Genuine Mistake in Form 10 Curable Before Assessment Completion: ITAT

The Income Tax Appellate Tribunal (ITAT), Bengaluru, partly allowed the appeal filed by a charitable trust against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2018-19.

The trust is registered under Section 12AA of the Income Tax Act and filed its income tax return on 09th October 2018 along with Form 10. In its return and audit report, the trust clearly mentioned that it wanted to accumulate income of Rs. 1,44,00,000 under Section 11(2). However, due to a mistake, this amount was not mentioned in Form 10.

Because of this omission, the Assessing Officer disallowed the accumulation claim. The AO also treated certain amounts as anonymous donations under Section 115BBC and made additions to the income of the trust. Further, depreciation claimed by the trust was also disallowed.

The assessee challenged the order before the Commissioner of Income Tax (Appeals), but the appeal was dismissed. The matter was then taken before the ITAT.

Before the Tribunal, the assessee argued that the omission in Form 10 was only an accidental mistake. It pointed out that the return of income and audit report already contained details of the accumulation. The trust later filed a revised Form 10 correcting the error before completion of the assessment proceedings.

The assessee also submitted that the alleged anonymous donations were not actually anonymous because all donor details were available and the donations had been received through banking channels. It further explained that part of the amount represented unspent grants received from the Ministry of Rural Development, Government of India, which did not belong to the trust.

The Tribunal said that the mistake made in Form 10 was accidental and genuine. Since the trust had already mentioned the amount it wanted to accumulate in its income tax return and audit report, and it corrected Form 10 before the assessment was completed, the AO should not have denied the tax benefit under Section 11(2).

Accordingly, the Tribunal deleted the addition of excess tax on account of accumulated income and allowed the assessee’s appeal on this point.

Regarding anonymous donations u/s 115BBC, the Tribunal observed that the assessee submitted that the information of donors was available with it, and the AO did not make proper verification of all the explanations and documents during the assessment.

Therefore, the Tribunal remitted the issue to the AO for fresh verification, and the assessee shall submit all supporting documents to prove that the donations were not anonymous.