Kendrapara College, Kendrapara Vs Commissioner of Income… — Income Tax | Orissa HC (2026)

Kendrapara College, Kendrapara Vs Commissioner of Income… — Income Tax | Orissa HC (2026)

What the court decided

AI extract

Outcome

Writ petition disposed of: the Section 143(1) intimation/order dated 23 December 2024 is set aside and the matter remitted to the Centralized Processing Centre (opposite party no.2) to consider the petitioner's explanation afresh with adequate opportunity to substantiate its exemption claim under Section 10(23C)(iiiab); pending Interlocutory Application(s), if any, stand disposed of.

Issue for consideration

Whether the petitioner's claim of exemption under Section 10(23C)(iiiab) for assessment year 2023-24, made in the return with evidence uploaded but recorded as '0' in Part-2B due to inadvertence, could be refused on the view that in absence of a revised return no relief could be granted. +1 more

Court's answer

Passing of the intimation under Section 143(1) on 23 December 2024, before lapse of thirty days from 29 November 2024 allowed to clarify the position, deprived the petitioner of clarifying its exemption claim and constitutes a flagrant violation of principles of natural justice warranting interference.

Ratio / Principle

The petitioner had in fact claimed exemption under Section 10(23C)(iiiab), eminent on scrutiny of serial no. A17 of the return in Form ITR7, and the '0' at Part-2B(2b) was due to human error in feeding the data.

Key takeaways

The revisional authority (Commissioner of Income Tax (Exemption), Hyderabad) erred by proceeding as if the petitioner had not at all claimed such exemption in its return.ratio¶¶29
The Commissioner of Income Tax (Exemption), Hyderabad, by order dated 27 November 2025, failed to delve deep into the matter to perceive the lapse on the part of the Centralized Processing Centre.ratio¶¶32
The intimation/order dated 23 December 2024 is set aside, and the matter is remitted to the Centralized Processing Centre (opposite party no.2) to consider the petitioner's explanation afresh by affording adequate opportunity to substantiate its claim for exemption under Section 10(23C)(iiiab) of the Act.

Detailed headnote1 paragraphs

Income-tax – Exemption under S.10(23C)(iiiab) of the Income Tax Act, 1961 – Educational institution (Kendrapara College) – Return for AY 2023-24 claimed exemption in Form ITR7 (serial no. A17) with evidence uploaded, but '0' inadvertently entered in Part-2B – CPC issued intimation u/s 143(1) on 23.12.2024 refusing the claim and determining demand, before expiry of the 30-day period allowed by the Department's communication dated 29.11.2024 for clarifying the data – Revision u/s 264 rejected by CIT(Exemption), Hyderabad on 27.11.2025 applying Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC) – Held: premature intimation is a flagrant violation of principles of natural justice; the revisional authority proceeded as if no claim was made and failed to perceive the CPC's lapse – Order dated 23.12.2024 set aside; matter remitted to CPC to consider the explanation afresh with adequate opportunity – Writ petition disposed of (Orissa HC, bench of Chief Justice Harish Tandon and Justice M.S. Raman).

IN THE HIGH COURT OF ORISSA AT CUTTACK WP(C) No.4169 of 2026

Kendrapara College

…. Petitioner

Mr. Sidharth Shankar Padhy, Advocate

-versus-

Commissioner of Income Tax …. Opposite parties (Exemption) and another

Mr. Subash Chandra Mohanty, Senior Standing Counsel for Income Tax Department

CORAM:

THE HON’BLE THE CHIEF JUSTICE AND

THE HON’BLE MR. JUSTICE MURAHARI SRI RAMAN

ORDER

Order No.

19.02.2026

1. The petitioner in the return claimed exemption under Section 10(23C) (iiiab) of the Income Tax Act, 1961 (for short, “the Act”).

2. Learned counsel appearing for the petitioner submitted that though in the relevant column of the return pertaining to the assessment year 2023-24 such exemption has been claimed and evidence was uploaded, due to inadvertence in Part-2b “0” has been placed.

2.1. He submitted that an intimation under Section 143(1) of the Act vide order dated 23^rd December, 2024 is communicated by the Centralized Processing Centre (CPC), Income Tax Department refusing to allow such claim and determined the huge demand against the petitioner.

