RAWAT BAL VIDHA NIKETAN SAMITTEE,JAIPUR vs PCIT(CENTRAL), JAIPUR

2.

That the Ld. PCIT has grossly erred in holding the order of the AO as erroneous on the basis of assessment made in earlier AY (2017-18) without considering the fact that the additions in the earlier year were made on estimation. Appellant prays that estimation is always a basis of opinion and one of the possible views, revision action under section 263 is bad in law if addition needs to be made on the basis of an estimation or one of the possible views.

3.

That Ld. PCIT has further erred in passing revisionary order u/s 263 of the Act. Appellant prays that the order of AO neither being erroneous nor prejudicial to the interest of Revenue, hence the order of Ld. PCIT being without juri iction deserves to be quashed.

4.

That Ld. PCIT has grossly erred in holding the order of AO as erroneous and prejudicial on the grounds that in earlier years exemption u/s 11 and 12 was withdrawn, by disallowing salary to specified persons and the same was being fully allowed in the relevant year. Appellant prays that specific details relating to salary paid to both specified and non-specified persons were duly called for and examined and based on same a view was taken by the AO. Holding such view as erroneous and prejudicial without bringing any new material on record, being outside the purview of sec 263, the order passed deserves to be quashed."

2.

1 Brief facts of the case are that the assessee trust e-filed its return of income for the previous year 2017-18 relevant to assessment year 2018-19 on 31-10-2018 declaring an income of Rs. NIL. The case of the assessee was taken up for "Limited Scrutiny" u/s 143(3) of the Income Tax Act. 1961 on the basis of Computer Assisted Selection for Scrutiny (CASS) and statutory notice u/s 143(2) of the Act dated 22-09-2019 was issued through ITBA and duly served upon the assessee. The information/s 142(1) of the Act was called for vide questionnaire through ITBA. Incompliance of the said notices, the assessee submitted details / information through e-proceedings and the information so filed by the assessee was examined by the AO. The AO while assessment proceedings noted that the assessee trust is engaged in education Sector wherein the following institutions are run by the Rawat Bal Vidhya Niketan Samiti. S.N. Name of the institution Address

1.

Rawat Public School, PratapNagar Sector-17, Pratap Nagar, Raipur

2.

Rawat Sr. Secondary School, Vivek Vihar 348-349, Vivek Vihar, New Sanganer Road,

3.

Rawat Public School, Mansarovar 366, Vivek Vihar, New Sanganer Road, Raipur

4.

Rawat Mahila P.G. College Kami Vihar, Hirapura, Ajmer Road, Raipur

5.

Rawat B.Ed College -do-

6.

Rawat Nursingh College -do- It is noted that the AO vide his assessment order dated 21-04-2021 accepted the assessee's returned income by observing as under:- “4. After examination of the information and other details, the returned income of the assessee trust is accepted." The total income is assessed at income of Rs. Nil u/s 143(3) of the Income Tax Act, 1961, ITNS-150 showing calculation of tax and interest chargeable, if any, is attached herewith forming a part of this order."

2.

2 The ld. PCIT on examination of the details/ record available before him observed that the assessment order passed on 21-04-2021 by the AO appears to be erroneous as well as prejudicial to the interest of revenue and set aside the same with direction to make afresh assessment order on the point of salaries paid to specified persons as being excessive based on the order of earlier year. The relevant observations as made by the ld. PCIT in his order are mentioned as under:

6.

The taxpayer (through Counsel) has pleaded, among other things, that on grounds of consistency an adverse view cannot be taken in this year particularly when revenue has been holding that the taxpayer is eligible for grant of exemption as per provisions of sections 11 and 12 of the Income Tax Act 1961. 7. The taxpayer also pleaded that there was no need or no occasion or no necessity for triggering the said disallowance in this year. The petitioner also pointed out that the disallowance was specific to findings of that year. Since there were no findings in this year, therefore, the AO did not need to make any disallowance and therefore no prejudice whatsoever has been caused to revenue. The assessing officer, pleads the assessee, has proceeded to make this disallowance on the basis of view arrived at by him on the basis of facts of earlier year which too are contested in appeal and not final. The taxpayer, through counsel, pleaded that there was no positive evidence specific to this year which could have led to disallowance. Thus, pleaded the petitioner that the hypothesis of loss having been caused to revenue is merely an allegation which remains unsubstantiated. As such, the taxpayer (that is the assessee or the petitioner) has propositioned that the disallowance in the earlier year was a view taken by the assessing officer in that year. The view to be taken in this year needs to be a different view and therefore as per law laid down in the case of Malabar by Honorable Supreme Court 243 ITR 83, an adverse view cannot be taken in this year.

8.

The petitioner (or assessee or taxpayer) has also pointed out that some of the additions have also been made in the hands of one of the trustees. Thereby, the taxpayer has propositioned that there are double additions and that revenue itself is not sure as to in what hand such an addition is to be made. According to the taxpayer, these common items did not belong to income of the society, which is this assessee. The taxpayer has also propositioned that the society is actually involved in the activity of education being running of the school which is a fact that cannot be denied and is a ground reality

9.

