Brij Educational Trust, Meerut V. CIT (Exemption), Lucknow

ITA 1498/DEL/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5931 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-06-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 26-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SINGH
• Keywords: Revision of order; Set aside
• Section: 148; 263; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA NO. 1498/Del/2022 A.YR. : 2011-12 BRIJ EDUCATIONAL TRUST, A-162, DEFENCE COLONY, MEERUT-250001 (UP) (PAN: AABTB4074C) VS. CIT (EXEMPTION), LUCKNOW C.R. BUILDING, ITO, I.P. ESTATE, NEW DELHI - 110 002 (APPELLANT) (RESPONDENT) Appellant by : Sh. K. Sampath, Adv. & Sh. V. Rajkumar, Adv. Respondent by : Ms. Nidhi Singh, CIT(DR) Date of hearing : 27.06.2024 Date of pronouncement : 08.07.2024 ORDER PER SHAMIM YAHYA, AM : The Assessee has filed the Appeal against the Order of the Ld. CIT (Exemption), Lucknow dated 31.3.2021 passed u/s. 263 of the Income Tax Act, 1961 (hereinafter referred as Act), relating to assessment year 2011-12 on the following grounds:- “That on the facts and in the circumstances of the case and in law the Pr. Commissioner of Income Tax, Lucknow erred in passing order under section 26 of the Income Tax Act, 1961 holding the order passed by the Addl. Commissioner of Income Tax (Exemptions), Ghaziabad, to be erroneous and prejudicial to the interest of revenue and directing the Assessing Officer to make a fresh assessment de novo. The order being without jurisdiction, arbitrary, misconceived, erroneous and unlawful must be quashed.” 2. Briefly stated facts are that the assessee filed its return of income for the assessment year 2011-12 on 28.09.2011 declaring NIL income. The case was reopened u/s. 148 of the Act to examine the cash deposit of Rs. 83,57,700/- during the year in the bank account as per Non- PAN – AIR information. The assessment was completed u/s. 143(3) r.w.s. 147 of the Act on 21.6.2018 by the ITO, Exemption Ward, Ghaziabad. Subsequently, it was brought to 2 the notice of the Ld. CIT(E), Lucknow by the Addl. Commissioner of Income Tax (Exemptions), Ghaziabad that the order passed u/s. 143(3) r.w.s. 147 of the Act passed by the Assessing Officer is erroneous in far as it is prejudicial to the interests of revenue in as much as necessary enquiries or verification to verify the genuineness and correctness of the claim of the assessee have not been made. After examination of the records, a show cause notice u/s. 263 of the Act dated 12.1.2021 was issued to the assessee requiring it to explain as to why the order u/s. 143(3)/147 of the Act should not be considered as erroneous in so far as it is prejudicial to the interest of the revenue by observing that assessee society has made corpus addition amounting to Rs. 1,07,53,000/- and also received unsecured loan from the specified persons of the society during the financial year relevant to the assessment year under consideration. During the assessment proceedings, AO has not verified the introduction of corpus addition amounting o Rs. 1,07,53,000/- and unsecured loans of Rs. 1,26,88,000/- received from Sh. Ravi Bhisan and Shri Sachin Agarwal, the specified persons of the society through the above issues were identified during the recording of reasons for reopening of case as well as during assessment proceedings, but he passed the assessment order without making inquiries / verification which should have been made,. Therefore, Ld. CIT(E) noted that there is non-application of mind on the part of the AO in as much as the necessary enquiries which should have been made, have not been made, making the order erroneous and prejudicial to interest of revenue within the meaning of section 263 read with clause (a) of Explanation 2 thereunder, hence, he set aside the order passed by the AO u/s. 14(3) r.w.s. 147 of the Act for AY 2011-12 with the direction to pass fresh order after obtaining the required details and examination of the issues by providing due opportunity to the assessee vide order his order dated 31.3.2021. 3. Aggrieved with the aforesaid Ld. CIT(Exemption)’s order, Assessee is in appeal before us. 4. We have heard both the parties and perused the relevant records. 4.1 Ld. A.R. for the assessee has filed the written submissions in support of his arguments which was made during the hearing, which are reproduced as under:- “At the outset, it is submitted that the impugned order of the Ld. CIT(E) is misconceived, misdirected and is seriously erroneous being contrary to facts and repugnant to law and also devoid of jurisdiction. That is because originally the then Ld. CIT(E) had granted administrative approval u/s. 151 of the Act the Act to the proposal of 3 the AO to carry out a reassessment u/s. 147/148 of the Act in the subject case to specifically enquire into and verify the cash deposits of Rs. 83,57,700/-. That authorisation further stated that, if the corpus donations of Rs. 1,07,53,000/- received during the year, were in cash then that also be explained. It is noteworthy that nowhere in the satisfaction note there was any mention about the loans extended to the Appellant from the specified persons and of the applicability of the provisions of Sec.l3(3) of the Act to such loans. That is erroneously alleged by the incumbent CIT(E). So long as that direction of the then CIT(E) granting sanction u/s. 151 of the Act had been complied