LIC HOUSING FINANCE LIMITED,MUMBAI V. ACIT 2(2)(1), MUMBAI, AAYKAR BHAVAN, MUMBAI

ITA 5037/MUM/2025

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LIC Housing Finance Ltd. appealed against the order of the Commissioner of Income-tax (Appeals) which confirmed the reopening of their assessment for the assessment year 2017-18. The reassessment was initiated based on an audit objection regarding the deduction claimed under section 80G for donations made from CSR funds. The Tribunal examined whether the reassessment was justified and if the deductions claimed were permissible under the law. The Tribunal concluded that the reassessment was not valid as it was based on a change of opinion without any new material, and the legal position regarding the deductibility of CSR expenditures under section 80G was not sufficiently clear to warrant a reassessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788753 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 13-08-2025
• Other Referred Cases: Castrol India Ltd. v. DCIT, ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd., Dr. Mathew Cherian v. ACIT, Kelvinator of India Ltd. v. CIT, McDowell & Co. Ltd. v. CTO, CIT v. Infosys Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: SUNIL BHANDARI; SIDDHARTH BHANDARI
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings; Business expenditure; Reopening of assessment; Audit objection; Reason to believe; Tangible material
• Section: 147; 148; 143(3); 37; 115JB; 37(1); 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “A” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 5037/MUM/2025 Assessment Year: 2017-18 LIC Housing Finance Ltd., 2nd floor, Bombay Life Building, 45/47 Veer Nariman Road, Fort, Mumbai-400 001. Vs. ACIT 2(2)(1), Aayakar Bhavan, Mumbai-400020. PAN NO. AAACL 1799 C Appellant Respondent Assessee by : Mr. Sunil Bhandari & Mr. Siddharth Bhandari Revenue by : Mr. Surendra Mohan, Sr. DR Date of Hearing : 25/09/2025 Date of pronouncement : 26/11/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against order dated 06.07.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds: 1) Reopening of assessment proceedings:- On the facts and in law, the Ld. CIT(A) erred in confirming reopening of assessment proceedings by passing order u/s 148A(d) for Printed from counselvise.com initiating reassessment u/s 148 for the AY 2017 alleged wrongful deduction u/s 80G of Rs. 4,86,48,800/ by the Appellant Company since the said donations were paid out of CSR Funds of the Company and Audit Party had raised objections to the claim of deduction u/s 80G. Order so passed u/s 148A(d) deserves to be quashed for following reasons: a) Non-compliance with provisions of section 151A Notice u/s 148A(b) was issued by Jurisdictional Assessing Officer and not by NFAC which is not permitted in terms of provisions of section 147 r.w.s. 151A of the Act. b) Specific Query raised during earlier assessment 143(3) and complete disclosure made by the Appellant Assessee Appellant Assessee had made complete disclosure in the Annual Report, Computation of Income and Tax Return filed by Company wherein CSR Expenses of Rs. 16,84,75,600/ deduction u/s 80G was claimed to the extent allowable u/s 80G. Return filed by Company was processed u/s 143(3) on 20/12/2019. Moreover, in the course of said assessment proceedings specific query was raised by the AO in the notice dated 17/10/2019 regarding CSR Expenses and Assessee Company had uploaded itemized details of CSR Expenses and corresponding deduction claimed u/s 80G. Reliance placed on decision of Hon'ble Bombay High Court in the case of Castrol India Ltd. v. dcit Circle 1(2) (1) Mumb c) \"Change of opinion\" is not permissible On the facts and in law, initiation of reassessment proceeding now is \"Change of Opinion\" which is not permissible. Appellant places reliance, among others, on th Vs. Deputy Commissioner of Income Tax taxmann.com 304(Bombay). The Assessing Officer only has power to reassess and not review. 2) Deduction claimed u/s 80G fully allowable on merits Without prejudice law, erred in disallowing deduction of Rs. 4,86,48,800/ This issue has passed the scrutiny of various orders of Hon'ble Income Tax Appellate Tribunals in favour of the Assessees on LIC Housing Finance Ltd ITA No. 5037/MUM/2025 initiating reassessment u/s 148 for the AY 2017-18 to bring to tax alleged wrongful deduction u/s 80G of Rs. 4,86,48,800/ by the Appellant Company since the said donations were paid out of CSR Funds of the Company and Audit Party had raised objections to the claim of deduction u/s 80G. Order so passed u/s 148A(d) deserves to be quashed for following reasons:- iance with provisions of section 151A Notice u/s 148A(b) was issued by Jurisdictional Assessing Officer and not by NFAC which is not permitted in terms of provisions of section 147 r.w.s. 151A of the Act. b) Specific Query raised during earlier assessment proceedings u/s 143(3) and complete disclosure made by the Appellant Assessee Appellant Assessee had made complete disclosure in the Annual Report, Computation of Income and Tax Return filed by Company wherein CSR Expenses of Rs. 16,84,75,600/- were added deduction u/s 80G was claimed to the extent allowable u/s 80G. Return filed by Company was processed u/s 143(3) on 20/12/2019. Moreover, in the course of said assessment proceedings specific query was raised by the AO in the notice dated 9 regarding CSR Expenses and Assessee Company had uploaded itemized details of CSR Expenses and corresponding deduction claimed u/s 80G. Reliance placed on decision of Hon'ble Bombay High Court in the case of Castrol India Ltd. v. dcit Circle 1(2) (1) Mumbai, reported in [2024] 161 taxmann.com 18 (Bombay). c) \"Change of opinion\" is not permissible On the facts and in law, initiation of reassessment proceeding now is \"Change of Opinion\" which is not permissible. Appellant places reliance, among others, on the judgment of Aroni Commercials Ltd. Vs. Deputy Commissioner of Income Tax-2(1)2, {(2014) 44 taxmann.com 304(Bombay). The Assessing Officer only has power to reassess and not review. 2) Deduction claimed u/s 80G fully allowable on merits Without prejudice to Ground 1 above, Ld. CIT(A), on the facts and in law, erred in disallowing deduction of Rs. 4,86,48,800/ This issue has passed the scrutiny of various orders of Hon'ble Income Tax Appellate Tribunals in favour of the on merits. LIC Housing Finance Ltd 2 ITA No. 5037/MUM/2025 18 to bring to tax alleged wrongful deduction u/s 80G of Rs. 4,86,48,800/- claimed by the Appellant Company since the said donations were paid out of CSR Funds of the Company and Audit Party had raised objections to the claim of deduction u/s 80G. Order so passed u/s - Notice u/s 148A(b) was issued by Jurisdictional Assessing Officer and not by NFAC which is not permitted in terms of provisions of proceedings u/s 143(3) and complete disclosure made by the Appellant Assessee Appellant Assessee had made complete disclosure in the Annual Report, Computation of Income and Tax Return filed by Company were added back and deduction u/s 80G was claimed to the extent allowable u/s 80G. Return filed by Company was processed u/s 143(3) on 20/12/2019. Moreover, in the course of said assessment proceedings specific query was raised by the AO in the notice dated 9 regarding CSR Expenses and Assessee Company had uploaded itemized details of CSR Expenses and corresponding deduction claimed u/s 80G. Reliance placed on decision of Hon'ble Bombay High Court in the case of Castrol India Ltd. v. dcit Circle ai, reported in [2024] 161 taxmann.com 18 (Bombay). On the facts and in law, initiation of reassessment proceeding now is \"Change of Opinion\" which is not permissible. Appellant places e judgment of Aroni Commercials Ltd. 2(1)2, {(2014) 44 taxmann.com 304(Bombay). The Assessing Officer only has power 2) Deduction claimed u/s 80G fully allowable on merits to Ground 1 above, Ld. CIT(A), on the facts and in law, erred in disallowing deduction of Rs. 4,86,48,800/- u/s 80G, This issue has passed the scrutiny of various orders of Hon'ble Income Tax Appellate Tribunals in favour of the Printed from counselvise.com 2. At the outset, the Ld. counsel for the assessee submitted at bar the assessee was the appeal and therefore, same is dismissed as infructuous. 