Delayed audit report filing under section 10(23C) is directory; submission before assessment completion constitutes sufficient compliance for exemption, not barred by procedural lapse despite strict interpretation in other contexts.

ORDER

PER MANU KUMAR GIRI, JM:

This appeal filed by the assessee is directed against the order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19 dated 29.08.2025.

2. Facts of the case are as under: The appellant submitted its return of income on 26.10.2018 within the prescribed due date, declaring a total income of Nil, as it had obtained approval for exemption under Section 10(23C).

However, due to an inadvertent error in the auditor’s office, Form 10B was filed on 26.10.2018 (Acknowledgment No. 348247361261018), under the mistaken belief that it was the correct form. Upon receipt of the notice, this mistake was identified. Immediately thereafter, the auditor rectified the error by filing the revised return in Form 10BB on 04.07.2020 (Acknowledgment No. 380701291040720). This correction was made within 612 days from the due date.

Subsequently, the appellant filed a petition on 15.09.2020 seeking condonation of delay in filing Form 10BB. However, the Commissioner of Income Tax (Exemptions), Chennai rejected the request on the ground that the delay exceeded the authority vested in the office. In accordance with Circular No. 15/2022 dated 19.07.2022 issued by the Central Board of Direct Taxes (CBDT), the appellant has filed a petition before the Principal Commissioner of Income Tax (Exemptions) seeking condonation of the delay. The appellant is currently awaiting decision thereon.

3. On appeal by the assessee, the ld. CIT(A) upheld the action of the AO by observing that in this case, the demand has been raised in the computation due to non-filing of Form 10BB. According to the appellant, the matter relating to condonation of delay is pending before the Principal Commissioner of Income Tax (Exemptions) and therefore falls outside the scope of the present appeal. Accordingly, the appeal is treated as infructuous and is dismissed for statistical purposes. In the result, the appeal is dismissed.

4. On further appeal before this Tribunal, the ld.AR contended that due to an inadvertent error in the auditor’s office, Form 10B was filed on 26.10.2018 (Acknowledgment No. 348247361261018), under the mistaken belief that it was the correct form. Upon receipt of the notice, this mistake was identified. Immediately thereafter, the auditor rectified the error by filing the revised return in Form 10BB on 04.07.2020 (Acknowledgment No. 380701291040720). He also relied upon the order of the Pune Bench of Tribunal in the case of ACIT vs. Nanded SikhgurudwaraSachkhandHazur Sahib [2025] 174 taxmann.com 1116 (Pune - Trib.)[26-05-2025] which held as under:

7.2.1. The case of the present assessee has been decided by the Hon'ble ITAT Pune in its judgment delivered in ACIT v. Nanded SikhgurudwaraSachkhandHazurApchalnagar Sahib [2022] 141 taxmann.com 427 (Pune Trib.) for AY 2014-15 where the facts and circumstances of the case are exactly similar. The judgment of the Hon'ble ITAT is reproduced here as under-

"2. The Revenue raised the following grounds of appeal:-

1. The Ld. CIT(A), has erred in allowing exemption u/s 10(23C)(v) of the Act in the given facts of the case, particularly the assessee failed to furnish Audit report in Form No. 10BB us 10(23C) (v) r.w.r. 16CC AX DEPAR

2. The Ld. CIT(A), has erred in granting exemption u/s 11 of the Act by accepting Form No. 10 filed during the course of assessment proceedings, even though the Trust is not registered u/s 12A of the Act." 3. Briefly, the facts of the case are that the respondent-assessee is a religious and charitable trust engaged in the work of managing the administration and functioning o