2025 (7) TMI 104 - AT - Income Tax

Denial of exemption u/s 11 - default in ensuring timely mandatory compliance of filing Form 10B tax audit report on or before the due date of filing section 139(1) return. HELD THAT - A perusal of the case file indicates that the assessee had filed its return on 03.11.2017 claiming section 11 exemption and thereafter; its form 10B tax audit report was belatedly uploaded on 23rd November 2018 i.e. much before the CPC s processing in its case on 31st March 2019. The assessee had very well filed the tax audit report in Form 10B before the CPC s processing. That being the case we hereby quote CIT vs. Xavier Kelavani Mandal (P.) Ltd. 2012 (9) TMI 1049 - GUJARAT HIGH COURT to conclude that once their lordships have already settled the issue in assessee s favour and against the department thereby holding the above compliance as directory provision the learned lower authorities action rejecting section 11 exemption is hereby reversed in very terms. AO is directed to frame its consequential computation in assessee s case after verifying all the relevant facts as per law. Assessee appeal allowed.

Summary

The Appellate Tribunal (ITAT Delhi), per Judicial Member Satbeer Singh Godara, heard an appeal concerning the disallowance of section 11 exemption for AY 2017-18 due to the assessee's delayed uploading of Form 10B tax audit report. The Revenue upheld the lower authorities' rejection, asserting that timely filing of Form 10B is mandatory under the Income-tax Act, 1961. However, the assessee had filed the return on 03.11.2017 and uploaded Form 10B belatedly on 23.11.2018, but before CPC's processing on 31.03.2019.Relying on CIT vs. Xavier Kelavani Mandal (P.) Ltd., [2014] 41 taxmann.com 184 (Guj.), the Tribunal held that the requirement to file Form 10B timely is a "directory provision," not mandatory, and thus reversed the lower authorities' rejection of the section 11 exemption. The order directs the Assessing Officer to recompute the assessment accordingly. The appeal was allowed.