DIKSHA MANIJARI,KOLKATA vs. I.T.O.,WARD-1(2), KOLKATA

आयकर अपीलीय अधिकरण कोलकाता 'ए' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘A’ BENCH, KOLKATA श्री राजपाल यादव, उपाध्यक्ष (कोलकाता क्षेत्र) एवं डॉ. मनीष बोरड, लेखा सदस्य के समक्ष Before SRI RAJPAL YADAV, VICE PRESIDENT & DR. MANISH BORAD, ACCOUNTANT MEMBER I.T.A. No.: 2661/KOL/2019 Assessment Year: 2016-17 Diksha Manjari.......................................................................Appellant [PAN: AAHFD 2942 F] Vs. ITO (Exemption), Ward-1(2), Kolkata.....................................Respondent Appearances: Assessee represented by: Sh. Sanjoy Chatterjee, FCA. Department represented by: Sh. S. Datta, CIT(D/R). Date of concluding the hearing : February 8th, 2024 Date of pronouncing the order : February 19th, 2024 ORDER Per Rajpal Yadav, Vice-President (KZ): The present appeal is directed at the instance of the assessee against the order of the Commissioner of Income Tax (Exemptions), Kolkata [in short ld. 'CIT(E)'] passed u/s 263 of the Income Tax Act, 1961 (in short the 'Act') dated 14.11.2019 for AY 2016-17. 2. The assessee has taken three grounds of appeal. In brief, the grievance of the assessee is that ld. CIT (Exemption) has erred in taking cognizance u/s 263 of the Act and setting aside the assessment order vide which exemption u/s 10(23C)(iiiad) of the Act was granted to the assessee.

I.T.A. No.: 2661/KOL/2019 Assessment Year: 2016-17 Diksha Manjari. 3. The brief facts of the case are that assessee has filed its return of income. Such return was processed u/s 143(1) of the Act. The claim made u/s 10(23C)(iiiad) of the Act was disallowed to the assessee by way of prima facie adjustment by the CPC, Bangalore. 4. Dissatisfied with this action of the Assessing Officer (in short ld. 'AO'), assessee carried the matter in appeal before ld. CIT(A). The assessee contended that immediately in the preceding year i.e. AY 2015-16 its case was examined by the AO in scrutiny assessment u/s 143(3) of the Act and exemption was allowed to the assessee. The ld. first appellate authority after going through the case of the assessee, passed the following order:

“In this case, assessment is made U/s. 143(1) of the Act by CPC, Bangalore. The appellant is a registered society and is also registered U/s. 12AA of the I T Act 1961. The appellant claimed that the AO has denied the benefit U/s. 10(23C)(iiiad) of the Act to the appellant thereby disallowing its claim for exemption under the above Section and also wrongly determined the status of the appellant as a Firm instead of an AOP (Trust).' The appellant, in support of its contention, has referred to its assessment order passed U/s. 143(3) by the jurisdictional AO, Ward-1(2) (Exemption), Kolkata, dated 28/12/2017 for A.Y. 2015-16wherein the appellant's both issues, i.e. issue of its status and its issue of eligibility for exemption U/s. 10(23C)(iiiad) of the Act were considered. The AO is directed to verify the claim of exemption made by the appellant as per provisions of Sec. 10(23C)(iiiad) of the Act whether the appellant is actually entitled to exempt U/s. 10(23C)(iiiad) of the Act or not and whether the activities the appellant covered U/s. 2(15) of the Act because the receipt of Rs. 33,21,621/- is shown from other sources. If its activities are covered within Sec. 2(15) or 10(23C)(iiiad) of the Act, then the claim of exemption made by the appellant be allowed. In case of contrary facts, the disallowance made by the AO in case of denial of exemption U/s. 10(23C)(iliad) of the Act shall stand confirmed. The AO is also directed to properly examine the activities of the appellant whether it fits the provisions of Sections 167A/167B of the Act. If it is seen after thorough examination of the appellant's activities that its status is that of an 'AOP' instead of a 'Firm', then the status of the appellant, as claimed, be rectified. The appeal of the appellant trust is statistically allowed.

