TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1482
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....ated that it was in this backdrop that the appeal was filed belatedly causing a delay of 198 days. 3. Ld A.R. reiterating the submissions in the condonation petition submitted that the Hon'ble Supreme Court has also passed limitation to file appeal during the COVID -19 pandemic. Therefore, the delay in filing the appeal may be condoned. Ld CIT DR did not object to condone the delay. 4. After hearing the rival submissions, we are satisfied that the assessee was prevented by sufficient cause in not filing within the stipulation period. Therefore, we condone the delay of 198 days and admit the appeal for adjudication. 5. The sole grievance raised in the grounds of appeal is that the CIT(Exemptions), Hyderabad has passed the revision order u/s.263 of the Act, in a hurriedly manner without providing reasonable opportunity of hearing to the assessee. 6. Facts of the case are that the assessee is a charitable trust filed its return of income on 20.9.2016 showing income at Nil after claiming exemption u/s.11 of the Income tax Act. The return of income was selected for complete scrutiny. The Assessing Officer completed the assessment u/s.143(3) of the Act on 23.10.2018 on a total income....
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....ing of section 11(2) of the Act, to which, the assessee has furnished all the details and after satisfying the reply, the Assessing Officer completed the assessment u/s.143(3) of the Act. Hence, the order passed by the AO cannot be termed as erroneous and prejudicial to the interest of the revenue. 9. Further, ld A.R. submitted that in reply to show cause notice, the assessee requested 15 days time for compliance but the Ld CIT (E) without giving any opportunity passed the order, which is in clear violation of principles of natural justice. Ld A.R. of the assessee also submitted that in the previous assessment years, the assessee has never taken cost of fixed assets as application u/s.11 and the assessment orders were passed accepting the returned income by the assessee. 10. Ld A.R. of the assessee submitted that if the CIT(E) was under the impression that the AO has not made enquiry, then, the CIT(E) could have verified himself to record the finding that the assessment order is erroneous and prejudicial to the interest of the revenue as prescribed in section 263 of the Act in terms of claim of cost of fixed assets as application of income as all the returns of income were availa....
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....e and, therefore, the assessee rightly claimed depreciation as application of income in the subsequent years. 12. Placing reliance on the decision of ITAT Chennai 'D' Bench in the case of ACIT vs Grama Vidiyal Trust (2016) 71 taxmann.com 88 (Chennai), especially paras 13.1 & 13.2, ld A.R. submitted that in a case where the cost of asset was allowed u/s.11 of the Act to the assessee charitable trust as application of income in the year of purchase, then the assessee would be entitled to depreciation on the said assets but in the present case, the assessee has successfully demonstrated before the AO as well as before the CIT(E) by filing e-reply to the show cause notice u/s.263 of the Act that at the time of purchase of assets, the assessee has not claimed amount as application of income, therefore, it is entitled for claiming depreciation on those assets, which have not been included in the amount of application of receipts in the financial statement. Ld A.R. further drew our attention that despite the assessee filed e-reply on 28.3.2021 before the ld CIT(E) seeking 15 days time for filing compliance but same was not taken into consideration and the revisionary order u/s.263 has be....
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.... or the AO should be allowed to redo the assessment. 15. Placing rejoinder to above, ld A.R. submitted that the ld CIT(E) initiated revisionary proceedings by issuing notice u/s.263 of the Act on 26.3.2021 and the assessee by way of adjournment petition requested to grant 15 days time for compliance but instead of providing time, the ld CIT(E) dismissed the request of adjournment by observing that the time barring date and limit for passing the order is 31.3.2021. ld A.R. vehemently pointed out that if the department wants to initiate revisionary proceedings then, it should have been done early. It is not fair on the part of the department to initiate revisionary proceedings by issuing notice before 5-6 days time of time barring date and without providing due opportunity of hearing in violation of principles of natural justice. Ld A.R. also submitted that for invoking revisionary proceedings u/s.263 of the Act, the CIT (E) is required to call upon the assessment record and thereafter if he is satisfied that the assessment order is erroneous and prejudicial to the interest of the revenue, he may issue notice to the assessee and after allowing due opportunity of hearing to the asses....
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....e power of suo motu revision u/s 263(1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous, and prejudice has been caused to the interests of the Revenue. 20. For the purpose of exercising jurisdiction u/s 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interest of the revenue has to be preceded by some minimal enquiry by CIT(E). If the CIT(E) is of the view that the AO did not undertake any enquiry, it becomes incumbent on the CIT(E) to conduct such enquiry. If the CIT(E) does not conduct such basic exercise then the CIT (E) is not justified in setting aside the order u/s. 263 of the Act. 21. In this case, in reply to show cause notice u/s.263(1) of the Act, the assessee had requested in email to give 15 days' time for compliance, but on account of time barring, the CIT(E) has passed the order without giving any opportunity to the assessee. Hence, on this ground the CIT(E) is not justified in directing....
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.... preposition has been rendered in view of the fact that the assessee cannot claim depreciation as application of income twice, once at the time of purchase of assets and secondly during the subsequent period for claiming depreciation of asset as application of income. Now, the position is very much clear that the assessee trust/society has two options either the cost of asset, in the year of purchase, has to be claimed the amount u/s.11 of the Act as application of income or in case the assessee has not availed the first option, then the assessee can claim depreciation as application of income by exercising the second option only claiming depreciation during subsequent assessment years but both the options cannot be exercised or enjoyed by the assessee. 25. In the present case from audited financial statement for assessment years 2011-12 to 2015-16 pertaining to assessment years 2012-13 to 2016- 17 including the assessment year under consideration i.e A.Y. 2016-17, it is clearly demonstrated that the assessee has not claimed cost of asset in the year of purchase or during any subsequent period but it has only claimed depreciation thereon as application of income, which is permissi....
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.... revisionary proceedings only before 6-7 days time from the last date of limitation i.e. on 26.3.2021 by issuing notice u/s.263 giving date of hearing on 30.3.2021. Before the date of hearing, the assessee requested by way of e-mail on 28.3.2021 for granting 15 days time for compliance but this prayer of the assessee was not acceded to by ld CIT (E) and he passed order on 31.3.2021 and entire revisionary proceedings, including issue of notice, passing of order was completed within 6 days, which is not a reasonable and justifiable approach for exercising power u/s.263 of the Act. Hence, we decline to accept the submission of ld CIT DR that the matter may be restored to the file of the CIT(E) for fresh adjudication. 28. In the present case this is not a case of no enquiry and the AO has made enquiry of several issues including the claim of depreciation by the assessee. Even if, when the CIT (E) was not satisfied about the enquiry done by the AO during the scrutiny assessment proceedings, then instead of directing to the AO to conduct further enquiry and redo the assessment, the ld CIT (E) was required to conduct enquiry himself to arrive at a conclusion that the assessment order is ....
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....x proceedings by the tax officers as per the judgment of Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT (1992) 193 ITR 321 (SC). In the present case, the assessee was claiming depreciation since several previous assessment years and he submitted audited financial statement for FYs. 2012-13 to 2015-16 including present assessment year 2016-17 has successfully demonstrated that it has not claimed the cost of asset as application of income at the time of purchase or acquisition of the asset but only claimed depreciation as application of income availing second option to claim depreciation and this was consistently claimed by the assesseea and allowed by the department, thus the AO was not required to go into micro details of claiming of depreciation by the assessee. 30. Hon'ble Delhi High Court Gee Vee Enterprises v. ACIT [(1995) 99 ITR 375 (Del)] defining the duty of the AO observed that, "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, therefore, obvious that when the circumstances are not such as to provoke an inquiry, he need not put every proposition to the test ....