Appeal allowed as revisionary jurisdiction under section 263 of Income Tax Act deemed unwarranted

The ITAT Kolkata allowed the appeal of the assessee, ruling that the Ld. CIT(E) erroneously exercised revisionary jurisdiction under section 263 of the Income Tax Act. The alleged mistake in claiming the application amount was found to be rectified by the assessee, and there was no basis for the apprehension of double deduction. The assessment order by the AO was upheld, and the revisional jurisdiction of the Ld. CIT(E) was deemed unwarranted.

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Issues:
1. Revisionary jurisdiction of Ld. CIT(E) under section 263 of the Income Tax Act.
2. Admissibility of application claimed by the assessee for assessment year 2017-18.

Issue 1: Revisionary jurisdiction of Ld. CIT(E) under section 263 of the Income Tax Act:
The appeal was against the order of Ld. CIT(Exemptions), Kolkata for the assessment year 2017-18. The assessee contended that Ld. CIT(E) did not have the revisionary jurisdiction under section 263 of the Act as the AO's order was not erroneous or prejudicial to revenue. The Ld. CIT(E) issued a Show Cause Notice pointing out an alleged fault in the assessment order by allowing an exemption incorrectly. The assessee responded, explaining the alleged mistake and providing supporting documents. However, Ld. CIT(E) disagreed with the explanation and set aside the issue to the assessing officer for verification. The ITAT Kolkata, after hearing both parties, found that the mistake in the Schedule-I was rectified by the assessee, and the alleged double deduction claim was unfounded. Therefore, the ITAT concluded that the Ld. CIT(E) erroneously exercised revisional jurisdiction under section 263, and the appeal of the assessee was allowed.

Issue 2: Admissibility of application claimed by the assessee for assessment year 2017-18:
The Ld. CIT(E) alleged that the assessee wrongly claimed an application amount in the assessment year 2017-18, resulting in double exemption. The assessee argued that the mistake in Schedule-I was rectified, and the amount applied was part of the total claimed. The ITAT analyzed the documents provided by the assessee, including Schedule-I, Schedule EC, and computation of income. The ITAT found that the assessee had applied the amount correctly and had set apart another sum as surplus under section 11(2) of the Act. The ITAT concluded that the Ld. CIT(E)'s apprehension of double deduction was erroneous, and the AO did not err in framing the assessment order. Therefore, the ITAT held that the revisional jurisdiction exercised by Ld. CIT(E) was unwarranted, and the appeal of the assessee was allowed.

In conclusion, the ITAT Kolkata ruled in favor of the assessee, quashing the revisional jurisdiction exercised by Ld. CIT(E) under section 263 of the Act. The ITAT found that the alleged mistake in claiming the application amount was rectified by the assessee, and there was no basis for the apprehension of double deduction. The assessment order by the AO was upheld, and the appeal of the assessee was allowed.

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