Further, the taxpayer has pleaded that merely a percentage disallowance on account of salary payments without any strong basis being there is not appropriate. The taxpayer also submits that this was the primary basis of disallowance of exemption and that in this year there is no such basis for "disallowance. Even the disallowance in the earlier year is not final and is disputed. 10 In this connection I am of the view that Revenue had, on the basis of inquiries made an evidence available in the earlier assessment year, disallowed the exemption given to the assessee society. Further, the triggering factor were, the salary payments that were disallowed relating to the specified persons. The additions made in the earlier year were the surplus of income over expenditure as well as addition on account of disallowance of salary paid to specified persons

11.

The taxpayer has also pleaded vehemently that the show cause notice speaks of additions/ disallowance of exemption, to be made on a basis similar to assessment year 2017-18. In this connection, it is pointed out by the learned Counsel that the assessment order for AY 2017-18 was based on survey carried out under section 133A of the Income Tax Act 1961 relating to the post Demonetization period, that is in March 2017. The irregularities found (without prejudice) pertain to that period only and cannot be a basis for taking action in this year particularly when no evidence thereof was available with the assessing officer during the course of assessment proceedings for AY 2018-19. Furthermore, pleads the taxpayer, that proceedings under section 263 cannot be made to uncover evidence on a supposed / hypothetical basis, particularly when the information that was available was specific and additions to be made in this year will be merely based, if at all, on the basis of projection in future/ estimation. This kind of approach is not acceptable in the courts of law, pleads the assessee.

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.”

2.

3 During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for “Limited scrutiny” on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for “Limited scrutiny” on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/non specified persons, but it can be inferred from the very basic details that the highest qualified person is Shri AK Gupta, who might be the principal/head of any of the Colleges run by the trust, to whom salary of Rs 4,44,000/- only has been paid. Apparently there is excessive and unreasonable payment of salary to the specified persons which clearly attracted provisions of section 13(1)(c)(ii) of the Act. They may at the most have been reasonably paid @ Rs. 4,44,000/-p.a totaling to Rs. 22,20,000/-. As against this they have been paid total salary of Rs.49,66,800/-. As such, there is excess payment of Rs. 27,46,800/- .All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons, the salary payment to non-specified persons is at a far lower figure. b. As such the trust has made excessive and unreasonable payments to specified persons, with high salaries paid to them and far lower salaries paid to non-specified persons. This violates the provisions of Section 13(1)(c)(ii) of the Act, and the excessive payment of salaries to specified persons cannot be considered for charitable purposes. Further the trust has claimed a high amount of salary in the current year, which is excessive and disallowable. Additionally, heavy amounts of rent have been paid to specified persons, but there is no record of whether the properties were actually used by the trust or if the payments were reasonable. The trust also owns luxury vehicles that are being used for personal purposes of specified persons, which cannot be considered for charity. c. In the AY 2018-19, total salary claim is of Rs. 7,89,25,249 as against claim of Rs.6,24,99,589 in AY 2017-18. Around 42% of salary claim was found genuine and reasonable in AY 2017-18 and remaining 58% was disallowed. On the same analogy 58% of the salary of the current year i.eRs 4,57,76,644 is not for the purpose of activities of the trust and excessive and thus disallowable. This amount also covers excess and unreasonable salary paid to specified persons as above. d. It is further noticed that as per copies of accounts of various expenses, a substantial part has been incurred in cash without any details of the payee and any supporting evidence. Such expenses cannot be considered for charity in absence of clear details of payee and purpose of expenditure.

9.

Furthermore, depreciation of Rs. 8708189/- has been claimed for the year under consideration on assets which have already been claimed as application of income in earlier years and therefore this claim was not an allowable expenditure for charitable purpose within the meaning of section 11(6) of the Act. Since, the assessee is not entitled to benefit of section 11 of the Act for the reasons as detailed above, this claim may otherwise be disallowed on the principal of lack of commercial expediency.

10.

The funds of the trust have not been deposited or invested in the specified forms/modes/assets as prescribed u/s 11(5) of the Act. As such, there is a violation of provisions of section 13(1)(d) of the Act. Furthermore, during the year under consideration, the assesseetrust has shown advances of Rs. 1,49,00,000/- under the head loans and advances for land and construction without any description of persons to whom such amounts were given.

11.

In view of above, it was a case of a trust where substantial expenses were not for charitable purpose and the trust has violated provisions of section 13(1)(c) and 13(1)(d)"

12.

