Accumulation under Section 11(2) as a Matter of Right and the Bar on Reassessment for Mere Change of Opinion: Commentary on Sir Jamsetjee Jejeebhoy Charity Fund v. Income Tax Officer (Exemption) 2, Ward 2(3), Mumbai

I. Introduction

This Bombay High Court judgment, delivered on 7 November 2025 by a Division Bench (B. P. Colabawalla and Amit Satyavan Jamsandekar, JJ.), addresses two important questions in Indian income-tax law:

1. What constitutes sufficient compliance with the conditions for accumulation of income by a charitable trust under Section 11(2) of the Income-tax Act, 1961, particularly the requirement of “stating the purpose” in Form 10?
2. Whether a completed scrutiny assessment can be reopened under the new Section 148A regime on the basis of an internal audit objection and a different view on the very same material, i.e. a mere change of opinion.

The petitioner, Sir Jamsetjee Jejeebhoy Charity Fund, is a historic charitable trust registered under Section 12A, founded in 1838 by Sir Jamsetjee Jejeebhoy, I Baronet. For Assessment Year (AY) 2018–19, it accumulated a substantial part of its income under Section 11(2) and duly filed Form 10. Its return was scrutinised and an assessment was completed by the National Faceless Assessment Centre (NFAC) under Section 143(3), expressly accepting the accumulation.

Several years later, relying on an internal audit objection, the jurisdictional Assessing Officer (ITO (Exemption), Ward 2(3)) issued notices under Section 148A(b), passed an order under Section 148A(d), and then a notice under Section 148 to reopen the assessment on the ground that:

• Form 10 did not specify a “particular purpose” of accumulation and merely repeated the trust’s objects; and
• The trustee resolution allegedly authorising the accumulation was passed after the due date and only to “cover up” the deficiency once scrutiny commenced.

The trust filed a writ petition under Article 226 challenging (i) the Section 148A(b) notices (9 August 2024 and 20 August 2024), (ii) the Section 148A(d) order (28 August 2024), and (iii) the subsequent Section 148 notice (28 August 2024). While several grounds were raised (including limitation, lack of “information”, invalid sanction under Section 151), the Court decided the matter on two core grounds:

1. Full compliance with Section 11(2) and Rule 17; and
2. Impermissible reassessment based on a mere change of opinion and incorrect facts.

The decision is significant because it:

• Clarifies how far a charitable trust must go in specifying the “purpose” of accumulation in Form 10, especially given the constraints of the electronic format and the role of trustee resolutions; and
• Reaffirms, even under the post-2021 Section 148A regime, that reassessment cannot be used to review a concluded assessment absent new tangible material, and that internal audit objections cannot justify reopening where there is only a different view on the same facts.

II. Factual Background

1. Return, accumulation and Form 10

• For AY 2018–19, the trust filed its return of income from Mumbai, declaring total income of Rs. 1,96,983 and claiming exemption under Section 11.
• It filed Form 10 under Section 11(2), stating that by a trustees’ resolution dated 26 September 2018, Rs. 3,17,00,000 (66.72% of its income) was being accumulated or set apart for carrying out the purposes of the trust till 31 March 2023.
• In the limited text field provided in the electronic Form 10, the trust specified the purpose of accumulation as:

  MEDICAL, EDUCATIONAL AND SOCIAL RELIEF TO MEMBERS OF THE ZOROASTRIAN COMMUNITY AND CONSERVATION, MAINTENANCE AND UPKEEP OF THE PROPERTIES.

