AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1607
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....assed by the AO for A.Y. 2017-18 u/s 143(3) of the Act by holding the same as erroneous and pre-judicial to the interest of the Revenue, in as much as the said Assessment Order was passed by the AO after due inquiry and verification. 3. In the facts and circumstances of case and in law, the Order passed u/s 263 of the Act by the Ld. CIT is bad in law as the same has been passed without due application of mind and deserves to be quashed. 4. In the facts and circumstances of case and in law, the Ld. CIT has erred in invoking the provisions of Section 263 of the Act, and thereby directing the Assessing Officer to make the de-novo assessment. The appellant craves leave to add, alter, modify or delete one or more ground of appeal before or at the time of hearing of appeal." BRIEF FACTS OF THE CASE 3. Facts giving rise to the present appeal are that in this case, the assessment for AY 2017-18 was completed u/s 143(3) of the Income Tax Act, 1961 ("the Act") on 26.11.2019 by the Income Tax Officer (Exemption), Ward 1(2) (hereinafter "the Assessing Officer/AO"). Thereafter, Ld.CIT (Exemption) exercising the power u/s 263 of the Act proceeded to revise the assessment ....
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.... prejudice is concerned to the Revenue. He contended that law is well settled that for exercising power u/s 263 of the Act, twin conditions embedded in it, are required to be satisfied absence of any of one would render invocation of such power illegal and unjustified. Ld. Counsel for the assessee reiterated the written submissions. For the sake of clarity, the relevant contents of the written submissions are reproduced as under:- 1. "This appeal has been filed on 27.04.2022 before the Hon'ble ITAT, Delhi against the Order dated 31.03.2022, passed under Section 263 of the Income Tax Act, 1961 ( hereinafter referred as "Act") by the Commissioner of Income Tax (Exemption), Delhi. The Ld. CIT (E) has vide the said Order held that the Assessment Order passed by the AO on 26.11.2019 for A.Y. 2017-18, in case of Indian Federation of United Nation Association, is erroneous in so far as it is pre-judicial to the interest of the Revenue and has accordingly set aside the said Order back to the file of the AO for passing a de novo Assessment Order, upon proper examination of the issues as identified by him in para 4,5 and 6 of the impugned Order u/s 263. GROUNDS OF APPEAL ....
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....ellaneous Receipts amounting to Rs. 1,30,85,700/- have been declared but however no documentary evidences is available on record in respect of receipt and payment of rental income, in support of genuineness of the income. Also that there is nothing on record to suggest that enquiries have been made to verify the claim of payment of rent to DDA out of the same. 5. In response to the SCN, the assessee trust filed written submissions before the Ld. CIT (E), all of which have largely re-produced in the impugned Order. 5.1 As regards the issue of expenses amounting to Rs. 27,42,500/-, paid to interested persons, the response of the assessee is reproduced in para 4 and 4.1 of the Order under Section 263. The substance of the reply is that in response to the notice u/s 142(1) dated 29.07.2019 issued by the AO, the assessee had vide its reply dated 04.09.2019 filed explained in detail the nature of services being rendered by these persons namely Sh. Suresh Srivastava, Secretary General of the Organization who under it's Constitution is responsible for the overall Management including conducting various seminars, conference, workshop and observance of United Nati....
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....ges 14 to 30 of the paper book), as framed in the National Council Meeting held on 29.07.2012 which gives the details of the objects for which the society has been established and which inert alia includes promoting various development and welfare programmes in the States and the Union Territory of Delhi with respect to the goals of the Charter of the United Nations Organisation, to be carried out in India. The then members of the National Council were all eminent persons of the society and public life. Under para 9.d. of the said Constitution the executive powers of the society has been vested in the Secretary General, who is assisted by 4 other Secretary Generals, for the working of the organisation/ appellant society and that the Secretary General has been authorised to execute the policies and programmes formulated by the executive committee and is also responsible for keeping the minutes book and other important documents. Likewise in para 9.e. of the Constitution the responsibilities of the treasurer has been clearly spelled out. The said reply filed by the assessee also encloses a brief note indicating the past history and a note on activities undertaken during F.Y ....
