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Facts
The assessee, a registered trust, filed its Income Tax Return (ITR) claiming exemption under sections 11 and 12 of the Income Tax Act. The audit report in Form 10B was filed three days after the ITR, which was later extended. The Assessing Officer-CPC denied the exemption on the grounds of delayed filing of Form 10B.
Held
The Tribunal held that the requirement of filing Form 10B online on or before filing the ITR is a curable defect and not mandatory. The delay in filing the audit report is condonable, and denial of exemption on this ground is not justified.
Key Issues
Whether the delay in filing the audit report in Form 10B, if filed after the due date of filing the Income Tax Return, warrants denial of exemption under Section 11 and 12 of the Income Tax Act?
Sections Cited
147, 148, 143(1), 11, 12, 154, 139(1), 139(9), 12A
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Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI AVDHESH KUMAR MISHRA
Date of Hearing 28/08/2025 Date of Pronouncement 14/11/2025 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal for Assessment Year (‘AY’) 2019-20 filed by the Assessee is directed against the order dated 13.01.2025 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT(A)’].
Vide 7 grounds of appeal, the appellant assessee has raised the issue that whether the requirement of submission of Form-10B on or before filing the Income Tax Return (‘ITR’) is mandatory for claiming benefit under section 11 and 12 of the Income Tax Act, 1961 (‘the Act’)
3. The relevant facts giving rise to this appeal are that the assessee, a registered trust under section 12A of the Act, filed its ITR on 27.09.2019 declaring NIL income after claiming exemption under section 11 and 12 of the Act. The said ITR was not annexed with the audit report in Form No.-10B. The assessee filed its audit report in Form No.-10B on 30.09.2019; i.e. 3 days after filing the ITR. Thus, there is a delay in filing of the audit report. However, the said date for filing the ITR was extended upto 31.10.2019. While processing the said ITR under section 143(1) of the Act, the Ld. Assessing Officer-CPC (‘AO’) denied the claim of exemption under section 11 and 12 of the Act on the reasoning that the audit report in form No. 10B was not filed within the stipulated time. Aggrieved, the assessee filed rectification application under section 154 of the Act, which was also rejected on the similar reasoning. Aggrieved, the assessee filed appeal against the order passed under section 154 of the Act, but the Ld. CIT(A) dismissed the same. Hence, this appeal is before us.
At the outset, the Ld. Authorized Representative (‘AR’) of the assessee, drawing our attention to the CBDT Circular No. 10/2019 dated 22.05.2019, submitted that the filing of the audit report in Form No. 10B was directory in nature and not mandatary; hence, the same was condonable in view of the provisions of section 12A of the Act and that was why the CBDT condoned the delay in filing the audit report in Form No. 10B for AYs 2016-17 and 2017-18 even without filing the condonation petition. However, in cases for the AY 2018-19 onward, the Circular was silent. The Ld. AR submitted that the said audit report in Form No. 10B was filed before the last day of filing the ITR, which was extended from 30.09.2019 to 31.10.2019. The Ld. AR submitted that the filing of the audit report in Form 10B online on or before filing the ITR under section 139(1) of the Act was one of the requirements to avail the benefit under section 11 and 12 of the Act. The requirement of filing of Form No. 10B online on or before filing the ITR under section 139(1) of the Act was directory in nature and thus, was curable defect. The Ld. AO-CPC should have accepted the uploaded audit report in Form No. 10B at the time of processing the ITR under section 143(1) of the Act as the said audit report was available on the Income Tax Portal. It was contended that the Ld. AO-CPC, at most, had treated the said ITR as a defective ITR under section 139(9) of the Act if the audit report was not available online along with the ITR on the Income Tax Portal and the assessee should have been provided an opportunity to rectify the said defect/deficiency in the ITR. However, the AO-CPC did not do the needful. The Ld. Counsel, in view of above-mentioned Circular and following judicial decisions, submitted that the Ld. AO was not justified in rejecting the claim of exemption under section 11 of the Act:
(i) Rai Bahadur Bissesswarlal Motilal Malwasie Trust 195 ITR 825, (Cal) (ii) Calcutta Management Association 42 ITD 62 (iii) Sankulp Welfare Society 303 ITR 64 (iv) National Horticulture Board 176 taxman.167
(v) Sahja Nand Charity Trust 228 ITR 292
Alternatively, the Ld. Counsel submitted that after rejection the claim of exemption under section 11 of the Act, at most the income as per the Income & Expenditure account of the assessee would have been taxed instead of the gross receipts of Rs.51,29,004/-. The corresponding revenue expenditure of Rs.23,18,685/- claimed against the gross receipts should have been allowed.
On the other hand, the Ld. Sr. Departmental Representative (‘Sr. DR’), placing reliance on orders of the Authorities below, prayed for dismissal of the appeal on the reasoning that filing of the audit report in Form No. 10B online on or before the filing of ITR under section 139(1) of the Act was mandatory and not directory in nature and in this case the audit report in Form No. 10B was filed after filing the ITR.
We have heard both parties and have perused the material available on the record. We find merit in the submissions/arguments/contentions of the Ld. AR that failing in filing the audit report in Form NO. 10B online on or before the filing of ITR under section 139(1) of the Act is a curable defect which gets buttressed by the above-mentioned case laws and the intent of the above-mentioned Circular issued by the CBDT. Further, we are of the considered view that the denial of the claim of exemption under section 11 of the Act due to delay in filing the audit report in Form No. 10B online on or before the filing of ITR under section 139(1) of the Act is a debatable issue as evident from various case laws and such delay is condonable too as the CBDT, vide the above-mentioned Circular has already condoned the delay for two AYs. Thus, keeping in view the above, we hereby hold that the denial of claim of exemption under section 11 of the Act while processing the ITR under section 143(1) of the Act is not justified. Consequentially, we condone the delay in filing the audit report in Form No. 10B online after filing the ITR and direct the Ld. AO to allow the benefit of section 11 of the Act in this case. The assessee gets consequential relief accordingly.
In the result, the appeal of the assessee is allowed.