TaxTMI 
TaxTMI 
2025 (11) TMI 422
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....issued by the 1st Respondent under Section 148 of theAct. By the Notice dated 28th August 2024, the 1st Respondent has reopened the assessment of the Petitioner for A.Y. 2018-2019. The Revenue has filed its Reply dated 14th November 2024 to the Petition, which is affirmed on behalf of the 1st and the 2nd Respondent by one Mr. Pravin Kumar. The Petitioner has filed its Rejoinder to the Revenue's Reply. 2. The Pleadings are complete, and therefore, by consent of the parties, we have heard the Petition finally at the admission stage. Accordingly, we issue Rule. The Respondents waive service. By consent of the parties, Rule is made returnable forthwith and heard finally. 3. The facts and circumstances leading to the Notices and the order impugned in the present Petition are as follows :- i) The Petitioner is a charitable Trust registered under section 12A of the Act. Sir Jamsetjee Jejeebhoy, First Baronet, a Parsi Merchant and a Philanthropist, was the settlor of the Petitioner in 1838. ii) The Petitioner filed its Return of Income for the A.Y. 2018-2019 in which it declared its total income at Rs.1,96,983/-. The Petitioner is assessed in Mumbai. The Petitio....
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....iii) On 15th February 2021, the NFAC passed an Assessment Order under Section 143(3) read with Section 143(3A) and 143(3B) of the Act. By the Assessment Order, the total income of the Petitioner was assessed at Rs.1,96,980/-, and the accumulation made by the Petitioner was accepted. ix) Thereafter to the shock and surprise of the Petitioner on 9th August 2024, the 1st Respondent issued a notice to the Petitioner under Section 148A (b) of the Act. The annexure to the notice dated 9th August 2024, under section 148A(b), reads as follows :- "In this case, as per the details filed you it is observed that the assessee has not specified the reason for utilization of accumulated income u/s 11(2) in Form 10. It is not enough for the trustees to repeat the object of the trust in Form 10, but should specify the particular purpose for which the income is being accumulated to meet the requirement of section 11(2) of the Act. As the assessee has not complied with the provisions of section 11(2)(a) of the Act, the assessee's claim for accumulation of funds u/s. 11(2) of the I.T. Act, amounting to Rs. 3,17,00,000/- needs to be rejected." (emphasis supplied) ....
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.... rejected the submissions of the Petitioner. In the order, the 1st Respondent referred to the internal audit objections which, inter alia, recorded that:- "During the course of internal audit, it is observed that the assessee has claimed accumulation u/s. 11(2) of the I. T. Act, amounting to Rs. 3, 17,00,000/-. It is also seen from the statement in Form No. 10 by the assessee that it has shown purpose of accumulation as "Medical, Educational and Social relief to members of the Zoroastrian community and conservation, maintenance and upkeep of the properties". For allowing the exemption u/s. 11(2) the condition is that the trust should specify in the prescribed Form the purpose for which the income is accumulated or set apart. It is not enough for the trustees to repeat the object of the trust, but must specify a particular purpose for which the income is being accumulated. It is essential that the trust should specify its purposes and the requirement is that, the purposes must have some individuality and mere repetition of the object of the trust or mentioning like General activities, special activities & capital expenditure of the institution would not meet the re....
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....kdrop that, the Petitioner has challenged, i) the show cause Notices dated 9th August 2024, and 20th August 2024; ii) the Order dated 28th August 2024 passed under Section 148 A(d) of the Act; and iii) the Notice dated 28th August 2024 issued under Section 148 of the Act by the 1st Respondent. 5. The Petitioner's challenge to the said notices and the order is on various grounds which, inter alia, includes: i) that the 1st Respondent lacked jurisdiction; ii) that the Notice under Section 148 is barred by limitation under section 149 of the Act; iii) that there exists no "information" for the purpose of Section 148 of the Act; iv) that the 1st Respondent has no power to review its own assessment based on the same information; v) that the order under Section 148A(d) is bad in law; vi) that the sanction given by the 2nd Respondent is bad in law; and vii) that even on merits of the case, no income has escaped assessment, etc. In any case, it is the contention of the Petitioner that it is fully compliant with the provisions of Section 11 (2) and the Assessing Officer has grossly erred on facts. 6. Though various grounds....
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....etter dated 30th January 2020, after submitting it online on 20th January 2020. Further, the information which was sought by the 1st Respondent by issuing Notice under Section 143(2) was specifically in respect of the issue of accumulation of income by Trustees of the Petitioner. Further, the information which was sought by the 1st Respondent under Section 142(1) by the notice dated 10th January 2020 was specifically in respect of accumulation made under Section 11(2) of the Act. The Petitioner has provided a detailed Reply to the 1st Respondent and has furnished the required information and documents. Therefore, the 1st Respondent had all the documents and the required information when the 1st Respondent assessed the return of income. Therefore, Mr. Mistri submitted that the Petitioner has complied with the provisions of section 11(2) of the Act. Therefore, the notices issued and the order passed by the 1st Respondent are factually incorrect and legally non-sustainable. 10. Mr. Mistri, further submitted that in view of the fact that all the required documents and information were given to the 1st Respondent during the original assessment proceedings, which included the Resoluti....