3. Briefly stated, facts of the case are that Banking Financial Company promoted by the Life Insurance Corporation of India and engaged in the business of housing finance, filed its return of income on 01.11.2017 declaring total income of ₹2,597.16 crores, subsequently revised on 30.03.2019 to ₹2,512.65 crores. The assessment under section 143(3) of the Income-tax Act, 1961 (“the Act”) was completed on 20.12.2019, determining income under normal provisions at and under minimum alternative tax (MAT) provisions of section 115JB at ₹2,955,93,53,702/ 3.1 Subsequently, pursuant to an audit objection, the Assessing Officer (AO) issued notice under section 148A(b) on 15.02.2024 calling upon the assessee to explain the allowability of deduction of ₹4.86 crores under section 80G. The assessee submitted that although a sum of ₹16.84 crores was debited in the books as CSR expenditure and correspondingly added back in the computation, certain donations crores were made to institutions eligible under section 80G, and deduction was lawfully claimed thereon. Notwithstanding the assessee’s detailed response that this issue was duly examined in regular assessment u/s 143(3) dated LIC Housing Finance Ltd ITA No. 5037/MUM/2025 the outset, the Ld. counsel for the assessee submitted at was not interested in pursuing ground No. 1(a) of the appeal and therefore, same is dismissed as infructuous. Briefly stated, facts of the case are that the assessee, a Non king Financial Company promoted by the Life Insurance Corporation of India and engaged in the business of housing finance, filed its return of income on 01.11.2017 declaring total 2,597.16 crores, subsequently revised on 30.03.2019 to crores. The assessment under section 143(3) of the tax Act, 1961 (“the Act”) was completed on 20.12.2019, determining income under normal provisions at ₹2,512,96,43,883/ and under minimum alternative tax (MAT) provisions of section 93,53,702/-. pursuant to an audit objection, the Assessing Officer (AO) issued notice under section 148A(b) on 15.02.2024 calling upon the assessee to explain the allowability of deduction of 4.86 crores under section 80G. The assessee submitted that 16.84 crores was debited in the books as CSR expenditure and correspondingly added back in the computation, certain donations crores were made to institutions eligible under ion 80G, and deduction was lawfully claimed thereon. Notwithstanding the assessee’s detailed response that this issue was duly examined in regular assessment u/s 143(3) dated LIC Housing Finance Ltd 3 ITA No. 5037/MUM/2025 the outset, the Ld. counsel for the assessee submitted at not interested in pursuing ground No. 1(a) of the appeal and therefore, same is dismissed as infructuous. the assessee, a Non- king Financial Company promoted by the Life Insurance Corporation of India and engaged in the business of housing finance, filed its return of income on 01.11.2017 declaring total 2,597.16 crores, subsequently revised on 30.03.2019 to crores. The assessment under section 143(3) of the tax Act, 1961 (“the Act”) was completed on 20.12.2019, 2,512,96,43,883/- and under minimum alternative tax (MAT) provisions of section pursuant to an audit objection, the Assessing Officer (AO) issued notice under section 148A(b) on 15.02.2024 calling upon the assessee to explain the allowability of deduction of 4.86 crores under section 80G. The assessee submitted that 16.84 crores was debited in the books as CSR expenditure and correspondingly added back in the computation, certain donations crores were made to institutions eligible under ion 80G, and deduction was lawfully claimed thereon. Notwithstanding the assessee’s detailed response that this issue was duly examined in regular assessment u/s 143(3) dated Printed from counselvise.com 20.12.2019, the AO passed an order under section 148A(d) on 20.03.2024 alleging e section 148. The reassessment culminated on 31.03.2024 with the disallowance of the said deduction under section 80G. 3.2 The assessee carried the matter in appeal Commissioner (Appeals), chall reassessment proceedings as well as the disallowance on merits. The learned CIT(A), however, upheld the reopening, invoking Explanation 1 to section 148 and opining that audit objections constitute “information” so long as the belief. The learned CIT(A) further held, on merits, that donations made out of CSR allocations do not qualify for deduction under section 80G, as such claim allegedly defeats the legislative intent underlying Explanation 2 to secti the challenge to reopening of the assessment proceedings observing as under: “Ground 1: Reopening of Assessment Proceedings The appellant has challenged the order passed under section 148A(d) on the ground that the reasses improperly initiated based on a mere audit objection, without any fresh tangible material, and that its detailed reply dated 22.02.2024 was not considered judiciously by the Assessing Officer (AO). It is further alleged that the AO f independent judgment and simply adopted the audit objection mechanically, thereby rendering the proceedings void ab initio. Upon careful consideration, this ground is found to be without merit. Under the reassessment framework introduced by the Finance Act, 2021, Explanation 1 to section 148 clarifies that information suggesting escapement of income includes inputs such LIC Housing Finance Ltd ITA No. 5037/MUM/2025 the AO passed an order under section 148A(d) on 20.03.2024 alleging escapement of income and issued notice under section 148. The reassessment culminated on 31.03.2024 with the disallowance of the said deduction under section 80G. The assessee carried the matter in appeal before the learned Commissioner (Appeals), challenging the very initiation of reassessment proceedings as well as the disallowance on merits. The learned CIT(A), however, upheld the reopening, invoking Explanation 1 to section 148 and opining that audit objections constitute “information” so long as the AO forms an independent belief. The learned CIT(A) further held, on merits, that donations made out of CSR allocations do not qualify for deduction under section 80G, as such claim allegedly defeats the legislative intent underlying Explanation 2 to section 37(1). The Ld. CIT(A) rejected reopening of the assessment proceedings observing Ground 1: Reopening of Assessment Proceedings The appellant has challenged the order passed under section 148A(d) on the ground that the reassessment proceedings were improperly initiated based on a mere audit objection, without any fresh tangible material, and that its detailed reply dated 22.02.2024 was not considered judiciously by the Assessing Officer (AO). It is further alleged that the AO failed to exercise independent judgment and simply adopted the audit objection mechanically, thereby rendering the proceedings void ab initio. Upon careful consideration, this ground is found to be without merit. Under the reassessment framework introduced by the Finance Act, 2021, Explanation 1 to section 148 clarifies that information suggesting escapement of income includes inputs such LIC Housing Finance Ltd 4 ITA No. 5037/MUM/2025 the AO passed an order under section 148A(d) on scapement of income and issued notice under section 148. The reassessment culminated on 31.03.2024 with the disallowance of the said deduction under section 80G. before the learned enging the very initiation of reassessment proceedings as well as the disallowance on merits. The learned CIT(A), however, upheld the reopening, invoking Explanation 1 to section 148 and opining that audit objections AO forms an independent belief. The learned CIT(A) further held, on merits, that donations made out of CSR allocations do not qualify for deduction under section 80G, as such claim allegedly defeats the legislative intent The Ld. CIT(A) rejected reopening of the assessment proceedings observing Ground 1: Reopening of Assessment Proceedings The appellant has challenged the order passed under section sment proceedings were improperly initiated based on a mere audit objection, without any fresh tangible material, and that its detailed reply dated 22.02.2024 was not considered judiciously by the Assessing ailed to exercise independent judgment and simply adopted the audit objection mechanically, thereby rendering the proceedings void ab initio. Upon careful consideration, this ground is found to be without merit. Under the reassessment framework introduced by the Finance Act, 2021, Explanation 1 to section 148 clarifies that information suggesting escapement of income includes inputs such Printed from counselvise.com as audit objections, provided the AO applies his mind and arrives at a reasoned belief. In this case, the AO issued a notice under section 148A(b), considered the appellant's reply, and thereafter passed a speaking order under section 148A(d), stating why the claim of deduction