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Facts
The assessee's appeal for AY 2021-22 arose against the order of CIT(A) which refused a deduction of Rs. 46,30,420/-. The refusal was based on the belated filing of the tax audit report in Form 10B. The assessee did not appear before the tribunal, and the case proceeded ex-parte.
Held
The tribunal held that the requirement of filing the tax audit report (Form 10B) on or before the due date of filing the return is directory, not mandatory, as per established case law. Therefore, the refusal of the exemption claim solely on this ground was incorrect.
Key Issues
Whether the belated filing of the tax audit report in Form 10B renders the assessee ineligible for claiming exemptions under Section 11(1) of the Income Tax Act, 1961.
Sections Cited
143(1), 11(1), 139(1)
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 03.06.2025 Date of pronouncement 03.06.2025 ORDER This assessee’s appeal for assessment year 2021-22, arises against the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)- 1, Visakhapatnam’s DIN and order no. ITBA/APL/S/250/2024- 25/1073818616(1), dated 28.02.2025 involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte.
This assessee’s appeal raises the following substantive grounds: “1. That the Ld. Commissioner of Income Tax (A) has erred in not allowing the deduction of Rs. 46,30,420/- which is bad in law and hence needs to be annulled. 2. That the Ld. Commissioner of Income Tax (A) has erred in not allowing the deduction of Rs. 46,30,420/- and upholding the Intimation Order of the CPC, which is the deemed application under clause (2) of the Explanation to section 11(1) during the previous year 2020-21 and reported in the Audit Report Form No. 10B on the basis of Form No. 9A, filed timely and accepted on 03.02.2022 under rule 17(1). That it is prayed the legal deduction with due compliance may please be allowed to the assessee.
That the assessee craves indulgence to amend, alter, add or modify any or all the grounds of appeal and/or take additional grounds of appeal.”
3. 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 10B, on or before the due date of filing of section 139(1) return. The Revenue’s case accordingly is that the above compliance of timely filing of Form 10B 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 10B tax audit report is directory than a mandatory provision. That being the case, I find merit in the assessee’s instant sole