Taxation of private trust

The assessee is a Privat Child Benefit Trust with Only one Beneficiary , there is a written trust deed but not registered any where. The assessee filed its Income tax return in Form no ITR 7 for AY 2015-16 showing income of around 2.4 lakhs. Now the department has raised demand calculating tax on MMR. Is the department correct in raising this demand ? If not how can we file a rectification application as earlier the ITR form itself was not correct ? We tried to submit the rectification in paper to the assessing officer but he rejected the application saying that the ITR was submitted online so the rectification also can be filed online only. Please suggest.