S.P. Kapur, J.M. revenue is in appeal in following specific ground: "Whether on facts and in circumstances of case AAC was not justified in directing ITO to allow benefit of s. 11 of IT Act, 1961, even though assessee have failed to comply with statutory provisions of s. 12A (b) of IT Act. background facts as are found from assessment order are to following effect: "Return declaring nil income was filed on 12th September 1983. Notice under s. 143(2) was issued in response to which Shri P.K. Sunderka, CA appeared from time to time. Case was discussed. On perusal of return it was noticed that assessee did not file with return audited copies of accounts and audit report in form No. 10-B prescribed under r. 17B of IT Rules, 1962. Since non-filing of said document with return amounted to violation of provisions of. 12A(b) counsel of assessee was required to explain as to why benefit ss. 11 & 12 should not be disallowed to assessee on account of said statutory lapse. In response to this counsel of assessee explained that books of assessee were audited only on 30th June 1984 and hence audited accounts and audit report in form 10B could not be filed with return. counsel however, filed revised return under s. 139 (5) which was enclosed with audited copies of statements of accounts and also audited report in form No. 10B. On perusal of these documents it was noticed that on date of filing of original return assessee did not have audited books of accounts. revised return filed under s. 139(5) is also not return in eye of law in as much as original return was neither return under s. 139 (1) or under s. 139(2). Since revised return is invalid return audit copies of statements of accounts and audit report in form No. 10B filed with it cannot be treated as compliance of provisions of s. 12A(b), at best these documents can be regarded to have been filed during course of assessment proceedings. Now question that need consideration is that whether assessee can comply with provisions of s. 12A(b) during course of assessment proceedings. For this purpose reference has to be made to spirit of law contained in s. 12A(b). Various ingredients of s. 12A (b) are discussed in ensuing paragraphs. According to scheme of IT Act any person claiming exemption under ss. 11 and 12 is legally required to file audited copies of statements of accounts and audit report in form No. 10B along with return of income. law has not prescribed any specified time limit for compliance of these provisions. only requirement under section is that return should be accompanied by audited copies of statements of accounts and audit report in form No. 10B. In other words, only requirement of law under this section is that on date of filing of return assessee must have audited books of accounts. If assessee had audited copies of books of accounts on date of filing of return and if per chance he forgets to file audited copies of statements of accounts and form No. 10B alongwith its return of income, law can permit him to file said documents during course of assessment proceedings also. law contained in s, 12 A(b) appears to be of procedural nature but penalty prescribed for tits infringement speaks volumes about intention of legislature in laying down these provisions. By bringing these provisions on statute legislature has made it mandatory on part of charitable institution to maintain regular and perfect books of accounts during course of their activities and also to get them audited by CA immediately after expiry of accounting period or atleast before filing of return. This has been done to avoid any tempering or adjustment in books of accounts after filing of return. If we apply test discussed in para 3 above to facts of assessee's case we notice that assessee did not have audited books of accounts on date of filing of return and thus he lost his right to file statements of accounts in form No. 10B during course of assessment proceedings. He has therefore, violated requirements of s. 12A(b). I therefore, disallow benefit of ss. 11 and 12 to assessee. (Emphasis italicised in print supplied) On appeal by assessee learned AAC held assessee to be entitled to benefit of s. 11, inter alia, relying upon ratio of decision of Allahabad High Court in CIT vs. Sri Baldeoji Maharaj Trust (1983) 36 CTR (All) 79: (1983) 142 ITR 584 (All). He held assessee to be entitled to file revised return of income. On our part we have heard parties at length. stand of Revenue is reflected in reasoning of ITO, which has been reiterated before us by learned departmental representative. learned Departmental Representative also relied upon ratio of decision of Delhi High Court in O.P. Malhotra vs. CIT (1981) 129 ITR 379 (Del) at