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Judgment
PER AMITABH SHUKLA, ACCOUNTANT MEMBER:
This appeal is filed by the Department is directed against the order of Ld. Joint Commissioner of Income Tax(Appeals), Raipur, dated 23.12.2024 arising out of assessment order dated 27.03.2024 passed by the Income Tax Officer-Ward-(1)(4), Salem, under section 143(3) of the Income Tax Act, 1961, for the Assessment Year 2023-24. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The Department has raised the following grounds of appeal:
I. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the deduction of Section 80JJAA to the assessee despite late filing of Form 10DA (mandate as per Act to be filed before the specified date referred to in section 44AB giving such particulars in the report as may be prescribed).
II. Whether the Ld. CIT(A) has erred in law in allowing the appeal filed by the assessee holding that once the substantial compliance has been made by filing the prescribed form albeit before the return of income, such belated filing of prescribed form is not fatal in the sense that the requirement of Rule 19AB and Rule 12(2) are not mandatory per se but are essentially directory in nature?
III. That the Department may be permitted to add, modify or alter or withdraw any of the grounds of appeal before or at the time of hearing of the case.
The only issue raised by the assessee is regarding denial of deduction u/s 80JJAA on account of late filing of Return of Income. The brief facts of the case are that return declaring income was filed by the assessee which was processed under section 143(1)(a). In the impugned return, the assessee had claimed deduction under section 80JJAA of Rs.75,59,069/-. Form 10DA was filed by the assessee on 12.10.2023. Rule-19AB mandated that the said Form 10DA was to be filed along with Return of Income for allowance of deduction u/s 80JJAA. Amendment to the Act from AY 2020-21 onwards mandated that the said Form 10DA shall be furnished by the assessee at least one month prior to date of filing of return u/s 139(1) of the Act. Vide its order u/s 143(1)(a) dated 27.03.2024, CPC denied the assessee claim of deduction under section 80JJAA of Rs.75,59,069/-.
Heard rival parties. Perused the material available on record.
It is the claim of the assessee that delayed filing of impugned Form 10DA would not be fatal to the assessee’s claim for deduction u/s 80JJAA. It was stated that the said stipulation in Rule-19AB is merely directory and not mandatory for allowance of assessee’s claim for deduction u/s 80JJAA. In support of its contentions, the ld. Counsel has placed reliance upon judicial precedents reportedly covering its case.
The ld. DR placed reliance upon the order of the lower authorities.
We have noted that Hon’ble Delhi High Court in the case of Matrix Clothing (P.) Ltd. Vs ACIT as at [2025] 181 taxmann.com 614 (Delhi) had an occasion to examine an nearly identical matter on the sufficiency of Form 10DA qua allowance of an assessee’s claim for deduction u/s 80JJAA. Thus, it was held
“….44. Having heard the learned counsel for the parties, the short issue which arises for consideration in these writ petitions is whether the respondents are justified in issuing the impugned notice under Section 148 of the Act for two AYs 2014-15 and 2015-16 initiating the reassessment proceedings against the petitioner herein. The primary ground on which the reassessment has been decided is on two grounds, viz that the survey was conducted at the petitioner's premises wherein fresh material was found suggesting excessive claim of expenses under the head of manufacturing expenses. Additionally, the petitioner/ assessee did not furnish the Form 10DA electronically.
45.It is considered position that the assessment for AY 2014-15 has resulted in an assessment order dated 04.11.2016 under Section 143(3) of the Act assessing the income at Rs.17,47,55,280/-. Similarly, the income was assessed at Rs.22,06,27,070/- for the AY 2015-16 in terms of the order dated 27.11.2017. Primarily, the submission of Mr Salil Aggarwal, learned Senior Counsel for the petitioner, is that at the time of initial assessment, the petitioner/assessee has provided the breakup of the manufacturing expenses, which was the part of the audited financial statement in Schedule - 25 and wherein the claim under Section 80JJAA of the Act was duly verified by the auditor in the tax audit report and Form 10DA was duly signed by the tax auditor. Further, a notice under Section 142(1) of the Act was issued to the petitioner/assessee wherein the petitioner had provided the financial statement and Form 10DA. The assessee furnished a note of claim under Section 80JJAA of the Act and also the details of all expenses including manufacturing expenses, which resulted in the aforesaid assessment orders.
