Income Tax Appellate Tribunal - Jabalpur
Income Tax Officer(Exemption), ... vs Sarvoday Vindhya Vikas Samiti, Rewa on 14 May, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL, JABALPUR BENCH, MP
BEFORE HON'BLE SHRI KUL BHARAT, VICE PRESIDENT
AND
SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER
ITA No.: 035/JAB/2024 For Assessment Year: 2018-19
Income Tax Officer
(Exemption), Jabalpur . . . . . . . Appellant
V/s
Sarvoday Vindhya Vikas Samiti
Behind Amardeep Marriage Garden,
Adarsh Nagar Bara, Rewa (MP)
PAN No. AAAAP7358P . . . . . . . Respondent
Represented
Assessee by: Mr Neeraj Agrawal ['Ld. AR']
Revenue by: Mr N. M. Prasad ['Ld. DR']
Date of conclusive Hearing : 12/05/2026
Date of Pronouncement : 14/05/2026
ORDER
PER G. D. PADMAHSHALI;
The DIN & Order No. ITBA/NFAC/S/250/2023- 24/1060369980(1) dt. 01/02/2024 passed by the National Faceless Appeal Centre, Delhi ['Ld. NFAC'] u/s 250 of the Income Tax Act ['the Act'] for assessment year 2018-19 ['AY'] is challenged by the Revenue u/s 253(2) of the Act on the following grounds; ITAT-Jabalpur Page 1 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19
1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.1,49,59,566/- made by the Assessing Officer on account of unexplained voluntary contributions other than corpus under section 68 read with section 115BBE of the Act ignoring the fact that the assessee failed to provide details of such contributions during the assessment proceedings so that independent verification can be done by the Assessing Officer.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 1,49,59,566/- made by the Assessing Officer on account of unexplained voluntary contributions other than corpus under Section 68 read with section 115BBE of the Act, admitting additional evidence in contravention of provisions of Rule 46A of the Income-tax Rules, 1961.
ITAT-Jabalpur Page 2 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19
3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,37,764/- being estimated net profit from contract receipts by ignoring the fact that the assessee failed to provide details of such contributions during the assessment proceedings so that independent verification can be done by the Assessing Officer.
4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,37,764/- being estimated net profit from contract receipts admitting additional evidence in contravention of provisions of Rule 46A of the Income-tax Rules, 1961. On the facts and in the circumstances of the case, the order of the Ld. CIT(A) is contrary to facts and law.
5. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), was justified in not granting an ITAT-Jabalpur Page 3 of 22 ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 opportunity to the Assessing Officer for independently verifying the genuineness of entries in the books of account.
6. The appellant reserves his right to add, amend or alter the grounds of appeal on or before the date; the appeal is finally heard for disposal.
2. The long and short of assessee's case is that; 2.1 The assessee is a society and vide order dt. 18/02/2016 was registered with Revenue u/s 12A of the Act and further vide order dt. 30/08/2016 was also granted certificate of registration u/s 80G of the Act. For AY 2018-19 the assessee filed its return of income on 30/10/2018 ['ITR'] declaring NIL income after claiming exemption u/s 11 of the Act for ₹1,49,59,566/-. The said ITR was processed summarily u/s 143(1) of the Act whereby the claim for exemption was denied solely for defaulting in filing audit report in Form-10B within the time allowed. ITAT-Jabalpur Page 4 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 2.2 Subsequently vide notice dt. 22/09/2019 the case of the assessee was selected for scrutiny u/s 143(2) of the Act. Owning to failure on the part of assessee to respond to various notices issued to it and furnish details vi-a-vis make submissions etc., the assessment was completed u/s 144 r.w.s. 143(3A) & (3B) of the Act to the best of judgement whereby claim for exemption both u/s 11 and u/s 10(23C) of the Act were denied and as a result total income of the assessee was assessed at ₹1,51,97,330/- on account of twin additions viz; (1) ₹1,49,59,566/- a sum representing voluntary corpus donation received during the year under consideration & charged to tax u/s 115BBE of the Act and (2) ₹2,37,764/- representing estimated from contractual income/receipts & interest income. 2.3 Being aggrieved by the assessment order the assessee society filed an appeal before the Ld. NFAC which was allowed by the impugned order. ITAT-Jabalpur Page 5 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 2.4 The Revenue aggrieved by the relief granted in first appeal has come in present second appeal on the grounds paraphrased hereinbefore at para 1.
