Reassessment Cannot Be Based on a Change of Opinion or Form Limitations: Bombay High Court Quashes Reopening Against Sir J. J. Charity Fund

“When all particulars were disclosed and examined during original assessment, reassessment on same facts is impermissible. The power to reassess cannot be exercised to review,” ruled the Bombay High Court, quashing Income Tax reassessment proceedings initiated against a 19th-century charitable trust for alleged non-compliance with Section 11(2) of the Income Tax Act.

On 7th November 2025, Division Bench of Justice B. P. Colabawalla and Justice Amit Satyavan Jamsandekar of the Bombay High Court delivered a significant ruling in Sir Jamsetjee Jejeebhoy Charity Fund v. Income Tax Officer (Exemption) Ward-2(3), Mumbai & Ors., setting aside reassessment notices issued under Sections 148A(b), 148A(d), and 148 of the Income Tax Act, 1961, on the ground that the proceedings were a clear case of change of opinion and not based on any tangible new material.

The Court also held that compliance with Section 11(2) regarding accumulation of income by a charitable trust was duly made in Form 10, and the Revenue’s allegations of non-disclosure were factually incorrect and legally untenable.

"Assessee Cannot Be Penalised for Limited Space in Form 10"

The core dispute stemmed from the Revenue’s claim that the Trust’s Form 10 for A.Y. 2018–19 failed to specify the “particular purpose” for accumulation of income under Section 11(2), and merely repeated the general objectives of the Trust.

The Court rejected this allegation outright:

“The Petitioner in Form 10 has specifically stated the particular purpose for which the income is being accumulated… It is not the fault of the Petitioner that a more specific purpose could not be mentioned in Form 10 due to the limited space provided therein.” [Para 23]

The Sir J. J. Charity Fund, established in 1838, had filed its return claiming Section 11 exemption, and submitted Form 10 declaring that ₹3.17 crore was set apart for “medical, educational and social relief to members of the Zoroastrian community and conservation, maintenance and upkeep of properties.” The Trust also submitted the trustees’ resolution dated 26/09/2018 during original assessment, explicitly stating the intended use of funds.

Reassessment Based on Audit Objection Held Impermissible

The reassessment proceedings were initiated in August 2024, based solely on an internal audit objection that the Form 10 lacked specific purpose, and that a resolution dated 28/01/2020 was a post-facto attempt to rectify the omission.

The High Court found these claims factually flawed, noting:

“The 1st Respondent has misread the dates on the certified true copy of the Resolution… The Resolution was passed on 26th September 2018, and only certified as a true copy on 28th January 2020.” [Para 23]

Further, the Court held that:

“The Assessing Officer has no power to reassess merely to have a relook at the documents that were filed and considered by him in the original assessment proceedings.” [Para 28]

Reopening Barred by Doctrine of “Change of Opinion”

The Court strongly reaffirmed the principle that Section 148 cannot be invoked to revisit matters already examined during original scrutiny assessment under Section 143(3).

Citing Siemens Financial Services (P.) Ltd. and Kelvinator of India Ltd., the Court reiterated:

“Once the Assessing Officer has looked into the relevant details and particulars during original assessment, reassessment proceedings based on the same facts are not justified.” [Paras 28–30]

The Bench emphasized that “change of opinion” is not a valid ground for reopening under the amended Section 148, and there must be tangible new material or information to trigger reassessment.

No Default in Compliance With Section 11(2)

The Revenue also alleged that the Trust failed to comply with the requirements under Section 11(2) and Rule 17 of the Income Tax Rules.

The Court disagreed, holding:

“The Petitioner has fully complied with all the requirements of Section 11(2) of the Act and Rule 17 of the Income-tax Rules. There is nothing more that the Petitioner could have done.” [Para 27]

It observed that:

• Form 10 was submitted electronically before the due date.

• Purpose of accumulation was clearly mentioned within space limitations.

• Trustee resolution was disclosed and submitted.

• All queries regarding accumulation were answered during original assessment.

• The NFAC passed the final order under Section 143(3), accepting the accumulation.

“Format of Form 10 Designed by Revenue; Assessee Cannot Be Blamed”

The Court turned its attention to the design and limitations of Form 10:

“The Revenue provides the format and the contents of Form 10. There is no scope for the Assessee to make any changes. If that is the only way to comply, the Assessee cannot be faulted for noncompliance.” [Para 25]

It emphasized that Form 10 itself requires mention of the resolution date, allowing Assessing Officers to seek further details, which was done and satisfied in this case.

Cited with Approval: Bochasanwasi Trust, Patkar Trust, and Siemens Financial

The Court drew strength from a series of precedents:

• CIT (Exemption) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust, (2019) 102 taxmann.com 122 (Gujarat)

Non-specificity in Form 10, if explained in resolution submitted during assessment, does not vitiate exemption.

• Chandrakant Narayan Patkar Charitable Trust v. ITO (Exemption), (2022) 138 taxmann.com 564 (Bom.)

No reopening permitted without fresh material or information.

• Siemens Financial Services (P.) Ltd. v. DCIT, (2023) 154 taxmann.com 159 (Bom.)

AO cannot reassess merely to reclassify entries or reassess previously accepted deductions.

Notices and Orders Quashed; Rule Made Absolute

Finding the entire reassessment exercise flawed, the Court allowed the petition and held:

“The impugned show cause notices dated 9th August 2024 and 20th August 2024, the impugned order dated 28th August 2024 and the impugned notice dated 28th August 2024 are quashed and set aside.” [Para 31]

The Court clarified that all other legal grounds raised in the petition were kept open for future consideration and no costs were imposed.

A Strong Reaffirmation of Legal Certainty for Charitable Trusts

The decision provides clear judicial reassurance to charitable trusts that full compliance with procedural norms will be respected and cannot be disturbed arbitrarily under reassessment. It also reiterates the importance of finality in scrutiny assessments and the limited nature of reassessment powers, especially in the post-Kelvinator and post-Rajeev Bansal framework.

Date of Decision:07 November 2025