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Facts
The assessee, registered under Section 12A, filed its income tax return for A.Y. 2016-17 but submitted the Form 10B audit report belatedly. Consequently, the CPC denied exemption under Section 11, and the CIT(E) rejected the condonation of delay petition. The CIT(A) upheld the denial and dismissed the appeal due to a six-year delay.
Held
The tribunal held that filing Form 10B is a procedural requirement, not mandatory for claiming exemption under Section 11 and 12, citing the Gujarat High Court. It remanded the matter back to the Assessing Officer to verify the assessee's claim in accordance with Form 10B and decide the allowability of exemption on merits.
Key Issues
Whether exemption under Section 11 and 12 can be denied solely due to the delayed filing of the audit report in Form 10B.
Sections Cited
11, 12, 12A, 119(2)(b), 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S. BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order Ld. Commissioner of Income Tax (Appeals)-1, Jaipur vide DIN & Order No. ITBA/APL/250/2024-
I.T.A.No.319/VIZ/2024 Comprehensive Rural Promotional Association 25/1066474427(1) dated 08.07.2024 for the A.Y. 2016-17 arising out of the intimation passed under section 143(1) of the Act dated 29.03.2024.
Brief facts of the case are that, assessee having registration under section 12A of the Act filed its return of income on 24.03.2017, however, did not file the audit report in Form 10B within the stipulated time prescribed under the Act. The assessee filed the Form 10B belatedly and the Centralized Processing Centre, Bangalore [In short “CPC”] while processing the return of income under section 143(1) denied the exemption claimed by the assessee under section 11 of the Act on the ground that the statutory audit report in Form 10B was not filed within the due date as specified.
On being aggrieved by the order of the CPC, assessee filed a petition for condonation of delay under section 119(2)(b) of the Act. The petition for condonation before the Ld. Commissioner of Income Tax (Exemption), Hyderabad [in short Ld.CIT(E)] was rejected as “Not Maintainable” vide Letter No. ITBA/COM/F/F/17/2023-24/1063644549(1) dated 29.03.2024.
4. The assessee, thereafter filed an appeal before the Ld. CIT(A) against the intimation passed under section 143(1) of the Act dated 02.01.2018, the Ld.CIT(A) observed that the appeal was filed with an inordinate delay of more than six years and hence dismissed the appeal. Further on merits, Ld. CIT(A) observed that assessee violated the provisions of section 12A(1)(b) of the Act
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I.T.A.No.319/VIZ/2024 Comprehensive Rural Promotional Association which stipulates mandatory filing of statutory audit report in Form 10B along with return of income within the due date. The Ld. CIT(A) also observed that the Ld.CIT(E) rejected the petition for condonation of delay filed by the assessee vide order dated 29.03.2024 in accordance with the CBDT Circular No. 2/2020 dated 03.01.2020 and hence dismissed the appeal on merits also.
5. On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal: - “1. The order of the CIT (A) is erroneous both on facts and on the law.
2. The CIT (A) has not verified the fact of submission of the Medical Report and Audit Report.
3. The accounts have been audited before the due date of filing the audit report. However, due to an error the Audit report was not filed within the due date.
The error was not realized, as the managing trustee has been sick and admitted to the hospital and under recovery during that period. After discovering this error, the return was uploaded promptly.
For those and other grounds that may be urged at the time of hearing, the appellant prays for relief.”
The only issue contested by the assessee is denial of the exemption claimed under section 11 of the Act due to the fact that the Audit Report in Form 10B was filed belatedly.
None appeared on appeared on behalf of the assessee, therefore, we proceed to dispose of this appeal based on the material available on record and Page. No 3
I.T.A.No.319/VIZ/2024 Comprehensive Rural Promotional Association by hearing the Ld. Departmental Representative [hereinafter in short “Ld. DR”] on merits. Ld. DR heavily relied on the order of the Ld. CIT(A).
We have heard Ld. DR and gone through the material available on record. On perusal of the material on record, we observe that assessee has filed an appeal before the Ld. CIT(A) after a period of more than six years, pursuant to the rejection of the condonation by the Ld.CIT(E) on 29.03.2024. However, Ld.CIT(A) considered the date of intimation i.e., 02.01.2018 and concluded that the assessee has filed the appeal with the delay of more than six years. He found that assessee has not advanced any sufficient cause for such inordinate delay and therefore dismissed the appeal of the assessee. However, on verification of the material available on record before us, we find that the assessee has filed an appeal immediately pursuant to the rejection of the condonation by the Ld.CIT(E). In these peculiar circumstances, we find the assessee has exhausted his option of filing condonation petition before the Ld.CIT(E) before challenging the intimation passed under section 143(1) of the Act. However, the core issue is whether the exemption can be disallowed by CPC under section 11 and 12 of the Act due to delayed non-filing of audit report in Form 10B. The Hon’ble Gujarat High Court in the case of Association of Indian Panel Board Manufacturer v. DCIT [157 taxman.com 550 (Gujarat)] has held that filing of Form 10B is only a procedural requirement and cannot be a deterrent for allowing the claim of exemption under section 11 of the Act.
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I.T.A.No.319/VIZ/2024 Comprehensive Rural Promotional Association Various judicial pronouncements have held that filing of Form 10B is only a directory in nature and not mandatory for claiming the benefit of exemption under section 11 and 12 of the Act. We also find from the record that the assessee has obtained the audit report in Form 10B on 06.06.2016, however, the contention of the assessee is that it could not be uploaded within the due date as specified under the Act. In these circumstances, we remand the matter back to the file of Ld. AO to verify the claim made by the assessee in accordance with Form 10B and thereby decide the allowability of exemption claimed by the assessee under section 11 and 12 on merits. Accordingly, appeal of the assessee is allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 05th December, 2025.