TaxTMI 
TaxTMI 
2026 (6) TMI 471
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....it, which are self-explanatory and which do not require repetition, were discussed and the Ld. DR for revenue does not have any objection if the bench condones delay and accordingly left it to the wisdom of bench. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a "sufficient cause" for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a "sufficient cause" for not presenting appeal within prescribed time. It is also a settled position by Hon'ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the facts of case, the provision of section 253(5) and the decision of Hon'ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing. 4. The background facts leading to present appeal are as under: ....
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....e registration granted to it by tax authorities u/s 12A was in force. That the delay in filing Audit Report [Form No. 10B] is a procedural lapse and there is no other reason except this procedural lapse to deny the benefit of section 11/12 to assessee. He submitted that the assessee should not be denied the legitimate exemption of section 11/12 when the assessee is genuinely doing charitable activities for the welfare of public and satisfying all conditions prescribed in incometax law for being entitled to exemption. Ld. AR submitted that if the Audit Report [Form No. 10B] filed by assessee belatedly on 27.12.2018 is accepted, the assessee would be entitled to the benefit of exemption. Ld. AR submitted that in following decisions, the Hon'ble High Courts and ITAT Benches (including ITAT, Indore bench also) have held that the requirement of filing Audit Report [Form No. 10B] in time is one of the conditions for claiming benefit of exemption u/s 11/12 but it is a procedural-cum-directory requirement and even if the report is subsequently filed to AO, the exemption u/s 11/12 can't be denied: (a) ITAT, Indore - Indore Contract Bridge Association Vs. CPC, Bangalore in ITA No. 4....
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.... copy of the audited-accounts is placed in the Paper-Book. However, the auditors of assessee failed to upload the audit-report alongwith the return of income. But, post-processing of return u/s 143(1) and before filing of first appeal, the assessee arranged to get the audit-report e-filed/uploaded on 03.04.2019 / 04.05.2019. Ld. AR submitted that the CIT(A) has, without appreciating these facts, dismissed the appeal of assessee merely on a technical defect that the audit-report was not filed alongwith the return of income. Ld. AR submitted that except such technical defect, there is no other reason to deny the benefit of section 11/12 to assessee. Ld. AR submitted that the e-filing/uploading of audit-report is done by auditors and not by assessee; therefore the defect is not per se attributable to assessee. Ld. AR submitted that in any case, the defect is due to an inadvertent human error and the assessee should not be denied the legitimate exemption, when the assessee is genuinely doing charitable activities for the welfare of public and satisfying all conditions prescribed in income-tax law for being entitled to exemption. Ld. AR submitted that if the audit-report obtained by ass....
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.... and has been purportedly enjoying the benefits of section 11 since 2011. In the impugned assessment year, the benefit of exemption under section 11 of the Act has been denied to the assessee for the reason that assessee has failed to furnish audit report along with return of income. The contention of the ld. Authorized Representative of the assessee is that the audit report was available with the assessee at the time of filing of return of income however due to inadvertent error the assessee failed to upload Audit Report in Form 10B along with e-filing of return of income. Non-filing of Audit Report is a bonafide error. The assessee has placed on record Audit Report dated 19/10/2018 in the prescribed Form 10B at page 15 of the Paper Book. The assessee after receiving the intimation under section 143(1) of the Act uploaded the Audit Report on 18/04/2020 in First Appellate proceedings. 5. In my considered view non-filing of Audit Report in Form 10B along with Return of Income is merely a procedural defect which is rectifiable. If the Audit Report was available with the assessee at the time of filing of Return of Income and was not filed due to bonafide reasons the benefit o....
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....ember 2014 much before the date of filing the return of income by the assessee. Thus, it appears that report for the audit in the prescribed form was prepared well in time but it was filed belatedly. 12.1 Now the controversy arises whether the assessee can claim the benefit of exemption under section 11 of the Act in a situation where the audit report in the prescribed form was not filed along with return of income. In this context we note that act of the assessee to file the audit report duly signed by the qualified chartered accountant is a procedural requirement and the courts have held that the assessee cannot be denied the benefit for which it is entitled in the event of any procedural contravention specified under the provisions of the Act. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in case of CIT vs. Gujarat Oil & Allied Industries reported in 201 ITR 325, the relevant extract of the judgment is reproduced as under: "In our view, the aforesaid reasoning of the Allahabad High Court and the Patna High Court would squarely apply to the facts of the present case. The provision about furnishing of the auditors'....
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....ill the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an assessee is required to pay tax or becomes entitled to a refund, would be ascertained by the assessing authority after giving effect to the order of the Tribunal." 12.3 Admittedly, the appeal was pending before the ITAT at the time when the audit report in form 10B was filed which transpires that the assessment has not reached to the finality and therefore principle laid down by the Hon'ble High Court of Gujarat in the case of CIT vs. Gujarat Oil & Allied Industries (Supra), that the requirement for filing the audit report is a procedural requirement, can be applied in the given facts and circumstances. Therefore, the benefit for which the assessee is entitled cannot be denied." 14. Respectfully following these decisions, we are of the view that in the present case, the assessee can't be denied the benefit of exemption u/s 11 as claimed in the return of income for mere delay in filing of audit-report. We, therefore, deem it fit to remand this matter back....
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....ng the same, we too hold that the assessee cannot be denied exemption u/s 11/12 as claimed. However, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income. Therefore, we restore this issue to the file of the AO for the limited purpose of recomputing the income and allowing exemption in accordance with law, after accepting the Audit Report [Form No. 10B] filed by assessee on 27.12.2018. The assessee succeeds accordingly. 11. Resultantly, this appeal of assessee is allowed for statistical purpose in terms indicated above. Order pronounced in open court on 08/05/2026. ============= Document 1 BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL AT INDORE BENCH IN THE MATTER OF: - BAGLI PRAGATI SAMITI (APPELLANT) VERSUS EXEMPTION WARD, UJJAIN (RESPONDENT) ASSESSMENT YEAR 2018-2019 ITA 982/IND/2025 I, SMT. Kala Bai Devda, President of Bagli Pragati Samiti [PAN No. AACAB2603F] aged 51 years currently residing at Gram-Dhantalav post -aagurli tehsil-Bagli,Dewas do hereby solemnly affirm and state as follows: 1. THAT, I am the President of the abovementioned Society having PAN: AACAB2603F (th....