INCOME TAX OFFICER..E..1..2..MUMBAI, MUMBAI vs. CHRIST CHURCH BYCULLA, MUMBAI

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ITA 4392/MUM/2025Status: DisposedITAT Mumbai26 August 2025AY 2018-197 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the decision of the learned CIT(A) and dismissed the appeal filed by the Revenue. The Tribunal found that the assessee's consistent claim was that the sum of Rs. 5,26,41,905 was inadvertently reported in Schedule-I of the ITR for AY 2018-19 due to a 'punching error'. The assessee's contention that all accumulated funds from previous assessment years, up to FY 2015-16, were spent during FY 2016-17, leaving no accumulated funds to be spent in the year under consideration, was supported by the details filed by the assessee during assessment proceedings. The Tribunal noted that the balance accumulation in FY 2016-17 was negative (INR (32,75,233)). The Tribunal agreed with the assessee that due to the 'punching error', the sum of Rs. 5,26,41,905 was inadvertently reported. Regarding the AO's reliance on Goetze (India) Ltd, the Tribunal held it to be erroneous because the assessee did not claim any deduction in the current year's return based on accumulated funds of preceding years, nor did they make such a claim during assessment proceedings. Therefore, the Tribunal found no infirmity in the CIT(A)'s findings and upheld the deletion of the addition. The grounds raised by the Revenue were dismissed.

What were the facts?

The Revenue has appealed against an order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year 2018-19. The appeal challenges the deletion of an addition of Rs. 5,36,41,905 made by the Assessing Officer (AO) under Section 11(3) of the Income Tax Act, 1961. The assessee, Christ Church Byculla, a public trust, had its return selected for scrutiny due to income accumulation. During assessment, the AO proposed an addition of Rs. 5,26,41,905. The assessee contended that this amount was spent on church restoration and was inadvertently reported due to a 'punching error' in the ITR. The AO rejected this, citing inconsistencies with earlier returns and lack of revised returns, and made the addition. The CIT(A) deleted the addition, agreeing with the assessee that funds were spent in earlier years.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s.11(3) of the Act to the tune of Rs.5,36,41,905/-, considering the assessee's claim of application of funds was inconsistent with earlier returns and not substantiated with proper documentary evidence during assessment proceedings? 2. Whether the learned CIT(A) erred in deleting the addition without considering that the assessee's claim of restoration work over three preceding financial years (2014-15, 2015-16, 2016-17) was not supported by Form 10B or ITRs, and the assessee failed to explain why the entire accumulated sum was claimed for application in AY 2018-19 if spent earlier? 3. Whether the learned CIT(A) erred in deleting the addition by ignoring that no capital expenditure was declared in ITRs for relevant assessment years, except for AY 2016-17 (Rs. 72,76,154/-), which does not align with the claim of application of accumulated sum? 4. Whether the learned CIT(A) erred in deleting the addition by ignoring that Schedule-I of the ITR showed 'Amount applied for charitable/religious purposes up to the beginning of the previous year' as NIL for the assessment year under consideration and preceding years? 5. Whether the learned CIT(A) erred in deleting the addition despite the assessee failing to furnish complete ledger accounts, bank statements, and proper bills/vouchers for expenses during assessment proceedings? Revenue's Contentions: The Revenue argued that the CIT(A) erred in deleting the addition because the assessee's claim of fund application was inconsistent with earlier returns and lacked proper evidence. They contended that the claim of restoration over three years was not supported by Form 10B or ITRs, and the assessee did not explain the application of the entire accumulated sum in AY 2018-19 if spent earlier. The Revenue also pointed out the absence of declared capital expenditure in ITRs for relevant years, except for AY 2016-17, and the NIL entry for 'Amount applied for charitable/religious purposes up to the beginning of the previous year' in Schedule-I for prior years. Furthermore, the Revenue highlighted the assessee's failure to provide complete documentation during assessment and the dispute over the sanctity of statutory declarations versus audited accounts. The Revenue relied on the Supreme Court decision in Goetze (India) Ltd v/s CIT. Assessee's Contentions: The assessee contended that the amount of Rs. 5,26,41,905 was inadvertently reported in Schedule-I of the ITR for AY 2018-19 due to a 'punching error'. They claimed that all accumulated funds from previous assessment years, up to FY 2015-16, were spent during FY 2016-17, leaving no accumulated funds to be spent in the year under consideration. The assessee also referred to computations of total income for AYs 2012-13 to 2017-18 to substantiate their claims.

