HARYANA BUILDING AND OTHER CONSTRUCTION WORKERS WELFARE BOARD,PANCHKULA vs. CIT(EXEMPTION), CHANDIGARH

( PHYSICAL HEARING ) �नधा�रती क� ओर से/Assessee by : Sh. Nikhil Goyal, Advocate, Sh. Ashok Goyal, CA and Sh. Sifatfreet Singh, CA राज�व क� ओर से/ Revenue by : Sh. Manav Bansal, CIT DR सुनवाई क� तार�ख/Date of Hearing : 08.12.2025 उदघोषणा क� तार�ख/Date of Pronouncement : 10.12.2025 आदेश/Order Per Bench: The captioned appeals preferred by the assessee are directed against the separate orders of the Ld. Commissioner of Income- tax (Appeals) for different assessment years, as per the details given below: S.No.

Dated Delayed By 1 237/Chd/2020 CIT(A)-1, 31.01.2020 - Chandigarh 2 337/Chd/2023 CIT(A), NFAC 28..5.2023 01 day Delhi 3 338/Chd/2023 CIT(A), NFAC 23.03.2023 01 day 2017-18 Delhi 4 339/Chd/2023 CIT(A), NFAC, 23.03.2023 01 day 2018-19 Delhi 5 63/Chd/2021 CIT Exemptions, 05.03.2021 - 2015-16 Chandigarh 2. From the records, it is noticed that the appeals in to 339/Chd/2023 are filed belatedly by one day in each case. The Ld. Counsel for the assessee has submitted an application praying for condonation of delay giving identical reasons in each case which is reproduced as under:

4. The ld. DR had no objection for condonation of delay.

5. Since the issue involved in all the appeals are identical, (except in for AY 2015-16) wherein, the order had been passed u/s 263 of the I.T. Act by CIT Exemptions, Chandigarh, therefore, these appeals were heard together and are disposed off for the sake of brevity.

6. Appeal of the Assessee for A.Y. 2014-15 in is taken as a lead case, wherein, the grounds raised

by the Assessee are as under:

1. That the order passed by the Ld. Commissioner of Income tax (Appeals), National Faceless Appeal Centre, Delhi is erroneous, devoid of merits, has been passed in haste without taking into consideration the facts of the case and submissions made and the same deserves to be quashed.

2 That the First Appellate Authority has erred both on facts and law in holding that the appellant was engaged in the activities for general public utility and accordingly holding that exemption provisions of section 11 and 12 can not be applied to the case of the Appellant. These observations and findings are based upon incorrect understanding of the facts and by ignoring the orders of the Hon'ble Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh who clearly held that the appellant was engaged in the activities of welfare of poor. Necessary directions in this regard may be given and the observations of the Ld. Commissioner of Income tax (Appeals), National Faceless Appeal Centre, Delhi that the appellant was engaged in carrying out objects of general public utility may be ordered to be quashed and consequential relief arising therefrom may kindly be ordered.

3. That the First Appellate Authority has erred both on facts and law in affirming the order of the AO that the Cess amount which was received by the appellant Board who is a custodian on behalf of the State Government of Haryana belonged to the appellant Board and was to be treated its income. The observations and findings of the First Appellate Authority are not based upon fair appreciation of facts of the case and deserve to be quashed. It is prayed that the Cess amount received by the appellant Board on behalf of State Government of Haryana though held by it in its account may kindly be ordered to be excluded from the scope of income.

4. That the Ld. Commissioner of Income tax (Appeals), National Faceless Appeal Centre, Delhi has erred both on facts and law in not allowing the benefit of accumulations as per provisions of Section 11(2) of the Income Tax Act on the ground that the notice of accumulation given by the appellant was not as per provisions of law, defective and thus deemed to have never been given and that the appellant was engaged in activities of general public utility which were commercial in nature and on these grounds subjecting to tax the sum of Rs.4,86,73,08,657. The findings of the Ld. Commissioner of Income tax (Appeals), National Faceless Appeal Centre, Delhi are unjust, illegal and deserves to be quashed. It is prayed that the notice of accumulation given in Form 10 may be considered to be a notice of accumulation in accordance with the provisions of law and the benefit of accumulation may be allowed. Addition of sum of Rs.4,86,73,08,657may kindly be ordered to be deleted.

5. That the First Appellate Authority has erred both on facts and law in not allowing appropriate relief in regard to the addition of the sum of Rs.1,58,34,30,328 made under section 11(3)(c). The order has been passed without considering the facts of the appellant and is illegal and deserves to be quashed.

It is prayed that the addition of the sum of Rs.1,58,34,30,328 made under provisions of section 11(3)(c) may kindly be ordered to be deleted.

6. That the Ld. First Appellate Authority has erred both on facts and law in not allowing the statutory reduction of 15% allowable under section 11(2) of the Income tax Act, thus making whole of the receipts amounting to Rs.4,86,73,08,657 liable to be treated as income. This resulted in excessive addition of Rs.73,00,96,298 to the income.

Humbly stated that this ground will become infructuous if relief in respect of ground 4 is allowed. The action of the Ld. First Appellate Authority in not reducing from gross receipts the statutory 15% deduction is illegal. Suitable directions in the matter may kindly be given.

7. The appellant craves/ leave to add, amend alter or otherwise raise any other ground of appeal.

Whereas, the grounds raised by the assessee in for A.Y. 2015-16 are as under:

1. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in passing the order under section 263 of the Income Tax Act, 1961 (the Act), which in contrary to the material on record and provisions of the Act unjust and bad in law.

The same being bad in the eyes of law deserves to be quashed.

2. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in holding that Assessing Officer (AO) passed the order dated 27.09.2017 under section 143(3) of the Act for the impugned assessment year 2015-16 without making required enquiries/investigations.

The order passed by Ld. Commissioner of Income tax (Exemption) may be ordered to be quashed.

3. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in giving contradictory observations that the Appellant was covered by fourth limb of definition of Charitable Purpose i.e. Advancement of any other object of General Public Utility' laid down in section 2(15) of the Act and the Appellant being engaged in carrying out business was not eligible for exemption. Since the order passed by Ld. Commissioner of Income tax (Exemption) is based on incorrect understanding of facts, the same may be ordered to be quashed.

3. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in giving contradictory observations that the Appellant was in receipt of sums in the nature of 'cess' during assessment years 2016-17 and 2017- 18 and were covered under 4th limb of section 2(15) of the I.T. Act i.e. advancement of any other object of general public utility and since the major receipts of the assessee were 'cess receipts' far exceeding 20% of the total receipts as per provisions of section 2(15), the tax exemption was not allowable. The facts being the same, the AO should have denied the assessee the benefit of accumulation for the A.Y. 2015-16 also which he had failed to do so.

