Procedural delay in Form 10B filing cannot by itself deny exemption, while rejection of condonation under section 119(2)(b) is not appealable.

Delay in filing Form 10B was treated as a procedural lapse and not a substantive ground to deny exemption under sections 11 and 12 where the audit report was filed with the return and was already on record when the return was processed under section 143(1); relief was therefore allowed on the exemption issue. An order under section 119(2)(b) rejecting condonation of delay was held not to be an appealable order before the Tribunal, so the appeal on that issue was dismissed as not maintainable.

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Issues: (i) Whether delay in filing Form 10B could justify denial of exemption under sections 11 and 12 of the Income-tax Act, 1961, when the report was filed along with the return and was available at the time of processing under section 143(1); (ii) whether an appeal lies against an order passed under section 119(2)(b) of the Income-tax Act, 1961 rejecting condonation of delay.

Issue (i): Whether delay in filing Form 10B could justify denial of exemption under sections 11 and 12 of the Income-tax Act, 1961, when the report was filed along with the return and was available at the time of processing under section 143(1).

Analysis: The filing of the audit report in Form 10B was treated as a procedural requirement rather than a substantive condition affecting the exemption itself. Since the report was filed with the return and was on record when the return was processed, the delay did not defeat the claim. The reasoning followed the settled view that exemption under sections 11 and 12 should not be denied merely on account of a technical or minor procedural default when the statutory report is available before the relevant processing or assessment is completed.

Conclusion: The delay in filing Form 10B did not warrant denial of exemption under sections 11 and 12, and relief was allowed to the assessee on this issue.

Issue (ii): Whether an appeal lies against an order passed under section 119(2)(b) of the Income-tax Act, 1961 rejecting condonation of delay.

Analysis: The order under section 119(2)(b) was treated as not constituting an appealable order before the Tribunal. The proper remedy was held to lie elsewhere, and not by way of the present appeal.

Conclusion: The appeal against the section 119(2)(b) order was not maintainable and was dismissed.

Final Conclusion: The assessee succeeded on the exemption issue, but the challenge to the condonation-rejection order failed for want of maintainability, resulting in a partial relief overall.

Ratio Decidendi: Where an audit report required for exemption is filed before processing or assessment and is available on record, its delayed filing does not by itself defeat the exemption claim; conversely, an order rejecting condonation under section 119(2)(b) is not, by itself, an appealable order before the Tribunal.

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