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Facts
The assessee's appeals for assessment years 2018-19 and 2019-20 arose from orders disallowing Section 11 exemption claims. The reason for disallowance was the failure to file/upload the prescribed Form 10B tax audit report within the due date of filing the Section 139(1) return.
Held
The tribunal held that the requirement to file Form 10B is directory, not mandatory, citing a Gujarat High Court precedent. Therefore, the disallowance of the Section 11 exemption based solely on this procedural lapse was deemed incorrect.
Key Issues
Whether the failure to file Form 10B within the due date for filing the return of income renders the Section 11 exemption claim invalid, or if such compliance is merely directory.
Sections Cited
143(1), 11, 139(1), 10B
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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI MANISH AGARWAL
Date of hearing 13.08.2025 Date of pronouncement 13.08.2025 ORDER PER SATBEER SINGH GODARA, JM These assessee’s twin appeals & 622/Del/2025 for assessment years 2018-19 and 2019-20 arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-1, Jaipur’s orders, both dated 20.01.2025 having DIN and order no. ITBA/APL/S/250/2024-25/1072325559(1) and ITBA/APL/S/ 250/2024-25/1072325690(1), involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case files perused.
Suffice to say, it transpires during the course of hearing that both the learned lower authorities have disallowed section 11 exemption claim(s) to the assessee; involving varying sums for the sole reason that it could not file/upload the prescribed 10B tax audit report within “due” date of filing section 139(1) return. The Revenue vehemently argues that the impugned disallowance of section 11 exemption deserves to be upheld as the above compliance is mandatory in nature.
We find no merit in the Revenue’s instant sole substantive grievance in light of CIT vs. Xavier Kelavani Mandal (P.) Ltd., [2014] 41 taxmann.com 184 (Guj.) has already settled the issue in assessee’s favour that the foregoing compliance of filing/upholding form 10B tax audit report is only directory than mandatory in nature. That being the case, we find merit in the assessee’s instant sole substantive grievance and direct the learned Assessing Officer to frame its consequential computation as per law after verifying all the relevant facts.