3. In the course of hearing, on merits the Ld. Prasad on behalf of Revenue contended that, the Ld. NFAC erred in adjudicating merits by admitting fresh evidence without adhering to rule 46A of Income Tax Rules, 1962 ['IT-Rules']. It was submitted that, without the verification genuineness of voluntary corpus claimed to earned/received by the assessee was accepted by the Ld. NFAC. Such action was without either first calling for remand or else remitting same for verification. Insofar as deletion of addition towards estimated contractual income and interest income brought to tax is concerned, the Revenue assailed that the Ld. NFAC vaguely deleted the additions for the want of inquiry in respect of genuineness of corresponding expenses if any incurred by the assessee. ITAT-Jabalpur Page 6 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19
4. It was argued that, while adjudicating both the issues in favour of the respondent the Ld. NFAC has completely lost sight of the fact that, in the course of assessment proceedings the assessee did fail to make any submission, answer the queries raised and adduce the evidence called for. Drawing our attention to para 2 of the assessment order the Ld. Prasad further solidified that, when the assessee deliberately opted out from complying with notices & from making submissions, the Ld. AO had no choice but to proceed ex-parte and determine income to the best of judgment by estimations since permitted in law. Insofar as denial of exemption is concerned the Ld. DR put forth twin supports; (1) requisite Form No 10B was not filed within the prescribed due date and such non-compliance is fatal and (2) the assessee was otherwise also not entitled to claim section 11 exemption because same was not claimed in the return but without registration claimed exemption u/s 10(23C) contrarily. ITAT-Jabalpur Page 7 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19
5. Per contra, the Ld. AR Agrawal for the respondent submitted that, the assessee was granted 12A and 80G registration and same for the year under consideration were in force, therefore the assessee was entitled for claiming exemption in respect of income derived from property held under trust and voluntarily corpus donation. Though the claim for exemption u/s 11 or 10(23C) of the Act was conditional to filing of audit report in Form 10B within the prescribed due date, the delay in filing of such Form 10B on 19/12/2018 vide order dt. 18/03/2020 was condoned by the Ld. CIT(E). In view of such condonation, the Form 10B for the purpose of claim so filed stands accepted, therefore the Revenue was barred from denying the claim of exemption. Insofar as the return of income filed with claim for exemption u/s 10(23C) instead of claim for exemption u/s 11 is concerned, the Ld. AR submitted that, the said mistake was through oversight & was bonafied as the assessee in the earlier years (before 12A ITAT-Jabalpur Page 8 of 22 ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 registration) was claiming the exemption u/s 10(23C) of the Act. To buttress that any of two claims of exemption at the choice of claimant assessee is otherwise also permissible a reliance was placed on 'CIT Vs Beant college of Engineering and Technology' [2019, 108 taxmann.com 196 (P&H)]. Insofar as the violation of rule 46A (supra) is concerned, the respondent could hardly dismantle the Revenue's contention & plea.
6. We have heard the rival party's submission and subject to rule 18 of the ITAT-Rules, 1963 perused the material available on record and considered the facts in the light of settled position of law and we note that; in the present appeal the Revenue set dispute on twin issues (1) claim for exemption granted in first appeal is devoid of filing compliance and (2) claim for exemption as applicable (either u/s 12A or 10(23C)) was granted arbitrarily without verification and in violation of rule 46A of IT-Rules.
ITAT-Jabalpur Page 9 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19
7. Belated filing of form 10B and claim for exemption u/s 11;
7.1 It is an undisputed fact that, the respondent assessee's books were audited & audit report in form 10B was obtained on 09/08/2018 that is within the due date prescribed for filing of income tax return. Further there is no dispute that the return of income was filed within the due date on 30/10/2018 whereas the audit report in form 10B was filed post filing of ITR on 19/12/2018. Further there was no agitation that said the delay in filing the audit report since was bonafied, therefore the application for condonation filed by the respondent assessee was accepted and the said delay was condoned by the Ld. CIT(A) vide its order dt. 18/03/2020. Meanwhile the ITR of the respondent was processed and exemption claimed therein was denied by the Ld. CPC for non-compliance of requirement of filing of audit report within the due date. ITAT-Jabalpur Page 10 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.2 It goes without saying that, as soon as the delay in filing audit report is condoned, the form 10B stands accepted for all the consequential purpose including giving effect to eligible claims which are otherwise available owning to registrations under the statute. The Revenue's basis or the foundation based upon which the exemption claimed in the return was denied to the respondent u/s 143(1) of the Act by such condonation and acceptance stands vacated. As the basis of denial stands vacated, the respondent assessee's entitlement for claim of exemption stands also restored. Therefore we see no reason to interfere with the adjudication of Ld. NFAC in directing the Ld. AO to allow the exemption in accordance with law. In view thereof, respective arguments of the Revenue stands rejected and thus is the plea for confirming the order of denial of exemption. 7.3 Next comes to the claim made in the return of income u/s 10(23C) as against the entitlement u/s 11 ITAT-Jabalpur Page 11 of 22 ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 of the Act. At the outset we note that, the case law relied by the respondent assessee and the Ld. NFAC in allowing the alternate claim is factually distinguishable. In 'CIT Vs Beant college of Engineering and Technology' (supra) the issue before Hon'ble High Court was relating to option available to assessee for registration. Wherein it was held that, when an assessee has more than one option for registration either u/s 12A or 10(23C) of the Act, then the Revenue cannot cease the option for or on the behest of assessee concerned, it lies with assessee, therefore assessee is free to make suitable choice under which provisions it is to be registered.
