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Wrong claim in the ITR u/s. 10(23C)(vi) instead of claim U/s 10(23C)(iiiab): Claim is rectifiable U/s 154
There are lot of cases wherein taxpayer make claim in the ITR under wrong section. Whether it is rectifiable U/s 154 is the next question which is often raised by the taxpayers. Here was one such issue wherein claim in the ITR was made u/s. 10(23C)(vi) instead of claim U/s 10(23C)(iiiab). TIAT has held that Claim is rectifiable U/s 154 following the rule of consistency.
The case details is as under:
The University of Burdwan Vs. ACIT [ITA No.362/Kol/2022 Assessment Year: 2018-19]
In this case, assessee submitted that since the notice issued u/s 274 r.w.s. 271(1)(c) of the Act was defective, therefore, the penalty proceedings deserves to be held as invalid and void ab initio. Ld. Counsel for the assessee also submitted that the issue stands squarely cover by the decision of Hon’ble Jurisdictional High Court in the case of PCIT vs. Brijendra Kumar Poddar, IA No:GA/2/2018 dated 23.11.2021.
The grounds before ITAT by the appellant were as under:
- “1. FOR THAT the Ld. Commissioner of Income Tax (Appeals)-NFAC failed to appreciate that none of the conditions precedent existed and/or have been complied with and/or fulfilled by the Ld. Assistant Director of Income Tax. Centralized Processing Centre for not accepting the plea of the appellant u/s. 154 of the Income Tax Act. 1961 and the specious order dated 31-03-3022 passed thereunder is therefore ab initio void. ultra vires and null in law.
- FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s. 154 of the Income Tax Act. 1961, the Ld. Commissioner of Income Tax (Appeals)-NFAC was absolutely in error in upholding the action of the Ld. Assistant Director of Income Tax. Centralized Processing Centre of sustaining the wrong committed by the appellant citing technical considerations in support of such hostile exercise and the purported conclusion reached on that behalf is completely unfounded. unjustified. and untenable in law.
- FOR THIAT the specious action of the Ld. Commissioner of Income Tax (Appeals)-NFAC in upholding the action of the Ld. Assistant Director of Income Tax, Centralized Processing Centre without considering the claim u/s. 10(23C)(iiiab) of the Income Tax Act, 1961 and rejecting the claim wrongly made u/s. 10(23C)(vi) of the Act on extraneous parameters not germane to the issue is wholly illegal, illegitimate and infirm in law.”
In this case, assessee was a University incorporated by the Burdwan University Act, 1981 by the West Bengal Legislative Assembly for imparting education. Return was filed on 22.10.2018 reporting NIL income by claiming exemption u/s. 10(23C)(vi) of the Act against aggregating annual receipt of Rs.113,13,24,059/-. The said claim of exemption was rejected in the processing of the return by the Centralised Processing Centre (CPC), 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.
Assessee submitted that inadvertently while filing the return, the claim was made u/s. 10(23C)(vi) of the Act. Assessee also submitted that a rectification application was filed to correct the inadvertent mistake by making claim of exemption under the correct section of 10(23C)(iiiab) of the Act which has been unjustifiably rejected. Thus, in view of all the above processing and assessment in the assessee’s own case of the preceding as well as subsequent assessment years, Ld. Counsel emphasized that Rule of Consistency ought to be applied and there is no reason to deviate from the view which has already been taken. Since there is no change in the facts and the applicable law, there is no occasion for the ld. AO to take a different view from that adopted in the above referred proceeding.
Assessee relied on the CBDT Circular No. 14 (XL35) of 1955 dated 11.04.1955 and submitted that it is the duty of the officers of the department to assess the tax payer in every reasonable way, particularly in the matter of claiming and securing 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.
Assessee placed reliance on the decision of coordinate bench of ITAT, Lucknow in the case of Desh Bharti public School Samiti Vs. DCIT (2022) 139, 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.”
ITAT Kolkata held as under:
- Counsel has evidently demonstrated that it was an inadvertent mistake which occurred at the end of the assessee in the filing of return where the claim of exemption was made u/s. 10(23C)(vi) of the Act instead of section 10(23C)(iiiab) of the Act. It is also noted that upon receiving intimation u/s. 143(1) of the Act wherein the inadvertent claim made u/s. 10(23C)(vi) was disallowed and remedial measure was taken by the assessee by filing an application u/s. 154 for rectifying the mistake by making a claim under the correct section of sec. 10(23C)(iiiab) of the Act.
- We note that assessee had been consistently claiming exemption u/s. 10(23C)(iiiab) of the Act. Considering thi ITAT Lucknow in the case of Desh Bharti public School Samiti.
- We note that mistake apparent from record is rectifiable under the provisions of section 154 of the Act which in the present case ought to have been allowed as claimed by the assessee.
- Accordingly, we set aside the finding of the Ld. CIT(A) and direct the Ld. AO to allow the claim of the assessee by applying the provisions of section 10(23C)(iiiab) of the Act. Accordingly, grounds taken by the assessee in this respect are allowed.