Case Law Details
Charchit Garg Vs ITO (ITAT Indore)
The Income Tax Appellate Tribunal, Indore Bench adjudicated an appeal filed against an order of the Commissioner of Income Tax (Appeals) confirming disallowance of deduction under Section 80JJAA of the Income-tax Act, 1961 for Assessment Year 2023–24. The disallowance arose solely on the ground that the prescribed audit report in Form No. 10DA was not filed within the time prescribed under the Act and the Rules.
The assessee, an individual engaged in the manufacturing of apparels, filed the return of income on 18.10.2023 declaring total income after claiming deduction of ₹4,58,090 under Section 80JJAA. The tax liability was fully discharged. While processing the return under Section 143(1) on 31.07.2024, the Central Processing Centre disallowed the deduction on the ground that Form No. 10DA was not furnished by the due date of 30.09.2023. As a result, the total income was enhanced by ₹4,58,090.
Before the appellate authority, the assessee submitted that all substantive conditions under Section 80JJAA were fulfilled, that Form No. 10DA had been filed electronically on 05.10.2023 and revised on 21.10.2023 to correct a technical error, and that the form was available on the income-tax portal much before the return was processed. It was argued that the requirement of filing Form No. 10DA within the prescribed time was procedural and that the deduction could not be denied on this technical ground. The Commissioner (Appeals), however, held that the statutory timeline was mandatory and confirmed the disallowance.
Before the Tribunal, the assessee reiterated that eligibility and quantum of deduction under Section 80JJAA were not in dispute and that the only reason for denial was a marginal delay in filing Form No. 10DA. It was pointed out that the form was filed prior to processing of the return and that no prejudice was caused to the Revenue. Reliance was placed on judicial precedents holding that filing of audit reports and prescribed forms within a stipulated time is a procedural requirement.
The Tribunal noted that it was undisputed that the assessee satisfied all substantive conditions of Section 80JJAA and that the deduction related to additional employee cost incurred in an eligible manufacturing business. It further observed that Form No. 10DA had been filed before the return was processed under Section 143(1). The disallowance was made only due to delay in filing the form and not due to any defect in eligibility or computation.
Relying on decisions of the Madhya Pradesh High Court, Gujarat High Court, various benches of the Tribunal, and the Supreme Court, the Tribunal held that while obtaining an audit report may be substantive, the time and manner of furnishing such report is procedural. Delay in filing the prescribed form cannot defeat a substantive claim when the form is available on record before assessment or processing of return. The Tribunal emphasized that procedural lapses should not override substantive rights when statutory conditions are otherwise fulfilled.
Accordingly, the Tribunal held that the deduction under Section 80JJAA could not have been denied merely due to a technical delay in filing Form No. 10DA. The addition of ₹4,58,090 made while processing the return under Section 143(1) was directed to be deleted, and the Assessing Officer/CPC was directed to allow the deduction as claimed. The appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT INDORE
The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), ADDL/JCIT(A)-3, Visakhapatnam vide order dated 30.01.2025 passed for A.Y. 2023-24.
2. The Assessee has raised the following grounds of appeal:
Grounds of appeal before Honorable ITAT
1. On the facts and circumstances of the case and in law the Learned J-CIT(A) has erred in passing the order u/s 250 of the Act and upholding the addition of Rs. 4,58,090/- for the reason that the report in form No. 10DA was not filed within the time prescribed.
2. On the facts and circumstances of the case and in law the Ld. J-CIT (A) has failed to appreciate that the assessee complied with all requisite for claiming exemption u/s 80JJAA of the Act and also erred in not considering that the non-filing of any required form/certificate within the time is a technical and procedural defect and the assessee was to be allowed the deduction according to following judicial pronouncement
a. [2024] 162 com 861 (Ahmedabad – Trib.) IN THE ITAT AHMEDABAD BENCH ‘A’ Akuntha Projects (P.) Ltd. v. Deputy Director-CPC.
b. [1998] 230 ITR 714 (MP) HIGH COURT OF MADHYA PRADESH Commissioner of Income-tax v. Devradhan Madhavlal Genda Trust A.K. MATHUR, C.J. AND S.K. KULSHRESTHA, J. M.C.C. NO. 138 OF 1990 FEBRUARY 26, 1996.
