This is departmental appeal against order of CIT (A), Visakhapatnam, dt, 30th March, 1987 against grant of s. 80J relief despite filing audit report required to be filed under s. 80J(6A) beyond prescribed time therein. facts was are few and they may be stated as under: assessee is registered firm and firm does business as offset printers. assessee is entitled to s. 80J relief. However, for asst. yr. 1981-82 on basis of Calcutta High Court decision in Century Enka Ltd., vs. ITO & Ors. (1976 CTR (Cal) 433: (1977) 107 ITR 909 (Cal) and Andhra Pradesh High Court decision in CIT vs. Warner Hindustan Ltd., (1978) CTR (APP) 228: (1979) 117 ITR 68 (APP). For assessment year 1981-82 relief claimed was Rs. 2,62,530. However, in view of amendment and insertion of sub-s. (1A) to s. 80J by Finance (No. 2) Act, 1980, correct relief was worked out by ITO at Rs. 77,497. Having worked correct relief he denied relief on ground that assessee did not file auditor's report in Form No. 10D as prescribed under r. 18C of IT Rules r/w s. 80J (6A) of IT Act. It is not as if audit reports were not prepared. Inter alia, audit reports for asst. yr. 1982-83 also were prepared and signed on 31st Dec, 1984. assessment for asst. yr. 1981-82 was completed on 2nd Jan., 1985. However, audit report prepared and finalised under provisions of s. 288 was received in ITO's office on 3rd Jan, 1982. On ground that audit report was not filed along with return ascertained relief of Rs. 77,497 was not granted to assessee. Aggrieved against assessment order assessee went in appeal. considered whether requirement of s. 80J(6A) that audit report should be filed along with report is directory or mandatory provision. Several decisions were cited before ld., CIT(A) purport of which is that filing of audit report should be merely directory and not mandatory. said submission was accepted by ld., CIT(A) and held that simple because assessee did not enclose audit report along with return firm should not be denied benefit of allowance under s. 80J. He also stated that ITO's objection that audit report was prepared after close of accounting year is also not relevant. He held that there is no stipulation that audit report should be prepared along with closure of books of account. He further held that audit report can be filed even before AAC when appeal proceedings were pending before him according to decision of Chandigarh Bench in Mahalaxmi Rice Factory vs. ITO (1984) 18 TTJ (Chd) 553: (1983) 5 ITD 238 (Chd). only intendment of certificate of auditors was that it should point out that books of accounts were maintained in proper manner and that accounts gave true and fair view of affairs of industrial undertaking for relevant accounting year, and there was no necessity for audit report to be prepared at any particular point of time. Therefore, he held ultimately that assessee is entitled to s. 80J relief as computed correctly by ITO. Aggrieved against impugned order of ld., CIT(A) present second appeal is filed by Revenue and thus matter stands for our consideration. It is argued by ld., Departmental Representative that there is inbuilt time limit prescribed in s. 80J(6A) to file audit report. filing of audit report is not permissible after assessment is made. Here in this case assessment was made on 2nd Jan, 1985 whereas audit report was received in ITO's office on 3rd Jan, 1985. It was never filed along with return of income. ld., departmental representative relied upon following decisions: ITO vs. Manav Hitkari Trust (1987) 28 TTJ (Del) 169: (1987) 20 ITD 42 (Del). Dilsukhrai Ranglal vs. CIT, Orissa (1976) 102 ITR 640 (Ori) Halima Fancy Stores vs. CIT (1976) CTR (Mad) 295: (1976) 104 ITR 190 (Mad). He took us through r. 18C of IT Rules which states that report of t h e audit of accounts of assessee other than company or Cooperative society, which is required to be furnished under sub-s. (6A) of s. 80J shall be in Form No. 10D. He also took us through Form No. 10D. ITO vs. Manav Hitkari Trust (1987) 28 TTJ (Del) 169: (1987) 20 ITD 42 (Del) is case of charitable trust claiming exemption under s. 11 of IT Act. It did not file any audited balance sheet along with its report. However, even before assessment could be completed revised return with audited balance sheet was submitted along with revised return and it was claimed that since audited balance sheet was submitted along with revised return assessee was entitled to exemption under s. 11. Tribunal held that revised return should be deemed to have been filed under s. 139(4a) which came into statues books effect from 1st April, 1973 and nothing prevented to treat revised return under s. 139(1). In fact, this decision is more helpful to assessee than to department's contention. In Dilsukhrai Ranglal vs. CIT (1976) 102 ITR 640 (Ori) Orissa High Court considered whether firm is entitled to continuation of registration under s. 184(7) if mere declaration that there is no change in constitution of firm was filed without said declaration being accompanied by return. Orissa High Court held that in such case and under those circumstances earlier registration will continue to have effect for subsequent year. Halima Fancy Stores vs. CIT (1976) CTR (Mad) 295: (1976) 104 ITR 190 (Mad) is also case where continuation of registration was point for decision. In that case Madras High Court held that Parliament had imposed condition for law to operate. Giving effect to it cannot be refrained from merely on ground that in effects there was no change in constitution of firm, since giving effect to registration for subsequent year is conditioned upon filing such declaration along with return of income. No doubt Madras High Court decision and Orissa High Court decision appeared to be supporting case of Department. However, it should be remembered that both cases were decided much before insertion of sub- s. (9) in s. 139 by Finance (No. 2) Act, 1980 w.e.f. 1st Sept, 1980. Accordingly to inserted