IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 274/Agr/2025 Assessment Year: 2017-18

Assessee by Sh. R.K. Agrawal, CA Department by Sh. Anil Kumar, Sr. DR Date of hearing 18.09.2025 Date of pronouncement 28.10.2025

ORDER

PER : SUNIL KUMAR SINGH, JUDICIAL MEMBER:

This appeal has been preferred by assessee against the impugned order dated 18.03.2025 passed in Appeal No. NFAC/2016-17/10297334 by the Ld. Commissioner of Income-tax (Appeals), NFAC, Delhi u/s. 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2017-18, wherein learned CIT(Appeals) has dismissed assessee’s appeal filed against rectification order dated 26.09.2023 passed u/s. 154 of the Act.

2. Brief facts state that the appellant assessee is a charitable organization duly registered u/s. 12A vide registration number CIT/GWL/12AA/43/16/09-10 and 80G. Appellant assessee claimed the exemption u/s 11 of the Act at the time of filing return. The CPC, Bengaluru considered Rs. 1,92,66,092/- as income of the appellant and raised demand of Rs.89,74,690/-, whereas according to the assessee, it had carried out charitable activities and had applied more than 85% of its receipts for charitable purposes. Appellant filed audit report and revised return but the demand has not been rectified. Rectification application moved u/s. 154 of the Act has also been rejected by CPC, Bengaluru.

3. Aggrieved, assessee preferred an appeal before learned CIT(Appeals), who, dismissed assessee’s first appeal.

4. Assessee has filed this second appeal on the following grounds :

“1. That the Ld. CIT(A) failed to appreciate that the appellant is a registered charitable trust under section 12AA, and the income was fully applied for charitable purposes, which qualifies for exemption under section 11, and the denial of exemption solely on technical grounds is grossly unjustified. Hence the demand so generated by confirming the order of AO should be deleted.

2. That the Ld. CIT(A) erred in law and on facts in upholding the rejection of rectification under section 154 of the Income Tax Act, 1961, despite the assessee has shown all revenue expenditure under Schedule ER and all Capital Expenses under schedule EC. Only because income was wrongly shown under Income from other sources which should have been shown under schedule Ai. Hence the order so passed by the Ld CIT(A) confirming the order of AO is bad in law.

3. That the Ld. CIT(A) erred in dismissing the assessee's appeal stating that "This section does not cover the case of appellant and hence the action of AO is upheld" were as section 154(1)(b) covers the rectification of intimation u/s 143(1) and the mistake was also apparent on record.

Hence action of AO and CIT(A) are incorrect.

4. That the Ld. CIT(A) erred by not verifying the fact that ITR-7 so filed by the assessee by using departmental utility does not reflect any taxable income or tax liability under PART BTTI "Computation of Tax Liability on Total Income" hence the mistake did not come in the knowledge of assessee and hence the demand so generated by AO is incorrect and should be deleted.

5. That the Ld. CIT(A) erred in upholding the CPC's action of applying Maximum Marginal Rate (MMR) on gross receipts were as the assessee is a registered charitable trust duly registered by Registrar Public Charitable Trust, Guna vide its order dated 20.08.2002 and hence provisions of section 1678 are not applicable in assessee's case. Hence, tax so computed on gross total income under Maximum marginal rate is incorrect.

6. That the authorities below failed to invoke the doctrine of substance over form, leading to taxation of a registered public charitable trust's income purely on the