Since the order passed by Ld. Commissioner of Income tax (Exemption) is based on incorrect appreciation of facts, the same may be ordered to be quashed.

5. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in giving contradictory observations that A.O, did not make any inquiries at all about the issue and at the same time observing that A.O. erred in allowing the benefit of accumulation under provisions of section 11(3)(c) of the Act. The order passed by Ld. Commissioner of Income tax (Exemption) is thus bad in the eyes of law and may be ordered to be quashed.

6. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in holding that the notice given by the Appellant in the prescribed manner in form 10 was not correct and did not amount to compliance with provisions of section 11(2) of the Act and also directing the A.O. to reframe the assessment.

The order passed by Ld. Commissioner of Income tax (Exemption) beings based in incorrect appreciation of facts and law may be ordered to be quashed.

7. On the fact and circumstances of the case and in law, Ld. Commissioner of Income tax (Exemption) erred in holding that assessment order passed by the A.O. is erroneous in so far as it is also prejudicial to the interest of revenue, thereby setting aside the said assessment order to the file of the A.O. to re- examine the issue.

The order passed by Ld. Commissioner of Income tax (Exemption) may be ordered to be quashed.

8. The appellant craves leave to add, amend alter or otherwise raise any other ground of appeal.

1.2. The BOCW Act, 1996 was enacted by the Parliament with the primary objective of regulating the employment and conditions of service of building and other construction workers and to provide for adequate measures relating to their safety, health, and welfare. In furtherance of this legislative intent, Section 18 of the BOCW Act (Relevant extract of the Section 18 is mentioned at page 11 of the BOCW Act, 1996) mandates every State Government to constitute a “Building and Other Construction Worker’s Welfare Board” as a body corporate, having perpetual succession and a common seal, with power to acquire, hold and dispose of property, to contract, and to sue or be sued in its own name, to exercise powers conferred on, and perform the functions assigned to it under this Act. 1.3. Further, Section 24 of the Act (Relevant extract of Section 24 is mentioned at page 13 of the BOCW Act, 1996) lays down that the Board shall have the responsibility of providing welfare measures and benefits to registered construction workers. Simultaneously, the Cess Act, 1996, particularly under Section 3 (Relevant extract of the Section 3 of the Cess Act, 1996 is mentioned at page 259 of the BOCW Act, 1996), requires the levy and collection of cess on the cost of construction incurred by employers, which is credited to the welfare fund. These funds are statutorily earmarked and can be utilized only for the welfare of building and construction workers in accordance with the provisions of the Act and the Rules framed thereunder. 1.4. In pursuance of these statutory provisions, the State of Haryana notified the constitution of the present Board. The Board thus functions as an instrumentality of the State, discharging statutory obligations, and administering welfare schemes exclusively for the benefit of registered construction workers, in strict conformity with the mandate of the BOCW Act, 1996 and the Cess Act, 1996.

2. Grant of Exemption Under Section 12AA 2.1. It is pertinent to note that the appellant–Board has already been recognized as an institution established for charitable purposes within the meaning of Section 2(15) of the Income-tax Act, 1961. The Board was duly granted registration under Section 12AA of the Act pursuant to the order of the Hon’ble ITAT, Chandigarh Bench, dated 23.09.2009, wherein relief was allowed by accepting the contention of the appellant that it is engaged in carrying out welfare activities strictly in terms of the statutory mandate under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. The copy of Order of Commissioner of Income Tax, Panchkula dated 26.04.2010 form part of Paperbook (Volume-I) on Page No.

2.4. On a careful analysis of the objectives and activities of the appellant– Board, it becomes evident that the functions carried out by the Board are for the benefit of poor building workers and the general public at large, particularly a vulnerable section of society, i.e., building and other construction workers. Therefore, these activities clearly fall within the scope of “charitable purposes” as defined under Section 2(15) of the Income-tax Act, 1961, which includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility. Relevant extract of Section 2 (15) of the Income Tax Act, 1961, is reproduced: “(15) "charitable purpose" includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless— (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year;” 2.5. In fact, the Department itself has recognized the charitable nature of such Boards in the past. An identical view was taken in the case of the Building and Other Construction Workers Welfare Board, Karnataka, wherein registration under Section 12AA of the Act was granted by order dated 30.09.2008. This reinforces and fortifies the claim of the appellant that its functions are in line with the statutory and charitable purposes contemplated under law. 2.6. Thus, this affirm that the appellant–Board is a statutory body engaged in charitable activities, and its registration under Section 12AA is in conformity with the law.

3. Grant of Exemption Under Section 10(46) 3.1. The exemption under Section 10(46) of the Income-tax Act, 1961 was inserted by the Finance Bill, 2011 with effect from 01.06.2011. The intention of the legislature, as reflected in the Memorandum explaining the provisions, was to provide tax neutrality to statutory regulatory authorities, Boards, and Commissions constituted by the Central or State Governments for discharging functions in the nature of public service or welfare administration. The copy of the extract of Finance Bill, 2011 form part of Paperbook (Volume-I) from Page No. 15-25. Prior to this amendment, such statutory bodies could only claim exemption under the general charitable registration framework of Section 12AA of the Act, subject to fulfilling the definition of “charitable purpose” under Section 2(15). However, many of these bodies were created under specific legislations and carried out welfare, regulatory, or supervisory activities as part of statutory obligations rather than voluntary charitable activities. This often resulted in litigation and interpretational difficulties, since these organizations were not “charitable trusts” in the strict legal sense, but rather statutory authorities functioning under mandate of law. 3.2. Therefore, the introduction of Section 10(46) was done to recognize such statutory entities as a distinct class and to exempt their income of specified nature, provided:  They are established by a Central/State/Provincial Act or by Government notification.  Their primary object is to regulate or administer activities for the benefit of the general public.  They are not engaged in any commercial activity; and  Their specified incomes are duly notified by the Central Government in the Official Gazette.

