The Delhi High Court has ruled that a deduction under Section 80-IA(7) of the Income Tax Act cannot be denied simply because the assessee failed to digitally file an audit report.
A bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that since the Audit Report was duly furnished to the Assessing Officer (AO) and was available for scrutiny during the assessment proceedings, the requirements of Section 80-IA(7), as it stood before the 2020 amendments, were substantially met. The court further stated that the failure to digitally file the report should not be considered fatal to the claim under Section 80-IA(7).
The petitioner/assessee had submitted a Return of Income for the Assessment Year 2013–14 on September 30, 2013, claiming deductions under Section 80-IA(4)(iv)(a) of the Income Tax Act. The tax audit report in Form 3CA under Section 44AB was electronically filed on the same day, and the audit report in Form 10CCB was manually submitted to the AO on February 12, 2016. The AO completed the assessment under Section 143(3), allowing the claimed deductions under Section 80-IA.
However, the department argued that according to the amended Rule 12 of the Income Tax Rules, 1962, effective April 1, 2013, the audit report in Form 10CCB was required to be submitted online. The department asserted that the failure to digitally submit the report constituted a non-disclosure of complete particulars, which led to the issuance of a reassessment notice under Section 148.
The petitioner/assessee challenged the reassessment notice, questioning whether the failure to electronically upload Form 10CCB along with the return of income justified the initiation of reassessment proceedings.
The assessee argued that the digital filing of the audit report was merely procedural and that the statutory requirements had been substantially complied with. The department, on the other hand, contended that the statutory requirements in Section 80-IA(7) were mandatory, justifying the reassessment under Section 148.
The court, in its judgment, allowed the appeal, ruling that the reassessment action for AY 2013–14, which was beyond the maximum six-year window, was invalid and should be set aside.