2020 (3) TMI 1193 - AT - Income Tax

Exemption u/s 11 denied - filing the return of income online electronically, certain mistakes were made in ticking of certain circle - instead of clicking yes whether assessee is registered u/s.12A/12AA, by mistake assessee has clicked No - Rectification of mistake u/s 154 - deduction claimed has been disallowed while processing the return of income by the CPC - HELD THAT - Once, the assessee has brought on record that not only it is registered u/s.12A but has also filed form 10B, then it is incumbent upon the Assessing Officer to allow the benefit of Section 11 and compute the income in accordance with law, when it brought to his notice. Certain clerical/typographical mistake in filing of return of income cannot deny the benefit which is otherwise available under the provisions of the Act, especially when such defect or mistake is brought to the notice of the Assessing Officer. The reasoning given by the Ld. CIT(A) to deny the deduction simply on the ground that assessee itself has mentioned that it was not registered u/s.12A has filled up the columns wrongly cannot be upheld. A typographical mistake or minor procedural lapse cannot act as an estoppel to deny statutory benefit to the assessee unless statute lays down the condition for claiming benefit or deduction or there is statutory violation. Looking to the facts and circumstances of the case, we direct the Assessing Officer to verify the claim of the assessee and compute the income in accordance with law as contained in Sections 11 to 13 and grant exemption/benefit allowable to the assessee. - Decided in favour of assessee for statistical purposes.

Issues Involved:
1. Legality and fairness of the order passed by the Commissioner of Income Tax (Appeals).
2. Powers of the Assessing Officer to make additions/disallowances under Section 143(1) concerning deductions claimed under Sections 11(1), 11(2), and 12A of the Income Tax Act, 1961.
3. Consideration of typographical errors in the income tax return and audit report.
4. Disallowance of deduction claimed under Section 11(2).
5. Inclusion of income declared as exempt under Section 12A in the total income.
6. Inclusion of income earned from donations and other sources used for charitable and religious purposes.

Detailed Analysis:

1. Legality and Fairness of the Order:
The appellant contended that the order passed by the Commissioner of Income Tax (Appeals) was "bad at law, wrong in facts and against the principles of natural justice." The Tribunal noted that the assessee is a charitable trust registered under Section 12A and has been regularly filing returns. The Tribunal emphasized that minor procedural lapses or typographical errors should not lead to the denial of statutory benefits unless there is a statutory violation.

2. Powers of the Assessing Officer:
The appellant argued that the Assessing Officer had no powers to make additions/disallowances under Section 143(1) for deductions claimed under Sections 11(1), 11(2), and 12A. The Tribunal observed that the disallowance of deductions was primarily due to clerical errors in the return. The Tribunal directed the Assessing Officer to verify the claims and compute the income in accordance with Sections 11 to 13 of the Income Tax Act, granting the exemptions/benefits allowable to the assessee.

3. Typographical Errors:
The appellant highlighted several typographical errors in the return and audit report, such as incorrect entries in various columns and schedules. The Tribunal acknowledged these errors and emphasized that such clerical mistakes should not result in the denial of benefits. The Tribunal directed the Assessing Officer to consider the corrected information and allow the appropriate deductions.

4. Disallowance of Deduction under Section 11(2):
The appellant claimed a deduction of ?700,000 under Section 11(2), which was disallowed due to typographical errors. The Tribunal noted that the assessee had mistakenly indicated "No" instead of "Yes" for registration under Section 12A/12AA and failed to fill in certain details in Schedule-I. The Tribunal directed the Assessing Officer to verify the corrected information and allow the deduction if the conditions under Section 11(2) were fulfilled.

5. Inclusion of Income Declared as Exempt:
The appellant declared an income of ?318,428, which was claimed as exempt under Section 12A but was included in the total income by the Assessing Officer. The Tribunal observed that the inclusion was due to typographical errors and directed the Assessing Officer to recompute the income, considering the exemptions under Sections 11 to 13.

6. Income from Donations and Other Sources:
The appellant argued that income from donations and other sources used for charitable and religious purposes should not be included in the total income as per Section 10(23C)(v) and Section 12A/12AA. The Tribunal directed the Assessing Officer to verify the claims and exclude such income from the total income, granting the exemptions as per the provisions of the Income Tax Act.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to verify the claims and compute the income in accordance with the law, granting the exemptions and benefits allowable to the assessee. The Tribunal emphasized that minor procedural lapses or typographical errors should not lead to the denial of statutory benefits.

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