This statutory carve-out was thus intended to bring uniformity, certainty, and relief from litigation to welfare Boards and similar authorities across India. Relevant extract of the Finance Act, 2011 - Explanatory notes to the provisions of the Finance Act, 2011 - Circular No. 02/2012 [F. No.142/01/2012- SO (TPL)], dated 22-5-2012 mentioned on the Page 7 of the Notes: “6. Provision relating to exemption of a specified income of certain bodies or authorities or trust or board or commission 6.1 Section 10 of the Act excludes certain incomes from the ambit of total income. A new section 10(46) has been inserted in the Act, to provide exemption from income-tax to any specified income of body, authority, board, trust or commission which is set up or constituted by Central, State or Provincial Act or constituted by the Central Government or a State Government with the object of regulating or administering an activity for the benefit of general public, which is not engaged in any commercial activity, and is notified by the Central Government in this behalf. Such notified entities shall also file its return of income. 6.2 Applicability- This amendment has been made effective from 1st June 2011.” The copy of the Explanatory Notes to the provisions of the Finance Act, 2011 form part of Paperbook (Volume-I) from Page No. 26-41. 3.3. In the case of the appellant–Board, exemption under Section 12AA had already been granted vide ITAT, Chandigarh order dated 23.09.2009, recognizing its welfare-oriented functions. Subsequent to the coming into force of Section 10(46), statutory bodies across India, including the present appellant, sought exemption under this special provision. Accordingly, the appellant made its application before the CBDT on 31.01.2018 in the prescribed manner. After examination of its statutory functions, the Central Government, being satisfied about the eligibility, was pleased to notify the appellant under Section 10(46) on 27.07.2021, vide Dairy No. 4689. The notification specifically exempted registration fees, cess proceeds, and interest income of the Board, subject to certain conditions. The copy of the Application for granting of Exemption u/s 10(46) dated 31.01.2018 and 15.01.2020, for part of Paperbook (Volume-I) from Page No. 42 to 43. The copy of the Notification No. 78/2021 granting Exemption 10(46), form part of Paperbook (Volume-I) from Page No. 44 to 49.

Thus, the appellant’s exemption has transitioned from a general charitable framework under Section 12AA to the special statutory exemption under Section 10(46), which is in line with the rationale and legislative intent behind the Finance Act, 2011. Relevant Extract of the Section 10(46) of the Income Tax Act, 1961 is reproduced: “Any specified income arising to a body or authority or Board or Trust or Commission (by whatever name called), or a class thereof which- a). has been established or constituted by or under a Central, State or Provincial Act, or constituted by the Central Government or a State Government, with the object of regulating or administering any activity for the benefit of the general public; b). is not engaged in any commercial activity; and c). is notified by the Central Government in the Official Gazette for the purposes of this clause. Explanation.—For the purposes of this clause, "specified income" means the income, of the nature and to the extent arising to a body or authority or Board or Trust or Commission (by whatever name called), or a class thereof referred to in this clause, which the Central Government may, by notification in the Official Gazette, specify in this behalf;” 3.4. The relevant extract of the Notification dated 09.07.2021 is reproduced as follows: “In exercise of powers conferred by clause (46) of Section 10 of the Income tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, ‘Haryana Building and Other Construction Workers Welfare Board’ (PAN AAATH6995H), a Board constituted by the State Government of Haryana, in respect of the following specified income arising to that Board, namely:- (a). Registration fees and yearly subscription collected from construction workers registered with the Haryana Building and Other Construction Workers Welfare Board as beneficiaries.

(b). Proceeds of the cess collected under the Building & Other Construction Workers Welfare Cess Act, 1996 (28 of 1996) and rules there under; and (c ). Interest income received from investment.

2. This notification shall be effective subject to the conditions that Haryana Building and Other Construction Workers Welfare Board,- (a). shall not engage in any commercial activity. (b). activities and the nature of specified income shall remain unchanged throughout the financial years; and (c ). Shall file return of income in accordance with the provisions of clause (g) of sub-section (4C) of section 139 of the Income Tax Act, 1961. (d). shall file audit report along with return, duly verified by the accountant as provided in explanation to section 288(2) of the Income Tax Act, 1961 along with a certificate from the chartered accountant that the above conditions are satisfied.” This notification further recognizes that the appellant is a statutory authority engaged in administering welfare schemes for the benefit of building and construction workers, and that its receipts and application of funds are basically linked to the discharge of statutory obligations, thereby qualifying for exemption under the provisions of the Act. Now, in regard to the satisfaction of the conditions under Section 10(46) – notification:- Condition: The Board shall not engage in any commercial activity From its inception, the appellant–Board has been a statutory body  constituted under Section 18 of the BOCW Act, 1996 (reference supra mentioned) , with the exclusive object of implementing welfare measures for construction workers. The Board’s statutory functions, as prescribed under Section 22 of the  BOCW Act, 1996 (reference supra mentioned), are entirely welfare- oriented, such as provision of financial assistance, medical relief, housing loans, accident benefits, maternity benefits, and education support. The Board has never undertaken any trade, commerce, or business  activity with a profit motive. All its receipts are statutory in nature, either by way of registration fees, cess, or interest on investments of such funds, and are utilized solely for welfare objects.

Condition: The activities and nature of specified income remain unchanged The appellant–Board’s activities have remained uniform and unchanged  since its establishment. Its operations continue to revolve exclusively around the welfare of construction workers as envisaged in the parent Act. Similarly, the nature of its receipts has always been limited to:  1. Registration fees and yearly subscriptions from registered workers.

