Belated Form 10B filing did not defeat section 11 exemption where audit was completed and substantive conditions were met.

Belated filing of Form 10B audit report, after processing of the return under section 143(1), did not by itself deny exemption under section 11 where the trust had completed audit before filing the return and the report was available before the appellate authority. The ITAT treated the filing lapse as procedural, found no mala fides, and applied the view that the audit-report requirement is directory when the substantive conditions for charitable exemption are otherwise satisfied. The appellate order granting relief was therefore upheld, and the Revenue's challenge failed.

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Issues: Whether belated filing of Form 10B audit report, after processing of the return under section 143(1), disentitled the assessee trust from exemption under section 11 of the Income-tax Act, 1961.

Analysis: The audit report in Form 10B was admittedly furnished after the return had been processed under section 143(1), but it was available before the appellate authority. The Tribunal noted that the trust had completed audit before the return was filed and that the delayed filing was a procedural lapse without mala fides. Relying on the view that the audit-report requirement is directory in nature and that exemption should not be denied where the substantive conditions for charitable exemption are otherwise fulfilled, the Tribunal held that the delay did not invalidate the claim. The Tribunal also found support in the cited judicial precedents and saw no infirmity in the appellate order granting relief.

Conclusion: Belated filing of Form 10B did not disentitle the assessee from exemption under section 11, and the Revenue's challenge failed.

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