Exemption under Section 11 cannot be denied for non-filing of Form 10B if total receipts are below Rs. 5 crores (making Form 10BB applicable), nor can it be denied based on the status of Section 80G registration if Section 12A registration is valid.

ORDER

PER MADHUMITA ROY, JM:

The instant appeal filed by the assessee is directed against the order dated 14.10.2025 passed by the Ld. Commissioner of Income-tax (Appeals)-9, Mumbai [hereinafter referred to as the Ld. CIT(A)] under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of the assessment order dated 18.08.2025 passed by the DDIT, CPC, Bengaluru (hereinafter referred to as ‘the ld. AO’) under Section 154 of the Act for Assessment Year 2023-24.

2. The appellant is a registered society formed on 24.09.2013 engaged in carrying out charitable activities in accordance with its objects. The registration was granted under Section 12A of the Act under the new regime operative from AY 022-23 to 2026-27. The appellant before us duly filed its application in Form 10AB for permanent grant of registration in accordance with the provisions of Section 12A B of the Act. It has filed its return of income on 23.11.2023 declaring nil income along with audit report in Form 10BB as the total income/receipt of the trust did not exceed Rs.5 crores and the same is only Rs.25,53,998/- and, therefore, the audit report in Form 10B is not required to be filed. However, on 18.11.2024 the claim under Section 11 of the Act was denied for non-filing of audit report in Form No.10B and income was determined at Rs.19,86,710/- resulting in raising demand of Rs.2,37,130/-. A rectification application was, therefore, filed on 29.07.2025 which stood rejected and further confirmed by the First Appellate Authority. Hence, the instant appeal before us.

3. The Ld. Counsel appearing for the assessee, Shri R.S. Singhvi, CA, submitted before us that the order denying exemption under Section 11 of the Act was solely on the ground of non filing of audit report in Form 10B which is not required as the total receipt of the assessee trust was much below than Rs.5 crores and only Rs.25,53,998/- and, therefore, the assessee has correctly filed the application in Form No.10B fact of which though accepted by the Ld.CIT(A) the said appellate authority denied the claim under Section 11 of the assessee trust merely on the ground that the assessee’s application for benefit under Section 80G(5) in Form No.10B stood rejected by and under its order dated 07.08.2024 by the CIT(E), Delhi as the same covers AY 2012-13 w.e.f. 05.04.2022 to AY 2024-25 meaning thereby the same has a bearing on assessment year under consideration, i.e., AY 2023-24. The exemption so claimed under Section 11 cannot be allowed which is palpably bad in view of the fact that firstly the said rejection order of exemption dated 05.04.2022 from AY 2022-23 to 2026-27 subsequently was considered in appeal by the Coordinate Bench and the same was restored to the file of the Ld.CIT(E) for fresh decision and consequential order was passed granting registration under Section 12A and 80G of the Act till AY 2031-32 copy whereof has duly been furnished before us in course of the hearing of the matter. Secondly, this particular issue was not under consideration by the CPC in its order of rejection of claim of exemption dated 18.11.2024 under Section 143(1) of the Act and raising this issue suo moto by the Ld.CIT(A) and decision thereon against the assessee so as to justify the order under Section 143(1) dated 18.11.2024 rejecting the claim of exemption under Section 11 of the Act is beyond jurisdiction as the case made out by the Ld. AR found to be acceptable. This particular aspect of the matter has not been controverted by the Ld. DR, nei