pages 383 to 385 and further contended that original return of income, filed by assessee being not under s. 139(1) of Act, assessee had no right to revise return under s. 139(5). Sec. 139 (4A) of Act is also pressed into service on behalf of Revenue, alongwith ratio of decision of Hon'ble Supreme Court as stands reported in (1950) 18 ITR 274 (SC) (sic). learned departmental representative further contended that audit report was not in existence when assessee filed original return of income, hence assessee is not entitled to any benefit. learned departmental representative as such assailed order of learned AAC and further contended that learned AAC should have applied ratio of decision of Hon'ble jurisdictional High Court in O.P. Malhotra vs. CIT (1981) 129 ITR 379 (Del) as against that of Hon'ble Allahabad High Court as relied upon by him in (1983) 36 CTR (All) 79: (1983) 142 ITR 584 (All) (supra). On his part learned authorised representative of assessee kly relied on order of learned AAC and cases reported as Mahindra and Mahindra Ltd. & Ors. vs Union of India & Ors. (1983) 36 CTR (Del) 153: (1983) 141 ITR 174 (Del), CIT vs. Mahindra and Mahindra Ltd. & Ors. (1983) 36 CTR (SC) 300: (1983) 144 ITR 225 (SC) and CIT vs. Sri Baldeoji Maharaj Trust (1983) 36 CTR (All) 79: (1983) 142 ITR 584 (All), ITO vs. Shahaji Chhatrati General Charitable Trust (1986) 26 TTJ (Pune) 262: (1986) 15 ITD 556 (Pune) and ITO vs. Manav Hitkari Trust (1987) 20 ITD 42 (Del) have also been pressed into service. case of assessee being that statutory audit report was with assessing officer during course of assessment proceedings and before presently impugned assessment order dt. 25th March, 1985 was passed. learned counsel for assessee as such contended that statutory requirement stood complied with, hence assessee was entitled to benefit of s. 11 as has been allowed to assessee by learned AAC. We have reproduced above verbatim reasoning of learned ITO. He has observed that, "..... at best these documents can be regarded to have been filed during course of assessment, proceedings." He also held that, " contained in s. 12A(b) appears to be of procedural nature but penalty prescribed for its infringement speaks volumes about intention of legislature in laying down these provisions." Being that, what is second (sic) of Revenue at assessment stage, when any non compliance of procedure will result in irregularity and certainly not illegality. Non compliance and non-furnishing of statutory audit report in statutory form No. 10B alongwith return of income filed, can at best be said to be procedural irregularity, which assessee had made good before assessment stood finalised as is evident from observations of ITO himself, when he says "at best these documents can be regarded to have been filed during course of assessment proceedings." In case of ITO vs. Shahaji Chhatrapati General Charitable Trust (1986) 26 TTJ (Pune) 262: (1986) 15 ITD 556 (Pune) Pune Bench vide orders of 21st Oct., 1985, held that audit report in form No. 10 B was not enclosed with return of income also lost its force, when once it was accepted that such audit report was produced before ITO at time of hearing in response to notice under s. 143(2). Moreover, this is not requirement of law that such audit report in form 10-B should be attached in sense pinned to return of income of assessee in order to entitle assessee to exempt under s. 11. Again Tribunal Delhi Bench 'B' (SMC) is case of ITO vs. Manav Hitkari Trust (1987) 20 ITD 42 (Del) which was on identical facts held as under: "Having regard to built in deeming feature in s. 139(4A) return filed by trust was to be treated for all purposes as return under s. 139(1) and therefore, could be revised and since audit report in present case, was admittedly filed with revised return there was no default under s. 12(b) and infirmity, if any, got cured and assessee was entitled to exemption under s. 11. More over, there is no requirement that audited balance sheet must be attached to return and it would be sufficient compliance if audit report is filed before completion of assessment. In instant case, assessment proceedings were commenced only after second return was filed and therefore, right at initiation of proceedings report was in hand of ITO and therefore, ITO was not right in denying exemption under s. 11 to assessee." Following above reasoning, we also hold accordingly. assessee is held to be entitled to benefits of s. 11, but not on reasoning of learned AAC as found out in impugned order, but for above reasoning i.e. of two Benches of Tribunal referred to above. Revenue's ground stands rejected and appeal fails. *** INCOME TAX OFFICER v. ARIHANT KALYAN TRUST