Council For Fair Business Practices Vs ITO (ITAT Mumbai)
Summary: The appeal concerned an adjustment of ₹76,36,550 made by CPC while processing the assessee’s return under section 143(1) for Assessment Year 2023-24 and sustained by the learned CIT(A) as income taxable under section 115BBI.
The assessee, Council for Fair Business Practices (CFBP), is a non-profit organisation registered under section 12A and engaged in charitable objects relating to fair business practices and consumer interests. The dispute was confined to the taxability of ₹76,36,550 under section 115BBI.
The disputed amount arose from an accumulation of ₹86,82,812 made under section 11(2) in Assessment Year 2017-18. ₹10,46,266 had been utilised in Financial Year 2021-22, leaving ₹76,36,546, which the assessee stated was utilised during Financial Year 2022-23 relevant to Assessment Year 2023-24. The revised Form 10-BB electronically filed on 28.11.2023 recorded application of ₹76,36,546 out of income accumulated under section 11(2) in an earlier previous year.
The assessee explained that while preparing Schedule A of the return, ₹76,36,546 had correctly been shown as a source of funds available for application, but the corresponding application/expenditure figure was inadvertently not carried into the relevant field. This created a mismatch. At the same time, the assessee had shown income chargeable under section 115BBI as Nil in the relevant portion of the return.
CPC nevertheless treated ₹76,36,550 as taxable under section 115BBI. The CIT(A) sustained the adjustment, principally relying upon the reporting in the return and declining to rely upon a manually furnished Form 10-BB.
Before the Tribunal, the assessee contended that the disputed amount was not income generated during the relevant year and did not constitute “specified income”. It represented earlier income validly accumulated under section 11(2) and actually applied during the year. The Revenue supported the adjustment on the basis that it had arisen from information furnished by the assessee itself.
The Tribunal held that the starting point for applying section 115BBI is the existence of “specified income”. A mere figure appearing in a particular column, or an inconsistency between schedules, cannot by itself create substantive taxability. The underlying transaction and the statutory character of the amount must first be determined.
The Tribunal found that there was no finding that the earlier accumulation was invalid, that the conditions of section 11(2) had been violated, that the amount had remained unapplied beyond the permissible period, or that it had been used for non-charitable purposes or otherwise fallen within the statutory categories of specified income. Valid utilisation of an earlier section 11(2) accumulation for the stipulated charitable purposes was materially different from specified income contemplated by section 115BBI.
The Tribunal also noted that the CIT(A)’s order contained extraneous references to an “eligible unit”, “SEZ” profits and substantial business profits which had no connection with CFBP. Further, the CIT(A)’s conclusion that the amount was taxable “as per the declaration of the appellant” was inconsistent with the return, which expressly showed income chargeable under section 115BBI at Nil.
Relying, inter alia, upon Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 348 ITR 306 (SC), CIT v. Shelly Products [2003] 261 ITR 367 (SC), Balmukund Acharya v. Dy. CIT [2009] 310 ITR 310 (Bom.) and CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom.), the Tribunal held that an inadvertent reporting or computational error cannot independently create a tax liability where the substantive provisions do not otherwise make the amount taxable.
The Tribunal further held that the issue did not depend upon the admissibility of the subsequently furnished physical Form 10-BB because the relevant factual position was already discernible from the return, its schedules and the electronically revised Form 10-BB filed on 28.11.2023.
Accordingly, the Tribunal held that ₹76,36,546 represented earlier accumulated income under section 11(2) which had been applied during the relevant year and did not constitute specified income under section 115BBI. The finding of the CIT(A) was set aside and the Assessing Officer/CPC was directed to delete the adjustment of ₹76,36,550 made under section 143(1). The appeal was allowed.
Cases Discussed
- Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 348 ITR 306 (SC) — bona fide and inadvertent error in reporting does not by itself alter the substantive legal character of an amount.
- CIT v. Shelly Products [2003] 261 ITR 367 (SC) — tax liability must rest upon lawful authority and legitimate tax due.