46.The issue which now arises is whether in view of the material given by the petitioner/assessee at the time of assessment, the action of the respondent to initiate the reassessment proceedings would be justified. What is important to be noted here is that the survey was conducted on 27.03.2019. The case of the respondent is that a trial balance was found during the survey. The same as per petition pertains to unaudited tangible figures of AY 2019-20. In other words, it is the figures as were found in the trial balance relating to AY 2019-20, which was sought to be compared with AY 2014-15 and AY 2015-16. The plea of Mr Salil Aggarwal, that the reliance placed by the respondents on unaudited trial balance of the AY 2019-20 is uncalled for / unjustified in law, is appealing. In fact, it is his plea that there was no tangible material with regard to the impugned assessment orders before the respondents, which resulted in the initiation of the reassessment proceedings, is also appealing. It follows that any material subsequent to the relevant AY could not be the subject matter to reopen the previous assessments. Even the other ground that the Form 10DA was not sent electronically, but was given in physical form, cannot be a ground for reopening the assessment, as no such objection was ever taken during the process of the assessment during the relevant AY. Even otherwise, the plea of Mr Salil Aggarwal that such a ground would amount to change of opinion, is also appealing…..”
Again, we have noted that on the issue of claim of deduction 80JJAA vis a vis filing of Form 10DA, an Hon’ble Co-ordinate Bench of this Tribunal in its decision in the case of Jubilant Food works Ltd. as at [2025] 177 taxmann.com 374 (Delhi - Trib.) held as under:-
“…..10. We have heard the parties and gone through the material available on record. In the instant case the report of the accountant in Form No. 10DA was available before the CPC at the time of processing of the revised return of the assessee. The judgments relied by the Ld. DR, do not help the revenue as it is distinguishable. Although the said Form No. 10 DA was not filed on or before the due date of furnishing the original return, the assessee is entitled to claim the deduction u/s 80JJAA of the Act because this is a procedural omission and on this basis the AO/CPC could not have denied the deduction u/s.80 JJAA of the Act. Respectfully following the decision of the Hon'ble Apex Court and the coordinate Bench considering the fact, we deem it fit and proper to remit the issue to the file of AO/ CPC with the above observations for limited verification of quantification of allowable deduction u/s. 80JJAA of the Act. The assessee is also directed to produce the relevant document evidence before the AO/CPC. The appeal of the assessee is liable to be allowed for statistical purpose…..”
We have also noted that on the issue of timely filing of such forms under section 10B, 10D, etc. and particularly as to whether the same are directory or mandatory in nature, an Hon’ble Co-ordinate Bench of the Chennai Tribunal in the case of M/s.Alternative India for Development in ITA No.2114/Chny/2024, vide order dated 22.01.2025 observed as under:-
3.0We have heard the rival submissions in the light of material available on records. The Ld. DR placed reliance upon the order of the lower authorities. It is the case of the assessee that filing of Form-10B is merely a directory exercise and not a mandatory requirement. In support of its contentions, the Ld. Counsel for the assessee has relied upon the decisions of Hon’ble Madras, Bombay and Gujarat High Courts and Hon’ble Coordinate benches of this tribunal as well as those emanating from Delhi Benches, Ahmadabad Benches, Bangalore Benches. Thus, our attention is drawn to the decisions of ITA No.1166/Chny/2024 of Chennai in the case of Kaakkum Karangal, ITA No.302/DEL/2024 of Delhi in the case of Rajdhani Maitri Club Foundation, ITA No.209/Ahd/2022 of Ahmedabad in the case of Gujarat Energy Development Agency, ITA No.3657/Del/2023 of Delhi in the case of Bhagwant Kishore Memorial Educational Society, ITA No.1396/Bang/2024 of Banglore in the case of M/s.Sarvadeivatha Education Trust and ITA No.695/Ahd/2023 of Ahmedabad in the case of Anjana Foundation Vadodara and of Hon’ble Gujarat High Court decision in the case of Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022), decision of the Hon’ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11, decision of the Hon’ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018 and of Hon’ble Bombay High Court in the case of Xavier Mandel Pvt Ltd. As regards decision of Hon’ble Coordinate bench of this tribunal in the case of Kakkum Karangal ITA No.1166/Chny/2024 the following was held:-
