S.K. Kulshrestha, J.
1. The Income-tax Appellate Tribunal of Jabalpur Bench, Jabalpur, has referred the following question of law at the instance of the Revenue :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that filing of the audit report in Form No. 10B with the return of income was not mandatory and filing of it at any stage during the course of the assessment proceedings was sufficient compliance of Clause (b) of Section 12A of the Income-tax Act, 1961 ?”
2. The years of assessment involved in this case are 1982-83 and 1983-84. The assessee-trust filed returns of income for these two years on July 12, 1982, and July 12, 1983, respectively, but did not file audit reports with the return which were later filed on June 29, 1984. The Income-tax Officer holding that Clause (b) of Section 12A was mandatory, did not allow the claim for exemption to the assessee-trust under Section 11 in any of the two years by virtue of Section 12A.
3. The assessee filed an appeal before the Appellate Assistant Commissioner of Income-tax contending that it was not mandatory to file the audit report along with the return of income and the same could be filed during the course of assessment proceedings. The Appellate Assistant Commissioner accepted the submissions and allowed the appeals.
4. Against the order of the Appellate Assistant Commissioner, the Department filed an appeal before the Tribunal and the Tribunal upheld the order passed by the Appellate Assistant Commissioner. The Department, therefore, moved the, Tribunal under Section 256(1) of the Income-tax Act, 1961, for stating the case and referring the said question to this court and hence this reference.
5. Learned counsel for the Revenue placed reliance on Section 12A(b) of the Act and the rules and contended that the requirement to furnish
the audit report along with return was mandatory and, therefore, the order of the Appellate Assistant Commissioner and that of the Tribunal was not in conformity with law. Section 12A(b) of the Income-tax Act requires that where the total income of the trust or institution as computed under the Act without giving effect to Section 11 and Section 12 exceeds 25 thousand rupees (raised to fifty thousand rupees with effect from April 1, 1995, by the Finance Act, 1994), in any previous year, the accounts of the trust or institution for that year should be audited and a report of such audit in the prescribed form should be furnished with the return of income. The Tribunal held that the provisions of Section 12A(b) are not mandatory and it would be sufficient compliance with the said provisions if the audit report is filed at any stage of the assessment proceedings.
6. Under the scheme of the Act, it is permissible to file a return even after the due date under Sub-section (4) of Section 139 of the Income-tax Act, 1961. Sub-section (4) of Section 139, during the relevant period, read as under :
“(4)(a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Sub-section (8) shall apply in every such case ;
(b) The period referred to in Clause (a) shall be-
(i) Where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year ;
(ii) Where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year ;
(iii) Where the return relates to a previous year relevant to any other assessment year two years from the end of such assessment year.”
7. It is, thus, clear that where law permits the filing of the return at a stage beyond the prescribed date, it is natural to assume that any report required by law to be appended to the return can be furnished at any time during which it is permissible to file the return beyond the due date, subject to the other provisions of the Act and the Rules such as the provisions of Sub-section (8) of Section 139.
8. Under these circumstances, if the audit report is not at all filed, there would be justification to reject the claim for exemption under Section 11 but if the same has been filed, even after the return has been filed but within the period permitted by law, it would be against the spirit of the Act to deny exemption. The requirement is, thus, directory and we find that the Tribunal was justified in holding that filing of the audit report in Form No. 10B with the return of income was not mandatory and it was sufficient compliance with Section 12A(b), if the same was filed during the course of the assessment proceedings.
9. Reference is, thus, answered against the Revenue and in favour of the assessee.