2022 (8) TMI 1066

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....oneous as well as prejudicial to the interest of the revenue. 3. The brief facts of the case are that the assessee is a Society registered under section 12A of the Income Tax Act. It has filed its return of income on 30th September, 2016 declaring total income at 'NIL'. The case of the assessee was selected for scrutiny assessment and a notice under section 143(3) was issued and served upon the assessee. After perusing the details submitted by the assessee, the ld. Assessing Officer has determined the taxable income of the assessee at 'NIL'. 4. On perusal of the record, ld. Commissioner formed an opinion that assessment order is erroneous as well as prejudicial to the interest of the revenue. Therefore, action under section 263 is required to be taken. The ld. CIT has issued a show-cause notice under section 263, whose copy is available on page 19 of the paper book, which reads as under:- Office of the Commissioner of Income Tax, (Exemptions), Kolkata 6th Floor, 10B, Middleton Row, Kolkata-700071 No. CIT(E)/Kol/263/AAATPS3SSC/202f Dated: 02.03.2021 To The Secretary, H.P. Budhia Charitable Trust 3C, Camay Street Kolkata-....

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....age 23, which reads as under:- Sub.: Reply to proceedings u/s 263 of Income Tax Act, 1961 for A.Y. 2016-17 Dear Sir, The above assessment has been completed u/s 143(3) of Income Tax Act, 1961 dt. 30/10/2018 showing taxable income as nil. In our earlier reply to the said order vide letter dt. 5/09/18, we have forwarded all the details relating to amount spent on corpus donation. We also intimated you running of charitable hospital and construction of Government run school for the benefit of poor. Once again please find enclosed herewith details of Corpus fund utilization as on 31.03.16 in H.P. Budhia Charitable Trust:- Sr. No. Particulars Amount (Rs.) 1. Amount spent on maintenance & running of R.C. Agarwal Memorial Hospital & Research Centre (RCMHRC) at Tinsukia (owned by us) 15,66,114/- 2. Paid to Medica SuperSpeciality Hospital for reimbursement of Doctor's remuneration who attended R.C.M.H.R.C., Tinsukia 19,40,000/- 3. Paid for construction of Govt. School in the name of Smt. Kamla devi Budhia- Rajaykiaya Uchha Madhyamik Vidyalaya, Hirapur, Jaipur 1,41,57,500/-     1,76,63,614/- ....

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....which is available on page 47 of the paper book and the same reads as under:- 8. The ld. Counsel for the assessee further took us through various correspondences with regard to the utilisation of its Corpus Donation. On the strength of these details, he submitted that all the details with regard to Rs.1,76,00,000/- was brought to the notice of ld. Commissioner, but he did not take any step to verify. He simply set aside the assessment order for readjudication. 9. On the other hand, ld. CIT(DR) contended that first objects of the assessee-Trust are to be seen whether these donations were made in the line of objects of the Trust or not. He submitted that on the last occasion, the assessee was directed to produce the Trust Deed. 10. We have heard the ld. Representatives and with their assistance gone through the record carefully. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not, it is pertinent to take note of this section. It reads as under:- "263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and i....

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....riod of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 11. A bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assess....

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....d determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction. (ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 12. Apart from the above principles, we deem it appropriate to make reference to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Sun Beam Auto reported in 227 CTR 113 and Gee Vee Enterprises Ltd vs. Ad....

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....egard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return. The reason is obvious. The position and function of the Income-tax Officer is very diffident from that of a civil court. The statement made in a pleading proved by the minimum amount of evidence may be adopted by a civil court in the absence of any rebuttal. The civil court is neutral. It simply gives decision on the basis of the pleading and evidence which comes before it. The Income-tax Officer is not only on adjudicator but also an investigator. He cannot remain passive in the face of the return which is apparently in order but called for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry... It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would made such an inquiry prudent that the word 'erroneous' in section 263 includes the failure to make such an enquiry. The order becomes errone....

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2022 (8) TMI 1066