NFAC bound to Follow CBDT Circular: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ), Hyderabad bench has held that the National faceless Appeal Centre (NFAC) is bound to follow the circulars of the Central Board of Direct Taxes (CBDT).

The assessee, Telangana Working Journalists Welfare Fund a society registered under the Telangana Societies Registration Act, 2001, is formed for the purposes of welfare of the journalists by improving the living standards of the journalists and to support their families through various welfare activities and other similar objects. While considering the application for income tax exemption, the CPC considered the corpus donation of Rs. 23,18,75,399 as income and determined the tax and other liabilities on the basis of such corpus donation and bank interest income of Rs. 1,32,69,393/-.

The department was of the view that since the assessee has not furnished the return of income along with audit report in Form No.10B on or before the due date of furnishing of return of income, which is one of the conditions to claim thebenefit under section 11 and 12.

The assessee relied on the CBDT vide circular No.F.173/193/2019-ITA-1, dated 23.04.2019 has issued certain clarifications, in support of their contentions.

ITAT bench comprising Shri Rama Kanta Panda, Accountant Member and Shri K. Narasimha Chary, Judicial Member observed that “Since the above instruction dated 23.04.2019 and subsequent circular No.2/2020 vide F.No.197/55/2018-ITA-I dated 03.01.2020 were not considered by the CIT(A)/NFAC, although, these are instructions/circulars issued by the Board and are binding on the revenue authorities, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of CIT(A)/NFAC with the direction to adjudicate the issue afresh in the light of the circulars/instructions issued by the CBDT clarifying the time allowed for filing of return of income subsequent to the insertion of clause(ba) in sub-section (1) of section 12A of the Act. Needless to say, the CIT(A)/NFAC shall give due opportunity of being heard to the assessee and decide the issue as per fact and law.”

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