4.4. Cess Collected is in the Nature of Corpus and Not Income 4.5. The amounts collected by way of cess under the Cess Act, 1996 cannot be treated as “income” of the appellant within the meaning of Section 2(24) of the Income-tax Act, 1961. The true legal character of the collection is that of a statutorily mandated contribution, forming part of a dedicated welfare fund, the utilization of which is strictly governed by law. 4.6. As per Section 24 of the BOCW Act, 1996 (reference supra-mentioned), all amounts of cess collected under the Cess Act are required to be transferred to the Welfare Board (constituted under Section 18 of the Act), and the said amounts stand credited to the “Building and Other Construction Workers’ Welfare Fund.” Further, Section 22 of the Act (reference supra-mentioned) enumerates the purposes for which the Fund may be utilized, which include provision of financial assistance to beneficiaries, loans and advances, group insurance, educational and medical assistance, and other notified welfare measures. 4.7. Section 2(24) of the Income-tax Act, 1961 provides an inclusive definition of “income.” While the scope is wide, it is settled law that not every receipt is income; only those receipts which belong to the assessee as a matter of right, or which the assessee can apply freely for its own purposes, qualify as income. Statutory Earmarking under BOCW Act & Cess Act Under Section 3 of the Building and Other Construction Workers’  Welfare Cess Act, 1996, cess is levied and collected at a prescribed percentage of construction cost. As per Section 24 of the BOCW Act, 1996, all such proceeds are to be  credited to the “Welfare Fund” maintained by the Board. Section 22 of the BOCW Act, 1996 restricts the utilization of such  funds strictly to welfare activities (education, medical benefits, accident relief, housing loans, insurance, maternity benefits, etc.). Hence, cess receipts are statutorily earmarked for specific purposes and  cannot be diverted for any other use. Doctrine of Corpus – Trust Principles In income-tax jurisprudence, where funds are received with an  obligation to spend them only on specified purposes, such receipts are treated as “corpus” or capital receipts, not as income. The Board acts merely as a custodian/trustee of these amounts. Since it  has no beneficial ownership or discretion to treat these funds as its own, the cess does not accrue as income in real terms. Exemption under Section 11 & 12AA For charitable institutions, Section 11 specifically exempts income in  the form of voluntary contributions made with a specific direction to form part of the corpus. Though cess is not a voluntary contribution, the same principle applies  because it is a compulsory statutory contribution with a binding direction under law that it forms part of the Welfare Fund (corpus) and not general income. The assessee–Board is registered u/s 12AA, and therefore eligible for  exemption on such corpus receipts. Section 10(46) Recognition The Central Government, vide Notification dated 09.07.2021  (reference supra-mentioned), has expressly recognized cess proceeds as “specified income” exempt under Section 10(46). This is a legislative acknowledgment that such cess is not taxable income but statutory funds. 4.8. Thus, the cess collected does not vest in the Board as its income or revenue receipt, but rather as an earmarked corpus fund, held in fiduciary capacity for the benefit of registered workers. It is a settled principle of law that receipts which are statutorily earmarked for application towards specific purposes and cannot be appropriated for general use do not constitute income in the hands of the collecting authority. It has been held in various judicial precedents that statutory bodies collecting and applying funds for specified public utility purposes are not liable to be treated as having earned taxable income, as the amounts so collected partake the nature of trust or corpus funds. 4.9. Accordingly, the cess collections of the appellant–Board are basically linked to its statutory obligation and welfare objects, and therefore, must be regarded as corpus funds exempt from tax, and not as taxable income. Reliance is placed on the judgment of Hon’ble Supreme Court in the case of Ahmedabad Urban Development Authority v. CIT (2022) 449 ITR 1 (SC) (reference supra-mentioned) – that amounts collected by statutory authorities (such as development charges, betterment charges, fees) cannot be treated as commercial income where such collections are under statutory compulsion and are earmarked for statutory objects. The Court emphasized that receipts which are statutorily earmarked and cannot be applied freely by the authority are to be treated as corpus funds and not taxable income. The Relevant extract is: “142. What then is the true meaning of the expressions "fee, cess or consideration"? The careful analysis of the amended proviso to section 2(15), reveal that the prohibition applies in a four-fold manner- (a) The bar to engaging in trade, commerce or business, (b) The bar to providing any service in relation to trade, commerce or business, (c) wherein "for a fee, cess or any other consideration" is the controlling phrase for both (a) and (b)(which are collectively referred to as "prohibited activities" for brevity) (d) irrespective of the application of the income derived from such 'prohibited activities'.

5.2. In this regard, Section 18 of the BOCW Act, 1996 (reference supra- mentioned) establishes the Board as a statutory body corporate for the purpose of administering the welfare fund, while Section 24 (reference supra-mentioned) mandates that all proceeds of cess collected shall be credited to the Building and Other Construction Workers’ Welfare Fund maintained by the Board. Importantly, Section 22 (reference supra- mentioned) of the Act strictly prescribes the objects for which such fund may be utilized, thereby eliminating any discretion in the hands of the Board to treat the cess as its own resources. 5.3. From the perspective of the Income-tax Act, 1961, it is well settled that only real income arising to an appellant can be subjected to tax. Income must be understood as a real accrual in the hands of the appellant, and not hypothetical or notional. In the present case, since the Board does not have any beneficial ownership or unfettered control over the cess but is legally bound to hold and apply the same only for prescribed welfare purposes, the amount collected cannot be said to be the Board’s income. 5.4. In essence, the cess operates only as a pass-through receipt, wherein the Board functions as a channel between the collecting machinery and the beneficiaries of the fund. The Board’s role is fiduciary in nature, akin to that of a trustee administering a specific corpus fund. Therefore, such receipts do not partake the character of taxable income under Section 2(24) of the Act.

7. Accounting Treatment and Disclosure in Financial Statements & ITR 7.1. It is further submitted that the treatment of cess collections as a corpus fund has been duly reflected in the financial accounts and income-tax returns of the appellant–Board. Initially, prior to the grant of exemption under Section 10(46) of the Act, the amounts collected by way of cess were inadvertently reflected on the receipts side of the Income and Expenditure Account. In order to safeguard its position, the Board simultaneously filed Form 10 for accumulation of income in accordance with Section 11(2) of the Income-tax Act, 1961, thereby ensuring that the statutory funds remained earmarked for welfare purposes. 7.2. Subsequently, upon obtaining greater clarity on the true legal nature of such collections — being statutorily earmarked funds and not income in the commercial sense — the matter was duly deliberated in the meetings of the Board. It was unanimously resolved and accepted that cess is to be treated as a corpus fund, and not as the Board’s income. In line with this decision, the financial statements were revised to correctly reflect the cess collections under Corpus, and not as revenue income. 7.3. Thereafter, following the notification issued by the Central Government granting exemption under Section 10(46) in the year 2021, the appellant has consistently filed its Income-tax Returns by treating cess as corpus contributions, fully in line with statutory provisions and the accounting policy adopted by the Board. This uniform treatment across Board resolutions, audited financial statements, and income-tax filings demonstrates that the appellant has at all times acted bona fide and in strict conformity with the statutory mandate.

8. Recent Assessment Orders for AY 2021-22 And AY 2022-23 in the case of Appellant- Board 8.1. Assessment Year 2021-22: In response to the notices issued, the appellant-Board submitted all the requisite documents and clarified that  Cess collected by the Board is a statutory contribution meant for specific welfare activities and does not partake the character of income in the commercial or taxable sense.  The sums expended during April to May (i.e. following the close of FY) were towards the fulfillment of objectives from previously accumulated funds under Section 11(2).  The Board’s activities are charitable in nature, duly registered under Section 12AA, and meet all conditions under Sections 11 and 12 for exemption.  Form 10s filed for AYs 2019–20 and 2020–21 were submitted showing accumulation and break-up of funds under Section 11(2), along with corresponding applications.  The surplus accumulated in AY 2016–17 was fully utilized by AY 2021–22, in line with the five-year timeline prescribed under Section 11(2).  Since 85% of the gross receipts were spent during the FY, no accumulation under Section 11(2) was claimed for FY 2020–21 relevant to AY 2021–22.

