FORM 10BB for ITR 7

Hey Ramkumar,

This is a common issue many trusts face with Form 10BB and ITR-7. Here’s a breakdown and some steps your client can consider:

Context:

• Form 10BB is specifically for audit report filing under section 10(23C) trusts.

• Earlier, Form 10B (for tax audit under section 44AB) was filed, but that does not substitute Form 10BB.

• Due to non-filing of Form 10BB, the AO did not allow exemption under 10(23C), resulting in tax demand.

• Rectification request was rejected by CPC as not a “mistake apparent from record” because the exemption issue is a substantive one, not a clerical error.

Next Steps to Reduce Tax Liability:

1. File a Rectification Application at AO Level

   • Instead of CPC, file a rectification application directly with the Assessing Officer citing the genuine mistake that Form 10BB was not filed along with the return.

   • Attach the Form 10BB audit report now and request re-consideration of exemption.

2. File an Appeal

   • If AO rejects rectification, the next step is to file an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].

   • Highlight that the exemption was rightly available if Form 10BB is filed, and the mistake was genuine.

3. Provide Explanation and Evidence

   • Along with Form 10BB, provide a detailed letter explaining the error, timelines, and proof of audit report completion.

   • If audit report was prepared on time but not filed, emphasize the intent to comply.

4. Future Compliance

   • For future years, ensure Form 10BB is filed timely to avoid similar issues.

5. Consult a Tax Expert

   • Since trust taxation can be complex, consulting a specialist CA who deals with charitable trusts could help frame submissions effectively.