In a recent ruling, the Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the addition of deemed income to the trust, citing the CBDT’s extension of the deadline, which allowed for the belated filing of Form 10B.
In this case, the assessee, St. Anthonys Education Trust, had e-filed its Income Tax Returns ( ITR ) for the Assessment Year ( AY ) 2022-23 on 5-11-2022, declaring a total income of Rs. 12,538 and claimed a Tax Deducted at Source ( TDS ) refund of Rs. 2,888. The ITR was processed by the CPC under Section 143(1) of the Income Tax Act, 1961, and assessed the total income at Rs. 62,56,517.
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An addition of Rs. 62,43,979 was made by disallowing the entire expenditure claimed under Section 11 of the Income Tax Statute, amounting to Rs. 47,43,979. Additionally, Rs. 15 lakhs deemed to have been applied in the previous year as per Clause (2) of Explanation to Section 11(1) was added, on the ground that there was a failure to e-file Form 10B (Audit Report) under Section 12A(1)(b) within the specified deadline, resulting in a tax demand of Rs. 22,78,210 after adjusting a TDS refund of Rs. 2,888.
The Commissioner of Income Tax Appeals [ CIT(A) ] dismissed the appeal of the assessee after referring to the Circular issued by the Central Board of Direct Taxes ( CBDT ) No. 2/2022 dated 3-01-2020 stating that for the delay in filing Form No. 10B, the assessee has to file condonation application u/s 119(2) before the concerned CIT with the reason for the belated filing of the auditor’s report.
The bench, comprising Sandeep Singh Karahail ( Judicial Member ) and Amarjit Singh ( Accountant Member ) observed that the CBDT extended the deadline for filing income tax returns under Section 139(1) of the Income Tax Act for AY 2022-23 to 7-11-2022, and the assessee submitted Form 10B within this extended period. Thus the decision of CIT(A) that the audit report was filed late was considered unjustified.
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The bench restored the case back to the bench of CIT(A) for deciding denovo on merit after considering Circular No. 20/2022 of the CBDT and submissions and documents filed by the assessee.
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