AO Disallows Deemed Application of Income for Non-Filing of Form 10 Electronically: ITAT allows Claims [Read Order]
The lower authorities disallowed the claim solely for not filing electronically, ignoring the tribunal’s earlier direction to consider both manual and electronic filings
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition of ₹25.50 lakh made for non-electronic filing of Form 10 and directed the Assessing Officer (AO ) to allow the deemed application of income.
Institute of Driving & Traffic Research ,appellant-assessee, was registered under section 12A and 80G of the Income Tax Act, 1961. For AY 2016-17, it transferred Rs. 25,50,000 to the utilization fund under section 11(2) and claimed it as deemed application of income. The assessee filed Form No. 10 manually instead of electronically, and later submitted it electronically during assessment.
The AO, by order dated 07.12.2018, denied the benefit of deemed application and added Rs. 25,50,000. The Commissioner of Income Tax (Appeals)[CIT(A)] dismissed the appeal on 24.07.2019. On further appeal, the tribunal remanded the matter to the AO to consider both manual and electronic filings.
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In the second round, the AO again rejected the manual Form No. 10 and recomputed income at Rs. 25,50,020 on 06.11.2023. The CIT(A) upheld this order on 11.03.2025, leading to the present appeal before the tribunal.
The assessee counsel argued that the lower authorities had not followed the tribunal’s order dated 03.01.2023, as the AO again disallowed the claim only because Form No. 10 was not filed electronically. It was submitted that the AO should have considered the manually filed form and allowed the deemed application of Rs. 25,50,000. The counsel, therefore, requested the appeal be allowed.
The departmental representative contended that since Form No. 10 was not filed electronically on time, the lower authorities were right in rejecting the manual form and their orders required no interference.
The two member bench comprising Yogesh Kumar U.S (Judicial Member) and S.Rifaur Rahman (Accountant Member) heard both sides and noted that in its earlier order dated 03.01.2023, it had directed the AO to consider both the manually filed Form No. 10, which was submitted on time, and the electronically filed form, and decide the matter as per law. That order had become final as the Department had not challenged it.
The appellate tribunal found that the AO ignored this direction and again disallowed the claim only because Form No. 10 was not filed electronically on time, despite no adverse finding against the assessee.
The tribunal held this to be a violation of its earlier order, deleted the addition, and directed the AO to allow the deemed application of Rs. 25,50,000. The appeal was thus allowed.
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