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Facts
The assessee, an educational trust, earned income from various sources and filed its return. The AO framed the assessment, and later the CIT(E) issued a revision order under Section 263, holding that the assessment order was passed without proper inquiries into donations made by the trust.
Held
The Tribunal found that the AO had conducted a full inquiry into the donations made by the assessee to other educational trusts. The CIT(E) incorrectly invoked Section 263 as there was no lack of inquiry and the donations were not found to be not genuine.
Key Issues
Whether the CIT(E) was justified in invoking Section 263 to revise the assessment order for alleged lack of proper inquiry regarding donations made by the assessee trust.
Sections Cited
263, 143(3), 144B, 143(2), 142(1), 11, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI
Before: SHRI MAHAVIR SINGH & SMT. RENU JAUHRI
Date of Hearing 13.1.2026 Date of Pronouncement 13.1.2026 ORDER PER MAHAVIR SINGH, VP:
This appeal by the assesse is arising out of the revision order passed by the Ld. CIT Exemption, Lucknow u/s. 263 of the Income Tax Act, 1961 (hereinafter referred the “Act”) vide his order dated 29.3.2025 for the assessment year 2020-21. Assessment was framed by the AO, NFAC for the assessment year 2020-21 u/s. 143(3) r.w.s. 144B of the Act vide order dated 17.9.2022.
The only issue in this appeal of assessee is against the revision order passed by the CIT Exemption, Lucknow u/s. 263 of the Act by holding that assessment order is passed without making proper enquiries and directed to examine the objections of the donee trusts.
Brief facts of the case are that the assessee is an educational trust and during the year under consideration the trust has earned income from academic fee, non-academic fee and income from other sources. The assessee filed its return of income for the relevant assessment year 2020-21 on 12.12.2020 and assessee’s case was selected for complete scrutiny assessment with the following reasons:- i) Expenditure for Charitable or Religious Purposes. ii) Accumulation of Income by Trust.
3.1 Accordingly, notice u/s. 143(2) of the Act dated 29.6.22021 was issued for the details. Subsequently, notice u/s. 142(1) of the Act dated 3.1.2022 was issued and particularly the question regarding the donations made by the assessee was required to be explained vide Question No. 11 as under:- “11. Please provide the details and documentary evidence (like Name, PAN, address, bank account statement, ledger copy, confirmation etc.) of the donation of Rs. 8,09,84,000/- made by your trust during the F.Y. 2019-20. Please also provide the approval of the board of trustee of such donation. Please also furnish the source of the such donation. Please further specific the relation of your trust with Donee/trustee (recipient of the donation) if any.”
3.2 Further vide notice u/s. 142(1) dated 1.9.2022, the assessee was required to give details of donee trusts vide Question No. 2 as under:- “2. In your submission you have stated that, your Trust has given donation to Centre for Advance Education to the tune of Rs. 6 crores, Mohendra Nath Memorial Trust to the tune of Rs. 2 crores and Arya Samaj Hanuman Road of Rs. 9,84,000/-.
In this respect, you are requested to furnish list of General Body Members as on 1.4.2019 in the following format:- (a) Centre for Advance Education : Sl Name PAN Address Designation No.
(b) Mahendra Nath Memorial Trust : & Sl Name PAN Address Designation No.
(c )Arya Samaj Hanuman Road Sl Name PAN Address Designation No.
3.3 Again vide show cause notice dated 9.9.2022, the AO required the assessee to furnish the following details vide Question Nos. 3 & 4 as under:- “3. Accordingly, notices under section 143(2) of the I.T. Act was issued on 29.06.2021 and subsequently issued notices u/s. 142(1) of the I.T. Act issued from to time. The assessee has furnished partial details as called for. On perusal of the submission, it is revealed that that assessee trust has given donation to Centre for Advance Education to the tune of Rs. 6 Crores, Mohendra Nath Memorial Trust to the tune of Rs. 2 crores and Arya Samaj Hanuman Road of Rs. 9,84,000/-.
