2016 (7) TMI 535

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.... 2. The assessee raised the following grounds of appeal: 1. "The order passed by the Commissioner of Income Tax Davengere is perverse and contrary to the facts and circumstances of the case. 2. The appellant denies itself being liable to be assessed at Rs. 51,84,582/- as against the returned income. 3. The Commissioner of Income tax Davengere was not justified in directing the assessing officer under section 263 of the Act to bring to tax the entire donation amount that was received by the Appellant Trust. 4. The Commissioner of Income Tax Davangere failed to appreciate that the donation received by the Appellant trust was in the form of corpus donation which is capital receipt in nature and the same was not liable to tax. 5....

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....s. 51,84,582/-. 4. While matter stood thus, the CIT, Davangere, had issued a show cause notice dated 17/4/2013 calling upon the assesseetrust to show cause why the assessment order passed u/s 143(3) dated 28/03/2012 should not be treated as erroneous and prejudicial to the interests of revenue, as the AO failed to bring to tax corpus donation to the extent of Rs. 45,58,900/- as the assessee-trust was not granted registration u/s 12A of the Act. In response to the said show cause notice, the assessee-trust replied vide its letter dated 23/4/2013 that out of the total donations received of Rs. 70,58,900/-, an amount of Rs. 20 lakhs was received as loan from International Construction Ltd., thus leaving a balance of Rs. 45,58,900/- and out ....

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....Rs. 45,58,900/-, Rs. 41,47,000/- was brought to tax u1s.68 of the Act as cash credit. The Assessing Officer has not given any exemption as per Sec.12(1) of the Act in respect of donation treated as corpus donation. When Rs. 41,47,0001- is brought to tax u1s.68, out of the total corpus - donation of Rs. 45,58,9001-, the same issue cannot be subject matter of /Revision on change of opinion. However, the learned Assessing Officer has accepted loan amount of Rs. 25,00,000/- received from International Construction Ltd after satisfying himself regarding the genuineness of this transaction. The xerox copy of Receipt No.247 dated 13.04.2009 issued to Subhash Projects is enclosed. Considering the above, we request you to kindly drop the pr....

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.... consequential order, the AO had to afford reasonable opportunity of being heard to the assessee. 5. Being aggrieved by this order of the CIT, assessee-trust is in appeal before us in the present appeal. 6. Learned counsel for assessee contended that the order passed u/s 263 exercising power of revision on the mere proposal sent by the new AO without application of mind and therefore, he prayed that exercise of power by the CIT u/s 263 was not justified. Learned counsel for the assessee further contended that issues raised in show cause notice were examined by the AO and submitted that the very fact that out of total donations of Rs. 70,50,900/- an amount of Rs. 41,47,000/- was brought to tax goes to show that the AO had applied his m....