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Judgment
PER SHRI M BALAGANESH, ACCOUNTANT MEMBER:
The appeal in ITA No.3370/Del/2026 for AY 2018-19, arises out of the order of the Id National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as 'Id. CIT(A)', in short] dated 21.01.2026 against the order of assessment passed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') dated 02.03.2020 by the Assessing Officer, CPC, Bangalore (hereinafter referred to as 'Id. AO').
The Assessee has raised the following grounds of appeal:
1)That the appellant shall be allowed the benefit of registration us 12AB of the Income Tax Act 1961 on the basis of the revised audit report filed and shall not be denied the benefit on the basis of some inadvertent errors committed by the then counsel at the time of filing of income tax return.
2)That the CPC Bangalore has erred in law by not allowing the benefit to the assessee for the entire receipts under Section 11 as the assessee is registered us 12AB of the Income Tax Act 1961 in spite of the fact that the receipts were available at the time of processing of return failing which the income of the assessee has been computed at 19670598 in place of NIL only due to clerical and inadvertent reporting errors in ITR and Audit report. Accordingly, the exemption may kindly be allowed and there shall be no addition made on the assessee.
3)That the CPC Bangalore has erred on fact by overlooking that the inaccurate particulars furnished by the appellant tax consultant in the return of income creating a demand of 8395511 including interest on the appellant will be nullified once the particulars are filled in the correct column that is column 2 of part B TI statement of income for the period ended on 31st march 2018 instead of column 13 iv of the same schedule and the revised audit report considered. As such Once the said option for correction is allowed the addition shall be deleted, and the demand shall be nullified.
4)The Ld. CIT(A) has erred on facts by concluding that the CPC has rightly assessed the income of the assessee and needs no interference without appreciating the fact that the said error happened only due to error on the part of the then counsel and the assessee was not aware of any such notice and as and when the same and also erred by not allowing the benefit to the assessee of the 12AB registration and expenses by considering the application of merits owing to which such demand has been sustained. This nescience of the assessee is the sole reason as to why the assessee could not take any remedial measures against the said intimation. As such, the addition sustained by the CIT A shall be deleted.
5)That the appellant craves leave to add amend alter OR withdraw any of the above grounds at OR before the time of hearing.
We have heard the rival submissions and perused the material available on record. The assessee, Blue Bell Dr. Ram Tirth Dube Memorial Shiksha Sansthan, is a registered educational society running an educational institution at 15, Cantonment, Fatehgarh, District Farrukhabad, Uttar Pradesh 209601. The assessee-society is registered under section 12AB of the Income-tax Act, 1961 and is also registered under section 80G. The assessee is engaged in imparting education, and its receipts are applied towards its educational objects. For A.Y. 2018-19, the assessee filed Form No. 10B/Audit Report on 06.10.2018 as required under section 12A(1)(b) of the Act. Thereafter, the assessee filed its return of income on 18.10.2018 as per section 139(1) of the Act declaring total income at Rs Nil. During the relevant year, the gross receipts of the assessee were ₹1,96,70,598/-, which were derived from educational activities. Against the said receipts, substantial application was made towards educational objects. Therefore, the income of the assessee was required to be computed in accordance with section 11 of the Act, after considering application of income and eligible accumulation. However, due to bona fide and inadvertent reporting/clerical errors committed by the then counsel / tax consultant while filing the ITR and Form No. 10B, certain figures were entered in incorrect schedules/columns. The gross receipts were wrongly reflected under Income from Other Sources, and there were also errors in reporting revenue application, capital application and accumulation. These were only reporting mistakes and not mistakes in the books of account or actual application of income. Due to the aforesaid reporting errors, the return was processed under section 143(1) by CPC, Bengaluru by treating the entire gross receipts of 1,96,70,598/- as taxable income. Consequently, demand including tax and interest, was raised against the assessee. On noticing the mistake, the assessee filed a rectification application under section 154 of the Act on 08.01.2020 requesting reprocessing of the return on the basis of correct figures. The assessee explained that the mistake was apparent from record and that, after considering the corrected figures, the taxable income would be Rs Nil. However, the learned CPC passed order under section 154 of the Act dated 12.02.2020, continuing to treat the gross receipts of ₹1,96,70,598/- as taxable income and sustaining the demand for A.Y. 2018-19. Being aggrieved by the order under section 154 of the Act, the assessee preferred an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee submitted that the demand had arisen only due to bona fide reporting errors and not due to any taxable income. The assessee further submitted that the correct receipts, application of income and accumulation were verifiable from the audited accounts and records. The assessee thereafter filed a revised Form No. 10B/ Audit Report on 15.11.2025, wherein the correct particulars relating to exempt income, revenue application, capital application, accumulation and income from other sources were reflected. On the basis of the corrected particulars, the taxable income of the assessee works out to Rs Nil. The Ld. CIT(A), however, passed order under section 250 dated 21.01.2026, dismissing the appeal and sustaining the action of learned CPC. The Ld. CIT(A) failed to appreciate that the demand had arisen merely due to reporting errors and that the audited accounts/revised Form No. 10B supported the assessee's claim of exemption under section 11 of the Act, which was duly rectified by the Auditor in his audit report on 15.11.2025, that is almost 2.5 months before the said erroneous order passed by ld. CIT(A).
Aggrieved by the order of the ld CIT(A), the assessee has preferred an appeal before us, challenging the denial of exemption u/s 11 of the Act and the consequential addition made. It could be seen that assessee had filed the revised audit report, which require factual verification by the ld AO. It is a fact that mistaken figures were reflected in the ITR, basis which return was processed and demand raised on the assessee. Now that the revised audit report is available on record, we deem it fit and appropriate, in the interest of justice and fair play, to restore the entire appeal to the file of ld AO, for de novo adjudication in accordance with law. The ld AO shall examine the revised audit report and frame the assessment afresh, uninfluenced by figures mentioned by the assessee earlier in the ITR and determine the total income of the assessee. Accordingly, the Grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.