Tribunal overturns Commissioner's order, reinstates Assessing Officer's decision on corpus donation

The Tribunal overturned the Commissioner of Income Tax's order under section 263, reinstating the Assessing Officer's decision regarding a corpus donation received by a charitable society. The Tribunal found that the Assessing Officer had conducted a thorough inquiry, accepted the income after due consideration, and that the donation did not prejudice revenue as the impact would be neutral due to the society's charitable activities. Consequently, the Tribunal quashed the Commissioner's order, ruling in favor of the assessee.

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Issues involved:
The judgment involves assessing the correctness of an order passed under section 263 of the Income-tax Act, 1961 by the Commissioner of Income Tax (Exemption) concerning the assessment year 2015-16.

Assessment of Corpus Donation:
The assessee, a registered society with charitable objects, received a corpus donation of Rs. 1 crore from M/s. Suran Protsahan. The Commissioner of Income Tax (CIT) alleged that the Assessing Officer did not inquire into the receipt of the donation, leading to an erroneous assessment order. The CIT set aside the assessment order for further inquiry, citing Explanation 2 to section 263 of the Act.

Contentions and Findings:
The assessee contended that detailed inquiries were made during assessment proceedings, providing all necessary details and evidence, including bank statements and donor information. The Assessing Officer had accepted the income declared after due inquiry. The Departmental Representative argued that the donation was received in the subsequent financial year, making the order erroneous. However, the Tribunal found that the Assessing Officer had conducted a thorough inquiry, and the corpus donation was properly reflected in the records.

Decision and Conclusion:
The Tribunal observed that the Assessing Officer had diligently investigated the corpus donation issue and accepted the return of income after due consideration. The Tribunal found no clear finding of prejudice to the Revenue in the CIT's order under section 263. Even if the donation was considered general, the tax impact would be neutral due to the assessee's charitable activities. Therefore, the Tribunal quashed the CIT's order and reinstated the Assessing Officer's order, allowing the appeal.

Separate Judgment:
The judgment was delivered by Shri Saktijit Dey, Judicial Member, and Shri M. Balaganesh, Accountant Member of the Appellate Tribunal ITAT Delhi.

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