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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
PER SUCHITRA KAMBLE, JUDICIAL MEMBER:
This appeal is filed by the assessee against order dated 22.05.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2012-13.
The assessee has raised the following grounds of appeal :-
“1. In law and in the facts and circumstances of the appellant’s case, the Hon’ CIT(A) has erred in upholding the disallowance made aby the Ld. AO in disallowing the deduction u/s.10AA. 2. In law and in the facts and circumstances of the appellant’s case, the Ld. CIT(A) has erred in confirming the levy of interest u/s.234(a), 234(b), 234(c), 234(d).” 3. The assessee company filed its return of income for Assessment Year (A.Y.) 2012-13 on 26.09.2012 declaring Nil income. The case was selected for scrutiny and order under Section 143(3) of the Income Tax Act, 1961 was passed accepting the
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returned income. The PCIT passed order under Section 263 of the Act on 22.03.2017 setting aside the order afresh after verification and deduction under Section 10A claimed by the assessee. The Assessing Officer completed the assessment under Section 143(3) read with Section 263 of the Act by disallowing the deduction under Section 10AA of Rs.1,10,30,619/- claimed by the assessee.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that there is delay of 35 days in filing the present appeal which is due to the medical exigencies in the family. Since the delay has been explained by the assessee, and the reasons given for delay in filing the present appeal before the Tribunal appears to be genuine, the delay is condoned.
The Ld. AR submitted that as regards ground no.1 regarding disallowance made by the Assessing Officer under Section 10AA of the Act, the same was denied on the sole ground that the Audit Report (Form 56F) was filed at a belated stage instead of filing the same along with the return of income. The Ld. AR submitted that the assessee is engaged in the activity of Software Development and providing IT enabled service. The Ld. AR submitted that certain important dates and events are mentioned herein below :-
Date Event Pg. of P/B 20.09.2012 Form 56F was obtained Pgs. 3-5 26.09.2012 Return of income was filed Pgs. 1-2 30.11.2016 Form 56F was filed before PCIT Pg. 7 22.03.2017 Order u/s.263 was passed Pgs. 8-10 19.12.2017 Show cause notice was issued by AO Pg. 11 20.12.2017 Reply to show cause notice was furnished Pgs. 12-13 20.12.2017 Assessment Order was passed by AO --
The Ld. AR further submitted that Form 56F was obtained before filing the return of income but the same was not filed along with return of income. The Ld. AR further submitted that Form 56F was later filed before the PCIT during revisionary proceedings and, therefore, the Assessing Officer at this juncture cannot decide the
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matter only on the ground that the Audit Repot/Form 56F was not filed along with return of income as the same is belatedly filed and, therefore, deduction claimed under Section 10A of the Act was rejected. The Ld. AR submitted that the requirement of filing of Audit Report (Form 56F) is merely directory in nature and hence even if such Audit Report is filed belatedly, the same has to be treated as sufficient compliance as the assessee has filed the Form 56A on 30.11.2016 so the same was obtained on 20.09.2012. Thus, the Assessing Officer while passing the order under Section 243(3) read with Section 263 of the Act should have taken cognisance that Form 56F was already filed by the assessee. The genuineness of claim of deduction under Section 10A of the Act is not in dispute at all and merely on technical ground the claim should not be rejected. It is well settled that the requirement of filing the Audit Report is merely directory in nature and failure to furnish such Audit Report before due date prescribed under Section 139(1) of the Act cannot be so fatal so as to deny the very claim of deduction under Section 10AA of the Act especially when such Audit Report was available on record when order under Section 263 as well as order under Section 143(3) read with Section 263 of the Act were passed. The Ld. AR relied upon the following decisions :- - Association of Indian Panelboard Mfg. TA 655 of 2022 (Guj) - DCIT vs. Cryogas Equipment P. Ltd. – ITA 415/Ahd/2020 - Ramji Mandir Religious & Charitable Trust – 205 ITD 150 (Ahd) - True Sparrow Systems P. Ltd. vs. PCIT – ITA 765/Ahd/2019 - Zenith Processing Mills vs. CIT – 219 ITR 721 (Guj) - CIT vs. Mayur Foundation – 274 ITR 562 (Guj)
