Belated Form 10 for accumulation of income allowed as trust believed it applied 85% income

Belated Form 10 allowed as trust had reasonable belief it has applied 85% of income for charitable purposes and not required to file Form 10 for accumulation of income

ABCAUS Case Law Citation:
ABCAUS 3729 (2023) (05) ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) National Faceless Appeal Centre (NFAC) in holding that the Assessing Officer (AO) was correct in making addition u/s 11(2) of the Income Tax Act, 1961 (the Act) on account  of  shortfall in accumulation of income as the appellant failed to file the requisite Form 10 before the AO

The appellant assessee was a trust registered u/s 11 and 12 of the Act as a charitable institution engaged in running of an educational institution.

Since the assessee has failed to furnish the Form No. 10 in time, the Assessing Officer denied the benefit of accumulation of fund as provided u/s 11(2) of the Act and made the impugned addition.

The assessee submitted that the relevant assessment year was the first year for e-filing of Form No. 10 and that even the CBDT had taken note of the above fact that due to certain circumstances, some of the assessees could not file Form 10 in time and hence the CBDT directed Commissioners to condone the delay in filing Form 10 in cases in which assessees were prevented by reasonable cause of filing the Form 10 in time.

It was further submitted that Form No. 10 was duly filed before the Assessing Officer and was very much available to the Assessing Officer at the time of assessment proceedings.

The Tribunal observed that the assessment year in hand was the first year for which Form 10 was to be e-filed.

The Tribunal opined that since the assessee-trust  was having reasonable belief that the assessee-trust had applied 85% of its income for charitable purposes and, therefore, the assessee-trust was not required to file Form 10 for shortfall in application of income and claiming accumulation thereof and  since the assessee-trust had filed the Form 10 during the assessment proceedings,  the  Assessing Officer should consider the said Form 10 and grant relief to the assessee as per the relevant provisions, if the assessee is otherwise so found eligible.

Accordingly, the order of CIT(A) was set aside with direction to the Assessing Officer to grant relief to the assessee as admissible under the provisions of section 11 and 12 of the Act.

Download Full Judgment Click Here >>

• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT
• Cost Inflation Index for FY/Tax Year 2026-27 notified by CBDT. See Up-to-date Table of CII
• Power of CIT(A) u/s 251(1)(a) to remand case can be exercised only in best judgment assessment