2023 (3) TMI 263 - AT - Income Tax

Deduction u/s.11 12 - delay in filing of the audit report in Form 10B - auditors of the assessee had failed to include the Form 10B being the audit report alongwith return of income - HELD THAT - A perusal of the decision of the Hon ble P H High Court in the case of Shahzedanand Charity Trust 1997 (8) TMI 72 - PUNJAB AND HARYANA HIGH COURT clearly shows that the Hon ble P H High Court has categorically held that the audit report u/s.12A(1)(b) of the Act can be filed even at the appellate stage. Thus, clearly, the Hon ble P H High Court has held that the filing of the audit report alongwith the return as per provisions of section 12A(1)(b) is not mandatory. As we are faced with a decision of the Hon ble High Court on the issue, the decision of the Co-ordinate Bench of this Tribunal would not hold value of precedence. Thus, clearly, it is noticed that the audit has been done within time in the case of the assessee and it is only the audit report which has not been filed within the time prescribed. This is only a venial breach of the provisions. This being so, as also considering the fact that CBDT in its Instruction No.1/1148 has given the powers to the AO to condone the delay in filing of the audit report, we are of the view that the impugned assessee should not be denied the benefit of deduction u/s.11 12 of the Act on account of the said venial breach in respect of the delay in filing of the audit report. Consequently, the delay in filing of the audit report in Form 10B is condoned and the Assessing Officer is directed to consider the same when computing the income of the assessee. Appeal of the assessee stands allowed.

Summary

Issues:
Appeal against CIT(A) order for assessment year 2015-16 regarding non-filing of audit report in Form 10B along with return of income by a trust.

Analysis:
The appeal was filed by the assessee against the order of the ld CIT(A), NFAC, Delhi, for the assessment year 2015-16. The assessee, a trust, had failed to include the Form 10B audit report along with the return of income. The auditors rectified this mistake on 21.11.2019 after the due date of 30.9.2015. The ld CIT(A) dismissed the appeal citing ignorance of law as inexcusable. The assessee argued that reliance on auditors should not disadvantage them if not at fault. They referenced various court decisions and a CBDT instruction stating that filing the audit report along with the return is not mandatory. The assessee's audit report was filed before the appeal was adjudicated. The CBDT instruction allowed for condoning delays beyond the assessee's control. The Hon'ble P&H High Court held that filing the audit report at the appellate stage is permissible under section 12A(1)(b) of the Act.

The Co-ordinate Bench of Panaji Tribunal's decision was cited by the revenue to argue the mandatory nature of section 12A(1)(b). However, the ITAT bench noted the Hon'ble P&H High Court's decision allowing the filing of the audit report at the appellate stage, making the provision non-mandatory. The ITAT held that the delay in filing the audit report was a minor breach and, considering the CBDT instruction's provision for condonation of such delays, directed the Assessing Officer to consider the audit report in Form 10B for computing the assessee's income. Consequently, the appeal of the assessee was allowed, and the delay in filing the audit report was condoned.

In conclusion, the ITAT bench, after considering the submissions and legal precedents, allowed the appeal of the assessee, directing the Assessing Officer to consider the audit report filed in Form No.10B despite the delay, as the delay was considered a minor breach and was condoned in accordance with the CBDT instruction and the decision of the Hon'ble P&H High Court.