The Ld. AR further submitted that the requirement of e-filing of Form 56F became mandatory at a later stage as contemplated in proviso to Rule 12(2) of the Income Tax Rules, 1962. Upto 31.03.2013, audit report only under Section 44AB, 92E or 115JB were to be filed electronically. W.e.f. 01.04.2013, scope of relevant sections for Audit Report in the said proviso was explained by inserting few more Sections as noted/ mentioned in Section 10AA did not find place in those Sections. W.e.f. 01.04.2014, legislature inserted Section 10AA in the said proviso i.e. w.e.f. 01.04.2014, even audit report under Section 10AA is to be filed electronically. Thus, requirement of filing Audit Report under Section 10AA electronically along with return of income became mandatory w.e.f. 01.04.2014. The present Assessment Year in question is Assessment Year 2012-13 and Form 56F i.e. Audit Report under Section
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10AA was obtained on 20.09.2012, though the said audit report was not filed at the initial stage of return of income for the A.Y. 2012-13, yet during the proceedings and under Section 263 of the Act the assessee filed the same and the PCIT has accepted the same. When assessee filed return of income for the year under consideration, it was not at all mandatory to file the Audit Report under Section 10AA along with return of income, such requirement was made mandatory at much later stage. Even on that scope, the Assessing Officer and the CIT(A) were not justified in delaying the claim of 10AA on such a hyper technical ground and, therefore, the assessee is eligible for claiming deduction under Section 10AA of the Act.
The Ld. DR submitted that when Form 56F is available at the time of filing the return of income or prior to the original assessment order passed under Section 143(2) of the Act, the assessee at this juncture cannot take contradictory view and file the same belatedly. The Ld. DR further submitted that the Assessing Officer as well as the CIT(A) has rightly rejected the assessee’s contention as E-filing of forms was enabled in later year along with return of income does not mean “attached to the return of income” is itself absurd contention of the assessee which is contrary to its own conduct and, therefore, as contemplated by various case laws, cited by the CIT(A) in paragraph no. 4.3.2 as well as the Tribunal’s decision in case of Mahendra Kumar Damani vs. ACIT, the same has to be taken into cognisance and the CIT(A) has rightly dismissed the appeal.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the decision quoted by the Hon’ble Apex Court in case of PCIT vs. Wipro (2022) 288 taxmann.com 491 though held that since the assessee did not file the Audit Report in Form No.56F, as required under law, the Assessing Officer was right in disallowing the deduction claimed under Section 10AA of the Act as it is a mandatory condition prescribed under Section 10AA(8) of the Act read with Section 10A(5) of the Act but in the present case the assessee before the PCIT has filed the Audit Report i.e. Form No.56F. Subsequently, the Assessing Officer passed the order under Section 143(3) read with Section 263 and was having access to the Audit report i.e Form No.56F. The fact remains that when the assessee has filed the Form No.56F and the assessee on merit, is entitled for the deduction for which
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the Assessing Officer has not commented anything on merit, the provision for filing Form 56F cannot come in the way of the assessee, as Form No.56F was filed before the Revenue Authorities. In fact, the decision of Hon’ble Gujarat High Court in case of Zenith Processing Mills vs. CIT 219 ITR 721 (Guj.) will be applicable in the present case and the same should be taken into account wherein it is held that the requirement of furnishing Audit Report in prescribed form along with return is directory in nature prior to 01.04.2014 and it became mandatory w.e.f. 01.04.2014 while filing the returns electronically. The present Assessment Year is that of 2012-13 and, therefore, the decision relied by the assessee will be applicable in the present case. Thus, the appeal of the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open Court on this 12th June, 2024.
Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 12th June, 2024 PBN/*
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File
By order UE COPY
Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad