In the recent case, the High Court of Calcutta dismissed the revenue petitioner’s appeal challenging the Income Tax Appellate Tribunal’s( ITAT ) decision for assessment year(AY) 2020-21. The Court upheld the ITAT’s ruling, noting it correctly applied Central Board of Direct Taxes ( CBDT ) Circulars on timely filing for tax exemptions, finding no significant legal errors.
Camellia Educare Trust the respondent-assessee,the revenue petitioner filed an appeal under Section 260A of the Income Tax Act, 1961 of the act. The appeal was filed against the order dated May 30,2023 passed by the bench of Kolkata Tribunal for the AY 2020-21.
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The petitioner raised the following significant legal questions for review: Firstly, whether the tribunal erred by dismissing the revenue-petitioner’s appeal and accepting the respondent-assesse’s cross objection, despite the assessee not submitting the audit report on time and failing to apply for delay approval. Additionally, whether the tribunal made a mistake by ignoring that the respondent-assessee cannot claim exemption under Section 11 without a timely audit report, even in the absence of intimation under Section 143(1).
The Tribunal needed to decide if the respondent assessee’s tax return was filed on time. The decision was based on two key rules from the CBDT.
The Circular issued on April 23, 2019, clarifies Section 12A concerning charitable or religious trusts. It specifies that for trusts registered under Section 12AA to qualify for tax exemptions under Section 11, they must file their returns within the timeframe stipulated by Section 139 of the Income Tax Act.
Additionally, the Circular addresses concerns related to belated returns for the assessment year 2018-19, directing that any demands raised due to late filing should be corrected.
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The court noted that the tribunal has used these rules to fairly assess the timeliness of the respondent-assesse’s return.
The division bench of Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya reviewed the case and found that the Tribunal had correctly applied the Circulars and granted relief to the respondent assessee. As a result, they saw no major legal issues and dismissed the appeal.
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