Due Date for Income tax Compliance (June 2024)

Under-Reporting vs. Misreporting:
Under section 270A, under-reporting and misreporting are treated as separate offenses. Under-reporting is detailed in sections 270A(1) and (2), while misreporting is covered under sections 270A(9) and (10).

Conditions for Immunity under Section 270AA:
The AO must consider three aspects: compliance with section 270AA(1), the lapse of the appeal period under section 249(2)(b), and whether the penalty pertains to misreporting under section 270A(9).

Examination of Immunity Application:
Immunity cannot be denied unless the penalty is based on misreporting as defined in section 270A(9).
The AO failed to establish specific findings of misreporting, such as false entries or unsubstantiated expenditures, in the assessment order or SCNs.

Deficiencies in SCNs and Assessment Orders are as follows:
The SCNs did not clearly specify whether the petitioner was charged with under-reporting or misreporting, rendering them ambiguous and unsustainable.
Both the assessment orders and SCNs failed to meet the specificity requirements established in previous cases [CIT v. Minu Bakshi and Schneider Electric South East Asia (HQ) (P) Ltd. v. CIT]
The petitioner argued that the disputed income should not be considered royalty based on a legitimate interpretation of the legal regime.
The petitioner had complied with all statutory pre-conditions for immunity under section 270AA(1).

Conclusion of the case:
The court found that the rejection of the immunity application and the SCNs were unsustainable due to the lack of specific findings of misreporting. The writ petitions were allowed, the orders rejecting the immunity application were quashed, and the SCNs were also quashed. The petitioner was entitled to consequential reliefs, and there was no need to further pursue or reconsider the immunity applications.

2.Trust not eligible for claiming exemption u/s 10(23C)(iiiad) if it wasn’t existing solely for educational purposes: ITAT
In this case ,The assessee, Prahar Foundation, a charitable trust, appealed against the orders dated 15.11.2021 and 12.11.2021 by the National Faceless Appeal Centre (NFAC), Delhi, which upheld the assessments by the Assessing Officer (AO), DCIT, Exemptions Circle, Coimbatore. The assessments were for the fiscal years 2014-15 and 2015-16, determining the trust’s total income without granting exemption under section 10(23C)(iiiad) of the Income Tax Act, 1961.

Delay in Filing Appeals :
The appeals were delayed by 752 and 755 days. The delay was attributed to the trustee’s demanding medical profession, the death of the managing trustee, and the subsequent handling of trust affairs by inexperienced trustees. An affidavit explaining these reasons was submitted, and the tribunal condoned the delay, admitting the appeals for adjudication.

Issue :
The main issue was whether the trust existed solely for educational purposes and was therefore eligible for exemption under section 10(23C)(iiiad).

Tribunal’s Decision :
The tribunal referenced a previous decision in the assessee’s own case for AY 2009-10, where it was determined that the trust did not exist solely for educational purposes. The trust had 42 listed objectives, and its activities were not limited to education. Additionally, the trust had claimed exemption under section 10(23C)(iiiad) only after it faced the likelihood of disallowances.

Conclusion :
Following the precedent set in the earlier case, the tribunal upheld the NFAC’s decisions, denying the exemption and dismissing the appeals. The trust was found not to exist solely for educational purposes, and thus, was not entitled to the claimed tax exemption under section 10(23C)(iiiad).