- Balmukund Acharya v. Dy. CIT [2009] 310 ITR 310 (Bom.) — tax authorities are required to collect only legitimate tax legally due and should not take advantage of an assessee’s mistake or misconception.
- CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom.) — appellate authorities can entertain legitimate claims notwithstanding the manner in which they were presented at an earlier stage.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The aforesaid appeal has been filed by the assessee against the impugned order passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, arising out of the intimation dated 23.12.2024 issued by CPC, Bengaluru under section 143(1) of the Income-tax Act, 1961 (“the Act”) for the Assessment Year 2023-24. The solitary substantive grievance raised before us relates to the adjustment of ₹76,36,550 made while processing the return of income and bringing the said amount to tax under section 115BBI of the Act. The learned CIT(A) has affirmed the adjustment principally on the ground that the amount was liable to be taxed under section 115BBI as per the declaration made by the assessee itself in the return/audit report. The assessee has assailed this finding contending that the amount in question represents income accumulated under section 11(2) in an earlier year and duly applied for its charitable objects during the year under consideration, and that the adjustment has arisen solely on account of an inadvertent and demonstrable error in reporting the corresponding figures in one of the schedules to the return.
2. The assessee, Council for Fair Business Practices (“CFBP”), is a non-profit organisation incorporated under section 25 of the erstwhile Companies Act and is registered under section 12A of the Act. It was established in the year 1966 with the principal objects, inter alia, of promoting high ethical standards in business and professions, educating consumers regarding their rights and responsibilities, providing a mechanism for redressal of consumer grievances without recourse to litigation, and promoting a code of conduct amongst businesses for ensuring fair trade practices. Thus, broadly speaking, the assessee functions as a self-regulatory and consumer-oriented institution seeking to foster fair business practices and to provide an interface between consumers and the business community. Its charitable status as such is not in dispute before us and, significantly, neither the CPC nor the learned CIT(A) has questioned the genuineness of its activities or its entitlement to registration under section 12A. The controversy before us is confined exclusively to the taxability of ₹76,36,550 under section 115BBI.
3. The material facts bearing upon this controversy need to be examined in some detail because, in our opinion, the answer substantially emerges from the accounting and statutory trail of the disputed amount itself. The assessee filed its return of income for the year under consideration on 28.11.2023 declaring Nil income. The return was processed under section 143(1) and CPC, vide intimation dated 23.12.2024, computed the total income at ₹76,36,550 and consequently raised a demand of ₹25,95,690. The genesis of this adjustment lies in an accumulation made several years earlier. In Assessment Year 2017-18, the assessee had accumulated a sum of ₹86,82,812 under section 11(2) of the Act. Out of the said accumulation, an amount of ₹10,46,266 was utilised during Financial Year 2021-22 relevant to Assessment Year 2022-23. Consequently, a balance of ₹76,36,546 remained available out of the said accumulation, which, according to the assessee, was utilised during Financial Year 2022-23 relevant to the present Assessment Year 2023-24. The utilisation of the earlier accumulation during the year was not something subsequently conceived by the assessee after the adjustment had been made; it formed part of the disclosures made in the return and the audit material placed on record.
4. It is further borne out from the figures furnished before us that the assessee had income of ₹1,75,41,440 for the year under consideration. Against the said amount, it claimed application of ₹97,57,424 towards its objects, accumulation of ₹51,52,800 under section 11(2), and accumulation of ₹26,31,216 representing 15% of the income under section 11(1)(a). These three figures aggregate to ₹1,75,41,440. The assessee has also explained that the deduction/accumulation of ₹51,52,800 was inadvertently not reflected in the first audit report in Form 10-BB dated 31.10.2023 and, therefore, a revised audit report in Form 10-BB was electronically filed on 28.11.2023. More importantly for the controversy before us, the revised Form 10-BB records the application of ₹76,36,546 out of income accumulated under section 11(2) during an earlier previous year. Thus, the source, character and utilisation of the disputed amount are capable of being traced from the contemporaneous return and audit material itself.
