Wrong amount of income accumulation mentioned in Form-10 due to clerical error – ITAT deleted addition made by AO
In a recent judgment, ITAT Guwahati has deleted addition made due to wrong amount of income accumulation u/s 11(2) was mentioned in Form 10 due to clerical error and revised Form 10 was not submitted electronically.
ABCAUS Case Law Citation:
ABCAUS 4154 (2024) (07) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming disallowance of claim for income accumulation u/s 11(2) of the Income Tax Act, 1961 (the Act).
The appellant assessee was a charitable society engaged in works for the benefit of poor and indigenous tribes of the State of Arunachal Pradesh. The Income Tax Department had granted registration under section 12AB of the Act to the assessee. The assessee filed its return of income showing accumulation of income u/s 11(2) as the amount of income applied for charitable purpose fall short of 85% of total income during the year.
The assessee also filed Form-10 for accumulation of income. However, in the opening para of the Form-10 instead of mentioning the amount to be accumulated, the assessee mentioned the amount of deemed application up to 15%. Although in the table of first para of the Form-10, the correct amount of income to be accumulated was mentioned along with the purpose and period of accumulation.
The Central Processing Centre (CPC) while processing the return of income filed by the assessee, issued a notice to the assessee mentioning that the amount entered in Sr. no 4vi of Schedule Part B-TI “Amount in addition to amount referred to in (iv) above, accumulated or set apart for specified purposes if all the conditions in section 11(2) and 11(5) or third proviso to section 10(23C) are fulfilled (fill out schedule I)” is not equal to the amount entered in Form-10. Hence, the exemption claimed for accumulation is allowable to the extent of amount entered in Form 10’.
The assessee gave reply to the said notice of the CPC that no adjustment was required and claimed that due to clerical mistake the amount accumulated was wrongly entered in 1st Para of Form 10 instead of accumulated amount with a further claim that the mistake is rectifiable.
However, the Assessing Officer (AO), CPC rejected the claim of the assessee and made an addition of difference of the abovesaid amount to the total income of the assessee.
The Tribunal observed that the CIT(A) dismissed the appeal of the assessee by observing that the assessee ought to furnish a revised Form 10 electronically. The CIT(A) had further observed that the revised Form 10 filed by the assessee during appellant proceedings cannot be considered by him as the same was not furnished electronically. The CIT(A) further held that CBDT had authorized jurisdictional Commissioner / Director of Income-Tax to condone delay in filing Form 10, and Commissioner (Appeals) / Addl CIT(A) do not have any power under section 119(2)(b) to condone delay in filing Form 10. The assessee has remedy of filing revised Form 10 before jurisdictional Commissioner / Pr. Commissioner / Director of Income Tax for condoning delay in filing Form 10 and claiming benefit of section 11.
The Tribunal noted that the assessee had clarified the matter by informing the AO that there was a clerical mistake in Form 10, yet the actual and correct accumulated amount had been mentioned there in the Form 10. The correct accumulated amount was also stated in the return of income filed by the assessee. The assessee had reiterated his claim before ld. CIT(A) and also relied on certain decisions. It is not the case of the assessee that it was not entitled for any relief due to non-filing of the revised Form 10 electronically. The revised Form 10 was produced before the CIT(A) for his consideration.
The Tribunal observed that the CIT(A) had dismissed the case of the assessee due to non-filing of the revised Form 10 electronically. That means that, the CIT(A) was also satisfied that the amount of accumulation stated in Form No.10 as 15% of the income of the assessee was not a correct figure, because, correct figure had also been stated in Form 10 besides mentioning this amount in the return of income as accumulated amount. However, the CIT(A) has rejected the appeal of the assessee on the ground that the revised Form 10 ought to furnish by the assessee electronically. No other ground except non-furnishing of the Form 10 electronically by the assessee had been mentioned by the CIT(A) as ground for dismissal of the appeal of the assessee.
The Tribunal opined that the assessee should not lose his lawful exemption merely on the ground that revised Form 10 was not submitted by him electronically. The mistake in the Form 10 was apparent and after perusal of the relevant portions of the Form 10 as well as the return of Income as stated in the order of the CIT(A) the assessee had accumulated income as claimed by him.
Accordingly, the Tribunal set aside the order of the CIT(A) and deleted the addition made by the AO.
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