SWAYAM,KOLKATA vs. CIT(EXEMPTIONS), KOLKATA

This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2016-17 is directed against the order passed u/s 263 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Exemptions), Kolkata [in short ld. “CIT-E”] dated 22.03. 2021 which is arising out of the assessment order framed by the AO, ITO( E ), W-1(3), Kolkata u/s 143(3) of the Act dated 02.08.2018.

Brief facts of the case are that the assessee is a trust, engaged in the activities of the Protection of Women from Domestic Violence Act, 2005 and registered u/s. 12A of the Income-tax Act, 1961 ( in short, referred to as the ‘Act’ vide order No. DIT( E )/T-169/8E/182/95-96 dated 28.03.96. Nil income declared in the return filed on 30-09-2016 for the AY 2016-17. After the case is being selected for scrutiny, the ld. AO examined the details and assessed assessee trust income at Rs. Nil. Subsequently, the ld.CIT ( E ) called for assessment records and on perusal of the same formed an opinion that the ld.AO allowed the exemption beyond the permissible scope as per Income-tax Act, 1961.Thus, the ld. CIT ( E ) issued show cause u/s. 263 of the Act stating that the claim of application of fund of Rs.12,26,015/- was wrongly allowed as the said sum was already claimed as application of fund during financial year 2010-11 and the amount was set apart to be applied in subsequent year as per provisions of section 11(2) of the Act.

During the course of revisionary proceeding u/s. 263, it was stated by the assessee that the assessee has not claimed the application of fund at Rs. 12,26,015/- against the income & receipt during the year. It was directly debited to the accumulated fund account. However, the ld. CIT ( E ) was not satisfied and held that expenditure of Rs.53,52,501/- out of the accumulated fund cannot be allowed as the assessee failed to give right treatment in the audited accounts by not taking it in Income &

Aggrieved, the assessee is now in appeal before this Tribunal.

The Ld. Counsel for the assessee took us through the written submissions dt. 04.03. 2021 given to ld. CIT ( E ) Kolkata and also referred to various schedules showing details of accumulated fund and application during the year. It was asserted that the assessee has not claimed the alleged sum of Rs. 53,52,501/- as application of income during the year and, therefore, the revisionary proceedings carried out u/s. 263 of the Act are liable to be quashed.

Per contra, the Ld. Departmental Representative vehemently argued supporting the order of the ld.CIT ( E ).

We have heard the rival contentions and perused the material placed on record before us. Assuming jurisdiction u/s 263 of the Act by the ld. CIT ( E ) and holding the assessment order dt. 02-08-2018 as erroneous and prejudicial to the interest of the revenue is in challenge before us. We find that the assessee trust is registered u/s. 12A and engaged in activities in Protection of Women from Domestic Violence Act, 2005. In the impugned order the ld. CIT ( E ) has alleged that the assessee has wrongly claimed expenditure of Rs. 53,52,501/- out of the accumulation fund, the claim of which has already been allowed to the assessee in the past. To examine the correctness of this observation, we, on perusal of the audited financial statement notice that in the receipt and payment the assessee has shown application of accumulated fund during the year at Rs. 53,52,500/-. In the income and expenditure account two amounts Rs. 32,58,021.71 and Rs.

Further, we find that the assessee trust furnished details of each and every amount forming part of total amount of Rs. 53,52,501/-, which is appearing at page 22-25 of the P.B. The sum of Rs. 12,26,014.75, which the ld. CIT ( E ) mentioned in the show cause notice issued u/s. 263 of the Act, is also part of the list of amount spent at Rs. 53,52, 501/- mentioned above. On perusal of the details show that the assessee has accumulated the fund in the past as per provisions of section 11(2) and has rightly applied the accumulated fund for the purpose it was meant for. On perusal of the financial statements clearly shows that the assessee has not claimed the alleged sum of Rs. 53,52, 501/- as application of income during the year. It seems that the ld. CIT ( E ) has inadvertently considered the figures of expenditure shown under the head ‘building renovation & construction & purchase of assets’ totalling to Rs.49,70,037.71 (Rs.32,58,029.71 + Rs. 17,12,008.00) as part of sum of Rs.53,52,501/-, which in our considered view is not correct.