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Facts
The assessee, a subsidiary of BSE, contributed Rs. 22,56,00,000/- to the Core Settlement Guarantee Fund (CSGF). The Assessing Officer (AO) disallowed this contribution, treating it as a contingent reserve. The CIT(A) confirmed the AO's order. The assessee appealed against this disallowance and other issues related to the assessment year 2018-19.
Held
The Tribunal noted that the issues involved were common to other assessment years and were pending adjudication before the CIT(A). Both the assessee's counsel and the Revenue's representative agreed to set aside the impugned order and restore the matter to the CIT(A) for fresh adjudication.
Key Issues
Whether the disallowance of contribution to CSGF was justified, and whether procedural irregularities in the assessment process occurred.
Sections Cited
143(3), 144B, 72, 115, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI “C” BENCH : MUMBAI
Before: SHRI VIKRAM SINGH YADAV & SHRI SANDEEP SINGH KARHAIL
Assessment Year : 2018-19 Indian Clearing Corporation Deputy Commissioner of Ltd., Income Tax, 25th Floor, P.J. Tower, vs. Circle-1(2)(1), Dalal Street, Fort, Aayakar Bhavan, Mumbai-400001. Mumbai-400020. PAN : AABCI7140K (Appellant) (Respondent) For Assessee : Shri Niraj Sheth a/w. Ms. Niyati Parikh For Revenue : Shri R.A. Dhyani, CIT-DR Date of Hearing : 09-02-2026 Date of Pronouncement : 18-02-2026 O R D E R PER VIKRAM SINGH YADAV, A.M :
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 11-08-2025, pertaining to Assessment Year (AY) 2018-19, wherein the assessee has taken the following grounds of appeal:
1. On the facts and circumstances of the case and law the learned Commissioner of Income tax (Appeals), NFAC erred in confirming the order passed by the learned Assessing officer, even though the learned Assessing Officer had not adhered to the provisions of Faceless Assessment Scheme 2019 breach of principles of national justice which are engrafted in the said scheme.
2. On the facts and circumstances of the case and law the learned Commissioner of Income tax (Appeals), NFAC erred in considering the case of the appellants as that of a "reopening of assessment" when issue of "reopening of assessment" was never involved.
3. On the facts and circumstances of the case and law the learned Commissioner of Tax (Appeals), NAFC failed to consider that assessment order dated 07/09/2021 was passed based on the order passed for Assessment Year 2017-2018.
4. On the facts and circumstances of the case and law the learned Commissioner of Income tax (Appeals), NFAC erred in confirming the disallowance of Rs.22,56,00,000/- being contribution made to Core Settlement Guarantee Fund (CSGF) on the ground that the said contribution to CSGF was in the nature of Contingent Reserve, the meet contingent liability of Stock Exchange and the Clearing Corporation.
5. On the facts and circumstance of the case and law the learned Commissioner of Income tax (Appeals), NFAC erred confirming that the learned Assessing Officer has correctly followed the provisions of section 72 of the Act by not setting of the balance carried forward loss of Rs.40,57,88,638/- stated in CFL of ITR 6 against the current year's income from business.
On the facts and circumstances of the case and law the learned Commissioner of Income tax (Appeals), NFAC erred in confirming the order of Assessment Officer of not granting credit of Dividend Distribution tax (DDT) paid of Rs.7,37,50,973/- shown in Schedule DDT of ITR 6 and charging of interest of Rs. 1,66,40,041/- u/s.115 of the Act in spite of the fact that DDT was paid in time. 7. The appellant craves leave to add, delete, withdraw and/or modify any one/more or all the above grounds of appeal on or before the date of final hearing.”
2. Briefly, the facts of the case are that the assessment in this case was completed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 („the Act‟), vide order dt. 07-09-2021, wherein the AO has disallowed the contribution made by the assessee to Core Settlement Guarantee Fund (CSGF) amounting to Rs. 22,56,00,000/- claimed by the assessee. The assessee thereafter carried the matter in appeal before the Ld.CIT(A), who has since confirmed the findings of the AO and against the said order, the assessee is in appeal before us.
