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Facts
The assessee, a Public Charitable Trust, filed its return of income and audit report for AY 2019-20. However, due to software glitches on the income tax portal, the audit report in Form 10B could not be uploaded within the due date, resulting in a delay of 137 days.
Held
The Tribunal held that the requirement of filing the audit report in Form 10B is directory and not mandatory. The exemption under Section 11 of the Income Tax Act cannot be denied solely on account of a delay in filing the audit report, especially when the delay is due to a sufficient cause like technical glitches.
Key Issues
Whether the claim for exemption under Section 11 of the Income Tax Act can be denied solely due to a delay in uploading the audit report in Form 10B, if the delay is attributable to technical glitches?
Sections Cited
11, 143(1), 12AA
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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI OM PRAKSH KANT
This appeal filed by the assessee is arising out of the order of the Learned Commissioner of Income-tax, Appeal ADDL / JCIT (A)-1, Visakhapatnam [hereafter, Ld.CIT(A)], dated 17/02/2025 for the assessment year 2019-20.
The only ground raised
by the assesse in the present appeal relates to challenging the order of the Ld.CIT(A) confirming the action of the Assessing Officer
2. ITA 2668/Mum/2025 Tara Meera Education Trust in denying the claim of deduction under section 11 of the Income-tax Act, 1961 on account of late filing of Form 10B of the act.
We have heard the arguments of both the counsels, perused the materials placed on record, judgements cited before me and also the order passed by the revenue authorities.
From the records we notice that the Assessing Officer denied the claim of exemption under section 11 of the Act on account of delay in filing audit report in Form 10B. We noticed that the said issue has already been discussed and decided by co-ordinate benches of the Tribunal and also the Hon’ble High Court and Hon’be Supreme Court in the following cases:- 1. CIT vs G.M. Knitting Industries (P.) Ltd 71 taxmann.com 35 (SC) 2. CIT vs Nagpur Hotel Owner’s Association 247 ITR 201 (SC) 3. CIT (Exemption) vs Anjana Foundation (Gujarat) 168 taxmann.com 462 (Guj) 4. Association of Indian Patel board Manufacturer vs DCIT 157 taxmann.com 550 (Guj)
5. Kumbharwada Welfare Centre vs ITO order dated 18/02/2025 6 . Metro Brands Limited vs DCIT 2(2)(1) order dated 17/06/2025 More particularly, in the case of Kumbharwada Welfare Centre vs ITO (supra), where one of us was party to the order, holding as under:-
“6. The basic ground in the present appeal is with regard to challenging the action of the revenue authorities disallowing the exemption of income, on account of the fact that form 10B could not be uploaded within the prescribed time 7. In this regard, for adjudicating, the grounds of appeal raised by the assessee, I have heard the counsel for both the parties and have gone through the documents placed on record, judgements cited before me and also the orders passed by the revenue authorities.
8. From the records, I noticed that the 3 ITA 2668/Mum/2025 Tara Meera Education Trust assessee is a Public Charitable Trust registered under section 12 AA of the income tax Act. The object of the trust is to provide educational aid, medical relief and relief of poverty. The assessee trust filed its return of income on 1/10/2022 by filing details of audit like date of submission of audit report dated 3/09/2022 by generating UDIN dated 3/09/2022. It was submitted that due to frequent changes in software glitches the error of uploading audit report form 10B on income tax portal had happened. Although the audit report form 10B was signed with UDIN dated 3/09/2022 and thereafter income tax return was also filed on 1/10/2022 within due date. But the audit report form 10B could not be uploaded by the assessee on the portal within due date because of software glitches as it was showing technical error. It is pertinent to mention here that the date of signing of form 10B is 3/09/2022 and in this way, there was delay of 137 days in uploading audit report on the portal. However, because of this delay, the total income was calculated without allowing exemption of income.
It would not be out of place to mention here that assessee had received email on 28/01/2025 that he can apply for condonation of delay in uploading audit report to jurisdictional Commissioner of Income-tax exemption, which also goes to show that there was indeed technical glitches in the software. I have gone through the CBDT circular number 16/2024 dated 18/11/2024 where in powers for condonation of delay in uploading form 10B has been delegated to the respective officers of the department. This fact alone makes it clear that there were technical glitches and the assessee was prevented with the ‘sufficient cause’ for not filing the requisite form within time. Thus, in my view the reason for not filing form 10B was beyond the control of the assessee. Since these type of difficulties were being faced by different applicants. Therefore, CBDT vide their circular had delegated the powers for condoning the delay.
I have also considered and gone through the decisions relied upon by the assessee. In the case of Shri Swami Vivekananda trust Vs DCIT, Bangalore decided on 12 July 2023 and the Dushkal Go Sewa Samiti versus ITO (E), Jodhpur decided on 06/10/2023. And considering the fact that assessee had already submitted documentary evidences from serial number 1 to 9 of the paper book in support of his grounds. I am of the considered view that assessee was prevented by sufficient cause for not uploading signed audit report, form 10B because of software glitches. Therefore, I direct to condone the delay of 137 delays in uploading audit report on the portal and to allow the claim of exemption of income under section 11 of the Act for application of income of the assessee, if otherwise found entitled.”
After going through the orders cited before us, facts and circumstances of the case and also keeping in view the decision of the co-ordinate benches, we are of the view that the requirement of filing audit report in Form 10B is directory and not mandatory and exemption under section 11 of the Act cannot be denied only on account of delay in filing of audit report in Form 10B. As in the present case, according to the assessee, the audit report was prepared on 30th August, 2019; but