7.4 May it as be, the respondent's submission that the claim in the return was made in incorrect column through oversight was hardly dislodged by the Revenue. Also, there is much less material suggest that such typo error was deliberate or much less bonafide. ITAT-Jabalpur Page 12 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.5 It is well settled law that the non-quoting of source of power or misquoting of power while passing any order by an authority does not de-facto invalidates or vitiates any order. Following the decision of Hon'ble Apex Court in 'Kedar Deshpande Vs Bhor Municipal Council & Others' [2011, 2 SCC 654] the aforestated legal proposition finds reiterated in catena of judicial precedents by the Hon'ble Jurisdictional High Court including in 'Subhash Dubey Vs State of MP' [WP 3314 of 2023 dt. 23/02/2023. Similarly decision can also be traced back in 'N. Mani v. Sangeetha Theatres & Ors.' [2004, 12 SCC 278 (SC)] wherein their Hon'ble lordships have held that, "it is well settled that if an authority has a power under the law merely because while exercising that power the source of power is not specifically referred to or a reference is made to a wrong provision of law, that by itself does not vitiate the exercise of power so long as the power does exist and can be traced to a source available in law." ITAT-Jabalpur Page 13 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.6 Further the Hon'ble Supreme Court in 'State of Karnataka Vs Muniyalla' [AIR 1985 SC 470] has categorically held as "but it is now well-settled that merely because an order is purported to be made under a wrong provision of law, it does not become invalid so long as there is some other provision of law under which the order could be validly made. Mere recital of a wrong provision of law does not have the effect of invalidating an order which is otherwise within the power of the authority making it."
7.7 On a similar line in context of relief or exemption it is worthy to note that, the Hon'ble Apex Court in the case of 'P. K. Palanisamy v. N. Arumugham & Anr.,' 2007(9) SCALE 197 dt. 23/07/2009 (SC)] held that mentioning of a wrong provision by a person claiming a relief under the provisions of any statute does not disentitle such person for relief, if he is under the provision of such statute is entitled otherwise. ITAT-Jabalpur Page 14 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.8 Thus the aforestated judicial precedents clearly establishes & upholds that jurisdiction overrides the citation. The said doctrine and settled position of law also applied in tax litigation in catena of judicial precedents including 'Cherian Abraham Vs DCIT' [ITA 1575/Bang/2016 dt. 21/11/2017] and 'DCIT Vs K M Nagaraj' [ITA 1259/Bang/2013 dt. 19/05/2017] 7.9 At this junction it is worthwhile reproduce the provisions of section 292B of the Act as;
'Return of income, etc., not to be invalid on certain grounds No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.' ITAT-Jabalpur Page 15 of 22 ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.10 A bare perusal of above section makes it very clear that not only notices or summons but also return of income shall and thus claims made therein not to be invalided merely by reason of any mistake, defect or omission in such return of income and claims made therein, if such return of income or the claims made therein/thereby is in substance and effect is in conformity with the provisions of law or according to the intent and purpose of the Act.
7.11 In the present case, admittedly the respondent pursuant to 12A registration was entitled to claim exemption u/s 11 of the Act. Therefore, while filing the return such claim if mistakenly made in a column meant for 10(23C) instead, it would in view of section 292B of the Act and judicial precedents (supra) neither disentitle the assessee for exemption/relief nor empower the Revenue to turn down one for the simple reason that the such exemption was entitled otherwise. ITAT-Jabalpur Page 16 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 7.12 In view of the aforestated elaborate discussion and judicial precedents (supra), the Revenue's arguments and pleas for confirming the denial for incorrect claim or wrong claim found devoid of settled position of law & merits therefore rejected.