After considering the response and details furnished by the appellant- Board, the assessment was completed with no modification on the returned income. The copy of the Replies along with Annexures form part of Paperbook (Volume-II) from Page No. 142-204. The copy of the Assessment Order for the AY 2021-22 dated 19.12.2022, form part of Paperbook (Volume-II) from Page No. 205-209. The relevant extract of the Assessment Order: “3.4 Reasons for inference drawn that no variation is required on this issue. The assessee in response to notice u/s 142(1) dated 13.10.2022 had stated that the assessee board was setup on 02.11.2006 under a Central act namely Building and Other Construction Workers Welfare Board Act, 1996. State of Haryana by virtue of a delegated legislation adopted the Act framed by the Central Government and setup a Board to carry out objectives specified in the Act. As per the assessee reply, the objects of the assessee board involve welfare of the workers engaged in building and other construction activities in the State of Haryana. The assessee had further stated that it is neither trust nor a society but, it has been notified by the CBDT vide notification number 78/2021 F.NO. 300196/5/2018-ITA1Delhi dated 09.07.2021 to be exempt u/s 10(46). Copy of notification has been furnished. With respect to the issue of selection of the case for scrutiny, it is observed that the return of incomes filed by the assessee in the preceding assessment years were selected for scrutiny and additions were made on the issue of non utilization of amounts accumulated under section 11(2) of the Act within the stipulated time which led to non-fulfillment of requirements of sections 11, 12 and 13 of the Act. Vide notice u/s 142(1) dated 02/12/2022, the assessee was asked to furnish Form No. 10, breakup of the depreciation claim, details of accumulated fund and its utilization For the AY 2021-22. In response, the assessee had stated that it had not opted for accumulation of income for the FY 2020-21 relevant to AY 2021-22 as more that 85% of the gross income earned was duly spent by the assessee board for carrying out its charitable activities. The assessee had stated that in respect of the benefit of accumulation availed under section 11(2) in the earlier years, the accumulated surplus of the AY 2016-17 was to be utilized by the assessee board till the end of the AY 2021-22 as per provisions of section 11(2) of the Income Tax Act, 1961 and stated that the amount had been utilized earlier i.e. in the AY 2019-20. The assessee had furnished copies of Form 10 filed for AYs 2019-20 and 2020-21, breakup of the funds set apart u/s 11(2) and Application made out of the funds during the AYs 2016-17 to 2021-22. The details furnished by the assessee are perused. The assessee, in response to the notice u/s 142(1) dated 13.10.2022, had furnished the nature of activities, sources of income, copy of Rules of the assessee board, Copy of order of registration under section 12AA, computation of income, audit report containing Balance sheet, Income and expenditure account, and receipts and payments account. The details furnished by the assessee are perused. The assessee’s response has been examined in the light of the provisions of the Act and claim of the assessee is found to be acceptable.”

8.2. Assessment Year 2022-23: The facts and issues in AY 2022-23 were identical to those of AY 2021-22. Assessment for AY 2022-23 were proceeded on same lines. The AO relied on previous accepted positions, reviewed the records and completed the assessment without making any additions. The copy of the Assessment Order for the AY 2022-23 dated 22.03.2024, form part of Paperbook from Page No 210-214. 8.3. It is thus, contented that when various determining factors like mode, manner and pattern of preparing and filing form 10, accumulation and utilization of unspent funds and nature of activities of the appellant-Board were fully accepted by the department in AYs 2021–22 and 2022–23, the same principle and consistency ought to be applied to the assessment year under appeal (2014-15, 2016-17, 2017-18 and 2018-19), where no change in factual matrix exists. Prayer In light of the above submissions and the consistent stand taken and accepted by the department in subsequent assessments (AYs 2021–22 and 2022–23), it is most respectfully prayed that the Hon’ble Tribunal may kindly allow the appeals for AYs 2014–15, 2016-17, 2017-18 and 2018– 19 by deleting the additions made.

(AY 2015-16) has 9. submitted the facts and his submissions as under: 1. Brief Facts 1.1 The facts of the case are that the Appellant-Board filed the Return of Income declaring an Income of Rs. Nil, on 30.09.2015. The case was selected for Scrutiny under CASS and after going through the submissions made by the appellant, no adverse inference was being drawn and the original assessment in this case was completed under section 143(3) of the Income-tax Act, 1961 on 27.09.2017 whereby the returned income was accepted.

1.2 Subsequently, the assessment was revised under section 263 of the Act. Vide order dated 05.03.2021, the learned Commissioner of Income-tax (Exemptions), Chandigarh set aside the original assessment with a direction to frame the order afresh in accordance with law. Thereafter, proceedings under section 143(3) read with section 263 and section 144B were initiated. In the course of such proceedings, the appellant furnished complete replies to all queries raised. The assessment under section 143(3) r.w.s 263 read with section 144B of the Income Tax Act, 1961 was finally completed on 23.03.2022 by assessing the income at Rs. 54,10,35,296/-.

1.3 Aggrieved by the Assessment Order under section 143(3) r.w.s. 263 and 144B dated 23.03.2022, the appellant filed an appeal before the Hon’ble CIT(A), NFAC on 22.04.2022. The first appeal proceedings are presently pending, wherein the appellant has already filed detailed written submissions on 19.08.2025 in response to the notice under section 250 dated 07.08.2025. 1.4 The appellant, Haryana Building and Other Construction Workers Welfare Board, is a statutory body constituted under the relevant State enactment adopting the Central legislation, with its registered office at Panchkula. The Board functions under the administrative control of the State Government and is headed by the Labour Commissioner-cum-Secretary (IAS). The primary objective of the appellant is the welfare and upliftment of building and construction workers through schemes such as medical aid, educational support, housing, marriage assistance, and other social security benefits. For this purpose, the Board is vested with statutory collection of Cess, which is to be deployed strictly in accordance with Government directions. 1.5 The appellant holds registration under section 12AA of the Income-tax Act, 1961. Accordingly, its income is eligible for exemption under sections 11 and 12, subject to fulfillment of statutory conditions. The appellant maintains regular audited books of account, and its receipts are duly applied or accumulated towards the stated objects, with unutilized funds invested in modes prescribed under section 11(5). The statutory Cess collected by the appellant does not partake the character of income, being neither voluntary contribution nor income from property held under trust, and its disbursement is not at the discretion of the appellant. Hence, such Cess cannot be considered for the purpose of determining application or accumulation under section 11.

