TaxTMI 
TaxTMI 
2021 (7) TMI 881
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....rt and various high courts including jurisdictional high courts. 2. The CIT on the facts and the circumstances of the case and in law has grossly erred in invoking jurisdiction under Sec.263. When the case was selected for complete scrutiny there was proper application of the mind by the assessing officer and details were given which were sought for and clarified during the assessment proceedings under Sec.143(3) of the income tax act. 3. On the facts and circumstances of the case and in law the assessing officer had duly examined the issue of donations, expenditure of the trust on charitable activities and receipts of the trust and hence the CIT cannot sit on judgment of the assessing officer on the assessment order under Sec.143(3) which was passed after submissions of all details as per the questionnaire and the case was fully discussed and requisite details were examined hence the CIT has wrongly assumed jurisdiction under s263 of the income tax act The appellant craves leave to add amend or alter the aforesaid ground's of appeal which are without prejudice to one another." 2. Briefly stated, the assessee which is registered as a charitable org....
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.... of expenditure of Rs. 11.88 crores were called for and accepted only after necessary verificationsthat were carried out by the A.O to his satisfaction. As regards the contributions of Rs. 12.84 crores that were claimed to have been received during the year under consideration, it was submitted by the assessee that the same comprised of foreign donations of Rs. 11,90,32,941/- and local donations of Rs. 80,91,848/-. It was the claim of the assessee that the 'Form FC-6'that was filed in the course of the assessment proceedings revealed the complete profile of the foreign donors, viz. their names, addresses and purpose of the donation. Apart from that, it was submitted by the assessee that it had furnished the party wise details of the donors in the course of assessment proceedings. In sum and substance, it was the claim of the assessee before the CIT that it was incorrect on his part to say that the A.O in the course of the assessment proceedings had not verified the assessee's claim of expenses, and also, the details pertaining to the donations. Backed by the aforesaid contentions, it was the claim of the assessee that now when the A.O after making necessary verifications in context....
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....immediately filed the appeal. In support of his aforesaid claim the ld. A.R had taken us through the 'affidavit' of Mr. Alireza A. Bundeally, trustee of the assessee trust,wherein the aforesaid facts were deposed. It was further submitted by the ld. A.R that in March, 2020, the Hon'ble Supreme Court taking suo motto cognizance of the impact of Covid-19 restrictions on the compliances that were to be made within limitation periods, vide its order passed in Writ Petition (Civil) No. 3 of 2020, dated 23.03.2020 had extended the limitation periods from 15th March, 2020 until further orders. Accordingly, on the basis of the aforesaid facts it was submitted by the ld. A.R that the delay in filing of the aforementioned appeal which was for reasons beyond the control of the assessee may therein be condoned. 5. Per contra, the ld. Departmental Representative (for short 'D.R') did not object to the seeking of condonation of the delay involved in filing of the appeal by the assessee. 6. Considering the facts that had led to the delay of 60 days in filing of the present appeal, we herein condone the same. 7. Adverting to the merits of the case, the ld. A.R submitted that as the A.O....
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....' of the assessee trust as on 31.03.2015 and the annexures enclosed alongwith the same. The ld. A.R took us through the bank account Number 750061001006139 that was held by the assessee trust with Kokan Mercantile Cooperative Bank Limited, Branch :Govandi. The ld. A.R further took us through the reply dated 14.06.2017 that was filed by the assessee with the A.O, wherein it was submitted that though as per the FCRA return the amount totalled to Rs. 11,97,48,585.05, however, after considering the interest and the income tax refund that formed part of the aforesaid amount the foreign donations received by the assessee amounted to Rs. 11,90,32,941.65. It was further stated in the reply that the assessee during the year under consideration had also received local donations of Rs. 80,91,848/-. In its aforesaid reply it was further stated by the assessee that the amount of Rs. 11,88,29,498/- was incurred towards furtherance of the objects of the trust, viz. education, medical, natural calamities and marriage aid to the poor i.e kanyadaan. The ld. A.R further took us through the copies of the ledger accounts, viz. Foreign donation A/c: Rs. 11,90,32,941.65; Local cheques donation A/c: Rs. 6....
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....A.O without making any enquiry in undue haste. Drawing support from the aforesaid judicial pronouncements, it was submitted by the ld. A.R that in a case where two views are possible and the A.O had taken one of the possible view with which the CIT does not agree, the same on the said standalone basis cannot be treated as an erroneous order and brought within the realm of Sec. 263 of the Act. Ld. A.R further relied on the order of the Hon'ble High Court of Allahabad in the case of M/s Meerut Flour Mills Pvt. Ltd. Vs. CIT & Anr., ITA No. 223 of 2013; dated 14.08.2019. It was submitted by the ld. A.R that the Hon'ble High Court in its aforesaid order had observed that a mere non-discussion and non-mentioning of the reply filed by the assessee in the order of the assessing officer would not lead to an assumption that there was no application of mind and the order therein passed was erroneous. It was submitted by the ld. A.R that as per the settled position of law, the CIT, while assuming jurisdiction under Sec. 263 of the Act cannot merely state that the A.O had failed to conduct a complete enquiry but remained under a statutory obligation to conduct an independent enquiry on his own,....