It is noted that the assessing officer has failed to take note of the fact that there were disallowances on account of salary payments in the earlier year, which might have needed to he disallowed in this year too and therefore consequential denial of exemption might have followed. Further on the basis similar to the earlier year, the exemption needed to be disallowed. It has therefore been noted in the show cause notice issued to the taxpayer that this is a case of a trust where substantial expenses (primarily salary payments) have not been made for charitable purposes and therefore the trust has violated provisions of section 13(1)(c) and 13(1)(d) of the IT Act 1961. As such, It has been detailed in the show cause notice that the income should have been prima facie computed on a basis similar to the preceding year. The assessee pleads that the view arrived at in the earlier year was based on the facts obtaining in that year and this view has not been arrived at in this year. According to the taxpayer, in this year, the assessing officer has adopted one of the various plausible legal views which is not illegal as the fact of survey having been carried out in this year is absent The survey had been carried out in an earlier "previous year (which was the demonetization year) and therefore that view cannot be applicable in this year to reopen the case under section 263. The taxpayer pleaded that there is no survey in this year and no adverse findings in this year, as such, the view in this year has to be different. The taxpayer thus pleads that their being no survey in this year, (and no demonetization in this year) there is no error in the action by the assessing officer.

13.

This failure on part of the assessing officer to primarily ascertain the disallowance of salary to be made (which was the primary trigger for disallowance of exemption addition in the earlier year) and in examining/disallowing the eligibility of the taxpayer for purposes of exemption is an erroneous act which has caused prejudice to the interests of revenue. The assessing officer failed to take the possible view as had been taken in the earlier year, and caused prejudice to the interest of revenue from this erroneous action. logically

14.

Furthermore, it is noted that the taxpayer had incorrectly claimed depreciation. The taxpayer has intimidated that he has already moved a petition for rectification of the same, being an error apparent from record. The taxpayer has also explained / clarified as to why did this error occur. If such a petition has been suo motto moved by the taxpayer, then, I am of the view that, on adverse view with regard to depreciation may not be taken by the assessing officer

15.

Summing up, the assessing officer is directed to examine the eligibility of salary payments on the basis as in the earlier year, Further, the assessing officer consequently may also examine whether the petitioner is eligible for exemption within the meaning of provisions of Income Tax Act 1961. To this extent, the assessment order made on 21.04.2021 is hereby set side to be made afresh within the parameters as above.” During the course of hearing, the ld.AR of the assessee prayed that the ld. PCIT has wrongly invoked the provisions of Section 263 as well as wrongly set aside the order of the AO whereas the AO after examination of the information and other details submitted by the assessee, accepted the returned income of the assessee for which the ld. AR of the assessee filed the detailed written submission as under:- "The assessee is a charitable entity engaged in imparting education through various schools and colleges in Jaipur. The return of income for the relevant year was filed on 31.10.2018 declaring NIL income by claiming exemption u/s 11 of the Act. The case of the assessee was taken up for "Limited scrutiny" on the basis of CASS for examining the 'expenditure for charitable and religious purposes'. Various documents and explanations called for were duly examined and an order u/s 143(3) of the Act was passed on 21.04.2021 accepting the returned income. Later Ld. PCIT(Central) called for records and a notice u/s 263 of the Act was issued on 01.08.2023. The points considered in the notice were as under:-

5.

It has been noted that as per information available on record, assessment of immediately preceding assessment year i.e. A.Y. 2017-18 was completed under scrutiny u/s 143 (3) of the Act on 31.12.2019. 6.In that assessment, the ACIT (Exemption) held in unambiguous terms that based on various irregularities found during survey proceedings u./s 133A at the premises of the assessee, coupled with the facts gathered is carried out during the assessment proceedings, the assessee had violated provisions of section 13 (1)(c)(ii) and 13(1)(d) and was thus not entitled to any benefits as provided u/s 11 of the Act.

7.

It is noted that the nature of activities and transactions in the current year are similar to those in the immediately preceding year. As such, there is no case for allowing benefit of section 11 of the Act to the assessee. Expenses in the current year have not been incurred for charitable purposes. However, the same have been allowed by the AO. There is nothing on record to indicate that the facts and circumstances in the current year are different from those in AY 2017-18, so as to enable the AO to deviate from the stand taken in AY 2017-18. The AO appears to have overlooked the findings in AY 2017-18 and has therefore, arrived at incorrect while accepting the claim of theassessee.

8.

The facts in the current year also indicate a clear violation of provisions of section 13(1)(c)(ii) and 13(1)(d) of the Act read with section 13(2)(c) and section 13(3) of the Act. Following specific instances have been found, viz:- a. As per reply dated 15.2.2021,the trust has paid salary of Rs. 15,18,000/- to ShBachan SinghRawat, Rs, 12,40,800/- to SmtNirmalaRawat, Rs. 7,59,000/- to NarendraRawat, Rs. 7,59,000/- to HemendraRawat and Rs, 6,90,000/- to Arpan Mehra. All these 5 persons are specified persons within the meaning of u/s 13(3) of the Act. As against such high payment of salary to specified persons the salary payment to non-specified persons is much below. The highest salary paid to nonspecified person is of Rs 4,44,000/- only to one Shri A K Gupta. Though nothing is on record to show as to what qualifications and posts are held by the specified/

RAWAT BAL VIDHA NIKETAN SAMITTEE,JAIPUR vs. PCIT(CENTRAL), JAIPUR