2. Constitution of the Board and Cess collection is a Statutory mandate 2.1 The Appellant Board has been constituted under a Central Act with a statutory mandate to safeguard the welfare of construction workers. Its activities are wholly welfare-oriented and devoid of any profit motive. The receipts primarily comprise statutory cess collected under the Building and Other Construction Workers’ Cess Act, which are held in a fiduciary capacity for the benefit of workers and not in the nature of income. 2.2 The Board is duly registered under section 12AA of the Act and its activities fall squarely within the definition of “charitable purpose” under section 2(15). Additionally, the Appellant is covered by the provisions of section 10(46), which provides exemption to statutory bodies established under law and duly notified by the Central Government. The nature of the receipts and their application have been consistently disclosed in the accounts, which reflect the Board’s compliance with statutory provisions. 2.3 The statutory cess credited to the Board is in the nature of corpus funds and cannot be regarded as taxable income. Such funds are mandatorily applied towards welfare schemes and benefits of workers, thereby fulfilling the objectives of the Board as envisaged under the governing legislation. Being a statutory authority discharging public welfare functions, the Appellant operates on a not-for-profit basis and is entitled to exemption on its income. 2.4 In light of its statutory constitution, welfare-oriented functioning, 12AA registration, and eligibility under section 10(46), the Appellant’s receipts are not liable to tax. Its activities are inherently charitable, and the cess received forms part of corpus funds dedicated to public welfare. Accordingly, no part of its income can be brought to tax under the Act.

3 Whether reassessment on account of revision under section 263 is bad in law and liable to be quashed? 3.1 Complete Enquiry Conducted by the Learned Assessing Officer 3.1.1 In this case, the original assessment order passed under Section 143(3) was not an instance of non-application of mind or a failure to conduct inquiry. It is respectfully submitted that the Learned AO had conducted a detailed and exhaustive enquiry during the original assessment proceedings. A comprehensive questionnaire was issued to the Appellant containing 23 queries, including specific questions on accumulation of income under section 11(2), filing of Form No. 10, utilization of income, and treatment of corpus fund 3.1.2 The Appellant furnished detailed replies along with documentary evidence which were duly examined. After considering these submissions and after granting personal hearing, the Learned AO consciously accepted the returned income and passed the order under section 143(3) dated 27.09.2017. The Learned AO’s conclusion that "no adverse inference is being drawn" is not a mere formality but a clear statement that a conscious decision was made based on the material on record. 3.1.3 It is settled law that where the Learned AO has made enquiries and taken one of the possible views, the Learned Commissioner cannot invoke section 263 merely because he has a different opinion. The Hon’ble Supreme Court in CIT v. Max India Ltd. [295 ITR 282] held that when two views are possible and the Assessing Officer has taken one such view, revision under section 263 is not permissible. 3.1.4 Section 263 can be invoked only if the impugned assessment order is both erroneous and prejudicial to the interests of revenue. The twin conditions are conjunctive, satisfaction of only one does not permit revision. The record demonstrates that the AO carried out a detailed enquiry before passing the assessment. In particular, a comprehensive questionnaire (23 points) was issued and detailed replies were filed by the appellant during scrutiny. 3.1.5 The existence of detailed queries, the filing of written replies, and the conduct of personal hearing demonstrate application of mind by the AO. Where the AO has made specific enquiries and accepted the replies, it is not open to the Learned CIT to simply record a contrary view and label the AO’s order as “erroneous” unless there is a clear non-application of mind. The Ld. AO accepted the claims under section 11 and section 12 in the assessment dated 27.09.2017 after considering the material placed on record. Where an assessing officer, after enquiry, takes a view which is tenable on the material, such a view cannot be re- characterised as “erroneous” merely because the Learned CIT prefers an alternate conclusion. 3.1.6 In the present case, the Learned CIT, Exemptions has failed to demonstrate that the order was passed without enquiry. On the contrary, the records establish that full enquiries were made and the order was passed after due application of mind. Therefore, the allegation that the order was “erroneous and prejudicial to the interests of revenue” is factually incorrect and legally untenable.

3.2 It is not a case of “no enquiry” 3.2.1 The Learned AO has passed the Assessment order after taking into consideration all the relevant documents and evidence submitted during the course of Assessment proceedings. Thus, it is not a case of no enquiry. Following are the case laws that place light on the fact that “An enquiry made by the Assessing officer, considered inadequate by the commissioner, cannot make the order of Assessing officer inadequate” a) In the Supreme Court, in the case of Commissioner of Income-tax, LTU v. Nuclear Power Corporation of India Ltd (2022) 138 taxmann.com 332, High Court by impugned order held that Commissioner was not justified in revising order, particularly when in order passed by Commissioner, there was no mention as to under which category of Explanations (a) to (k) of section 115JB(2) these four items would fall, A special leave petition was preferred by the Revenue against the said order which was accordingly dismissed. The order of Supreme court read as follows- “We have some reservations on the observation made in the impugned judgment that the Commissioner, while exercising the power of revision under section 263 of the Income-tax Act, 1961, cannot examine an issue on merits. - However, we are not inclined to issue notice as we find that on merits, the order passed by the Commissioner under section 263 of the Income-tax Act, 1961 is not sustainable. (Emphasis supplied by us) b) In the Jurisdictional ITAT Chandigarh Bench, in the case of Krypton Datamatics Ltd. V. DCIT, Central Circle, Patiala, 65 taxmann.com 324, Hon’ble commissioner passed a revisional order u/s 263 of the Act stating that the Ld. AO even after observing that TDS was required to be deducted from the said payments, AO had not invoked the provisions of section 40(a)(ia) of The Act, but however the said issue was raised by the Assessing officer during the course of Assessment proceedings, to which the Appellant has duly submitted his reply. The tribunal held that – “The fact that the Assessing Officer in his order did not mention these investigations made by him does not itself make his action illegal. He may not have referred to these documents may be because he was convinced that no disallowance is called for. Therefore, in such a scenario, on the facts and circumstances of the case, there is no error in the order of the Assessing Officer. In this case, the Commissioner had tried to read too much from the mind of the Assessing Officer. Once, one reaches to a conclusion that provisions of section 40(a)(ia) are not applicable on the facts and circumstances of this case, whatever was going through in the mind of the Assessing Officer at that time, it is a fact that he has reached to a correct conclusion.” (Emphasis supplied by us) c) In the High Court of Allahabad, in the case of CIT v. Krishna Capbox (2015) 60 Taxmann.com 243, Hon’ble CIT held that AO had not enquired into certain matters and the order has been passed without application of mind. Appellant has submitted his reply stating that the AO has enquired into the matters addressed by CIT to which reply has been duly filed by Appellant. The order of CIT was challenged by Appellant in ITA No. 3340/DEL/2013. The tribunal further investigated and as a matter of fact, found that this defense on part of CIT factually incorrect and contrary to record. The relevant portion of the decision taken by Tribunal is as under – “Inviting our attention to the order under section 263, the learned authorized representative submitted that as per paragraph 3 of the order the learned Commissioner of Income-tax from the assessment records had observed that the Assessing Officer had not carried out any investigation with regard to the queries as contained in sub-paragraphs (a) to (f) of paragraph 3 but in fact the Assessing Officer had investigated all these points and in this respect, our attention was invited to paper book pages 21-39 wherein the documents relating to the reply filed with the Assessing Officer, vide letter dated September 20, 2010, was placed. Similarly, our attention was invited to paper book pages 40-86 wherein reply relating to query at (b) in respect of sundry creditors was placed. Similarly, pages 109- 124 were referred to highlight that the query regarding unsecured loan was also made by the Assessing Officer and in reply, necessary confirmations were filed. As regards the observation of the Commissioner of Income-tax as contained in paragraph (d), the learned authorized representative took us to pages 125-166 of the paper book to highlight that the same was also replied to the Assessing Officer. Similarly, he took us to copy of Form 2 filed with the Registrar of Companies for the allotment of shares was placed. It was submitted that no share application money was raised during the year and it was only the share applicants of earlier year who were allotted shares during the year. As regards point (e), the learned authorized representative took us to pages 175-211 wherein a copy of the letter dated October 5, 2010, submitting details of freight and cartage were placed. Regarding difference in creditors as observed by the learned Commissioner of Income- tax at point (f), the learned authorized representative submitted that the difference was already explained to the Assessing Officer, vide letter dated September 20, 2010, placed at paper book pages 40-41 and in this respect, we were taken to paper book page 41 where the necessary explanation was placed." (Emphasis supplied by us) The Tribunal further, considering relevant judgements held that once the enquiry was made, a mere non- discussion or non- mention thereof in the assessment order cannot lead to assumption that AO did not apply his mind or AO has not made inquiry on the subject and this would not conclude that the order passed by AO be called for revision under section 263 of The Act, 1961.