Which sections of the Income-tax Act were involved?

Section 11(3),Section 11(5),Section 143(2),Section 142(1),Section 143(3),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYASHRI SANDEEP SINGH KARHAIL

For Appellant: Shri Nitesh Joshi
For Respondent: Ms. Virabhadra S. Mahajan, Sr.DR

Date of Hearing – 21/08/2025 Date of Order - 26/08/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The Revenue has filed the present appeal against the impugned order dated 08/05/2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2018-19.

2.

In this appeal, the Revenue has raised the following grounds:

–

1. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s. 11(3) of the Act to the tune of Rs. 5,36,41,905/- without considering that the assessee's claim of application of funds was inconsistent with the returns of income filed for earlier years and was not substantiated with proper documentary evidence during the assessment proceedings? 2. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s. 11(3) of the Act to the tune of Rs. 5,36,41,905/- without considering that the assessee's claim that the entire work of restoration was carried out over three years (F.Y. 2014-15, 2015-16, 2016- 17) is not supported by Form 10B or ITRs, nor has the assessee explained why the application of entire accumulated sum was claimed in the A.Y. 2018-19, if funds were allegedly applied in the preceding years? 3. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s. 11(3) of the Act to the tune of Rs. 5,36,41,905/- ignoring the fact that no capital expenditure was declared in the ITRs for the relevant assessment years, except for A.Y. 2016-17 where a capital expense of Rs. 72,76,154/- was declared by the assessee, which does not align with the claim of application of accumulated sum? 4. Whether on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s. 11(3) of the Act to the tune of Rs. 5,36,41,905/. ignoring the fact that as per Schedule-1 of the ITR, the figure for 'Amount applied for charitable/religious purposes up to the beginning of the previous year' is NIL for the assessment year under consideration and for preceding years, indicating that no such application was made during the prior periods? 5. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in deleting the addition made by the Assessing Officer u/s. 11(3) of the Act to the tune of Rs. 5,36,41,905/- despite the fact that during the course of assessment proceedings, the assessee failed to furnish ledger accounts, complete bank statements, and proper bills/vouchers for various expenses, and whatever was furnished was incomplete and haphazard after availing repeated opportunities provided to assessee? 6. Whether, on the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has failed to consider that during the assessment proceedings, the assessee disputed the sanctity of its own statutory declarations in Forms and ITRs, claiming instead that only its audited accounts are authentic and correct, but even those audited accounts were furnished only for A.Y. 2016-17 onwards and not for the previous years relevant to the claim? 7. The appellant craves leave to add, amend, modify, or withdraw any ground of appeal at the time of hearing.”

3. The solitary grievance of the Revenue is against the deletion of the addition made as per the provisions of section 11(3) of the Act.

4. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is a public trust formed on 14/08/1933. The return filed by the assessee was selected for complete scrutiny for the reason “accumulation of income by the trust”. Accordingly, statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, a show cause notice was issued to the assessee along with the draft assessment order proposing to make an addition of INR 5,26,41,905 under section 11(3) of the Act. In response, the assessee submitted that the entire accumulations were spent for major repair and restoration of the church building, which is a century-old. The assessee further submitted that due to a “punching error” while filing the return, an amount of INR 5,26,41,905 was inadvertently reported in Schedule-I of the income tax return for the assessment year 2018-19.

5.

