TaxTMI 
TaxTMI 
2025 (7) TMI 2020
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....ed Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the denial of exemption/ deductions under Section 11 of the Act resorted to by the Centralized Processing Centre, Income Tax Department, Bengaluru (herein after referred to as ITD") while "CPC - processing the Return of Income under Section 143(1) of the Act on the grounds that the Audit Report in Form 10B was filed belatedly, though with the Return of Income which was filed in prescribed time. 2. The learned and the learned CPC - ITD failed to appreciate that the time limit prescribed for filing the Audit Report is only declaratory and not mandatory. The lower authorities failed to appreciate that delay in filing the Audit Report is only a procedural lapse and the same cannot be fatal leading to denial of exemption/ benefits under Section 11 of the Act particularly when the said Audit Report was available on record when the Return of Income was processed under Section 143(1) of the Act. 3. The learned CIT (Appeals) failed to appreciate the explanations/ submissions furnished by the Appellant and the legal position emerging from the decisions of various High Courts/ Income-tax Appellate Tribunals....
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.... the Act, citing delay of 29 days in e-filing of the audit report in Form 10B. It is not in dispute that although the due date for furnishing the return stood extended to 30.11.2023, the requirement under the law was that Form 10B be filed one month prior to such extended due date. The audit report was filed on 29.11.2023 and thus held to be beyond the prescribed timeline. As a result, exemption under Sections 11(1)(a), 11(2), and 11(6) was disallowed and consequential adjustments were made under Section 143(1)(a) of the Act. 3. In appeal, the Ld. CIT(A) affirmed the adjustments made by the CPC, holding that the audit report was not filed within the prescribed time as per Section 12A(1)(b) read with Rule 17B. The appellate authority, relying on CBDT Circular No. 16/2024 dated 18.11.2024, observed that the Assessing Officer as well as the CIT(A) lacked jurisdiction to condone the delay in filing Form 10B and was advised to approach the jurisdictional Principal Commissioner or Chief Commissioner for condonation of delay under Section 119(2)(b) of the Act. The relevant finding of the Ld. CIT(A) is reproduced as under: "Decision: 6.1 The statement of facts, grounds....
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.... Section 12A(1)(b) and Rule 17B, Trusts are obligated to file Form 10B, which is mandatory. Form 10B can only be accessed and submitted online and must be filed no later than the specified date mentioned in Section 44AB of the Act, which is one month before the due date for submitting the Income Tax Return under Section 139(1) of the Act. 6.5 In the present case, the appellant submitted Form 10B on November 29, 2023, while the deadline for filing Form 10B was one month prior to the due date for submitting the Return. The due date for submitting the return in case of the appellant was October 31, 2023 which was further extended to November 30, 2023. There was a delay of 29 days in filing the Form 10B. Hence, Form 10B was not filed within the time frame outlined by the Act. 6.6 In view of the above, I find no error in the AO's decision to disallow the appellant's claim for exemption under Section 11 and 12 of the Act when processing the return under Section 143(1) of the Act. 7.1 Further, Section 119 empowers the Board to issue orders and guidelines regarding the condonation of delay in compliance with any provision of the Act. Section 119(2) reads ....
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.... in respect of Form No. 10, the Pr. CCsIT/ CCsIT/ Pr. CsIT/ CsIT as the case may be, shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in any one or more of the forms or modes specified in sub-section (5) of section 11 of the Act. 3. No application for condonation of delay in filing of Form No. 9A/10/10B/10BB shall be entertained beyond three years from the end of the assessment year for which such application is made. The time limit for filing of such application within three years from the end of the assessment year will be applicable for application filed on or after the date of issue of this Circular. A condonation application should be disposed of, as far as possible, within six months from the end of the month in which such application is received by the Competent Authority. 4. The delegation of powers, as per para 1.1 & 1.2 of this Circular shall cover all such applications for condonation of delay under section 119(2)(b) of the Act which are pending as on date of issue of this Circular. 7.3 It is evident from the CBDT Circulars and Section 119(2)(b) of the Act that the Assessing Officer (AO), Joi....