2024 (11) TMI 639 - AT - Income Tax

Disallowance of deduction claimed u/s 80IAB - appellant could not file form 10CCB in respect of deduction - HELD THAT - As decided in Arunachalam 1994 (1) TMI 65 - MADRAS HIGH COURT held that filing of audit report is directory in nature and if such audit report is filed on or before the AO passed the assessment order u/s 143(1) or u/s 143(3) then the AO should consider the audit report for the purpose of allowing the benefit of deduction under the provisions of the Act. In the present case, it is not a case of the AO that the appellant has not filed the relevant audit report in Form 10CCB for claiming deduction u/s 80IA and 80IAB of the Act. In fact, the assessee has promptly filed form 10CCB on or before the due date for filing return of income in respect of deduction claimed u/s 80IA of the Act. But, could not file Form 10CCB in respect of deduction claimed u/s 80IAB of the Act, and the reasons given by the appellant for not filing said form, there is some technical glitches in the IT Portal. In our considered view, it is a fact that in a time, there are lot of technical glitches in the IT Portal for filing return of income or any other document which has been reported to the concerned authorities by the taxpayers. Going by the conduct of the assessee in filing audit report in respect of deduction claimed u/s 80IA of the Act, and also considering the reasons given by the assessee, that there are certain technical glitches and because of this, it could not upload 2nd audit report in Form 10CCB, in our considered view, the AO ought to have considered the audit report filed by the assessee on 25/06/2022 for claiming deduction u/s 80IA of the Act, because the said audit report was very much available to the Assessing Officer, when he passed the order u/s 143(1) of the Act. In our considered view, as held that filing of audit report is directory in nature but not mandatory and further if such audit report is filed on or before the AO passed the assessment order, then the same needs to be considered for allowing deduction or exemption under the provisions of the Act. Since, the appellant has filed the audit report in Form 10CCB before the AO passed order u/s 143(1) of the Act, in our considered view, the claim by the assessee u/s 80IAB of the Act needs to be allowed. Thus, we set aside the order of the CIT (A) and direct the AO to allow deduction claimed u/s 80IAB of the Act. Decided in favour of assessee.

Issues:
1. Disallowance of deduction claimed u/s 80IAB for belated filing of audit report.
2. Consideration of audit report for deduction u/s 80IAB.
3. Technical glitches in filing audit report.
4. Applicability of judicial precedents in similar cases.
5. Mandatory vs. directory nature of filing audit reports.
6. Decision on the appeal filed by the assessee.

Analysis:

The first issue in this case revolves around the disallowance of deduction claimed under section 80IAB of the Income Tax Act due to the belated filing of the audit report. The appellant filed its return of income for the relevant assessment year, claiming deductions under sections 80IA and 80IAB. While the audit report for section 80IA was filed on time, the report for section 80IAB was submitted after the due date, leading to the Assessing Officer denying the deduction claimed under section 80IAB.

The second issue concerns the consideration of the audit report for deduction under section 80IAB. The appellant argued that despite the delayed filing of the audit report, it was submitted before the Assessing Officer passed the assessment order. The appellant contended that the audit report should have been considered as the filing is directory, not mandatory, and the report was available to the Assessing Officer during the assessment process.

The third issue raised was regarding technical glitches faced by the appellant in uploading the second Form-10CCB for claiming deduction under section 80IAB. The appellant cited technical issues with the Income Tax Portal as the reason for the delay in filing the report and communicated this to the authorities. This technical difficulty was a crucial factor in the appellant's argument for the acceptance of the belated audit report.

The fourth issue involved the application of judicial precedents to support the appellant's case. The appellant referred to decisions from the Hon'ble Madras High Court and the Hon'ble Delhi High Court, emphasizing that the filing of the audit report before the assessment order is passed should warrant consideration for allowing deductions under the Income Tax Act.

The fifth issue tackled the debate over the mandatory versus directory nature of filing audit reports. The Tribunal analyzed the legal position on this matter, citing the decision of the Hon'ble Madras High Court, which held that filing the audit report before the assessment order is passed should be sufficient for considering the deduction, even if filed after the due date.

Finally, the Tribunal decided in favor of the assessee, allowing the appeal and directing the Assessing Officer to permit the deduction claimed under section 80IAB of the Income Tax Act. The Tribunal emphasized the importance of considering the audit report filed before the assessment order and highlighted the technical challenges faced by the appellant in filing the report on time.

In conclusion, the Tribunal's decision was based on the principles of timely consideration of audit reports for deductions and the recognition of technical difficulties faced by taxpayers in fulfilling compliance requirements.

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