under section 80G made from CSR funds requires re-examination. The AO has not mechanically acted on the audit note but has independently formed an opinion that the deduction, claimed to the tune of Rs.4.86 crores, may not be legally tenable As held in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) and reiterated in Dr. Mathew Cherian v. ACIT (450 ITR 568), reassessment can be initiated even on a legal issue if the AO possesses relevant information an preliminary stage, a conclusive finding is not required; a prima facie belief that income has escaped assessment suffices. Since the AO's order reflects due process and independent reasoning, the invocation of reassessment proce law. Regarding the argument that reopening constitutes a change of opinion because the issue was previously examined during original assessment, the Court in Kelvinator of India Ltd. (320 ITR 561) did hold that mere change of o However, Explanation 1 to Section 148 now allows reliance on audit inputs as information, provided an independent decision is made. In this case, AO issued a specific notice, evaluated the reply, and concluded with reasoning under evidence has been presented to suggest this was a mechanical exercise. On the issue of reassessment beyond 3 years under section 149(1)(b), the donation entry is clearly traceable in the books and results in a claimed deduction. As such of an entry in the books of account and meets the test under the amended provisions. Thus, all components of Ground 1 are devoid of merit and accordingly dismissed. 3.3 The Ld. CIT(A) also dismissed the claim of the assessee on merit. Ground 2: Deduction Under Section 80G is Fully Allowable Even for CSR Donations LIC Housing Finance Ltd ITA No. 5037/MUM/2025 t objections, provided the AO applies his mind and arrives at a reasoned belief. In this case, the AO issued a notice under section 148A(b), considered the appellant's reply, and thereafter passed a speaking order under section 148A(d), stating why the im of deduction under section 80G made from CSR funds examination. The AO has not mechanically acted on the audit note but has independently formed an opinion that the deduction, claimed to the tune of Rs.4.86 crores, may not be legally tenable in light of CSR provisions. As held in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) and reiterated in Dr. Mathew Cherian v. ACIT (450 ITR 568), reassessment can be initiated even on a legal issue if the AO possesses relevant information and applies his mind. At this preliminary stage, a conclusive finding is not required; a prima facie belief that income has escaped assessment suffices. Since the AO's order reflects due process and independent reasoning, the invocation of reassessment proceedings is in accordance with Regarding the argument that reopening constitutes a change of opinion because the issue was previously examined during original assessment, the Court in Kelvinator of India Ltd. (320 ITR 561) did hold that mere change of opinion is impermissible/ However, Explanation 1 to Section 148 now allows reliance on audit inputs as information, provided an independent decision is made. In this case, AO issued a specific notice, evaluated the reply, and concluded with reasoning under section 148A(d). No evidence has been presented to suggest this was a mechanical On the issue of reassessment beyond 3 years under section 149(1)(b), the donation entry is clearly traceable in the books and results in a claimed deduction. As such, it falls within the category of an entry in the books of account and meets the test under the amended provisions. Thus, all components of Ground 1 are devoid of merit and accordingly dismissed.” The Ld. CIT(A) also dismissed the claim of the assessee on Ground 2: Deduction Under Section 80G is Fully Allowable Even for CSR Donations LIC Housing Finance Ltd 5 ITA No. 5037/MUM/2025 t objections, provided the AO applies his mind and arrives at a reasoned belief. In this case, the AO issued a notice under section 148A(b), considered the appellant's reply, and thereafter passed a speaking order under section 148A(d), stating why the im of deduction under section 80G made from CSR funds examination. The AO has not mechanically acted on the audit note but has independently formed an opinion that the deduction, claimed to the tune of Rs.4.86 crores, may not be As held in ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. (291 ITR 500) and reiterated in Dr. Mathew Cherian v. ACIT (450 ITR 568), reassessment can be initiated even on a legal issue if the AO d applies his mind. At this preliminary stage, a conclusive finding is not required; a prima facie belief that income has escaped assessment suffices. Since the AO's order reflects due process and independent reasoning, edings is in accordance with Regarding the argument that reopening constitutes a change of opinion because the issue was previously examined during original assessment, the Court in Kelvinator of India Ltd. (320 ITR pinion is impermissible/ However, Explanation 1 to Section 148 now allows reliance on audit inputs as information, provided an independent decision is made. In this case, AO issued a specific notice, evaluated the section 148A(d). No evidence has been presented to suggest this was a mechanical On the issue of reassessment beyond 3 years under section 149(1)(b), the donation entry is clearly traceable in the books and , it falls within the category of an entry in the books of account and meets the test under the Thus, all components of Ground 1 are devoid of merit and The Ld. CIT(A) also dismissed the claim of the assessee on Ground 2: Deduction Under Section 80G is Fully Allowable Printed from counselvise.com The appellant has contended that the deduction under section 80G is legally tenable even if the donations are mandatory Corporate Social Responsibility (CSR) allocations. It is argued that while Explanation 2 to section 37(1) bars CSR expenditure as a business deduction, this embargo does not extend to deductions under Chapter VI Reliance has been plac the decision of ITAT Mumbai in Societe Generale Securities India Pvt. Ltd. v. Pr. CIT [(2023) 157 taxmann.com 533], which upheld such deductions, provided they were not made to the Swachh Bharat Kosh or the Clean Ganga Fund (specifically excluded under section 80G(2)(a)(iiihk) and (iiihl)). However, upon a deeper scrutiny of the legislative framework, intent, and facts as revealed in the assessment proceedings, this ground of appeal is not recognizing the legislative purpose of introducing CSR under section 135 of the Companies Act, 2013. The law mandates certain companies to allocate a portion of their profits toward specified social causes. This is statutory obligation. In tandem, the Finance Act, 2014 introduced Explanation 2 to section 37(1) of the Income denying the deduction of such expenses as business expenditure. The Memorandum explainin allowing deduction for CSR expenditure would effectively subsidize such expenditure by the Government, defeating the principle that CSR is an obligation and not a tax expense. The Assessing Officer, in the 148A the assessee incurred Rs.16.84 crores as CSR expenditure, of which Rs.9.72 crores were disallowed in the computation of income. Yet, from this very pool, Rs.4.86 crores were routed through section 80G to claim a deduction un essence, the CSR expenditure disallowed under section 37 as per statute was partially re under section 80G. This attempt circumvents the statutory denial and results in a backdoor tax Cadvantage. T observed that CSR and 80G fundamentally distinct planes: one is a statutory obligation, and the other is a voluntary charitable contribution. The convergence of both, without clear legislative authorization, would architecture of the tax law and CSR policy. The argument that only certain clauses of section 80G (like Swachh Bharat Kosh) specifically bar deduction on CSR donations cannot be stretched to imply that all other CSR LIC Housing Finance Ltd ITA No. 5037/MUM/2025 The appellant has contended that the deduction under section 80G is legally tenable even if the donations are sourced from mandatory Corporate Social Responsibility (CSR) allocations. It is argued that while Explanation 2 to section 37(1) bars CSR expenditure as a business deduction, this embargo does not extend to deductions under Chapter VI-A such as section 80 Reliance has been placed on several decisions of ITATs the decision of ITAT Mumbai in Societe Generale Securities India Pvt. Ltd. v. Pr. CIT [(2023) 157 taxmann.com 533], which upheld such deductions, provided