SHRI MOTILAL NAGAR SMRITI SHIKSHAN SAMITI,INDORE vs. CIT EXEMPTION, BHOPAL

Feeling aggrieved by revision-order dated 25.03.2025 passed by learned CIT (Exemption), Bhopal [“CIT(E)”] u/s 263 of Income-tax Act, 1961 [“the Act”] which in turn arises out of assessment-order dated 09.09.2022 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 143(3) r.w.s. 144B of the act for Assessment-Year [“AY”] 2020-21, the assessee has filed this appeal on the grounds raised in Appeal-Memo (Form No. 36).

The background facts leading to present appeal are such that the assessee, a trust engaged in charitable purpose and entitled to exemption u/s 11/12 of the Act, filed return of income of relevant AY 2020-21 u/s 139(4A) which was subjected to scrutiny-assessment and the AO completed assessment u/s 143(3) vide assessment-order dated 09.09.2022.

Ld. AR for assessee carried us to impugned order of revision and demonstrated that there is one single issue for which the Ld. CIT(E) undertook revision. The CIT(E) has noted that the assessee accumulated income of Rs. 1,59,80,555/- but filed Form No. 9A [prescribed under Clause 2 of Explanation-1 to section 11(1) for securing accumulation for spending in next year] instead of Form No. 10 [prescribed under section 11(2) for securing accumulation for a longer period of 5 years]. He further observed that the assessee did not file Form No. 10B (Audit Report) of next AY 2021- 22 to show as to whether the accumulated income was spent or not in next year. He further observed that although the assessee filed Form No. 10 to AO on 15.04.2022 during assessment-proceeding, after a delay of 365 days, but the assessee did not file any approval granting condonation of delay by Page 2 of 6 CBDT u/s 119 and yet the AO has allowed benefit of accumulation to assessee and not made disallowance/addition of Rs. 1,59,80,555/- which was required to be made. Therefore, the assessment-order passed by AO is erroneous-cum-prejudicial to the interest of assessee and the CIT(E) has invoked revisionary jurisdiction.

Having explained thus, Ld. AR carried us to Page 70 of Paper-Book where the AO raised a specific query No. 16 in the notice dated 02.11.2021 issued to assessee u/s 142(1) qua the impugned accumulation of Rs. 1,59,80,555/- claimed by assessee. Then, Ld. AR carried us to Pages 71 to 78 of Paper-Book where a copy of reply-letter filed by assessee to AO on 05.05.2022 is placed. In Para No. 16 of this reply-letter, the assessee furnished the evidence of filing Form No. 10 on 15.04.2022 to AO. Further, the assessee also made a submission that the Form No. 9A was filed mistakenly and that to correct that error, the assessee had already filed Form No.

The assessee further submitted certain judicial rulings to AO wherein it was held that the delayed filing of form was a procedural ir- regularity and for that reason alone, the substantive benefit of accumulation sought by assessee cannot be denied. Ld. AR submitted that the AO considered this cogent submission of assessee and thereafter, while passing assessment-order, allowed benefit of accumulation and did not make any disallowance/addition as questioned by Ld. CIT(E). Therefore, there is no error in the order of AO and no prejudice has been caused to revenue. Hence, the revision-order passed by Ld. CIT(E) is not warranted and must be Page 3 of 6 quashed.

Per contra, Ld. DR for revenue submitted that the AO has not conducted a proper enquiry on the issue. He submitted that the AO has simply kept the reply submitted by assessee in file and not dealt the same with application of mind which is evident from the fact that the AO has passed a very summarised/cryptic order. Ld. DR also filed a gist of case-laws compilation holding that where the AO has passed cryptic order without making adequate enquiry, the order passed by AO attracts revisionary jurisdiction u/s 263.

We have considered rival contentions of both sides and perused the impugned order as well as the material held on record to which our attention has been drawn. On a careful consideration of various documents placed in Paper-Book, as noted in the foregoing discussion, we find that during the course of assessment-proceeding, there was a specific query raised by AO with regard to the issue contemplated by Ld. CIT(E) and the assessee filed a detailed reply to AO. To this extent, there is no dispute or rebuttal by revenue. Coming to substantive issue raised by Ld. CIT(E) that there was a delay in filing Form No. 10 by assessee, we find that the assessee has initially filed Form No. 9A mistakenly and during scrutiny-proceedings before completion of assessment itself, the assessee has rectified mistake and filed Form No. 10 correctly required as per law. Thus, the mistake stands rectified before passing of assessment-order by AO. Even otherwise, there are numerous holdings in the context of forms required to be filed under various

In view of above discussion and for the reasons stated therein, we are persuaded to hold that in present case, the AO’s order granting benefit of accumulation to assessee on the basis of Form No. 10 filed during assessment-proceedings was a valid order and the same cannot be considered as erroneous or prejudicial to the interest of revenue. Therefore, the invocation of revisionary power u/s 263 by Ld. CIT(E) is not warranted.

Resultantly, this appeal is allowed.