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Facts
The assessee filed its return and the assessment was completed accepting the returned income. The PCIT initiated revision proceedings u/s 263, proposing to disallow a deduction claimed u/s 80G, as it was not admissible.
Held
The Tribunal held that the Assessing Officer had examined the issue of deduction u/s 80G in detail during the assessment proceedings, and after considering the assessee's reply, decided not to make any disallowance. Therefore, the PCIT was not justified in invoking Section 263.
Key Issues
Whether the PCIT was justified in invoking Section 263 to set aside an assessment order when the Assessing Officer had already examined the issue and decided not to make a disallowance.
Sections Cited
263, 143(3), 144B, 80G, 142(1)
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Before: SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL & SMT. RENU JAUHRI
सुिवधई की िधरीख / Date of Hearing 07.05.2025 घोर्णध की िधरीख/Date of Pronouncement 15.05.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.]:- This appeal is filed by the assessee against the order of the Learned Principal Commissioner of Income-tax, Mumbai-8 [hereinafter referred to as “PCIT”] dated 03.02.2025 passed u/s. 263 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2020-21.
The assessee has raised the following grounds of appeal:
A.Y. 2020-21 Sapat International Pvt. Ltd. “On the facts and the circumstances of the case and in law, the Id. Principal Commissioner of Income Tax, Mumbai-8 has wrongly passed Order u/s.263 and wrongly set aside the assessment Order passed u/s.143(3) r.w.s.1448 dated 20.08.2022 on the issue relating to disallowance of deduction u/s.80G.”
Brief facts of the case are that the assessee filed its return declaring income of Rs. 54,34,25,840/- on 05.12.2020. The assessment order was completed u/s 143(3) r.w.s. 144B on 20.08.2022, accepting the returned income. Thereafter, Ld. PCIT issued notice u/s 263 for revision of the assessment on account of the fact that the deduction of Rs. 54,00,000/- claimed u/s 80G was not admissible. Aggrieved with the order of Ld. PCIT, the assessee is in appeal before the Tribunal.
Before us, Ld. AR has pointed out that even though no discussion has been made in the assessment order regarding verification of claim u/s 80G, but the issue had been explained at length during the course of assessment proceedings. In order to substantiate the claim, the assessee filed a paper book containing a draft assessment order dated 11.03.2022, wherein the disallowance of Rs. 45,00,000/- on account of donations u/s 80G had been proposed. A copy of the notice u/s 142(1) dated 05.08.2022 has also been filed, wherein a specific query had been raised by the Ld. AO with regard to the claim of deduction u/s 80G. The assessee filed its response vide letter dated 10.08.2022, enclosing a copy of the 80G certificate issued by the Ld. CIT(E) to the donee viz. Global Hospital and Research Centre. After considering the replies filed by the assessee A.Y. 2020-21 Sapat International Pvt. Ltd. on 23.03.2022 and 10.08.2022, no disallowance of 80G claim was made in the final assessment order u/s 143(3) r.w.s. 144B dated 20.08.2022. Hence, it is clear that the issue had been examined extensively and a view was taken by the Ld. AO in view of the factual position as well as in accordance with various judicial pronouncements. Ld. AR has, further, explained that all these facts were brought to the notice of Ld. PCIT in response to the show cause notice issued on 22.01.2025. However, Ld. PCIT did not accept the assessee’s contentions and proceeded to pass the order u/s 263 setting aside the assessment order for verification of the issue relating to deduction claimed u/s 80G.
Ld. DR has, on the other hand, strongly relied on the order of Ld. AO and pointed out that in the assessment order, there was no discussion regarding the claim of deduction u/s 80G, and hence, Ld. PCIT was justified in passing the order u/s 263 of the Act directing the Ld. AO to pass a fresh order after making necessary inquiries.
We have heard the rival submissions and perused the material before us. It is clear that the issue has been examined in detail, and the disallowance was proposed in the draft assessment order by the Ld. AO. After considering the assessee’s reply, he did not make any disallowance in the final assessment order, after taking a view, which is in accordance with various judicial pronouncements on the issue. Several coordinate benches have held that the donations made for CSR activity which eligible for deduction u/s 80G of the Act.
A.Y. 2020-21 Sapat International Pvt. Ltd. Specifically, in the case of Naik Seafoods Pvt. Ltd. v/s CIT (ITA No. 490/Mum/2021) (ITAT, Mumbai), it was held that once the Ld. AO had allowed deduction u/s 80G of the Act, the Ld. PCIT cannot invoke provisions of section 263 of the Act.
In view of the above facts and circumstances, we are of the view that Ld. PCIT was not justified in passing the order u/s 263 on the issue of disallowance of claim u/s 80G of the Act. The impugned order is, accordingly, quashed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 15.05.2025.