Clerical Mistake In Form 10B Audit Report Can Be Rectified: ITAT

The Income Tax Appellate Tribunal (ITAT Lucknow) in the matter Desh Bharti Public School Samiti Vs. The AO/DCIT ruled out that Clerical Mistake In Form 10B Audit Report Can Be Rectified.

The assessee has been claiming exemption u/s.10(23C) in the earlier years and during the year under consideration the assessee had got registration u/s. 12A of the Act and in this respect our attention was invited to P.B. pg. 24 where a copy of registration u/s. 12A dated 02.09.2014 effective from 1.4.2012. It was submitted that the assessee by mistake in the return of income filled the claim of exemption u/s.10(23C) of the Act as against u/s. 12A of the Act whereas the assessee had obtained the audit form in Form-10B as required u/s. 12A(b) and had uploaded the same along with return of income. It was submitted that the CPC on the basis of return filed by the assessee rejected the claim of the assessee u/s.10(23C) by holding that since the receipt of the assessee exceeded Rs. 1.00 crore therefore the exemption u/s.10(23C) was available to the assessee only if the assessee had obtained necessary approval and which it had not obtained.

The assessee had by mistake claimed exemption under a wrong section and all other documentary evidences regarding existence of registration u/s. 12A and uploading of audit report u/s. 12A was available with the Revenue, there was necessarily a mistake apparent from record which the CPC should have rectified or in the alternative the ld. CIT(A) should have allowed the claim by the assessee. Therefore it was prayed that the appeal filed by the assessee may be allowed and Assessing Officer be directed to allow the claim of assessee u/s. 12A of the Act.”

The Tribunal ruled out that, “We find that it is undisputed fact that assessee got registration u/s.12A of the Act w.e.f. 1.4.2013 vide order dated 2.9.2014, a copy of such registration certificate is placed in P.B. pg.24. It is also an undisputed fact that assessee in the earlier years has been claiming exemption u/s.10(23C) of the Act and which was being allowed by the department also as the receipt of the assessee in the earlier years were less than Rs.1.00 crore. During the year under consideration, the assessee got the registration u/s.12A of the Act on 2.9.2014 and filed the income tax return on 20.9.2014. Along with filing of return of income, the assessee also uploaded Form-10B which is audit report u/s. 12A(b) of the Act. However, in the return of income, the assessee claimed exempt income u/s.10(23C) instead of claiming the same u/s.12A of the Act. The CPC rejected the claim of the assessee u/s.10(23C) by holding that the assessee had not obtained necessary approval from the prescribed authority and the receipts of the assessee exceeded Rs.1.00 crore. The application for rectification u/s.154 was also rejected and on appeal before ld. CIT(A), the ld. CIT(A) also dismissed the appeal of the assessee by first holding that there was no mistake apparent from record and further held that there is lot of difference between the claim of exemption u/s.10(23C) and Section 11 of the Act. However, nowhere in the appellate order the ld. CIT(A) disputed the fact that assessee was not registered u/s.12A of the Act. The registration certificate granted by the department on 2.9.2014 is on record. Further the uploading of Form-10B which is a audit report u/s.12A(b) of the Act, proves that the mistake committed by assessee in claiming exemption u/s.10(23C) is inadvertent mistake as by committing such a mistake the assessee is not going to gain anything. Fact of the matter is that assessee is registered u/s.12A of the Act and is eligible for exemption u/s.11 of the Act. Therefore for inadvertent mistake the assessee cannot be penalized. Since the assessee has been claiming exemption u/s.10(23C) in the earlier years therefore during the year under consideration there is high probability that assessee again claimed exemption u/s.10(23C) by overlooking the fact that it had already got registration u/s.12A of the Act which in any case was available with the assessee before the filing of return of income. The mistake has occurred as a human error and should have been judicially considered.

In view of above facts and circumstances, we direct the Assessing Officer to allow the exemption to the assessee u/s.12A of the Act in accordance with law.

In the result, the appeal of the assessee is allowed.”

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