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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
Before: SHRI NARENDRA KUMAR BILLAIYA & SHRI ANUBHAV SHARMA
O R D E R
PER ANUBHAV SHARMA, JM:
The assessee has come in appeal challenging the orders dated 11.03.2022 for A.Y. 2017-18 and 23.01.2023 for A.Y. 2018-19 passed by the Principal Commissioner of Income Tax, Delhi-12, New Delhi u/s 263 of the Income-tax Act, 1961 (hereinafter referred as the “Act”) in assessment orders dated 30.12.19 and 26.2.21 respectively. Both the appeals were heard together and are being disposed of by a common order for the sake of convenience.
Heard and perused the record.
2 & 773/Del/2023 3. The learned PCIT exercised powers u/s 263 of the Act on the basis of fact that he found the assessment orders to be erroneous and prejudicial to the interests of Revenue for the reason that the learned AO had considered the assessee eligible for claiming deduction u/s 10AA of the Act in spite of the fact that mandatory Auditor’s report in prescribed Form 56 was not filed before the due date of filing the return.
On hearing, learned AR pointed out that return of income for A.Y. 2017-18 was filed on 12.10.2017 and for A.Y. 2018-19 on 1.10.2018, while the due date of filing the return was 7.11.2017 and 30.10.2018 respectively. He submitted that form 56 was submitted to the AO during the course of assessment proceedings, for A.Y. 2017-18 it was submitted online on 8.12.2019 while for A.Y. 2018-19 it was filed on 3.10.2018. The assessments were completed for A.Y. 2017-18 on 30.12.2019 and for A.Y. 2018-19 on 26.2.2021. He submitted that in any case before the assessment was completed, form 56F was filed before the learned AO. In this context he relied on the judgment of Hon’ble Delhi High Court in CIT Vs. Contimeters Electrical (P) Ltd. (2009) 317 ITR 249 (Del.) and submitted that the said judgment has been relied again by Hon’ble Delhi High Court in CIT Vs. Axis Computers (India) (P) Ltd. (2009) 178 Taxman 143 (Delhi), to hold that as long as compliance is made before the framing of the assessment, the mandate of law shall be considered to be complied and as such the mandate is directory and not mandatory.
Learned DR has, however, submitted that the learned AO had not examined this issue, nor made any query in this regard order of Ld. PrCIT is correct.
Giving thoughtful consideration to the facts and material on record the Bench is of the considered view that during assessment proceedings in response to 3 & 773/Del/2023 notices issued by the AO assessee had submitted justification of the deduction u/s 10AA of the Act. Thus, as such, the issue stood examined by the learned AO and also before the assessment order was passed, the Auditor’s report in form 56 stood filed. The judgments relied by the learned AR were certainly then holding the field as Hon’ble Supreme Court only on July 11,2022 in the case of Pr. CIT v. Wipro Ltd. [2022] 140 taxmann.com 223, held that filing of declaration under Section 10B is mandatory. Assessing Officer exercises quasi judicial powers so if in exercise of such powers an assessing officer accepts delayed compliances, which as per prevailing law he considered only directory in nature, that cannot make the assessment order erroneous, so as to justify the exercise of powers u/s 263 by the learned PCIT. The grounds raised in the appeals are allowed. Both the appeals are allowed. The impugned order is set aside.
Order pronounced in open court on 13.09.2023.