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Income Tax Appellate Tribunal, DELHI BENCH “G” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI M BALAGANESH
आदेश /O R D E R PER C.N. PRASAD, J.M.
This appeal is filed by the Assessee against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 18.3.2024 for the AY 2021-22. The assessee in its appeal raised the following ground:
“That the Ld. Commissioner of Income Tax (Appeals) has erred in law and in facts in confirming the addition made by the CPC in respect of Foreign Contribution received of Rs.43,16,125/- by observing that no revised return was 1 filed by the assessee as directed by the CPC classifying the Foreign Contribution of Rs.43,16,125/- in corpus fund and other than corpus fund.” registered u/s 12 of the Act filed its return of income on 27.01.2022 declaring Nil surplus from its charitable activities. Return was processed by the CPC, wherein the foreign contribution of Rs.43,16,125/- received by the assessee trust was treated as income of the assessee. The assessee trust filed a rectification petition u/s 154 of the Act whereby the assessee sought exemption for the amount of Rs.43,16,125/- on the ground that it was a voluntary contribution from foreign sources which could not be exigible to tax.
However, the request was not exceeded by CPC and passed an order u/s 154 dated 26.12.2022 wherein it had stated that the amount of foreign contribution entered in “schedule other details” sr. no. (D)(iv)(a) is not consistent with the total contribution mentioned in sr. no. (b)(i) and sr. no. (b)(ii) of “schedule VC” and suggested the assessee to file a revised return providing the correct break-up of foreign contribution as “corpus fund donation” or “other than corpus fund donation” in schedule VC. It was also stated in the 154 order that in case revised return is not filed the difference amount between the schedules will be treated as other than corpus fund donation and will be taxed accordingly. The assessee seems to have attempted to file a revised return on 22.06.2023 as suggested by CPC in its 154 order. But due to technical glitches the assessee could not upload the revised return. The assessee approached the Ld. CIT(Appeals) who also rejected the claim of the assessee. Before us the Ld. Counsel for the assessee reiterating the contentions of the assessee before Ld. CIT(A) and also made the following submissions:
“4.1 The fact that the Appellant Trust has received foreign donations of the order of Rs.43,16,125/- is beyond denial. It is certified by the donors (places at pages 2 to 8 of the PB). The factum of foreign donations as received during the year is also certified by the auditors (placed at page 54 of the PB). The CPC also does not dispute the receipt of foreign donations as aforesaid. The only objection raised by CPC is that it was not properly depicted in the relevant column in the return as originally filed on 27.01.2022 and further that to be able to confer the benefit, the Appellant Trust shall have to file a revised return u/s 139(5) of the Act. However, by that time, the limitation for filing a revised return u/s 139(5) of the Act had supervened, and so despite attempts made by the Appellant Trust, it failed to convey the same through the system because it would not accept it. In this way, the NFAC wrongly inferred that the Appellant Trust had made factually incorrect submissions before it. On the ground that the fault could not be attributed to the CPC the NFAC rejected the appeal by ignoring the fact that the CPC’s directive could not be complied with due to the non-response of the system which is entirely due to a technical hitch. 4.2 It is submitted that the NFAC’s approach in the subject case denying justice is superficial, opposed to natural justice and incorrect. There is overwhelming evidence on record to show that foreign contribution had indeed been received and dealt with by the Appellant 3
Trust according to law. The Appellant Trust enjoys the FCNR registration and as per the applicable regulations it had dealt with those donations. Therefore sufficient material was available with the NFAC to direct exemption of income emanating from those foreign donations. The NFAC missed the cardinal point that where technical considerations are pitted against substantive justice the cause of substantive justice has to receive precedence. This hallowed principle of law has been reiterated, by no less than, the apex Court of the country in 161 ITR 471. The further legal principle concerning computation of income that the consideration of the entire material on record has also been arbitrarily ignored. In this case the CPC has failed to abide by these basic principles which even the NFAC has refused to correct. Disclosure of figures in the different columns of the return of income is an entirely technical exercise. That technical exercise could not be consummated successfully by the assessee due to the intervention of limitation for filing of a revised return u/s 139(5) of the Act. There was thus a sufficient and a wholly plausible cause for the failure of the Appellant Trust to file the revised return as desired by the CPC. The NFAC failed to appreciate these basics in law and procedure thereby compounding the error. PRAYER: In the aforesaid circumstances it is most respectfully prayed that the benefit of exemption u/s 11 and 12 of the Act be kindly granted to the Appellant Trust in respect of foreign donations of Rs.43,16,125/- which stands added on the income and thus the ground may please be allowed.”
Heard rival contentions, perused the orders of the authorities below. We observed that the CPC on the petition filed by the assessee for rectification passed an order dated 26.12.2022, wherein the foreign contribution received by the assessee was brought to tax.
The CPC also suggested the assessee to file a revised return giving the break-up for ‘corpus fund donation’ and ‘other than corpus fund donation’ in the revised return. The assessee seems to have attempted to file a revised return which is placed at pages 9 to 36 of Paper Book and the revised computation of income is placed at pages 37 to 39 of the Paper Book. It is the submission of the Ld. Counsel that due to technical glitches the revised return could not be filed by the assessee. The Ld. Counsel also submitted that since the time for filing revised return u/s 139(5) had supervened the assessee failed to upload the return and convey the same through the system as the system did not accept it.
Thus, taking the totality of facts and circumstances into consideration, we are of the view that the revised return which the assessee could not file due to the technical glitches may be considered by the AO subject to verification of the donations and to allow the claim for exemption u/s 11 of the Act to the assessee trust.
Accordingly, we restore this issue to the file of the AO to accept the revised return of the assessee and after verification of the claims of the assessee viz-a-viz the donations from foreign contributions, allow the exemption u/s 11 in accordance with law after providing opportunity to the assessee.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 30.09.2025