TaxTMI 
TaxTMI 
2016 (6) TMI 177
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....issues raised in the notice u/s 263 of the Act 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 in the notice u/s 263 and has passed the order only after being satisfied with the explanation and evidences filed by the assessee and after examining the 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 26....
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....be set aside u/s. 263 of the Act to be made afresh. In response to the same, Assessee filed its reply dated 11.3.2015 objecting to the proceedings initiated u/s. 263 of the Act. After considering the reply filed by the Assessee-Society, the Ld. Commissioner of Income Tax(E) has passed the impugned order u/s. 263 of the I.T. Act dated 23.3.2016 by holding the assessment order dated 24.3.2014 passed u/s. 143(3) of the Act was passed in a hurried and casual manner without application of mind, without making proper inquiries. Therefore, he held that the assessment order dated 24.3.2014 is erroneous and prejudicial to the interest of revenue and set aside the same with the directions to the AO to examine the issues and pass a fresh assessment in accordance with law after affording due opportunity of hearing to the assessee. 4. Against the above order of the Ld. CIT(E) dated 23.3.2016 passed u/s. 263 of the I.T. Act, the assessee appealed before the Tribunal. 5. We have heard the arguments of both the parties and have carefully perused the relevant materials placed on record before us. The learned Counsel of the assessee submitted that the original assessment for relevant assessmen....
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....ounts, audit reports etc. of all donors, copies whereof are placed at pages No.84 to 169 of the assessee's paper book. It was pointed out by him that all these details had been filed by the assessee before the A.O. in response to the specific query raised by the A.O. in his notice dated 23.01.14, a copy whereof is placed at page No.57 to 60 of the assessee's paper book. It was further contended by him that all such donations were corpus donations and each of the donor had confirmed before the A.O. that the amounts donated by them were towards corpus donation for the assessee society and thus were covered by the provisions of section 11(1)(d) of the Act. It was contended by him that the allegation of the learned CIT(E) that evidence regarding genuineness of the transaction and capacity of the donors had not been submitted, is therefore unjustified and not borne out of material available on record of the Assessing Officer. It was further contended by him that this was the case where the A.O. had duly made the required inquiries for verification of the corpus donation and it was only when the A.O. was satisfied with the details and voluminous documentary evidences filed by the assesse....
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....tice, the A.O. submitted that these room rent receipts were in respect of hostel fee received by the assessee society from its own students in the various institutes run by it and was incidental to the activity of education carried out by the assessee society. He further submitted that the assessee society had been earning such hostel fees from its students in all the earlier years and our attention was drawn to the comparative chart of hostel fee receipts placed at page No.170 of the assessee's paper book. It was further contended by the learned A.R. that the allegation of the CIT(E) in the notice u/s 263 that the assessee has not filed details to explain the nature of these receipts and whether these are eligible u/s 11 of the Act, is also factually wrong and not borne out of any material on record. The A.R. pointed out that the Assessing Officer in his questionnaire dated 23.1.14 has raised a specific query in question No.26 whereby he has required the assessee to justify the hostel receipts in the light of amended provisions of section 2(15) of the Act. He further submitted that reply to this query had been submitted by the assessee during the course of assessment proceedings v....
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....and was purchased by the assessee society in addition to the land purchased by it in the same location in the immediately preceeding year for expansion of the assessee's educational activity. The A.R. pointed out that the assessee had duly submitted a copy of the registered sale deed before the Assessing Officer and a copy thereof is placed at pages No.78 to 83 of the assessee's paper book. It was contended by him that the observation of the CIT(E) that no evidence in support of the expenditure has been submitted is factually wrong, when the assessee has duly submitted the copy of the registered sale deed and thus the entire detail regarding investment of Rs. 1,19,03,750/- in land at Bahadurgarh in the form of sale deed in favour of the appellate society was furnished. The A.R. further submitted that the details of payment made for purchase of this land were duly given in the registered sale deed and it clearly proved that the assessee society had paid the sale consideration through cheques drawn on its bank account with Indian Overseas Bank, Janakpuri, New Delhi. It was further contended by the A.R. that during the course of assessment proceedings the details of bank accounts as w....
