TaxTMI 
TaxTMI 
2020 (11) TMI 618
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....see, The West Bengal National University of Juridical Science (WBNUJS) is one of the premier national law schools of India. It was brought into existence by the Government of West Bengal, by way of the WBNUJS Act, 1999 (West Bengal Act IX of 1999) adopted by the West Bengal Legislature in July, 1999. The University was notified under Clause (f) of Section 2 of the UGC Act, 1956 in August, 2004 and was granted permanent affiliation by the Bar Council of India in July, 2005. The Chief Justice of India is the Chancellor of the WBNUJS and is also the Chairman of the General Council, the supreme policy making body of University. The assessee got registration u/s 12A of the Act on 09/12/2016 vide M. No.: CIT(E)/10E/666/2016-17/S-0307/3396-98. The ld. CIT(E), Kolkata, has also granted approval to the assessee u/s 10(23C)(vi) of the Act on 27/09/2016. The approval is applicable from the Assessment Year 2017-18 onwards. 3.1. The assessee filed its original return of income for the Assessment Year 2016-17 on 20/10/2016. Notice u/s 143(2) of the Act was issued on 10/07/2017 and scrutiny proceedings initiated.. The assessee got registration u/s 12A of the Act on 09/12/2016. Thereafter, t....
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....on 11(2) is to be allowed only if the return of income as well as Form-10 is filed before the due date. In this case, delay in filing of form 10 only has been condoned in exercise of powers delegated to the undersigned. It however, does not mean that the delay in filing of return of income also stands condoned. In view of the requirements of Section 13(9) the action of the A.O. in allowing accumulation u/s 11 (2) in the case of a late return is clearly erroneous and prejudicial to the interest of revenue. The proper remedy, if at all, available to the assessee was to apply to C.B.D.T. for condonation of delay in filing of return of income. In the absence of condonation of delay in filing of return of income. the claim of exemption u/s 11(2) cannot be allowed in the facts of the present case. The Assessment Order of the A.O. is therefore erroneous and prejudicial to the revenue. The A.O. is accordingly directed to compute the income without allowing accumulation u/s 11 (2)." 4. The ld. Counsel for the assessee submitted that the order passed u/s 263 of the Act is incorrect in law as well as on facts. He filed a paper book running into 166 pages and drew t....
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.... the ld. CIT(E), as the Circular No. 6/2020 issued by the CBDT to condone the delay, was issued much later on 19/02/2020. He submits that this legal issue of applicability of Section 13(9) of the Act, has not been examined by the Assessing Officer while completing the assessment u/s 143(3) of the Act on 31/10/2018 which is an error, which caused prejudice to the interest of revenue. He pointed out that the twin conditions that i.e., (a) return of income has to be filed in time and (b) the claim has to be made by filing Form No. 10, have to be satisfied for claiming exemption. He argued that the first condition was not satisfied and hence the ld. CIT(E) was forced to revise the order u/s 263 of the Act. On the legal arguments raised by the assessee, the ld. D/R submitted that information can be gathered from any source by the Commissioner of Income Tax and what the Assessing Officer recommended was only information but the powers were exercised by the ld. CIT(E) u/s 263 of the Act by application of mind. He distinguished all the case-law cited by the ld. Counsel for the assessee. 6. In reply, the ld. Counsel for the assessee submitted that the original return of income was in fac....
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....O is erroneous in so far as prejudicial to the interest of the revenue, he may after giving opportunity of being heard to the assessee pass orders as prescribed under the Act. So, the power vested in the CIT is that of revisional jurisdiction to interfere with the order of AO, if it is erroneous in so far as prejudicial to the revenue and, therefore, the power to exercise the revisional jurisdiction is vested only with the Pr. Commissioner/Commissioner if he considers the order of the AO to be erroneous in so far as prejudicial to the interest of the revenue. Therefore, this power is vested with the Pr. CIT/CIT to exercise revisional jurisdiction is only when he considers that the order passed by the AO is erroneous in so far as prejudicial to the interest of the revenue and that power cannot be usurped by the AO to trigger the revisional jurisdiction vested with the CIT as per the scheme of the Act which gives various power to various authorities to exercise and they have to exercise powers in their respective given sphere which is clearly ear-marked and spelled out by the statute. Here, we note that the AO who is empowered by the Act to assess a subject within a prescribed time p....
