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 Board of Direct Taxes as respondent and issuing notice returnable on 22.7.2025. The petitioner, a private discretionary trust previously allowed to file ITR-2 up to AY 2020-21, was unable to file ITR-2 from AY 2021-22. The Court expects CBDT to assist in determining whether the petitioner should continue to be treated for filing and tax-slab purposes as an individual (ITR-2) or be required to file ITR-5.

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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.

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