with by the AO in the reassessment the incumbent CIT(E) could not hold the reassessment erroneous on the ground of non-enquiry or non- verification of other items not forming part of the initial direction and approval of the predecessor CIT(E) granting the Sec.151 of the Act approval. Pursuant to that mandate and direction of the then Ld. CIT(E), the AO had carried out the reassessment dated 21.06.2018 after verification of the cash deposits and also of the corpus donation. He had even additionally verified the loans from specified persons though verification of the loans was not a part of the original directions. After examining the transactional details from the cash book, ledger, fee register, bank statements, audit report etc. etc. and obtaining copies of relevant material including bank statements and fee register and the cash book for the year, the AO concluded the reassessment on 21.06.2018. On this background the basic premise on which the present CIT(E) has acted to order a revision order u/s. 263 of the Act is ex facie flawed, fallacious and untenable. Qua the subject order the incumbent CIT(E) has sought to expand the scope of enquiry and investigation not directed by the predecessor CIT(E) granting the sanction u/s. 151 of the Act. That is particularly so where the incumbent CIT(E) alleges in para 2 of the impugned order and does so rather vaguely that the enquiries or verification regarding the genuineness and correctness of the claim of the Appellant had not been made. In the impugned order the claim which remained un-enquired or unverified in the reassessment have neither been identified nor named by the incumbent CIT(E). In the circumstances, therefore, the baseless allegation of the incumbent CIT(E) of the AO omitting to verify the unnamed claims is ambiguous, obfuscatory, erroneous and specious. The enquiries made by the AO in the reassessment are all part of the records and are placed in the Paper Book at pages 63 to 109. There is a specific and clear mention by the AO in the reassessment order that the cash deposits in the bank account were out of the fee receipts from the students. Both the Corpus donations and the unsecured loans find explicit mention in the Axis Bank statements placed at pages 63 to 109 of the Paper Book were duly verified by the AO. In the circumstances the observations of the Ld. CIT(E) on page 7 para 4 of the impugned order while rejecting the Appellant's explanations are all incorrect and contrary to facts and repugnant to law for the following reasons:- 4 (1) The AO in the reassessment had indeed enquired into the transactions as he was directed to do by the then predecessor CIT(E) which is clearly apparent from the recordings in the satisfaction note placed at page 62 of the Paper Book. There was thus no dearth, deficiency or error manifest in the reassessment order. The corpus donations and unsecured loans were all duly verified by the AO in the reassessment even though there was no specific direction or order by the predecessor CIT(E) to verify the cheque donations received through bank or for the unsecured loans. (2) The provisions of Sec.13(3) of the Act are not applicable to loans granted by specified persons to a Trust. The cited section gets triggered only in a situation where the specified persons have themselves availed of a loan or any benefit from the Trust with which they are associated and whose specified persons they were. In other words, it is to the transaction in the reverse order that Sec.13(3) of the Act applies to foribid and certainly not to the converse of it. The Ld. CIT(E) is totally wrong in her understanding of Sec. 13(3) of the Act itself. (3) The corpus donations, as stated above, have been verified by the AO in reassessment. No discrepancy, shortcoming or error had been located in them by the AO in the reassessment. (4) Full and complete explanation for the cash deposits received on account of fees from students had been submitted to the AO. The cash book and the fee register have been examined by the AO in detail. The copy of the entire cash book forms part of the records of the assessment. The AO has made specific mention about the cash book. (5) The reply submitted by the Appellant to the Ld. CIT(E) vide letter dated 03.02.2021 was an invitation to her to identify and notify the error that she noticed in the reassessment order passed by the AO. The Ld. CIT(E) was duty bound to identify the error and to bring it on record so as to be able to demonstrate the prejudice to the Revenue. That was a jurisdictional requirement. In that task, the Ld. CIT(E) had totally failed. The two decisions of the Apex Court and the Punjab & Hayana High Court cited by the Ld. CIT(E) are inapplicable to the facts of this case. The decision in Amitabh Bachchan's case (supra) is passed on its own facts as a careful reading has been clearly recorded of the order of the Apex Court would show. Likewise the decision in Rajmandir Estates case (supra) is inapplicable for that could only arise for application in a case where there is any lack of enquiry. In the subject case there is none such contingency because the AO has enquired into and verified all facts which be directed to and did even more than that. The decision in Venus Woollen Mills (supra) is also inapplicable for the reassessment has been completed by the AO after making due 5 enquiries and receiving explanations