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Facts
The assessee filed its audit report in Form 10B on the extended due date of 30.11.2023. The return of income was processed u/s 143(1) of the Income Tax Act, and additions were made, disallowing the exemption claimed. The assessee's first appeal was dismissed by the CIT(A).
Held
The Tribunal held that the furnishing of the audit report (Form 10B) is a procedural requirement and its substantial compliance is sufficient. The delay in filing should not deny the benefit of exemption, especially when the legislature has conferred powers to condone such delays.
Key Issues
Whether the delay in filing Form 10B can be a ground to deny the exemption claimed by the assessee under Section 11 of the Income Tax Act, when substantial compliance has been made.
Sections Cited
250, 143(1), 139(1), 44AB, 119(2b), 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI OMKARESHWAR CHIDARA
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 30.12.2024, impugned herein, passed by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2023-24.
In this case, the Assessee e-filed its audit report in form no.10B on dated 30.11.2023 before e-filing of its return of income for the assessment year under consideration on dated 30.11.2023 within the extended due date i.e. 30.11.2023. Subsequently, the return filed by the Assessee was processed u/s 143(1) of the Act and vide intimation/order dated 19.11.2024 the total income of the Assessee was assessed at Rs.2,57,71,434/- as against the taxable income of Rs.66,094/- as shown by the Assessee, by making additions by way of adjustment to the tune of Rs.2,57,05,340/- in total.
The Assessee, being aggrieved, challenged the said addition by way of adjustments by filing first appeal before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner dismissed the appeal of the Assessee affirming the additions made by the Assessing Officer (AO) vide intimation dated 19.11.2024 u/s 143(1) of the Act mainly by holding that according to the Circular No.16/2024 dated 18.11.2024, the CBDT has delegated the powers to condone the delay of Forms 9A and 10B to various jurisdictional Authorities. Therefore, the Assessee may apply for condonation to the jurisdictional Authority/Board.
The Ld. Commissioner also relied on the judgment of the Tribunal at Ahmadabad in the case of Association of Indian Panel Board Manufacturer vs. Dy. CIT (2022) 143 taxmann.com 418 (Ahmedabad) wherein it was held that in case of delay in filing of Form 10B the Assessee is required to approach Jurisdictional Commissioner/Director of Income Tax to condone the delay in filing Form 10B; and Commissioner (Appeals) has no power to condone such delay, as per section 119(2b) of the Act.
The Assessee being aggrieved, has preferred the instant appeal before us and submitted that Form 10B was filed prior to filing of return of income on dated 30.11.2023 and even otherwise Form 10B of the Act was available at the time of processing the return of income. Therefore, the benefit claimed by the Assessee, cannot be denied on procedural lapses/technical ground.
On the contrary, the Ld. D.R. refuted the claim of the Assessee by submitting that filing of Form 10B, 30 days prior to filing of the return of income u/s 139(1) of the Act is mandatory and cannot be sidelined and thus both the authorities below have rightly disallowed the claim of deductions by their respective orders.
We have heard the parties and perused the material available on record. Admittedly, the Assessee has not filed Form 10B before one month of due date of submitting the income tax return u/s 139(1) of the Act, as specified in section 44AB of the Act. However, it is a fact that the Assessee had duly furnished Form no.10B online on dated 30.11.2023 before filing of its return of income for which the last date was extended up to 30.11.2023 and/or the Form 10B has been made available before the processing of the return of income u/s 143(1) of the Act on dated 19.11.2024.
We 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 10B 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”.
We further observe that the Hon’ble Gujarat High Court in the case of Commissioner of Income Tax (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 of the Sarvodaya Charitable Trust case (supra) approved the decision of the Tribunal in following the judgment of the 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 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, we direct the AO to consider Form no.10B filed by the Assessee, as valid and verify the facts and determine on merit, the deduction/exemption claimed by the Assessee.
In the result, the Assessee’s appeal is allowed in the aforesaid terms.
Order pronounced in the open court on 29.08.2025.