Section 11 exemption survives delayed audit report filing where substantial compliance and sufficient cause are shown.

The audit report required to support exemption under section 11 was treated as a procedural, directory requirement rather than a mandatory condition that would defeat substantive relief. Substantial compliance was held sufficient, and delayed production of the report could be accepted where sufficient cause was shown, including at the appellate stage. On the facts, the report had been obtained before the return was filed, so the appellate authority was justified in directing its acceptance and allowing the exemption. Late filing of the audit report did not by itself disentitle the claimant from section 11 relief.

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Issues: Whether the audit report required for claiming exemption under section 11 could be accepted at the appellate stage despite not having been filed during the assessment proceedings, and whether exemption under section 11 could accordingly be granted.

Analysis: The requirement to furnish the audit report along with the return was treated as procedural and directory in nature, not mandatory in a manner that would defeat the substantive entitlement to exemption. Substantial compliance was held sufficient, and earlier authority had recognized that delayed filing of the audit report could be permitted either before the Assessing Officer or at the appellate stage on sufficient cause being shown. On the facts, the audit report had been obtained before filing the return, and the appellate authority was justified in directing its acceptance and granting the exemption.

Conclusion: The late filing of the audit report did not disentitle the assessee from exemption under section 11, and the assessee succeeded on the issue.

Ratio Decidendi: A procedural requirement to furnish an audit report in support of exemption is directory where substantial compliance is shown, and delayed production of the report may be accepted if it does not prejudice the substantive entitlement.

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