5. The actual error which resulted in the impugned adjustment is equally important. While filling Schedule A of the return, the assessee correctly reflected ₹76,36,546 as a source of funds available for meeting its revenue and capital application, being income accumulated under section 11(2) in an earlier year. However, after bringing this amount into the source side of the computation, the corresponding amount was inadvertently not added to the figure of expenditure/application reflected on the other side. In other words, the accumulated income was correctly recognised as a source available for application during the year, but its corresponding utilisation was not appropriately carried into the relevant field of the electronic schedule. The result was a mismatch broadly corresponding to the very same sum of ₹76,36,546. The assessee has explained that although the gross application was ₹2,52,44,487, the return reflected only the net amount after the relevant adjustment, thereby creating an apparent difference between the source of funds and the application thereof. What assumes significance is that, elsewhere in the return, in Part B3 dealing with applicability of section 115BBI, the assessee itself had shown income chargeable under section 115BBI at Nil. Therefore, the return, when read as a whole, does not manifest any conscious declaration by the assessee that ₹76,36,546 constituted “specified income” chargeable under section 115BBI. What emerges instead is an internal inconsistency in the electronic reporting of the figures.
6. During processing of the return, CPC issued a communication pointing out an inconsistency in relation to section 115BBI, with reference to clause 33(c) of Form 10B. The assessee’s specific explanation was that the audit report applicable to it was Form 10-BB and not Form 10B and that the revised Form 10-BB electronically filed on 28.11.2023 correctly reflected the relevant position. However, the explanation did not find favour and the amount of ₹76,36,550 came to be brought to tax under section 115BBI while processing the return under section 143(1). Before the learned CIT(A), the assessee reiterated the factual reconciliation and also furnished a manually prepared Form 10-BB reflecting the figures according to it in their correct places. The learned CIT(A), however, declined to take cognizance of the manually furnished Form 10-BB on the ground that it had not been filed in accordance with the prescribed procedure and proceeded to sustain the adjustment.
7. Before us, learned counsel for the assessee took us through the return of income, the relevant schedules, the original as well as revised Form 10-BB and the reconciliation of the accumulation and application. Her principal submission was that ₹76,36,546 was not an item of income generated during the relevant previous year, much less an item falling within the ambit of “specified income” under section 115BBI. It represented the balance of an accumulation validly made under section 11(2) in Assessment Year 2017-18 and the said amount was actually utilised during the year under appeal. According to her, an inadvertent error in placing the corresponding application figure in the electronic return could not alter the intrinsic character of the amount or create a tax liability which otherwise did not arise under the substantive provisions of the Act. The learned Sr. DR, on the other hand, relied upon the orders of the authorities below and submitted that the adjustment was made on the basis of the information furnished by the assessee itself and, therefore, there was no infirmity in the action of CPC or in the order of the learned CIT(A).
8. We have heard the rival submissions and carefully perused the material placed before us. In our opinion, the controversy has to be examined first from the substantive statutory provisions rather than from the manner in which a particular figure happened to be populated in an electronic schedule. Section 115BBI is attracted where the total income of a trust or institution referred to therein includes income by way of “specified income”. The provision prescribes a special rate of tax on the aggregate of such specified income. Thus, the sine qua non for invoking section 115BBI is the existence of an item which answers the statutory description of “specified income”. The charge cannot arise merely because a figure appears in a particular column or because an inconsistency has crept into the return. The statutory character of an amount must first be ascertained from the underlying transaction and the substantive provisions governing it; the computational machinery thereafter gives effect to that character. The process cannot legitimately be reversed so as to permit a computational or reporting inconsistency to determine the substantive incidence of taxation.