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....o open the reassessment under Section 148 of the Act is justified and is not based on a change of mind. According to Mr. Gulabani, true and correct information was not disclosed by the Petitioner during the original assessment, and therefore, income has escaped the assessment, which entitled the revenue to invoke the provisions of Section 148 of the Act. He, therefore, submitted that there was no merit in the above Writ Petition and the same be dismissed with costs. 14. We have heard the rival submissions and perused the record. 15. The Petitioner has claimed benefit under Section 11(2) of the Act. Section 11(2) of the Act reads as follows:- "11[(2) "Where "[eighty-five] per cent of the income referred to in clause (a) or clause (b) of sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provi....
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.... No. 9A and shall be furnished before the expiry of the time allowed under sub-section (1) of section 1.39 of the Act for furnishing the return of income of the relevant assessment year. (2) The statement to be furnished to the Assessing Officer or the prescribed authority under clause (a) of the Explanation 3 to the third proviso to clause (23C) of section 10 of the Act or under clause (a) of sub-section (2) of section 11 of the Act or under the said provision as applicable under clause (21) of section 10 of the Act shall be in Form No. 10 and shall be furnished before the expiry of the time allowed under sub-section (1) of section 139 of the Act, for furnishing the return of income. (3) The option in Form No. 9A referred to in sub-rule (1) and the statement in Form No. 10 referred to in sub-rule (2) shall be furnished electronically either under digital signature or electronic verification code. (4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall- (i) specify the procedure for filing of Forms referred to in sub-rule (3); (ii) specify the data str....
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....ary 2020 issued by 1st Respondent under section 142(1) of the Act also sought details and particulars from the Petitioner. This notice of the 1st Respondent also sought a copy of the Resolution passed by the Trustees of the Petitioner. On 30th January 2020, the Petitioner provided a copy of the Resolution dated 26th September 2018 to the 1st Respondent. Thereafter, an assessment was conducted, and on 15th January, 2021, the NFAC passed an assessment order under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act. By this assessment order, the accumulation made by the Petitioner was accepted. Thus, when the NFAC passed the assessment order, all the details and material particulars which are required to be furnished by virtue of the provisions of Section 11(2) of the Act were provided by the Petitioner. Form 10 filed by the Petitioners specifically referred to the Resolution dated 26th September, 2018, and in which, in clear terms, the purpose for which the amount is being accumulated or set apart was mentioned. The purpose is clearly stated in the space provided in the electronic form. In addition, a copy of the Resolution under which the amount is accumulated or set ap....
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.... 10, and the Petitioner provided a copy of the same to the 1st Respondent by its letter dated 30th January 2020. Therefore, the 1st Respondent has based his decision on incorrect and wrong facts. A copy of the Resolution dated 26th September 2018, provided by the Petitioner to the 1st Respondent, clearly states that the Resolution is dated 26th September 2018 and that a copy of the same was certified as a true copy on 28th January 2020. The 1st Respondent has misread the dates on the certified true copy of the Resolution. Therefore, he arrived at the wrong finding that the Resolution for the accumulation of income is dated 28th January 2020. 24. In Commissioner of Income Tax (Exemption) Vs. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [2019] 102 taxmann.com 122 (Gujrat), while answering the question that: "A. Whether on the facts and circumstances of the case and in law, the Tribunal was justified in interpreting the provisions of section 11(2) of the Act and holding that it is not mandatory to specify the object/purpose in Form No. 10 for claiming accumulation u/s. 11(2) of the Act?", it is observed that: "Section 11(2) of the Act provides th....
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....hows that limited space in the Form is contemplated, and therefore the contents of the Form also require the Assessee to give details of the resolution passed by the Assessee Trust. The relevant part of the content and the format of Form 10 reads as : "...hereby bring to your notice that it has been decided by a resolution passed by the trustees/governing body, by whatever name called, on ---- that, out of the income..." (emphasis supplied). Therefore, the particulars specified in the limited space provided in Form 10 ought to be supported by providing the date of the resolution. Once the date of resolution of the Assessee Trust is provided in the Form, the Assessing Officer can verify the same by calling upon a certified copy of the resolution during the assessment. In the present case, a certified copy of the resolution passed by the Trustees of the Petitioner was provided to the 1st Respondent not only in the original assessment proceedings but also in their replies to the notices issued under Section 148A (b) of the Act. 26. The plain language of Section 11(2) is unambiguous and mandatory. Once the requirements of the Section are fulfilled, then the mandatory provisions, 'su....
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....7. The Assessing Officer does not have any power to review his own assessment when during the original assessment petitioner provided all the relevant information which was considered by him before passing the assessment order under section 143(3) of the Act dated 23rd December 2018. Petitioner had debited an amount of Rs. 6,41,87,931/- on account of software consumables in the profit and loss account and a detailed break-up of the said expenses were submitted before the Assessing Officer during the course of assessment proceedings vide a letter dated 6th December 2018. It is settled law that proceedings under section 148 cannot be initiated to review the earlier stand adopted by the Assessing Officer. The Assessing Officer cannot initiate reassessment proceedings to have a relook at the documents that were filed and considered by him in the original assessment proceedings as the power to reassess cannot be exercised to review an assessment. In petitioner's case the Assessing Officer having allowed the amount of software consumables as a revenue expenditure now seeks to treat the same as capital expenditure which is a clear change of opinion. Various judicial precedents have he....