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Filing of Form 10B under Income Tax Act

What is form 10B?

Form 10B is an audit report of an organization registered under 12A of the income Tax Act.

Applicability of filing of Form 10B:

Every 12A registered organization must file form 10B signed by a Chartered Accountant. There is no criteria on the basis of receipts or payments of an organization which makes the filing of form 10B mandatory. The only criteria is registration under 12A.

Due Dates & Mode of filing:

Form 10B is to be filed every year before filing the income tax return (ITR) of an organization. The due date of ITR filing applies to form 10B. Recently the Income Tax department has relaxed above provisions for past few years owing to technical difficulties faced by assessees. Until FY 2015, the filing was in physical mode. From FY 2015-16, electronic filing has been made mandatory.

Consequences of failure to file form 10B / delay in filing:

Registration under section 12A of the income tax act entitles income tax exemptions to eligible organizations. This registration is granted with many conditions. Such conditions must be fulfilled by the organization throughout the lifetime of an organization to continue the 12A registration. One of such pre-condition is getting the accounts audited from a Chartered Accountant and filing audit report in form 10B. Failure to compliance with this condition may lead to cancellation of 12A registration and losing the income tax benefits. As of now there are no provisions which allows delayed filing of form 10B with monetary penalties / fees.

Recent Circulars:

Circular dated 3rd January 2020:

Condonation of delay under section 119(2)(b) of the Income Tax Act, 1961 in filing of Form No. 10B for assessment year 2018-2019 and subsequent years-circular no, 2/2020- Income Tax Dated - 3rd January,2020.

Under the provision of section 12A of Income tax act ,1961 where the total income of a trust or institution as computed under the act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income tax in any previous year, the accounts of the trust or institution for that year have to be audited by any accountant as defined in the Explanation below sub section (2) of section 288 and the person in receipt of the income is required to furnish along with the return of income for the relevant assessment year the report of such audit in the prescribed from duly signed and verified by such accountant and setting forth such particular as may prescribed. .

As per Rule 17B of the Income Tax Rules, 1962 the audit report of the account of such a trust or institution is to be furnished in Form no. 10B. As per Rule 12(2) of the Rules, such audit report is to be furnished electronically. The failure to furnish such report in the prescribed from along with the return of income results in disentitlement of the trust or institution from claiming exemption under section 11 & 12 of the act.

Representations have been received by the Board/ field authorities stating that Form no. 10B could not be filed along with the return of income for AY. 2016-17 and AY 2017-18. It has been requested that the delay in filing of Form no. B may be condoned. Previously, vide instruction in F no. 267/482/77-IT (Part) dated 09.02.1978, the CBDT had authorized the ITO to accept date a belated audit report after recording reasons in case where some delay has occurred for reasons beyond the control of the assesse.

Accordingly, the CBDT issued circular no. 10/2019 circulated through F no. 197/55/2018-ITA -1 in supersession of earlier circular/ instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trust or institution for condoning the delay in filing Form no. 10B and in the exercise of the power conferred under section 119(2) of the Act, the Central Board of Direct Taxes vide circular no. 10/2019 dated 22 march,2019 and circular no. 28/2019 dated 27th September, 2019 both issued vide F. No. 197/55/2018- ITA- I has directed that:-

i. The delay in filing of Form no. 10B for AY 2016-17 and AY 2017-18, in all such cases where the audit report for the previous year has obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned.

ii. In all other cases of belated application in filing Form No. 1013 for years prior to AY 2018-19. The commissioner of Income Tax arc authorised to admit and dispose off by 31.03.2020 such applications for condonation of delay u/s 119(2) (b) of the Act. The commissioner will while entertaining such belated application in filing Form No. 1013 shall satisfy themselves that the assesse was prevented by reasonable cause from filing such application within the stipulated time.

In addition to the above, it has also been decided by the CBDT that where there is delay of up to 365 days in filing form no. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the commissioner of Income-Tax are hereby authorized of condonation of delay u/s 119(2) of the Act and decide on merits.

The commission of Income-Tax shall, while entertaining such belated applications in filing Form No. 1013, satisfy themselves that the assesse was prevented by reasonable cause from filing such application within the stipulated time.

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