In this regard, vide this office notice u/s. 142(1) dated 01.09.2022, the assessee was asked to furnish certified copy of latest Registration Certificate u/s. 12AA, approval u/s. 80G and Notification u/s. 10(23C)/Exemption under any section of I.T. Act, 1961 if any. Please also state whether the Registration / approval notification was withdrawn? The Assessee was also requested to furnish the list of General Body Members as on 1.4.2019 comprising Name, Address, PAN No. of Centre for 3
Advance Education, Mohendra Nath Memorial Trust and Arya Samaj Hanuman Road (the done trust) for verification whether there is substantial interest of the donor trust.”
3.4 Assessee vide reply dated 10.7.2021 explained to the AO by filing the details of expenditure, balance sheet, Form no. 10BB, exemption certificate u/s. 12AA, assessee registration certificate, assessee Memorandum etc. and complete computation claiming deduction and exemptions. The assessee vide reply dated 5.9.2022 filed complete details in regard to these three trusts to whom the assessee has given donations with the list of General Body Members as on 14.1990 in Centre for Advance Education; Mahindra Nath Memorial Trust and Arya Samaj Hanuman Road. It is noted that the assessee itself disallowed the donation of RS. 9,84,000/- donation given to Arua Samaj Hanuman Road and for this he in reply admitted as under:- “(c) Arya Samaj Hanuman Road Since Institute of Management Technology, Centre for Distance Learning, A Unit of General Education Society, had used the premises of Arya Samaj Hanuman Road, and giving Donation to them on monthly basis. Hence, we do not have the details of their General Body members. However, donation given to them was accepted as donation by Arya Samaj Hanuman Road and accordingly the same was treated as donation in the books of the assessee. We are disallowing this donation of Rs. 9,84,000/- in our return of income.” 3.5 The same reply was reiterated vide letter dated 13.9.2022 by observing as under:-
“You are disallowing the donation made to Arya Samaj Hanuman Road to the tune of Rs. 984000/- and added to our returned income. In this regard we have to state that we had already not claimed this above said donation of Rs. 984000/- in our return of income. We had reduced from our expenditure (utilization of fund) the amount of Rs. 984000/-. The computation of income of AY 2020-21 is enclosed herewith in which we already disallowed this amount. So you may verify the fact from our computation of income.”
3.6 The AO after considering the genuineness of the donations made, passed the assessment order making no disallowance except the disallowance offered by the assessee in regard to Arya Samaj Hanuman Road of Rs. 9,84,000/-. Subsequently, the AO after Revenue’s audited objection issued notice u/s. 154 of the Act vide dated 15.1.2025 whereby the AO was of the view that there is a mistake apparent from record in the assessment order while allowing the deduction/exemption in regard to donations amounting to Rs.8,09,84,000/-. The AO recorded this fact in the notice issued u/s. 154 of the Act vide para no. 2 and 3 as under:- “2. The assessment proceedings u/s. 143(3) of the Income Tax Act, 1961 have been completed on 26.9.2002 on total income on NIL. During examination of case records, it has been found by the RAP that the assessee has given donation amounting to Rs. 8,09,84,000/- to the other trust which should be disallowed and added back to the income…..
Keeping in view the above, it is clear that there is a mistake apparent from record in tax/surcharge computation, hence, the same is proposed to be rectified as per details mentioned preceding para.”
3.7 The assessee replied this rectification notice u/s. 154 of the Act vide letter dated 22.01.2025 and claimed that the donations of Rs. 8,09,84,000/ have been given to the educational institutions (the above noted trusts) for 5 the same object of education and its allowable deduction and therefore, remaining sum of Rs. 9,84,000/- has already been disallowed and added to the returned income. So, all points relating to donations have been taken into consideration and discussed. In the meantime, CIT (E) issued show cause notice dated 20.3.2025 for revising the assessment u/s. 263 of the Act and the relevant para 3 and 4 of the said show cause notice reads as under:- “3. A perusal of the records shows that the assessee Trust has given donation to Cente for Advance Education to the tune of Rs. 6 crore, Mohendra Nath Memorial Trust to the tune of Rs. 2 Crore and Arya Samaj Hanuman Road of Rs. 984000/-. It is observed that the donations are given to fulfill the expenditure limit for getting the exemption. Therefore, donation given by the trust to other trusts/firms should be disallowed and added back to the income of the assessee.