2. Scrutiny assessment and acceptance of accumulation

• The case was selected for compulsory scrutiny on the issue of “Accumulation of Income by Trust”.
• A notice under Section 143(2) dated 22 September 2019 expressly identified this as the scrutiny issue.
• A further notice under Section 142(1) dated 10 January 2020 sought:
  • Details of accumulation under Section 11(2) in the last 10 years;
  • Details of utilisation in the prescribed chart; and
  • Copies of Form 10 and trustee resolutions for each accumulation.
• By letter dated 30 January 2020, the trust furnished a true copy of the trustees’ resolution dated 26 September 2018 relating to the accumulation of Rs. 3.17 crore.
• Thereafter, the assessment was handled by the National Faceless Assessment Centre (NFAC). A further 142(1) notice was issued on 19 November 2020, and on 4 January 2021 the trust provided detailed data on a 10-year history of accumulations and utilisation.
• On 15 February 2021, the NFAC passed an assessment order under Sections 143(3), 143(3A) and 143(3B), assessing income at Rs. 1,96,980 and explicitly accepting the accumulation claimed under Section 11(2).

3. Audit objection and Section 148A proceedings

• On 9 August 2024, the jurisdictional ITO (Exemption), Ward 2(3), issued a notice under Section 148A(b) with an annexure alleging that:
  • The assessee “has not specified the reason for utilisation of accumulated income u/s 11(2) in Form 10”;
  • It is “not enough” to repeat the objects of the trust; a “particular purpose” must be specified; and
  • Therefore, the claim for accumulation of Rs. 3,17,00,000 “needs to be rejected”.
• On 19 August 2024, the trust responded, pointing out that:
  • The case had already undergone compulsory scrutiny on the exact same issue; and
  • Reopening was therefore a “change of opinion”.
• A further 148A(b) notice of 20 August 2024 extended time to reply. On 21 August 2024, the trust filed a detailed response:
  • Emphasising Form 10’s limited space and the role of the detailed trustees’ resolution to set out the detailed utilisation plan;
  • Re-asserting that the resolution dated 26 September 2018 had been passed and shared with the AO;
  • Enclosing the resolution again and reiterating that the Form 10 purpose language was not a mere repetition of the objects but clearly specified the purposes.

4. The 148A(d) order and Section 148 notice

• On 28 August 2024, the ITO passed an order under Section 148A(d) rejecting the trust’s submissions and holding that:
  • An internal audit had objected that the purpose in Form 10 was merely “medical, educational and social relief to members of the Zoroastrian community and conservation, maintenance and upkeep of the properties”, which, according to the audit, was only a repetition of objects and lacked sufficient specificity;
  • The audit objection constituted “information” that income had escaped assessment;
  • The trustees’ resolution was allegedly dated 28 January 2020, i.e., after the due date for filing the return and Form 10, and had been passed only to “cover up” the defect after scrutiny had commenced;
  • Form 10 had “ample space” to specify a specific purpose, and hence reliance on a separate resolution was unnecessary.
• On the same date, the Principal Chief Commissioner of Income-tax (Exemption), New Delhi, granted approval under Section 151.
• A notice under Section 148 dated 28 August 2024 followed, requiring the trust to file a fresh return for AY 2018–19.

5. The writ petition and limited grounds argued

The trust challenged all these actions by writ. Multiple grounds were raised, including:

• Lack of jurisdiction;
• Limitation under Section 149;
• Absence of valid “information” under Section 148;
• Improper sanction under Section 151; and
• Factual compliance with Section 11(2) and impermissible change of opinion.

At the hearing, Senior Counsel for the petitioner confined arguments to two principal grounds:

1. Compliance with Section 11(2) and Rule 17; and
2. Bar on reopening due to change of opinion and absence of new material.

The Court accepted this approach and left all other grounds explicitly open.

