Object of a procedure is to advance cause of justice not to obstruct justice – ITAT

The object of a procedure is to advance the cause of justice. Procedural law is not to be tyrant but a servant not an obstruction but an aid to justice – ITAT

In a recent judgment, ITAT Agra has held that the object of prescribing procedure is to advance the cause of justice. Procedural law is not to be tyrant but a servant not an obstruction but an aid to justice. Technical justice cannot take place of substantial justice.

ABCAUS Case Law Citation:
4837 (2025) (11) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC dismissing assessee’s appeal filed against rectification order passed u/s. 154 of the Income Tax Act, 1961 (the Act).

The assessee was a charitable trust registered under section 12A of the Act. Appellant assessee claimed the exemption u/s 11 of the Act at the time of filing return. However, the appellant mistakenly showed its receipts of the trust under the wrong head “income from other sources”. As a result, the CPC, Bengaluru considered the gross receipts of the assessee as and raised demand.

The assessee filed a rectification application along with audit report and revised return but the demand was not rectifie and rectification application moved u/s. 154 of the Act was rejected by CPC, Bengaluru. Aggrieved, assessee preferred an appeal before CIT(Appeals), who, dismissed assessee’s first appeal.

Before the Tribunal the assessee submitted that it was a charitable trust registered u/s. 12A of the Act and is eligible for exemption u/s. 11 of the Act.  During the year under consideration, a clerical mistake was made due to new utility on the portal.

It was submitted that the income was mistakenly shown under another head “income from other sources”, which led the aforesaid demand, having been raised

It was contended that CIT(A) was not justified in upholding the rejection of rectification under section 154 of the Act despite the assessee had shown all revenue expenditure under Schedule ER and all Capital Expenses under schedule EC. Only because income was wrongly shown under Income from other sources which should have been shown under schedule AI.

It was further submitted that the CIT(A) did not verify the fact that ITR-7 so filed by the assessee by using departmental utility did not reflect any taxable income or tax liability under PART BTTI “Computation of Tax Liability on Total Income” hence the mistake did not come in the knowledge of assessee and hence the demand so generated by AO was incorrect and should be deleted

It was submitted that CIT(Appeals) rejected assessee’s appeal, merely on the ground that there is no error apparent on record. It was requested that matter may be restored back to the Assessing Officer for verifying the income shown under the head “income from other sources” and if found for charitable activities, tax liability may be determined after allowing benefit of section 11 of the Act.

The Tribunal observed that it is settled law that 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 Tribunal restored the matter back to the file of Assessing Officer with a direction to examine as to whether the impugned income was the exempt income as claimed to have been received from public charitable trust etc. and if so to give credit of exemption under section 11 to the assessee and pass an order afresh in accordance with law, ignoring all clerical mistakes/technical errors for doing substantial justice.

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