In view of the above facts, the assessment order passed by the Assessing Officer on 17.9.2022 is erroneous and prejudicial to the interest of revenue as no enquiry has been done and deserves suitable order u/s 263 of the Income Tax Act, 1961.” 3.8 From the above show cause notice the CIT(E) is of the view that the donations given to the above three trusts is for the purpose of fulfilling the expenditure limit for getting the exemption and therefore, according to him the donation given by the assessee trust to these three trusts should be disallowed and added back to the returned income of the assessee. It was noted by the CIT(E) that AO order is erroneous and prejudicial to the interest of revenue as enquiry has not been conducted. Consequent to the show cause notice, assessee filed the complete reply before the CIT(E) which is enclosed in Assessee’s Paper Book at Pages WS1 to WS 14 explaining the entire position as explained before the AO that all these trusts are educational trusts and donations given to these trusts falls under section 11 of the Act and therefore, allowable deduction/exemption for the purposes of computation to the extent of 100% of the donation. 3.9 The CIT(E) accordingly passed the revision order and the CIT(E) was of the view the AO has failed to examine the objects of the trust to which the donation has been given by the assessee. The CIT(E) stated the reasons in para 6.2 of his order which reads as under:- “6.2 Assessee trust has given donation amounting to Rs. 6,00,00,000/- to Centre for Advance Education and Rs. 2,00,00,000/- to Mahendra Nath Memorial Trust but AO has failed to examine the objects of the trust to which donation has been given by the assessee. Consequently, it is observed that the donations are given to fulfill the expenditure limit for getting the exemption. Hence, the AO is directed to examine the objects of the trusts. In my considered opinion, the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue. Hence, by invoking the provisions of section 263 of the Income Tax Act, the order passed by the Assessing Officer is liable to be revised as the order is passed without making proper inquiries or verification which should have been made.” 3.10 Accordingly, he revised the order and directed the AO to pass fresh assessment order, after obtaining a detailed reply and examination of the details as above.
Aggrieved, assessee came in appeal before the Tribunal.
We have heard the rival contentions and gone through the facts and circumstances of the case. We noted from the above details that the assessee in response to notice issued u/s. 143(2) dated 14.7.2021 and 142(1) dated 16.12.2021 and 1.9.2022 replied every notice and filed the details of these three trusts namely Central for Advance Education, Mohendra Nath Memorial Trust and Arya Samaj Hanuman Road to whom the assessee has made the donation of Rs. 6 crore; Rs 2 crore and Rs. 9.84 lacs respectively. The assessee before the CIT(E) submitted that the issue of donation specifically examined by the AO by issuing various notices and assessee replied by filing the following details in respect of these three trusts: a) Exemption certificate b) Society registration certificate, memorandum c)List of member d)List of trustee e) Trust deed, MOA of assessee and donees f) Certificate u/s. 12AA, 10(23) (C) and 80(G) g) Bank accounts of the assessee h) Accumulated Balance u/s. 11(2) invested in bank account i) Bank FDR and SBI Fund Management as per Section 11(5) j) Details of all donations of Rs.8,09,84,000/- along with documents such as name, address, PAN, donation receipts, ledger a/c, bank statement, board resolution 5.1 We have gone through the entire assessment records and paper book filed by the assessee consisting of 290 pages and noted that each and every evidences are relating to these three trusts is available which were filed by the assessee during the assessment proceedings on specific query raised by the AO. 5.2 The AO examined each and every query as replied by the assessee on various dates. In view of these facts and circumstances, we are of the considered view that this is not a case of lack of enquiry rather full enquiry was conducted by the AO and even the CIT(E) could not bring on record that the donation given is not genuine. In his revision order the CIT(E) should not have invoked the provision u/s. 263 of the Act in the given facts and circumstances as narrated above. It is noted that subsequently in the previous year similar donations given and accepted by the revenue. Accordingly, we set aside the revision order passed u/s. 263 of the Act of the Ld. CIT(E) and accordingly, allow the appeal of the assessee.
In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 13.01.2026.