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Facts
The assessee, a trust, claimed accumulation of income under Section 11(2) of the Income Tax Act, 1961. Due to a typographical error while filing Form 10 online, the accumulated amount was incorrectly reported as Rs. 6,00,000 instead of Rs. 15,00,000. This led to a disallowance of Rs. 9,00,000 by the Assessing Officer and subsequent appeals.
Held
The Tribunal noted that the error in Form 10 was a genuine typographical mistake, evidenced by the original return of income and Form 10B, both filed on the same day. The Tribunal relied on judicial precedents that allow for correction of such bona fide errors, especially when the substantive compliance is met.
Key Issues
Whether a genuine typographical error in reporting the accumulated amount in Form 10 can lead to denial of exemption under Section 11(2) of the Income Tax Act, and if the lower authorities properly appreciated the law in this regard.
Sections Cited
11(2), 11(5), 143(1), 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH,
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
आदेश / O R D E R
PER DINESH MOHAN SINHA, JM:
Captioned appeal filed by assessee pertaining to Assessment Year 2017-18, is directed against order passed by Commissioner of Income Tax (Appeal), vide order dated 04/02/2025, which in turn arises out of an order passed by the Assessing Officer dated 24.11.2019 of the Income Tax Act, 1961.
Grounds of appeal
raised by the assessee, are as follows:
1. The order u/s 154 passed by the CPC u/s 143(1) is bad in law.
2. The learned Commissioner (Appeals), NFAC, Delhi erred in not rectifying the mistake of CPC and in not granting deduction to the extent of Rs. 9,00,000/- out of Rs. 15,00,000/- claimed by the Appellant u/s 11(2) of the Act in the original as well as revised return of income by not considering revised Form 10 filed by the Appellant.
3. The learned Commissioner (Appeals), NFAC, Delhi erred in not adjudicating the appeal on merits and thus failed to appreciate that benefit of Sec. 11 of Rs. 9,00,000/- could not have been denied by CPC u/s 143(1)(a) of the Act when revised Form 10 was duly filed along with revised return of income.
4. The learned Commissioner (Appeals), NFAC, Delhi failed to take cognizance of revised Form 10 during appellate proceedings by exercising his co-terminus powers.
5. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal.
Brief facts of the Case that the trust maintains and runs Jain Derasar at Bidada Village in Kutch District. Regular books of accounts are maintained and Audited by the Chartered Accountants. In the present case total addition of Rs. 900000 was made by the Learned Assessing Officer (DCIT, CPC) in the income of the assessee on account of disallowance of accumulation of income under section 11(2) of the Act. The learned Assessing Officer has disallowed the claim of accumulation of income u/s 11(2) of the act because the Form 10 filed by the assessee on 24.07.2017 showed accumulation of Rs. 6,00,000 instead of Rs. 15,00,000 without considering the facts that Rs. 5,00,000 was duly claimed in the original return of income filed on 24.07.2017 and even Audit Report in Form 10B filed on same day 24.07.2017 is also showing a claim of Rs. 15,00,000 as accumulation of income. As per the resolution passed by the Trustees also the original claim of Accumulation was Rs. 15 Lakhs (5 lakhs for Derasar Jirnodhar and 10 Lakhs for Building construction and repairs and maintenance.) However, while filing the Form 10 online, a clerical mistake was made while furnishing on line data in the website of the Department and instead of entering Rs. 10,00,000 against Page | 2 Building Construction and Repairs and maintenance only Rs. 1,00,000 was entered inadvertently. The said mistake came to the notice of assessee only on 28.09.2018 (after one year) when the assessee received communication from department on 28.09.2018 (CPC/1718/G21/1834922617). To rectify the said mistake the assessee has duly filed the Corrected Form 10 along with revised return of income on 03.10.2018 showing ac cumulation claim of Rs. 15,00,000 (5 lakhs for Derasar Jirnodhar and 10 Lakhs for Building construction and repairs and maintenance.) However, the learned AO has not considered the corrected Form 10 file d on 03.10.2018 and has passed the order u/s 154 without considering complete facts and circumstances of the case. That in Origin a Form 10 was a bona-fide mistake and a mere data entry error which can be clearly seen from the original return of income filed on 24.07.2017 an d Audit Report duly signed by the Chartered Accountant in Form 10B filed on the very same day i.e. 24.07.2017. Thus, all the three forms; Form 10, Form 10B and ITR were filed on 24.07.2017 and both ITR and Form 10B shows accumulation claim of Rs. 15 Lakhs. The error was only made while filing the Form 10. The error was a genuine mis take made while feeding the data online. Thus, in view of above facts and circumstances there can be no disallowance of accumulation under section 11(2) of the act as there was a genuine error in filing Form 10 and full claim of accumulation under section 11(2) of Rs. 15,00,0 00 shall be allowed to the assessee.
The assessee filed an appeal against the order dated 24-11-2019 on application u/s. 154 of rectification whereby, the claim of the assessee was disallowed, before the Ld. CIT(A) on dated 07-12-2019. The Ld. CIT(A) has issued six notices for hearing to the assessee but the assessee failed to complied with the notice. That the Ld. CIT(A) had dismissed the case with following remarks;
“The Ld. CIT(A) has disposed of after considering the assessment order, the statement of facts, the facts on record and position of law on the issue in the succeeding paras. 5.1 Ground No 1: Income tax return filed by the appellant originally is as per law and the grounds of appeal filed by the appellant is hereby dismissed. 5.2 Grounds No. 2 and 3:- Ground no 2 and 3 are general in nature and does not require any adjudication hence dismissed In the result, the appeal of the assessee is Dismissed.”
