The requirement of filing a tax audit report in Form 10B is a procedural and directory requirement. Therefore, an assessee cannot be denied substantive tax exemptions under Sections 11 and 12 of the Income Tax Act, 1961 merely due to a delay in filing the audit report, provided the report is available on record before the finalization of assessment.

आदेश/ORDER

PER VIJAY PAL RAO, VICE PRESIDENT :

The appeal ITA No.365/Hyd/2025 by the Assessee is directed against the Order dated 30.12.2024 of the learned Commissioner of Income Tax (Exemptions), Hyderabad, passed u/sec.119(2)(b) of the Income Tax Act, 1961 [in short "the Act"] whereby the application for condonation of delay in filing Form-10B was rejected for the assessment year 2022-2023. The other appeal i.e., ITA.No. 1307/Hyd/2025 by the Assessee is directed against the Order dated 31.07.2025 of the Addl./JCIT(A), Faridabad arising from the Order dated 28.03.2023 of CPC, Bengaluru, passed u/sec.143(1) of the Act for the assessment year 2022-2023.

2. First, we take-up appeal filed by the assessee in ITA.No.1307/Hyd./2025 for the assessment year 2022-2023 whereby the assessee has raised the following grounds :

1. “The order passed by the Ld. CIT(A) u/s 250 of the Act dated 08:03.2024 is erroneous both on facts and in law to the extent the order is prejudicial to the interest of the appellant.

2. The Ld. CIT(A) ought to have appreciated that, the delay in filing of Form 10B was due to ill medical health of the accountant. This constitutes a reasonable cause under Section 119(2)(b) of the Income Tax Act, 1961.

3. The Ld. CIT(A) erred in not giving a reasonable opportunity of being heard to the appellant and passing the order u/s 250 of the Act.

4. The Ld. CIT(A) erred in confirming the disallowance of entire expenditure claimed by the assessee amounting to Rs.8,76,751/, which is exempt as per the provisions of Sec 11 of the IT Act, 1961.

5. The Ld. CIT(A) erred in not appreciating that the entire amount of Rs.8,76,751/-has been duly expended towards the objects of the trust on Revenue account and Capital account which is clearly evident from the Return of Income filed.

6. The Ld. CIT(A) ought to have appreciated that the assessee has duly complied with the provisions of Sec 11 of the Act in all the previous years and not allowing the claim on the reason of delay in filing the audit report is against principles of natural justice.

7. The Ld. CIT(A) erred in dismissing the appeal without appreciating the fact that appellant has reasonable cause for the delay in filing the Audit Report in Form No.10BB,

8. The Ld. CIT(A) erred in dismissing the appeal without appreciating the fact that the genuine claim of exemption cannot be disallowed on a technical reason of delay in filing of the Audit Report in Form No. 10BB, which is due to reasonable cause and the same is beyond the control of the appellant.

9. The assessee may add, alter or modify or substitute any other points to the grounds of appeal at any time before or at the time of hearing the appeal.”

3. The assessee is a trust and was registered u/sec.12A of the Income Tax Act, 1961 [in short "the Act"]. The assessee filed it’s return of income for the year under consideration on 02.11.2022 declaring total income of Rs.25,526/- along with tax audit report in Form-10B. The return was processed by the CPC, Bengaluru u/sec.143(1) of the Act vide Order dated 28.03.2023 whereby the benefit of secs.11 and 12 of the Act was denied to the assessee on the ground of delay in filing the audit report in Form-10B. The assessee challenged the order of the CPC before the learned CIT(A). However, the learned CIT(A) has dismissed the appeal of the assessee on the ground that application for condonation of delay in filing Form-10B before the Pr. CIT was also rejected by the concerned Pr. CIT u/sec.119(2)(b) of the Act.

4. Before the T