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Facts
The assessee company filed its return of income and audit report (Form No. 10CCB) before the due date. However, the AO issued a notice for adjustment due to an alleged incorrect claim, stating the Form 10CCB was not filed within the prescribed time. The CIT(A) upheld the AO's action.
Held
The Tribunal held that the requirement to file Form No. 10CCB along with the return of income is directory, not mandatory. Filing the audit report before the completion of assessment is considered substantial compliance.
Key Issues
Whether the filing of Form 10CCB before the due date of filing the return of income is mandatory or directory for claiming deduction under Section 80-IB/80IA.
Sections Cited
143(1), 139(1), 44AB, 80-IB, 80IA, 80J(6A)
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 03.09.2024, pertaining to the assessment year 2022-23. The assessee has raised the following grounds of appeal: -
1. The learned CIT (Appeals) has erred in law in dismissing the appeal of the appellant.
1. 2. The Learned CIT (Appeals) has erred in applying wrong provisions of the Act in the case of the appellant.
3. The Learned CIT(Appeals) failed to differentiate Section and Clause specific provisions of Sec 80-IB and applied the specific provisions Page 2 of 7 regarding filing of Audit report in specified Clauses of Sec 80-IB to clauses (10) of Sec 80-IB also.
4. The Learned CIT(Appeals) failed to appreciate the fact that the AO has erred in issuing notice u/s 143(1)(a)(ii) because under this sub-section, the notice is issued when there is an incorrect claim in the filed Income Tax Return. Incorrect claim means: a. The information provided in one part of the Income Tax Return doesn’t match with any other part of the return. b. The required information that should be disclosed in the return has not been provided. c. Deduction claimed while filing the return exceeds the specified statutory limit as per the Act. Whereas the fact is that none of the above conditions apply in our case. Appellant craves to raise any other ground at the time of hearing with due permission of Your Lordship.”
The facts in brief are that the assessee is a company filed its return of income in ITR-6 on 27.10.2022 i.e. before due date of filing of the return. The assessee filed its audit report in Form No.10CCB on 13.10.2022 i.e. before the due date of filing of the return u/s 139(1) of the Income Tax Act, 1961 (“Act”, for short). Further, the assessee filed mandatory Tax Audit Report u/s 44AB of the Act in Form 3CA & 3CD on 30.09.2022 which was filed on time. However, the assessee received a notice u/s 143(1)(a) of the Act dated 14.12.2022 calling upon it as to why the adjustment should not be made on account of incorrect claim to the tune of Rs.3,36,91,079/- and the reason for such notice was stated to be having failed to file the requisite Form No. 10CCB before one month of due date of filing of ITR. Aggrieved by this, the assessee preferred an appeal before the Ld. CIT(A) who sustained the action of the Assessing Officer. Now, the assessee is in appeal before this Tribunal.
Page 3 of 7 3. Apropos to the grounds of appeal, the Ld. Counsel for the assessee reiterated the submissions as made in the written submissions. He contended that the authorities below have failed to appreciate that it is no mandatory under law that Form No.10CCB is required to be submitted one month prior to date of filing of the return of income u/s 139(1) of the Act. He submitted that such direction is purely directory in nature.
On the other hand, the Ld. Departmental Representative (DR) opposed the submissions and supported the orders of the lower authorities. He submitted that the law is clear on this point, the assessee was required to file audit report in Form No. 10CCB a month prior to due date of filing of such return.
We have heard the rival submissions and perused the materials available on record and gone through the orders of the authorities below. The short issue that arises for our consideration is whether the authorities below are justified in making the adjustment and sustaining the same on the ground that the Form No. 10CCB was not filed within the time prescribed under law. The Ld. CIT(A) has decided the issue by observing as under:-
“6.3 For claiming deduction u/s 80-B, the assessee is required to file Form 10CCB before the specified date referred to in section 44AB. Specified date in section 44AB is defined as under: - “specified date”, in relation to the accounts of the assessee of the previous year relevant to an assessment year, means [date one month prior to] the due date for furnishing the return of income under sub-section (1) of section 139. 6.4 The due date to file return of income u/s 139(1) was extended upto 07.11.2022. Thus, the due date for filing Form 10CCB was 07.10.2022 (one month prior to the due date for filing return of income u/s 139(1). The appellant has filed Form 10CCB on 13.10.2022 i.e. after the due date. As the condition to claim deduction u/s 80-IB has not been fulfilled, therefore, the AO has rightly disallowed deduction u/s 80-IB. Accordingly, these grounds of appeal are dismissed.”
