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Facts
The assessee filed its audit report late by 48 days due to a bonafide mistake by the Chartered Accountant, but it was submitted before the processing of the return of income. The assessee provided a sworn affidavit explaining the delay.
Held
The Tribunal held that the provision for furnishing the audit report with the return is procedural and directory, not mandatory. Substantial compliance is sufficient, and delay can be condoned if a reasonable cause is shown.
Key Issues
Whether the delay in filing the audit report beyond the prescribed time limit, with a reasonable cause, should lead to denial of exemption.
Sections Cited
250, 143(1), 11, 12
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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY
O R D E R Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 15.02.2025, impugned herein, passed by the Ld. Addl./Joint Commissioner of Income Tax (Appeals) (in short “Ld. Addl./Joint Commissioner”) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2019-20.
Though the Assessee had failed to file the audit report in Form 10B within the prescribed time limit due to bonafide mistake of the Ld. Chartered Accountant of the Assessee, as it appears from duly sworn affidavit dated 23.05.2025 (available in paper book at pages No.168-170), however, the same was filed belatedly with a delay of 48 days along with the said affidavit but admittedly before the date of processing the return of income, vide intimation/order dated 26.03.2021 u/s 143(1) of the Act by the CPC/AO and therefore the same could not have been side-lined, which both the authorities have done.
Thus, in view of the judgment of the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat Oil and Allied Industries Ltd. (1993) 201 ITR 325 (Guj.) wherein the Hon'ble High Court was pleased to hold “that provision regarding furnishing of audit report with the return, has to be treated as a procedural proviso, as it is directory in nature and its substantial compliance would suffice the purpose. The benefit of exemption should not be denied merely on account of delay in furnishing the audit report 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”, the appeal of the Assessee is liable to be allowed, specifically in view of the fact that the Assessee in this case has, demonstrated plausible and reasonable cause for delay in filling of audit report, with duly sworn affidavit. Consequently, the AO is directed to recompute the tax liability, while considering claim of the Assessee lodged u/s 11 & 12 of the Act.
Thus, the appeal of the Assessee is allowed in the aforesaid terms. Order pronounced in the open court on 05.06.2025.