3.3 Non- fulfillment of Twin Conditions under Section 263 3.3.1 For invoking jurisdiction under section 263, two conditions must be simultaneously satisfied: (i) the order must be erroneous, and (ii) it must be prejudicial to the interests of the revenue. If either of the conditions is not satisfied, recourse to section 263 cannot be taken. 3.3.2 In the present case, the order of the Learned AO is neither erroneous nor prejudicial. It is not erroneous because the Learned AO conducted full enquiry, considered all relevant facts, and took a plausible view. It is not prejudicial to the revenue because even if funds were accumulated, the law under section 11(2) specifically permits such accumulation subject to conditions, which the Appellant duly complied with. The Learned CIT, Exemptions has not brought any material on record to show actual prejudice to the revenue. It is a settled law that every loss of revenue cannot be treated as prejudice, unless the order is also erroneous. 3.3.3 Therefore, the impugned order fails the basic jurisdictional test under section 263 and is liable to be quashed. 3.3.4 The Hon’ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (243 ITR 83) has laid down the twin requirements of section 263: the order must be both erroneous and prejudicial to the Revenue. Where the AO has made enquiries, considered replies, and adopted one of the possible views, the assessment cannot be held erroneous merely because the Commissioner does not agree. Therefore, the impugned order fails the very test of law and deserves to be quashed. The copy of the order, form part of the Judicial Paperbook from Page No. 4-8.

3.4 Misappreciation of Exemption under Section 11 and the Nature of Appellant’s Activities 3.4.1 The Appellant is a statutory board constituted under the Building and Other Construction Workers Welfare Cess Act, with the primary object of providing relief to poor workers engaged in construction activities. The Appellant has been granted registration under section 12AA by the Learned Commissioner of Income-tax (Panchkula), pursuant to directions of the Hon’ble ITAT itself. The activities of the Appellant fall within the section 2(15) of the Act. 3.4.2 The Appellant had also demonstrated before the Learned Commissioner that its accumulation and utilization of funds were in conformity with section 11(2) and section 11(5). The funds were invested only in specified securities and utilized strictly in accordance with approved welfare schemes. The allegation of profiteering is misconceived because the Appellant, being a statutory welfare board, is mandated by law to accumulate and deploy funds as per government-approved schemes. Thus, the view taken by the Learned AO was legally correct and cannot be substituted under revisionary powers. 3.4.3 The appellant respectfully submits that the Learned CIT, Exemptions has failed to appreciate the statutory framework governing charitable trusts. The Learned AO, while completing the assessment for Assessment Year 2015- 16, duly examined the appellant’s claim under Sections 11 and 12 after calling for detailed information regarding accumulation, utilization and the filing of Form No.

10. Identical forms and wording had been consistently accepted in earlier scrutiny assessments, including Assessment Years 2012- 13 and 2013-14, after full enquiry. Thus, the approach of the Learned AO was in conformity with past practice and established principles of law. 3.4.4 The Learned CIT, Exemptions has criticized the Appellant on the ground that it applied only a small percentage of its receipts during the year and accumulated nearly 85% of the funds, that Form No.10 filed by the Appellant did not specify purposes clearly, and that investments of surplus funds were not in accordance with section 11(5). These findings are factually incorrect and legally untenable. The Appellant is a statutory Welfare Board constituted under law and is entrusted with large inflows of cess collections which, by the very nature of its functioning, must be accumulated until they are disbursed under specific welfare schemes sanctioned by the State Government. The Learned CIT, Exemptions, however, has erroneously proceeded on the footing that the quantum of accumulation (85%) by itself renders the order erroneous. This conclusion is contrary to the statutory mandate of Section 11(2), which specifically permits accumulation for a period of up to five years, subject to prescribed conditions. Equally, Section 11(5) mandates investment of accumulated funds only in approved securities, which the appellant has strictly complied with. Mere accumulation within the statutory framework cannot be construed as evidence of profiteering or misapplication of income. 3.4.5 It is respectfully submitted that the principle of consistency and legitimate expectation applies squarely to the appellant’s case. When similar Form No. 10 filings and patterns of accumulation were duly accepted in scrutiny assessments of earlier years, the same cannot be retrospectively invalidated without cogent reasoning or material evidence. The failure of the Learned Commissioner to recognize this settled position has resulted in a misapplication of law. 3.4.6 Accordingly, the invocation of revisionary powers under Section 263 on this issue is unsustainable and deserves to be quashed.

