TaxTMI 
TaxTMI 
2022 (12) TMI 1015
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....e (i) Deduction u/s 80G of the Act amounting to Rs. 20,000/- for which no evidence in support of payment of donation is produced to ascertain its veracity (ii) Deduction u/s 80G of the Act amounting to Rs. 15,37,987/- on account of CSR expenses which is not allowable in terms of Explanation to section 37 of the Act and is required to be added back in the computation of income. 3. Brief facts of the case are that assessee is engaged in the business of manufacturing and selling of jewellery. Return was filed on 30.10.2017 reporting total income of Rs. 25,16,27,420/-. Case was selected for scrutiny through CASS for which statutory notices were issued and served on the assessee and were replied by the assessee by filing all the required details, information and documents as per questionnaire issued by the ld. AO. Assessment was completed u/s 143(3) of the Act vide order dated 03.12.2019 with assessed income equal to income returned by the assessee. Subsequently, ld. PCIT called for the assessment records and on the basis of verification of the material available on record, initiated the revisionary proceedings by issuing notice u/s 263 of the Act, dated 07.03.2022, by raising the two ....
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.... Institution registered u/s 80G of the Act. He submitted that assessee had on its own added back the amount of CSR expenditure while computing income under the head 'income from business' of Rs. 25,31,85,411/-. To corroborate this, Ld. Counsel referred to computation of taxable income and tax payable placed in the paper book at page 31 and 32. He further stated that this sum of Rs. 30,75,973/- was claimed as deduction @ 50% u/s 80G which was reduced from the gross total income as computed in the computation of taxable income. Ld. Counsel stated that acknowledgement receipt of payment of Rs. 30,75,973/- to Radha Madhab Institution along with approval u/s 80G(5)(vi) of the Act dated 05.01.2015 issued by the office of CIT(E), Kolkata vide order no. DIT(E)/303/8E/54/82-83 were submitted before the ld. AO and are placed in the paper book at page no. 21 to 23. He submitted that the approval granted to Radha Madhab Institution was deemed to be extended in perpetuity as stated in the letter of approval referred above. 4.3. Ld. Counsel further submitted that ld. PCIT has referred to Explanation 2 to Section 37 which has no co-relation with claim of deduction u/s 80G of the Act. According t....
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....he twin conditions are that the order of the AO sought to be revised is erroneous and is prejudicial to the interest of the revenue. 5. Per contra, Ld. CIT(DR) placed reliance on the order of Ld. PCIT. 6. We have heard the rival contentions and perused the material available on record and have given thoughtful consideration to the submission made before us. We observe that in the course of proceedings u/s 263 of the Act, before the Ld. PCIT, assessee had furnished the relevant details and explained the issue raised through the show cause notice by the Ld. PCIT, supporting its contentions by various decisions as narrated above. It is well settled law that for invoking the provisions of section 263 of the Act, both the conditions, that the order must be erroneous and prejudicial to the interest of revenue needs to be satisfied. This ratio stands laid down by various Hon'ble Courts. 7. Before we advert on the facts and law involved in this appeal before us, it is worth apprising ourselves on the law governing the issue involved. In the first place, the assessee company has challenged the very invocation of jurisdiction by Ld. Pr. CIT of his revisional powers u/s 263 of the Act.....
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....relevant documentary evidences relating to the donation and CSR expenses made by the assessee were placed before the authorities below and also forms part of the Paper Book placed on record before us. We have perused all the relevant documentary evidences contained in the Paper Book for which ld. PCIT in the show cause notice had observed that there is no evidence in support of such payment of donation because of which veracity of such payment could not be established. Having perused the records, we do not ascribe to such observation made by the ld. PCIT while invoking the revisionary proceedings u/s 263 of the Act. 9.1. As far as the position of law is concerned in respect of deduction claimed u/s 80G on account of CSR expenses, we note that ld. PCIT has referred to Explanation 2 to section 37 inserted by Finance Act, 2014, according to which, expenditure incurred by an assessee on the activities relating to CSR shall not be deemed to be an expenditure incurred by the assessee for the purpose of business. By referring to Explanation 2 to section 37, ld. PCIT drew his consideration that claim of deduction u/s 80G by the assessee of Rs. 15,37,987/- (50% of Rs. 30,75,973/-) is requi....
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....ng necessary enquiry, if required and necessary before the order u/s 263 of the Act is passed. In such cases, the order of the AO will be erroneous because the order passed is not sustainable in law and the said finding must be recorded by CIT who cannot remand the matter to the assessing officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/enquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the AO, making the order unsustainable in law. 11. We find that Ld. Pr. CIT in Para 4 of the impugned order has taken note of the amendment made in section 263 w.e.f. 01.06.2015. This amendment relates to Explanation 2 inserted in section 263 of the Act. The co-ordinate bench of Mumbai ITAT has dealt with Explanation 2 as inserted by the Finance Act, 2015 in the case of Narayan Tatu Rane v. Income Tax Officer [2016] 70 taxmann.com 227 (Mum) to hold that the said Explanation cannot be said to have overridden the law as interpreted by the Hon'ble....