8. Violation of rule 46A (supra) while admitting the claim of the respondent assessee on merits 8.1 It is the case of the Revenue that; the impugned order not only suffered from compliance of rule 46A (supra) but transgressed the provisions of s/s (1) of section 251 and s/s (6) of section 250 of the Act. The sum & substance of Revenue's contention is that, the income in the hands of recipient subject to exemption u/s 11/10(23C) was chargeable to tax in accordance with provisions of section 4 of the Act. The Ld. NFAC however turning blind eye thereto granted the relief by deleting the impugned additions vaguely. ITAT-Jabalpur Page 17 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 8.2 While doing so, the impugned adjudication was culminated; (a) without verification of facts narrated or brought before by the respondent assessee (b) without satisfying the litmus test of rule 46A (supra) in admitting fresh evidences (c) without carrying out or causing any enquiry into the claims made on the basis of such fresh evidences (d) without granting an opportunity to the Ld. AO to rebut or negate the claims made by the respondent and (e) without calling for the remand reports from the field etc. In cementing that the impugned order infracted the provisions of s/s (1) of section 251 of the Act, the Ld. DR also made out a case that, since original assessment was culminated in terms of best judgement assessment passed u/s 144 of the Act therefore, the purported action of the Ld. CIT(A) in deleting the additions made by Ld. AO was without verification of evidence at any stage therefore was devoid of merits and hence deserves to be set-aside as it is unsustainable in law.
ITAT-Jabalpur Page 18 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 8.3 As we note from impugned orders that, in the course of proceedings before Ld. AO the respondent assessee had filed copy/copies of (a) copy of bye-law & details of its governing body (b) copies of 12A & 80G registration (c) form 10B etc. It remained an admitted fact that, the respondent assessee neither during the assessment proceedings nor in the first appellate proceedings could adduce any other details including ledger accounts of corpus donation, bank statement, and audited financial statements etc. for verification of claim in accordance with law under scrutiny assessment. However without verification of such cogent material evidences, the first appellate proceedings were culminated on the basis other additional evidence placed before him. Further while doing so, the Ld. NFAC neither recorded his satisfaction u/r 46A(2) (supra) as to why such additional evidences qualifies admission nor confronted same to the Ld. AO for verification or comments.
ITAT-Jabalpur Page 19 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 8.4 The former unceremonious action in allowing additional evidences and in turn the appeal, the Ld. NFAC sidestepped the provisions of rule 46A of the Act. 8.5 We note that, in the case of 'Prabhavati Shah Vs CIT' [1998, 100 Taxman 404 (Bom)] their Hon'ble Lordship had occasion to consider whether Rule 46A is intended to put fetters on the right of the assessee to produce before NFAC/CIT(A) any additional supporting evidence. After considering section 250 r.w.r 46A their lordships have held that if certain evidences are necessary for deciding controversy, the CIT(A) has all rights calling for additional evidence, however before admitting the same he is duty bound to give opportunity to AO to consider & cross examine such evidence fresh taken on record or rebut such additional evidence. Failure on the part of first appellate authority to do so was held violative of rule 46A (supra). ITAT-Jabalpur Page 20 of 22
ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 8.6 Similarly in the case of 'CIT Vs Gani Bhai Wahab Bhai' [1998, 97 Taxman 310 (MP)], it was also held by their Hon'ble Lordships that, though additional evidence can be admitted at appellate stage but while admitting the CIT(A) was required/mandated to ensure compliance with rule 46A and further admission of such evidence came on board first time should be subject to comments of AO for their consideration. 8.7 In the present case, there is much less dispute between rival parties that, the impugned order suffered from the compliance of provisions of rule 46A (supra). On the other hand there is much less material before us to suggest otherwise. For the reasons, in our considered view the impugned adjudication deleting the addition on the basis of material considered/admitted in violation of rule 46A (supra) rendered it irregular in the eye of law. Therefore, this being the clinching factual position, without commenting on the merits f ITAT-Jabalpur Page 21 of 22 ITO(E) Vs Sarvoday Vindhya Vikas Samiti ITA No. 035/JAB/2024 AY: 2018-19 addition the impugned order on this limited score deserves to be set-aside for its remand to the files of Ld. NFAC with a direction to deal therewith in accordance with provisions of s/s 1 of section 251 of the Act and pass speaking orders in terms of s/s (6) of section 250 of the Act, Ordered Accordingly.
8.8 The ground number 1 to 5 accordingly stands partly allowed for statistical purposes.
9. In result, the appeal is partly allowed for statistical purposes in aforestated terms.
In terms of rule 34 of ITAT Rules, 1963 the order pronounced in the open court on date mentioned herein before.
-S/d- -S/d-
KUL BHARAT G. D. PADMAHSHALI
VICE PRESIDENT ACCOUNTANT MEMBER
Copy of the Order forwarded to :
1.अपीलार्थी / The Applicant 2. प्रत्यर्थी / The Respondent. 3. The Pr.CIT, Jabalpur
4. DR, ITAT, Jabalpur Bench, Jabalpur 5.गार्डफ़ाइल / Guard File.
By Order
Sr. Private Secretary ITAT, Jabalpur.
ITAT-Jabalpur Page 22 of 22