ITAT Bangalore Says a Genuine Form 10 Mistake Cannot Defeat Section 11 Tax Exemption

The ITAT Bangalore Bench has granted major relief to the National Academy of RUDSETI in a tax dispute related to Assessment Year 2018-19. The key concern is the trust’s claim for accumulation of income under Section 11(2) of the Act.

The assessee is a charitable trust registered under Section 12AA of the Income Tax Act that challenged an order dated July 05, 2024, passed by the National Faceless Appeal Centre (NFAC), Delhi.

The assessee company filed its income tax return (ITR) for the year under consideration, where it showed an accumulated amount of Rs 1.44 crore under Schedule 1. However, the assessee did not mention the same while furnishing Form 10 along with the tax return. However, later the company had corrected the mistake by filing a revised Form 10 before completion of the assessment. However, when the tax authorities assessed the trust’s return, they rejected the claim and completed the assessment by making an addition of the same accumulated amount to the assessee’s taxable income.

The aggrieved assessee approached ITAT Bangalore, which, when it analysed the case, noted that the omission in Form 10 was only an unintentional mistake because the accumulation details were already available in the return and audit report. Since the revised Form 10 was filed before completion of the assessment, the ITAT held that the tax authorities were not justified in denying the exemption and deleted the addition.

Another issue involved the addition of Rs 52.31 lakh as anonymous donations under Section 115BBC. The trust argued that the amount represented excess income and unspent grants received from the Ministry of Rural Development, Government of India, and that complete donor details were available.

The assessee filed an appeal challenging the Rs 52.31 lakh addition before the ITAT Bangalore. The tribunal, after analysing the case, noted the assessee had all the details about the donations given by various persons, and proper examination of documents was required to determine whether the donations were truly anonymous. Therefore, it set aside this entire impugned addition and remanded the case to the tax authorities for fresh consideration after examining the records and explanations submitted by the trust. Accordingly, the appeal of the assessee was partly allowed.