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2024 (11) TMI 94 - HC - Income Tax


Issues Involved:

1. Legality and validity of the order under Section 264 of the Income Tax Act.
2. Legality and validity of the order/communication under Section 154 of the Income Tax Act.
3. Technical error in filing the income tax return.
4. Entitlement to claim benefit under Sections 11 and 12 of the Income Tax Act.
5. Procedural compliance concerning filing of Form 10B.
6. Scope of powers under Section 264 of the Income Tax Act.

Detailed Analysis:

1. Legality and Validity of the Order under Section 264:
The petitioner challenged the order dated 22.03.2019 passed by the Commissioner of Income Tax (Exemption) under Section 264 of the Income Tax Act. The petitioner argued that the Commissioner failed to consider the genuine technical error that occurred while uploading the income tax return, which led to the omission of the application of income in the return. The court referenced the decision in Shree Rudra Technocast Private Limited and the Bombay High Court's decision in Pramod R. Agrawal, emphasizing that the Commissioner should have considered the merits of the case and the wide powers conferred under Section 264 to correct errors, even those committed by the assessee. The court held that the Commissioner was duty-bound to consider the revision petition on merits and quashed the impugned order, remanding the matter for a fresh decision.

2. Legality and Validity of the Order/Communication under Section 154:
The petitioner's rectification request under Section 154 was rejected by the Centralized Processing Center (CPC) on the grounds that a fresh claim of exemption or income details cannot be made in a rectification request. The court noted that the petitioner had incurred the expenditure for charitable purposes, which was not reflected due to a technical glitch. The court found that the respondent should have considered this fact while deciding the revision application and that the rejection under Section 154 was not justified.

3. Technical Error in Filing the Income Tax Return:
The petitioner claimed that a technical glitch in the XML utility used for filing the income tax return led to the omission of the application of income amounting to Rs. 16,09,553/-. The court acknowledged this technical error, which resulted in the income applied not being reflected in the return. The court emphasized the need for the respondent to consider this error in the revision application under Section 264.

4. Entitlement to Claim Benefit under Sections 11 and 12:
The petitioner, being a charitable trust, argued that it was entitled to claim the benefit of Sections 11 and 12 of the Income Tax Act for the income applied towards charitable purposes. The court agreed, stating that the petitioner is entitled to the benefit of the application of income and that the respondent should have taken this into account while deciding the revision application.

5. Procedural Compliance Concerning Filing of Form 10B:
The respondent contended that the petitioner failed to file Form 10B within the due date. However, the petitioner argued that Form 10B was uploaded prior to the filing of the return. The court noted the lack of evidence to prove the manual filing of Form 10B on the due date but emphasized that the technical glitch should have been considered in the revision application.

6. Scope of Powers under Section 264:
The court highlighted the wide powers conferred on the Commissioner under Section 264, which allows for the correction of errors committed by the assessee. Citing previous judgments, the court reiterated that the Commissioner is supposed to consider the merits of the case and provide relief where the law permits. The court concluded that the Commissioner should have exercised these powers to address the technical error and the omission of income application in the return.

In conclusion, the court allowed the petition, quashing the impugned order under Section 264 and remanding the matter for a fresh decision, instructing the respondent to consider the technical error and the application of income while computing the tax for the year under consideration. The court directed that this exercise be completed within 12 weeks from the date of receipt of the order.

 

 

 

 

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