Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1984-85, the following two questions of law have been referred to this court : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that there is nothing illegal on the part of the assessee in giving notice to the Income-tax Officer in Form No. 10 listing all its objects for the purpose of accumulation of income as provided in Section 11(2) of the Income-tax Act, 1961, which requires specification of the purposes ? Whether, on the facts and in the circumstances of the case, the Tribunal is justified in cancelling the order of the Commissioner of Income-tax under Section 263 of the Income-tax Act, 1961, holding that the assessment of the Income-tax Officer allowing accumulation of the income under Section 11(2) of the Income-tax Act, for all the objects for which the trust was created and not for any specific objects, was neither erroneous nor prejudicial to the interests of the Revenue"
(2.) The facts leading to this reference are that the assessee, a public charitable trust, was assessed by the Income-tax Officer for the assessment year 1984-85 on January 7, 1987, and allowed exemption under Section 11, relying on the notice given by the assessee under Section 11(2). Thereafter, the Commissioner of Income-tax, invoking the powers vested in him under Section 263 of the Income-tax Act, 1961, called for and examined the assessment records of the assessee. On such examination, the Commissioner of Income-tax found that, in the notice given by the assessee under Section 11(2) of the Act, the assessee had listed as purposes of accumulation of income all the charitable objects for which the assessee-trust was created. According to the Commissioner of Income-tax, Section 11(2) enjoins on the assessee to state the specific or concrete purposes to which its income is being accumulated for application at a later point of time. Since this was not done by the assessee, the impugned order of the Income-tax Officer was erroneous and prejudicial to the interests of the Revenue. He, therefore, put the assessee on notice of his intention to pass suitable orders under Section 263 of the Act.
(3.) The assessee responded by pointing out that the notice given by it in Form No. 10 was valid in law and that the Income-tax Officer rightly exempted the assessee's income on the basis of the said notice and that, therefore, the impugned order of the Income-tax Officer was neither erroneous nor prejudicial to the interests of the Revenue.;