AAI SHREE KHODIYAR MANDIR TRUST KACHHOLI,NA vs. ARIVS.JAO ITO, EXEMPTION WARD, SURAT

This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as “Ld. CIT(A)”] dated 16.07.2025, under section 250 of the Income-tax Act, 1961 [in short “the Act”] for the Assessment Year 2022-23.

We have heard both the parties and perused the material on record. In this case, the assessee filed its return of income on 22.09.2022 along with ITR-7 within due date. The Central Processing Centre (in short, CPC) passed under section 143(1) of the Act on 31.03.2023. The audit report in Form 10B was uploaded on 22.09.2022 and subsequently approved on 01.05.2023. The delay occurred only in electronic approval of the said audit report.

The purpose of section 12A is to ensure that the accounts of the trust are duly audited and the audit report is available to the Assessing Officer. In the present case, this Asst. Year: 2022-23 - 2– condition stands satisfied, as the audit report was already on record at the time of processing of return. It is well settled law that procedural or technical lapses should not defeat substantive rights, particularly in the case of charitable institutions. Denial of exemption under sections 11 and 12 merely on account of delayed approval of Form 10B is not justified. In view of the above facts and position, it is evident that the audit report was duly furnished within the prescribed time and the delay in electronic approval was purely technical and unintentional. No reasonable cause exists to deny the assessee the benefit of exemption under sections 11 and 12 of the Act. On going to the record, we find that the disallowance of exemption made while issuing intimation under section 143(1) of the Act is unsustainable in law. The assessee is entitled to the claimed exemption and the addition made by CPC deserves to be deleted.