I-T department allows condonation of delay in filing audit reports by trusts, institutions

The Income Tax Department has allowed condonation of delay in filing audit reports by trusts, institutions, universities and hospitals who claim tax exemption.

Any funds, trusts, institutions including educational and medical universities or hospitals claiming income tax exemption will have to get their accounts audited if their total income of that year exceeds the maximum amount not chargeable to tax.

Income tax law mandates that such institutes can claim tax benefits available to them only after furnishing the tax audit report in form 10BB before the prescribed time.

The Central Board of Direct Taxes (CBDT) in a circular said that income tax commissioners would admit belated applications in filing Form 10BB for years prior to assessment year (AY) 2018-19 for "condonation of delay".

"The commissioner, while entertaining such applications regarding filing form 10 BB, shall satisfy themselves that the applicant was prevented by reasonable cause from filing such application within the stipulated time. Further all such applications shall be disposed of by March 31, 2021," it said.

Sandeep Jhunjhunwala, Partner, Nangia Andersen LLP, said thus relief to condone delay in filing audit reports of trusts, institutions, universities, and hospitals is much anticipated, as similar relief was given to other charitable organisations at the beginning of 2020.

"Many NGOs were not able to claim any tax benefits available to them from AY 2016-17 for non-furnishing of tax audit reports. With a deadline to dispose of such condonation applications for earlier years, such organisations will be hopeful to claim their tax benefits for past years," he said.

Many organisations had filed a representation before the tax authorities that they were unable to file their return along with an audit report and to condone the same in order to claim benefit and to avoid litigation.
Taking into consideration their plea, the authority has issued a circular on November 3 for condonation of delay for filing form 10BB.

In this regard, now the authorities have provided relief to such institutes by expediting the process to dispose of such condonation applications.

The authorities have set a deadline to close all the applications prior to AY 2018-19 by March 31, 2021 and post that all other applications with a delay of 365 days shall be condoned.

Amit Maheswari, Tax Partner, AKM Global, said that form 10BB audit report is required to be filed electronically along with the return so that the trusts, institutions, universities, and hospitals remain entitled to the exemption under section 10(23C).

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"The condonation in filing of form 10BB is a relief to such institutions as non-filing on time directly affects their exemption status," Maheswari added.