2022 (12) TMI 232 - AT - Income Tax

Tribunal grants appeal, directs AO to reconsider rectification and exemption claims under section 11.

The Tribunal allowed the appeal, setting aside the lower authorities' orders. The AO was directed to consider the rectification application and the claim ... Rectification u/s 154 - mistake was apparent or fresh claim of exemption u/s 11 - Mistake in personal details / information - HELD THAT:- CIT(A) were both of view that as revised return is not filed the claim of exemption u/s 10 read with section 12A cannot be sustained. A distinction needs to be made here between a revised return which is filed, before the Department completes assessment. A rectification, on the other hand, can be filed only after assessee receives an intimation Section 143(1) or assessment order is passed and intimated to the assessee. So rectification application is more appropriate a remedy when assessment is complete and assessee claims on the basis of the assessment record available with the AO, that there is a mistake apparent in the order arising from the assessment record and same be rectified. What is important here in the case in hand is that the mistake was in the Part A of the return which calls for personal information of the assessee. Assessee was supposed to submit “YES” in the column in point B to Part A-GEN of the Return meant to disclose date of approval/ registrations etc, to claim of benefit of exemption u/s 10 read with 12A of the Act. It seems that mistakenly “NO” was mentioned by the assessee and relevant information about registration etc. was shown as “NO”. In Part B of the return under the head statement of income for the period ended on 31/3/2013 income from other sources is shown and in deductions at relevant places amount applied for charitable/ religious places and amount accumulated or set apart have been disclosed, with total deduction claim shown. At the same time in computation of income, which was part of the Return, as available at Page no 34 of PB, Amount applied to charitable purposes, amount deemed to be applied and accumulated amount has been shown at Rs 3,74,58,598/- and accordingly Gross Total Income is shown as NIL. The matter of fact is that the CPC while considering the return of the assessee had issued an notice dated 13.08.2019 for payment of outstanding demand for Assessment Year 2013-14 in which it was mentioned that there was an outstanding demand. At the same time it was mentioned that if the assessee does not agree with the computation of the income he can seek online rectification by providing the correct data. Reminders issued by CPC are available where demand identification No. 2014201337066018840T is mentioned and outstanding demand of Rs. 1,42,46,510/- is shown. The assessee has placed intimation wherein reason for the demand raised has been mentioned that the assessee has not provided details of 12A/ 12AA registration and other details, but exemption u/s 11 is claimed. It mentioned that this can be resolved by filing an online rectification and correcting the details. The aforesaid discussion has helped this bench to reach a conclusion that the primarily the mistake was one which was in the personal information of the assessee. Such a mistake is always rectifiable at any stage. Then it can be observed that computation of income and return filed together form part of the assessment record. It is not so that the assessee has not claimed exemption at all. The claim was there in the computation of income, with complete details available with regard to nature of income earned and how the income was utilized in accordance with the law to claim the exemption. There was material on record to support the claim of relief u/s 11 of the Act. It is not the case where the record in the form of Computation, being part of Return, did not contain any material to show there was claim of exemption. Thus acutully it cannot be said that a new or fresh claim was being raised without revising the return. Even the intimation issued calling for payment of demand and it”s annexure A, as discussed, above establish that the nature of mistake was such that it could have been rectified u/s 154 of the Act itself. There is no doubt in the mind of the bench that the ld Tax Authorities below have fallen in error in not taking into consideration the rectification application. The nature of mistake, as discussed, is one which falls into the definition of mistake apparent from the record and was liable to corrected without any requirement of a revised return. Consequently, the ground No. 1 deserves to be allowed. Issues Involved:1. Validity of the order under section 154 of the Income Tax Act, 1961.2. Denial of exemption under section 11 of the Income Tax Act.3. Error in holding that the appellant did not claim exemption under section 11.4. Legality of interest charged under sections 234B and 234C of the Income Tax Act.Issue-wise Detailed Analysis:1. Validity of the order under section 154 of the Income Tax Act, 1961:The primary issue is the validity of the order passed under section 154 of the Income Tax Act, 1961. The Assessing Officer (AO) rejected the application for rectification under section 154, stating that the assessee did not claim exemption under sections 11 and 12 in the return of income. The AO observed that no error was found in the order of the CPC, and the assessee did not file a revised return within the stipulated time. The Tribunal emphasized that the scope of rectification under section 154 is limited to mistakes apparent from the record, which are patent and self-evident. The Tribunal concluded that the mistake in the return, where the assessee marked 'NO' instead of 'YES' for claiming exemption under section 12A, was a rectifiable mistake apparent from the record.2. Denial of exemption under section 11 of the Income Tax Act:The assessee, a government board registered under section 12A, claimed exemption under section 11 for an amount of Rs. 3,74,58,598/-. The exemption was denied by the CPC due to incorrect particulars filed in the return. The Tribunal noted that the assessee had consistently claimed and been granted exemption under section 11 in previous and subsequent years. The Tribunal found that the mistake was in the personal information section of the return and that the computation of income clearly showed the claim for exemption. The Tribunal held that the denial of exemption was incorrect and that the rectification application should have been considered.3. Error in holding that the appellant did not claim exemption under section 11:The CIT(A) upheld the denial of exemption, stating that the assessee did not claim exemption under section 11 in the return of income. The Tribunal found this to be incorrect, as the computation of income and the return filed together showed the claim for exemption. The Tribunal emphasized that the mistake was in the personal information section and that the computation of income contained material supporting the claim for exemption. The Tribunal concluded that the claim for exemption was evident from the record and should have been allowed.4. Legality of interest charged under sections 234B and 234C of the Income Tax Act:The assessee contested the interest charged under sections 234B and 234C. However, the Tribunal's primary focus was on the rectification and exemption issues. The Tribunal did not provide a detailed analysis of the interest charges but implied that the rectification of the exemption claim would impact the interest calculations.Conclusion:The Tribunal allowed the appeal, setting aside the orders of the lower authorities. The Tribunal directed the AO to consider the rectification application and the claim for exemption under section 11 based on the information available on record. The Tribunal emphasized that the mistake in the return was rectifiable under section 154 and that the exemption claim was evident from the record. The appeal was allowed, and the matter was remanded to the AO for reconsideration.