2. 2. Aggrieved by the said order, the petitioner preferred revision under Section 264 of the Act before the Commissioner of Income Tax (Exemption), Hyderabad on 22^nd January, 2025, which

Page 1 of 4

came to be rejected vide order dated 27^th November, 2025 on an erroneous approach by applying the ratio laid down in Goetze (India) Ltd. Vs. CIT [2006] 284 ITR 323 (SC).

2.3. Learned counsel submitted that the petitioner, in fact claimed exemption under Section 10(23C)(iiiab) of the Act by furnishing details at relevant column, but in one of the columns i.e., Part-2B(2b), due to inadvertence “0” was placed. Such fact has not been appreciated in its proper perspective by the Commissioner of Income Tax (Exemption), Hyderabad. He submitted that it is not a case that no claim for exemption was made under said provision and evidence for such claim was not adduced.

2. 4. Having submitted so, learned counsel for the petitioner brought to our notice a communication dated 29^th November, 2024 issued from the Department seeking information/clarification on the data in the return filed, wherein the following is directed:-

“Please note that your response should be provided within 30 days of receipt of this intimation.”

2.5. He submitted that before lapse of said period as stipulated for filing response, the Centralized Processing Centre has issued intimation under Section 143(1) of the Act by order dated 23^rd December, 2024, thereby there was violation of principles of natural justice.

3. Learned Senior Standing Counsel appearing for the Income Tax Department resisting the contention of the learned counsel for the petitioner, submitted that since the petitioner has not claimed the exemption under Section 10(23C)(iiiab) of the Act in the return, the Revisional Authority has rightfully concluded that in absence of revised return, no relief could be granted to the

Page 2 of 4

petitioner; as such the writ petition is liable to be dismissed without interference.

4. Heard learned counsel for the petitioner and learned Senior Standing Counsel appearing for the Income Tax Department. 5. Perusal of papers enclosed with the writ petition, it is discernable that the petitioner in fact has claimed exemption under Section 10(23C)(iiiab) of the Act which is eminent on scrutiny of serial no.A17 of the return in Form ITR7, but due to human error in feeding the data at Part-2B(2b), “0” has been placed.

5.1. On bare reading of order dated 27^th November, 2025 passed under Section 264 of the Act by the Commissioner of Income Tax (Exemption), Hyderabad, it is noticed that the said authority has proceeded as if the petitioner has not at all claimed such exemption in its return. While examining the veracity of the contention of the learned counsel for the petitioner it could be ascertained that the Centralized Processing Centre sought for information/clarification on the data in the return filed is dated 29^th November, 2024, and thirty days’ time was allowed to clarify the position.

5.2. We find force in the submission of the learned counsel for the petitioner that before lapse of thirty days from 29^th November, 2024, intimation under Section 143 vide order dated 23^rd December, 2024 has been passed. It is, thus, manifest the petitioner was deprived of clarifying the position with respect to claim of exemption under Section 10(23C)(iiiab) of the Act while furnishing returns for the assessment year 2023-24. Therefore, this Court is of the considered view that there has been flagrant violation of principles of natural justice, which warrants

Page 3 of 4

interference in the matter. The Commissioner of Income Tax (Exemption), Hyderabad vide order dated 27^th November, 2025 failed to delve deep into the matter to perceive such lapse on the part of the Centralized Processing Centre.

5.3. As has already been discussed above, the Centralized Processing Centre having allowed thirty days period from 29^th November, 2024 to furnish explanation, intimation under Section 143(1) of the Act could not have been passed on 23^rd December, 2024. This Court is inclined to set aside the order dated 23^rd December, 2024. Having done so, it is deemed that the matter be remitted to the Centralized Processing Centre-opposite party no.2 to consider the explanation of the petitioner afresh by affording adequate opportunity to substantiate its claim for exemption under Section 10(23C)(iiiab) of the Act.

6. With the aforesaid observation and direction, the writ petition stands disposed of. As a result of disposal of the writ petition, pending Interlocutory Application(s), if any, shall stand disposed of.

(Harish Tandon) Chief Justice

(M.S. Raman) Judge

MRS/Laxmikant

Signature Not Verified

Digitally Signed Signed by: LAXMIKANT MOHAPATRA Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 24-Feb-2026 11:22:07

Page 4 of 4