Non-filing of the Audit report along with Return of Income is a Procedural Omission and can't be claimed as an Exception: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAI) held that the non-filing of the audit report along with the return of income is a procedural omission and can’t be claimed as an exception.

The assessee filed its return of income showing a gross receipt at Rs.76,71,487. The Centralized Processing Centre (CPC), Bangalore while processing the return under Section 143(1) of the Income Tax Act, made a disallowance to Rs.76,71,487/-, being the expenses/application of income claimed by the assessee and raised a demand of Rs.32,34,000/ by denying Form No.10B.

The Counsel for the assessee submitted that the filing of Audit Report is a substantive requirement but the mode and stage of filing is a procedural one. Once it is filed under Form 10B and made available with the Assessment Officer before the assessment initiates, the purpose is served.

The counsel relied upon the judgment passed by the Gujarat High Court in the case of Association of Indian Panelboard Manufacturer vs. DCIT in R/Tax Appeal No. 655 of 2022, wherein the ratio has been laid down in affirmative and in favour of the assessee.

The Departmental Representative has not been able to controvert such submission made by the assessee, and neither could place any judgment on this issue passed against the assessee pronounced by any Judicial Forum.

In view of the ratio laid down by the Jurisdictional High Court holding that non-filing of the Audit Report along with the return of income is a procedural omission and cannot be an impediment in law in claiming the exemption.

The two-bench member consisting of Waseem Ahmed (Accountant member) and Madhumita Roy (Judicial member) allowed the appeal condoning delay in filing the Audit Report in Form No. 10B.

Also, upon condoning the delay, restore the matter to the file of the Commissioner of Income Tax (Appeal) [CIT(A)] to pass an order in regard to the exemption claimed by the assessee strictly in accordance with the law. Thus, the assessee’s appeal is allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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