facts of the case are that the appellant is a society registered under 12A of the Income Tax Act, 1961 (the Act). The return of income for AY 2015-16 was filed on 29.09.2015 declaring Nil income after claiming deduction us 11 of the Act. Against the said return of income, the assessment was completed by the ACIT (Exemption), Thiruvananthapuram (hereinafter called "the AO") vide order dated 20.11.2017 accepting the returned income. Subsequently, the AO issued Sanathana Dharma Vidyasala a notice u/s. 154 of the Act, proposing to rectify the assessment order n the ground that as per the audit report submitted in Form 10B, income applied to charitable purposes is only Rs.5,04,16,939/- as against Rs. 5,54,07,660/- allowed as application of income in the original assessment. Therefore, a notice us 154 was issued to the appellant on 21.02.2019. In response to the show cause notice the appellant filed petition stating that the information contained in the audit report is wrong and the claim made by the appellant based on the financial statements is correct. However, the AO rejected the above contentions and passed the order u/s. 154 of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before us in the present appeal.
I have carefully perused the material on record. The information contained in the audit report in Form 10B, undoubtedly gives rise to a mistake apparent from record. Therefore, the AO was justified in exercising jurisdiction u/s. 154 of the Act. However, I remand the matter back to the file of AO with a direction to determine the correct amount of income applied for charitable purposes having regard to the evidence led before him, not solely based on the information contained in the audit report.
Order pronounced in the open court on 30th April, 2025.