Assessee, an educational institution, was registered under section 12AA and was also granted exemption under section 10(23C)(vi). During the year, due to a clerical omission, deduction was claimed under section 10(23C)(iiiad) instead of the correct section 10(23C)(vi). The revenue authorities should have rectified such clerical mistake instead of rejecting the assessee’s request for rectification of the same.

The assessee-trust was an educational institution registered under section 12AA and also granted exemption under section 10(23C)(vi). The assessee claimed exemption under section 10(23C)(iiiad) in the return of income filed electronically. The Assessing Officer observed that the assessee had shown gross receipts of Rs. 5.64 crores and claimed the same as exempt under section 10(23C)(iiiad). He further observed that the assessee was neither entitled to claim exemption under section 10(23C)(iiiad), as such exemption is available only up to annual receipts of Rs. 1 crore in view of Rule 2BC, nor under section 11, despite being registered under section 12AA and under section 10(23C)(vi), due to non-submission of Form 10B along with the return, which was required to be filed online in accordance with section 12A(b).

The Assessing Officer also recorded in the assessment order that Form No. 10B dated 15.09.2017, duly signed by a Chartered Accountant, was submitted in physical form during the course of assessment proceedings, but the same was not accepted on the ground that it was not filed along with the return of income in electronic mode. On appeal, the Commissioner (Appeals) upheld the assessment order and dismissed the assessee’s appeal.

On further appeal before the Tribunal, it was noted that the assessee had stated in the “facts of the case” that due to a clerical omission, exemption was claimed under section 10(23C)(iiiad) instead of the correct provision, namely section 10(23C)(vi). The Revenue did not dispute the fact that the assessee society was duly registered under section 12AA and had also been granted exemption under section 10(23C) by the competent authority. In such circumstances, the Tribunal held that the clerical mistake ought to have been rectified by the Revenue authorities instead of rejecting the assessee’s request. Once such mistake is corrected, the question of applicability of Rule 2BC relating to annual receipts exceeding Rs. 1 crore would not arise.

The Tribunal further noted that the assessee had stated that Form No. 10B could not be submitted electronically despite best efforts and was therefore filed in physical form by the assessee’s Chartered Accountant. This fact was corroborated by the assessment order itself, wherein the Assessing Officer acknowledged receipt of Form 10B during the course of assessment proceedings. The assessment year involved was AY 2017-18. No defect was pointed out by the Assessing Officer in respect of the contents of Form 10B.

The Tribunal observed that law is nothing but an uncommon common sense and that procedural law is only a handmaid of justice. Procedural provisions are meant to advance justice and not to defeat substantive rights. A hyper-technical approach should not be adopted to deny a legitimate exemption, particularly when substantial compliance has been made and no prejudice is caused to the Revenue. The Assessing Officer, therefore, should not have denied the rightful claim of the assessee merely because Form 10B was filed in physical form and not electronically, especially when it was filed before the due date. The Commissioner (Appeals) also failed to appreciate this aspect.

Accordingly, the Tribunal held that the impugned orders did not stand the test of law. The issue was decided in favour of the assessee and against the Revenue. The appeal was allowed for statistical purposes, the impugned orders were set aside, and the matter was restored to the file of the Assessing Officer with a direction to decide the issue afresh in accordance with law, ensuring compliance with the principles of natural justice.

Decision: In favour of the assessee
Assessment Year: 2017-18
Case: Om Charitable Chikitsa Samiti v. Assessing Officer, Exemption
Citation: (2025) 214 ITD 633 : 178 taxmann.com 14 (ITAT Agra)