they were not made to the Swachh Bharat Kosh or the Clean Ganga Fund (specifically excluded under section 80G(2)(a)(iiihk) and (iiihl)). However, upon a deeper scrutiny of the legislative framework, intent, and facts as revealed in the assessment proceedings, this ground of appeal is not sustainable. It is important to begin by recognizing the legislative purpose of introducing CSR under section 135 of the Companies Act, 2013. The law mandates certain companies to allocate a portion of their profits toward specified social causes. This is not a voluntary act of charity but a statutory obligation. In tandem, the Finance Act, 2014 introduced Explanation 2 to section 37(1) of the Income-tax Act, explicitly denying the deduction of such expenses as business expenditure. The Memorandum explaining the amendment makes it clear that allowing deduction for CSR expenditure would effectively subsidize such expenditure by the Government, defeating the principle that CSR is an obligation and not a tax The Assessing Officer, in the 148A(d) order, has aptly noted that the assessee incurred Rs.16.84 crores as CSR expenditure, of which Rs.9.72 crores were disallowed in the computation of income. Yet, from this very pool, Rs.4.86 crores were routed through section 80G to claim a deduction under Chapter VI essence, the CSR expenditure disallowed under section 37 as per statute was partially re-characterized as deductible donations under section 80G. This attempt circumvents the statutory denial and results in a backdoor tax Cadvantage. The AO rightly observed that CSR and 80G deductions operate on two fundamentally distinct planes: one is a statutory obligation, and the other is a voluntary charitable contribution. The convergence of both, without clear legislative authorization, would undermine the architecture of the tax law and CSR policy. The argument that only certain clauses of section 80G (like Swachh Bharat Kosh) specifically bar deduction on CSR donations cannot be stretched to imply that all other CSR LIC Housing Finance Ltd 6 ITA No. 5037/MUM/2025 The appellant has contended that the deduction under section 80G sourced from mandatory Corporate Social Responsibility (CSR) allocations. It is argued that while Explanation 2 to section 37(1) bars CSR expenditure as a business deduction, this embargo does not A such as section 80G. ITATs including the decision of ITAT Mumbai in Societe Generale Securities India Pvt. Ltd. v. Pr. CIT [(2023) 157 taxmann.com 533], which upheld such deductions, provided they were not made to the Swachh Bharat Kosh or the Clean Ganga Fund (specifically excluded under However, upon a deeper scrutiny of the legislative framework, intent, and facts as revealed in the assessment proceedings, this sustainable. It is important to begin by recognizing the legislative purpose of introducing CSR under section 135 of the Companies Act, 2013. The law mandates certain companies to allocate a portion of their profits toward not a voluntary act of charity but a statutory obligation. In tandem, the Finance Act, 2014 introduced tax Act, explicitly denying the deduction of such expenses as business expenditure. g the amendment makes it clear that allowing deduction for CSR expenditure would effectively subsidize such expenditure by the Government, defeating the principle that CSR is an obligation and not a tax-optimized (d) order, has aptly noted that the assessee incurred Rs.16.84 crores as CSR expenditure, of which Rs.9.72 crores were disallowed in the computation of income. Yet, from this very pool, Rs.4.86 crores were routed der Chapter VI-A. In essence, the CSR expenditure disallowed under section 37 as per characterized as deductible donations under section 80G. This attempt circumvents the statutory denial he AO rightly deductions operate on two fundamentally distinct planes: one is a statutory obligation, and the other is a voluntary charitable contribution. The convergence of undermine the The argument that only certain clauses of section 80G (like Swachh Bharat Kosh) specifically bar deduction on CSR-funded donations cannot be stretched to imply that all other CSR-linked Printed from counselvise.com donations ar superficially persuasive, ignores the broader policy intent. Judicial discipline demands that provisions be interpreted not in isolation but in harmony with the entire statute. A mandatory expense, statutorily denied as business deduction, cannot simultaneously be repackaged as voluntary charity to gain a deduction unless the law so permits. This view finds support in the legislative materials as well. The CBDT in Circular No. 01/2020 clarified that Explanation 2 section 37(1) reflects the legislative intent to disallow CSR as a tax-saving tool. Additionally, the Hon'ble Madras High Court in CIT v. Infosys Ltd. [(2022) 444 ITR 401 (Mad)] emphasized that a claim not voluntary in nature such as CSR does not fulfi voluntary donation required under section 80G. Furthermore, the AO's analysis aligns with the Supreme Court's principle in McDowell & Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)] where the Hon'ble Court held that tax planning cannot be a colorable device to defeat legislative intent. In the present case, the redirection of CSR expenditure into 80G deductions, after already claiming a disallowance under section 37, is effectively an act of fiscal camouflage. The CSR policy was never intended tax deduction but to make companies partners in nation through direct social expenditure. To allow tax deduction under 80G on mandatory CSR contributions would result in the State indirectly funding a third of such outcome that the Explanation to section 37(1) sought to prevent. Therefore, the conclusion drawn by the AO that both avenues CSR and 80G cannot be simultaneously availed for the same expenditure is well that allowing this deduction would render Explanation 2 to section 37(1) redundant. The statutory distinction between business deductions and Chapter VI their misuse avoided in letter and spirit. Accordingly, Ground 2 is without merit and is dismissed. 4. Aggrieved, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. LIC Housing Finance Ltd ITA No. 5037/MUM/2025 donations are therefore eligible. Such reasoning, though superficially persuasive, ignores the broader policy intent. Judicial discipline demands that provisions be interpreted not in isolation but in harmony with the entire statute. A mandatory expense, enied as business deduction, cannot simultaneously be repackaged as voluntary charity to gain a deduction unless the law so permits. This view finds support in the legislative materials as well. The CBDT in Circular No. 01/2020 clarified that Explanation 2 section 37(1) reflects the legislative intent to disallow CSR as a saving tool. Additionally, the Hon'ble Madras High Court in CIT v. Infosys Ltd. [(2022) 444 ITR 401 (Mad)] emphasized that a claim not voluntary in nature such as CSR does not fulfill the condition of voluntary donation required under section 80G. Furthermore, the AO's analysis aligns with the Supreme Court's principle in McDowell & Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)] where the Hon'ble Court held that tax planning cannot be a olorable device to defeat legislative intent. In the present case, the redirection of CSR expenditure into 80G deductions, after already claiming a disallowance under section 37, is effectively an act of fiscal camouflage. The CSR policy was never intended to create parallel channels of tax deduction but to make companies partners in nation through direct social expenditure. To allow tax deduction under 80G on mandatory CSR contributions would result in the State indirectly funding a third of such expenditure, precisely the outcome that the Explanation to section 37(1) sought to prevent. Therefore, the conclusion drawn by the AO that both avenues CSR and 80G cannot be simultaneously availed for the same expenditure is well-founded. The assessment correctly identifies that allowing this deduction would render Explanation 2 to section 37(1) redundant. The statutory distinction between business deductions and Chapter VI-A incentives must be respected, and their misuse avoided in letter and spirit. rdingly, Ground 2 is without merit and is dismissed. Aggrieved, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. LIC Housing Finance Ltd 7 ITA No. 5037/MUM/2025 e therefore eligible. Such reasoning, though superficially persuasive, ignores the broader policy intent. Judicial discipline demands that provisions be interpreted not in isolation but in harmony with the entire