3. On the facts and circumstances of the case and in law the Ld. J-CIT(A) erred in considering the fact that assessee has filed the original form 10DA before filling of the Income Tax return as the assessee was eligible to claim the exemption u/s 80JJAA on the basis of new employees employed during the year and the same was available on the record at the time of assessment u/s 143(1). Hence, deduction u/s 80JJAA should have been allowed on the basis thereof.
4. That the appellant further craves leave to add alter and or amend any of the forgoing grounds of appeals as and when considered necessary.
3. The brief facts of the case are that the assessee, Shri Charchit Garg, is an individual engaged in the business of manufacturing of apparels and is a regular taxpayer. For the Assessment Year 2023–24, relevant to the Previous Year 2022-23, the assessee filed his return of income on 18.10.2023 declaring a total income of ₹46,49,812/- after claiming deduction under section 80JJAA of the Income-tax Act, 1961 amounting to ₹4,58,090/-. The tax liability of ₹12,55,741/- was duly discharged through TDS, advance tax and self-assessment tax.
4. The return of income was processed by the CPC under section 143(1) of the Act on 31.07.2024. While processing the return, the Assessing Officer disallowed the deduction claimed under section 80JJAA of the Act on the ground that the assessee had not furnished the prescribed audit report in Form No. 10DA within the due date prescribed under the Act and the Rules. As a result, an addition of ₹4,58,090/- was made and the total income was determined at ₹51,07,900/-.
5. Aggrieved by the intimation dated 31.07.2024 passed under section 143(1), the assessee preferred an appeal before the learned CIT(Appeals). Before the CIT(Appeals), the assessee submitted that he had complied with all substantive conditions prescribed under section 80JJAA, that Form No. 10DA was filed electronically on 05.10.2023 and a revised Form No. 10DA was filed on 21.10.2023 to rectify an inadvertent error relating to the date of the tax audit report, and that the return of income itself was filed on 18.10.2023. It was contended that filing of Form No. 10DA within the prescribed time is a procedural requirement and that the deduction could not be denied when the form was available on record before processing of the return. Reliance was placed on various judicial precedents in support of the contention that procedural lapses cannot defeat substantive claims. The learned CIT(Appeals), however, held that in terms of section 80JJAA(2)(c) read with Rule 19AB and Rule 12(2), Form No. 10DA was required to be furnished on or before the specified date referred to in section 44AB, which, in the case of the assessee, was 30.09.2023. Since the assessee had filed Form No. 10DA on 05.10.2023, the learned CIT(Appeals) held that the statutory requirement was not fulfilled and accordingly confirmed the disallowance made by the CPC and dismissed the appeal.
6. The assessee is in appeal before us against the order passed by the CIT(Appeals) dismissing the appeal of the assessee.
7. Before us, the Counsel for the assessee submitted that the assessee is a manufacturing entity providing employment opportunities and has been consistently claiming deduction under section 80JJAA of the Act from earlier assessment years. It was submitted that for the year under consideration also, there is no dispute regarding the eligibility of the assessee or the computation of additional employee cost and that all substantive conditions of section 80JJAA stand fully satisfied. It was further submitted that Form No. 10DA was filed on 05.10.2023 and revised on 21.10.2023 only to correct a technical error, and that the return of income was filed on 18.10.2023. Thus, Form No. 10DA was very much available on the income-tax portal before the return was processed under section 143(1) of the Act on 31.07.2024. The learned Counsel contended that the delay, if any, in filing Form No. 10DA is purely technical and procedural and cannot override the substantive right of the assessee to claim deduction.
8. The learned Counsel placed reliance on the judgment of the Hon’ble Madhya Pradesh High Court in Commissioner of Income-tax v. Devradhan Madhavlal Genda Trust [1998] 230 ITR 714 (MP), the judgment of the Hon’ble Gujarat High Court in Commissioner of Income-tax-IV v. Xavier Kelavani Mandal (P.) Ltd. [2014] 41 com 184 (Gujarat), and the recent decision of the Ahmedabad Bench of the Tribunal in Akuntha Projects (P.) Ltd. v. Deputy Director (CPC) [2024] 162 taxmann.com 861 (Ahmedabad – Trib.), wherein it has been held that filing of audit reports or prescribed forms is procedural in nature and delay therein cannot be a ground to deny deduction when the form is filed before completion of assessment or processing of return and the assessee otherwise fulfils all statutory conditions. It was therefore prayed that the disallowance made under section 143(1) be deleted.