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....r set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the following conditions are complied with, namely:-] 2[(a) such person furnishes a statement in the prescribed form and in the prescribed3 manner4 to the Assessing Officer, stating the purpose for which the income is being accumulated or set apart and the period for which the income is to be accumulated or set apart, which shall in no case exceed five years; (b) the money so accumulated4 or set apart is invested or deposited in the forms or modes specified in sub-section (5); (c) the statement referred to in clause (a) is furnished on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the previous year: Provided that in computing the period of five years referred to in clause (a), the period during which the income could not be applied for the purpose for which it is so accumulated or set apart, due to an order or injunction of any court, shall be excluded.] 5[Explanation.-Any amount credited or paid, out of income referred to in clause (a) or clause (b) of....
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.... Explanation 3.-For the purposes of this section, a person shall be deemed to have a substantial interest in a concern,- (i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-section (3); (ii) in the case of any other concern, if such person is entitled, or such person and one or more of the other persons referred to in sub-section (3) are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.] 10.1. We find that the Assessing Officer in his order passed u/s 143(3) of the Act on 31/10/2018 had considered each and every aspect of this issue. In fact, the return of income was filed on 20/10/2016 declaring Nil income and this was in time. The assessee filed the revised return of income on 29/11/2017 and this was selected for scrutiny. The....
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....the assessee. 4. The assessee is still aggrieved and has come up in appeal before the Tribunal. Shri Atul K. Jasani, the learned counsel appeared for the assessee and Shri V. S. Gore, the learned Departmental Representative, appeared for the Revenue. After hearing both the parties I am of the view that the AO as bound to rectify the order in the light of the decision of the Hon'ble Calcutta High Court cited above. Since the Hon'ble Calcutta High Court has held that the filing of the audit report in Form No. 10B was merely a procedural formality for the purpose of enabling the AO to allow the benefit of exemption to the trust and such procedural defect only makes the return become defective and rectifiable, the assessee is to be given the benefit as the defect has since been removed by filing of Form No. 10B. The AO is directed to rectify the order accordingly. 5. In the result, the appeal stands allowed." 12. In the case also, the Assessing Officer was bound to consider the original return of income which was filed in time as well as the Form 10 filed after condonation of delay by the ld. CIT(E) and grant exemption to the assessee. He did so in the asse....
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....t. Tara Devi Aggarwal V. CIT (1973) 88 ITR 323 (SC)". 25. In Max India Ltd. (3 Supra), reiterated the view in Malabar Industrial Co.Ltd. (2 Supra) and observed that every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income Tax Officer adopted 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. On the facts of that case, Sec.80HHC(3) as it then stood was interpreted by the Assessing Officer but the Revenue contended that in view of the 2005 Amendment which is clarificatory and retrospective in nature, the view of the Assessing Officer was unsustainable in law and the Commissioner was correct in invoking Sec.263. But the Supreme Court rejected the said contention and held that when the Commissioner passed his order disagreeing with the view of the Assessing Offi....
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....sing Officer called for interference and revision. 27. In Sunbeam Auto Ltd.( 5 Supra), the Delhi High Court held that the Assessing Officer in the assessment order is not required to give a detailed reason in respect of each and every item of deduction, etc.; that whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately; there must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. In that case, the Delhi High Court held that the Commissioner in the exercise of revisi....
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....cer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income Tax Officer; but that would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure; there must be material available on the record called for by the Commissioner to satisfy him prima facie that the order is both erroneous and prejudicial to the interests of the Revenue. Otherwise, it would amount to giving unbridled and arbitrary power to the revising authority to initiate proceedings for revision in every case and start re-examination and fresh inquiry in matters which have already been concluded under law. 29. In M.S. Raju(15 Supra), this Court has held that the power of the Commissioner under Sec.263 (1) is not limited only to the material which was available before the Assessing Officer and, in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment. ....
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....sional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the and must irresistibly lead to the conclusion that the order of the Income Tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income Tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each and every disallowance, deduction, etc., it is incumbent upon the Commissioner not to exercise his suomotu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. e) The Commissioner cannot initiate proceedings with a v....