IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.3652/MUM/2025 Assessment Year: 2020-2021 National Payments CIT (Exemptions)

Corporation of India Room No. 601, 6th floor, 1001A B-Wing, 10th floor, The Cumballa Hill MTNL TE Capital, Plot No. C-70 Bandra Building, Peddar Road, Dr.

Vs.

Kurla Complex, Bandra, Gopalrao Deshmukh Marg, Mumbai-400051. Cumballa Hill, Mumbai-400026.

PAN: AACCN 9852 G (Appellant) (Respondent)

Present for:

Assessee : Shri Niraj Sheth a/w Ms. Niyati Parikh, Advocates Revenue : Shri Satya Prakash Singh, Sr. DR Date of Hearing : 28.07.2025 Date of Pronouncement : 09.10.2025

O R D E R

PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of Commissioner of Income Tax (Exemptions), Mumbai, vide order no. ITBA/REV/F/REV5/2024-25/1075324373(1), dated 31.03.2025, passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), for Assessment Year 2020-2021.

2. Grounds taken by the assessee are reproduced as under:

“1) The Learned Commissioner of Income Tax (Exemptions) ["Ld. CIT (E)"] erred in initiating revision proceedings under section 263 of the Income Tax Act, 1961 ("the Act"). Your Appellants submit that the initiation of proceedings under section 263 of the Income Tax Act, 1961 is illegal and bad in law and the order of the Ld. CIT (E)

be quashed.

2) The Ld. CIT (E) erred in stating that there is failure on part the Assessing Officer to apply correct position of law for AY 2020-21 on the ground that Ld. AO had passed the Assessment Order without making necessary inquires and verification before allowing exemption u/s 11 of Income Tax Act, 1961 since the Appellant company was hit by proviso to section 2(15) of the income tax act, 1961 for AY 2017-18 to AY 2019-20. Looking into the facts & circumstances of your Appellant it is submitted that specific queries with respect to clarification "on business income of the trust" and "detailed note on activities carried on by NPCI and explanation as to why the activities of the trust is not hit by proviso to section 2(15) of the income tax act, 1961" were already raised by the Ld. AO in his notices dated 29/06/2021 & 12/11/2021 during the course of assessment proceeding. In response your Appellant vide acknowledgement nos. 154780881140721, 239793631171221, 239970781171221 and 245265231171221 uploaded the necessary details alongwith the Annexures. Thereafter Ld. AO after due application of his mind and in accordance with law, passed the assessment order by accepting the claim of exemption. Therefore proceedings under section 263 of the Income Tax Act, 1961 is illegal, bad in law and the order of the Ld. CIT (E) be quashed.

3) The Ld. CIT (E) erred in applying deeming provision of explanation 2 to Section 263 on the ground that Ld. AO failed to examine or conduct requisite inquiries for the relevant issues. Looking into the facts & circumstances of your Appellant it is submitted that specific queries with respect to relevant issues were already raised by Ld. AO. Thereafter after due application of mind and in accordance with law, Ld. AO passed the assessment order. Therefore, assessment order passed is not erroneous & prejudicial to the interest of the revenue.

3. This issue raised by the assessee is in respect of initiation of revisionary proceedings u/s 263 and passing the revisionary order thereafter. Broadly, the assessee’s contentions are that the Ld. AO has failed to apply correct position of law as held by Ld. Commissioner of Income-tax (Exemptions) [in short ‘the Ld. CIT(E)’], since the Ld. AO did not carry out necessary inquiries and verification while allowing exemption u/s 11 as assessee is hit by proviso to section 2(15) of the Act. According to the Ld. CIT(E), claim of exemption u/s 11 was denied to the assessee for A.Y. 2017-18 to A.Y. 2019-20 since hit by proviso to section 2(15), fact of which formed the basis for