9. We have heard the rival contentions and perused the material on record. It is an undisputed fact that the assessee fulfils all the substantive conditions prescribed under section 80JJAA of the Act and that the claim relates to additional employee cost incurred in the course of an eligible manufacturing business. There is also no dispute with regard to the eligibility of the assessee or the quantum of deduction claimed. The sole basis for disallowance of the claim under section 80JJAA is the alleged delay in filing of Form No. 10DA.
10. From the record, it is evident that Form No. 10DA was filed by the assessee on 05.10.2023 and thereafter revised on 21.10.2023 to rectify a technical error, while the return of income itself was filed on 18.10.2023. The return of income was processed under section 143(1) of the Act on 31.07.2024. Thus, Form No. 10DA was very much available on record much prior to the processing of the return under section 143(1) of the Act. The disallowance has been made solely on the ground that the said form was not filed within the time prescribed under the Rules, without disputing the fulfillment of substantive conditions of section 80JJAA. The Hon’ble Madhya Pradesh High Court in the case of CIT v. Devradhan Madhavlal Genda Trust [1998] 230 ITR 714 (MP) has clearly held that filing of an audit report is a procedural requirement and that such report can be furnished even at a later stage before completion of assessment. Similarly, the Hon’ble Gujarat High Court in CIT-IV v. Xavier Kelavani Mandal (P.) Ltd. [2014] 41 taxmann.com 184 (Gujarat) has held that delay in furnishing the audit report cannot be a ground to deny deduction when the assessee has otherwise complied with the substantive provisions of law. The Ahmedabad Bench of the Tribunal in Akuntha Projects (P.) Ltd. v. Deputy Director (CPC) [2024] 162 taxmann.com 861 (Ahmedabad – Trib.) has also held that the requirement of filing the prescribed form within the stipulated time is directory in nature and that deduction cannot be denied when the form is filed before processing of the return.
11. The issue now stands further fortified by the decision of the Hon’ble Supreme Court in Commissioner of Income-tax (Exemption) v. Anjana Foundation [2025] 178 com 658 (SC) / [2025] 307 Taxman 169 (SC), order dated 15.09.2025, wherein the Hon’ble Supreme Court dismissed the SLP filed by the Revenue and upheld the view that the benefit of exemption cannot be denied solely on account of non-filing of the audit report within the prescribed time, as such requirement is only procedural in nature. Similar view has been taken by the Ahmedabad Bench of the Tribunal in Shree Vardhman Stanakvasi Jain Shravak Trust v. ITO, ITA No.1881/Ahd/2024, order dated 14.02.2025, after considering the judgment of the Hon’ble Gujarat High Court in Association of Indian Panelboard Manufacturers v. DCIT [2023] 157 taxmann.com 550 (Guj.), wherein it has been held that while obtaining an audit report may be a substantive requirement, the time and manner of furnishing the same is purely procedural and what is relevant is the availability of the audit report at the time of assessment proceedings.
12. The Hon’ble Gujarat High Court in Parul Mahila Pragati Mandal v. Income-tax Officer (Exemption) [2025] 175 com 922 (Gujarat), order dated 30.04.2025, has also reiterated that filing of audit report is a procedural requirement and even if such report is filed at a later stage, the assessee cannot be denied the benefit otherwise available under law. Consistent view has also been taken by the Tribunal in Shree Swaminarayan Charitable Trust v. ITO, ITA No.1106/Ahd/2024.
13. Respectfully following the aforesaid judicial precedents and considering the facts of the present case, we are of the considered view that the deduction claimed by the assessee under section 80JJAA could not have been denied merely on account of a technical and procedural delay in filing Form No. 10DA, when the said form was filed before processing of the return under section 143(1) of the Act and no prejudice has been caused to the Revenue. Accordingly, the addition of ₹4,58,090/- made while processing the return under section 143(1) of the Act dated 31.07.2024 is hereby directed to be deleted and the Assessing Officer/CPC is directed to allow the deduction under section 80JJAA as claimed by the assessee.
14. In the result, the appeal of the assessee is allowed.
This Order pronounced on 13/01/2026
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