The provisions of Section 12A(b) of the Income-tax Act, 1961, are directory and not mandatory.

Ajit K. Sengupta, J.

1. IN this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1982-83, the following question of law has been referred to this court :

"Whether, on the facts and in the circumstances of the case and having regard to the provisions of Section 12A(b) of the Income-tax Act, the Tribunal is justified in law in setting aside the orders of the Commissioner of Income-tax (Appeals) and the Income-tax Officer and in directing the Income-tax Officer to accept the auditor's report in Form No. 10B and to process the assessee's claim for exemption under Section 11 of the Income-tax Act afresh?"

2. THE facts leading to this reference are that the assessee filed a return for the assessment year in question without the auditor's certificate in Form No. 10B on December 16, 1983. THE assessee, however, filed the balance-sheet as at March 31, 1982, and the income and expenditure account along with the return. THE auditor's certificate was not furnished even at the time of hearing. THE accounts of the trust have been audited on February 20, 1985, and the report of such audit in the statutory Form No. 10B had been signed by the chartered accountant on February 20, 1985. THE Income-tax Officer completed the assessment denying exemption under Section 11 of the Income-tax Act, on March 5, 1985, on the ground that the certificate in Form No. 10B had not been filed as required by the law. The assessee, being aggrieved, preferred an appeal before the Commissioner of Income-tax (Appeals). At the hearing of the appeal before the Commissioner of Income-tax (Appeals), the assessee submitted two copies of the audited accounts and the report of the auditor in Form No. 10B. The Commissioner of Income-tax (Appeals) held that the trust had not fulfilled the conditions laid down in Section 12A(b) and, consequently, its income was not entitled to exemption provided under Sections 11 and 12 for the assessment year under consideration. Against this finding of the Commissioner of Income-tax (Appeals), the assessee took the matter to the Tribunal.

3. IN the appeal before the Tribunal, it was argued by the assessee that the filing of the auditor's report in Form No. 10B along with the return was not mandatory but it was only directory. Reliance was placed on certain decisions of the High Courts and the Tribunal. The Tribunal set aside the orders of the lower authorities and restored the matter to the file of the Income-tax Officer with a direction to accept the auditor's report in Form No. 10B and process the assessee's claim for exemption under Section 11 and frame a fresh assessment as per law after giving the assessee a reasonable opportunity of being heard.

4. AT the hearing before us, it has been contended by learned counsel for the assessee that the Tribunal was justified in directing the Income-tax Officer to accept the auditor's report although it had not been filed before the assessment was completed. It was also contended that the provisions of Section 12A(b) of the Act are only directory and not mandatory. He has relied on several decisions in support of this contention. Our attention has been drawn to a decision of the Gujarat High Court in Billimora Engineering Mart v. CIT [1985] 156 ITR 153. There the question was whether the application for registration of the firm was valid as it was not accompanied by an instrument evidencing the partnership.

5. THERE, the Gujarat High Court held that the procedural law is always to be construed and applied in a manner so as to make it a handmaid of justice, and it cannot be treated as a substantive provision so as to defeat the rights of the parties. Sub-section (5) of Section 185 no doubt provides that the application for registration shall be accompanied by the original instrument evidencing the partnership. The provision is, however, directory or, in any case, even if mandatory, is capable of being waived. Legislative intent conferring a right of condonatio