III. Summary of the Judgment

The High Court held as follows:

1. Full compliance with Section 11(2): The trust had duly complied with Section 11(2) and Rule 17 by:
   • Filing Form 10 electronically within the statutory time;
   • Stating in Form 10 a sufficiently specific purpose of accumulation; and
   • Referring in Form 10 to a resolution dated 26 September 2018 and furnishing a certified copy during the original assessment.
   The AO’s finding that Section 11(2) was not complied with was factually incorrect and legally unsustainable.
2. Mandatory nature of Section 11(2): Once the statutory conditions are met, the income “so accumulated or set apart shall not be included” in the total income. The Assessing Officer has no discretion to deny the benefit; it accrues to the assessee as a matter of right.
3. Form 10 and trustee resolution together satisfy the “purpose” requirement: Given the limited space in electronic Form 10 and the very structure of Form 10 (which itself contemplates reference to a trustees’ resolution), it is sufficient if:
   • A broadly but clearly worded purpose is stated in Form 10, and
   • A resolution containing further detail is passed within time and provided to the AO during assessment.
4. Errors of fact and non-application of mind: The AO misread the certified copy of the resolution and wrongly treated 28 January 2020 (the date of certification) as the date of the resolution itself, ignoring that the resolution was actually passed on 26 September 2018. He also wrongly asserted that the resolution had not been produced during 148A proceedings. The Court held that the 148A(d) order was based on incorrect facts and amounted to non-application of mind.
5. Reassessment barred by change of opinion: All material relevant to Section 11(2) (Form 10, resolution, 10 years’ accumulation and utilisation data) was already on record and considered during the original 143(3) assessment. The reopening, triggered by an internal audit objection, was purely an attempt to re-examine the same material and therefore represented a mere change of opinion, which is impermissible under Section 148/148A.
6. Reaffirmation of Kelvinator doctrine under new Section 148A: Citing its own earlier decisions and the Supreme Court’s ruling in CIT v. Kelvinator of India Ltd., the Court reiterated that:
   • The AO has power to reassess, not to review;
   • “Change of opinion” is an in-built check against abuse of reassessment powers; and
   • Post-1989 and even post-2021 amendments, reopening requires tangible material with a live link to the belief of escapement.
7. Relief: The Court quashed and set aside:
   • The Section 148A(b) notices dated 9 August 2024 and 20 August 2024;
   • The Section 148A(d) order dated 28 August 2024; and
   • The consequential Section 148 notice dated 28 August 2024.
   No order as to costs was made, and all other grounds were expressly kept open.

IV. Detailed Analysis

A. Statutory Framework: Section 11(2), Rule 17 and Form 10

1. Section 11(2): conditions for accumulation

Section 11(2) permits a charitable/religious trust to accumulate or set apart income that is not applied in the year of receipt, without it being included in its taxable income, provided certain conditions are met. The key conditions identified by the Court are:

1. Statement in prescribed form and manner: A statement must be furnished to the Assessing Officer in the prescribed form (Form 10) and manner, stating:
   • The purpose for which the income is being accumulated or set apart; and
   • The period (not exceeding 5 years) for such accumulation or setting apart.
2. Permitted investments: The accumulated money must be invested/deposited in modes specified in Section 11(5).
3. Time-limit for filing Form 10: The statement must be furnished at least two months prior to the due date under Section 139(1) for filing the return for the relevant previous year.

Crucially, the Court highlighted the mandatory language of the provision:

“… such income so accumulated or set apart shall not be included in the total income of the previous year … provided the following conditions are complied with …”

On this basis, the Court concluded that once the statutory conditions are met, the AO has no residual discretion to deny the benefit.

2. Rule 17 and the electronic Form 10

Rule 17 of the Income-tax Rules implements Section 11(2). It provides that:

• The statement under Section 11(2)(a) must be in Form 10 (Rule 17(2));
• Form 10 must be furnished before the expiry of the time allowed under Section 139(1) for filing the return (Rule 17(2));
• Form 10 must be furnished electronically under digital signature or electronic verification code (Rule 17(3)); and
• The Principal DGIT (Systems) / DGIT (Systems) is responsible for prescribing the data structure and format (Rule 17(4)).

