Case Law Details
National Academy of Rudseti Vs ACIT (ITAT Bangalore)
Revised Form 10 Filed Before Assessment Saved ₹1.44 Crore Accumulation Claim- Bangalore ITAT Grants Relief to Charitable Trust
In a taxpayer-friendly ruling, the Bangalore ITAT held that a mere inadvertent mistake in Form 10 cannot deprive a charitable trust of exemption u/s 11(2), especially when the accumulation was properly disclosed in the return of income and audit report and the mistake was voluntarily corrected before completion of assessment.
The assessee trust, National Academy of Rudseti, had filed its return along with Form 10 claiming accumulation of ₹1.44 crore. However, while the accumulation amount was correctly disclosed in the return and Form 10B audit report, the same was inadvertently omitted in the originally filed Form 10.
The AO disallowed the accumulation claim u/s 11(2) on the ground that the amount was not specified in Form 10 and also treated certain balances as anonymous donations u/s 115BBC.
Before the Tribunal, the assessee explained that the omission in Form 10 was a genuine clerical error and that a revised Form 10 correcting the mistake had been filed before completion of assessment proceedings.
Accepting the contention, the ITAT observed that all primary records – including the return of income and audit report – clearly reflected the accumulation claim. The Tribunal noted that the assessee itself discovered the mistake and voluntarily rectified it by filing a revised Form 10 before assessment was completed.
The Bench held that when the substantive claim was always available on record, denial of exemption merely because of an inadvertent omission in Form 10 would be unjustified. Accordingly, the Tribunal deleted the addition and allowed the assessee’s claim for accumulation u/s 11(2).
On the separate issue of alleged anonymous donations u/s 115BBC amounting to about ₹52.31 lakh, the ITAT observed that the assessee claimed to possess complete donor details and contended that the amount actually represented excess income/grants capitalized in the books. Since proper examination had not been carried out by the AO, the Tribunal restored the issue back for fresh verification.
Accordingly, the appeal of the assessee was partly allowed
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 05/07/2024 in respect of the A.Y. 2018-19.
2. The brief facts of the case are that the assessee is a charitable trust registered u/s. 12AA of the Act. The assessee filed their return of income on 09/10/2018 along with the form 10. The assessee in the Schedule 1 to the return of income had mentioned the sum of Rs. 1,44,00,000/- as the accumulated amount. But while filing the form 10, the said fact was not mentioned in the form. Therefore the AO had proposed to disallow the accumulation of the income. Similarly, the AO had proposed to add the balance of corpus funds available as on 31/03/2017 as income. The difference has been treated as anonymous donation as per section 115BBC of the Act. The AO had proposed that the donation of Rs. 52,31,184/- has to be taken as anonymous donation as per section 115BBC of the Act. The AO had also disallowed the depreciation claimed by the assessee and to that effect, an assessment order has been passed.
3. As against the said order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) had not accepted the claim of the assessee and dismissed the appeal filed by the assessee.
4. As against the said order, the assessee is in appeal before this Tribunal.
5. At the time of hearing, the Ld.AR submitted that the assessee had claimed for the accumulation of the corpus donation of Rs. 1,44,00,000/- in the return of income and in the audit report filed in form 10B but mistakenly not mentioned the said details in the original form 10 filed on 09/10/2018 and therefore a revised form 10 was filed in which the mistake has been corrected and therefore the addition made by the AO is not correct. The Ld.AR further submitted that the assessee had all the details of the donors and also the donations were received through banks and therefore the addition made by the AO is not correct. The Ld.AR further submitted that the AO had failed to note that the original form 10 was filed in time and the mistake crept in the said form 10 was rectified and a revised form 10 was filed by the assessee before passing the assessment order and therefore the disallowance and the addition made by the AO is not in order. The Ld.AR further submitted that the corpus donations were received for capital expenses of construction of building and therefore the same could not be treated as revenue receipts and assessed to tax.
6. The Ld.AR further submitted that the addition by treating the donations as anonymous donation and not accounted by the assessee is also not correct since the income over expenditure for the period ended 31/03/2018 and 31/03/2017 was capitalized. The Ld.AR further submitted that the grant was given by the Ministry of Rural Development, Government of India and treated the unspent grants as their own money at the end of the year and the said amounts were treated as the grants granted in the next year. Therefore the said unspent grant even though shown as capital fund in the balance sheet, it belongs to the Ministry of Rural Development and therefore the same was not shown in the return of income. The Ld.AR therefore submitted that the additions made by the AO and confirmed by the Ld.CIT(A) has to be deleted.
7. The Ld.DR submitted that the assessee had filed form 10 along with the return of income in which the said accumulation was not mentioned and therefore the AO had rightly made the addition. Similarly, the excess income over the expenditure even though it belongs to the Ministry of Rural Development, the assessee had not mentioned about the same in the return of income and therefore the said amount has been added as anonymous donation u/s. 115BBC of the Act.
8. We have heard the arguments of both sides and perused the materials available on record.
9. In this appeal, the first dispute involved is that the addition made by the AO on the accumulation of income which was not mentioned in the form 10 filed along with the return. We have considered the materials placed by the assessee from which all the documents such as return of income and audit report exhibits that the accumulation of amount by the assessee. But unfortunately, while filing the form 10, the said amount was inadvertently not mentioned in the said form and therefore the assessee had corrected the said mistake by filing a revised form 10. We also found that the said revised form 10 was filed before the assessment has been completed by the AO.
10. We accept that it is an inadvertent mistake since the return of income as well as the audit report clearly mentioned about the accumulation of the said income. The assessee also voluntarily found out the said mistake and filed a revised form 10. When such being the case, the AO is not justified in making the said addition by disallowing the accumulation u/s. 11(2) of the Act. The assessee had not filed the rectified return of income and the audit report and therefore in the basic records, the accumulation was very much available and only in the statement in form 10, the mistake has been committed by the assessee which was rectified suomoto by filing a revised form 10. In such circumstances, we are not accepting the findings of the Ld.CIT(A) as well as the AO and allow the appeal filed by the assessee insofar as this issue is concerned.
11. The second dispute involved in this appeal is about the addition made u/s. 115BBC of the Act by treating the said amount as anonymous donation and not accounted for by the assessee. The case of the assessee is that it is the excess income over the expenditure for the period ended 31/03/2018 and 31/03/2017 which has been capitalized. It is also the case of the assessee that the said unspent grant along with the interest kept by the assessee in their bank account does not belongs to the assessee and therefore the said amount was not shown in the return of income filed by the assessee. We have considered the said fact and also the fact that the excess income of Rs. 55,06,509/- is the excess income for the year ending 31/03/2018 and 31/03/2017 and after deducting 5%, the donation comes out Rs. 52,31,184/- for which all the details were available with the assessee. It seems from the assessment order, no proper explanation was given by the assessee about the said excess income and therefore the AO had added the said amount as anonymous donation u/s. 115BBC of the Act. Before us, it was submitted that it could not be termed as anonymous donation since the assessee is having all the details about the donations given by various persons and therefore it could not be treated as anonymous donation. Therefore we are of the view that this issue has to be relooked into by the AO by considering the various objections and the documents and thereafter arrive a conclusion that whether the said donations are anonymous or not. We, therefore set aside the order of the AO as well as the Ld.CIT(A) insofar as this issue is concerned and remit this issue to the file of the AO for denovo consideration. We also direct the assessee to appear before the AO along with the documents and establish their case that there is no anonymous donation received by the assessee.
12. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 25th May, 2026.
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