statute. A mandatory expense, enied as business deduction, cannot simultaneously be repackaged as voluntary charity to gain a deduction unless the This view finds support in the legislative materials as well. The CBDT in Circular No. 01/2020 clarified that Explanation 2 to section 37(1) reflects the legislative intent to disallow CSR as a saving tool. Additionally, the Hon'ble Madras High Court in CIT v. Infosys Ltd. [(2022) 444 ITR 401 (Mad)] emphasized that a claim ll the condition of Furthermore, the AO's analysis aligns with the Supreme Court's principle in McDowell & Co. Ltd. v. CTO [(1985) 154 ITR 148 (SC)] where the Hon'ble Court held that tax planning cannot be a olorable device to defeat legislative intent. In the present case, the redirection of CSR expenditure into 80G deductions, after already claiming a disallowance under section 37, is effectively an act of to create parallel channels of tax deduction but to make companies partners in nation- building through direct social expenditure. To allow tax deduction under 80G on mandatory CSR contributions would result in the State expenditure, precisely the outcome that the Explanation to section 37(1) sought to prevent. Therefore, the conclusion drawn by the AO that both avenues CSR and 80G cannot be simultaneously availed for the same orrectly identifies that allowing this deduction would render Explanation 2 to section 37(1) redundant. The statutory distinction between business A incentives must be respected, and rdingly, Ground 2 is without merit and is dismissed.” Aggrieved, the assessee is in appeal before the Tribunal by way Printed from counselvise.com 5. Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 34 and grounds on merit 6. Addressing the ground challenging validity of reassessment, the Ld. counsel for the assessee submitted that issue of claim of deduction u/s 80G was thoroughly examined in the regular assessment proceedings u/s 143(3) of the Act and in the proceedings u/s 147 of the Act without there being any fresh tangible material, the ld AO has was available for assessment u/s 143(3) which is based merely on the that the Assessing Officer u/s 147 of the Act is allowed the income but he is assessment without there being any new fresh tangible material in his possession. The Ld. counsel for the assessee in support thereof relied on the decision of the Hon’ble Bombay High Court in the case of Castrol India Ltd. v. Dy. CIT [2024] 161 taxmann.com 18 (Bombay). 7. We have heard rival submissions with anxious consideration and perused the record as well as the judicial authorities pressed into service. The learned counsel for the assessee our attention to the recent judgment of the Hon’ble Bombay High Court in Castrol India Ltd. v. DCIT Court, after reviewing the statutory scheme and binding LIC Housing Finance Ltd ITA No. 5037/MUM/2025 Before us, the Ld. counsel for the assessee has filed a Paper Book containing pages 1 to 34 assailing validity of the reassessment and grounds on merit. Addressing the ground challenging validity of reassessment, he Ld. counsel for the assessee submitted that issue of claim of deduction u/s 80G was thoroughly examined in the regular ent proceedings u/s 143(3) of the Act and in the proceedings u/s 147 of the Act without there being any fresh , the ld AO has re-visited the same for assessment u/s 143(3) and disallowed sed merely on the ‘change of the opinion he Assessing Officer u/s 147 of the Act is allowed is not permitted to review the already completed assessment without there being any new fresh tangible material in his possession. The Ld. counsel for the assessee in support thereof relied on the decision of the Hon’ble Bombay High Court in the case rol India Ltd. v. Dy. CIT [2024] 161 taxmann.com 18 We have heard rival submissions with anxious consideration and perused the record as well as the judicial authorities pressed The learned counsel for the assessee has rightly d our attention to the recent judgment of the Hon’ble Bombay High Castrol India Ltd. v. DCIT (supra) wherein the Hon’ble Court, after reviewing the statutory scheme and binding LIC Housing Finance Ltd 8 ITA No. 5037/MUM/2025 Before us, the Ld. counsel for the assessee has filed a Paper assailing validity of the reassessment Addressing the ground challenging validity of reassessment, he Ld. counsel for the assessee submitted that issue of claim of deduction u/s 80G was thoroughly examined in the regular ent proceedings u/s 143(3) of the Act and in the proceedings u/s 147 of the Act without there being any fresh the same material which and disallowed the claim, change of the opinion’. He submitted he Assessing Officer u/s 147 of the Act is allowed to reassess not permitted to review the already completed assessment without there being any new fresh tangible material in his possession. The Ld. counsel for the assessee in support thereof relied on the decision of the Hon’ble Bombay High Court in the case rol India Ltd. v. Dy. CIT [2024] 161 taxmann.com 18 We have heard rival submissions with anxious consideration and perused the record as well as the judicial authorities pressed has rightly drawn our attention to the recent judgment of the Hon’ble Bombay High (supra) wherein the Hon’ble Court, after reviewing the statutory scheme and binding Printed from counselvise.com pronouncements of the Supreme Court including of India Ltd. (320 ITR 561), reiterated that reassessment cannot be founded upon a mere reappraisal of the very material which was earlier available and considered. The Hon’ble Court unequivocally held that in absence of fresh tangible material and in absence failure to disclose fully and truly all material facts, reopening is impermissible in law. Hon’ble Bombay High Court held as under: “13. From the perusal of the documents, two glaring facts emerge. One is that all material/documents necessary for computing the income were disclosed and submitted by Petitioner during the course of assessment proceedings leading to an irrefutable conclusion on the part of Petitioner to disclose fully and truly all material facts. Secondly, there is a notable absence of any fresh tangible material coming to the knowledge of the AO and the reopening of assessment is purely on a re very Gaikwad RD same material on the basis of which the original assessment order was passed. 14. It is a well settled principle of law that an AO has no power to review and this power is not to be confused with the power to reassess. The Ap India Ltd. [2010] 187 Taxman 312/320 ITR 561/[2010] 2 SCC 723 has reiterated that mere change of opinion cannot be a ground for reopening concluded assessment. The observations made in para \"6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of \"change of opinion\" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. LIC Housing Finance Ltd ITA No. 5037/MUM/2025 pronouncements of the Supreme Court including CIT v. Kelvinator (320 ITR 561), reiterated that reassessment cannot be founded upon a mere reappraisal of the very material which was earlier available and considered. The Hon’ble Court unequivocally held that in absence of fresh tangible material and in absence failure to disclose fully and truly all material facts, reopening is impermissible in law. In the case of Castrol India Ltd. (supra) Hon’ble Bombay High Court held as under: From the perusal of the documents, two glaring facts emerge. One is that all material/documents necessary for computing the income were disclosed and submitted by Petitioner during the course of assessment proceedings leading to an irrefutable conclusion that there was no failure on the part of Petitioner to disclose fully and truly all material facts. Secondly, there is a notable absence of any fresh tangible material coming to the knowledge of the AO and the reopening of assessment is purely on a re-examination of the very Gaikwad RD same material on the basis of which the original assessment order was passed. 