The Court placed considerable emphasis on the fact that:

• The format and structure of Form 10, including the limited text space for describing the purpose, are entirely decided by the revenue authorities; and
• The text of Form 10 itself contemplates reference to a trustees’ resolution in these terms:

  “… hereby bring to your notice that it has been decided by a resolution passed by the trustees / governing body … on ____ that, out of the income … an amount of Rs. ____ shall be accumulated …”

This structure, in the Court’s view, naturally envisages:

1. A concise description of the purpose in the Form; and
2. Supporting detail in the trustees’ resolution, which the AO can call for and examine during assessment.

B. Compliance with Section 11(2): Form 10 plus Resolution

1. The trust’s compliance

The Court found, on facts, that:

• Form 10 was filed electronically within time, stating:
  • Accumulation of Rs. 3.17 crore (66.72% of income);
  • Period of accumulation (up to 31 March 2023); and
  • Purpose: “Medical, educational and social relief to members of the Zoroastrian community and conservation, maintenance and upkeep of the properties”.
• The Form specifically referred to a resolution dated 26 September 2018.
• A certified copy of that resolution was furnished to the AO on 30 January 2020, in response to a specific request under Section 142(1), well before the assessment order.
• The NFAC, while making the 143(3) assessment in February 2021, had all these documents before it and nonetheless accepted the accumulation.

2. Factual errors in the AO’s reasoning

The AO’s 148A(d) order proceeded on two key factual assumptions, both rejected by the Court:

1. Wrong date of resolution: The AO treated 28 January 2020 as the date of the resolution, claiming it was passed after the due date to file the return/Form 10 and after scrutiny selection, as a cover-up. The Court found that:
   • The resolution itself was clearly dated 26 September 2018;
   • 28 January 2020 was only the date on which a true copy was certified; and
   • The AO had “misread the dates” and thus reached an “incorrect and wrong finding”.
2. False assertion of non-production: In the Revenue’s affidavit it was asserted that the resolution of 26 September 2018 was never produced during 148A proceedings and that only a resolution dated 28 January 2020 existed. The Court held this to be factually incorrect, noting that:
   • Form 10 itself referred to the 26 September 2018 resolution; and
   • The trust’s letter of 30 January 2020, enclosing the resolution, was on record; the same resolution was also filed again in response to the 148A(b) notice.

On this basis, the Court concluded that the impugned order under Section 148A(d) was vitiated by non-application of mind and reliance on demonstrably incorrect facts.

3. Adequacy of the stated “purpose”

The Revenue argued that Form 10 merely repeated broad trust objects, and that Section 11(2) demands a “particular purpose” rather than generic categories. The Court disagreed:

• It held that the description in Form 10 — medical, educational and social relief to members of the Zoroastrian community and conservation, maintenance and upkeep of properties — was more than sufficient for purposes of Section 11(2).
• It emphasised the limited space in Form 10 and the statutory design whereby:
  • The assessee cannot alter the form’s structure; and
  • The form itself expects the detailed authority to appear in a trustee resolution, which the AO can call for and scrutinise.
• Once the AO had the resolution and Form 10 during the original assessment, there was “nothing more that the Petitioner could have done” to comply with Section 11(2).

4. Reliance on Gujarat High Court in BAPS case

The Court cited Commissioner of Income-tax (Exemption) v. Bochasanwasi Shri Akshar Purshottam Public Charitable Trust [2019] 102 taxmann.com 122 (Guj) (“BAPS case”), where the Gujarat High Court held that:

• While Section 11(2)(a) requires the purpose of accumulation to be stated, minor inaccuracies or incomplete detail in Form 10 are not fatal if, during assessment, the assessee provides a clear statement of purpose (e.g., via a trustees’ resolution).
• In that case, the trust’s resolution setting apart funds for ongoing hospital projects and modernisation of existing hospitals sufficed, even though Form 10 was somewhat general.

Following this approach, the Bombay High Court accepted that:

• Even if Form 10 alone were viewed as inadequate (which, in this case, the Court did not concede), the combination of Form 10 and the detailed resolution clearly satisfied Section 11(2);
• The “prime requirement” of stating the purpose was in substance fulfilled.

C. Mandatory Nature of Section 11(2): No Discretion Once Conditions are Met

A key doctrinal development in this judgment is the clear articulation that Section 11(2), read with Rule 17, is mandatory in nature:

“Once the requirements of the Section are fulfilled, then the mandatory provisions, ‘such income so accumulated or set apart shall not be included in the total income …’ triggers, and therefore the assessees, after fulfilling the requirements … as a matter of right become entitled for the benefit … Once the Assessees fulfill the requirements and conditions, the Assessing Officer has no discretion to reject and disallow …”

This is important practically: it prevents Assessing Officers from attempting to deny Section 11(2) benefits on subjective or hyper-technical grounds once the statutory checklist is satisfied. The focus is on objective compliance — timely Form 10, specified period, stated purpose, prescribed investments — not on the AO’s personal preferences about the level of detail beyond what the statute and rules demand.

D. Reassessment and Change of Opinion under Section 148 / 148A

1. Factual context for reassessment

The reassessment was initiated after:

• A full scrutiny assessment under Section 143(3) by the NFAC on the very issue of accumulation;
• Detailed enquiries under Sections 143(2) and 142(1); and
• Acceptance of accumulation under Section 11(2) in the assessment order.

The only new element was an internal audit objection expressing a different view about the sufficiency of purpose in Form 10. There was no new external information, no fresh facts, and no allegation of non-disclosure by the assessee.

2. Bombay High Court precedents relied upon

The Court relied on its earlier decisions to hold that reassessment could not be used as a review mechanism:

• Chandrakant Narayan Patkar Charitable Trust v. ITO (Exemption) [2022] 138 taxmann.com 564 (Bom):
  Reopening is invalid where there is no tangible material, no new information, and no fresh material; reopening cannot be based on a mere change of opinion.
• Siemens Financial Services (P.) Ltd. v. DCIT [2023] 154 taxmann.com 159 (Bom):
  The Court held that:
  • The AO has no power to review, only to reassess, and reassessment cannot be used to re-examine issues already considered in the original assessment;
  • Where expenditure was explicitly examined and allowed in the original assessment, a subsequent attempt to treat it as capital instead of revenue is a clear change of opinion and invalid;
  • The Supreme Court’s decision in Kelvinator governs: reassessment requires “tangible material” apart from a mere change of opinion.

3. Supreme Court in Kelvinator and its reaffirmation

The Court quoted extensively from CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), where the Supreme Court held:

• Section 147 cannot be interpreted so as to confer arbitrary power to reopen assessments on a mere change of opinion;
• There is a conceptual difference between a power to review and a power to reassess; the AO has only the latter;
• After 1 April 1989, reopening is permissible only if there is tangible material to support a reasonable belief that income has escaped assessment, and the reasons must have a “live link” with such belief;
• The doctrine of “change of opinion” is an in-built test to check abuse of power.

The Bombay High Court emphasised that this doctrine continues to apply under the post-2021 reassessment regime, despite the new Section 148A procedure. It noted that its reasoning in Siemens Financial is not affected by the Supreme Court’s later decision in UNION OF INDIA v. RAJEEV BANSAL (2024) 469 ITR 46 (SC), at least as regards the change of opinion principle.

4. Delhi High Court in Seema Gupta

The Court also referred to Seema Gupta v. ITO [2022] 140 taxmann.com 463 (Delhi), which held that orders under Section 148A(d) and consequent 148 notices must be quashed where reassessment is initiated on a mere change of opinion, especially when the issue was already examined in original assessment.

5. Application to the present case

Applying these principles, the Court concluded that:

• The original assessment had fully examined the issue of accumulation under Section 11(2), including:
  • Form 10;
  • Trustee resolution;
  • 10-year history of accumulations and utilisation.
• The NFAC had consciously accepted the accumulation in its 143(3) order.
• There was no new material or information; the internal audit had only taken a different view of the same record.
• The AO thus sought to revisit the same issue and re-evaluate material already considered — an impermissible review in the guise of reassessment.

