TaxTMI 
TaxTMI 
2026 (2) TMI 1182
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome-tax (Appeal) has erred in law and on facts in passing the order without considering the exemption u/s. 10(23C)(iiiad) of income tax act 1961 and made addition of Rs. 9427096 during AY 2018-19. 4. The Ld. Commissioner of Income-tax (Appeal) has erred in law and on facts in passing assessment order which is contrary to the facts and law. 5. The appellant craves leaves to add, amend, alter or withdraw any ground or appeal or raise any new ground of appeal during the pendency of appeal." (B) In this case, the return filed by the assessee was processed u/s. 143(1) of Income Tax Act, 1961 ("Act", for short) and intimation dated 04.05.2020 was issued to the assessee u/s. 143(1) of I.T. Act wherein adjustment was made and the assessee's total income was determined at 94,27,096/- as against returned income of Rs. Nil. The aforesaid adjustment of Rs. 94,27,096/- was made disallowing assessee's claim for exempted income. The assessee filed application for rectification u/s. 154 of I.T. Act, submitting that there was an inadvertent typographical mistake in wrongly making claim of exempted income u/s. 10(23C)(iv) instead of the correct section 10(23C)(iiiad) of I.T. Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Lucknow Bench of ITAT in the case of Desh Bharti Public School Samiti vs DCIT (2022) 139 taxmann.com 231 (Luck) vide order dated 05.04.2022 for A.Y. 2014-15 in ITA. No.09/LKW/2022. The relevant portion of this order is reproduced below: - "2. The ld. AR at the outset submitted that the assessee has been claiming exemption u/s. 10(23C) in the earlier years and during the year under consideration the assessee had got registration u/s. 12A of the Act and in this respect our attention was invited to P.B. pg. 24 where a copy of registration u/s. 12A dated 02.09.2014 effective from 1.4.2012. It was submitted that the assessee by mistake in the return of income filled the claim of exemption u/s. 10(23C) of the Act as against u/s. 12A of the Act whereas the assessee had obtained the audit form in Form-10B as required u/s. 12A(b) and had uploaded the same along with return of income. It was submitted that the CPC on the basis of return filed by the assessee rejected the claim of the assessee u/s. 10(23C) by holding that since the receipt of the assessee exceeded Rs. 1.00 crore therefore the exemption u/s. 10(23C) was available to the assessee only if the assessee had obtained ne....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d necessary approval from the prescribed authority and the receipts of the assessee exceeded Rs. 1.00 crore. The application for rectification u/s.154 was also rejected and on appeal before ld. CIT(A), the ld. CIT(A) also dismissed the appeal of the assessee by first holding that there was no mistake apparent from record and further held that there is lot of difference between the claim of exemption u/s.10(23C) and Section 11 of the Act. However, nowhere in the appellate order the ld. CIT(A) disputed the fact that assessee was not registered u/s.12A of the Act. The registration certificate granted by the department on 2.9.2014 is on record. Further the uploading of Form-10B which is a audit report u/s.12A(b) of the Act, proves that the mistake committed by assessee in claiming exemption u/s.10(23C) is inadvertent mistake as by committing such a mistake the assessee is not going to gain anything. Fact of the matter is that assessee is registered u/s.12A of the Act and is eligible for exemption u/s.11 of the Act. Therefore for inadvertent mistake the assessee cannot be penalized. Since the assessee has been claiming exemption u/s.10(23C) in the earlier years therefore during the year....
