2025 (7) TMI 1734 - AT - Income Tax

Assessee wins exemption under Section 11 despite late Form 10B filing; timely filing deemed directory, not mandatory

Sant Shri Asaramji Ashram Trust, C/o- Rakesh Khiwani & Co, CA Versus Income Tax Officer, Ward- Exemption 2 (1), Delhi

The ITAT Delhi allowed the assessee's appeal against the denial of exemption under section 11 due to belated filing of Form 10B tax audit report. The ... Denial of exemption u/s 11 - belated filing of tax audit report Form 10B, on or before the due date of filing of section 139(1) return - Revenue’s case accordingly is that the above compliance of timely filing of Form 10B tax audit report is mandatory. HELD THAT:- Case law CIT vs. Xavier Kelavani Mandal (P.) Ltd., [2012 (9) TMI 1049 - GUJARAT HIGH COURT] has already settled the issue in assessee’s favour that the foregoing compliance of filing/upholding form 10B tax audit report is directory than a mandatory provision. That being the case, find merit in the assessee’s instant sole substantive grievance and direct the learned Assessing Officer to frame its consequential computation as per law after verifying all the relevant facts. Assessee’s appeal is allowed. The Appellate Tribunal (ITAT Delhi) heard the assessee's appeal for AY 2021-22 against the CIT(A)'s order dated 28.02.2025 under section 143(1) of the Income-tax Act, 1961. The appeal was heard ex-parte due to non-appearance of the assessee. The assessee challenged the denial of deduction of Rs. 46,30,420/-, contending that the Commissioner erred in rejecting the claim based on the alleged belated filing of the tax audit report (Form 10B) required under section 11(1) and rule 17(1). The assessee relied on timely filing of Form 9A and the Audit Report Form 10B, accepted on 03.02.2022, asserting compliance with procedural requirements. The Tribunal noted that the lower authorities disallowed the exemption solely because Form 10B was not filed on or before the due date of filing the section 139(1) return. However, relying on the precedent in CIT vs. Xavier Kelavani Mandal (P.) Ltd., [2014] 41 taxmann.com 184 (Guj.), the Tribunal held that the requirement of timely filing of Form 10B is 'directory than a mandatory provision.' Consequently, the Tribunal found merit in the assessee's grievance and directed the Assessing Officer to recompute income in accordance with law after verifying relevant facts. The appeal was allowed accordingly.