INCOME TAX OFFICER(EXMP)-2(4), MUMBAI , MUMBAI vs. VISHNU JANARDAN SHIROLKAR MAHAJAN WADY TRUST, MUMBAI

1. And held as under:- “3. The issue in narrow compass and is about the Commissioner of Income-tax (Appeals) directing acceptance of audit report from the assessee and granting exemption under section 11 of the Income-tax Act, 1961 (hereinafter referred to as `the Act' for sake of brevity). 3.1 The assessee filed its return of income for the Assessment Year 2006-07. On verification, the Assessing Officer noticed that the assessee had not furnished audit report in Form No.10B, which was compulsory requirement for eligibility of exemption under section 11A of the Act as stated in section 12A(b) read with Rule 17B of the Income Tax Rules, 1962. Assessee was issued show cause notice as to why exemption claimed by it under section 11 should be disallowed. The Assessing Officer passed order denying the exemption. He taxed gross receipts without granting deduction of expenditure. 3.2 In the appeal preferred by the assessee, the Commissioner of Income-tax (Appeals) permitted the assessee to file the audit report and directed to accept the same by his order dated 16.04.2009 and the exemption under section 11 of the Act allowed. The Department filed appeal which came to be dismissed by the impugned order bringing the Department before this Court by way of present appeal. 4. The question whether it is permissible to the assessee to produce the audit report at the appellate stage, has already been answered by this court in CIT v. Gujarat Oil & Allied Industries Ltd. [1993] 201 ITR 325 (Guj.), wherein it is held that the provision regarding furnishing of audit report along with the return has to be treated as a procedural provision. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income, but produced before completion of the assessment. The Punjab and Haryana High Court in CIT v. Shahzadanand Charity Trust [1997] 228 ITR 292/[1998] 96 Taxman 494 has reiterated the same principle holding that the 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 showing a sufficient cause. This decision of Punjab & Haryana High Court has been relied on by the Tribunal. 5. In the above view, the Tribunal is eminently justified both in law and on facts in observing and holding as under:— "In this case, it is not in dispute that the audit report in prescribed form was obtained prior to filing of the return on 20/12/2006; therefore, there was no reason for the assessee to keep the audit report with it in order to loose the exemption. The assessee in the earlier as well as in the subsequent assessment years filed the audit report and got the exemption. The conduct of the assessee in earlier year and subsequent years would prove that due to the facts stated above there was delay in filing the audit report and the contention of the assessee was supported by the affidavit of Mohmad Iqbal Vohra (PB-4). The learned CIT(A) on proper appreciation of the facts and material on record in the light of the decisions of the Hon'ble Punjab & Haryana High Court and the Hon'ble Calcutta High Court rightly directed the AO to accept the audit report of the assessee and grant exemption u/s. 11 of the IT Act."

For the above reasons, the appeal of the Revenue is devoid of merit, raising no question of law much less any substantial question of law.”

Similar view was taken by the Co-ordinate Bench in the case of Church of Our Lady of Immaculate Conception in ITA No. 4999 & 4998/Mum/2025. The relevant findings of the Co-ordinate Bench read as under:- “We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by the Id. AR of the assessee. We find that there is very short dispute in the present appeal. Admittedly, there is delay of 29 days in filing Form 10B. Though, the same was filed along with the return of income. Return of income was filed within extended period allowed by CBDT. We find that in a series of decision, as relied by Id AR of assessee, various High Courts as well as Tribunals have taken view that when audit report / Form 10B was filed even at later stage and the same was available before assessing officer when return was processed, the assessee is entitled to exemption. Moreover, in the present case now, Hon'ble Juri iction High Court has already allowed delay in filing Form 10B. Thus, considering the facts of the case and keeping in view, various decision of High Courts and co-ordinate bench of Tribunal delay in filing form 10B in AY 2023-24 is also allowed and juri ictional assessing officer (JAO) is directed to verify the fact and allow appropriate relief for application of income under section 11. The assessee is also directed to provide requisite details, if so desired by juri iction assessing officer. In the result, grounds of appeal raised by assessee are allowed.”

Respectfully following the decision of the Hon’ble High Court, we decline to interfere with the findings of the ld. CIT(A). The appeal filed by the Revenue is accordingly dismissed. Since the appeal of the revenue is dismissed, the cross-objection of the assessee becomes infructuous. 7. In the result, the appeal of the revenue and the cross-objection filed by the assesse are dismissed. Order pronounced in the Court on 16th October, 2025 at Mumbai. (SAKTIJIT DEY) ACCOUNTANT MEMBER

अपीलाथ / The Appellant 2.  थ / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु")अपील (/ The CIT(A)- 5. िवभागीय ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file.