TaxTMI 
TaxTMI 
2025 (7) TMI 1367
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....uly uploaded on the e-filing portal. However, the assessee, due to inadvertence and technical oversight, failed to verify the said Form 10B at that time. It was only upon checking the status of return processing that the assessee became aware that the Form 10B was still showing as unverified. The assessee promptly verified the Form 10B on 17.04.2023. 2.1 Subsequently, CPC processed the return under section 143(1) on 21.04.2023, disallowing the claim of exemption under section 11 and making an addition of Rs. 1,60,22,225/-, thereby raising a demand of Rs. 65,21,700/-. The assessee filed a rectification application before CPC, which was rejected, and thereafter filed an appeal before the CIT(A). The CIT(A), however, upheld the action of CPC, holding that since the audit report in Form 10B was verified only on 17.04.2023 beyond the due date for filing such report the CPC was justified in denying the exemption. 3. In appeal before us, the learned counsel for the assessee submitted that the disallowance was purely technical in nature and not on the merits of the exemption claim. He pointed out that Form 10B had been uploaded by the auditor within time and that the delay was only i....
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....aid backdrop that the respondents argue that the allegation of non-availability of the functionality to upload the forms on the portal is baseless. It is the aforesaid rival contentions which fall for determination. 23. In our considered opinion, the stand as struck by the respondents, relying on Paragraph 16 of the counter affidavit, is firstly belied by the issuance of the CBDT Circular itself. The Circular itself acknowledged and took note of the grievances which were raised with respect to the non-functionality of the facility for digital submission of forms leading to a delayed e-filing of Form 10. The CBDT also appears to have taken a sympathetic view bearing in mind the fact that the requirement of digital filing had come to be introduced and become applicable for the first time in AY 2016-17. It was in that backdrop that the CBDT had hoped that assessing authorities would approach the issue bearing in mind reasonable cause being established by individual assessees in case of a delayed digital submission of Form 10. 24. We additionally note that the respondents allude to 3687 digital submissions of Form 10 in the month of October 2016. We have not been prov....
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....ewith which were aspects succinctly explained by the Supreme Court in Commissioner of Income-tax v. Nagpur Hotel Owners' Assn. (2001) 2 SCC 128/[2001] 114 Taxman 255/247 ITR 201 (SC). The Bench of three learned judges in Nagpur Hotel Owners' Assn. (supra) rendered the following pertinent observations:- "6. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form 10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and on....
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....tory but directory and that if the audit report is filed at any time before the framing of the assessment, the requirement of section 80-IA(7) would be met." 31. While we are conscious that the judgments in Nagpur Hotel Owners' Assn. as well as Contimeters Electricals P. Ltd. were rendered prior to the promulgation of the 2015 Act and the 2016 Amendment Rules, the said decisions clearly underline the importance of due disclosure as opposed to adherence to the mere procedural requirements of the digital filing of a form. 32. We further note that a Division Bench of the Gujarat High Court has in its decision rendered after the insertion of the 2015 Act and the 2016 Amendment Rules in Association of Indian Panelboard Manufacturer v. Deputy Commissioner of Income-tax 2023 : GUJHC : 27028-DB/[2023] 157 taxmann.com 550 clearly held that the electronic submission of Form 10B is essentially a matter of procedure as opposed to being a mandatory condition which may be recognized to form part of substantive law. We deem it apposite to extract the following passages from that decision:- "5.4 Recollecting the relevant dates, the income was filed on 31.8.2018. On 1....
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....m 12B is filed to be available with the Assessing Officer, before assessment proceedings take place, the requirement of law is satisfied. In that view, the Income Tax Tribunal was not justified in dismissing the appeal of the assessee. 6.1 The appellant assessee has to be held to be eligible and entitled to exemptions under Section 11(1) and 11(2) of the Act and the alleged ground of non-filing of audit report alongwith return of income which was at the best procedural omission, could never to an impediment in law in claiming the exemption. 6.2 Accordingly the substantial questions of law have to be decided in favor of the appellant. 7. They are accordingly decided. The appeal is allowed." 33. Though rendered in the context of Form 10B, in our considered opinion, the legal position as enunciated in the aforesaid judgment would equally apply to the submission of Form 10. 34. We, accordingly, allow the instant writ petition and quash the impugned order under Section 148A (d) dated 31 March 2023 and the consequent initiation of reassessment proceedings through notice under Section 148 of the Act of even date. 5.1 We also rely upon the or....