Law does Not Require Performance of Impossible Act: ITAT directs Revenue to adopt Constructive Approach in ITR-7 Filing [Read Order]

In a recent ruling, the Visakhapatnam Bench of the Income Tax Appellate Tribunal ( ITAT ) held that it was impossible for the assessee to mention the renewal details obtained on 04/04/2022 in ITR-7, which was filed on 13/03/2022. The bench directed the revenue to adopt a constructive approach in ITR-7 filing.

The assessee, PIME Welfare Society, is a Charitable Society which was initially registered under Section 12 A of the Income Tax Act, 1961.

Law and Procedure for Filing of Appeals

After the amendment in the Income Tax Act, effective from 01/06/2022, all charitable trusts were required to apply for registration under Section 12AB of the Act, even if already registered. The CBDT extended the deadline for renewal applications to 30/09/2022 by a circular dated 31/03/2022.

The assessee applied for renewal on 27/03/2022 and obtained registration on 04/04/2022. However, since the last date for filing the income tax return for assessment year ( AY ) 2021-22 was 31/03/2022, the assessee filed ITR-7 using the old registration number.

The CPC, Bangalore, through an intimation under Section 143(1) of the Income Tax Act, denied the exemption claimed by the assessee and was of the opinion that the amended Section 12AB, effective from 01/06/2022, which requires entities to obtain new registration. Since the assessee's renewed registration details were not reflected in ITR-7, the exemption claimedd was disallowed by CPC.

Law and Procedure for Filing of Appeals

The Commissioner of Income Tax ( Appeals ) [ CIT( A ) ], upheld this decision, stating that merely filing the return with the existing registration number does not qualify the assessee for exemption under Section 11 for AY 2021-22.  The assessee, who was aggrieved by the above order, appealed before the ITAT. 

It was submitted by the counsel on behalf of the assessee contended that , it was impossible for the assessee to give the new registration particulars in ITR-7, which was filed on 13/03/2022.

The bench observed that as the assessee received the communication of renewal on 04/04/2022, it was not possible for the assessee to mention such details in ITR-7, which was filed on 13/03/2022.

Law and Procedure for Filing of Appeals

It was held that “Law does not require the performance of the impossible act. It was impossible for the assessee to mention the renewal details obtained on 04/04/2022 in ITR-7 which was filed on 13/03/2022.”

The tribunal comprising S. Balakrishnan ( Accountant Member ) and K. Narasimha Chary ( Judicial Member ), set aside the impugned order and restored the issue to the file of the AO to complete the assessment by using the old registration number.

To Read the full text of the Order CLICK HERE

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