sub-s. (9) of s. 139 whenever return of income is filed before ITO and which is found to be defective, then ITO should give opportunity to assessee to rectify said defect within period of 15 days from date of intimation or within such further time which on application made in this behalf ITO may in his discretion allow. circumstances under which return would be considered defective were also given in Explanation to subs- s. (9). Opening sentences of Explanation together with cl. (e) to said Explanation are as follows: Explanation are as follows: Explanation: For purposes of this sub-section, return of income shall be regarded as defective unless all following conditions are fulfilled, namely: (e) where accounts of assessee have been audited, return is accompanied by copies of audited profit and loss account, balance sheet and auditor's report and where audit of cost accounts of assessee has been conducted under s. 233B of Companies Act, 1956 (1 of 1956), also report under that section: therefore, non-accompanying of audit report along with return is instance which should be considered as defective return. As already stated s. 139(9) was inserted w.e.f. 1st Sept., 1980 whereas Madras High Court decision in 1976 CTR (Mad) 295: (1976) 104 ITR 190 (Mad) (supra) was rendered on 8th July, 1975 whereas Orissa High Court decision in (1976) 102 ITR 640 (Ori) (supra) was rendered on 16th July, 1974. Thus it can be seen that both of these decisions were rendered much prior to insertion of s. 139(9). However, we are concerned with asst. yr. 1981-82 for which previous year ended by 31st March, 1981. Therefore, as assessment was completed subsequent to 1st Sept., 1980 s. 139(9) obviously applies to case and so ITO is obliged to give op to assessee to rectify defect by giving assessee some time. However, in whole of assessment order not word was stated by ITO that he had given any opportunity whatsoever to assessee to rectify this defect. Sri. C.V.K. Prasad, ld., counsel for assessee contended that on 2nd Jan, 1985 i.e., on order was passed audit report was despatches. He contended that direction to file audit report along with return under s. 80J(6a) was only directory but not mandatory. He relied upon two decisions covering point. first is decision of Madras Bench in Coromandal Steel Products vs. Eighth ITO (12 TAXMAN 55). In that case assessee did not furnish audit report specified in s. 80J(6A) along with return and ITO also did not notice omission. When omission was pointed out by AAC assessee produced report before him. However, AAC held that omission to file report along with return was incapable of being rectified and disallowed assessee's claim for deduction. Tribunal ultimately held that requirement that audit report should accompany return is directory and cannot totally deprive assessee of relief if it is otherwise admissible. AAC's order that mistake was not capable of rectification cannot be accepted and since audit report was in order, assessee would be entitled to deduction. Another direct decision is also cited both before lower authority and before us and that is Chandigarh Bench decision in Mahalaxmi Rice Factory vs. ITO (1984) 18 TTJ (Chd) 553: (1983) 5 ITD 238 (Chd). facts of that case are quite identical with facts on hand. There also assessee firm's claim for deduction under s. 80J was refused by ITO on ground that no audit report was accompanying return of income as required under s. 80J(6a). assessee actually filed audit report few dais after assessment was completed and on this basis claimed relied in its appeal before AAC. AAC was of opinion that provisions of s. 80J(6a) were mandatory in character and sustained ITO's order. On those facts in second appeal Chandigarh Bench held as follows as per head note of decision: "Section 80J (6a) as part of. 80J, which gives some benefits to assessee by encouraging certain types of industrial undertakings, is only directory in nature. If assessee had not furnished audit report but has given necessary particulars on which deduction can be computed, claim cannot be rejected without giving opportunity to assessee to rectify defect. In instant case, since audit report had been filed and proceedings were still open insofar as assessment was under appeal, audit report must be taken on record, and deduction allowed in accordance with law." It appears that Chandigarh Bench took view that appeal proceedings are only in continuation of original proceedings and it had proceeded on that premise. At page 4401 of Sampat Iyengar's Law of Income- tax, 7th Edition, Vol. No. 5, ld., author stated explaining scope of s. 250(4) of IT Act as follows: "Sub-section (4) of this section confers jurisdiction on Appellate Commissioner to make such inquiry as he deems fit. This provision seems to be based on principle that appeal is continuation of original proceedings and appellate authority has same powers to make inquiries as Assessing Officer himself had while making assessment". Having regard to all arguments advanced before us we are inclined to accept arguments advanced on behalf of assessee and ultimately we are inclined to confirm ld. CIT(A)'s order. We confirm his finding that provision to file audit report along with return under s. 80J (6a) is only directory and not mandatory. Even otherwise ITO from facts and circumstances of this case should have given opportunity to assessee to rectify defect. ITO admittedly did not give any such opportunity to assessee and therefore appeal being continuation of original proceedings CIT(A) before who appeal is pending, is entitled to receive or take cognizance of audit report filed on 3rd Jan, 1985 and act upon it. We are also of opinion that lower appellate authority is quite justified to hold that assessee is entitled to correctly computed relief of s. 80J by ITO. In result, appeal of Department is found to be without merit and hence it is dismissed. *** INCOME TAX OFFICER v. VIJAYADURGA OFF SET PRINTERS