SIDDHAGIRI GURUKUL FOUNDATION ,MUMBAI vs. CIT (EXEMPTION), MUMBAI

This appeal is filed by Siiddhagiri Gurukul Foundation (the appellant/assessee) against the order passed by The Commissioner Of Income Tax (Exemption), Mumbai (The CIT) for assessment year 2016 – 17 passed u/s 263 of The Income Tax Act, 1961 (The Act) dated 16th of March 2021, holding that the order passed u/s 143 (3) of The Act dated 1/12/2018 by The Income Tax Officer Exemption Ward (2/3), Mumbai (The Learned Assessing Officer/ AO) is erroneous and prejudicial to the interest of the revenue.

Assessee has raised following grounds of appeal

Brief facts of the case shows that assessee is a public charitable trust registered u/s 12 A of The Income Tax Act. Assessee filed its return of income on 27/9/2016 along with the income and expenditure account, balance sheet, and audit report in form number 10 B declaring total income at Rs. Nil. Assessee has also claimed exemption u/s 11 of The Income Tax Act.

Case of the assessee was picked up for scrutiny and assessment u/s 143 (3) of the Act was passed on 01/12/2018. In the assessment order the learned assessing officer denied the deduction at the rate of 30% u/s 24 (a) of the act of ₹ 62,000 on the income from property held under trust wholly for charitable purposes.

The assessee submitted its reply on 8/3/2021 stating that that though the learned assessing officer has not included the donation in the gross receipt in the body of the order, he has taken at ₹ 80,636,040/–,, in the computation of the assessment order the gross receipt is been taken at ₹ 86,005,904/– which included the figure of donation of ₹ 5,369,863/– and therefore there is no error on this account. The assessee further submitted the working of the taxable income and stated that if the gross receipt of even ₹ 86,005,904 is taken and after deduction of 15% thereof for amounting to Rs 12900886/– leaves the maximum required application of ₹ 73,105,018 whereas the assessee has already applied more than that and therefore the order is not erroneous and prejudicial to the interest of the revenue.

The learned CIT held that assessee has admitted in its submission that the learned assessing officer has not considered the amount of donation in gross receipts in the body of the order, on verification of this it was found that the assessment order has been passed in a perfunctory and routine manner without examining the claim of the assessee of application of income of ₹ 80,363,196/–.

Therefore, he held that the assessment order dated 1/12/2018 is erroneous insofar as it is prejudicial to the interest of the revenue, as learned assessing officer has failed to undertake the necessary verification/enquiry that needed to be done. Therefore, the assessment order was set-aside to the file of the learned assessing

The learned authorised representative submitted that there is no error in the assessment order passed by the learned assessing officer. He submitted that the sum of ₹ 5,369,863 has already been considered in the computation of the total income by the learned assessing officer in computation sheet; however, in the body of the assessment order it was not added. He therefore submitted that there may be a typographical error in the is body of the assessment order however in the computation sheet the income has been computed correctly by the learned assessing officer. He further stated that assessee has never claimed deduction of Rs 1,27,86,297/– being depreciation as an application of income. He specifically referred to page number 29/30 of the paper book which is a letter submitted during the course of assessment proceedings before the learned assessing officer wherein in a serial number 17 assessee has specifically stated that it has not claimed any application of income with respect to the depreciation on assets. The capital expenditure incurred by the trust during the year is claimed as application of income. Therefore, he submitted that the reason of jurisdiction assumed by the learned CIT is not proper. Even otherwise, the assessment order passed by the learned assessing officer is not erroneous and prejudicial to the interest of revenue.

The learned CIT DR vehemently supported the order of the learned CIT and submitted that the donation has not been considered by the learned assessing officer in the computation of total income and further has not examined the application of income and therefore the order passed by the learned AO is erroneous and prejudicial to the interest of revenue.

We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the assessment order

The learned CIT held that not including a sum of ₹ 5,369,864/– in the working of total income in the body of assessment order, though included in the computation sheet attached with the assessment order makes the order passed by the learned assessing officer erroneous and prejudicial to the interest of the revenue. We find that the learned assessing officer has though not mentioned sum of ₹ 5,369,864/– being the amount of voluntary contribution in the total income in the body of the assessment order, but it has already been taken in the computation sheet accompanying the assessment order. Therefore, the income is correctly computed in computation sheet. Therefore, we agree that in the assessment order, the learned assessing officer should have mentioned the correct figure; however, as the correct income has been computed in the computation sheet, which is also part of the assessment order, the order passed by the learned assessing officer is not prejudicial to the interest of the revenue. This is so because the total income of the assessee is also computed at Rs Nil at both the places. Further, Assessee has incurred expenditure towards the object of the trust of ₹ 82,816,931/– against which the learned assessing officer in body of assessment order has recorded it at ₹ 77,447,067/–, thus there is an exact difference of ₹ 5,369,864/– in the accumulation taken by

Further, on the second issue of depreciation on assets, the assessee in the assessment proceedings has clearly stated that it has not claimed depreciation as an application of income. The learned CIT also did not mention the same in his order u/s 263 of the act.

The learned CIT passed an order u/s 263 of the act only for the reason that assessee has admitted in the submission that the AO has not considered the amount of donation in gross receipts in the body of assessment order and there is an error. The assessee mentioned so that it has not been included in the computation made in the assessment order, however, the assessee has categorically stated that it has already been included in the income of the assessee. This was also shown by showing the computation sheet. Thus, though there is some error in the computation of income in the body of the assessment order, however, there is no error in the computation sheet of total income. Even otherwise, in both the cases the total income of the assessee is computed at nil i.e. in the body of the assessment order as well as in the computation sheet.

For the purpose of invoking the jurisdiction u/s 263 of the income tax act, the assessment order passed by the learned assessing officer should be erroneous so far as prejudicial to the interest of revenue. In the present case we do not find that any prejudices is caused to the revenue. In view of this, we quash revisionary order passed by the learned CIT u/s 263 of the Income Tax Act on 16/3/2021 for assessment year 2016 – 17.

Accordingly, appeal of the assessee is allowed.