9. Seen in this perspective, we find that the fundamental premise on which the adjustment has been sustained is misplaced. The amount of ₹76,36,546 had its origin in an accumulation of ₹86,82,812 made under section 11(2) in Assessment Year 201718. Out of this, ₹10,46,266 stood utilised in the immediately preceding year, leaving ₹76,36,546 which, as demonstrated from the material placed before us, was utilised during the relevant previous year. The revised Form 10-BB filed electronically on 28.11.2023 specifically records application during the previous year out of income accumulated under section 11(2) during an earlier previous year. Therefore, this is not a case where an accumulation had remained unapplied beyond the permissible period, nor has any such violation been found by either of the authorities below. It is also not the case of the Revenue that the amount had been diverted for non-charitable purposes, applied for the benefit of a prohibited person, invested in a prohibited mode, applied outside India in violation of the statutory conditions, or otherwise attracted any of the substantive circumstances contemplated for treatment as specified income. No such factual foundation has been recorded either in the intimation under section 143(1) or in the impugned appellate order.
10. This distinction becomes particularly material in the context of section 115BBI. The provision cannot be treated as an omnibus charging mechanism whereby every discrepancy in the return of a charitable institution automatically becomes taxable at the special rate. It operates only upon the species of income statutorily identified as “specified income”. The statutory return forms themselves illustrate that section 115BBI is concerned with identified categories such as deemed income under section 11(3), deemed income under section 11(1B), income losing exemption on account of violations contemplated by section 13, and accumulation in excess of the permissible limit where such accumulation is otherwise not allowed under the Act. Mere utilisation during the year of income validly accumulated under section 11(2) in an earlier year is qualitatively different. Indeed, application of such accumulation for the stipulated charitable purposes is precisely the event contemplated when an accumulation under section 11(2) is made. Therefore, unless the Revenue demonstrates a statutory event by which such accumulation has become deemed income or otherwise falls within the expression “specified income”, the mere fact that its utilisation was inaccurately carried into one field of the return cannot bring section 115BBI into operation.
11. There is yet another aspect which, in our opinion, goes to the root of the reasoning adopted by the learned CIT(A). In paragraph 4.1.2 of the impugned order, while dealing with the assessee’s case, the learned CIT(A) has recorded that the assessee had stated that the net profit from an “eligible unit”, i.e. income earned from “SEZ”, was ₹39,35,46,782, that ₹7,47,44,241 was profit from business in Schedule PGBP, and that gross total income including profits earned from the specified undertaking/eligible unit was ₹69,36,92,800. These facts evidently have no connection whatsoever with the assessee before us, which is a non-profit organisation carrying on the charitable objects noted hereinabove. There is neither an SEZ undertaking nor any controversy regarding eligible-unit profits in the present appeal. This portion of the appellate order evidently proceeds on facts extraneous to the present assessee and, therefore, cannot furnish any basis for adjudication of its grievance. We mention this not merely as a matter of form. It assumes relevance because the assessee had furnished a specific factual reconciliation of the ₹76,36,546 and the impugned order does not deal with that reconciliation in its proper factual setting.
12. The learned CIT(A) thereafter proceeded on the premise that, “as per the declaration of the appellant”, the income had been taxed in accordance with section 115BBI. This premise also does not withstand examination of the return as a whole. As noted above, the assessee had expressly shown the amount chargeable under section 115BBI at Nil in the relevant portion of the return.
Simultaneously, it had disclosed ₹76,36,546 as representing income accumulated under section 11(2) in an earlier year and available as a source for application during the present year. The revised Form 10-BB electronically filed on 28.11.2023 recorded its application during the year. Thus, the material contemporaneously furnished by the assessee itself contains the essential facts necessary to identify the nature of the amount. The mistake lies in the failure to correspondingly carry the application figure to the appropriate field in Schedule A. Such an error may produce a computational mismatch; it cannot amount to a declaration that the underlying sum is taxable as specified income when the return elsewhere expressly states the contrary.
