KAMLA EDUCATIONAL TRUST,DEOGHAR vs. ITO WARD 3(3), DUMKA
Facts
The assessee, Kamla Educational Trust, filed its return for AY 2023-24 claiming exemption under Section 10(23C) of the Income Tax Act. An intimation under Section 143(1) was subsequently issued, denying this exemption and bringing the entire gross receipts to tax. The assessee challenged this intimation as erroneous, while the revenue argued that the assessee had failed to provide audit reports and other necessary details.
Held
The Tribunal held that denying an exemption under Section 10(23C) and taxing gross receipts is not an 'arithmetical mistake' permissible under Section 143(1) of the Act. Such an action would necessitate computing the income as 'business income' after preparing financial statements, which was not done. Therefore, the intimation issued under Section 143(1) was quashed as being contrary to the provisions of the Act.
Key Issues
Whether the denial of exemption under Section 10(23C) and the taxation of entire gross receipts can be processed as an arithmetical mistake through an intimation issued under Section 143(1) of the Income Tax Act.
Sections Cited
Section 10(23C), Section 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC BENCH”, RANCHI
Before: SHRI GEORGE MATHAN
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC BENCH”, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER (THROUGH HYBRID MODE) आयकर अपील सं./ITA No.265/RAN/2025 (निर्धारण वर्ा / Assessment Year :2023-2024) Kamla Educational Trust, Vs. ITO Ward-3(3), Dumka, C/o Prem Kumar Jharkhand Bidhu Bhushan Sarkar Road, Willams Town, Deoghar-814112 स्थायी लेखा सं./PAN No. : AACTK 9414 E (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) ..
निर्ाारिती की ओर से /Assessee by : Shri P.P.Singh, AR राजस्व की ओर से /Revenue by : Shri Khubchand T Pandya, Sr. DR सुनवाई की तारीख / Date of Hearing : 24/11/2025 घोषणा की तारीख/Date of Pronouncement : 24/11/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld. Addl/JCIT(A)-1, Nashik, dated 10.06.2025 for the assessment year 2023- 2024. 2. Shri P.P.Singh, ld.AR appeared on behalf of the assessee. Shri Khubchand T Pandya, Sr. DR appeared on behalf of the revenue. 3. It was submitted by ld AR that the assessee had filed the return of income for the impugned assessment year on 9.10.2023 claiming exemption u/s.10(23C) of the Act. It was the submission that the intimation u/s.143(1) of the Act was issued denying the assessee exemption claimed u/s.10(23C) of the Act and had brought to tax the entire gross receipts of the assessee without allowing the exemption claimed.. It was the submission that the intimation u/s.143(1) of the Act issued to the assessee is erroneous and is liable to be quashed.
2 ITA No.265/Ran/2025 4. In reply, ld Sr DR submitted that the assessee has not provided the audit report and other details. It was the submission that the order of AO/CPC and that of the ld CIT(A) is liable to be upheld. 5. I have considered the rival submissions. What is permitted for adjustment in an intimation u/s.143(1) of the Act is an arithmetical mistake. If the CPC desires to deny the assessee the benefit of exemption u/s.10(23C) of the Act, then the option is for the CPC/AO is to compute the income of the assessee under the head “business income”. For this purpose, it would be required for the CPC/AO to prepare the balance sheet and profit and loss account of the assessee, that has not been done. Denying the assessee exemption u/s.10(23C) of the Act and bringing to tax the entire gross receipts, is not permissible, as it is not an arithmetical mistake. As the intimation issued u/s.143(1) of the Act is not in line with the provisions of section 143(1) of the Act, the intimation issued u/s.143(1) stands quashed. 6. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 24/11/2025. Sd/- (GEORGE MATHAN) न्यायिक सदस्य / JUDICIAL MEMBER रधाँची Ranchi; दिनांक Dated 24/11/2025 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनिलिपि अग्रेपर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant- . 2. प्रत्यर्थी / The Respondent- 3. आयकि आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT आदेशधिुसधर/ BY ORDER, 5. निभागीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, रधाँची / DR, ITAT, Ranchi 6. गार्ड फाईल / Guard file. (Senior Private Secretary) सत्यापपत प्रतत //True Copy// आयकर अिीिीय अधर्करण, रधाँची / ITAT, Ranchi
