2025 (1) TMI 1595 - AT - Income Tax

Filing Audit Report in Form 10B Procedural, Not Mandatory for Section 11 Exemption Claim

The ITAT Chennai held that the filing of the audit report in Form No. 10B is procedural and not mandatory for claiming exemption under section 11. The ... Denial of exemption u/s 11 - audit report in Form No. 10B was not filed within the due date prescribed under the Income Tax Act - mandatory or directory provision - HELD THAT:- It is a settled principle that the filing of audit report in 10B is procedural nature and not mandatory and as rightly pointed out that this Tribunal remanded similar issues to the file of the AO for his fresh consideration in allowing exemption u/s 11 of the Act taking into account the audit report. Therefore, we deem it proper to remand the matter to the file of the Jurisdictional Assessing Officer for fresh consideration to examine the claim of exemption under section 11 of the Act with reference to the audit report in Form 10B. Thus, the order of the ld. CIT (A) is not justified and set aside. Thus, the grounds raised by the assessee are allowed for statistical purposes. The ITAT Chennai, in appeal no. SA No. 17/Chny/2025, addressed an appeal by a charitable trust registered under section 12A of the Income Tax Act, 1961, which had claimed exemption under section 11 for AY 2020-21. The Assessing Officer denied exemption due to non-filing of audit report in Form 10B before one month of filing the return, a view upheld by the CIT(A). The Tribunal, relying on precedents, held that 'filing of audit report in Form 10B is procedural nature and not mandatory' and may be submitted during assessment or appellate proceedings. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter to the Jurisdictional Assessing Officer for fresh consideration of the exemption claim under section 11 with reference to the audit report. The appeal was allowed for statistical purposes, and the stay application dismissed.