6. The assessee placed reliance on the decision of the Co- ordinate Bench of this Tribunal in the case of Sanjay Kukreja vs ACIT in for A.Y. 2019-20 vide order dated 30.01.2024, the Tribunal has elaborately discussed the identical issue and held as under: – “5. Heard rival submissions. The only issue is to be decided is as to whether the Form 10CCB is mandatorily to be filed along with the return or the due date specified u/s 139(1) of the Act for claiming deduction u/s 80IA of the Act. We observe that the Hon’ble Delhi High Court in the case of CIT Vs. Contimeters Electricals Pvt. Ltd. (supra) held that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before framing of assessment the requirement of section 80IA(7) would be met observing as under: “According to the Commissioner of Income Tax since no audit report, duly verified and signed in the prescribed Form no.10CCB under Rule 18BBB had been furnished along with the return, the condition for claiming deduction had not been satisfied and, therefore, the action of the Assessing Officer in allowing rebate u/s 80-IA was erroneous and prejudicial to the interest of the Revenue. After issuance of the notice the Commissioner of Income Tax passed the order dated 29.03.2007 whereby he held that he was fully satisfied that the assessment which had been completed by the Assessing Officer was prejudicial to the interest of the Revenue and that it was erroneous in as much as the assessee had not satisfied the conditions laid down u/s 80-IA and consequently the deduction under that section for the sum of Rs.14,27,351/- had been wrongly allowed. The CIT(A), therefore, cancelled the assessment which had been earlier framed and directed the AO to complete the assessment as per law, in terms of the directions given in the said order. Being aggrieved by the said order, the assessee preferred an appeal before the Tribunal which was allowed by the Tribunal by virtue of the impugned order. The Tribunal took the view that the provisions of section 80IA(7) with regard to filing of the audit report along with the return were not mandatory and were merely directory. In coming to such conclusion, the Tribunal referred to the decisions of the Gujarat High Court in CIT vs. Gujarat Oil & Allied Industries, 201 ITR 325 (Guj.). In that decision the provisions of Section 80J(6A) were considered. The wording of Section 80J(6A) is similar to that of section 80-IA(7) which is in issue in the present appeal. The Gujarat High Court took the view that the word ‘shall’ which occurs in section 80J(6A) be read as ‘may’ and that the requirement of filing of an audit report along with the return was only to be taken as directory in nature. The Gujarat High Court took the view that in case the audit report is submitted at any time before the framing of the assessment, there would be substantial compliance with the provisions of Section 80J(6A). The Tribunal also relied on the decision of the Madras High Court in CIT vs. A.N. Arunachalam, 208 ITR 481 (Mad.), which, again, while considering the provisions of Section 80J(6A), took the same view as that of the Gujarat High Court. We notice that there are other decisions of other Courts taking the same view. The decisions being, CIT vs. Shivanand Electricals (1994) 209 ITR 63 (Bombay); Zenith Processing Mills vs. CIT (1996) 219 ITR 721 (Guj.); Cit vs. Jayant Patel (2001) 248 ITR 199 (Mad.) and CIT vs. Mahalaxmi Rice Factory (2007) 294 ITR 631 (P&H). In view of this long line on decisions of various High Courts in considering the provisions of Section 80J(6A) which are similar to the provisions of Section 80IA(7), we feel that the Tribunal has arrived at the correct conclusion that the requirement of filing the audit report along with the return is not mandatory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80IA(7) would be met.”
