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Judgment
PER: SUNIL KUMAR SINGH, JM.
This appeal has been preferred against the impugned order dated 16.02.2026 passed in Appeal No ADDL/JCIT (A) KOCHI/10005/2014-15 by the ld Commissioner of Income Tax, KOCHI [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2015-16, wherein ld CIT(A) has dismissed assessee’s appeal.
The brief facts of the case are that the appellant is a charitable society running educational institutions, the appellant filed return of income belatedly on 15.02.2017 whereas the due date of filing of return was 31.10.2015. Assessee, mistakenly, selected wrong section of exemption as against the correct exemption section 10(23C)(iiiad) of the Act. The return was processed u/s 143(1) on 28.02.2018 and CPC raised the demand on auto processing of ITR amounting to Rs. 31,23,721/-.
Aggrieved, assessee preferred an appeal before ld CIT(A) against the intimation order u/s 143(1) of the Act dated 28.02.2018. Ld CIT(A) observed that apart from the filing of belated return, Form-10BB was also belatedly filed on 15.02.2017 and assessee did not file Form-10B at all. Ld CIT(A) further observed that assessee neither filed revised return to correct the said mistakes in the original return nor obtained the order for condonation of delay from the competent authority, hence, dismissed assessee’s appeal.
Appellant assessee has raised the following grounds under this second appeal:
“1.That the order passed by the learned Addl./JCIT (Appeals), under section 250 of the Income-tax Act, 1961 is bad in law, erroneous on facts, contrary to the provisions of the Act, and liable to be quashed
2.That the learned Addl./JCIT (Appeals) erred in dismissing the appeal mechanically without appreciating the charitable nature of the appellant society and without examining the claim of exemption on merits
3.That the learned Addl./JCIT (Appeals) erred in law and on facts in holding that exemption could not be granted merely because the appellant inadvertently selected an incorrect exemption section in the return of income, ignoring settled law that a legitimate claim cannot be denied due to a technical OR procedural mistake
4.That the learned Addl./JCIT (Appeals) failed to appreciate that the appellant was otherwise fully eligible for exemption under section 10(23C)(iiiad) of the Act, being a charitable educational institution, and such exemption is substantive in nature
5.That the learned CIT(A) erred in denying exemption of Rs 71,18,021 by wrongly holding that filing of return of income within the due date under section 139(1) is a mandatory condition for exemption under section 10(23C)(iiiad), whereas no such condition is prescribed in the statute
6.That the learned CIT(A) erred in law in holding that audit and furnishing of Form 10B / audit report is mandatory for claiming exemption under section 10(23C)(iiiad), though the said requirement applies only to sections 11/12 OR other clauses of section 10(23C) and not to clause (iiiad).
7.That the learned CIT(A) failed to appreciate the fact that procedural delays cannot defeat substantive rights, especially in the case of charitable institutions.
8.That the demand of Rs 31,23,721/- raised pursuant to the intimation under section 143(1) is arbitrary, unjustified, and liable to be deleted in full ……………..”
Perused the records and heard ld representative for the appellant assessee and ld Sr DR for the respondent revenue.
On the basis of aforesaid various grounds, the main point for determination under appeal is as to whether ld CIT(A) has erred in denying the exemption of Rs. 71,18,021/- for belatedly filing return without audit report in Form-10B and due to not mentioning of the claim of exemption u/s 10(23C)(iiiad) but u/s 11/12 of the Act?
Ld representative for the assessee has submitted that the appellant satisfied all the substantive conditions for the said claim of exemption u/s 10(23C)(iiiad) of the Act, however, ld CIT(A) has denied the said claim merely due to an inadvertent error in selecting the exempt section in the relevant column. The educational character and genuineness of activities of the appellant was never disputed by the revenue authorities. Mere belated return cannot result in denying assessee’s claim of exemption u/s 10(23C)(iiiad). The audit report in Form-10B was not required to be furnished as the gross receipts of the appellant were below one crore. Form-10BB was also not required to be filed mandatorily but only by way of caution. The identical claim of assessee in subsequent A.Y. 2022-23 was allowed by the CPC on the basis of rectification application. Prayed to allow appeal.
Ld Sr DR for the respondent revenue supports the impugned order.
The instant matter relates to A.Y. 2015-16 and the claim of exemption is Rs. 71,18,021/- which is below prescribed limit of 1 crore, hence, there was no mandatorily requirement of uploading audited report in Form-10B. As regards assessee’s belatedly filing of return or uploading Form-10BB, it will be relevant to note that any rule of procedure is only a tool for justice and if necessary, can be moulded to decide the real controversy. Procedural laws provide for natural way of doing things and do not bar even for adoption of additional procedure, as and when the situation may demand. There has to be a human approach in following the procedure prescribed so that it serves the ends of justice and it should not be applied in such a manner to kill the right/duty of any party. It is well established principle of law that the substantial justice cannot be denied on mere technicalities. The sole object of procedural law is to promote justice. The object of prescribing procedure is to advance the cause of justice. Justice is the goal of jurisprudence. Procedural law is not to be tyrant but a servant not an obstruction but an aid to justice. A procedural prescription is the hand maid and not the mistress, lubricant, not a resistance in the administration of justice. Technical justice cannot take place of substantial justice. The assessee’s submissions in respect of acceptance of his similar claim for A.Y. 2022-23 has not been disputed by the revenue, hence, revenue authorities failed to follow the rule of consistency.
We are of the considered view that the valid dues of the assessee cannot be denied due to mere procedural technicalities. We, as tribunal, having the trappings of a court, deem it just and appropriate to exercise the power of implied authority and condone the said delay in filing audit report in form 10B etc. and remit the matter back to the file of ld CIT(A), who, will permit assessee to make correction in his claim of section of exemption in the return and pass order a fresh in accordance with law. Needless to say that the ld CIT(A) shall ensure the substantial compliance of the principles of natural justice. The aforesaid point is determined accordingly. Assessee’s appeal is liable to be allowed for statistical purposes.
In the result, the assessee’s appeal is allowed for statistical purposes.