AI Drafter 
TaxTMI 
TaxTMI 
2022 (10) TMI 789
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.... under Sec. 147 of the Income-tax Act, 1961 (in short 'the Act') dated 28.03.2014 for assessment year 2007-08. Before us the assessee has assailed the impugned order on the following revised grounds of appeal: "1. On the facts and circumstances of the case and in law, the ld CIT(A) has erred in upholding the action of the ld AO in initiating reassessment proceeding without having any tangible material in his possession for making 'reason to believe' for such alleged escapement of income of Rs.54,17,572/- by misapprehending the applicability of 85% utilization for claiming exemption u/s. 10(23C)(iiiad), which is based on opinion of 'audit party' based on audit scrutiny of income tax return. 2. On the facts a....
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....eopened by the A.O for the reasons, viz. (i). that as the assessee society had not applied 85% of its gross income as was required under the Income-tax Act, therefore, it was not entitled for claim of exemption u/s.10(23C)(iiiad) of the Act; and (ii). that as the assessee society had filed an application for registration u/s.12A of the Act on 28.11.2007, which was granted on 11.04.2008 i.e. w.e.f. 01.04.2007 from A.Y.2008-09 onwards, therefore, its income for the year under consideration i.e. A.Y.2007-08 would not be exempted and would be exigible to tax. 2.1 On the basis of his aforesaid observations the A.O holding a belief that the income of the assessee society chargeable to tax had escaped assessment, thus, reopened its case u/s.147....
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.... of Rs.54,17,572/- which escaped assessment during the F.Yr.2006-07 relevant to A.yr.2007-08. Hence, I deem it a fit case for issuing notice u/s.148 of the Income tax Act, 1961. Submitted. Sd/- DCIT-1(1)" 2.2. Thereafter, the A.O vide his order passed u/s.147 dated 28.03.2014 declined the assessee's claim of exemption u/s.10(23C)(iiiad) of the Act and determined its income at Rs.54,17,572/-. 3. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. 4. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 5. At the very outset of the hearing of the appeal the Ld. Authorized Representative (for short 'AR') for the as....
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....ly uncalled for in context of the assessee's claim for exemption during the year under consideration. It was the claim of the Ld. AR that as the assessee had in its return of income for the year under consideration i.e. A.Y.2007- 08 claimed exemption u/s.10(23C)(iiiad) of the Act and had not sought any exemption u/s.11 of the Act, therefore, the aforesaid reason forming the very basis for taking recourse to proceedings u/s. 147 was totally incorrect. On the basis of her aforesaid contention it was the claim of the Ld. AR that as both the reasons forming the basis for taking recourse to proceedings u/s.147 of the Act were incorrect and misconceived, therefore, the initiation of the proceedings which thereafter had culminated into the impugne....
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.... the Act, therefore, in our considered view the A.O had grossly misconceived; or in fact misunderstood the settled position of law, and thus, had wrongly taken recourse to proceedings u/s.147 of the Act. In order to dispel all doubts we herein cull out the provisions of Sec. 10(23C)(iiad) of the Act, which reads as under : "10. In computing the totalincome of a previous year of any person, any income falling within any of the following clauses shall not be included :- (23C). any income received by any person on behalf of - (iiiad). any university or other educational institution existing solely for educational purposes and not for the purposes of profit if the aggregate annual receipts of such university or educat....
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....his income of Rs. 54,17,572/- u/s.10(23C)(iiiad) of the Act. Although the assessee in its return of income had in substance claimed exemption of its income u/s.10(23C)(iiiad) of the Act, but had also referred to claim for exemption u/s.11(1)(a) of the Act of Rs. Nil. However, as the assessee had not claimed any part of its income as exempt under Sec. 11(1)(a) of the Act, therefore, there could have been no basis for the AO to arrive at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment on the said count i.e wrong claim of exemption u/s 11(1)(a) of the Act. On the basis of our aforesaid observation, we are of the considered view that as the "reasons to believe" forming the very basis for taking recours....