During the course of hearing, the Ld.AR submitted that assessee is a wholly owned subsidiary of BSE, which was incorporated to facilitate, set up and carry on the business of clearing and settlement of securities as defied under Securities Contracts (Regulation) Act, 1956 and is a recognized clearing corporation. It was submitted that it filed its return of income, wherein it has claimed contribution to the Core Settlement Guarantee Fund amounting to Rs. 22,56,00,000/-, which was disallowed by the AO. It was submitted that the assessee was issued a show cause dt. 02-09-2021 alongwith draft assessment order and the assessee was asked to show cause as to why the assessment should not be completed as per the draft assessment order and the assessee was asked to response on or before 06-09-2021. It was submitted that given the prevailing Covid-19 situation, it was very difficult to prepare written submissions in the given short span of four days out of which 4th and 5th September being Saturday and Sunday, accordingly, the assessee moved an adjournment letter asking time to furnish its response by 21-09-2021. However, without rejecting or considering the adjournment application so submitted by the assessee, the AO proceeded and passed the assessment order on 07-09- 2021 u/s. 143(3) r.w.s. 144B of the Act by following the order passed in the earlier assessment year i.e., AY. 2017-18.
It was submitted that the assessee thereafter carried the matter in appeal before the Ld.CIT(A), and the Ld.CIT(A) has disposed-off the assessee‟s appeal for the impugned AY. 2018-19 whereas the appeal for AY. 2017-18 is still pending adjudication before the Ld.CIT(A), wherein identical disallowance has been made by the AO and basis which the addition has been made in the impugned assessment year. It was further submitted that the Ld.CIT(A) has passed the impugned order considering the case of the assessee as that of the re-opening of the assessment whereas the issue of re-opening assessment was not involved for the year under consideration. It was submitted that detailed written submissions filed by the assessee in respect of disallowance of contribution to Core Settlement Guarantee Fund was not considered by the ld CIT(A). It was further submitted that there are certain other observations and the findings recorded by the Ld.CIT(A) and our reference was drawn to para 5.2 of the impugned order, wherein the Ld.CIT(A) has referred to additions u/s. 69A of the Act which was not subject matter of appeal before the Ld. CIT(A). It was submitted that there are other grounds relating to setting- off of the brought forward business losses as well as non-grant of credit of Dividend Distribution Tax (DDT) in respect of which there is no finding in the assessment order, however, the same arises out of the computation of income forming part of assessment order and in respect of which the assessee has raised specific grounds of appeals and relevant facts were brought on record which again has not been properly appreciated by the by the Ld.CIT(A). It was further submitted that given that the matter relates to AYs. 2015-16, 2016-17 and 2017-18 involving common issues are pending adjudication before the Ld.CIT(A), the impugned order may also be set aside to the file of the Ld.CIT(A) for fresh adjudication.
5. Per contra, the Ld. DR has been heard, who has fairly submitted that the AO has followed the assessment order for AY. 2017-18 and where the matter for 2017-18 is pending adjudication before the Ld.CIT(A), the Revenue has no objection where the subject matter is set aside to the file of the Ld.CIT(A) for fresh adjudication.
We have heard the rival contentions and perused the material available on record. Considering the limited prayer so raised by the Ld.AR on behalf of the assessee and which has not been objected to by the Ld.DR, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the Ld.CIT(A) for deciding the same afresh as per law after providing reasonable opportunity to the assessee. We also direct the assessee to fully co-operate with the Ld.CIT(A) for expeditious disposal of the matter and is at liberty to file necessary explanation/documentation as so advised.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 18-02-2026
Sd/- Sd/- [SANDEEP SINGH KARHAIL] [VIKRAM SINGH YADAV] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 18-02-2026 TNMM Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, ITAT, Mumbai 5) Guard file
By Order
Dy./Asst. Registrar I.T.A.T, Mumbai