The Court therefore held that the reassessment was not justified “on any count” and was based on both change of mind and non-application of mind.

E. Audit Objections as “Information” under Section 148

While the Court did not decide this issue in full (having allowed the petition on other grounds), its reasoning implicitly signals scepticism about using internal audit objections as independent “information” justifying reopening when:

• The audit only reinterprets existing material; and
• No new facts or omissions are shown, nor is there any failure of disclosure by the assessee.

In the 148A(d) order, the AO described the audit objection as “information” suggesting escapement of income. However, the Court’s finding that there was:

• Full disclosure in the original assessment; and
• No factual basis for the alleged non-compliance with Section 11(2),

effectively deprives the audit objection of any legal force. The message is that internal audit cannot convert a difference of legal opinion into “information” of escapement.

V. Impact and Implications

1. For charitable and religious trusts

This judgment significantly clarifies and strengthens the position of charitable/religious trusts claiming accumulation under Section 11(2):

• Form 10 drafting: A concise but meaningful description of purpose in Form 10, aligned with the trust’s charitable fields (e.g., medical, educational, relief to a defined community, conservation/maintenance of properties), will generally be adequate if:
  • A trustee resolution provides further internal authorisation and detail; and
  • The resolution is passed and referenced in Form 10 in time.
• Trustee resolutions are critical:
  • Resolutions should be passed before or at the time of deciding upon accumulation (and certainly within the window contemplated by Section 11(2));
  • The date of the resolution must be correctly recorded and preserved; and
  • Certified copies should clearly indicate the original resolution date separately from the certification date.
• Right, not concession: Once Section 11(2) conditions are met, the benefit is a matter of right. AOs cannot deny it based on vague complaints about “repetition of objects” if the statutory requirements are satisfied.
• Protection against harassment through reassessment: Where accumulation has been examined in a completed scrutiny assessment, trusts gain a strong shield against later reassessments that merely revisit the same issue without new material.

2. For the Revenue and Assessing Officers

The judgment sends several clear signals to tax authorities:

• Careful reading of the record is mandatory: Misreading basic documents (such as confusing resolution date with certification date) will vitiate 148A orders and expose the Revenue’s actions to judicial correction.
• Limits on internal audit: Internal audit can highlight potential issues, but it cannot:
  • Substitute itself for “information” of escapement where no new facts exist; or
  • Justify reopening completed assessments on mere reinterpretation of known data.
• Respect for the change-of-opinion doctrine: Even under the new regime (Sections 148A, etc.), AOs must appreciate that:
  • They cannot review earlier decisions under the guise of reassessment; and
  • They must identify tangible new material with a live nexus to escapement of income.
• Fairness in electronic compliance: When the Department itself designs restrictive e-forms (like Form 10 with limited character space), it cannot then fault assessees for not providing extensive detail within that confined space, particularly when additional documents (resolutions, letters) have been provided.

3. Broader doctrinal impact

• Reaffirmation of Kelvinator post-2021: By expressly relying on Kelvinator, Siemens Financial, and other precedents, the Bombay High Court confirms that the essence of the “change of opinion” doctrine persists under the new Section 148A framework.
• Substance over form in charitable exemptions: The Court’s approach resists hyper-technical interpretation of compliance requirements where the substantive purpose of the trust’s activities and the accumulation is clearly charitable and adequately documented.
• Interplay of faceless and jurisdictional AOs: The case illustrates tensions between:
  • NFAC’s original acceptance of a position after full scrutiny; and
  • A later jurisdictional AO’s attempt to reopen the same issue based on audit remarks.
  The judgment reinforces that NFAC orders cannot lightly be second-guessed without fresh material.

