2024 (7) TMI 1053 - AT - Income Tax

Denial of exemption u/s 11 - non-claiming of exemption in the original return had happened as a consequence of auditor s mistake in Form No. 10B - HELD THAT - It is only the second part of same provision of section 11(1)(a) which entitled the assessee to claim exemption which had not been allowed to assessee due to inadvertent mistake by auditors in Form No. 10B. The mistake also stands rectified by assessee by filing revised Form No. 10B. There can hardly be any dispute by revenue that the impugned second part of exemption u/s 11(1)(a) amounting to Rs. 43,98,666/- is a statutory claim of assessee. Thus, the exemption u/s 11(1)(a) is already claimed by assessee in original return, the only mistake which occurred was in mentioning the amount of second part of exemption. In any case, it is also a judicial view that a legal claim of assessee can be allowed by appellate authorities, if not by AO, and the decision of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT does not come in the way of appellate authorities. Therefore, we are of the considered view that in present case the assessee s claim of exemption of Rs. 43,98,655/- under second part of the section 11(1)(a) has to be considered by AO. Accordingly, we direct the AO to allow the claim of assessee after verifying the revised Form 10B filed by assessee. Assessee appeal allowed.

Summary

Issues:
1. Denial of exemption under section 11 of the Income-tax Act, 1961 due to a clerical error in filing the income tax return.

Analysis:
The judgment revolves around the denial of exemption under section 11 of the Income-tax Act, 1961 to the assessee due to a clerical error in filing the income tax return. The assessee, engaged in charitable activities, filed an appeal against the order passed by the First Appellate Authority, arising from an intimation of assessment by the Assessing Officer for the Assessment Year 2020-21. The crux of the issue was the inadvertent mistake in the audit report (Form No. 10B) filed by the auditors of the assessee, which led to the non-claiming of exemption amounting to Rs. 43,98,666 under the second part of section 11(1)(a).

During the hearing, it was revealed that the assessee, a registered society eligible for exemption under sections 11/12, had applied funds to charitable purposes but inadvertently failed to claim the exemption amount in the audit report and subsequently in the income tax return. The Authorized Representative for the assessee argued that the mistake was rectified by filing a revised audit report, but the revised return could not be filed due to the time limit. The contention was that the statutory claim of exemption could not be denied to the assessee based on a clerical error made by the auditors.

The Appellate Tribunal, after careful consideration, found merit in the arguments presented by the Authorized Representative for the assessee. The Tribunal noted that the second part of the exemption under section 11(1)(a) was a statutory claim of the assessee, which had not been allowed due to the inadvertent mistake in the audit report. The Tribunal emphasized that a legal claim of the assessee could be allowed by appellate authorities, even if not admitted by the Assessing Officer. Referring to legal provisions and judicial views, the Tribunal directed the Assessing Officer to consider and allow the assessee's claim of exemption amounting to Rs. 43,98,666 under the second part of section 11(1)(a) after verifying the revised Form 10B filed by the assessee.

In conclusion, the appeal was allowed, and the Tribunal directed the Assessing Officer to grant the exemption claimed by the assessee under the relevant section of the Income-tax Act, 1961, considering the rectified audit report.