The ITAT set aside the previous order and directed the AO to conduct a fresh assessment. The tribunal instructed the AO to take into account the decision of the CIT(E) on the condonation petition once it is finalized.
The Income Tax Appellate Tribunal (ITAT) in Chennai has remanded a case back to the Assessing Officer (AO) for reassessment due to the delayed submission of Form 10BB by a public charitable trust managing educational institutions.
Background of the Case
The trust, registered under Sections 12AA and 10(23C)(vi) of the Income Tax Act, 1961, filed its income tax returns for the assessment year (AY) 2017-18, declaring ‘NIL’ income. However, during the assessment process, it was discovered that the trust had failed to submit the mandatory audit report in Form 10BB within the prescribed timeframe.
The trust had initially submitted Form 10B, dated March 29, 2018, which was beyond the stipulated deadline. Furthermore, it had not filed Form 10BB, which is essential for claiming exemption under Section 10(23C)(vi). Subsequently, the trust electronically submitted Form 10BB on December 4, 2019, along with a request for condonation of delay.
Also Read: Income Tax Dept to Launch Nationwide Crackdown on 40K TDS/TCS Defaulters
AO’s Decision on Exemption and Depreciation
Due to the delayed submission, the AO denied the exemption and treated the income of the trust as taxable under the applicable rates for an Association of Persons (AOP). Additionally, the AO disallowed a depreciation claim of ₹37,08,051 on fixed assets, citing that these assets had already been accounted for as income application in previous years. As a result, only ₹1,040 in depreciation was allowed for assets acquired during the current assessment year.
Appeals and Tribunal’s Ruling
The trust appealed the AO’s decision before the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was unsuccessful. Subsequently, the trust escalated the matter to the ITAT for relief.
The taxpayer’s counsel argued that the delay in filing Form 10BB should not disqualify the trust from claiming the exemption, as the form was available during assessment proceedings. It was also pointed out that the Commissioner of Income Tax (Exemptions) [CIT(E)] had not yet ruled on the condonation request.
Considering these factors, the ITAT set aside the previous order and directed the AO to conduct a fresh assessment. The tribunal instructed the AO to take into account the decision of the CIT(E) on the condonation petition once it is finalized. Furthermore, the ITAT advised the taxpayer to inform the AO regarding the status of the condonation application.
Also Read: Why the Income Tax Department May Ask for Your Grocery and Restaurant Bills: Experts Explain
Final Verdict
The ITAT, comprising Accountant Member Manoj Kumar Aggarwal and Judicial Member Manu Kumar Giri, allowed the taxpayer’s plea for statistical purposes, ensuring that the matter is reassessed in light of the pending condonation decision.
Case Details:
- Case Title: M/s. Pachiyamman Ethirajammal Rajam vs. The Income Tax Officer
- Citation: ITA No.1981/Chny/2024
This ruling highlights the importance of timely filing of statutory forms to claim exemptions and ensures that procedural delays do not lead to unjust taxation.
READ MORE
Supreme Court: Court Judgments Are Retrospective Unless Specified Otherwise