Delayed Form 10B filing alone cannot deny section 11 exemption; audit compliance may be considered at first appeal.

Delay in filing Form 10B audit report was treated as insufficient, by itself, to deny exemption under section 11 where the compliance issue could be cured at the first appellate stage before CIT(A)/NFAC. The Tribunal followed the view that the audit report may be considered even during appellate proceedings, so delayed filing alone did not justify rejection of exemption. The matter was therefore restored for fresh adjudication on merits, with the denial of exemption not sustained on that ground alone.

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Issues: Whether exemption under section 11 could be denied solely because the audit report in Form 10B was filed after the due date under section 139(1), and whether such report could be considered at the first appellate stage.

Analysis: The appeal concerned disallowance of exemption on the ground that the audit report was furnished belatedly. The Tribunal noted that the issue was no longer res integra and followed the view that such compliance can be made even during first appellate proceedings before the CIT(A)/NFAC. On that basis, the assessee's objection to the denial of exemption was accepted in principle, and the matter was restored for fresh adjudication on merits.

Conclusion: Denial of exemption merely for delayed filing of the audit report was not sustained, and the appeal was allowed in principle with remand for reconsideration.

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