ITAT ruled that a mere technical error in reporting a foreign contribution under the wrong ITR schedule cannot justify its addition as taxable income.
Vanshika verma | Apr 13, 2026 |
ITAT: Wrong Schedule Entry in ITR Does Not Justify Addition of Foreign Contribution
The ITAT held that a foreign contribution wrongly reported in an incorrect schedule of the income tax return, despite being properly disclosed and accounted for, cannot be treated as taxable income merely due to a technical filing error.
The Rinchen Zangpo Endowment Society (assessee) filed the present case against the Income Tax Officer (respondent), challenging an order dated January 1, 2026, which was passed by CIT(A).
The assessee had filed its income tax return, declaring nil income after claiming exemption under Sections 11 and 12 of the Income Tax Act. During the relevant year, it received foreign contributions amounting to Rs 10,30,324. The assessee recorded this amount in its books of accounts and also included it in the total income computation.
However, while filing the income tax return, the assessee mistakenly reported the foreign contribution in the wrong schedule. Instead of showing it in “Schedule-VC”, it was entered under “Schedule-AI”.
While processing the return under Section 143(1), the Central Processing Centre (CPC) flagged this as an error and added back Rs 10,30,324 to the income, effectively treating it as taxable. The society explained that this was only a technical mistake.
Being aggrieved by the decision, the assessee appealed before the CIT(A). The CIT(A) observed that the assessee had reflected the foreign contribution in the wrong schedule, but upheld the addition made by the CPC.
Challenging this decision before the ITAT, the assessee argued that it had not hidden any income. The assessee also relied on a CBDT circular that states that tax authorities should not collect more tax than what is legally due, especially by taking advantage of an assessee’s ignorance or technical mistake.
After hearing both sides, the Tribunal stated that the foreign contribution was properly accounted for in the books and was also shown in the return, though in the wrong schedule.
The Tribunal stated, “Merely for the reason that in the return of income, the amount of foreign contribution is reflected at a place other than the designated place, cannot be a reason to sustain the addition.”
As a result, the addition of Rs 10,30,324 was deleted, the order of the CIT(A) was set aside, and the appeal of the assessee was allowed.
In case of any Doubt regarding Membership you can mail us at [email protected]
Join Studycafe's WhatsApp Group or Telegram Channel for Latest Updates on Government Job, Sarkari Naukri, Private Jobs, Income Tax, GST, Companies Act, Judgements and CA, CS, ICWA, and MUCH MORE!"
