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Facts
The assessee filed appeals against orders confirming the disallowance of a claim under Section 11 of the Income Tax Act due to delayed filing of the audit report in Form 10B. The appeals were filed with a delay, which was condoned.
Held
The Tribunal held that the filing of Form 10B is directory and not mandatory. Since the assessee obtained the audit report before filing the return of income, the disallowance made by the Assessing Officer and confirmed by the CIT(A) was not justified.
Key Issues
Whether the delayed filing of the audit report in Form 10B leads to disallowance of exemption under Section 11 of the Income Tax Act, when the report was obtained before filing the return of income.
Sections Cited
11, 139(4), 143(1), 154
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Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
Both the appeals filed by the assessee are directed against separate orders dated 14.03.2024 and 28.02.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment years 2016-17 & 2017-18 respectively.
Both the appeals filed by the assessee involving common issue on an identical facts, with the consent of both the parties, we proceed to hear both the appeals together and pass consolidated order for the sake of convenience.
We find that this appeal is filed with a delay of 119 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 6 grounds of appeal challenging the action of the ld. CIT(A) in confirming the order of the Assessing Officer in disallowing the claim of assessee under section 11 of the Income Tax Act, 1961 [“Act” in short] on delayed filing of Form 10B.
6. Heard both the parties and perused the material available on record. It is noted that the assessee filed return of income under section 139(4) of the Act on 21.03.2018 as against the due date of filing return on 31.03.2018. The CPC, Bangalore denied the claim of the assessee under section 11 of the Act for not filing the audit report in Form 10B vide order under section 143(1) of the Act dated 12.12.2018. It is brought to our notice that the audit report in Form 10B was filed on 11.01.2019 and accordingly, rectification was sought for with regard to allowance of claim of deduction under section 11 of the Act. The CPC denied the claim of deduction vide rectification order under section 154 of the Act dated 11.04.2019, which was confirmed by the ld. CIT(A).
The ld. AR Shri G. Akash, Advocate contends that filing of Form 10B is only directory and not mandatory and placed reliance in the case of Devasakayam Aangilappalli Paripalana Sabai v. ITO in dated 05.08.2025 and submits that this Tribunal, placing reliance on case law, held that filing of Form 10B is only directory and not mandatory.
We note that the audit report is placed at page 50 of the paper book, which clearly shows that the assessee obtained Form 10B on 16.06.2016 for AY 2016-17. Therefore, it is clear that the assessee obtained audit report well before filing of return of income on 21.03.2018 for AY 2016-17 and, but, however, it was not filed/uploaded within the due date and the reason is best known to the assessee. Taking into account the facts and circumstances of the case and in view of the order of this Tribunal in the case of Devasakayam Aangilappalli Paripalana Sabai v.
ITO (supra), we are of the opinion that the assessee is entitled to claim exemption under section 11 of the Act in view of obtaining audit report in Form 10B well before the filing of return of income and moreover, filing of audit report is directory, the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is not justified and deleted accordingly. Thus, the ground raised by the assessee is allowed.
I.T.A. No. 2356/Chny/2024 – AY: 2017-18
We find that this appeal is filed with a delay of 134 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
We find the issue involved in AY 2017-18 are similar to the facts and circumstances relevant to AY 2016-17 in Assessing Officer and allowed the ground raised by the assessee, therefore, we hold our findings would be equally applicable to the assessment year under consideration. Thus, the ground raised by the assessee for AY 2017-18 is allowed.
In the result, both the appeals filed by the assessee are allowed. Order pronounced on 09th September, 2025 at Chennai.