Facts of the Case

The assessee is a society registered under the Societies Registration Act, 1860 and is also registered under sections 12AA and 80G of the Income Tax Act, 1961. For the assessment year 2019-20, the assessee filed its return of income under section 139(1) declaring nil income. The accounts were duly audited under section 12A(1)(b) and audit report in Form 10B was filed.

During processing of return under section 143(1), exemption was denied on the ground that the assessee selected section 10(23C)(via) instead of section 12AA in the return. Consequently, income was computed at ₹5,48,647 resulting in tax demand. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals), which was dismissed. Aggrieved, the assessee approached the Tribunal.

 

Issues Involved

Whether exemption to a charitable society registered under section 12AA can be denied on account of technical mistakes such as incorrect selection of exemption section in return, difference in nomenclature of the society’s name, and typographical error in the audit report date.

 

Petitioner’s (Assessee’s) Arguments

The assessee contended that it was duly registered under section 12AA and 80G and had carried out charitable activities in accordance with its objects. It was submitted that the selection of section 10(23C)(via) instead of section 12AA was a technical mistake. It was further argued that the name “Abhiyan International Samiti” and “Abhiyan International” referred to the same entity having the same PAN. Regarding the audit report date, it was explained through an affidavit of the Chartered Accountant that the incorrect date was a typographical error.

 

Respondent’s (Revenue’s) Arguments

The Revenue relied on the observations made in the appellate order, contending that exemption was rightly denied due to incorrect section selection, discrepancy in the name of the assessee, and inconsistency in the audit report date.

 

Court Order / Findings

The Hon’ble Income Tax Appellate Tribunal, Allahabad Bench, observed that the assessee was duly registered under section 12AA and the PAN mentioned in all records was identical. The Tribunal accepted the explanation that the difference in name was only descriptive and did not alter the identity of the assessee.

The Tribunal further held that the typographical error in mentioning the audit report date was a clerical mistake, duly supported by an affidavit of the Chartered Accountant, and could not be a ground to deny exemption. It was held that exemption to a charitable institution cannot be denied merely on account of technical or procedural lapses when substantive conditions are satisfied.

Accordingly, the impugned appellate order dated 06/09/2024 was set aside and the appeal of the assessee was allowed.

 

Important Clarification

The Tribunal allowed the appeal on merits and held that technical defects in return filing or audit documentation cannot override substantive compliance with charitable registration and activities. The decision reinforces that procedural lapses should not defeat legitimate exemption claims of charitable institutions.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770875921_ABHIYANINTERNATIONALSAMITIPRYAGRAJVS.INCOMETAXOFFICEREXEMPTIONPRAYAGRAG.pdf  

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