Is delay in filing Form 56F fatal to a claim of deduction under s.10AA of the Income Tax Act, 1961 made in a return filed within time?

Income Tax Act, 1961 — ss.10AA, 139(1), 143(1), 154 — Audit report in Form 56F — Procedural requirement — Substantive claim —

Income Tax Act, 1961 — s.10AA — Form 56F filed after the due date —

Held: Delay in filing Form 56F is not fatal to a claim of deduction under s.10AA made in a return filed within time, the substantial requirement having been met and the breach being technical. (¶5, 7)

Income Tax Act, 1961 — s.10AA — Filing of the audit report after the due date —

Held further: Nothing bars an assessee from filing Form 56F after the due date, and the delay in filing is capable of being condoned; no provision to the contrary was shown. Appeal dismissed as raising no substantial question of law. (¶5)

Is delay in filing Form 56F fatal to a claim of deduction under s.10AA of the Income Tax Act, 1961 made in a return filed within time?

No. Delay in filing Form 56F is not fatal to a claim of deduction under s.10AA made in a return filed within time. The deduction was claimed in the original return filed within the prescribed period and the form followed about fifty days later; having fulfilled the substantial requirement as well as the procedural requirement, a minor technical breach in the latter does not defeat the substantive claim. [¶5, ¶7]

Can an assessee file Form 56F after the due date prescribed under the Income Tax Act, 1961?

Yes. Nothing bars an assessee from filing Form 56F after the due date, and the delay in filing is capable of being condoned. No provision was shown to the Court barring an assessee from filing the form after the prescribed date; the form was in fact filed and, in effect, the delay in filing stood condoned. [¶5]

“3. Assessee had filed return of income on 16.10.2018 for assessment year 2018-2019 declaring a total income of Rs.17,57,73,823/- and the return was processed under Section 143(1) of the Act. Assessee had claimed deduction under Section 10AA of the Act amounting to Rs.7,48,71,926/-. While processing the return under Section 143(1) of the Act, the deduction claimed by assessee under Section 10AA was disallowed, since the audit report in Form 56F, which is to be filed along with the return, was not filed by assessee. Assessee had filed a rectification application under Section 154 of the Act and a rectification order dated 28.1.2021 was passed rejecting the claim of the assessee.”

“5. The prescribed date for filing Form 56F was 31.10.2018 and, admittedly, assessee had filed it on 20.12.2018. Counsel was unable to show any provision which provides that after the due date an assessee is barred from filing Form 56F. Admittedly, Form 56F was filed and, in effect, the delay in filing has been condoned.”

“6. We agree with the ITAT that the facts in the case of Principal Commissioner of Income Tax v. Wipro Ltd (supra) were different. In that case, assessee initially made the claim and did not seek to carry forward losses, but during the assessment proceedings, the assessee had taken an altogether different stand and sought withdrawal of the initial deduction claimed in the return of income and sought to carry forward losses. In the case at hand, the deduction under Section 10AA of the Act has been claimed in the original return of income which was filed within the prescribed time, but Form 56F was filed about 50 days later.”

“7. Assessee having duly fulfilled the substantial requirement as well as the procedural requirement, though there is a minor technical breach in fulfillment of the procedural requirement, the CIT(A) as well as the ITAT have opined that the delay in filing Form 56F would not be fatal to the substantive claim of the assessee. In fact, what has also weighed in the mind of the ITAT is that the same claim had been allowed to assessee and this was the sixth assessment year of claiming the amount of deduction.”