6. We find that similar view has been taken by the Hon’ble Madras High Court in the case of CIT Vs. AKS Alloys Pvt. Ltd. (supra), wherein it has been held as under: “5. In so far as it relates to the substantial question of law (1) is concerned, namely, whether the filing of audit report in Form 10CCB is mandatory, it is well settled by a number of judicial precedents that before the assessment is completed, the declaration could be filed. In fact, the said issue came to be decided by the Karnataka High Court in the case in CIT v. ACE Multitaxes Systems (P.) LTD. [2009] 317 ITR 207 (Kar.), wherein it was held that when a relief is sought for under Section 80IB of the Act, there is no obligation on the part of the assessee to file return accompanied by the audit report, thereby, holding that the same is not mandatory. Therefore, it is clear that before the assessment is completed if such report is filed, no fault could be found against the assessee. That was also the view of the Delhi High Court in the case in CIT v. Contimeters Electricals (P.) Ltd. [2009] 317 ITR 249/ 178 Taxman 422 (Delhi), wherein the Delhi High Court, by following the judgements of the Madras High Court in CIT v. A.N. Arunachalam [1994] 208 ITR 481 / 75 Taxman 529 and in CIT v. Jayant Patel [2001] 248 ITR 199/ 117 Taxman 707 (Mad.) held that the filing of audit report along with the return was not mandatory but directory and that if the audit report was filed at any time before the framing of the assessment, the requirement of the provisions of the Act should be held to have been met.
That is also the consistent view of the other High Courts, including the High Court of Bombay in CIT v. Shivanand Electronics [1994] 209 ITR 63 / 75 Taxman 93 (Bom.), apart from Gujarat High Court in Zenith Processing Mills v. CIT [1996] 219 ITR 721 (Guj.) and Punjab and Haryana High Court in CIT v. Maholaxmi Rice Factory [2007] 294 ITR 631/ 1.63 Taxman 565 (Punj. & Har).
7. The Calcutta High Court in the case in the CIT v. Berger Paints (India) Ltd. [2002] 254 ITR 503/r20031 126 Taxman 435 (Cal.) has also concurred with the said view which was followed by the Tribunal in this case.
Mr. T. Ravikumar, the learned counsel for the appellant is not able to produce any other judgement contrary to the above said views consistently taken.
In the light of the above, by virtue of hierarchy of judgements which are against the Revenue, the substantial question of law (1) would not arise at all for consideration.”
Similar view has been taken by the Hon’ble Allahabad High Court in the case of PCIT vs. Surya Merchands Ltd. 387 ITR 105 and the Hon’ble High Court of Uttrakhand in the case of CIT Vs. Sanjay Kumar Bansal 35 taxmann.com 514, and Honb’ble Karnataka High Court in the case of CIT vs. ACE Multi Taxes Systems Pvt. Ltd. 317 ITR 207. The ratios of the above decision squarely applying to the facts of the case, we hold that filing of audit report in Form 10CCB before the due date for filing of return of income u/s 139(1) is only directory and not mandatory for the year under consideration. Thus, we direct the AO to allow deduction claimed u/s 80IA of the Act. Grounds raised
by the assessee are allowed.”
7. Further, the Co-ordinate Bench has relied on the judgment of the Hon’ble Allahabad High Court in the case of PCIT vs Surya Merchands Ltd (2016) 387 ITR 105 (Alld). The Hon’ble Jurisdictional High Court, after considering the various case laws Page 6 of 7 held that the requirement of sub-section (7) of Section 80-IA of the Act, which is made applicable to section 80-IB of the Act, in view of the provisions of sub-section (13) of Section 80-IB of the Act, that the audit report should be furnished along with the return of income is a directory requirement and would stand satisfied if the audit report is furnished during the course of the assessment proceedings. In the light of the binding precedents, the finding of the Ld. CIT(A) is erroneous, as in the present case there is no dispute regarding the fact that Form No. 10CCB was filed on 13.10.2022, i.e., before the due date for filing the return of income under section 139(1) of the Act. We hold accordingly. We hereby direct the AO to allow the claim of the assessee in accordance with law treating that the requirement of filing of audit report along with return of income is satisfied. Since, we have allowed the claim of the assessee that the audit report filed by the assessee before due date of filing of ITR may be treated sufficient compliance of the provision. The other ground raised by the assessee that the AO could not have made adjustment u/s 143(1) of the Act has become academic in nature and is left open.
8. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 28/10/2025.