Order Set Aside, Case Sent Back for Reevaluation; First Respondent to Issue New Order in 3 Months.

The HC set aside the order dated 18.03.2024, remanding the case to the first respondent for reevaluation. The first respondent was instructed to reconsider the matter, taking into account the observations in the judgment, and issue a new order within three months. The writ petition was disposed of without costs, closing related miscellaneous petitions.

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Issues:
Challenge to rejection of revision petition under Section 264 of the Income-tax Act, 1961 by a public charitable trust regarding exemption claim due to inadvertent error.

Analysis:
The petitioner, a public charitable trust running a school, was granted approval under Section 10(23C)(vi) of the Income-tax Act. An error in mentioning exemption in the return of income for the assessment year 2018-19 led to a request for rectification, which was rejected, prompting the filing of a revision application under Section 264. The petitioner argued that despite consistent exemption claims and wide powers of the CIT under Section 264, the benefit was denied due to a minor error.

The respondents, represented by learned senior counsel, defended the rejection by citing reasons such as the petitioner's failure to rectify the error post intimation under Section 143(1) and past instances of defective returns. However, the petitioner contended that the impugned order lacked justification for denying exemption, as evidenced by the examination of returns for other assessment years which only highlighted filing errors without questioning the entitlement to exemption. The petitioner emphasized the need for a reconsideration based on merits rather than a mere dismissal on procedural grounds.

In the final judgment, the High Court set aside the order dated 18.03.2024 and remanded the matter to the first respondent for a fresh consideration. The first respondent was directed to reevaluate the case, considering the observations made in the order, and issue a new order within three months. The writ petition was disposed of without any costs, along with the closure of connected miscellaneous petitions.

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