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Facts
The assessee filed its return showing NIL income but filed its audit report (Form 10B) 4 days after the due date. The CPC processed the return disallowing the exemption u/s 11 as the audit report was not filed on time. The assessee filed a rectification application which was not decided, and subsequently, filed an appeal before the CIT(A) after a significant delay, which was dismissed by the CIT(A) for being time-barred.
Held
The Tribunal held that the delay in filing Form 10B was condonable, referencing various High Court judgments that treat the filing of an audit report as a procedural requirement rather than a substantive one. The Tribunal also noted that CBDT circulars do not curtail the appellate authorities' powers to condone delay. The Tribunal directed the AO to consider the belatedly filed Form 10B and determine the tax liability.
Key Issues
Whether the delay in filing the audit report (Form 10B) can be condoned by the appellate authorities, and if so, whether the assessee is entitled to the exemption under Section 11 of the Income Tax Act.
Sections Cited
143(1), 11, 119, 119(2)(b)
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Before: SHRI NARENDER KUMAR CHOUDHRY
आदेश / O R D E R PER NARENDER KUMAR CHOUDHRY [J.M.] :-
The present appeal has been preferred by the Assessees against the 1st appellate order dated 04.09.2025 impugned herein passed by the Learned Commissioner of Income-tax, Appeal, ADDL/JCIT(A)-3, Delhi [hereinafter referred to as “Ld. Commissioner”] under section 250 of the Income Tax Act {in short ‘Act’} for the Assessment Year [A.Y.] 2020-21.
In the instant case, the Assessee by filing its return of income for the AY under consideration on dated 20th Jan, 2021 had shown the total income as ‘NIL’. The Assessee’s trust then filed its audit report in Form 10B online on 19th Jan, 2021 i.e. after the due date which was 15th Jan, 2021. Subsequently, the return filed by the Assessee was processed u/s. 143(1) of the Act on dated 30.11.2021 by the CPC, whereby, the exemption claimed u/s. 11 of the Act was disallowed to the Assessee by determining the total income of the Assessee at Rs. 23,37,474/- on the ground that the audit report in form 10B was not filed on time.
The Assessee, thereafter, filed a rectification application before the CPC on dated 1st Dec, 202, however, no order was passed against that application. The Assessee, therefore, filed another application on dated 02.09.2022 and kept waiting with a belief in good faith that it will get relief through rectification application in due course of time and thus preferred not to file 1st appeal before the Ld. Commissioner. However, subsequently, the Assessee on not receiving any order on the rectification application for a long time, contacted Ld. Chartered Accountant, who advised for filing of an application u/s. 119 of the Act before the Hon’ble PCIT/CCIT. However, as per circular No. 16/2024 dated 18.11.2024, the application could be filed only up to three years from the end of assessment year and since, the time limit has already been expired and therefore, Ld. Chartered Accountant advised the Assessee to file the present appeal before the Ld. Commissioner and therefore the appeal was filed immediately on dated 16.12.2024, however, with the delay of filing of 931 days in filing the same. And, therefore, the Assessee before the Ld. Commissioner requested for condonation of delay, however, the Ld. Commissioner rejected the condonation request and consequently dismissed the appeal of the Assessee being barred by limitation.
Thus, the Assessee being aggrieved has preferred instant appeal.
Heard the parties and perused the material on record. Admittedly, the Assessee by filing Form no. 10B with a delay of 04 days, before the CPC made available the same before the processing of the return filed, which was somehow not accepted by the CPC/AO and therefore, the Assessee, instead of challenging such order of the CPC, may be inadvertently or on a wrong advice, filed a rectification application before the CPC, successively. However, could not get any relief and ultimately on being advised by the known tax consultant, the Assessee preferred first appeal before the Ld. Commissioner but with a delay.
