Form 10B delay condonation sustained where auditor's report filing was treated as directory and later circular allowed extended relief.

Delayed filing of Form 10B for exemption under Section 11 was treated as a condonable procedural defect because the auditor's report filing requirement was directory in nature. The later administrative circular under Section 119(2)(b) permitted the Commissioner to condone delay beyond 365 days, up to three years from assessment year 2018-19 onwards, and the earlier circular was not shown to exclude that relief. On that basis, condonation was upheld and the Revenue's challenge to the Section 143(1) adjustment did not succeed.

---

---

Issues: Whether the assessee's delayed filing of Form 10B could be condoned for the purpose of claiming exemption under Section 11 of the Income-tax Act, 1961, and whether the Revenue's appeal challenging deletion of the adjustment under Section 143(1) was liable to succeed.

Analysis: The delay in filing Form 10B was governed by the administrative circulars issued under Section 119(2)(b) of the Income-tax Act, 1961. The later circular empowered the Commissioner to condone delay beyond 365 days up to three years from assessment year 2018-19 onwards. The earlier circular, which limited condonation to 365 days, was not shown to exclude application of the later circular. The filing of the auditor's report with the return was treated as a procedural requirement and, therefore, directory in nature.

Conclusion: The condonation of delay was upheld and the Revenue's challenge failed.

---