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....ors as claimed by the assessee's counsel were divulged, it was submitted by the ld. D.R that the said details so filed were for the limited purpose for the necessary verification by the Reserve Bank of India (for short 'RBI') as per the provisions of the Foreign Exchange Management Act (for short 'FEMA'). It was submitted by the ld. A.R that the powers vested with the A.O for verifying the genuineness and veracity of the amounts received by an assessee are separate and distinct as against those contemplated under the FEMA. It was submitted by the ld. D.R that a perusal of the "Form FC 6" that was heavily relied upon by the assessee's counsel for driving home his claim that the complete donor wise details of the foreign contributions were furnished in the course of the assessment proceedings revealed a different story. Taking us through the copy of "Form FC 6" forming part of the APB, it was submitted by the ld. D.R that a perusal of the same revealed beyond any scope of doubt that the complete details of the donors could not be gathered therefrom. It was submitted by the ld. D.R that in majority of the cases only the country of the donors was mentioned. It was further submitted by ....
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....ught to be revised by the CIT only on two grounds, viz. (i). that no verification, cross checks or even test checkswere made by the A.O with respect to the expenditure of Rs. 11.88 crores; and (ii). that the receipt of foreign contributions of Rs. 11.90 cores claimed by the assessee to have been received during the year under consideration were summarily accepted on the basis of 'Form FC 6' that was filed by the assessee;it was submitted by the ld. D.R that in the course of the revisional proceedings before the CIT the assessee was specifically afforded an opportunity to explain as to why the assessment order may not also be revised for the reason that the A.O had failed to make necessary verificationsas regards the local donations. It was further submitted by the ld. D.R that the assessee despite specific directions by the A.O had failed to furnish the complete details of the foreign donations in the course of the assessment proceedings. As regards the assessee's claim of having incurred an expenditure of Rs. 11.88 crores, it was submitted by the ld. D.R that the same too was summarily accepted by the A.O while framing the assessment without making any verifications, cross checks ....
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....ted 28.06.2017 was erroneous. It was further submitted by the ld. A.R that the CIT in exercise of his revisional jurisdiction u/s 263 of the Act had clearly traversed beyond the scope of jurisdiction therein conferred, and had in the garb of the powers vested with him u/s 263 had sought to dislodge apossibleview taken by the A.O by seeking to dictate the terms on the basis of which the order ought to have been passed. It was, thus, submitted by the ld. A.R that CIT in exercise of the powers vested with him u/s 263 cannot seek substitution of his view as against a possible view that was arrived at by the A.O while framing the assessment. As regards the judgments that were relied upon by the ld. counsel for the department, it was submitted by the ld. A.R that the same were distinguishable on facts, and thus, were not applicable to the case of the assessee. It was, thus, submitted by the ld. A.R that as the CIT by wrongly assuming jurisdiction u/s 263 of the Act had set-aside the assessment order passed by the A.O u/s 143(3), dated 28.06.2017, therefore, the same be vacated and the order passed by the A.O be restored. 10. We have heard the ld. authorized representatives for both th....
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.... receipt of large foreign donations; and (ii).that the assessee had claimed to have incurred substantial amount on its charitable activities. As such, the limited purpose for selection of the assessee's case for scrutiny assessment was to facilitate examination of the aforementioned twin issues, viz. receipt of donations; and incurring of expenditure by the trust on its charitable activities. It is in the backdrop of the aforesaid facts, we shall hereinafter advert to the sustainability of the view taken by the CIT that dehors the necessary verifications qua the issues in question, the order passed by the A.O u/s 143(3), dated 28.06.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. 11. On a perusal of the records, we find that it is a matter of fact borne from the record that the assessee during the year in question is stated to have received donations of Rs. 12.84 crores (including foreign donations of Rs. 11.90 crores). During the course of the assessment proceedings, the A.O vide his notice issued u/s 142(1) of the Act, dated 04.01.2017 had inter alia directed the assessee to furnish the party wise detail....
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....ceived during the year, if any, in a tabular format. Also, the A.O vide his Query No. 15 had directed the assessee to furnish party wise details of foreign donations received during the year, if any. As such, the assessee was in unequivocal terms directed to furnish certain specific details qua each donation, viz. name, address andPAN number of the donor; amount of donation; mode of payment (cheque/DD No.& bank); and nature of donation (corpus or non-corpus). In reply, it was stated by the assessee that it had not received any corpus donation during the year under consideration. As regards furnishing of the requisite details qua the non-corpus donations that were received during the year, the assessee vide its reply dated 16.01.2017 had sought some further time for furnishing the same.Thereafter, the assessee had vide its reply dated 14.06.2017 stated that it had during the year received foreign donations of Rs. 11,90,32,941/-; and local donations of Rs. 80,91,848/-. Alongwith its aforesaid reply the assessee had placed on record the copy of 'Foreign donation a/c' as was appearing in its books of account. Insofar the details qua the foreign donationswere concerned, it was submitted....
