AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 250
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....and that the assessee's claim of exemption of income under various sections and provisions of law has been accepted by the Assessing Officer without application of mind and without bringing on record necessary details and making necessary inquiries. That the learned CIT has erred in drawing the aforesaid conclusion without appreciating the fact that the Assessing Officer has made all due and necessary inquiries on all the issues raised by her in the notice U/s 263 and has passed the order only after being satisfied with the explanations and evidences filed by the assessee and after examining and books of accounts, bills, vouchers etc. during the course of assessment proceedings." "c) That the learned CIT (Exemp.) has erred in drawing adverse inference against the assessee only on the basis of suspicion without pointing out any specific discrepancy in various details and documentary evidences filed by the assessee before the Assessing Officer in response to questionnaire issued by him and duly examined by him during the course of assessment proceedings." "d) That the learned CIT (Exem.) has erred in passing the impugned order U/s 263 of the Act without having any valid basis/ ....
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....cond issue of room rent receipts the Ld counsel pointed out that the AO raised query by posing question no. 26 of the questionnaire to the assessee and the assessee replied the same in Para 4 in the reply dated 08.08.2013. The Ld Counsel pointed out that in Para 3.1 of the impugned order the CIT(E) wrongly alleged the same without any conclusive finding. The Ld Counsel pointed out that the room rent receipts were regularly allowed to the assessee for previous A.Ys as the same were incidental to the main object of the assessee i.e. dispensing of education and the AO allowed the same by following rule of consistency which cannot be alleged as erroneous and prejudicial to the interest of the revenue. 6 On the third issue of investment in land the Ld Counsel pointed out that reply to the question no. 8 and 29 of the questionnaire the assessee filed its stand in reply at serial no. 2 (available at pages 59 to 60 of the assessee paper book) and the assessee also submitted relevant document i.e. copy of sale deed at page no 70 to 74 of the assessee paper book. The Ld Counsel vehemently pointed out that the CIT(E) at page no 4 Para 3.2 of the impugned order recorded factually incorrect ob....
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.... spend six months in the assessment proceedings and he issued show cause notices and questionnaire mechanically without applying his mind and reply of the assessee was accepted without any justified reasoning and adjudication therefore the order has to be held as erroneous and prejudicial to the interest of the revenue. 10 The Ld CIT DR also submitted his contentions regarding all four issues raised by the CIT(E) and submitted that on the issue of Corpus Donations proper enquiry was not made and CIT(E) has in Para 3 of the impugned order clearly held that merely because questionnaire was issued and assessee filed its reply to the same does not show the conduct of required enquiry and the enquiry cannot be made by issuing questionnaire and if there is no deliberations or conclusion by the AO on the issue showing that he applied his mind to the facts and material placed before him then it would be a case of lack of enquiry which empowered the CIT(E) with valid jurisdiction to invoke provisions of section 263 of the Act. 11 The Ld CIT DR also pointed out that regarding room rent the assessee submitted only break up of the receipts and no further enquiry was carried by the AO therefo....
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....iry was not undertaken, as in se, the order is erroneous and prejudicial too and, therefore, revisable. Investigation should always be faithful and fruitful. Unless all fruitful areas of enquiry are pursued the enquiry cannot be said to have been faithfully conducted. In a different context the apex court observed "contra veri- lex nunquam aliquid permittit: implies a duty on the court to accept cord its approval only to a report which is the result of faithful and investigation" See Sidhartha Vashisht alias Manu Sharma v. State (NCT of Delhi) d in [2010] 6 SCC 1 paragraph 200 at page 80)" 14 On careful considerations of rival submissions we are satisfied that the AO raised details queries on all four issues as agitated by the CIT(E) in the impugned notice issued under section 263 of the Act. From the assessee's paper book page no 59 and 60 it is clear that the assessee filed its reply along with all documents relevant to the issues, therefore we are unable to agree with the contentions of LD CIT(E) that it is a case of no enquiry on the issues reviewed by the CIT(E). Further more, if the impugned order is logically tested on the point of view of inadequate enquiry then we not....
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....ent of consideration. Therefore the conclusion of the AO cannot be held as unsustainable or erroneous and prejudicial to the interest of the revenue. On the issue of addition to capital assets the CIT(E) has merely proceeded on the basis of suspicion and no allegation about wrong or unsustainable conclusion in the assessment order has been brought out by the CIT(E). 17 In view of above discussion we are of the considered opinion that the AO conducted required and adequate enquiry regarding all four points and after considering the reply of the assessee and all relevant material, evidence and explanations of the assessee and by following the rule of consistency as well as provisions of the Act rightly passed impugned assessment order which cannot be held as erroneous or prejudicial to the interest of the revenue on any issue as alleged in the notice u/s 263 of the Act. It is pertinent to note that as per the ratio of the decision of Hon'ble Calcutta High Court in the case of CIT Vs Maithan International (Supra) it was held that unless all fruitful areas of enquire are pursed the enquire cannot be said to have been faithfully conducted and in this situation provisions of section 263....