X X X X Extracts X X X X
X X X X Extracts X X X X
....PC), Bangalore vide intimation passed u/s. 143(1) of the Act dated 20.03.2020. Against the said processing, assessee moved an application of rectification u/s. 154 of the Act on 30.07.2020 by making a correction towards the claim of exemption u/s. 10(23C)(iiiab) of the Act as against eligible claim made u/s. 10(23C)(vi) of the Act. The rectification application was rejected vide order dated 04.09.2020 against which assessee went in appeal before the Ld. CIT(A), NFAC, Delhi who had upheld the rejection of the claim made by the assessee u/s. 10(23C)(iiiab) of the Act vide its rectification application. 5. Before us, Shri Somnath Ghosh, Advocate represented the assessee and Shri G. H. Sema, CIT, DR represented the revenue. 6. Before us, Ld. Counsel submitted that there is no dispute on the fact that assessee had been imparting education without any profit motive and is substantially financed by the Govt. of West Bengal. He further submitted that assessee had always claimed exemption u/s. 10(23C)(iiiab) of the Act on its receipt which has always been allowed. He also referred to the assessment order passed u/s. 143(3) of the Act dated 13.12.2019 for AY 2017-18 wherein assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g relief and in this regard the officers should take initiative in guiding a taxpayer where the proceedings before them indicate that some refund or relief is due to him. He also stated that it is mandated that the officers of the department should not take advantage of ignorance of an assessee as to his rights. 6.3. Ld. Counsel placed reliance on the decision of coordinate bench of ITAT, Lucknow in the case of Desh Bharti public School Samiti Vs. DCIT (2022) 139 taxmann.com 231 (Luck) wherein similar issue was dealt in. Head Note of the said decision is reproduced as under: "Where assessee, a trust, in earlier years had been claiming exemption under section 10(23C) and it got registration under section 12A on 2.9.2014 and it in return filed for assessment year 2014-15 claimed exempt income under section 10(23C) instead of claiming same under section 12A, mistake had occurred as a human error and thus Assessing Officer was to be directed to allow exemption under section 12A." 7. Per contra, the Ld. CIT, DR placed reliance on the order of the Ld. CIT(A). 8. We have heard the rival submissions, perused the material available on record and gone thro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....plication of human mind. However, an order passed for disposal of the assessee's application for rectification u/s. 154 of the Act as well as the order passed by the learned CIT(A), are outcomes of due application of human mind by concerned authorities. These orders cannot be passed mechanically without considering the facts and circumstances of the case and the material brought on record by the assessee. There is a qualitative distinction between a computerized process, such as processing and issuance of intimation under section 143(1) of the Act, and orders that are required to be passed after due application of mind by statutory authorities, such as an order under section 154 of the Act or an appellate order passed by the learned CIT(A). Merely because the assessee's claim for exemption was rejected under section 143(1) of the Act in a mechanical manner by the computerized system, owing to an inadvertent mistake in quoting the correct provision; the authorities deciding the rectification application under section 154 and the appeal proceedings are not bound by such automated and mechanical outcome. The provisions of section 143(1) of the Act are meant for making prima facie adju....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs." (D.2) However, we are conscious of the fact that the assessee's claim for exemption u/s. 10(23C)(iiiad) of the I. T. Act has not been examined on merits by the authorities of the Income Tax Department while passing the order under section 154 of the Act and the impugned appellate order of the Ld. CIT(A). The authorities have merely followed the outcome of the mechanical and computerized processing of the return under section 143(1) of the Act. We also take note of the submissions made by the Ld. Authorized Representative for the assessee as discussed in foregoing paragraph (C.2) of this order. The assessee itself made a mistake, claimed to be an inadvertent typographical mistake in wrongly claiming exemption u/s. 10(23C)(iv) instead of correct section u/s. 10(23C)(iiiad) of the Act. At this stage, the assessee should not be permitted to get benefit of exemption ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in law and on facts in passing the order without considering the exemption u's 10(23C)iliad) of income tax act 1961 and made addition of Rs 94,27,096/- during AY 2018-19." Brief Facts of the case- M/s Balaji Educational Welfare society is Educational Society. Appellate society has engaged in running of School . Appellate Society had filed income tax return during AY 2018-19 for claiming the exemption u/s 10(23C)(iliad) of income tax act 1961 on 04/08/2018. But Appellate society had selected section 10(23CM(iv) in place of section 10(23C)(iliad) of Income tax act 1961 at time of filing of ITR u/s 139(1) of income tax act 1961. Assessing officer, CPC had processed the ITR u/s 143(1) 10.03.2020. Assessee could not filed the revised ITR because March 2020 was covid period and Many places school city were closed due to Covid. Appellate Society had filed the Rectification Request u/s 154 on 19/05/2020 with correct section u/s 10(23C)(iliad) . Screen short of Rectified ITR is- Document 3 Details of the projects / institutions run by you SUNG None Section Apong Sector Sacar mstuctong racecti Attoty mauctor para 110 1 BALA JE BALAJP C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....4 (paper Book Page No- 32 to 44). The said claim of exemption was rejected in the processing of the return by the Centralized Processing Centre (CPC), Bangalore vide intimation passed u/s. 143(1) of the Act dated 10.03.2020. Against the said processing, Appellate moved an application of rectification u's. 154 of the Act on 19.05.2020 by making a correction towards the claim of exemption u/s.10(23C(iliad) of the Act as against eligible claim made u/s.10(23CM(iv) of the Act. The rectification application was rejected vide order dated 22.06.2020 . After that Appellate has filed appeal against the Rectification order passed by CPC. According to section 10(23C)(iiiad)- "any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed;" Appellate society has claimed exemption u/s 10(23C)iliad) of income tax , society have fulfilled all conditions of section 10(23C)(iliad) of income tax . Document 5 b. The total annual receipt of the educational Institution is less than Rs. 100....