Delayed Form 10B filing cannot by itself deny section 11 exemption when the audit report was available before processing.

Delayed filing of Form 10B is treated as a condonable procedural lapse where the audit report is on record by the time the return is processed, and exemption under section 11 cannot be denied merely because the report was filed belatedly. The note states that, in this context, filing Form 10B is directory rather than mandatory, and where the jurisdictional High Court has already allowed the delay for the relevant year, denial of the benefit is not sustainable. Relief under section 11 is therefore available subject to factual verification by the Assessing Officer.

---

---

Issues: Whether delay in filing Form 10B could be condoned and whether exemption under section 11 of the Income-tax Act, 1961 could be denied while processing the return under section 143(1) merely because the audit report was filed belatedly but was on record before processing.

Analysis: The assessee had filed Form 10B belatedly, but the report was available along with or before processing of the return, and the return itself was filed within the extended time allowed. The decision notes that judicial authorities have consistently treated the filing of Form 10B as directory in this context and have viewed delay as a procedural lapse capable of condonation. It also records that the delay for the relevant year had already been allowed by the jurisdictional High Court, and therefore the denial of the benefit under section 11 was not sustainable.

Conclusion: The delay in filing Form 10B was condoned and the assessee was held entitled to the benefit of section 11, with the jurisdictional Assessing Officer directed to verify the facts and grant appropriate relief.

Ratio Decidendi: Where the audit report in Form 10B is available by the time the return is processed, delayed filing of that report does not by itself justify denial of exemption under section 11, and the delay may be treated as a condonable procedural lapse.

---