and adjudging them with a positive application of mind to be valid and proper. On the contrary on the revisional powers of the Ld. CIT(E) U/s. 263 of the Act are circumscribed by the several conditions by Courts whose citations have been relied which are as under:- i) CIT vs. Gabriel India Ltd. (1993) 20 ITR 108 (Bom). ii) Malabar Industrial Co. ltd. vs. CIT (2000) 243 ITR 83 (SC) iii) CIT vs. New Delhi Television Corporation Ltd. (2014) 360 ITR 44 (Del.) iv) ITO vs. DG Housing Projects Ltd. (2012) 343 ITR 29 (Del) Thus order of the Ld. CIT(A) dated 1.3.2021 passed u/s. 263 of the Act is arbitrary, misconceived, erroneous and unjust and is bereft of jurisdiction. The incumbent CIT(E)’s order for revision may please, therefore, be directed to be quashed. As the minor delay of less than one month in filing the appeal qua, hence, the same may be condoned. In this regard, it was clarified by the Ld. AR that the Registry has notified a delay of 963 days in filing the appeal. The delay of 963 days notified by the Registry is not correct because the Covid period between 29.05.2021 and 28.2.2022 has not been reckoned for limitation purposes as per the order of the Apex court in 441 ITR 222. As on 28.2.2022, as per cited order, every litigant was permitted a further period of ninety days for filing the appeal. That ninety days limit in the subject case ended on 28.5.2022. The appeal in this case was filed on 27.6.2022. There is thus a minor delay thereafter of less than thirty days which it was explained on affidavit had been taken up for contacting the professionals for the preparing and the filing of the appeal. Such delay has been prayed for condonation through separate application accompanies by an affidavit placed on the records of appeal. Being an adequate and sufficient cause the prayer be kindly acceded to and the appeal heard.” 4.2 At the time of hearing, Ld. CIT-DR relied upon the order passed by the Ld. CIT(Exemption) u/s. 263 of the Act and submitted that the order passed u/s. 263 of the Act is fully justified as the assessment order is both erroneous and prejudicial to the interest of Revenue. She further submitted that the assessment order exhibits lack of proper inquiry / verification by the AO, which should have been made in light of peculiarity of the case and in accordance with the provisions of the Act. Hence, the order passed by the Assessing Officer was erroneous and prejudicial to the interest of Revenue within the meaning of section 263 of the Act. Therefore, the Ld. CIT(Exemption) was fully justified in holding the order dated 21.6.2018 passed u/s. 143(3) r.w.s. 147 of the Act was erroneous and prejudicial to the interest of Revenue while exercising the jurisdiction under section 263 of the Act and rightly 6 directed the AO to adjudicate the issue afresh, which does not need any interference and needs to be upheld. 4.3. At the threshold, we note that there is a delay in filing the appeal before the Tribunal. For the condonation of delay assessee has filed the condonation application alongwith supporting affidavit and in support thereof he also filed the written submissions wherein, he has averred that the Registry has notified a delay of 963 days in filing the appeal. The delay of 963 days notified by the Registry is not correct because the Covid period between 29.05.2021 and 28.2.2022 is not to be reckoned for limitation purposes as per the order of the Apex court in 441 ITR 222. As on 28.2.2022, as per cited order, every litigant was permitted a further period of ninety days for filing the appeal. That ninety days limit in the subject case ended on 28.5.2022. The appeal in this case was filed on 27.6.2022. There is thus a minor delay thereafter of less than thirty days which was explained on affidavit to be time taken up for contacting the professionals for the preparing and the filing of the appeal. Such delay has been prayed for condonation through separate application accompanies by an affidavit placed on the records of appeal. Upon careful consideration and hearing both the parties, we are inclined to condone the delay in dispute and accordingly the same is condoned and we further proceed to adjudicate the Ground of Appeal raised by the Assessee. 4.4 It transpires from record that CIT(E) had granted administrative approval u/s. 151 of the Act the Act to the proposal of the AO to carry out a reassessment u/s. 147/148 of the Act in the instant case to specifically enquire into and verify the cash deposits of Rs. 83,57,700/-. That authorisation stated that, if the corpus donations of Rs. 1,07,53,000/- received during the year, were in cash then that also be explained. It is nowhere in the satisfaction note there was any mention about the loans extended to the assessee from the specified persons and of the applicability of the provisions of Sec.l3(3) of the Act to such loans. As the direction of the then CIT(E) granting sanction u/s. 151 of the Act had been complied with by the AO in the reassessment. The CIT(E) could not hold the reassessment erroneous on the ground of non- enquiry or non-verification of other items not forming part of the initial direction and approval of the predecessor CIT(E) granting the Sec.151 of the Act approval. It is also noted that pursuant to that mandate and direction of the then Ld. CIT(E), the AO had carried out the reassessment dated 21.06.2018 after verification of the cash