14. It is a well settled principle of law that an AO has no power to review and this power is not to be confused with the power to reassess. The Apex Court in CIT v. Kelvinator of [2010] 187 Taxman 312/320 ITR 561/[2010] 2 has reiterated that mere change of opinion cannot be a ground for reopening concluded assessment. The observations made in paragraphs 6 and 7 read as below: \"6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of \"change of opinion\" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. LIC Housing Finance Ltd 9 ITA No. 5037/MUM/2025 CIT v. Kelvinator (320 ITR 561), reiterated that reassessment cannot be founded upon a mere reappraisal of the very material which was earlier available and considered. The Hon’ble Court unequivocally held that in absence of fresh tangible material and in absence of failure to disclose fully and truly all material facts, reopening is In the case of Castrol India Ltd. (supra) From the perusal of the documents, two glaring facts emerge. One is that all material/documents necessary for computing the income were disclosed and submitted by Petitioner during the course of assessment proceedings that there was no failure on the part of Petitioner to disclose fully and truly all material facts. Secondly, there is a notable absence of any fresh tangible material coming to the knowledge of the AO and the ination of the very Gaikwad RD same material on the basis of which the 14. It is a well settled principle of law that an AO has no power to review and this power is not to be confused with ex Court in CIT v. Kelvinator of [2010] 187 Taxman 312/320 ITR 561/[2010] 2 has reiterated that mere change of opinion cannot be a ground for reopening concluded assessment. The graphs 6 and 7 read as below: \"6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of \"change of opinion\" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, Printed from counselvise.com 7. One must treat the concept of \"change of opinion\" as an in built test to check abuse of power by the assessing officer. Hence, after 1 reopen, provided there is \"tangible material\" to come to the conclusion that there is escapement of income from assessment. Reasons must ha formation of the belief. . . . . . . . . . .\" 15. As held by this Court in Aroni Commercials Ltd. v. Dy. CIT [2014] 44 taxmann.com 304 during the assessment proceedings and replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitut reason to believe that income chargeable to tax has escaped assessment. Paragraph 14 of Aroni Commercials Ltd. (supra) reads as under: \"14. We find that during the assessment proceedings the petitioner had by a letter dated 9 July 20 they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No.4/20 for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen th assessment year 2008 Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to reopen assessment for A.Y. 2008 LIC Housing Finance Ltd ITA No. 5037/MUM/2025 7. One must treat the concept of \"change of opinion\" as an in ilt test to check abuse of power by the assessing officer. Hence, after 1-4-1989, the assessing officer has power to reopen, provided there is \"tangible material\" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. . . . . . . . . . .\" 15. As held by this Court in Aroni Commercials Ltd. v. Dy. [2014] 44 taxmann.com 304 once a query is raised during the assessment proceedings and Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reason to believe that income chargeable to tax has escaped assessment. Paragraph 14 of Aroni Commercials Ltd. (supra) reads as under: \"14. We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing he petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No.4/2007 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to eopen assessment for A.Y. 2008-09 is based on mere LIC Housing Finance Ltd 10 ITA No. 5037/MUM/2025 7. One must treat the concept of \"change of opinion\" as an in- ilt test to check abuse of power by the assessing officer. 1989, the assessing officer has power to reopen, provided there is \"tangible material\" to come to the conclusion that there is escapement of income from ve a live link with the 15. As held by this Court in Aroni Commercials Ltd. v. Dy. once a query is raised Assessee has replied to it, it follows that the query raised was a subject of consideration of the AO while completing the assessment. It is also not necessary that an assessment order should contain reference and/or discussion to disclose its in respect of the query raised. Therefore, the reopening of the assessment, in our view, is merely on the basis of change of opinion of the AO from that held earlier during the course of assessment proceedings and this e justification and/or reason to believe that income chargeable to tax has escaped assessment. Paragraph 14 of Aroni Commercials Ltd. (supra) \"14. We find that during the assessment proceedings the 10 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing he petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon 07 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice e assessment for 09 was considered by the Assessing Officer while originally passing assessment order dated 12 October 2010. This by itself demonstrates the fact that notice dated 28 March 2013 under Section 148 of the Act seeking to 09 is based on mere Printed from counselvise.com change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not referred to in the assessment order passed for A.Y. 200809. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer whi completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on al during the assessment proceeding even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Moreover, one must not forget that the manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and the satisfaction in The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. Ther the present facts as evidenced by a letter dated 8 September 2012 the very issue of taxability of sale of shares under the head capital gain or the head profits and gains from business was a subject matter of consideration by the Assessing Officer during the original assessment proceedings leading to an order dated 12 October 2010. It would therefore, follow that the reopening of the assessment by impugned notice dated 28 March 2013 is merely on the basis of change of opinion of the Ass held earlier during the course of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.\" 16. We have also noted the contents of the impugned order rejecting the objections of Petitioner. An identical and LIC Housing Finance Ltd ITA No. 5037/MUM/2025 change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not referred to in the assessment order dated 12 October 2010 passed for A.Y. 200809. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer whi completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the consideration bestowed by him on all issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Moreover, one must not forget that the manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and the satisfaction in respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. There can be no doubt in the present facts as evidenced by a letter dated 8 September 2012 the very issue of taxability of sale of shares under the head capital gain or the head profits and gains from business was a subject matter of consideration by the sing Officer during the original assessment proceedings leading to an order dated 12 October 2010. It would therefore, follow that the reopening of the assessment by impugned notice dated 28 March 2013 is merely on the basis of change of opinion of the Assessing Officer from that held earlier during the course of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped ment.\" 16. We have also noted the contents of the impugned order rejecting the objections of Petitioner. An identical and LIC Housing Finance Ltd 11 ITA No. 5037/MUM/2025 change of opinion. However, according to Mr. Chhotaray, learned Counsel for the revenue the aforesaid issue now raised has not been considered earlier as the same is not dated 12 October 2010 passed for A.Y. 200809. We are of the view that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. If an Assessing Officer has to record the l issues raised by him during the assessment proceeding even where he is satisfied then it would be impossible for the Assessing Officer to complete all the assessments which are required to be scrutinized by him under Section 143(3) of the Act. Moreover, one must not forget that the manner in which an assessment order is to be drafted is the sole domain of the Assessing Officer and it is not open to an assessee to insist that the assessment order must record all the questions raised and respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the e can be no doubt in the present facts as evidenced by a letter dated 8 September 2012 the very issue of taxability of sale of shares under the head capital gain or the head profits and gains from business was a subject matter of consideration by the sing Officer during the original assessment proceedings leading to an order dated 12 October 2010. It would therefore, follow that the reopening of the assessment by impugned notice dated 28 March 2013 is merely on the essing Officer from that held earlier during the course of assessment proceeding leading to the order dated 12 October 2010. This change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped 16. We have also noted the contents of the impugned order rejecting the objections of Petitioner. An identical and Printed from counselvise.com common place assertion is seen in various such orders rejecting the objections of Assessees. The Department routinely relies upon an o the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 161 Taxman 316/291 ITR 500/[2008] 14 SCC 208 which reads as follows: \"At the stage of issue of notice, the only que there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction.