The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) that the late submission of Form 10B was deemed a procedural lapse and should not be a reason to deny substantive claims. The tribunal granted exemption under Section 11 of the Income Tax Act, 1962.
Bhavnagar Dashashrimali Meshree Vanik Gnati, the assessee filed an appeal against an order by the Additional Commissioner of Income Tax (Appeals) under Section 250 of the Income-tax Act for Assessment Year 2019-20.
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The appellant raised multiple grounds in the appeal which included the denial of exemption under Section 11 of the Income Tax Act due to procedural lapses. The disallowance of an exemption of Rs. 10,67,766 under Section 11 of the Income Tax Act by the Revenue Authorities.
On appeal before the ITAT, the assessee submitted that the exemption was denied because the audit report (Form No. 10B) was not filed along with the income tax return which was procedural and not mandatory.
The assessee’s counsel argued that the substantive requirement of getting accounts audited was fulfilled as the audit report was submitted and reflected via the Unique Document Identification Number (UDIN).
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The assessee’s counsel further argued both AO and CIT(A) did not properly consider the explanations and information submitted during the proceedings which was a violation of principles of natural justice.
The two-member bench comprising B.R.R. Kumar (Vice-President) and Suchitra Kamble (Judicial Member) observed that the assessee filed the income tax return on August 27, 2019, and Form 10B was filed on September 5, 2019.
The tribunal referenced the Gujarat High Court ruling in the case of Association of Indian Panelboard Manufacturer Vs. Deputy Commissioner of Income-tax where it was held that filing of the audit report is a procedural aspect and should not deny substantive claims if the report is available on record.
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The tribunal ruled that the assessee was eligible for deduction under Section 11 of the Income Tax Act, 1961 as Form 10B had been filed even though it was late and was part of the records during the assessment process. The appeal of the assessee was allowed.
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