The Assessing Officer (“AO”), vide order dated 29/05/2021 passed under section 143(3) read with section 144B of the Act, disagreed with the submissions of the assessee and held that accumulation of previous years is not supported by the figures in the ITR or Form 10B. The AO further held that the assessee has also not explained why the entire application has been claimed in the year under consideration, if the funds were applied during the preceding years up to the financial year 2016-17. The AO held that the assessee was indulging in a manipulative exercise, and when it was confronted with the declaration made for the year, it had made claims which are not supported by the declarations made in the ITR or Form 10B for the preceding years. The AO further rejected the claim of the assessee that there was a “punching error” while filing the ITR, and INR 5,36,41,905 was inadvertently reported. The AO held that even though the assessee had claimed that the above was due to “punching error”, the assessee did not revise its return of income to prove what is being claimed now, consequent upon the selection of the case for regular scrutiny. In this regard, the AO placed reliance upon the decision of the Hon’ble Supreme Court in Goetze (India) Ltd v/s CIT, reported in (2006) 284 ITR 323 (SC). Accordingly, rejecting the claim of the assessee, the entire amount of INR 5,26,41,905 was deemed to be the income of the assessee during the year under consideration as per the provisions of section 11(3) of the Act.

6.

The learned CIT(A), vide impugned order, after comparing the details mentioned Schedule-I of the ITR with the details filed by the assessee during the assessment proceedings regarding the accumulation during each year from the financial year 2011-12 to 2016-17, agreed with the submissions of the assessee that the assessee had spent all the accumulated funds in the financial year 2015-16 itself, and therefore, during the year under consideration no funds were left with the assessee to spent. Accordingly, the learned CIT(A) directed the AO to delete the addition of INR 5,36,41,905. Being aggrieved, the Revenue is in appeal before us.

7.

From the perusal of the record, it is evident that it is a consistent claim of the assessee that due to a “punching error”, the sum of INR 5,26,41,905 was inadvertently reported by the assessee in Schedule-I of the ITR for the year under consideration. We find that it is the claim of the assessee that all the accumulation made by the assessee during the previous assessment years, i.e. till financial year 2015-16, was spent during the financial year 2016-17, and therefore, during the year under consideration, it was left with no accumulated funds to be spent. In this regard, we find that during the assessment proceedings, the assessee filed the following details: –

8.

However, the AO disagreed with the submissions of the assessee, merely relying on the amounts reported in Schedule-I of the ITR for the year as follows: –

9.

From the comparative analysis of both tables, as noted in the foregoing paragraphs, we find that the details mentioned therein match with each other. Further, we find that the balance accumulation in the financial year 2016-17 was INR (32,75,233). During the hearing, the learned Authorised Representative (“learned AR”) also referred to the computation of total income for the assessment years 2012-13 to 2017-18, forming part of the paper book, to substantiate the aforementioned details of accumulation as submitted during the assessment proceedings.

10.

From a careful perusal of the details as placed on record, we agree with the submissions of the assessee that the funds which were accumulated as per the provisions of section 11 of the Act were all spent in the preceding assessment year itself and the assessee was left with no accumulated fund from the preceding years to be spent in the year under consideration. Accordingly, having perused the details placed on record by the assessee, we agree with the submissions that due to a “punching error”, the sum of INR 5,26,41,905 was inadvertently reported in Schedule-I of the ITR for the assessment year 2018-19. Before concluding, we may also note that the AO, placing reliance upon the decision of the Hon’ble Supreme Court in Goetze (India) Ltd (supra), rejected the aforesaid contention of the assessee. However, it is pertinent to note that in the present case, neither the assessee, on the basis of the accumulated funds of the preceding years, made any claim of deduction in the return of income of this year, nor made any such claim during the assessment proceedings. Therefore, we are of the view that the reliance placed on the decision of Goetze (India) Ltd (supra) is completely erroneous in the facts and circumstances of the present case for rejecting the genuine claim of the assessee. Hence, we do not find any infirmity in the findings of the learned CIT(A) vide impugned order, and accordingly, the same are upheld. As a result, the grounds raised by the Revenue are dismissed.

11.

In the result, the appeal by the Revenue is dismissed. Order pronounced in the open Court on 26/08/2025

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