\" 17. However, Assessing Officers without appreciating the true import of the aforesaid decision of the Supreme Court, continue to reopen assessments on the ground of income having escaped material and information was already available with him while passing the original assessment order. Furthermore, while conclusive proof of escapement of income may not be necessary to reopen an assessment, the leas required is a requisite belief based on fresh and tangible material which was not accessible to the AO or that which was deliberately withheld by Assessee, which then would amount to non of the Apex (supra) must not be used by AO to reopen assessments to review the original assessment order on the basis of a change of opinion of the AO, as done in the present case. Further, the reasons to believe notice AO was already seized with information prior to passing of the original assessment order and as such, there is no tangible information on the basis of which he has allegedly formed the requisite belief. 18. In these circumstances that the notice dated 27th March 2021 under section 148 of the Act in respect of income having escaped assessment and the order dated 21st December 2021 passed by the AO rejecting the objections of Petitioner impugned her untenable and cannot be sustained in law. The Petition is allowed”. LIC Housing Finance Ltd ITA No. 5037/MUM/2025 common place assertion is seen in various such orders rejecting the objections of Assessees. The Department routinely relies upon an observation of the Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) [2007] 161 Taxman 316/291 ITR 500/[2008] 14 SCC which reads as follows: \"At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by e Assessing Officer is within the realm of subjective satisfaction.\" 17. However, Assessing Officers without appreciating the true import of the aforesaid decision of the Supreme Court, continue to reopen assessments on the ground of income having escaped assessment despite the fact that all the material and information was already available with him while passing the original assessment order. Furthermore, while conclusive proof of escapement of income may not be necessary to reopen an assessment, the leas required is a requisite belief based on fresh and tangible material which was not accessible to the AO or that which was deliberately withheld by Assessee, which then would amount to non-disclosure of relevant information. The finding Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) must not be used by AO to reopen assessments to review the original assessment order on the basis of a change of opinion of the AO, as done in the present case. Further, the reasons to believe notice itself indicates that the AO was already seized with information prior to passing of the original assessment order and as such, there is no tangible information on the basis of which he has allegedly formed the requisite belief. 18. In these circumstances, we have no hesitation in holding that the notice dated 27th March 2021 under section 148 of the Act in respect of income having escaped assessment and the order dated 21st December 2021 passed by the AO rejecting the objections of Petitioner impugned her untenable and cannot be sustained in law. The Petition is LIC Housing Finance Ltd 12 ITA No. 5037/MUM/2025 common place assertion is seen in various such orders rejecting the objections of Assessees. The Department bservation of the Supreme Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) [2007] 161 Taxman 316/291 ITR 500/[2008] 14 SCC stion is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by e Assessing Officer is within the realm of subjective 17. However, Assessing Officers without appreciating the true import of the aforesaid decision of the Supreme Court, continue to reopen assessments on the ground of income assessment despite the fact that all the material and information was already available with him while passing the original assessment order. Furthermore, while conclusive proof of escapement of income may not be necessary to reopen an assessment, the least that is required is a requisite belief based on fresh and tangible material which was not accessible to the AO or that which was deliberately withheld by Assessee, which then would disclosure of relevant information. The finding Court in Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra) must not be used by AO to reopen assessments to review the original assessment order on the basis of a change of opinion of the AO, as done in the present case. itself indicates that the AO was already seized with information prior to passing of the original assessment order and as such, there is no tangible information on the basis of which he has allegedly , we have no hesitation in holding that the notice dated 27th March 2021 under section 148 of the Act in respect of income having escaped assessment and the order dated 21st December 2021 passed by the AO rejecting the objections of Petitioner impugned herein, are untenable and cannot be sustained in law. The Petition is Printed from counselvise.com 7.1 In the present case, manner of doubt that the assessee had fully disclosed all relevant particulars relating to its CSR expenditure, do deduction under section 80G during the original assessment. The computation clearly reflected the add the claim under section 80G. These matters were indeed subject of enquiry during section 143(3) proceedings, and view while completing the assessment. 7.2 It requires no elaborate exposition to state that audit objections, by themselves, do not constitute tangible material. Even after insertion of Explanation 1 to section 148, such audit inputs cannot vest in the AO a power to reopen unless he independently arrives at a belief founded on fresh information. The record before us reflects no such fresh material; instead, it exhibits a mere change of opinion dressed as reassessment. counsel for the assessee has filed a copy of the extract from the Comptroller and Auditor General ( CAG)of India report ( report no. 12 of 2022) wherein the CAG recommended for amendment in the Act on the issue. A copy of such extract of report placed bef Hon’ble Parliament, which is available on paper book page 29 relevant part of which is reproduced for ready reference as under: “(iv) CBDT needs to consider bringing an amendment or issuing binding clarification as to whether donations to trust house/corporate trusts, out of CSR expenditure by specified companies covered by Section 135 of the Companies Act, 2013 is eligible for deduction under section 80G or not. Such an amendment LIC Housing Finance Ltd ITA No. 5037/MUM/2025 In the present case, the material placed before us leaves no manner of doubt that the assessee had fully disclosed all relevant particulars relating to its CSR expenditure, do deduction under section 80G during the original assessment. The computation clearly reflected the add-back of CSR expenditure and the claim under section 80G. These matters were indeed subject of enquiry during section 143(3) proceedings, and the AO had taken a view while completing the assessment. It requires no elaborate exposition to state that audit objections, by themselves, do not constitute tangible material. Even after insertion of Explanation 1 to section 148, such audit inputs cannot vest in the AO a power to reopen unless he independently arrives at a belief founded on fresh information. The record before us reflects no such fresh material; instead, it exhibits a mere change of opinion dressed as reassessment. Before us, the ld counsel for the assessee has filed a copy of the extract from the Comptroller and Auditor General ( CAG)of India report ( report no. 12 of 2022) wherein the CAG recommended for amendment in the Act on the issue. A copy of such extract of report placed bef Hon’ble Parliament, which is available on paper book page 29 relevant part of which is reproduced for ready reference as under: (iv) CBDT needs to consider bringing an amendment or issuing binding clarification as to whether donations to trust house/corporate trusts, out of CSR expenditure by specified companies covered by Section 135 of the Companies Act, 2013 is eligible for deduction under section 80G or not. Such an amendment LIC Housing Finance Ltd 13 ITA No. 5037/MUM/2025 the material placed before us leaves no manner of doubt that the assessee had fully disclosed all relevant particulars relating to its CSR expenditure, donations, and deduction under section 80G during the original assessment. The back of CSR expenditure and the claim under section 80G. These matters were indeed subject of the AO had taken a It requires no elaborate exposition to state that audit objections, by themselves, do not constitute tangible material. Even after insertion of Explanation 1 to section 148, such audit inputs cannot vest in the AO a power to reopen unless he independently arrives at a belief founded on fresh information. The record before us reflects no such fresh material; instead, it exhibits a mere Before us, the ld counsel for the assessee has filed a copy of the extract from the Comptroller and Auditor General ( CAG)of India report ( report no. 12 of 2022) wherein the CAG recommended for amendment in the Act on the issue. A copy of such extract of report placed before the Hon’ble Parliament, which is available on paper book page 29-34, relevant part of which is reproduced for ready reference as under: (iv) CBDT needs to consider bringing an amendment or issuing binding clarification as to whether donations to trusts, including in- house/corporate trusts, out of CSR expenditure by specified companies covered by Section 135 of the Companies Act, 2013 is eligible for deduction under section 80G or not. Such an amendment Printed from counselvise.com or binding clarification is necessary to ensure th interpreted uniformly by the Assessing Officers across all assessment charges and also to minimize the possibility of litigation. The CBDT stated that Corporate Social Responsibility contribution is in the nature o as expenditure. A specific amendment to this effect was brought in Section 37 of the Income Tax Act vide Finance (No.2) Act, 2014. The eligibility of entities listed in Section 80G of the Income Tax Act p to this amendment was not withdrawn as it is subject to conditions specified in the said Section. However, for the eligibility of donation to Swachh Bharat Kosh, and Clean Ganga Fund set up by the Central Government, which was introduced in Section 80 amendment of Section 37 with regard to corporate social responsibility, a condition was stipulated that only those donations to these two funds will qualify for deduction under Section 80G of the Income-Tax Act which is not spent by the ass corporate social responsibility under sub the Companies 7.3 The Hon’ble Bombay High Court in held in no uncertain terms that re previously scrutinised cannot provide jurisdiction to reopen under section 147. The ratio applies We find no distinguishing feature that would permit a departure from the binding authority of the jurisdictional High Court. 7.4 The issue in dispute involved in the present case being identical to the issue decided in the case (supra), therefore, respectfully following the finding of the Hon’ble Jurisdictional High Court reassessment proceedings initiated under section 148A and concluded under section 147 suffer from a fundamental LIC Housing Finance Ltd ITA No. 5037/MUM/2025 or binding clarification is necessary to ensure that the provisions are interpreted uniformly by the Assessing Officers across all assessment charges and also to minimize the possibility of litigation. (Paragraph 5.1.2.3) The CBDT stated that Corporate Social Responsibility contribution is in the nature of application of income and hence cannot be allowed as expenditure. A specific amendment to this effect was brought in Section 37 of the Income Tax Act vide Finance (No.2) Act, 2014. The eligibility of entities listed in Section 80G of the Income Tax Act p to this amendment was not withdrawn as it is subject to conditions specified in the said Section. However, for the eligibility of donation to Swachh Bharat Kosh, and Clean Ganga Fund set up by the Central Government, which was introduced in Section 80G subsequent to amendment of Section 37 with regard to corporate social responsibility, a condition was stipulated that only those donations to these two funds will qualify for deduction under Section 80G of the Tax Act which is not spent by the assessee in pursuance of corporate social responsibility under sub-Section (5) of Section 135 of the Companies Act, 2013.” The Hon’ble Bombay High Court in Castrol India Ltd. held in no uncertain terms that re-examination of an issue rutinised cannot provide jurisdiction to reopen under section 147. The ratio applies in pari materia to the present case. We find no distinguishing feature that would permit a departure from the binding authority of the jurisdictional High Court. ssue in dispute involved in the present case being identical to the issue decided in the case of Castrol India Ltd. herefore, respectfully following the finding of the Hon’ble Jurisdictional High Court, we are constrained to hold that the reassessment proceedings initiated under section 148A and concluded under section 147 suffer from a fundamental LIC Housing Finance Ltd 14 ITA No. 5037/MUM/2025 at the provisions are interpreted uniformly by the Assessing Officers across all assessment charges and also to minimize the possibility of litigation. (Paragraph 5.1.2.3) The CBDT stated that Corporate Social Responsibility contribution is f application of income and hence cannot be allowed as expenditure. A specific amendment to this effect was brought in Section 37 of the Income Tax Act vide Finance (No.2) Act, 2014. The eligibility of entities listed in Section 80G of the Income Tax Act prior to this amendment was not withdrawn as it is subject to conditions specified in the said Section. However, for the eligibility of donation to Swachh Bharat Kosh, and Clean Ganga Fund set up by the Central G subsequent to amendment of Section 37 with regard to corporate social responsibility, a condition was stipulated that only those donations to these two funds will qualify for deduction under Section 80G of the essee in pursuance of Section (5) of Section 135 of Castrol India Ltd. (supra) examination of an issue rutinised cannot provide jurisdiction to reopen under to the present case. We find no distinguishing feature that would permit a departure from the binding authority of the jurisdictional High Court. ssue in dispute involved in the present case being of Castrol India Ltd. herefore, respectfully following the finding of the Hon’ble we are constrained to hold that the reassessment proceedings initiated under section 148A and concluded under section 147 suffer from a fundamental Printed from counselvise.com jurisdictional infirmity and cannot be sustained in law. Nos. 1(b) and 1(c) of the appeal of the allowed. 8. In view of our finding that the reassessment itself is void, the grounds raised on merits under section 80G for donations made from CSR allocations rendered academic and are t 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on Sd/- (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 26/11/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// LIC Housing Finance Ltd ITA No. 5037/MUM/2025 jurisdictional infirmity and cannot be sustained in law. . 1(b) and 1(c) of the appeal of the assessee are In view of our finding that the reassessment itself is void, the grounds raised on merits—including the eligibility of deduction under section 80G for donations made from CSR allocations rendered academic and are therefore not adjudicated. In the result, the appeal of the assessee is allowed. ounced in the open Court on 26/11/2025. - Sd/ RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai LIC Housing Finance Ltd 15 ITA No. 5037/MUM/2025 jurisdictional infirmity and cannot be sustained in law. The ground assessee are accordingly In view of our finding that the reassessment itself is void, the including the eligibility of deduction under section 80G for donations made from CSR allocations—are herefore not adjudicated. In the result, the appeal of the assessee is allowed. /11/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "