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2022 (9) TMI 1525 - AT - Income TaxRevision u/s 263 - Inadequate or no enquiry - Assessment of trust - taxable income in terms of section 11(1) - as per CIT-E amount collected as development fees from its students had been directly carried to the balance sheet under the nomenclature “Development fund” instead of routed through the income and expenditure account - HELD THAT:- In this case, the assessee has complied by producing all the evidences as called for insofar as the compliance report which is a system generated report shows that the compliance is in full. Thus, this cannot be said that there is “lack of enquiry” by the AO much less “inadequate enquiry” and far less “no enquiry”. In this case, the assessee has complied by producing all the evidences as called for insofar as the compliance report which is a system generated report shows that the compliance is in full. Thus, this cannot be said that there is “lack of enquiry” by the AO much less “inadequate enquiry” and far less “no enquiry”. A perusal of the order passed u/s.263 of the Act shows that the ld. CIT(E) has taken the total revenue earned and amount is inclusive as development fees collected by the assessee from the students. When doing the computation, the ld. CIT(E) has granted 15% accumulation u/s.11(1) of the Act, he has not taken into consideration the capital expenditure which is an application. If this capital expenditure, which is application of income of Rs. 258 crores, is taken into consideration, the taxable income as computed by the ld. CIT(E) would automatically go into a loss. A perusal of the order of the ld. CIT(E) shows that after receiving this reply of the assessee no further verification much less an enquiry has been done by the CIT(E) to even make an attempt to show that the calculation as shown by the assessee is erroneous in any manner whatsoever. This is a minimum expectation. After the receipt of the reply of the assessee, the order has been passed after more than two months and there is nothing shown to show that the calculation as done by the assessee is erroneous. It is also not being rejected by the ld. CIT(E) but has just proceeded to hold that the assessment order is erroneous and prejudicial to the interest of revenue and set aside the same. This is not permissible. In the present case, clearly no enquiry has been done by the ld. CIT(E). The Hon’ble Jurisdictional High Court of Orissa []2022 (4) TMI 1395 - ORISSA HIGH COURT further goes on to hold that “the purpose of such an enquiry would be to arrive at a subjective view that the order of the AO was erroneous insofar as it is prejudicial to the interest of Revenue”. Here, the ld. CIT(E) has done nothing to arrive at the subjective view that the order of the AO was erroneous insofar as it is prejudicial to the interest of revenue. In fact, this is a case where there is “no enquiry” by the ld. CIT(E). Also the fact that the ld. CIT(E) has also made a calculation which attempts to show escapement of income u/s.11 of the Act which is taxable, by excluding the application of income which is permissible u/s.11(1) of the Act, is nothing but a jugglery in arithmetic. This is not a case where there is incorrect application of law. This being so, we are of the view that the principle of law laid down in the case of Orissa State Police Housing & Welfare Corporation Ltd. [2022 (4) TMI 1395 - ORISSA HIGH COURT] is squarely applicable in the case of present assessee, insofar as there is no enquiry done by the ld. CIT(E) after receipt of the reply filed by the assessee. This view of ours also support by the decision of the coordinate bench of the Tribunal in the case of Saroj Kumar Mishra [2022 (8) TMI 1456 - ITAT CUTTACK] - order passed by the ld. CIT(E) is unsustainable and consequently, the same stands quashed. Decided in favour of assessee.
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