13. It is here that a distinction between evidence of a transaction and the manner of reporting that transaction assumes importance. The former determines the substantive rights and liabilities under the Act; the latter is a mechanism for communicating those facts to the Revenue. An incorrect description or placement of a figure may undoubtedly call for an explanation and, where necessary, verification. But once the true character of the transaction emerges from the contemporaneous material already forming part of the record, the error in its reporting cannot be permitted to transmute the transaction itself. Income validly accumulated under section 11(2) and subsequently applied for the stipulated objects does not acquire the character of specified income merely because, while electronically filling the return, the corresponding utilisation was omitted from one particular field. Taxability is a consequence of the statute applied to facts; it cannot be the consequence of an inadvertent data-entry incongruity divorced from those facts.
14. We also cannot lose sight of the fact that the impugned adjustment has been made at the stage of processing the return under section 143(1). The jurisdiction at that stage is essentially computational and is circumscribed by the adjustments specifically contemplated by the provision. Where the return and the accompanying material themselves disclose facts which, when read together, reveal an apparent reporting inconsistency requiring substantive examination, the processing mechanism cannot selectively adopt one entry, disregard the corresponding disclosures elsewhere, and thereby convert a mismatch into an item of substantive taxable income under a special charging provision. This is particularly so when the very return relied upon for making the adjustment records the income chargeable under section 115BBI at Nil and the audit report records application of the earlier accumulation. The adjustment, therefore, proceeds not from an admitted item of taxable income but from an incongruity in the manner in which different schedules were populated.
15. Much emphasis has been placed by the learned CIT(A) upon the fact that the subsequently prepared physical Form 10-BB furnished before him could not be accepted because it had not been filed in the prescribed manner. In our view, the controversy need not be decided on the admissibility or otherwise of that physical Form 10-BB at all. The assessee’s case does not stand or fall upon that document. The material already available comprises the return of income, the relevant schedules, the accumulation trail originating from Assessment Year 2017-18 and, importantly, the revised Form 10-BB electronically filed on 28.11.2023. The subsequent physical statement was, at best, an attempt to present the reconciliation in a clearer form before the appellate authority. Even if that document is kept entirely aside, the substantive nature and trail of ₹76,36,546 remain discernible from the contemporaneous material. Therefore, rejection of the manually furnished Form 10-BB does not answer the assessee’s substantive contention and cannot sustain the impugned taxability.
16. Before parting with the issue, we may also deal with the judicial precedents relied upon by the learned counsel in support of the proposition that an assessee cannot be subjected to a tax liability merely because, owing to an inadvertent mistake or misconception, an amount has been incorrectly reflected or offered in the return, if such amount is otherwise not chargeable to tax under the substantive provisions of the Act. Reliance has been placed upon the judgment of the Hon’ble Supreme Court in Price Waterhouse Coopers (P.) Ltd. v. CIT [2012] 348 ITR 306 (SC), wherein the Hon’ble Court recognised that even a professionally managed assessee may commit a bona fide and inadvertent error and that the mere occurrence of such an error cannot, by itself, impart to it a character which the substantive law does not otherwise attribute. Reference has also been made to CIT v. Shelly Products [2003] 261 ITR 367 (SC), wherein the Hon’ble Supreme Court observed, in substance, that where an assessee, by mistake, inadvertence or ignorance, includes in its income an amount which is either exempt or is otherwise not income within the contemplation of law, the statutory authorities are not precluded from granting the relief which is legitimately due. Similar principle has been enunciated by the Hon’ble Bombay High Court in Balmukund Acharya v. Dy. CIT [2009] 310 ITR 310 (Bom.), emphasising that the authorities administering the Act are required to assess and collect only such tax as is lawfully due and an assessee should not be prejudiced merely on account of a mistake or misconception. The decision of the Hon’ble Bombay High Court in CIT v. Pruthvi Brokers & Shareholders (P.) Ltd. [2012] 349 ITR 336 (Bom.) has also been relied upon for the proposition that legitimate claims can be entertained by the appellate authorities even if the same had not been correctly or completely made at an earlier stage. We have referred to these decisions only as reinforcing the conclusion which, in the present case, otherwise flows directly from the statutory provisions and the admitted factual matrix. The issue before us is not to grant an equitable concession dehors the statute; rather, it is to ascertain whether the sum of ₹76,36,546 at all bears the statutory character of “specified income” so as to attract section 115BBI. Once that foundational requirement is absent, an erroneous reporting or computational entry cannot furnish an independent source of charge to tax.
