SARODIYA,,KOLKATA vs. ITO, WARD 1(3), EXEMPT, KOLKATA,, KOLKATA

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ITA 1618/KOL/2026Status: DisposedITAT Kolkata29 July 2026AY 2024-20255 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the delay in filing the audit report was not a ground for denial of exemption, especially when the report was available before the processing of the return. The filing of Form 10B/10BB is considered a procedural and directory requirement.

What were the facts?

The assessee claimed exemption under Section 11, but the CPC denied it due to a delay in filing the audit report (Form 10BB). The CIT(A) dismissed the assessee's appeal on the same ground.

What were the issues?

Whether delay in filing the audit report (Form 10B/10BB) is a mandatory condition for claiming exemption under Section 11, and if it can be condoned.

Which sections of the Income-tax Act were involved?

Section 11,Section 143(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH,

Before: SHRI YOGESH KUMAR U.S. & SHRI RAKESH MISHRA

For Appellant: Shri Rajashree, Shri Sourita
For Respondent: Shri Sandip Mandal, Sr. DR
Hearing: 23.07.2026Pronounced: 29.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.1618/KOL/2026 Assessment Year: 2024-25

Sarodiya Vs. ITO, Ward-1(3), 2/21, Akshya Kumar Mukherjee, Exemption, Kolkata RD Nawpara, Baranagore West Bengal-700090 [PAN: AARTS7834F] APPELLANT RESPONDENT Appellant by : Mrs. Saswati Mitra Dutta, Shri Rajashree Dutta & Shri Sourita Chongdar, Ars Respondent by : Shri Sandip Mandal, Sr. DR Date of hearing : 23.07.2026 Date of Pronouncement : 29.07.2026 O R D E R PER YOGESH KUMAR U.S., JUDICIAL MEMBER: This Appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal) (‘Ld. CIT(A)’ for short) dated 27.02.2026, passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2024-25.

2.

Brief facts of the case are that, an intimation u/s 143(1) of the Act came to be passed on 23.08.2025 by the CPC, Bengaluru for A.Y. 2024-25 wherein the CPC, Bengaluru denied the exemption claimed by the Assessee and determined the total income at Rs.7,50,000/-

ITA No.1618/KOL/2026 Sarodiya; A.Y: 2024-25 resulting demand of tax of Rs.79,340/-. Aggrieved by the intimation passed u/s 143(1) of the Act, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 27.02.2026, dismissed the Appeal filed by the Assessee on the ground that there was delay in filing of Audit Report in Form No.10B/10BB. As against the order of the Ld. CIT(A) dated 27.02.2026, Assessee preferred the captioned Appeal.

3.

Learned Counsel for the Assessee vehemently submitted that the Ld. CIT(A) erred in holding that exemption u/s 11 of the Act cannot be allowed due to delay in filing the Audit Report in Form No.10B/10BB for the A.Y. 2024-25, which is not mandatory and the same is only directory. The Learned Counsel relying on the plethora of the Judicial Presidents, sought for allowing the Appeal.

4.

Per contra, the Ld. DR relying on the orders of the Lower Authorities for dismissal of the Appeal.

5.

We have heard the parties and perused the material available on record. In the present case, Assessee filed Form No.10BB belatedly on 15.11.2024. As per the Assessee, due to prolonged illness of Parents of Managing Trustee, the same could not be filed on time. To substantiate the same, provided the medical documents. The Co- ordinate Bench of the Tribunal in the case of AMPI Foundation Vs.

ITA No.1618/KOL/2026 Sarodiya; A.Y: 2024-25 Deputy Director of Income Tax, CPC, Bengaluru reported in [2025] 175 taxmann.com 989 (Kolkata-Tribunal) in an identical facts held that when the Audit Report has not been filed on time but available at the time of processing the return, the same cannot be ground for denial of the exemption. The relevant portion of the order of the Co- ordinate Bench of the Tribunal is under:-

6.

