TaxTMI 
TaxTMI 
2022 (4) TMI 490
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.... The undisputed fact is that the ld AO proceeded to make enquiry with regard to the contribution made by the assessee to Shri Arvindo Institute of Applied Scientific Research Trust in the sum of Rs. 12,00,000/- on 10.03.2016 vide Cheque No. 516798 drawn on Indian Overseas Bank ,Churchgate Branch, Mumbai from Current Account No. 097302000002608. This payment was made pursuant to an appeal letter dated 05.02.2016 addressed by Shri Arvindo Institute of Applied Scientific Research Trust (Donee Trust) to the assessee, seeking for contributions. In the said letter dated 05.02.2016, the Donee Trust had categorically stated that they had been approved by CBDT u/s 35(1)(ii) of the Act and that the said approval has been renewed and updated till that date (i.e as on 05.02.2016). This letter is enclosed in page 70 of the paper book dated 31.12.2021 filed before us. 4. The assessee claimed weighted deduction @ 175% of contribution amount totalling to Rs. 21,00,000/- (1200000 * 175%) u/s 35(1)(ii) of the Act in the return. The ld AO had even mentioned the fact of his intention to verify this weighted deduction u/s 35(1)(ii) of the Act in the notice issued u/s 143(2) of the Act itself. Accordin....
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.... of the Act on 13.11.2018 accepting the returned income. 6. Subsequent to the completion of assessment, CBDT vide its Instruction in F.No. 225/351/2018-ITA(II) dated 14.12.2018 on the subject of Bogus Donation Racket under section 35(1)(ii) had informed to all the field officers that the approval u/s 35(1)(ii) of the Income Tax Act granted to the Donee Trust expired on 31.03.2006 and the said trust without being recognised to receive donations, had been in the habit of receiving donations from various donors for undertaking scientific research and had issued forged certificates thereon. 7. This apparently triggered the invocation of revisionary jurisdiction u/s 263 of the Act by the ld. PCIT, who sought to treat the order passed by the ld AO as erroneous in as much as it is prejudicial to the interests of the revenue. The main case of the ld. PCIT is that the ld . AO had merely accepted the evidences submitted by the assessee without causing further enquiries thereon. Accordingly an order u/s 263 of the Act was passed by the ld. PCIT on 23.02.2021 setting aside the order passed by the ld AO with a direction to conduct the requisite enquiries and frame the order of assessment de n....
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....dent on the 13th July, 2006 and has been enacted as Act No. 29 of 2006. This circular explains the nature and effect of the amendments with reference to provisions existing before these amendments to the Income-tax Act, 1961. 9. Guidelines, manner and conditions on the basis of which approval is to be granted under section 35(1)(ii) and section 35(1)(iii). 9.1 Prior to amendments by the Taxation Laws (Amendment) Act, 2006 (No.29 of 2006), the provisos to clauses (ii) and (iii) of sub-section (1) of section 35 did not provide for any guidelines or manner or conditions in relation to grant of approval of the Central Government to a scientific research association, university, college or other institution. This had been resulting in delay in the processing of applications received for approval from such entities. There was, therefore, a need to provide for a step-by-step manner to be followed by the applicants, the manner in which their applications would be processed and the conditions subject to which the approval was to be granted to a scientific research association under clause (ii) of sub-section (1) of section 35 and to a university, college or other institution under claus....
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.... to any entity is withdrawn. 9.6 The Act has inserted the fourth proviso to provide that in respect of an application received on or after the date of assent to the Taxation Laws (Amendment) Bill, every notification under clause (ii) or clause (iii) shall be issued or an order rejecting the application shall be passed before expiry of twelve months from the end of the month in which application for approval is received by the Central Government. 9.7 Applicability: Assessment year 2006-07 onwards. [Section 5] 10. We find that even the CBDT Advisory dated 14.12.2018 did not point out that the recognition granted to the Donee Trust u/s 35(1)(ii) of the Act had been withdrawn. In view of the aforesaid Taxation Laws (Amendment) Act, 2006, the bonafide belief of the ld. AO while framing the assessment on 13.11.2018 that the approval sought by the Donee Trust is existing in perpetuity cannot be faulted or doubted in the instant case. Admittedly, the CBDT Advisory to the field officers was issued only on 14.12.2018, which is after the completion of assessment by the ld. AO on 13.11.2018. Hence on the date of passing the assessment order, the ld. AO had no occasion to even suspect tha....
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....he provisions of section 263. He is not an appellate authority and exercises only a revisional jurisdiction. However, after lawfully initiating proceeding under section 263 on the basis of materials which were before the ITO, the Commissioner could take into consideration any material which might come into existence later, in view of the expression "after making or causing to be made such inquiry as he deems necessary" used in the second limb of this section. 12. In any case, we find from the narration of the aforesaid facts, the ld . AO had indeed carried out requisite enquiries on the issue of deduction u/s 35(1)(ii) of the Act. Once an assessment is framed after conducting enquiries as detailed supra, then the order passed by the ld AO cannot be subject matter of revision u/s 263 of the Act. The law is now very well settled that the revision jurisdiction u/s 263 of the Act could be invoked by the ld. PCIT only in the event of "lack of enquiry‟ by the ld AO and not on account of "inadequate enquiry‟. Reliance in this regard is placed on the decision of Hon‟ble Delhi High Court in the case of CIT vs Sunbeam Auto Ltd reported in 332 ITR 167 (Del). 13. We further....
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....e to the conclusion that the assessee was entitled to depreciation to the extent of Rs. 622.39 lakhs on the value of securities held on the trading account. In the absence of any tangible material to the contrary, the Commissioner of Income-tax could not have treated this finding to be erroneous or to be prejudicial to the interest of the revenue. The observation of the Commissioner of Income-tax that the Assessing Officer had arrived at his finding without conducting an enquiry was erroneous, since an enquiry was specifically held with reference to which a disclosure of details was called for by the Assessing Officer and made by the assessee. We have adverted earlier to the directions which have been issued by the Commissioner of Income-tax to the Assessing Officer with regard to the holding of a fresh enquiry. Before us it is common ground between counsel that the first and the second issues therein relating to the capital gain of Rs. 1.26 crores and depreciation of Rs. 622.39 lakhs constitute the basis of the view of the Revisional Authority and the others follow in consequence. Once we come to the conclusion that the Revisional Authority was not justified in exercising the juri....