3.5 Ld. Commissioner proceeded on disputed / incomplete facts instead of directing AO to verify 3.5.1 It is respectfully submitted that the Learned CIT, Exemptions erred in treating the original assessment order as erroneous on the ground that certain annexures, particularly “Annexure-A” to the appellant’s reply (relating to Query No. 9), were not found on the assessment record. The appellant had categorically submitted that all supporting annexures and balance sheets were duly furnished during the course of assessment proceedings, and the Learned AO had available with him the necessary financial and basic records while framing the order. 3.5.2 If at all there was any doubt as to completeness of records, or if any annexure was not traceable on file, the correct course of action was to remit the matter to the Assessing Officer for verification of such material or to call for original documents from the appellant. Instead, the Learned CIT, Exemptions proceeded to cancel the assessment outright. Such cancellation, based merely on an alleged absence of annexures in the file, is wholly disproportionate and inconsistent with the statutory mandate of Section 263. 3.5.3 It is a settled principle of law that the power under Section 263 is supervisory in nature, and is not to be exercised as an appellate power to re-assess disputed facts or to embark on a fresh fact-finding mission. The Hon’ble Courts have consistently held that if the record is incomplete or additional verification is required, the Commissioner can direct such verification but cannot presume adverse facts or cancel a valid assessment on that basis. By doing so, the Learned CIT, Exemptions has travelled beyond the permissible scope of revisionary jurisdiction and has violated the principles of fair procedure. 3.5.4 Accordingly, the invocation of Section 263 on the basis of disputed or incomplete facts, without directing verification by the Assessing Officer, is bad in law and the impugned order deserves to be quashed.

3.6 The Order 263 contains internal contradictions and reliance on other years is misplaced 3.6.1 The Learned CIT, Exemptions erred in invoking revisionary jurisdiction under section 263 by placing reliance on adverse findings recorded in other assessment years (AYs 2014–15, 2016–17 and 2017–18) to justify revision for AY 2015–16. It is respectfully submitted that such reliance is legally misplaced, as the record for AY 2014–15 was already available before the Learned AO at the time of completing the assessment for AY 2015–16. The Learned AO had the benefit of the earlier record and, after examining the material and submissions of the Appellant, consciously accepted the position. The impugned 263 order fails to demonstrate how such reliance renders the AY 2015–16 assessment order erroneous in law. 3.6.2 It is settled law that the scope of revision under section 263 is confined to the record of the year under consideration. A divergence in findings across years, without more, does not ipso facto render the order erroneous. Further, where two views are reasonably possible and the AO has taken one such plausible view after due enquiry, the power under section 263 cannot be invoked merely because the CIT prefers a different view. 3.6.3 The impugned order also suffers from internal contradictions inasmuch as it quotes the binding principle laid down in Malabar Industrial Co. Ltd. v. CIT [243 ITR 83]—that both error and prejudice must co-exist—but fails to apply this principle to the facts of the case. The invocation of revisionary jurisdiction in such a manner is contrary to law, arbitrary, and liable to be set aside.

3.7 Violation of Principles of Natural Justice 3.7.1 It is respectfully submitted that the Learned CIT, Exemptions failed to properly consider the detailed replies and submissions made by the Appellant. The Appellant had specifically drawn attention to binding precedents, to statutory registration under section 12AA, and to earlier assessments where similar Form No. 10 filings were duly accepted. However, the impugned order proceeds as if no such submissions were made, thereby violating the principles of natural justice. 3.7.2 The Hon’ble Courts have consistently held that revisionary orders must be reasoned and must deal with the submissions of the Appellant. Failure to do so vitiates the order. In the present case, the Learned Commissioner has passed the order in a mechanical manner without addressing the Appellant’s detailed factual and legal submissions. This renders the order unsustainable in law.

3.8 Jurisdictional Error Due to Improper Identification of the Assessment Order 3.8.1 At the very outset, it is respectfully submitted that the foundation of jurisdiction under section 263 lies in the proper identification of the assessment order sought to be revised. In the present case, the notice under section 263 as well as the impugned order repeatedly make reference to an assessment order dated 26.07.2017. However, as a matter of record, no such assessment order exists.

The only valid and subsisting order passed for the assessment year 2015-16 is the order dated 27.09.2017 passed under section 143(3) of the Act. By referring to a non-existent order, the Ld. CIT, Exemptions has sought to revise something which in law does not exist. Jurisdictional errors of this nature go to the very root of the matter and vitiate the proceedings ab initio. 3.8.2 This position is fortified by judicial pronouncements which have consistently held that jurisdictional defects strike at the root of revisionary powers. Thus, the reference to a non-existent order renders the entire proceedings void and unsustainable in law. 3.8.3 The Appellant had specifically brought this jurisdictional defect to the notice of the Learned CIT, Exemptions during the course of section 263 proceedings. However, without addressing this fundamental objection, the impugned order has been passed, which amounts to violation of principles of natural justice. 3.8.4 Accordingly, the Appellant submits that the impugned order under section 263 suffers from a jurisdictional defect and is therefore liable to be quashed on this preliminary ground alone, without going into the merits of other issues. 4 Prayer In light of the above detailed submission, the Appellant respectfully prays that the Hon’ble Tribunal may be pleased to quash the impugned order passed u/s 263 of the Income-tax Act, 1961, and grant such other relief as may be deemed just and appropriate in the interest of justice.

…… 3.11 Furthermore perusal of assessment record for A.Y. 2015-16, it was observed that the assessee had receipts amounting to Rs. 261,36,62,256/- in the nature of 'cess'. These receipts were covered under 4th limb of section 2(15) of the Act i.e. advancement of any other object of general public utility. Since the major receipts of the assessee were 'cess receipts' far exceeding 20% of the total receipts as per provisions of section 2(15), the tax exemption was not allowable. Section 2(15) of the Act reads as under:

(15) "charitable purpose" includes relief of the poor education, medical relief, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade. commerce or business, or any activity of rendering any service in relation to any trade. commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: The assessee is covered under 'advancement of any other object of general public utility in section 2(15) of the Act and if activities of any Institution/Trust/Society under the fourth limb i.e, 'the advancement of any other object of general public utility are in the nature of trade, commerce or business for cess or fee (who have 10 Lakhs or more receipts in the previous year) are not eligible to continue with registration u/s12A and the same is required to be withdrawn. The monetary limit was raised from Rs. 10 lakhs to Rs. 25 lakhs w.e.f. 01.04.2012. The monetary limit is further revised w.e.f. 01.04.2016 vide Finance Act, 2015 and cut off benchmark is changed from Rs. 25 lakh to 20% of the total receipts. This monetary benchmark of 20% of the total receipts is applicable in the year. Therefore, the benefit of section 11 of the Act was wrongly allowed by the assessing officer on incorrect assumption of facts, as well as an incorrect application of law that too without application of mind.