No denial of Section 11/12 exemption for technical lapses in choice of audit form 

ITO (Exemption Ward) Vs Savitribai Phule Shikshan Prasarak Mandale (ITAT Pune)

In ITO vs Savitribai Phule, the ITAT Pune addressed the Revenue’s appeal against the order allowing exemption under Sections 11 and 12 of the Income Tax Act to a registered charitable trust running educational institutions. The trust had filed a revised return for AY 2019–20 claiming exemption, which was initially rejected by the Centralized Processing Centre (CPC) on the ground that the audit report was submitted in Form 10B instead of Form 10BB, as prescribed for entities registered under Section 10(23C). A rectification application under Section 154 was also dismissed by the Assessing Officer (AO) on similar grounds.

On appeal, the CIT(A) noted that the trust was duly registered under Section 12AA and had submitted an audit report in Form 10B, certified by a Chartered Accountant. It was observed that over 85% of the trust’s income had been applied toward charitable purposes, and the remaining amount set aside did not exceed 15% of total receipts. The CIT(A) held that the trust met all conditions for exemption under Sections 11 and 12, and technical lapses in the choice of audit form should not lead to denial of legitimate exemption.

Upon further appeal by the Revenue, the ITAT concurred with the CIT(A)’s view, holding that the rejection of exemption solely due to a procedural issue was not justified. The Tribunal emphasized that the trust fulfilled the substantive conditions for exemption and had a valid registration under Section 12AA. The appeal by the Revenue was dismissed, and the order granting exemption under Sections 11 and 12 was upheld.