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Facts
The assessee claimed a deduction for accumulated income under Section 11 of the Income Tax Act. The lower authorities disallowed the deduction solely because Form 10 was filed after the due date of the return.
Held
The Tribunal held that the filing of Form 10 before the due date is a directory provision, not mandatory. Therefore, the disallowance based on the belated filing was erroneous.
Key Issues
Whether the disallowance of exemption under Section 11 due to belated filing of Form 10 is sustainable when the provision is directory, not mandatory.
Sections Cited
143(1), 11, 139(1)
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER These assessee’s twin appeals & 3373/Del/2025 for assessment year 2017-18 arise against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/APL/S/250/2024-25/1075196674(1), dated 28.03.2025, involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
At the very outset, it has been brought to our notice that against the very same order of learned CIT(A), the assessee has wrongly filed another appeal before the ITAT, registered as , which is dismissed having become infructuous.
This assessee’s first appeal raises the following substantive grounds:
1. 1. On the facts and circumstances of the case the Ld. CIT(A) has erred in upholding the disallowance of deduction Rs 12,15,020/- being accumulation in excess of 15 percent claimed by the appellant u/s Section 11 of the Income Tax Act, 1961 merely on the basis that Form 10 was not filed before due date of filing of return of Income.
2. That the order of the CT(A) is not sustainable in law in as- much-as the order has been passed without affording opportunity of being heard through virtual hearing despite repetitive requests by the appellant, which is against the principal of natural justice.
3. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.
4. A perusal of the assessee’s above extracted pleadings indicates that both the learned lower authorities have refused to its section 11 exemption claim for the sole reason of belated filing of tax audit report Form 10, on or before the due date of filing of section 139(1) return. The Revenue’s case accordingly is that the 2 | P a g e above compliance of timely filing of Form 10 tax audit report is mandatory. Case law 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 10 tax audit report is directory than a mandatory provision. That being the case, I 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.