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Jeevan Kalyana Sadhan vs. ITO - (Income Tax Appellate Tribunal) (02 Mar 2023)

Audit report can be filed even at the appellate stage


Direct Taxation

The assessee is a trust, which had filed its return of income for the relevant assessment year year. However, when the return of income was filed, the auditors of the assessee had failed to include the Form 10B being the audit report alongwith return of income. It was the submission that, the due date for filing the audit report was 30.9.2015 and the mistake in filing of the audit report was noticed and same was rectified on 21.11.2019. It was the submission that on appeal, the learned CIT(A) had dismissed the assessee's appeal on the ground that ignorance of law is not an excuse. It was the submission that the assessee is dependent on its Chartered Accountant and Auditors for filing the return. The mistake done by the auditors should not put the assessee on a disadvantage position as long as the assessee has not been found to be perse at fault.

A perusal of the decision of the High Court in the case of CIT vs. Shahzedanand Charity Trust clearly shows that the Hon'ble P&H High Court has categorically held that the audit report under Section 12A(1)(b) of the Income Tax Act, 1961 can be filed even at the appellate stage. Thus, High Court has held that the filing of the audit report alongwith the return as per provisions of section 12A(1)(b) of the Act is not mandatory.

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. The assessee should not be denied the benefit of deduction under Section 11 and 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.


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