Filing Audit report in form 10B is "Directory In Nature"- ITAT allowed sec. 11 claim

 As per provisions of Income-tax Act, 1961 ('the Act'), a charitable or religious trust registered under section 12A/AB of the Act is required to file its Audit report in form 10B on or before the given due date. Non compliance of the said requirement has led to denial of exemption under section 11 of the Act. 

In one such case, Income-tax department ('ITD') denied exemption u/s 11 of the Act since that trust had filed its audit report in form 10B with delay. Said matter traveled till Income-tax Appellate Tribunal ('ITAT'), wherein it was argued that such compliance is directory in nature and not a mandatory one, particularly when the AO (CPC in said case) was very well seized with the said audit report before processing the return, though the report was filed after due date. That is to say, audit report was filed after due date but before processing the return. The effect of which is that, concerned official was aware of the claims and the comments of the auditor at the time of processing the return, so merely a delay in filing of audit report should not be the reason for denying the exemption under section 11 of the Act, which is for benefit of the society at large. 

Hon'ble bench of ITAT was pleased to accept said proposition, and condoned the delay and allowed the claim of exemption. 

Case represented by Adv. (CA). Bhuvanesh Kankani

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