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....ective countries of the said donors. In fact, a perusal of the 'Foreign donation a/c' did not reveal a better picture and in case of majority of the individual donors only their respective countries were mentioned in the narration to the journal entries, except for in cases where the donations were received from certain donors based in Dubai, U.A.E, where their respective P.O Boxes were mentioned. In the backdrop of the aforesaid facts, as observed by the CIT in his order u/s 263, and rightly so, the addresses of the aforesaid donors could not be gathered from the details filed by the assessee. At this stage, we may herein observe, that not only the assessee in the course of the assessment proceedings had defied the directions of the A.O andfailed to divulge the complete details of the donors as were called for by him, but even in the course of the revisional proceedings no effort was made on its part to dispelall doubts and irrefutably substantiate the identity of the donors to the hilt. In fact, the assessee, as in the course of the assessment proceedings had in the revisional proceedings too merely harped on the fact that the details of the donors could be gathered from the "For....
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....uisite details and hadsummarily accepted the foreign donations on the basis of the "Form FC 6" filed by the assessee. At this stage, it would be relevant to point out that as observed by the CIT, and rightly so, the details as were called for and required by the A.O for carrying out the necessary verifications could not at all be deciphered from the "Form FC 6" that was filed by the assessee.In our considered view, de hors the furnishing of the requisite details as were called for by the A.O in the course of the assessment proceedings, the acceptance of the foreign donations by the A.O speaks for itself that the same had been accepted without carrying out necessary verifications. Although we concur with the ld. Senior Counsel that an inadequate inquiry on the part of an A.O cannot form a basis for assumption of jurisdiction by the CIT u/s 263 of the Act, however, the facts as have unfolded in the case before us do not lead to a case of an inadequate inquiry, but clearly points out to a case of no verification qua the issue in question by the A.O.It is not a case where the CIT had sought to dictate the manner in which the A.O ought to have verified the facts qua the issue in questio....
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....he foreign donations received by the assessee during the year under consideration, thus, the assessment order passed by him to the said extent was erroneous insofar it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act. 12. We shall now advert to the verifications which were carried out by the A.O qua the local donations of Rs. 80,91,848/- that are stated to have been received by the assessee during the year under consideration. As observed by us hereinabove, the A.O had vide his Notice u/s 142(1), dated 04.01.2017 directed the assessee to furnish the requisite details as regards the corpus/non-corpus donations that were received by it during the year under consideration, viz. name, address & PAN of the donors; amount of donation received; mode of payment (cheque/DD No.& Bank); nature of donation (corpus or non-corpus). On a perusal of the records, we find, that though the assessee had submitted before the A.O that it had received local donations of Rs. 80,91,848/- during the year under consideration, however, the details of the local donors as was called for by the A.O in the specified format were not provided by it. As is discernible fr....
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.... assessee was accepted only after carrying out necessary verifications by the A.O.In sum and substance, when the details called for by the A.O in itself were not provided by the assessee, it would be beyond comprehension to concludethat the necessary verifications qua the issue in question had been carried out by the A.O. In the backdrop of the aforesaid facts, we are of the considered view that the summarily acceptance of the local donations received by the assessee dehors filing of the requisite details by the assessee, specifically when the same were called for by the A.O, can only lead to the conclusion that there had been an absolute failure on the part of the A.O to carry out necessary verifications qua the issue in question. We are afraid, that the failure on the part of the A.O to carry out the aforesaid verifications by no means would fall within the realm of an inadequate inquiry, but is a clear case of having failed to carry out any verification. We, thus, in the backdrop of our aforesaid deliberations concur with the view taken by the CIT that as the A.O had failed to carry out verifications as regards the local donations of Rs. 80,91,848/- stated to have been receiv....
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....entity of the recipients in the absence of theirrespective addresses could not be gathered therefrom. We, thus, find that though the A.O had specifically directed the assessee to furnish the details of expenses which were incurred by it towards furtherance of its objects, however, the assessee in compliance thereto had furnished only part reply and placed on record half baked details from which the complete details of the recipients could not be gathered. However, the A.O despite failure on the part of the assessee to furnish the details that were specifically called for by him vide his Notice u/s 142(1), dated 04.01.2017 summarily accepted the aforesaid claim of expenses of the assessee. In our considered view, not much is required to be said about the verification carried out by the A.O in context of the aforesaid issue in question, specifically when the details that were called for by him itself had not been furnished by the assessee. We hold a strong conviction that in a case where the A.O in order to satisfy himself about the genuineness and veracity of a claim raised by the assessee had raised a query and called for certain details/information, then, the acceptance of such cl....