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.... that the statue of Shri Surajmal was installed by the assessee society during the instant year and all the expenses on statue were incurred in relation to such statue. The A.R. further pointed out that a copy of the Memorandum of Association of the assessee society was also filed before the A.O. which is available at pages No. 171 to 191 of the paper book. He drew our attention to page No.171 where it was pointed out that under the Aims & Objects of the assessee society it was clearly stated that the society is a non political and non Sectarian organisation formed to perpetuate the memory of the great Indian Hero and patriot Surajmal of Bharatpur. It was contended by the A.R. that the name of the assessee society was also after the same Indian Hero and Patriot Shri Surajmal of Bharatpur and therefore the expenditure incurred by the assessee society on installation of his statue was in accordance with Aims & Objects of the assessee society. The A.R. further submitted that even in the immediately preceeding year query had been raised by the Assessing Officer during the course of assessment proceedings relation to the advances given in respect of statue of Maharaja Surajmal and a spe....
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....ishing inquiries which is not permissible in law. He relied on the decisions of Hon'ble Delhi High Court in the case of DIT vs. Jyoti Foundation reported in 357 ITR 388 as also the judgment of Hon'ble Supreme Court in the case of CIT vs. Malabar Industries reported in 243 ITR 83. The A.R. also relied on the order of 'G' Bench of Delhi ITAT in the case of the assessee society for assessment year 2011-12 in ITA No. 2011/Del/2015. He prayed for quashing the notice u/s 263 as well as the order passed the u/s 263 of the Act. 5.5 The learned CIT(DR) appearing for the Revenue submitted that from a perusal of the impugned assessment order it appeared that the A.O. had issued a routine questionnaire and had framed the assessment only on the basis of details and information submitted by the assessee without carrying out any independent inquiry and verification. She further referred to the order of the CIT(E) and submitted that the CIT(E) had found the assessment order to be erroneous as well as prejudicial to the interest of Revenue on all the four issues raised by him in his notice u/s 263 of the Act. The learned DR supported the action of the CIT(E) by pointing out that the assessment o....
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....rs reported in 154 ITR 244. He further argued that the source of acquisition of land was verifiable from the registered sale deed filed by the assessee and was also verifiable from the audited accounts of the assessee as also the bank accounts and books of accounts which were duly produced and examined by the Assessing Officer during the course of assessment proceedings. The A.R. further submitted that the learned CIT(E) had also erred in drawing adverse inference against the assessee by holding in para 5 of the impugned order that the assessee had not produced supporting documents in his office. He contended that the entire supporting documents were available on the assessment record, and the learned CIT(E) ought to have examined the same before issue of notice u/s 263 and even during the course of the proceedings u/s 263 of the Act. He also contended that the judgments relied upon by the learned D.R. were not applicable in the facts of the assessee's case as in this case the assessment order was passed after making all inquiries and verification which should have been made and that the assessment order could not be held to be erroneous and prejudicial to the interest of the Reven....
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....dopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." 5.8 In the instant case we find that that the Assessing Officer has made the required inquiries on all the four issues raised by the Ld. CIT(E) in the impugned notice u/s 263, when the A.O. issued questionnaire dated 23.01.14. It is further seen from a perusal of the documents filed by the assessee in its paper book that the assessee has duly filed its reply along with supporting documentary evidences in respect of all the issues raised by the Ld. CIT(E) in his notice and order u/s 263. We note that the AO has taken note of room rent receipts, corpus donations as well as additions to fixed assets in the assessment order passed by him, which clearly indicates that all these four issues were duly considered by him while passing the assessment order. Therefore it cannot be said that it is a case of no inquiry on the issu....
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....of providing education and therefore the provision of hostel to the students is an incidental activity and therefore the room rent receipts from hostel are found to be covered by section 2(15) of the Act and the order of assessment cannot be said to be erroneous and prejudicial to the interests of Revenue when the claim of the assesse was accepted only after making inquiry on this point. It is also seen that such room rent receipts have been earned by the assessee society in all the earlier years also and exemption u/s 11 of the Act has always been allowed. Accordingly even as per the rule of consistency no adverse inference can be drawn against the assessee society on this issue. 5.10. The assessee society in support of the investment made by it in land at Bahadurgarh has submitted a copy of registered sale deed. A perusal of this registered sale deed shows that the details of payment made by the assessee society for acquisition of the land are duly stated in the sale deed itself where the details of bank account of the assessee society from which payments have been made are duly reflected. It is further seen that the investment made by the assessee society in this land is duly....