Curable delay in Form 10B filing does not defeat charitable exemption where audit was timely and no mala fides are shown.

A bona fide delay in filing Form 10B did not justify denial of exemption where the audit had been completed within time, the delay was merely procedural, and no mala fides were shown. The defect was treated as curable, and substantive relief for the charitable entity was preferred over rejection on technical grounds. On that reasoning, the exemption claim was to be allowed, and rectification under section 154 could not be refused merely because filing was delayed.

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Issues: Whether delay in filing the audit report in Form 10B could justify denial of exemption and rejection of rectification under section 154.

Analysis: The audit report had been obtained within time, but its filing was delayed. The decision relied on the settled approach that a procedural lapse in filing the audit report should not defeat exemption where the delay is inadvertent, the audit was completed in time, and no mala fides are shown. The defect was treated as curable, and the focus was placed on granting substantive relief to an eligible charitable entity rather than denying it on a technicality.

Conclusion: The delay in filing Form 10B did not warrant denial of exemption, and the assessee was entitled to the benefit claimed.

Final Conclusion: The appeal succeeded and the exemption claim was directed to be allowed.

Ratio Decidendi: A bona fide delay in filing the audit report, in the absence of mala fides and where the audit was otherwise completed within time, is a curable procedural defect that should not defeat exemption available to a charitable assessee.

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