GOURISHANKAR EDUCATION SOCIETY,SATARA vs. CIT EXEMPTION, PUNE

5. Learned CIT(E) ought to have appreciated that, scope of section 147 can't be enhanced to such other areas / issues, which required detailed probing / verification. Appellant contends that, only such other issue of escapement of income, which comes to "notice" of the learned ITO can be considered in the 147 proceedings. Appellant thus contends that, directions issued by learned CIT(E) for verification of "genuineness" is an incorrect and defective exercise of "jurisdiction".

6. Appellant craves leave to add / amend / modify / delete all / any of the grounds of appeal.”

& 1235/PUN/2024 5. The facts of the case, in brief, are that the assessee is a trust registered under the Societies Act, 1860 on 28.06.1993. The assessee trust is also registered u/s 12A of the IT Act w.e.f. 01.04.2007. The objects of the assessee trust are to establish and maintain pre-primary, primary, secondary, post SSC educational institutions including technical and medical education and to give educational aid to poor & needy students belonging to any community. The assessee trust filed its return of income on 01.04.2014 declaring a deficit of Rs.2,16,73,473/-. The above loss (deficit income) was disclosed after considering the interest income of Rs.14,55,213/- received from various banks. Subsequently, a survey action u/s 133A of the IT Act was conducted on 02.05.2019 in the case of Gourishanker Educational & Charitable Trust. During the course of survey proceedings, it was found that the assessee trust has advanced interest-free loan to Gourishanker Educational & Charitable Trust, although, the assessee himself has raised interest bearing loans from various banks/cooperative credit societies etc. Accordingly, the assessee’s case was reopened by recording reasons as per provisions of section 147 and notice u/s 148 was issued to the assessee.

& 1235/PUN/2024 6. During the course of assessment proceedings, it was found by the Assessing Officer that the assessee trust has given loan of Rs.3,30,00,000/- to Gourishanker Educational & Charitable Trust and therefore the provisions of section 13(2)(a) of the IT Act are violated. Since the assessee did not reply to any of the notices, the Assessing Officer passed ex-parte assessment order u/s 147 r.w.s. 144 of the IT Act on 16.03.2022 by making the addition of Rs.3.30 crores thereby assessing total income at Rs.3.30 crores. The assessee preferred first appeal before Ld. CIT(A) and being unsatisfied with the ex-parte order of Ld. CIT(A), second appeal was filed before the Tribunal and the Tribunal has set-aside the ex-parte order passed by Ld. CIT(A) and restored the matter back to the file of Ld. CIT(A) with a direction to decide the appeal on merits of the case, after providing reasonable opportunity of hearing to the assessee, which is still pending for disposal.

& 1235/PUN/2024 11. We have heard Ld. Counsels from both the sides and perused the material available on record. We find that the assessee trust in its return of income has already disclosed interest income of Rs.14,55,213/-. But when the Assessing Officer passed the reassessment order u/s 144 r.w.s. 147, the above interest income was not taken into consideration and only the interest-free loan of Rs.3.30 crores was added back to the income of the assessee trust and the same amount was determined as taxable income. It is further found that the assessee himself has shown loss in his books of accounts but it appears that the same was also not considered while passing the reassessment order. Accordingly, we do not find any error in the order passed by Ld. CIT, Exemption, Pune u/s 263 of the IT Act, wherein it was held by him in para 10 of his order by observing as under :- “10. ....., the AO failed to take into cognizance the information as per the return of income filed on 01.04.2014 during the assessment proceedings which shows lack of application of mind on the part of the A.O. The case is of wrong assumptions of facts without any enquiry as to the genuineness of the receipts to have emanated from the sources as defined u/s 11 and the expenses to have been expended for advancement of the objects within the definitions of section 11 of the IT Act.”

& 1235/PUN/2024 12. However, we also find that the ex-parte reassessment order is already subject to challenge before Ld. CIT(A) by the assessee trust. But till now, no orders have been passed by Ld. CIT(A) and accordingly we do not hesitate to confirm the revisional order passed u/s 263 of the IT Act wherein the ex-parte reassessment order was held to be erroneous & prejudicial to the interest of the revenue, & accordingly the Assessing Officer was directed to pass the assessment order afresh de novo for fresh determination of income after allowing reasonable opportunity of being heard to the assessee and to examine the facts of the case on the basis of material available on record. Thus, the grounds of appeal raised by the assessee in this appeal are dismissed.

13. In the result, the appeal filed by the assessee in A.Y. 2013-14 is dismissed.

A.Y. 2014-15 : 14. Since the facts and issues involved in the appeal of the assessee for the assessment year 2014-15 are identical to the facts of the case for assessment year 2013-14, therefore, our decision in A.Y. 2013-14 shall apply mutatis mutandis to this appeal of the assessee in ITA No.1235/PUN/2024