This Court thus observes that facts and issues involved are almost similar to the case as decided by the Hon’ble Coordinate Bench of the Tribunal in the case of Shri Bhagwandas Ramdasji Charitable and Religious Trust vs. ITO (Exemption) – 2(3) Mum (ITA No. 4451/Mum/2025) decided on 30.09.2025, wherein, the Hon’ble Bench by considering the identical facts and circumstances, accepted delay in filing appeal before the Ld. Commissioner and directed the AO to consider Form no. 10B filed by the Assessee with a delay of 6 days, as valid and verify the facts and determine the tax liability qua deduction/exemption claimed u/s. 11 of the Act, as per law, by observing and holding as under:
“6. The Assessee, being aggrieved, has preferred this appeal. As observed above, admittedly, the Assessee though had filed its return of income within the due date as prescribed, however, filed the Form 10B with delay of 06 days, which resulted into not allowing the exemption claimed by the Assessee by CPC and confirmation thereof by the Ld. Commissioner by taking refuge of the aforesaid CBDT circular without condoning the delay. Therefore, the following question emerge:
“As to whether the Assessee is entitled to get the deduction claimed on the basis of Form-10-B filed belatedly and/or on rejection of delay application u/s 119(2)(b) of the Act”.
7. First, we will address the question “As to whether CBDT Circular no. 06/2020 dated 19/02/2020 as relied on by the Ld. Commissioner, has created any bar or curtailed the powers of the appellate authorities, to condone the delay in filling of appropriate Forms”.
7.1 We observe that the Hon’ble Gujarat High Court in the case of Association of Indian Panelboard Manufacturer vs. DCIT in R/Tax Appeal No. 655/2022 decided on 21/03/2022 has also dealt with identical Circular and Issue, wherein Tribunal refused to entertain condonation of delay in filing of Form 10B on the ground that as per CBDT Circular No. 07/2018 dated 20/12/2018, the powers have been vested with certain authorities for condonation of delay u/sec. 119 of the Act. 7.2 The Hon’ble High Court has held as under: “That the Tribunal further committed an error in appreciating the merit of section 119(2)(b) of the Act, inasmuch as the application contemplated thereunder is only additional remedy for the Assessee which could not be said to be compulsorily resorted to by the Assessee. The Circular No. 07/2018 dated 20/12/2018 issued u/sec. 119 of the Act could not be, therefore said to have taken away the appellate authority.”
7.2 Thus, from the decision of the Hon’ble High Court it has become clear that CBDT by issuing Circular (as relied on by the Ld. Commissioner in this case} entrusting the powers to the Commissioner of Income Tax (Exemptions) or Chief Commissioner of Income Tax for condonation of delay in filing appropriate Forms for claiming deductions as applicable, has not created any bar or not curtailed the powers of the appellate authorities, which are otherwise, entrusted under the Statute. In fact, Circular CBDT Circular no. 06/2020 dated 19/02/2020 is ancillary to the respective provision and/or the powers of the appellate authorities for condonation of delay in appropriate and deserving cases for filing of proper Forms as prescribed and required. Thus, the question posed is answered in “affirmative”. 7.3 Coming to the main question/issue posed “as to whether the Assessee is entitled to get the deduction claimed on the basis of Form-10- B filed belatedly”, we observe that various High Courts including the Hon’ble Gujarat High Court in the aforesaid case, also dealt with identical issue, wherein there was a delay in filing of Form 10B and, therefore, the claim of the Assessee u/sec. 11 of the Act was denied. The Hon’ble High Court by analyzing various judgments of the Hon’ble High Courts ultimately held “that filing of audit report is held to be substantive requirement but not the mode and stage of filing, which is procedural. Once the audit report in Form 10B is filed to be available with the Assessing Officer, before assessment proceedings take-place, the requirement of law is satisfied”.
8. We further observe that in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) (2021) 125 taxmann.com 75 (Guj.) the Hon’ble Gujarat High Court has also dealt with the identical issue qua filing of Form 10B belatedly, however, in that case the Assessee approached the Appropriate Authority u/s 119(2b) of the Act for condonation of delay in filing of Form 10B. The Hon’ble Gujarat High Court by considering the Issue, held as under: “That in the cases of delay in filing form 108 the approach of the authorities ought to be equitious, balancing and judicious. Further, availing of exemption should not be denied merely on the bar of limitation especially when the legislature has conferred wide discretionary powers to condone such delay on the authorities concerned. This Court in CIT Vs. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj.) has also held that provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. Benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the Assessee to produce the audit report at a later stage either before the Income Tax Officer or before the appellate authority by assigning sufficient cause”.
9. We further observe that the Hon’ble Gujarat High Court in the case of CIT (Exemption) Vs. Laxminarayandev Shikshan Seva Kendra (2024) 167 taxmann.com 548 (Guj.) (10.09.2024) has also dealt with the issue “wherein the Form 10B was filed during the course of appellate proceedings before the Commissioner (Appeals) who allowed the benefit of section 11 of the Act to the Assessee” and the Tribunal upheld the said decision of the Ld. Commissioner. The Hon’ble Gujarat High Court by taking cognizance of the fact and the decision in the case of Sarvodaya Charitable Trust case (supra) approved the decision of the Tribunal in following the judgment in the case of Social Securities Scheme of GICEA Vs. Commissioner of Income Tax (Exemption), Ahmedabad dated 21.12.2022 in Special Civil Application No.17612 of 2022), wherein it has been held as under: “That though filing of audit report is mandatory in nature and substantial compliance is required to be made, however, furnishing of audit report along with return filed, is to be treated as a procedural requirement”.
The Hon’ble Gujarat High Court also distinguished the judgment of the Hon’ble Apex Court in the case of Pr. CIT Vs. Wipro Ltd. (2022) 446 ITR (1)(SC), which has been relied on by the then Ld. Commissioner, in approving the decision of the CPC, while rejecting the deduction claimed by the Assessee u/s 11 of the Act.
We further observe that the Hon’ble Jurisdictional High Court in the case of Mirae Audit Foundation Vs. Pr. Commissioner of Income Tax-6, Mumbai & Ors. has also taken into consideration the judgment of the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust case (supra) and ultimately condoned the delay of 246 days in filing of Form 10B by holding as under: “That if delay is not condoned, there will be genuine hardship to the petitioner, in as much as the petitioner would be denied the exemption otherwise claimed under the provisions of section 11 of the Act and which is substantial amount”.
Thus, on the aforesaid analyzations, the question posed is answered in “affirmative” and consequently, we direct the AO to consider Form no.10B filed by the Assessee, as valid and verify the facts and determine the tax liability qua deduction/exemption claimed by the Assessee u/sec. 11 of the Act as per law.”
This court thus, considering the peculiar facts and circumstances in totality specific to the effect “that there was delay of 04 days in filing of audit report but the same was available at the time of processing the return filed and the Assessee may be inadvertently or on wrong advice prosecuted the issues / case before the wrong forum and could not get any success and the Co-ordinate Bench in the case referred to above has also dealt with identical delay and allowed the relief” is inclined to condone the delay occurred in filing first appeal before the Ld. Commissioner, however, subject to deposit of Rs. 11000/- in the Revenue Department, under ‘other heads’ within 15 days of the receipt of this order. Thus, the delay is accordingly condoned with the cost observed above.
Coming to the merits of this case, as observed above, the Hon’ble Coordinate Bench of the tribunal has elaborately dealt with the identical issue and therefore, respectively following the order of the Hon’ble Bench, this court is inclined to grant the same relief and consequently direct the Ld. AO to consider Form No. 10B filed by the Assessee as valid and verify the facts and determine the tax liability/exemption claimed by the Assessee u/s. 11 of the Act, as per law. Thus, it is ordered accordingly.
In the result, the Assessee’s appeal is allowed for statistical purposes in the aforesaid terms. Order pronounced in the open court on 28/11/2025.