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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI GAGAN GOYAL
PER GAGAN GOYAL, A.M: This appeal by assessee is directed against the order of Ld. CIT (Exem.) dated 18.03.2023 u/s. 263 of the Income Tax Act, 1961 (in short ‘the Act’) for A.Y. 2018-19. The assessee has raised the following grounds of appeal:-
The Learned Commissioner of Income Tax (Exemptions), Mumbai (hereinafter referred to as Ld. CIT(E) erred in passing the order u/s. 263 of the Act, thereby setting aside the assessment order dated 02.03.2021 passed u/s. 143(3) r.w.s. 143 (3A) & 143 (3B) of the Act and directing the assessing officer to conduct the assessment proceedings de novo.
Your appellant submits that the order passed by the assessing officer is not erroneous in so far as it is prejudicial to interest of the revenue and ought to be set aside.
Your appellant craves leave to add to, alter or amend the aforestated ground of appeal.
The Brief facts of the case are that assessee is registered trust u/s. 12A of the Act, filed its return of income in the status of trust on 12.09.2018, declaring total income at Rs. NIL. Case of the assessee was selected for scrutiny under CASS to examine the issue “Large Receipts from Incidental Objects”. Accordingly, the notice u / s 143(2) of the I.T. Act, 1961 was issued to the assessee on 22.09.2019 which was duly served upon the assessee. It is worth to mention here that an order u / s 143(1) was passed in this case by the CPC on 01.10.2019 in which the gross total income of the assessee is considered as Rs. 37,13,576/- for the year under consideration without allowing deductions of amount of Rs. 42,45,384/- which is claimed to be applied during the year.
3. After going through the other details filed vis-à-vis the reasons on which the case was selected for scrutiny, a show cause notice was issued to the assessee on 09.02.2021 which reads as follows:-
"An order u/s 143(1) was passed in your case by the CPC on 01.10.2019 in which your gross total income is considered as Rs. 37,13,576/- for the year under consideration. In this regard, you are required to show cause why your gross total income should not be considered as Rs. 37,13,576/- as mentioned in the order passed by CPC dated 01.10.2019 alongwith supporting documentary evidences and details/information sought for vide notice u/s 142(1) of the I.T. Act 1961 dated 28.01.2021." However, no submission was made by the assessee against above said show cause notice. Ultimately, AO relied upon the order of CPC u/s. 143(1) and assessed the total taxable income at Rs. 37, 13,576/- not allowing the income applied for charitable or religious purposes.
Thereafter, a show cause notice u/s. 263 of the Act was issued by the office of Ld. CIT (E) vide notice dated: 25.01.2023. Copy of the same is reproduced herein below as under:
Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961-Assessment Year 2018-19. In this regard, a hearing in the matter is fixed on 08/02/2023 at 12:00 PM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiaefiling.gov.in 2. On verification and careful examination of the assessment records for the A.Y. 2018-19 in your case, wherein assessment was completed under section 143(3) r.w.s. 143(3A) & 143(3B) dated 02.03.2021, I am of the prima facie view that the order passed by NFAC, Delhi (hereinafter 'the Assessing Officer' or 'the AO') is erroneous in so far as it is prejudicial to the interest of revenue, in view of the following: a. In this case, return of income filed by the assessee on 12/9/2018 was selected for scrutiny & notice u/s143(2) of the IT Act was issued on 22/9/2019 The assessment was completed on 2/3/2021 assessing total income at Rs. 37,13,576/- by faceless assessment unit. It is seen from the Balance sheet (copy attached) filed by the assessee that it has received donation of Rs. 7,10,000/- under the head 'Educational & Medical Fund' however the assessee has not offered for taxation in return of income and the AO has also not added said amount in the assessment order. It is pertinent to mention that the auditor of the AO has certified that the assessee has not received corpus donation during the year under consideration therefore said amount needs to be taxed. The AO has passed order without the basic verification of the above facts stated above and therefore the order is prejudicial to the interest of revenue.
In view of the above, may I request you to show cause why the assessment order dated 02.03.2021 should not be set aside under section 263 of the Act with appropriate directions to the AO to redo the assessment? You are accorded an opportunity to attend in person or through an Authorized Representative before the undersigned on 08.02.2023 at 12:00 P.M. at my office. Personal appearance is not necessary, and you may alternatively file a written response to this show cause notice. You may further note that if nothing is heard from you at the appointed date, it will be presumed that you have no submissions to make. Necessary action on the matter will be taken without any further reference to you.
We have gone through the order of AO, Notice issued u/s. 263 of the Act and order of order of Ld. CIT(E) u/s. 263 along with submissions of the assessee. For sake of clarity and further adjudication we are reproducing herewith the copies of notices issued u/s. 142(1) of the Act along with its annexures vide dated: 10.11.2020 and 29.12.2020 as under:
In response to theses notices assessee filed its response vide letter dated: 06.01.2020:-
We have considered the notices issued u/s. 142(1) of the Act along with its annexures and reply thereto filed by the assessee (supra). We have considered the issue keeping in view the col. 15 and 14 respectively of notice issued u/s. 142(1) of the Act vide dated: 10.11.2020 and 29.12.2020 along with reply of the assessee in response to these notices vide letter dated: 06.01.2020. It is observed that assessee conveyed NIL against receiving of corpus donation, although the same has been reflected in the balance-sheet. We have gone through the certificate issued by the Statutory Auditor of the assessee, stating that for F.Y. under consideration, assessee trust has not received any corpus donation with specific direction. We have considered page no. 11 to 21 of the paper book wherein the communications with the donor and receipts issued to them are furnished for corpus donation. After considering all the information and documents placed before us, we are of considered view that assessee’s reply to the AO was incorrect in addition to the Statutory Auditor’s certificate and even receipts issued to the donors are also not serving the purpose of assessee. A complete mess in the communication from assessee is visible, may be inadvertently. Hence in the given state of facts, we are agreed with the view of Ld. CIT (E) that requires a de-novo assessment, where assessee can represent his matter with total clarity and firmness. In the result, grounds raised by the assessee are dismissed.