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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
ORDER
Per Shri Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Commissioner of Income Tax(Exemption), Kolkata [hereinafter referred to as ‘CIT(E)’] dated 30.03.2021 for the assessment year 2016-17.
Though the Registry has pointed out that the appeal is time barred, however, in view of the decision of the Hon’ble Supreme Court in the case of Miscellaneous Application No. 665 of 2021 in SMW(C ) No. 3 of 2020, the period of filing appeal during the COVID-19 pandemic is to be excluded for the purpose of counting the limitation period. In view of this, the appeal is treated as filed within the limitation period.
In the various grounds of appeal, the assessee has assailed the order passed by the ld. PCIT u/s 263 of the Act revising the assessment framed u/s 143(3) dated 09.04.2022 as being erroneous as well as prejudicial to the interest of the revenue.
Facts in brief are that the assessment was framed u/s 143(3) of the Act vide order dated 09.04.2018 determining the income at Rs. 6,85,84,740/-. The Ld. PCIT on examination of assessment record observed that the assessee has offered only an Armenian Church amount of Rs. 7,85,84,735/- for taxation out of total un-utilized amount of Rs. 10,74,48,000/- as set apart u/s 11(2) of the Act which has been brought to tax by the AO whereas the remaining amount of Rs. 3,88,63,265/- has not been brought to tax while passing the order u/s 143(3) of the Act. Therefore , the ld. PCIT observed that to that extent the order passed by the AO is erroneous as well as prejudicial to the interest of the revenue. Accordingly a show cause notice u/s 263 dated 24.03.2021 was issued to the assessee to reply on 30.03.2021 which was replied by the assessee which is extracted by the Ld. PCIT at page no. 2 and 3 of the revisionary order. Finally the Ld. PCIT ,after taking into account the reply of the assessee, revised the order on the ground that Rs. 3,88,63,265/- is required to be added to the income of the assessee and for this reason, the assessment order is erroneous as well as prejudicial to the interest of the revenue and directed the AO to pass an order afresh after considering this aspect.
The Ld. A.R. submitted before the Bench that the order passed by the AO u/s 143(3) dated 09.04.2018 is neither erroneous nor prejudicial to the interest of the revenue as the issue of part utilization of amount out of Rs. 10,74,48,000/- as set apart u/s 11(2) of the Act has been examined by the AO in detail and only thereafter remaining un-utilized money of Rs. 3,88,63,265/- which could not be extended within the period of 5 years in terms of mandate of Section 11(2) of the Act was spent in the 6th year in terms of Clause (c ) of sub-section 3 of Section 11 of the Act which provides that any income referred to in sub-section (2) of Section 11 which is not utilized for the purposes for which it is accumulated or set apart during the period referred to in clause (a) of that sub-section or in the year immediately following year after the expiry of the period aforesaid meaning thereby that in the 7th year the said amount can be taxed and not in the 6th year as has been held by the Ld. PCIT. The Ld. Counsel of the assessee therefore submitted that the order of the ld. PCIT passed u/s 263 is without jurisdiction and therefore may be reversed.
The Ld. D.R. on the other hand relied on the order of PCIT.
Armenian Church 7. Having heard the rival contentions and perusing the material on record and after going through the provisions of Section 11(2), 11(3)(c ) of the Act, we are of the view that whatever is accumulated u/s 11(2) of the Act upon being falling short of 85% of the total Revenue of the trust can be accumulated for a period of 5 years subject to fulfillment of certain conditions as envisaged in that section and shall be spent on the objects of the trust during the maximum period of 5 following years as set out in the form 10 filed by the trust along with the return of income . We have carefully perused the provisions of section as stated above and are of the opinion that if the assessee is not able to utilize the income set apart u/s 11(2) during 5th years next following from the end of the year in which the amount was accumulated or set apart then whatever is unspent has to be utilized in the 6th year failing which it can be brought to tax in 7th year and not in the 6th year as has been observed by the Ld. PCIT. In our opinion , the Ld. PCIT has misinterpreted and misconstrued the provisions of Section 11(2) and 11(3)(c ) of the Act and the assumption of jurisdiction is not valid. Accordingly, we set aside and quash the revisionary order passed by the Ld. PCIT.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 11th July, 2022