“….10. For completeness, we make it clear that the Ld.CIT(A) erred in rejecting the appeal preferred by the assessee on a ground which was not raised/flagged by the CPC i.e. delay of less than one month in filing / uploading of Audit Report. In this context, it is noted that such an issue is no longer res integra i.e. filing of Form 10AB (Audit Report) would be directory in nature and as such if the assessee files the Audit Report before completion of assessment, then, the same should be considered by the Income Tax Authorities for processing of the assessment/appellate order (refer the Hon’ble Gujarat High Court decision in the case of Indian Panel Board Manufacturer v. DICT (ITA No.655 of 2022 dated 21.03.2022) and also the decision of the Hon’ble Madras High Court in the case of Chandraprabhuji Maharaj Jain v. DCIT reported in 110 Taxmann.com 11; and also the decision of the Hon’ble jurisdictional High Court in the case of CIT v. SPIC Educational Foundation (TCA No.1593 of 2008 dated 12.12.2018), wherein the Hon’ble High Court has held that filing of Form 10 for accumulation of income u/s.11(2) of the Act which was filed beyond due date couldn’t disentitle the trust from exemption claimed u/s.11 of the Act. The Hon’ble Court directed the AO to examine the benefit of admissibility rather than to foreclose the claim of assessee on technicalities. Therefore, respectfully taking note of the binding decision of the Hon’ble High Court (supra), we hold that the Ld.CIT(A) erred by misdirecting on an issue which wasn’t raised by CPC; and since the TAR had been filed while the CPC was processing the RoI, it rightly didn’t raise any objection on belated filing of TAR, and therefore the First Appellate Authority erred in passing the impugned order, which we set aside and direct granting exemption claimed by the assessee u/s.11 of the Act….”
3.1We have noted that Hon’ble Delhi Tribunal in its latest decision in the case of Rajthani Maithri Club Foundation vide ITA No.302/Del/2024 dated 21.11.2024 has ruled as under:
“….3. Suffice to say, the substantive issue between the parties herein appears to be that of correctness of learned lower authorities’ action in disallowing the assessee section 11 exemption claim on the ground that it had belatedly filed its form 10B audit report dated 22.09.2022 than the due date of filing return u/s 139(1) of the Act. The Revenue’s case is that this tax audit report compliance is a mandatory provision for an assessee who claims section 11 exemption.
4.We note in this factual backdrop that the instant issue is no more res-integra in light of ACIT v. Xavier Kelvani Mandal Pvt. Ltd. (Gujarat), wherein their lordships have already settled the same at rest in assessee’s favour and against the department that such a compliance could be even made in first appellate proceedings before the CIT(A)/NFAC. I thus accept the assessee’s instant sole substantive grievance in principle and direct the learned CIT(A)/NFAC to readjudicate the lower appeal on merits as per law preferably within three effective opportunities subject to a rider that it shall be the taxpayer’s risk and responsibility only to plead and prove all the relevant facts within three effective opportunities in consequential proceedings. Ordered accordingly….”
4.0We have also noted with respectful deference the decision of Hon’ble Bombay High Court in the case of Xavier Mandel Pvt Ltd holding that “in order to claim exemption u/s 11, the assessee can file audit report in Form-10B even at later stage either before the assessing officer or appellate authority…”
5.0Thus, we find force in the argument of the assessee that filing of Form-10B along with return of income is a mere procedural requirement and not a statutory mandate, absence of which would disentitle an assessee from claim of its deduction u/s 11 & 12 of the act. In respectful compliance to the decisions of Hon’ble Coordinate Benches including those delivered by this tribunal as well as decisions of Hon’ble Madras, Gujarat and Bombay High Court supra, we are inclined to hold that the filing of Form-10B is merely directory in nature. Thus, the order of the Ld.CIT(A) is not justified and set aside. We direct the Ld. AO to allow the claim of exemption u/s 11 of the act. Accordingly, all the grounds appeal raised by the assessee are allowed.
6.0In the result, the appeal of the assessee is allowed.
Thus, in the light of above cited judicial precedents and in respectful compliance thereof, we are of the considered view that filing of Form 10DA is merely a directory compliance and its late filing would not be fatal to assessee’s claim of deduction u/s 80JJAA. Accordingly, we set-aside the order of the ld. CIT(A) and direct the ld. AO to allow the assessee its claim of deduction made u/s 80JJAA of the Act. All the grounds of appeal raised by the assessee are therefore allowed.
In the result, the appeal of the assessee is allowed.