ASTITVA CHARITABLE TRUST,BHAVNAGAR V. ITO(E) BHAVNAGAR, BHAVNAGAR

ITA 1529/AHD/2025

AI Insights

The case involves Astitva Charitable Trust, which appealed against the order of the CIT(A) sustaining the rejection of their rectification petition by the Assessing Officer. The rectification was sought due to an erroneous selection of exemption category in the ITR form, which led to an incorrect assessment of income and tax demand. The Assessing Officer rejected the rectification petition on grounds of limitation and non-applicability of CBDT Circular No. 04. The CIT(A) upheld this decision without examining the merits of the case. The Tribunal found that the mistake was clerical and directed the Assessing Officer to rectify the error, considering the assessee's valid registration under section 12AA and consistent claims of exemption under sections 11 and 12 in other years.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786824 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2018-2019
• Appeal Filed On: 01-08-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESHWAR P. MEENA
• Assessee Lawyers: GAURANG KHAKHAR
• Keywords: Set aside; Opportunity of being heard; Rule of consistency; Period of limitation; Charitable institution
• Section: 154; 11; 12AA; 12

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘D’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1529/Ahd/2025 Asstt.Year : 2018-19 Astitva Charitable Trust M-111, Akshar Deep Complex Shastri Nagar Nr.Jain Derasar Bhavnagar. PAN : AABTA 8858 K ITO (E) Aayakar Bhawan Bhavnagar. (Applicant) (Responent) Assessee by : Shri Gaurang Khakhar, AR Revenue by : Shri Rameshwar P. Meena, Sr.DR सुनवाई क तारीख/Date of Hearing : 19/11/2025 घोषणा क तारीख /Date of Pronouncement: 20/11/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER: The present appeal has been preferred by the assessee against the appellate order dated 15.07.2025 passed by the learned Addl. / Joint Commissioner of Income Tax (Appeals) from the office of Commissioner of Income Tax (Appeals)-3, Chennai [hereinafter referred to as “CIT(A)”], arising from the order dated 12.09.2024 passed by the Assessing Officer under section 154 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for Assessment Year 2018–19. Printed from counselvise.com ITA No.1529/Ahd/2025 2 2. Facts of the Case 2.1 The factual background, as emanating from the record, is that the assessee filed its return of income on 08.08.2018 declaring nil income after claiming exemption under sections 11 and 12 of the Act. The assessee is duly registered under section 12AA since 17.09.2005. While filing the return electronically, the assessee erroneously selected section 10(23C)(iv) in the relevant field of the ITR form instead of the correct provision relating to registration under section 12AA. Because of the said clerical error occurring in the electronic form, the Centralized Processing Centre (CPC) processed the return under section 143(1) on 30.09.2019 and made adjustments in Schedule ER and Schedule Part B-TI, determining a total income of Rs.56,17,029/- and raising a consequential demand of Rs.23,49,300/-. 2.2 On noticing that the adjustments made by CPC were the result of an inadvertent selection error in the ITR form and that the income ought to have been assessed as nil after allowing exemption under sections 11 and 12, the assessee preferred a rectification petition under section 154 dated 04.07.2024 before the Assessing Officer. The assessee explained that the adjustments in the intimation were purely the outcome of a data-entry error in the return and that the mistake was apparent from the record, warranting rectification. The assessee submitted that its registration under section 12AA was valid and subsisting during the relevant year, that the mistake was unintentional, and that the claim for exemption under sections 11 and 12 was fully supported by statutory registration and audited statements. Printed from counselvise.com ITA No.1529/Ahd/2025 3 2.3 The Assessing Officer, however, rejected the rectification petition holding that the application was beyond the period of limitation prescribed under section 154(7) of the Act. The Assessing Officer noted that the intimation under section 143(1) was passed on 30.09.2019 and therefore the outer time limit of four years expired on 31.03.2024. Since the rectification petition was filed on 04.07.2024, the Assessing Officer concluded that it was barred by limitation. 2.4 The Assessing Officer further held that CBDT Circular No. 04 dated 20.06.2012, relied upon by the assessee, was not applicable because the arrear demand in this case was not uploaded by the jurisdictional officer but was a result of processing by CPC under section 143(1). The Assessing Officer, therefore, rejected the rectification application without considering the merits of the claim and held that no relief could be granted. 2.5 Aggrieved, the assessee carried the matter in appeal before the learned CIT(A). Before the appellate authority, the assessee submitted that the rectification petition was within limitation after considering the extended period of limitation granted by the Hon’ble Supreme Court during the COVID-19 pandemic. The assessee also contended that the Assessing Officer failed to consider CBDT Circular No. 14 (XL- 35) dated 11.04.1955, which mandates that officers should not take advantage of an assessee’s ignorance and should assist the assessee in claiming lawful reliefs. It was also contended that the Assessing Officer was bound to grant rectification since the mistake was apparent from the face of the record, the registration under section 12AA was existing, and the exemption under sections 11 and 12 could not be denied on account of an inadvertent selection error in the ITR utility. Printed from counselvise.com ITA No.1529/Ahd/2025 4 The learned CIT(A), however, concurred with the Assessing Officer and sustained the rejection of the rectification petition solely on the ground of limitation. The learned CIT(A) also held that CBDT Circular No. 04 dated 20.06.2012 was not applicable to the present facts. The assessee’s contention that no opportunity of hearing was granted in the rectification proceedings was also rejected on the ground that the limitation issue was purely legal. The appellate authority, therefore, upheld the Assessing Officer’s order without examining the merits of the rectification claim or the evidences furnished by the assessee. 3. Against the aforesaid order of the learned CIT(A), the assessee is in further appeal before us and has raised the following grounds of appeal: 1. Hon’ble Addl / JCIT-(3) Chennai has erred in law as well as on facts in confirming action of Ld’ Assessing officer in dismissal of Rectification Petition and passing order u/s 154 of the Act, is in violation of the CBDT Circular No. 14 (XL–35) dated 11.04.1955, which is mandatory and binding on the assessing authority. 2. Based on the facts and circumstances of the case, Hon’ble Addl / JCIT-(3) Chennai has erred in law as well as on facts in passing the appellate order without affording any opportunity of being heard. (Video Conferencing specifically requested but same was not granted) 3. Based on the facts and circumstances of the case, Hon’ble Addl / JCIT-(3) Chennai has erred in law as well as on facts in passing the order as the order passed is non-speaking order and without going into the detailed facts of the case placed on record and without dealing it in the appellate order as to why the same is not accepted and thus the order appeal against is passed is a non-speaking order and without dealing with the evidences placed on record and thus the order is bad in law as well as on facts and required to be quashed. 4. That the order passed by the Ld. CIT u/s. 250 of the I.T. Act, 1961 was arbitrary, bad in law and unjust. Printed from counselvise.com ITA No.1529/Ahd/2025 5 5. The appellant craves leave to add delete modify or substitute any or all the grounds of appeal at any appropriate time. 4. During the course of hearing, the Authorised Representative (AR) of the assessee reiterated the factual matrix as emerging from the assessment order and the appellate order, and explained in detail the chronology of events which, according to the assessee, had a direct bearing on the controversy raised in the present appeal. In support of the plea relating to limitation and condonation, the authorised representative placed reliance on certain judicial precedents. 5. In reply, the Departmental Representative submitted that the circular and decisions relied upon by the assessee operated in an entirely different factual context and therefore could not be applied mechanically to the facts of the present case. 6. We have considered the submissions of both sides and examined the record. The central issue arises from the intimation issued by the Centralised Processing Centre under section 143(1), wherein the assessee’s claim of exemption was denied on the basis that the assessee had selected the code relating to section 10(23C)(iv) in the return of income instead of the correct category applicable to entities registered under section 12AA of the Act. The record indicates that the system-generated adjustment was made solely on account of this erroneous selection in the ITR form. 6.1 The CPC had provided an opportunity to the assessee to respond to the proposed adjustment. However, the assessee did not avail this opportunity. During the hearing, the AR submitted that the default occurred due to an inadvertent error by the representative handling the e-filing process, who failed both in correctly selecting the relevant exemption field and in responding to the electronic notice issued by Printed from counselvise.com ITA No.1529/Ahd/2025 6 the CPC. The AR submitted that the error was purely clerical, was never intentional, and that the assessee trust was not aware of the default until receipt of the final intimation. This explanation stands supported by the material on record and has not been controverted by the Revenue. 6.2 It is an undisputed fact that the assessee is a charitable trust duly registered under section 12AA since 2005. The trust has been regularly filing returns of income and has consistently claimed exemption under sections 11 and 12 in preceding years. The AR has confirmed before us that the return for the relevant assessment year was filed within the prescribed time including form 10B. These facts, taken together, establish that the assessee’s claim to exemption is rooted in an existing and valid registration and that the denial of exemption in the intimation under section 143(1) is the direct result of an inadvertent error at the time of electronically selecting the exemption code. 6.3 In such circumstances, the denial of exemption is not on account of any substantive failure to meet the statutory requirements but is a consequence of a technical mistake committed while filling the ITR form. The mistake is patent and apparent from the record, since the assessee holds a valid registration under section 12AA and has been consistently granted exemption under sections 11 and 12 both in earlier and subsequent years. The CIT(A) Appeals) has not appreciated these material aspects and has confirmed the adjustment without examining the assessee’s explanation or the undisputed factual background. The order of the CIT(A) is therefore unsustainable. Printed from counselvise.com ITA No.1529/Ahd/2025 7 6.4 In view of the totality of the facts, we set aside the order passed by the CIT(A) and restore the matter to the file of the Assessing Officer. The Assessing Officer is directed to condone the default arising from the mistaken selection of the incorrect exemption category in the ITR form and the non-response to the notice under section 143(1), since the error is genuine and bona fide. The Assessing Officer shall further verify the claim of exemption granted to the assessee in earlier and subsequent years and apply the principle of consistency in examining the assessee’s eligibility for exemption under sections 11 and 12 for the year under consideration. The Assessing Officer shall rectify the apparent mistake after providing due opportunity of hearing to the assessee and shall pass a speaking order on the basis of the material placed on record. 7. In the result the appeal of the assessee is allowed for the statistical purposes. Order pronounced in the Court on 19th November, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 19/11/2025 vk* Printed from counselvise.com "