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2023 (2) TMI 408 - AT - Income TaxRevision u/s 263 by CIT - bifurcation of cash deposits of SBNs in two periods and accepting the explanation of the assessee for the period from 09/11/2016 to 16/11/2016 without inquiring into the merits of the claim - HELD THAT:- It is trite law that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue and if one of them is absent, i.e., if the order of the Income-tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 - Therefore, as one of the limbs is absent in respect of the addition made by the AO under section 69A of the Act, the impugned revision order passed under section 263 of the Act is set aside to this extent. As regards the amount deposited in cash in SBN from 09/11/2016 to 16/11/2016, which has been allowed by the AO without making enquiries or examinations/verification of the source of cash deposit, we are of the considered view that the assessment order to this extent is erroneous insofar as it is prejudicial to the interest of Revenue in view of the Explanation 2 to section 263 of the Act. Accordingly, the impugned order passed by the learned CIT to this extent is upheld. As a result, ground no.2 raised in assessee’s appeal is partly allowed. Allowance of deduction under section 11(1)(d) - Even after rejecting the claim of exemption under section 11 of the Act, the AO allowed assessee’s claim of corpus donation under section 11(1)(d) - HELD THAT:- As is evident from the record, the AO on the basis that Form No. 10B was not filed before the due date under section 139(1) rejected the claim of exemption under section 11 - on the contrary, while computing the total income of the assessee, the AO allowed the exemption under section 11(1)(d), and therefore, on this issue, the learned CIT, inter-alia, invoked the provisions of section 263 of the Act. Thus CIT has rightly invoked the provisions of section 263 of the Act on this issue, as once the AO has held the assessee to be not eligible for exemption under section 11 of the Act, the allowance of exemption under section 11(1)(d) of the Act is contradictory to its own finding in the order, which is not only erroneous but is also prejudicial to the interest of the Revenue. It is the plea of the assessee that the amount allowed under section 11(1)(d) vide assessment order passed under section 143(3) was disallowed vide rectification order passed under section 154 of the Act and thus no prejudice is caused to the Revenue. In view of the above, we deem it appropriate to direct the AO to examine the aforesaid plea of the assessee while passing the consequential order and if the disallowance has already been made then there should be no double disallowance. The direction of the learned CIT vide impugned order on this issue is accordingly modified. Appeal of assessee partly allowed.
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