Page 2 of 4

I.T.A. No.: 2661/KOL/2019 Assessment Year: 2016-17 Diksha Manjari. In the result, the appeal filed by the appellant trust is statistically allowed.” 5. The AO thereafter, passed an order giving effect on 07.03.2019. The AO has allowed the deduction to the assessee by observing as under: “Less: Relief allowed by Ld. CIT(A)-25, Kol in terms of section 10(23)(iiiad) of the Act for the Asstt. Yr. 2015-16. Considering the order of Ld. CIT(A)-25, Koi addition made by A.O. CPC, Bangalore is being deleted” 6. The ld. CIT (Exemption) took cognizance u/s 263 of the Act. Ld. CIT (Exemption) was of the view that the AO has allowed the exemption without carrying out the directions of the ld. CIT(A) in right perspective. The ld. CIT (Exemption) thereafter, has gone through a detailed discussion whether exemption u/s 10(23C)(iiiad) of the Act is admissible to the assessee or not. Ultimately, by way of the impugned order, ld. CIT (Exemption) withdrew the exemption and directed the AO to compute the income without allowing exemption u/s 10(23C)(iiiad) of the Act. 7. With the assistance of ld. representatives, we have gone through the record carefully. The short question for our adjudication is whether action of the AO by way of passing an order giving effect dated 07.03.2019 is erroneous and prejudicial to the interests of the revenue which can authorize the ld. CIT (Exemption) to assume jurisdiction u/s 263 of the Act. A perusal of the record would suggest that ld. CIT(A) has passed the order against the disallowance on 28.03.2018. Before ld. CIT(A), assessee has relied upon the scrutiny assessment in AY 2015-16. The allowance of this deduction has been upheld by the first appellate authority in AY 2015-16. Copy of this order is available in paperbook page no. 41 to 54. Appeal in AY 2015-16 bearing No. 33/CIT(A)- 25/Kol/2018-19 was decided on 28.02.2019 i.e. after the order of the ld. CIT(A) in AY 2016-17 but before the passing of order giving effect. The ld. AO has followed the order of the AO passed in AY 2015-16 and which was confirmed by the ld. CIT(A). The short question is how this order can be erroneous and prejudicial to the interests of the revenue. The ld. CIT (Exemption) instead of focusing on that point elaborated the issue on merit which he was not authorized to look into because it is a disallowance u/s 143(1) of the Act while processing the return. The appeal against that issue

Page 3 of 4

I.T.A. No.: 2661/KOL/2019 Assessment Year: 2016-17 Diksha Manjari. was entertained by ld. CIT(A) and explanation to Section 263 of the Act specifically prohibits the ld. CIT (Exemption) to take cognizance on those issues which were subject matter of a quantum appeal before the ld. CIT(A). In the present case, the limited jurisdiction with the ld. CIT (Exemption) u/s 263 of the Act was, whether while giving effect to the order of ld. CIT(A), the AO has committed any error or not. If we look into the orders of AY 2015-16 wherein a scrutiny assessment was made and thereafter, appellate authority upheld that stand of the assessee then it is to be construed that no error has been committed by the AO by allowing exemption to the assessee u/s 10(23C)(iiiad) of the Act. The order of the ld. CIT (Exemption) in the present appeal is not sustainable and accordingly, quashed. 8. In the result, appeal of the assessee is allowed. Kolkata, the 19th February, 2024. Sd/- Sd/- [Manish Borad] [Rajpal Yadav] Accountant Member Vice President Dated: 19.02.2024 Bidhan (P.S.) Copy of the order forwarded to: 1. Diksha Manjari, 5B, Raja Ram Mohan Roy Road, Kolkata-700 008. 2. ITO (Exemption), Ward-1(2), Kolkata. 3. CIT(A)- 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

Page 4 of 4