We have considered the rival submissions. It is noted that Form No.10B had not been uploaded within the due date, which is claimed to be unintentional on the part of the assessee. However, it is noted that the same was available before the Ld. Assessing Officer at the time of processing of the return of income and was uploaded by the Chartered Accountant in time. The filing of Form No. 108 has been held to be a procedural requirement and directive in nature and not mandatory. Before us, the assessee relied upon the decision of Mis Indian Sugar Mills Association (supra) of the Hon'ble High Court of Calcutta wherein it has been held that the filing of the auditor's report along with the return of income has to be treated as a procedural provision and therefore, directory in nature. The relevant extract from the order is as under "The short question falls for consideration in the instant case is whether the Principal Commissioner of Income Tax (Appeals), NFAC was justified in allowing the appeal filed by the assessee thereby condoning the delay in filing the Form 10B of the Act. The learned Tribunal after going through the facts of the case took note of the latter circular issued by the Board in Circular No. 16 of 2022 dated 1907-2022 issued under Section 119(2)(b) by which the powers delegated to the Principal Chief Commissioner of Income Tax/Commissioner of Income Tax to condone the delay in filing Form 10B beyond 365 days up to 3 years from the assessment year 2018-19 or for subsequent year. Applying the said circular the learned Tribunal affirmed the order passed by the CIT (Appeals) in grounds before us in this appeal. The revenue has not dealt with the said circular nor anything has been brought on record to show that Circular No. 16 of 2022 dated 19-07-2022 cannot be applied to the case on hand. The Commissioner of Income Tax (Exemptions) while rejecting the application for condonation of delay by order dated 17-08-2020 has referred to the Circular No. 2 of 2020 dated 3.1.2020 which Page | 3

ITA No.1618/KOL/2026 Sarodiya; A.Y: 2024-25 admittedly gives power to condone the delay in filing Form 10B up to a period of 365 days. The CIT (Appeals), NFAC also took note of a decision of the High Court of Gujarat in Commissioner of Income Tax v. Gujarat Oil and Allied Industries reported in 1993 ITR (201) 325 wherein it was held that the filing of the auditor's report along with return of income has to be treated as procedural provision and therefore, directory in nature. Thus we find that there is no error committed by the learned Tribunal in dismissing the appeal filed by the revenue. Accordingly, the appeal is dismissed. Substantial questions of law are answered against the revenue." 7. It was also submitted before us by the Ld. AR that the due date for filing the return of income had been extended and the audit report was required to be filed a month earlier. The same was filed belatedly but was available at the time of processing of the return of income and therefore, the claim of exemption should not have been denied. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) as well as the intimation of the Ld. AO and remit the matter back to the Ld. AO for considering the claim of the assessee afresh as the audit report was available at the time of processing the return of income and therefore, the claim of exemption under section 11 of the Act had to be allowed. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments, Accordingly, all the grounds taken by the assessee in his appeal are allowed for statistical purposes.” 6. In view of the above, by relying on the order of the Co-ordinate Bench of the Tribunal in the case of AMPI Foundation (supra), we hold that the CPC has committed error in rejecting the claim of exemption due to belatedly filing of Form No.10BB, which was very much available much prior to the date of passing of intimation u/s 143(1) of the Act. Accordingly, the order impugned is hereby set aside and restored to the file of Assessing Officer for consideration of the Audit Report which was available at the time of processing the return of income and allowing the exemption u/s 11 of the Act, pass Page | 4

ITA No.1618/KOL/2026 Sarodiya; A.Y: 2024-25 consequential order after providing opportunity of being heard to the Assessee.

7.

In the result, Appeal of the Assessee is partly allowed for statistical purposes.

Order pronounced on 29.07.2026. Sd/- Sd/- (RAKESH MISHRA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29.07.2026 DP, PS Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR) //TRUE COPY//

ASSISTANT REGISTRAR KOLKATA BENCHES, KOLKATA

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