2025 (7) TMI 1899 - HC - Income Tax

CBDT asked to resolve conflicting guidance on whether private discretionary trusts should file ITR-2 (individual) or ITR-5

HC directed that contradictory CBDT instructions on whether a private discretionary trust must file ITR-2 or ITR-5 be resolved by joining the Central ... Non-acceptance of the Form ITR-2 filed by the petitioner for the Assessment Year 2021-2022 onwards in terms of Section 139(1) -Petitioner is required to file ITR-2 or ITR-5 - contradictory circulars - petitioner, which is a Private Discretionary Trust, cannot file the return in Form ITR-2 but the petitioner is required to file Form in ITR-5 in view of ‘CBDT’ instructions for filing of Form ITR-5. HELD THAT:- It is the case of the petitioner that till the AY 2020-2021, the system was accepting the return in Form ITR-2, but since Assessment Year 2021-22, the petitioner is unable to file the return in Form ITR-2, though the petition is to be treated as an individual as per the decision of Niti Trust [1996 (6) TMI 75 - GUJARAT HIGH COURT] and Deepak Family Trust No. 1 [1993 (12) TMI 20 - GUJARAT HIGH COURT] as well Circular No. 6/12 dated 3.8.2012 issued by the CBDT. In view of the above contradictory circulars appears to have been in existence, we direct the petitioner to join ‘Central Board of Direct Taxes” as party respondent No. 4. Issue Notice to ‘Central Board of Direct Taxes’, returnable on 22.7.2025. To be served through learned Senior Standing Counsel Ms. Maithili Mehta, by email. We expect that the CBDT to assist the Court to decide the issue whether the petitioner is required to file ITR-2 or ITR-5, in view of the controversy raised in this petition as upto Assessment Year 2020-21, the petitioner was considered as an individual entitled to have the benefit of Chapter-VI and the the Income Tax Slab, which would be changed if the petitioner is required to file ITR-5. Petitioner, a Private Discretionary Trust, seeks direction after the system ceased accepting Form ITR-2 from Assessment Year 2021-22 onward, on the ground that it must file ITR-5 per CBDT instructions, whereas petitioner contends it should be treated as an individual entitled to Chapter VI-A benefits and personal income-tax slab rates, relying on precedents including Niti Trust v. Commissioner of Income-Tax and Commissioner of Income-Tax v. Deepak Family Trust No. 1 and CBDT Circular No. 6/12 dated 3.8.2012. Court observed contradictory CBDT instructions and directed joinder of the 'Central Board of Direct Taxes' as respondent No. 4 and issued notice returnable 22.7.2025, to be served through Senior Standing Counsel. Court expects the CBDT to assist on whether the petitioner 'is required to file ITR-2 or ITR-5', noting that classification affects entitlement to Chapter-VI benefits and applicable income-tax slab treatment. Direct service permitted.