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....sp;27,42,500/- has been provided by the assessee, cannot be an observation which is farther from truth. In fact through its replies the assessee more than satisfied the A.O. regarding the nature of services performed by the payees of the above amount by the assessee, which is a society working under the aegis of the United Nations Organisation, New York and which is over seen by a Committee of eminent people and the Books of Accounts of which are subjected to deep scrutiny ( pages 175 to 177 of the paper book) even by the Ministry of External Affairs, Government of India on an annual basis before the sanctioning of the Annual Grant in Aid for each of the Financial Year on basis of the Annual Report submitted by IFUNA to the Ministry by 31st July of each year, on its performance and achievements. That therefore it is implicit in sanctioning of the said Annual Grant in Aid by the Hon'ble President of India, that the audited statement of accounts of IFUNA are also examined by the Government of India with reference to the nature of functions performed by the assessee. That this is yet another Certification of the justification and reasonableness of the expenses of the assessee Organisa....
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....uate, that would not, by itself, give occasion to the Commissioner pass Orders u/s 263 merely because he has different opinion in the matter. It is only in cases of "lack of enquiry" that such a course of action would be open. The relevant portion of the Judgment in the above case is as below:- "As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as Revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission ....
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.... submitted that the Ld. AO had after perusal of the balance sheet and the ledger account had allowed the conveyance expense. Attention is also invited to the fact that the performance and achievement report for F.Y 2016-17 of the society shows a large number of programmes, functions and seminars having been organised which could not have been done without spending the above average meagre sum of Rs. 36,472/- p.m. 7.2 On this issue the Ld. CIT (E) has in para 5.1 of the Order under Section 263, acknowledged the fact that the payment through various credit card accounts under the head conveyance expenditure, was available before the AO who failed to make necessary enquiry with respect to justification of payments made, the persons to whom the payments were made and whether these persons are covered u/s 13(3) of the IT Act. That as the assessee did not file any supporting documents before the AO with respect to the exact nature of the conveyance expense therefore it has been held that the Order passed by the AO is erroneous and pre-judicial to the interest of Revenue. 7.3. As regards the above issue the Appellant humbly submits that the Ld. AO had been provided ....
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....ed a copy of the lease deed dated 13.07.2016. However the assessee has not furnished any documentary evidence in support of the claim of payment of rent to DDA for Rs. 9,52,882/-, out of the rental income received and since the genuineness of such payment has not been examined by the AO therefore the Assessment Order is erroneous and pre-judicial to the interest of Revenue. 8.3 It is humbly submitted before the Hon'ble ITAT, that the very fact that the Ld. CIT (E) has accepted that the lease rent received for Rs. 1,26,89,716/- has been found to be correct and for which the copy of lease deed as referred above has been examined, there has been no occasion to set aside the assessment order on this issue, as has rightly been done by the Ld. CIT (E) too. However for some inexplicable reason the Ld. CIT (E) finds that no verification regarding the ground rent paid to DDA, as per the land allotment letter issued to the assessee, needs verification. The Appellant submits before the Hon'ble ITAT that the above rent is being paid to DDA by the Appellant which has been allotted with the land on which the society/ trust has its Office located at C-6, Qutub Institut....
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....s. 27,42,500/- have been paid to interested parties u/s 13(3) of the Act. In respect of this issue, no inquiry or verification was made to verify the genuineness of payments of this expenditure. Further, conveyance expenses amounting to Rs. 4,37,672/- were accepted without any supporting documents. The Ld.CIT (Exemption) further observed that legal and professional charges amounting to Rs. 13,13,000/- was paid out of the same, a sum of Rs. 11,90,000/- was claimed to have been paid to Shri Suresh Srivastava and lastly miscellaneous receipts amounting to Rs. 1,30,85,700/- have been declared without any documentary evidence. Regarding all these objections, Ld. Counsel for the assessee has taken us through the evidences filed before the AO which goes to prove that it is not the case of any inquiry. We find that in respect of miscellaneous receipts, the description is given in its books of accounts as rental and interest income which the assessee has been declaring in past as well. Further, payment of professional charges to Shri Suresh Srivastava which also has been with the valid approval of Management Committee for the services rendered by Shri Suresh Srivast....