17. We also do not consider it necessary to rest our conclusion upon the manually furnished Form No. 10-BB dated 23.04.2025, which the learned CIT(A) declined to take cognizance of on the ground that the same had not been filed in the prescribed electronic manner. In our view, the controversy can be and, indeed, ought to be decided on the basis of the return of income, the schedules forming part thereof and the revised audit report in Form No. 10-BB which had already been electronically furnished on 28.11.2023. Significantly, even the learned CIT(A), while recording the facts in paragraph 4.1.3 of the impugned order, has noticed that the revised Form No. 10-BB showed application of ₹76,36,546 out of “income accumulated under sub-section (2) of section 11 during any earlier previous year”. Therefore, the nature and source of the amount were not matters which came to be disclosed for the first time through the subsequent physical Form No. 10-BB. The later physical form was, at the highest, an attempt by the assessee to place the figures in a more intelligible and reconciled form before the first appellate authority. Whether such a manually furnished form could technically be treated as a valid revised audit report is, therefore, rendered academic for the present purpose. The substantive factual position was already discernible from the contemporaneous return and the electronically revised audit report filed within the relevant period, and it is on that material that the taxability of the amount has to be tested.
18. If the entire factual trail is viewed in its proper perspective, the position which emerges is quite unambiguous. The assessee had accumulated an amount of ₹86,82,812 under section 11(2) in Assessment Year 2017-18. Out of this, ₹10,46,266 had been utilised in the immediately preceding year and the balance amount of ₹76,36,546 was utilised during the previous year relevant to the present Assessment Year 2023-24. In the return, this accumulated amount was correctly reflected as a source of funds available for meeting the revenue and capital application during the year. However, while populating the corresponding application/expenditure field, the same amount was not simultaneously added to the expenditure figure, resulting in a mismatch substantially equivalent to ₹76,36,546. The error, therefore, lay not in the underlying transaction, nor in the actual utilisation of the accumulated income, but in the manner in which the two sides of the same transaction were electronically reported in Schedule A. What assumes further significance is that in the specific portion of the return dealing with income chargeable under section 115BBI, the assessee itself had shown the amount as Nil. Thus, the return, when read as a whole and not by isolating one computational entry from the rest, does not support the conclusion that the assessee had declared ₹76,36,546 as specified income chargeable under section 115BBI. On the contrary, the various disclosures reveal that the assessee treated the said amount as earlier accumulated income which had been brought forward and applied during the year for its charitable purposes.
19. This distinction, in our opinion, goes to the root of the matter. An amount does not acquire the character of taxable income merely because it has been placed in an inappropriate column of the return or because a corresponding entry has inadvertently remained to be populated. Taxability is a consequence which must flow from the charging and computational provisions of the statute and not from an error in electronic presentation. Section 115BBI comes into operation where the total income of the specified charitable or religious entity includes income by way of “specified income”. Thus, the existence of specified income is the indispensable statutory pre-condition for invocation of the special rate prescribed therein. Before applying section 115BBI, therefore, the Revenue must first identify the substantive provision by virtue of which the particular amount assumes the character of specified income. Here, there is no finding either in the intimation issued under section 143(1) or in the impugned appellate order that the accumulation made in Assessment Year 2017-18 was invalid, that the conditions of section 11(2) had been violated, that the amount had been applied for a non-charitable purpose, that it had ceased to remain available for application within the permissible period, or that any other statutory contingency arose which could bring it within the ambit of specified income. In the absence of such a finding, a mere mismatch between the source-of-funds column and the application column cannot, by itself, transform an otherwise legitimate application of earlier accumulated income into taxable specified income. To hold otherwise would amount to permitting the mechanics of return processing to create a charge of tax which the substantive provisions themselves do not create.
