2023 (9) TMI 1224 - HC - Income Tax

Difficulty being faced by the Trusts to file income tax return (ITR) - Trust directed to switch from ITR-2 to ITR-5 e-filing functionality commencing from AY 2021-22 - principal grievance of all three trusts is that while they have been directed to switch from ITR-2 to ITR-5 e-filing functionality commencing from AY 2021-22, concerning the deductions/rebates which were available to them when they were treated as individual assessees are not available in the new format - HELD THAT - It appears that, grudgingly, this aspect has been accepted by the respondents/revenue. It is the stand of the respondents/revenue, conveyed via Mr Abhishek Maratha, learned senior standing counsel, who appears on behalf of the respondents/revenue, that the trusts can ventilate their grievances in the regular appellate forum . According to us, this is not a satisfactory response. As goes on to submit that the trusts can also approach the Central Board of Direct Taxes (CBDT), with an appropriate application for redressing their difficulties. In this context, our attention has been drawn by Mr Maratha to Section 119. The response, according to us, would not help in resolving the difficulty faced by the trusts before us as, ordinarily, the deductions/rebates claimed by the assessees should be embedded in the Return of Income (ROI). This is a recurring problem which the respondents/revenue will have to address. This problem may occur in the future concerning other assessees i.e. private discretionary trusts as well. We may note that up until today, the stand of the respondents/revenue was that they would resolve the glitch obtaining in the e-filing system. This is evident upon a perusal of the orders dated 31.10.2022, 09.12.2022, 06.01.2023 and 17.04.2023. As a matter of fact, a perusal of our order dated 09.12.2022 would show that the applications moved on behalf of the trusts for being permitted to file returns for the aforementioned AYs in physical form were closed, as it was portrayed to the court that the respondents/revenue are attempting to resolve the glitch in the e-filing system. All these factors would have to be taken into account by the respondent no. 2, i.e., the CBDT, while deliberating on the plea articulated by the petitioner trusts in their respective writ petitions. Thus, the above-captioned writ petitions are disposed of with a direction to respondent no. 2/CBDT, to look into the matter and resolve the difficulty articulated by the aforementioned petitioner trusts. Respondent no. 2/CBDT will treat the writ petitions as applications filed u/s 119 keeping in mind that this is a recurring problem. Respondent no. 2, i.e., the CBDT, is requested to pass a speaking order; a copy of which will be furnished to the petitioner trusts. List the above-captioned writ petitions for compliance on 09.11.2023.

Summary

Issues involved:
The writ petitions involve concerns regarding the switch from ITR-2 to ITR-5 e-filing functionality for Assessment Year (AY) 2021-22 & 2022-23, specifically related to deductions/rebates not being available in the new format for private discretionary trusts.

Judgment Details:

Issue 1: Availability of deductions/rebates for trusts
The principal grievance raised by the trusts is the unavailability of deductions/rebates in the new e-filing format, despite being directed to switch from ITR-2 to ITR-5 for the mentioned assessment years. The respondents/revenue have reluctantly accepted this issue, but have suggested that the trusts can address their concerns in the "regular appellate forum" or by approaching the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act, 1961.

Issue 2: Respondents' response and recurring problem
The court finds the response of the respondents/revenue unsatisfactory, as the deductions/rebates should ideally be included in the Return of Income (ROI) itself. The judgment highlights that this is a recurring problem that needs to be addressed by the authorities, considering that similar issues may arise for other private discretionary trusts in the future.

Issue 3: Direction to CBDT for resolution
In light of the persisting difficulty faced by the petitioner trusts and the failure of the respondents/revenue to resolve the glitch in the e-filing system, the court directs respondent no. 2/CBDT to examine the matter and resolve the concerns raised by the trusts. The CBDT is instructed to treat the writ petitions as applications under Section 119 of the Act and provide a detailed response, with a copy of the order to be shared with the petitioner trusts. The court schedules a compliance hearing for the parties on 09.11.2023, emphasizing that actions should be based on the digitally signed copy of the judgment.