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Income Tax Appellate Tribunal, DEHRADUN BENCH “DB”: NEW DELHI
Before: SHRI VIMAL KUMAR & SHRI BRAJESH KUMAR SINGH
PER VIMAL KUMAR, JUDICIAL MEMBER:
The appeal filed by the appellant/assessee is against order dated 27.03.2024 of Learned Commissioner of Income-Tax (Appeal), Panchkula (hereafter referred to as “Ld. CIT(A)”) arising out of assessment order dated 31.03.2023 passed by the DCIT, Central Processing Centre, Bangalore (hereinafter referred to as “the AO”) under Section 143(3) of the Income-Tax Act,1961 (hereinafter referred to as “the Act”) pertaining to assessment year 2022-23.
Brief facts of case are that appellant/assessee filed income tax return for assessment year 2022-23 declaring total income as nil. The return was processed under Section 143(1) of the Act on 31.03.2023 determining total income at Rs.70,21,529/- denying exemption under Section 11 of the Act.
Against order dated 31.03.2023, appellant/assessee preferred appeal before the Learned Commissioner of Income-Tax (Appeals)/National Faceless Appeal Centre (NFAC), which was dismissed vide order dated 27.03.2024.
Being aggrieved, appellant/assessee preferred present appeal.
Learned Authorized Representative for the appellant/assessee submitted that Ld. JCIT, Panchkula erred in dismissing the appeal against order of Ld. AO ignoring that the inadvertent typographical error in selecting assessment year 2021-22 instead of assessment year 2022-23 at the time of filing the Form 10 electronically in terms of Rule 17(2) of the Income Tax Rule is directory in nature and not mandatory. Application seeking condonation of delay in filing Form under Section 119(2)(b) of the Act is pending adjudication before the Ld.CIT(A). Ld. AO erred in by adding to the income of Rs.52.00 lacs inspite of the fact that Form 10 was filed on the 10.05.2022 within the due time of the return under Section 139(1) of the Act. The appellant/assessee has filed Form 10 for Rs.70,00,000/- which is more than the actual fund set apart under Rule 19(2) read with section 11(2) of the Act. Reliance was placed on para nos. 6 to 9 titled as Earthing Trust Vs. ITO decided on 10.01.2025.
Learned Authorized Representative for the Revenue submitted that Ld. JCIT had no powers to condone the delay in filing Form 10.
From examination of record, in light of aforesaid rival submission, it is crystal clear that appellant/assessee filed return of income for assessment year 2022-23 on 16.08.2022 wherein assessee claimed exemption under Section 11 of the Act. The Trust had accumulated or set apart Rs.62,00,000/- for next year under Rule 11.2 of the Act and filed Form 10 on 10.05.2022 for Rs.70,00,000/-. The audit report in Form 10 was uploaded on Portal on 12.08.2022. Form 10B was filed on 10.05.2022 for financial year ending on 31.03.2022 was mentioned. The assessee filed @form10 dated 28.02.2024 correcting assessment year 2022-23.
The only reason for denying exemption that assessee has filed audit repot in Form 10B beyond the extended due date.
Hon’ble Delhi Bench of the ITAT in ITA No,882/Del/2024 titled as “Earthing Trust Vs. ITO” decided on 10.01.2025 has held as under:
“6. We have heard both the parties and perused the material available on record. In the present case, the Assessee filed return of income on 08/10/2022, wherein the Assessee claimed exemption u/s 11 of the Act. Due date for filing the Audit Report in Form No. 10B was 07/10/2022, however, the Assessee uploaded the Audit Report in Form No. 10B dated 3 23/09/2022 on 21/10/2022. Further, the assessment order came /intimation has been issued by the CPC on 31/03/2023 and as on the date of assessment, the Audit Report was very well filed by the Assessee. The only reason for denying the exemption that the Assessee has filed Audit Report in Form No. 10B beyond the extended due date.
We find that similar issue has been considered by the Hon’ble Madras High Court in the case of CIT Vs. A K S Alloys Pvt. Ltd. 18 Taxman.com 25 wherein the Hon'ble High Court held that filing of Audit Report along with the Return is not mandatory, but directory and if the Audit Report was filed at any time before framing the assessment, the requirement of the provision of the Act should be held to have been met. The relevant portion of the Judgment are 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 THE COMMISSIONER OF INCOME TAX AND ANOTHER vs. ACE MULTITAXES SYSTEMS (P) LTD. 5 Earthings Trust Vs. ITO (2009) 317 ITR 207(Karnataka), 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 COMMISSIONER OF INCOME TAX v. CONTIMETERS ELECTRICALS (P) LTD- (2009) 317 ITR 249(Delhi), wherein the Delhi High Court, by following the judgements of the Madras High Court in COMMISSIONER OF INCOME TAX V. ARUNACHALAM (A.N. )(1994) 208 ITR 481 and in CIT v. JAYANT PATEL (2001) 248 ITR 199 (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 Commissioner of Income Tax v. Sivanand Electronics(1994)209 ITR 63(Bom), apart from Gujarat High Court in zenith Processing Mills v. CIT(1996) 219 ITR 721 and Panjab and Haryana High Court in CIT V. Mahalaxmi Rice Factory (2007) 294 ITR 631.
The Culcutta High Court in the case in THE COMMISSIONER OF INCOME TAX V. BERGER PAINTS (INDIA) LTD (NO.2 ) 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 judgments which are against the Revenue, the substantial question of law (1) would not arise at all for consideration.”
In view of above material facts and judicial precedents, cited supra, respectfully following the same, it is held that filing of audit report before due date for filing return of income under Section 139(1) of the Act is only directory and direct the AO/CPC to allow exemption under Section 11 of the Act. Accordingly, the grounds of appeal of the assessee are allowed.
In the result, the appeal filed by assessee is allowed.
Order pronounced in the open court on 23/04/2025. Sd/- Sd/- (BRAJESH KUMAR SINGH) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 23/04/2025 Mohan Lal