That the assessee filed an appeal against the impugned order dated 04.02.2025 before us.
During the course of argument the Ld. AR submitted that in form no. 10A filed on 24/07/2017 by showing accumulation of Rs. 5,00,000 + 1,00,000 = 6,00,000 instated of 5,00,000 + 10,00,000 = 15,00,000 the assessee committed typographical mistake. For this mistake the assessee file rectification application and the same was dismissed. The Ld. AR requested for one more opportunity may kindly be granted for rectifying the mistake and correct the claim of accumulation of income u/s. 11(2) of the Act in the Form.
On the contrary the Ld. DR. has relied on the order of the lower authority. However, the Ld. DR has not objected the prayer of the assessee.
We note that the assessee has filed return of Income showing accumulation of Rs. 15,00,000/- u/s. 11(2) 11(5) the assessee has also submitted form no. 10 10(B) showing accumulation of Rs. 6,00,000/- u/s 11(2) 11(5). That CPC process written and made adjustment whereby tax was levied of Rs. 1,23,130/- on the assessee it is further noted. That the assessee file rectification application ITR 7 and the same was rejected by order dated 24/11/2019.
8.1 We note The Appellant had claimed Rs. 5,00,000/- u/s 11(2) of the Act and Rs. 10,00,000/-u/s 11(5) of the Act in the return of income filed for the year. However, in the original Form 10 filed, accumulation u/s 11(5) was shown at Rs. 1,00,000/- instead of Rs. 10,00,000/- due to typographical error and hence the CPC has worked out the variance in accumulation of Rs. 9,00,000/- (Rs. 15,00,000/- Less Rs. 6,00,000/-) in the intimation u/s 143(1) of the Act.
8.2 Disallowance of claim of accumulation u/s 11(2) and 11(5) of Rs. 9,00,000/- has been made by CPC u/s 143(1) of the Act for the reason that there is a variance of amount of accumulation u/s 11(2) and 11(5) as per return of income and as per original Form 10 filed by the Appellant.
Our above view is fortified by the judgement of Hon'ble jurisdictional High Court of Gujarat in the case of CIT vs. Xavier Kelavani Mandal (P.) Ltd., (2014) 41 taxmann.com 184 (Gujarat), where in it was held as follows: "4. The question whether it is permissible to the assessee to produce the audit report at the appellate stage, has already been answered by this court in CIT v. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj), wherein it is held that the provision regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income, but produced before completion of the assessment. The Punjab and Haryana High Court in CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292/[1998] 96 Taxman 494 has reiterated the same principle holding that the benefit of exemption should not be denied merely on account of delay in furnishing the same, and it is permissible for the assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by showing a sufficient cause. This decision of Punjab & Haryana High Court has been relied on by the Tribunal."
8.3 We note that Co-ordinate Bench of ITAT, Ahmedabad in the case of Shree Charitable Trust vs. ITO, (2004) 158 taxmann.com 159, held
“that where assessee-trust filed Audit Report in Form 10B belatedly and assessing officer denied exemption u/s 11 of the Act, on ground that Form 10B was not filed along with return of income, since Audit Report was not considered and verified by assessing officer, and the impugned order was to be set aside and AO was to be directed to verify Form 10B and then allow claim of exemption u/s 11 in accordance with law.”
8.4 Therefore, in the assesses case under consideration, before us. We perused the material available on record, including the paper book filed by the assessee it is most unfortunate case of the assesse that while e-filing the original return of income by mistake the assessee typed 1 lac on accumulation of income instead of 1lac while filing the form 10 along with return when the return was proceed u/s. 143(1) it demands of Rs. 1,23,130/- was established against the assessee. The assessee came to know about the mistake came to the notice of assessee on 28.09.2018 when the assesse received communication form department on 28.09.2018. for rectifying the said mistake the assessee during file the corrected form 10 along with revise return of income on 30.10.2018 showing accumulation of claim of Rs. 15,00,000/-, Rs.5 lac for derasar jinodhar and 10 lac for building construction repairing maintain. The ld. AO has not consider the corrected form and passed order u/s. 154 of the Act. Thus, the AO grossly failed know that it is apparent mistake on record and it typographical error committed by the assessee while filing the e- return. Similarly the LD. CITA) has also dismissed the appeal of the assessee and approved the order of the LD. AO.
In the present case, the assessee has not made any new claim or deduction the grievance of the assessee that typographical error which has happened while filing the e-return. Thus, this is the clear case of mistake apparent on record which is very well therefore, a rectifiable u/s. 153 of the Act, thus, both AO and Ld.CIT(A) has not properly appreciated the provision of law and acted arbitrary against genuine case of typographical mistake. This kind
of arbitrary action should be avoided where the assesse proved that there is the typographical mistake in e-filing the return.
therefore we hereby direct the Jurisdictional Assessing Officer to verify the Form No. 10B and then allow the claim of exemption u/s. 11 of the Act in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes, in above terms.
Order pronounced in the open court on 04-08-2025.