VI. Complex Concepts Simplified

1. What is “accumulation of income” under Section 11(2)?

Charitable/religious trusts are expected to apply at least 85% of their income each year to their charitable or religious purposes. If they do not, the unspent portion would normally be taxable. However, Section 11(2) allows them to:

• Set aside (accumulate) such unspent income for up to 5 years;
• For specific charitable purposes; and
• Invest the amount in safe, approved investments (e.g., government securities, bank deposits).

If all conditions are met, the accumulated income is not taxed for that year; it must, however, be applied to the stated purposes within the allowed period.

2. What is Form 10?

Form 10 is an electronic statement that a charitable trust must submit to the Income-tax Department if it wants to accumulate income under Section 11(2). In Form 10, the trust must state:

• The amount of income it wishes to accumulate;
• The period of accumulation (max. 5 years); and
• The purpose(s) for which it will use the accumulated funds.

Form 10 has limited space for describing the purpose. The form also requires mention of the trustees’ resolution authorising such accumulation. More detailed reasoning or project descriptions usually appear in the resolution.

3. What is “change of opinion” and why does it matter?

A “change of opinion” occurs when:

• The AO has already looked at a particular issue in an assessment (e.g., whether a deduction is allowable);
• The AO consciously decides one way (e.g., allows the deduction); and
• Later, without any new facts or information, the AO simply changes his mind and wants to disallow what he had previously allowed.

Courts have repeatedly held that reassessment provisions (Sections 147–148A) cannot be used to review past decisions; they are only for reassessment when new information about escaped income comes to light. Change of opinion alone is not enough to reopen an assessment.

4. What is “reason to believe” and “tangible material”?

For reopening an assessment, the AO must have “reason to believe” that income chargeable to tax has escaped assessment. Courts interpret this to mean:

• There must be concrete material (not mere suspicion or speculation);
• The material must have a live link with the alleged escapement of income; and
• It cannot be just a different legal view on facts that were already fully disclosed and examined earlier.

“Tangible material” is any new information or evidence — for instance, a third-party statement, a seized document, or later-discovered non-disclosure — that was not before the AO during the original assessment. An internal audit’s reinterpretation of the same old facts, without more, generally does not qualify.

5. What is Section 148A?

Introduced in its present form in 2021, Section 148A lays down a pre-reassessment procedure:

1. The AO gathers “information” suggesting income has escaped assessment;
2. The AO issues a show-cause notice under Section 148A(b), sharing such information and inviting the assessee’s reply;
3. After considering the reply, the AO passes an order under Section 148A(d), deciding whether it is a fit case to issue a notice under Section 148; and
4. If yes, a notice under Section 148 is then issued.

Courts insist that the Section 148A(d) order must be based on correct facts, proper application of mind, and genuine “reason to believe”, not mere mechanical acceptance of internal audit objections.

VII. Conclusion

The Bombay High Court’s decision in Sir Jamsetjee Jejeebhoy Charity Fund v. ITO (Exemption) is a significant reaffirmation of two core principles in tax jurisprudence:

1. Substantive, not hyper-technical, compliance with Section 11(2):
   • When a charitable trust has duly filed Form 10 in time, stated a substantive charitable purpose, passed and referenced an appropriate trustees’ resolution, and complied with the investment and time-limit conditions, it has satisfied Section 11(2).
   • In such circumstances, the exemption for accumulated income is mandatory — a statutory right, not a discretionary concession.
2. Reassessment is not a vehicle for review:
   • Where an issue has been fully examined in a completed scrutiny assessment, reopening on the basis of an internal audit’s different view on the same material is barred as a mere change of opinion.
   • The AO must have new tangible material indicating escapement of income; procedural innovations like Section 148A do not dilute this substantive safeguard.

The judgment thus strengthens legal certainty for charitable and religious trusts, curbs overreach in reassessment based on internal audit objections, and clarifies how Form 10 and trustee resolutions operate together to fulfil the statutory purpose requirement. It will likely serve as an important precedent in future disputes on Section 11(2) compliance and on the permissible scope of reopening assessments under the post-2021 regime.