Form 10B income accumulation amount inadvertent mistake. Income Tax authorities were misconceived in denying the claim for the difference-ITAT
ABCAUS Case Law Citation:
ABCAUS 1110 (2017) (01) ITAT
Assessment Year : 2003-04
Date of Pronouncement: 20-01-2017
Brief Facts of the Case:
The assessee was a charitable trust registered u/s 12AA of the Income tax Act, 1961. For the relevant Assessment Year it filed a return of income declaring NIL income and the assessment was finalized u/s 143(3) accordingly. in the return of income, assessee had made a claim in terms of exercise of the option available under Explanation-2(b) to Sec. 11(1)(a) of the Act of Rs.79,54,625/-. However, in the prescribed Audit report Form No. 10B the amount of such accumulation deemed to have been spent on the objects of the Trust was stated at Rs.75,78,521/- in contrast to Rs.79,54,625/- as claimed in return of income. Thus the difference of Rs.3,76,104/- was treated by the Assessing Officer (AO) as the amount that had escaped assessment within the meaning of Sec. 147/148.
Accordingly, the AO reopened the assessment by issuing notice u/s 148 on the ground that income to the extent of Rs.3,76,104/- had escaped assessment and made the addition.
The CIT(A) upheld the action of Assessing Officer u/s 147/148.
Contentions of the Assessee:
The assessee claimed that the difference was only an arithmetical error and that the amount of Rs.79,54,625/- stated in the computation of total income was the correct figure and that the amount of Rs.75,78,521/- stated in Form no. 10B was an inadvertent mistake.
Observations made by the Tribunal:
The Tribunal observed that in the proceedings before the lower authorities, assessee obtained and furnished a revised certificate from the Auditors substantiating the mistake.
It was observed by the Tribunal that the explanation of assessee was that the amount stated in Auditors Report in Form No. 10B was an inadvertent mistake. It was quite also clear that in the subsequent Assessment Year when assessee actually spent the said sum, the claim made was to the extent of Rs.79,54,625/-. The claim of application of income to the extent of Rs.79,54,625/- with respect to Assessment Year 2003-04 stood accepted in the assessment for Assessment Year 2004-05, which has been finalized u/s 143(3).
Therefore, the Tribunal opined that the furnishing of Form no. 10B at an understated figure was ostensibly a mistake and the action of income-tax authorities was quite misconceived having regard to the facts and circumstances of the case.
Order of CIT(A) was set aside with direction to AO to delete the addition made.