20. There is yet another aspect which cannot be overlooked. The impugned addition has emanated from processing of the return under section 143(1). The scope of such processing, though statutorily permitting specified adjustments, cannot be stretched to sustain a substantive levy under section 115BBI where the very applicability of that provision depends upon determination of the legal character of the amount in question and where the return and the accompanying audit material themselves disclose facts which militate against such taxability. The CPC appears to have proceeded on the mismatch in the electronic schedules without appreciating the complete trail of the accumulation and its subsequent application. Once the assessee had disclosed the earlier accumulation, had shown its utilisation during the year in the revised Form No. 10-BB, and had simultaneously declared the income chargeable under section 115BBI at Nil, the matter could not have been concluded by treating the computational inconsistency itself as determinative of taxability. A processing provision cannot be employed to convert an apparent reporting discrepancy into an independent substantive liability when such liability does not clearly emerge from the return read together with the accompanying statutory disclosures. What is capable of adjustment at the stage of section 143(1) is an inconsistency contemplated by the provision; what cannot be done is to attribute a new statutory character to an amount merely because the software-driven computation notices that two corresponding fields do not reconcile.
21. We also find considerable infirmity in the manner in which the learned CIT(A) has approached the controversy. In paragraph 4.1.2 of the impugned order, the learned CIT(A) has referred to alleged profit from an eligible unit/SEZ of ₹39,35,46,782, business profit of ₹7,47,44,241 and gross total income of ₹69,36,92,800. These figures and the reference to an eligible SEZ undertaking evidently have no connection with the assessee before us or with the issue arising in this appeal. Such observations appear to have travelled into the impugned order from an altogether unrelated factual matrix. We do not propose to dwell further upon this aspect except to observe that these extraneous facts could not have formed any basis for deciding the assessee’s explanation. More importantly, having himself recorded in the very next paragraph that the revised Form No. 10-BB dated 28.11.2023 disclosed application of ₹76,36,546 out of income accumulated under section 11(2) in an earlier year, the learned CIT(A) proceeded to conclude that the amount was taxed under section 115BBI “as per the declaration of the appellant”. This conclusion, with respect, does not follow from the record. There was no declaration by the assessee treating the amount as specified income. Rather, its specific declaration in the relevant part of the return was that income chargeable under section 115BBI was Nil. The entire explanation of the assessee was that the amount represented utilisation of an earlier accumulation and that the mismatch arose only because the corresponding expenditure/application field had not been correctly populated. Thus, the finding of the learned CIT(A) proceeds upon a conflation of an accounting/reporting entry with a statutory admission of taxability, which, in our view, is legally untenable.
22. Accordingly, having regard to the entire conspectus of facts, we find that the sum of ₹76,36,546 represented income accumulated under section 11(2) in an earlier assessment year and brought forward for application; that the said amount was applied during the previous year relevant to Assessment Year 2023-24; that its utilisation stood disclosed in the revised Form No. 10-BB electronically filed on 28.11.2023; and that the discrepancy which ultimately triggered the CPC adjustment arose because, while the said amount had been reflected as a source of funds for meeting the application, a corresponding addition was inadvertently not made to the expenditure/application figure in Schedule A. Such an error in reporting cannot efface the underlying factual position or alter the legal character of the amount. In the absence of any finding that the accumulated income had become taxable under the provisions governing section 11(2), or that it otherwise constituted “specified income” within the meaning and contemplation of section 115BBI, there was no statutory foundation for subjecting it to tax under that provision. The Revenue can undoubtedly collect every rupee which is legitimately due under the Act; equally, however, no liability can be sustained merely because an assessee has committed an inadvertent error in completing an electronic schedule when the substantive provisions do not fasten such liability. We, therefore, set aside the finding of the learned CIT(A) and direct the Assessing Officer/CPC to delete the adjustment of ₹76,36,550 made while processing the return of income under section 143(1). Consequently, the ground raised by the assessee is allowed.
23. In the result, the appeal of the assessee is allowed.
Order pronounced on 18th August, 2026.
