AO Mistakenly Added previous year’s Balance into Account while computing total receipt: Kerala HC sets aside Assessment Order [ Read Order]

The Kerala High Court set aside the assessment order wherein the Assessing Officer (AO) mistakenly added the previous year’s balance into account while computing the total receipt. It was necessary to calculate the correct income as to confirm tax exemption under Section 10(23C)(iiiad) of the Income Tax Act 1961.

St Josephs FCC Province Thalassery, the petitioner assessee impugning the passed by the Income Tax Officer, Exemption Ward, Kannur, whereby the petitioner’s turnover as per the receipts and payments statement has been taken to be Rs.1,02,85,571/- for the Assessment Year 2016-17, and found it to be a fit case for issuing of notice under Section 148 of the Income Tax Act, 1961.

Section 10(23C)(iiiad) of the Income Tax Act 1961, at the relevant time, provided that any income received by a person on behalf of any university or other educational institution existing solely for educational purposes and not for purposes of profit, and if the aggregate annual receipts did not exceed Rs. 1 crore, it should be exempted from payment of income tax.

The petitioner submitted that the annual receipt taken by the Assessing Officer of Rs.1,02,85,571/- would include bank deposits of the previous year of Rs.9,45,475.96, including some cash at hand.  It was argued that if this Rs.9,45,475.96 is excluded, which is not the receipt of the current year, the annual receipt for the Assessment Year 2016-17 would be less than Rs. 1 crore

Mr Christopher Abraham, Standing Counsel for the Revenue, does not dispute the fact that Rs.1,02,85,571/- include the deposit balance of the previous year of Rs.9,45,475.96.

Since there is a mistake apparent on the face of the record as the Assessing Officer has taken the previous year’s balance into account while computing the total receipt in the Assessment Year 2016-17, the orders appear to be incorrect. The single judge bench of Justice Dinesh Kumar Singh set aside the order.

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