Tribunal Finds Clerical Error in Tax Exemption Case, Emphasizes Right to Hearing and Due Process in Fresh Adjudication.

The Appellate Tribunal ruled that the exemption disallowance was due to a clerical error and the CPC's order under section 154 violated natural justice principles by denying a hearing. The Tribunal criticized Ld.CIT(A) for focusing solely on procedural issues and remanded the case for fresh adjudication. The Ld.CIT(A) was directed to verify the exemption claim under section 10(23C)(vi) and ensure the assessee's right to be heard. The appeal was allowed for statistical purposes, underscoring the necessity of due process and merit-based adjudication in tax disputes.

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Issues involved: Appeal against order of Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre, Delhi regarding disallowance of exemption u/s 10(23C)(vi) of the Income Tax Act, 1961 for Assessment Year 2018-19 due to clerical error in return of income.

Facts of the case: The assessee claimed exemption u/s 10(23C)(vi) but due to a clerical error, income was disclosed under "Income from Other Sources" in the return. CPC disallowed the exemption u/s 10(23C)(vi) and rejected rectification application u/s 154 without providing an opportunity to be heard. Ld.CIT(A) dismissed the appeal solely on procedural grounds.

Grounds of appeal: Assessee challenges Ld.CIT(A)'s decision, highlighting errors in processing by CPC and failure to consider eligibility for exemption u/s 10(23C)(vi) and extension of due dates by CBDT for AY 2018-19.

Decision: The Appellate Tribunal found that the exemption was disallowed due to a clerical error and CPC's order under section 154 violated principles of natural justice by not granting a hearing. Criticizing Ld.CIT(A) for focusing on procedural aspects, the Tribunal emphasized that Ld.CIT(A) should have adjudicated on merits. The matter was remanded back to Ld.CIT(A) for fresh adjudication, directing verification of exemption claimed u/s 10(23C)(vi) and ensuring the assessee's right to be heard.

Conclusion: The appeal of the assessee was allowed for statistical purposes, emphasizing the importance of due process and merit-based adjudication in tax matters.

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