deposits and also of the corpus donation and even verified the loans from specified persons. After examining the transactional details from the cash book, ledger, fee register, bank statements, audit report etc. etc. and obtaining copies of relevant material including bank statements and fee register and 7 the cash book for the year, the AO concluded the reassessment on 21.06.2018. Hence, the basic condition on which the present CIT(E) has acted to order a revision order u/s. 263 of the Act is not sustainable in the eyes of law. However, it seems that CIT(E) has sought to expand the scope of enquiry and investigation not directed by the predecessor CIT(E) granting the sanction u/s. 151 of the Act. In the impugned order the claim which remained un-enquired or unverified in the reassessment have neither been identified nor named by the incumbent CIT(E). It is noted that the enquiries made by the AO in the reassessment are all part of the records and are placed in the Paper Book at pages 63 to 109. There is a specific and clear mention by the AO in the reassessment order that the cash deposits in the bank account were out of the fee receipts from the students. Both the Corpus donations and the unsecured loans shows in the Axis Bank statements placed at pages 63 to 109 of the Paper Book were duly verified by the AO. In these circumstances the observations of the Ld. CIT(E) on page 7 para 4 of the impugned order while rejecting the assessee’s explanations are all incorrect and contrary to facts due to the reasons that since the AO in the reassessment had enquired into the transactions as he was directed to do by the then predecessor CIT(E) which is clearly apparent from the recordings in the satisfaction note placed at page 62 of the Paper Book. It is revealed that the corpus donations and unsecured loans were all duly verified by the AO in the reassessment even though there was no specific direction or order by the predecessor CIT(E) to verify the cheque donations received through bank or for the unsecured loans. The corpus donations, as stated above, have been verified by the AO in reassessment. No discrepancy, shortcoming or error had been located in them by the AO in the reassessment. Complete explanation for the cash deposits received on account of fees from students had been submitted to the AO. The cash book and the fee register have been examined by the AO in detail. The copy of the entire cash book forms part of the records of the assessment. The AO has made specific mention about the cash book. The reply submitted by the assessee to the Ld. CIT(E) vide letter dated 03.02.2021 was an invitation to her to identify and notify the error that she noticed in the reassessment order passed by the AO. The Ld. CIT(E) was duty bound to identify the error and to bring it on record so as to be able to demonstrate the prejudice to the Revenue. That was a jurisdictional requirement, in which she failed. 4.5 In view of above, we note that notice u/s. 263 of the Act issued by the CIT(E) is vague and only for making deeper enquiry and re-considering the evidences already on record duly considered during assessment proceedings based on purported proposal that fresh facts have been emerged subsequent to the order of assessment which is factually incorrect 8 and untenable and the conditions or the factors enabling the Ld. CIT(E) to invoke her jurisdiction u/s 263 have not been satisfied. There must be positive material for the Commissioner to consider objectively and not subjectively that the order of the Assessing Officer was erroneous, in so far as it was prejudicial to the interest of revenue. To support this view, we draw support from decision of the Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., reported in 203 ITR 108 wherein, it has been held that that there must be some prima facie material on record to show that the tax which was lawfully eligible has not been imposed or that by application of the relevant statute on an incorrect or an incomplete interpretation, a lesser tax than what was just, has been imposed. On the anvil of the aforesaid case law, it will be seen that the order made u/s 263 of the Act was entirely without any jurisdiction as there was absolutely no material to justify such an assumption nor has any material been brought on record or the materials which are on record have been disputed justifying such an assumption that the tax lawfully eligible has not been imposed. Hence, the same deserve to be cancelled. The judicial decision relied by the representatives of both the sides have been duly considered. In our considered view, we do not find any parity in the facts of the decisions relied upon in the impugned order which was further relied upon by the Ld. CIT(DR) with the peculiar facts of the case in hand. 5. In the background of the aforesaid discussions and respectfully following the precedent, as referred above, we hold that the impugned order passed by the Ld. CIT Exemption, Lucknow dated 31.3.2021 issued u/s. 263 of the Act is not sustainable in the eyes of law. Accordingly, the impugned order dated 31.03.2021passed u/s. 263 of the Income Tax Act, 1961 is hereby quashed. 6. In the result, the Appeal filed by the Assessee stands allowed. Order pronounced on 08/07/2024. Sd/- (SUDHIR PAREEK) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRB Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar