INCOMETAX OFFICER EXEMPTIONS WARD, TIRUNELVELI V. THE CHRISTIAN BUSINESSMEN EDUCATIONAL FELLOWSHIP, KOVILPATTI

ITA 2395/CHNY/2025

AI Insights

The case involves the Income Tax Officer, Exemptions Ward, Nellai City Centre, as the appellant, and the Christian Businessmen Educational Fellowship, a registered charitable society, as the respondent. The dispute arose from the assessment year 2019-20, where the CPC disallowed a revenue expenditure of Rs.5,10,46,521/- due to alleged inconsistencies between Schedule TI and Schedule ER of the tax return, leading to a tax demand. The CIT(A) found the CPC's adjustment to be beyond its jurisdiction and deleted the disallowance, which the Revenue appealed against in the Tribunal.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830710 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 29-08-2025
• Other Referred Cases: DCIT v. Zuari Estate Development and Investment Co. Ltd. (373 ITR 661), CIT v. Rajasthan and Gujarati Charitable Foundation, Poona (402 ITR 441), DIT (Exemptions) v. Mehta Charitable Prajnalay Trust (354 ITR 250)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C. SIVAKUMAR
• Assessee Lawyers: R. VISWANTHAN
• Keywords: Revenue expenditure; Charitable institution
• Section: 154; 11; 12A

Judgement Text

"आयकर अपीलȣय अͬधकरण ‘‘ए’ Ûयायपीठ, चेÛनई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI माननीय Įी मनु क ुमार ͬगǐर, ÛयाǓयक सदèय एवं एस. आर. रघुनाथा, लेखा सदèय क े सम¢ BEFORE HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S.R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No.2395/CHNY/2025 Ǔनधा[रण वष[ /Assessment Year: 2019-20 The Income Tax Officer, Exemptions Ward Nellai City Centre, Rahmath Nagar, Tiruchendur Road, Tirunelvali, Tamil Nadu-627011 Vs. THE CHRISTIAN BUSINESSMEN EDUCATIONAL FELLOWSHIP, No.46, ALWAR STREET, KOVILPATTI, TAMIL NADU-628501 [PAN: AACAT2359N] (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) अपीलाथȸ कȧ ओर से/ Appellant by : Mr.C.Sivakumar, Addl.CIT Ĥ×यथȸ कȧ ओर से /Respondent by : Mr.R. Viswanthan, CA सुनवाई कȧ तारȣख/Date of Hearing : 07.01.2026 घोषणा कȧ तारȣख /Date of Pronouncement : 19.01.2026 आदेश / O R D E R PER MANU KUMAR GIRI, JUDICIAL MEMBER: The captioned appeal filed by the Revenue is directed against order of the Ld. Commissioner of Income Tax (Appeal), ADDL/JCIT (A) Ranchi [‘CIT(A)’ in short] dated 26.06.2025 for Assessment Year 2019-20. Printed from counselvise.com ITA No.2395/Chny/2025 :- 2 -: 2. Brief facts of the case are that the assessee is a registered charitable society, holding valid registration under section 12A and approval u/s.80G of the Income-tax Act, 1961. The assessee runs an educational institution at Kovilpatti. For A.Y. 2019-20, the assessee filed its return of income on 30.09.2019 declaring NIL income, having applied its income towards charitable purposes in accordance with section 11 of the Act. The return was processed by CPC under section 143(1), wherein the revenue expenditure amounting to Rs.5,10,46,521/- was disallowed on the alleged ground of inconsistency between Schedule TI and Schedule ER, resulting in a tax demand of Rs.2,13,54,603/-. Subsequent rectification petitions filed under section 154 were also rejected by CPC by reiterating the same adjustment. 3. On appeal, the Ld. CIT(A) held that the adjustment made under section 143(1) was beyond jurisdiction, deleted the disallowance and quashed the consequential demand. 4. Aggrieved, the Revenue is in appeal before this Tribunal. Printed from counselvise.com ITA No.2395/Chny/2025 :- 3 -: 5. The Revenue has raised multiple grounds, the crux of which is that the Ld. CIT(A) erred in holding that the adjustment under section 143(1)(a) was beyond jurisdiction. He further contended that the Ld. CIT(A) erred in holding that the issue involved interpretation and examination of section 11 and was a debatable issue. Ld.DR submitted that the Ld. CIT(A) erred in holding that CPC was not empowered to disallow the claim which allegedly arose due to internal inconsistency in schedules of the return. The Ld.DR submitted that the inconsistency in Schedule TI and Schedule ER was apparent from the return itself and constituted an incorrect claim, which CPC was empowered to adjust u/s.143(1)(a)(ii). It was argued that the assessee’s own error led to the adjustment and that the Ld. CIT(A) failed to appreciate this aspect. 6. The Ld. AR, on the other hand, supported the order of the Ld. CIT(A). It was submitted that the assessee is a registered charitable institution under section 12A and the application of income under section 11 cannot be examined or disallowed at Printed from counselvise.com ITA No.2395/Chny/2025 :- 4 -: the stage of section 143(1). Any alleged inconsistency required verification and examination, which is impermissible in summary processing. 7. We have carefully considered the rival submissions, perused the material on record, and examined the impugned order. It is an undisputed fact that the assessee holds valid registration under section 12A. Once such registration is in force, the income of the trust is eligible for exemption under section 11, subject to verification of application of income, which necessarily requires examination of facts. The scope of adjustment under section 143(1) is limited to prima facie and apparent errors. The Hon’ble Supreme Court in DCIT v. Zuari Estate Development and Investment Co. Ltd. (373 ITR 661) has clearly held that no debatable or interpretational issue can be adjudicated while processing a return under section 143(1). In the present case, the disallowance of the entire revenue expenditure on the ground of inconsistency between Schedule TI and Schedule ER is not a mere arithmetical or clerical error. It directly involves examination of the Printed from counselvise.com ITA No.2395/Chny/2025 :- 5 -: assessee’s claim of application of income u/s.11, which is a substantive issue requiring verification. The Hon’ble Supreme Court in CIT v. Rajasthan and Gujarati Charitable Foundation, Poona (402 ITR 441) has held that where a trust is registered under section 12A, expenditure incurred for charitable purposes has to be allowed unless specifically hit by sections 11(5) or 13. Such determination cannot be undertaken in summary proceedings. Further, the Hon’ble Delhi High Court in DIT (Exemptions) v. Mehta Charitable Prajnalay Trust (354 ITR 250) has categorically held that application of income u/s.11 must be verified during regular assessment and cannot be summarily disallowed by CPC. 8. We also note that even during rectification proceedings u/s.154, no verification or opportunity of proper examination was undertaken, and the disallowance was mechanically repeated, which reinforces the finding that the CPC acted beyond its jurisdiction. In view of the above judicial precedents and facts, we find no infirmity in the order of the Ld. CIT(A) in holding that the adjustment u/s.143(1) was not Printed from counselvise.com ITA No.2395/Chny/2025 :- 6 -: sustainable in law and CPC exceeded its jurisdiction and the disallowance of Rs.5,10,46,521/- and the consequential demand of Rs.2,13,54,603/- deserved to be deleted. 9. The order of the Ld. CIT(A) is upheld. All grounds raised by the Revenue are dismissed. 10. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 19th day of January, 2026 at Chennai. Sd/- Sd/- (एस. आर. रघुनाथा) (S.R. Raghunatha) लेखा सदèय /Accountant Member (मनु क ुमार ͬगǐर) (Manu Kumar Giri) ÛयाǓयक सदèय / Judicial Member चेÛनई/Chennai, Ǒदनांक/Dated: 19th January, 2026. RSR, Sr.PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy to: 1. अपीलाथȸ/Appellant 2. Ĥ×यथȸ/Respondent 3. आयकर आयुÈत/CIT, Chennai /Madurai/Coimbatore/Salem 4. ͪवभागीय ĤǓतǓनͬध/DR 5. गाड[ फाईल/GF Printed from counselvise.com "