DAYSPRING ENTERPRISES OF INDIA ,HYDERABAD vs. INCOME IAX OFFICER ,EXEMPTION WARD 1(1) , HYDERABAD

Briefly stated facts relevant for the disposal of this appeal are that the assessee is a religious association and filed its return of income on 09- 09-2016 declaring income as NIL claiming exemption u/s.11 of the Income tax Act, 1961 (“the Act”). The case was selected for scrutiny to examine i) Large amount of income accumulated or set apart by Trust, ii) Application of income for charitable or religious purposes being higher than the Gross Income, iii) Large capital expenditure for charitable purposes and iv) Form- 10 filed after due date and large amount set apart u/s.11(2)/11(5)/11(1)(c) of the Act. Learned Assessing Officer issued notice u/s. 143(2) of the Act followed by u/s. 142(1) of the Act and passed order dt.23-06-2018, accepting the return of income.

Subsequently, Ld.CIT(E) noticed that the gross receipts during the year were Rs.2,62,94,189/-, accumulation u/s.11(1)(2) of the Act was Rs.8 Crores relating to AY.2015-16 and the assessee applied in the period relevant for AY.2016-17 only Rs.6,03,18,596/-. It was further observed that the assessee accumulated an amount of Rs.3.05 Crores u/s.11(2) of the Act and thereby there was a shortfall to the tune of Rs.1,15,31,404/- which had to be brought to tax. Further, the assessee did not file Form No.10. Inasmuch as the learned Assessing Officer failed to verify all these things, Ld. CIT(E) held that the assessment order is erroneous and also prejudicial to the interest of Revenue. He accordingly revised the order u/s. 263 of the Act, set it aside and directed the learned Assessing Officer to examine the issues for examination of which the case was picked up for scrutiny.

Aggrieved by such an action of Ld. CIT(E), assessee preferred this appeal with a delay of 45 days. It is submitted on behalf of the assessee

Per contra, learned DR submitted that the assessment order itself reads that purpose for which the case was selected for scrutiny but the assessment order is conspicuously silent as to the details to indicate the application of mind by the learned Assessing Officer. Assessment order itself reads that the gross receipts during the year were Rs. 2,62,94,189/- and the accumulation from the previous year was Rs. 8 Crores. Though the learned Assessing Officer recorded that the application of income was Rs. 9,18,18,596/-, there is no material on record to contradict the figures given by the Ld. CIT(E) in the order u/s. 263 of the Act.

We have gone through the record in the light of the submissions made on either side. It could be seen from the record that in spite of the Registry notifying the defects, which includes the aspect of delay, the assessee did not take any steps to rectify the same. Be that as it may, the effective portion of the assessment order is as follows:

For non-examination of the requisite material in the perspective required by the purpose of picking up this case for scrutiny renders the assessment order erroneous. In view of the fact that the Ld. CIT (E) demonstrated that there is shortfall in the application of the requisite funds makes it clear that the assessment order is prejudicial to the interest of Revenue. Inasmuch as the twin conditions required for invoking the jurisdiction u/s. 263 of the Act are satisfied, we do not find any illegality or irregularity in the order passed by the Ld. CIT (E). We, therefore, decline to interfere with the same. Appeal of the assessee is accordingly liable to be dismissed.

In the result, appeal of the assessee is dismissed.